Entertainment One on track to meet targets, finance chief steps down

Entertainment One reported growth across all divisions in the first half, with a cut in profits attributable to increased investment, although its finance director had decided to step down with immediate effect.

Revenues were 19% higher at £401m for the six months ended 30 september 2016.

Underlying earnings before, interest, tax, depreciation and amortisation (EBITDA) on the other hand were down at £38m from £52m in 2015 driven by the timing of increased theatrical investment in the first half.

Adjusted profit before tax fell to £24m from £40m in 2015, delivering adjusted earnings per share of 2.6p per share.

On the plus side, cash generation from operations during the period was higher which supported the higher investment in content in the first half. Net leverage is expected to be 1.1-1.2 times the group’s EBITDA at year-end.

The group’s independent library valuation increased to $1.5bn from $1bn.

The Television business had already delivered 86% of its full-year revenues, with the Family business underpinned by the exceptional performance from Peppa Pig, and the Film Division was set to benefit from both the second half's strong slate, and the home entertainment window for films including The BFG and The Girl on the Train, according to chief executive Darren Throop.

“We are pleased to be able to report revenue growth across all Divisions during the period, with particular highlights being the continued performance from The Mark Gordon Company and the wider Television Division, double-digit growth in the Family business and most notably the strong period in the box office that the Film Division has delivered with a number of high profile films performing extremely well.

"Whilst theatrical investment has impacted profitability in the period, we will see the financial benefits of this investment delivered in the second half of the financial year. As such, the Group remains on track to deliver full year financial performance in line with management expectations,” said Throop.

The group also announced that its chief financial officer Giles Willits had decided to step down from the board after ten years with the company after deciding to take some time off and then look to start the next stage of his career.

Joe Sparacio, who was recently CFO of IMAX, is stepping in as interim CFO with immediate effect. Prior to his nine years at IMAX he held senior roles at iN DEMAND and Loews Cineplex Entertainment.

"Operationally the first half has seen encouraging progress, with most TV content being delivered in H2 and the recovery in the Film division taking time to flow through to the bottom line. However, in our view management will now need to deliver a strong profit performance in order to meet full-year consensus estimates, with little room for error, which raises the risk profile of the investment. We remain cautious," Canaccord Genuity analysts David Amiras and Simon Davies said in a research note sent to clients.

The share price fell 9.41% to 222.66p at 0933 GMT