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Eros International Plc Reports Third Quarter Fiscal Year 2020 Results

Eros Now Paying Subscribers Grow 65% Y-oY to Reach 26.2 Million

Revenue of $50.8 Million and Adjusted EBITDA(1) of $22.0 Million

57.3% Revenue Growth Q-o-Q and Adj EBITDA Margin of 43.3%

DOUGLAS, Isle of Man--(BUSINESS WIRE)-- Eros International PLC (NYSE:EROS) (“Eros” or the “Company”), a global Indian entertainment company, today announced unaudited financial results for the third quarter fiscal year 2020.

(USD in millions) Q3 FY20 Q3 FY19 9M FY20 9M FY19
Revenue

50.8

76.7

126.6

200.4

Y/Y % Growth

-33.8%

17.6%

-36.8%

5.9%

Q/Q % Growth

57.3%

21.0%

-

-

 
Operating Profit/(loss)

8.9

13.2

-3.8

32

Operating Profit Margin

17.5%

17.2%

-3.0%

16.0%

 
Adjusted EBITDA (1)

22.0

35.8

48.4

90.8

Adjusted EBITDA Margin

43.3%

46.7%

38.2%

45.3%

 
Global Paid EN Memberships

26.2

15.9

26.2

15.9

Y/Y Growth

64.8%

218.0%

64.8%

218.0%

Q/Q Growth

11.5%

22.3%

-

-

Global EN Registered Users

186.9

142

186.9

142

Paid / Registered Users

14.0%

11.2%

14.0%

11.2%

 
Films Released

6

25

29

56

 
Cash

$44.9

$134.90

$44.9

$134.9

Gross Debt

221.2

294.0

221.2

$294.0

Net Debt

176.3

159.1

176.3

$159.1

(1)

A reconciliation of the non-GAAP financial measures discussed within this release to the Company’s IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.

The Company made the following statement:

“This quarter we generated $50.8 million of top-line revenue and $22.0 million in adjusted EBITDA. This represents quarterly growth of 57.3% and an adjusted EBITDA margin of 43.3%. Our Eros Now business had a strong operating and financial performance this quarter, buoyed by increasing digital users in India and several popular original releases. As of December 30, 2019 our Eros Now OTT platform reached 26.2 million paid monthly subscribers and 186.9 million registered users, increases of 65% and 32%, respectively, over the same period last year. This represents net additions of 2.7 million paid subscribers and 45 million registered users during the Third Quarter alone. Given the premium value the public equity markets ascribe to loyal paying users of OTT platforms, we feel growing our user base should continue to be a priority and will ultimately benefit all of our stakeholders in the long-term.

Our performance this quarter represents another important step in our company's transformation from a traditional film producer and content syndication player, with a less regular quarterly revenue profile, to a digital Over-the-top (“OTT”) platform with a more consistent, stable and high-growth revenue profile. Recent initiatives will not only bolster that growth rate but importantly help diversify our underlying sources of revenues and subscribers. While we expect the number of paying subscribers to continue to grow rapidly based on our current business plan, we believe that continued collaboration will drive growth higher.

New Partnerships with Apple, Microsoft, Wasu and YouTube Will Expand Growth

Our partnerships with YouTube India and WasuMedia in China are just the beginning - we hope they will lead to a considerable number of incremental direct-to-consumer subscribers around the world. The YouTube India partnership in particular is a good blueprint of the kind of collaboration we hope to replicate in the future with other partners. Outside India, we are currently Apple's only South Asian Partner and we have high expectations for the success and visibility of this global service. These initiatives will all benefit revenues, profits and free cash flow in the coming quarters, and importantly in subsequent years as the annualized benefit of these subscribers are realized. China remains an important and growing market for us and we continue to release titles through our Eros Now relationships in the country. Since announcing our tie-up with Microsoft last September, we are even more excited about providing a differentiated viewer experience for our subscribers.

Eros has a uniquely compelling slate of films and original series scheduled for release over the coming quarters, and we expect this to help drive continued growth in our Eros Now business as well as box-office revenue. Among the highlights of our upcoming theatrical film releases are the trilingual remake of Haathi mere Saathi, Go Goa Gone 2, Haseen Dilruba, Shokuner Lov and Rome Roam Main. In addition, we are very excited about the much anticipated film Atrangi Re, starring Akshay Kumar, Sara Ali Khan, Danush and directed by Anand L. Rai. Complementing the theatrical film slate, Eros Now also has a compelling slate of cutting-edge, best-in-class originals scheduled to release in the coming quarters.

Perhaps the most important developments this quarter have been the considerable additions to our management team across the board with notable talent hires with past experience in American Express, Tata Group, Viacom18, Zee, Sony Network, and others. It is also encouraging for us to see such talented people put their confidence in the future of Eros. We are confident that they will add considerable value to the company on our journey.

We recently announced the appointment of Pradeep Dwivedi as CEO of Eros International Media Limited, our majority-owned subsidiary. Mr. Dwivedi will be responsible for managing business growth and operations of the company and for all commercial negotiations and representation in various markets, forums, customers, vendors and regulatory authorities. Mr. Dwivedi is a senior media industry professional and an accomplished leader with over two decades of experience in advertising and media businesses, telecom and technology. Pradeep is a welcome addition to our leadership team, and we are very excited to have him join the Eros family.

Eros also recently appointed Mr. Vijay Vaishnav as Chief Finance Officer at Eros Now. Mr. Vaishnav has deep industry and financial expertise as evidenced through many years of experience in established media and entertainment organisations such as Zee Entertainment, Viacom18 and Balaji Telefilms.

Starting from next financial year, we will be providing disaggregated revenue information of our Studio business and Digital business, along with a historical comparison. Over the past few months we have fully settled our 2017 convertible note, and currently no material amount of long-term debt due over the next twelve months. We recently filed for an opportunistic $50 million equity facility which will provide us with incremental balance sheet flexibility should we decide to pivot and pursue specific content opportunities. Importantly, the $50 million equity facility can be drawn only at the Company’s discretion and we are not obligated in any way to issue any equity under the terms of the Facility. Our balance sheet remains strong and we are well positioned to capitalise on growth opportunities. Based on our current plan, for the full Fiscal Year 2020 we are expecting Adjusted EBITDA in the area of $80 million, and are forecasting growth of 20-25% in Adjusted EBITDA during Fiscal Year 2021. We are targeting 30 million monthly paying subscribers on Eros Now by the end of the current fiscal year.”

Eros Now –Targetting “Middle India” a 900m + Subscriber market

Over half of the Internet population in India is expected to come from rural areas by the end of 2020. A recent Cisco Annual Internet Report predicts that there will be over 900 million internet users and 950 million mobile users in India by 2023. Rural, or “Middle India”, will generate the highest levels of user growth over the coming years as broadband adoption grows, income levels rise, and infrastructure improves. This dynamic underpins our business strategy as we remain focused on reaching a broad base of consumers with the widest possible offering aiming to appeal to a multitude of regional cultures, languages and tastes.

Currently, Eros Now viewership in Tier 2,3 cities in India has increased 130% Y-o-Y in terms of time spent on the platform. Furthermore, Eros Now original shows now contribute 28% of overall viewership on the platform in non-metropolitan areas, which is higher than their contribution in cities. This is a new and important trend for Eros Now also given the substantial growth in regional language content in India – underpinned by different tastes, preferences and viewing habits. We are well positioned to capitalize on that growth given our deep and rich library of regional language film titles and our strong relationships with talent throughout India.

Our diverse and growing film library of 12,000 digital films, innovative content such as our short format “Quickie”, originals strategy and strategic technology partnership with Microsoft are great examples of how we are gearing up to build a sizeable Eros Now community aiming to reach the global niches. Beyond content and technology, our distribution machinery has pioneered partnerships within the industry across global Telcos such as Vodafone, Etisalat, Airtel as well as evangelizing the industry and community with our Veriown partnership. Furthermore, following on from our YouTube-Eros Now partnership, we launched new pricing tiers with a goal to further ramp up our direct-to-consumer subscribers. Our pricing strategy aims to provide consumer value and a longer life cycle as we focus on the next 500 million subscribers forecasted to come from India.

In India, consumers can now access Eros Now premium at INR49 per month, INR 79 per quarter or INR 399 annually. The revived infrastructure, technology and pricing of the platform enables extreme ease of use for subscribers across the world. The launch of our revamped pricing and infrastructure resulted in a 22% increase in the funnel from users to paid subscribers worldwide within one month of re-launch. Eros Now will continue to garner data-driven insights and consumer intelligence to feed consumers with the choicest of content and offer seamless transaction capabilities. Beyond the consumer experience, we are able to garner data insights to predict and drive content tastes. Not only does this benefit and funnel Eros Now’s content pipeline, these insights are invaluable to the studio side of the business.

Content & Programming

Our studio business continues to grow stronger than ever on the back of a capex investment program that has seen nearly $2 billion in content creation and aggregation spent over the last decade. Our slate of new content and programming for the forthcoming quarters is as versatile and robust as it has ever been, and we have a plethora of exciting new projects we are working on. This quarter we digitally launched a total of 249 films on Eros Now in 9 different Indian languages. Over the same period over 2,460 music audio files were released on Eros Now as well as 102 units of short form and Eros Now Quickie content. Over the past two years, we have digitally premiered (first ever digital release) over 60 films on the Eros Now platform, which is a testament to the strength of our platform and has proven very popular with our consumers. Eros theatrically released several successful films last quarter, including Marjaavaan, Pagalpanti, Pati Patni Aur Woh and The Body. Our investment in new content creation is on the ascendancy and sustained through the next 5 years.

A significant amount of content and social media chatter was created around the film business with the release of Saif Ali Khan’s ‘Laal Kaptaan”, as well as the selection of Eros’s film ‘Rome Roam Main’ as the official screening at Busan film festival and winner of the Asian Star Award. We celebrated the end of the year with #20to2020 campaign built with content around the best films and iconic characters of the decade. Since the beginning of this fiscal year, Eros Now has garnered 19 prestigious digital industry awards including: Marketing Campaign of the Year for Side Hero, Best Launch of the Year for Smoke, Best Short Film on the Web for A Monsoon Date and Best entertaining Video Content for The Investigation.

Our content strategy leverages on multi-verse unique IP development, high concept, new talent films, franchises and multi-language co-productions. The Indian audience’s propensity to consume content in local language has been increasing, and in recent times regional films are breaking language barriers as they cross over with dubbed versions to other markets especially the Hindi market. The regional industry also has strong releases in the next year and the market is only expected to expand further.

It is also worth noting that Eros and the production company Colour Yellow (run by the renowned director Mr. Anand L. Rai) share an incredible partnership which demonstrates the kind of films we make, showcasing Indian ethos that touch hearts all over the world. We have ramped up our own productions with an exciting line-up under development, encompassing a significant number of releases across budgets, genres and languages through key partnerships. A few highlights of upcoming works with Colour Yellow include Haseena Dilruba and Atrangi Re.

Also, with China and Saudi Arabia markets opening up, overseas collection of our Indian film’s library will continue to conquer box offices across the globe. We recently licensed the rights to English Vinglish, a highly successful 2012 release, in China and is scheduled for release later on this year. The value of digital rights is likely to continue to see an upswing as OTT platforms further penetrate the India audience and scale up their film libraries.

With our network of upcoming talent (producers/writers/directors/influencers), we continuously come across interesting stories that can be told. Our in-house writers’ room churns out many creative ideas per month. Until now we have a story bank of significantly different IP properties. Ideas from this initiative that are currently in development/early production stages include Indo-China Films.

We are continuously partnering with key talent to create franchise driven successes leveraged across all formats. These partnerships range across writers, directors, actors and production houses to create a compelling content engine. We are supplementing the creative teams with new processes and systems to improve operational efficiencies.

Eros has a strong slate of programming scheduled to release in the coming quarters, to highlight a few:

Eros Originals & Digital Films

Name

Target Release

FLESH by Siddharth Anand

1H FY2021

7 KADAM

1H FY2021

HALAHAL, a digital film, by Zeishan Qadri

1H FY2021

754 by Sachin Mohite

1H FY2021

AVATAR by Anirudh Pathak

2H FY2021

METRO PARK Season 2 by Abi Varghese and Ajayan Venugopalan

2H FY2021

SMOKE Season 2

2H FY2021

NAGPADA DUNK

FY 2022

MAHABHARAT

FY 2022

Eros Now Quickies

Name

Target Release

WOMEN OF METTLE

1H FY2021

AJAB GAJAB INDIA

1H FY2021

THE INVESTIGATION Season 2

1H FY2021

DATE GONE WRONG Season 2

1H FY2021

TUMSE NA HO PAYEGA Season 2

2H FY2021

Eros Upcoming Theatrical Slate

Name

Target Release

BRAHMA JANEN GOPON KOMMOTI

Cast - Ritabhari Chakraborty, Soham Majumdar, Soma Chakraborty and Ambarish Bhattacharya. Directed by – Aritra Mukherjee

6th March 2020

HAATHI MERE SAATHI

Trilingual film to be released simultaneously in Hindi, Tamil and Telugu.

Cast - Rana Duggubati alongside popular Tamil actor Vishnu Vishal in the Tamil and Telegu Version. Pulkit Sharma in the Hindi version. Shriya Pilgaonkar and Zoya Hussain also join the cast.
Directed by National Award winner Prabhu Solemon.

24th April 2020

SHOKUNER LOV

Name changed to tentatively ‘HEADLINE’ (Bengali)

Cast - Parambrata Chatterjee and Joy Sengupta.

Directed by – Anindya Bikas Dutta

1H FY2021

HASEEN DILRUBA

Cast – Taapsee Pannu, Vikrant Massey and Harshvardhan Rane.

Directed by - Vinil Mathew

2H FY2021

ROME ROAM MAIN

CastNawazuddin Siddiqui, Tannishtha Chatterjee and Valentina Corti.

Directed by - Tannishtha Chatterjee

2H FY2021

ATRANGI RE

Cast - Akshay Kumar, Sara Ali Khan, Danush

Director - Anand L. Rai

FY2022

AANKHEN 2

Director - Abhinay Deo

Cast - Amitabh Bachan

FY2022

DESI BOYS 2

FY2022

VICY DONOR 2

FY2022

GO GOA GONE 2

CastSaif Ali Khan, Kunal Kemmu and Vir Das.

Directed by - Raj and D.K.

FY2022

Distribution & Alliances

Eros Now continues to develop its vision of building a global audience for South Asian entertainment, and to that end continues to put in place more distribution deals across India and around the world. In India, in addition to the significant growth on viewing streams and time spent, we have had multi-year renewals on our telecom deals with Vodafone Idea and Airtel, and further penetrated the Tier 2 and Tier 3 markets with BSNL pre-paid plans. The Airtel deal specifically was a great scale-up in conjunction with the launch of the Airtel Xtreme platform to extend Eros Now from mobile subscribers to also broadband subscribers and across the large screen experience. In the International markets we also saw completion on several deals ranging from China to Middle East and Africa including Ooredoo Qatar and Airtel Africa.

Another landmark Eros Now digital distribution deal is in China with Wasu Media, a large state-owned culture media group. The Wasu Group is one of the biggest comprehensive digital content service providers across interactive TV, 3G / 4G mobile TV and Internet TV in China. Wasu’s services cover approximately 100 cities in 29 provinces in China with cable network as well as covering the three major telecom operators and several million Internet users. The Eros Now service went live earlier this year on Wasu.

Key partnerships this year have set the groundwork for the next 500+ million subscribers from India:

  1. Microsoft : The Microsoft partnership and development is in full swing with the combined teams re-defining the core architecture of video viewing across languages and development work underway to customize users cohorts at the most granular levels. The first phase roll-out of the new platform is anticipated in Q1 FY21.
  2. YouTube : This is a transformational alliance between Eros Now and YouTube Music Premium. As the start of our collaboration, a special Eros Now – YouTube Music subscription package priced at 99 Indian Rupees (INR) for 90 days will be made available to all new subscribers in India as a joint bundle. This was the first time ever, in any geography, that Google/YouTube had partnered with a SVOD OTT player for a joint bundling and marketing opportunity. In addition, Eros Now developed the customer journey to provision access to both products and leveraged our new payment funnel. The campaign was supported by a robust digital marketing push from both.
  3. Apple : Eros is proud to be included on the new Apple Plus entertainment services app. Eros Now is expected to go live on Apple Plus soon and will immediately strengthen our distribution reach around the world. Key terms and consumer pricing will be announced simultaneous with the roll-out.

Conference Call

The Company will host a conference call on Thursday, March 5th, 2020, at 8:30 AM Eastern Standard Time.

To access the call please dial +1 (877) 665-5543 from the United States, or +1 (470) 495-9519 from outside the U.S. The conference call I.D. number is 1890986. Participants should dial in 5 to 10 minutes before the scheduled time.

A replay of the call can be accessed through March 19th, 2020 by dialling +1 (855) 859-2056 from the U.S., or +1 (404) 537-3406 from outside the U.S. The conference call I.D. number is 1890986. The call will be available as a live webcast, which can be accessed at Eros’ Investor Relations website.

About Eros International Plc

Eros International Plc (NYSE: EROS) a Global Indian Entertainment company that acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital new media. Eros International Plc was the first Indian media company to list on the New York Stock Exchange. Eros International has experience of over three decades in establishing a global platform for Indian cinema. The Company has an extensive and growing movie library comprising of over 3,000 films, which include Hindi, Tamil, and other regional language films. The Company also owns the rapidly growing OTT platform Eros Now which has rights to over 12,000 films across Hindi and regional languages. For further information, please visit: www.erosplc.com.

This release contains “forward-looking statements.” These statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation, the factors discussed in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission on August 14th, 2019 (the “20-F”), including under the sections captioned “Risk Factors.” The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, as well as the other factors described in the 20-F under the sections captioned “Risk Factors.”

Eros International Plc Financial Highlights:

 

 

Three Months Ended December 31

 

 

Nine Months Ended December 31

 

(dollars in millions)

 

2019

 

 

2018

 

 

% change

 

 

2019

 

 

2018

 

 

% change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

50.8

 

 

$

76.7

 

 

 

(33.8)%

 

 

$

126.6

 

 

$

200.4

 

 

 

(36.8)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

28.6

 

 

 

32.3

 

 

 

(11.5)%

 

 

 

71.1

 

 

 

81.2

 

 

 

(12.4)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit/(loss)

 

 

8.9

 

 

 

13.2

 

 

 

(32.6)%

 

 

 

(3.8)

 

 

 

32

 

 

 

(111.9)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

22

 

 

$

35.8

 

 

 

(38.5)%

 

 

$

48.4

 

 

$

90.8

 

 

 

(46.7)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.

Financial Results for the Three and Nine Months Ended December 31, 2019

Revenue

In the three months ended December, 31, 2019, the Eros film slate was comprised of six films of which two were medium budget and four were low budget films as compared to 25 films in the three months ended December 31, 2018, of which two were medium budget and 23 were low budget.

In the three months ended December 31, 2019, the Company’s slate of six films comprised of five Hindi film and one Telugu regional film as compared to the same period last year where its slate of 25 films comprised six Hindi films and 17 regional films and two Tamil/Telugu regional films.

In the nine months ended December 31, 2019, the Eros film slate was comprised of 29 films of which two were medium budget and 27 were low budget films as compared to 56 films in the nine months ended December 31, 2018, of which seven films were medium budget, 49 were low budget. In addition Eros Now released five original series titled Modi: Journey of a Common Man, My name is Sheela, A Monsoon Date, That Man In The Picture and Maunn during the nine months ended December 31, 2019.

In the nine months ended December 31, 2019, the Company’s slate of 29 films comprised of eight Hindi films, one Telugu regional film and 20 regional films as compared to the same period last year where its slate of 56 films comprised of 14 Hindi films, five Tamil/Telugu films and 37 regional films.

Three months ended

High

Medium

Low

Total

December 31, 2019

0

2

4

6

December 31, 2018

0

2

23

25

Nine months ended

High

Medium

Low

Total

December 31, 2019

0

2

27

29

December 31, 2018

0

7

49

56

For the three months ended December 31, 2019, aggregate revenues from decreased by 33.8% to $50.8 million from $76.7 million for the three months ended December 31, 2018 mainly due to lower syndication revenue for the three months ended December 31, 2019, partially offset by increase in revenues from the Eros Now business and revenue from film production services for the three months ended December 31, 2019.

For the nine months ended December 31, 2019, aggregate revenues from decreased by 36.8% to $126.6 million from $200.4 million for the nine months ended December 31, 2018 mainly due to lower syndication revenue for the nine months ended December 31, 2019, partially offset by increase in revenues from the Eros Now business and revenue from film production services for the nine ended December 31, 2019.

Cost of sales

For the three months ended December 31, 2019, cost of sales decreased by 50.3% to 22.1 million compared to $44.5 million in the three months ended December 31, 2018 and in the nine months ended December 31, 2019, cost of sales decreased by 53.3% to $55.6 million, compared to $119.1 million for the nine months ended December 31, 2019 which is partially offset by decrease in cost of sales.

Gross profit

For the three months ended December 31, 2019, gross profit decreased by 11.5% to $28.6 million, compared to $32.3 million in the three months ended December 31, 2018.

The decrease was mainly due to decrease in revenue for the nine months ended December 31, 2019 which is partially offset by decrease in cost of sales.

Administrative cost

For the three months ended December 31, 2019, administrative cost increased by 3.7% to $19.8 million compared to $ 19.1 million in the three months ended December 31, 2018. For the nine months ended December 31, 2019, administrative cost increased by 52.0% to $ 74.8 million, compared to $49.2 million for the nine months ended December 31, 2018. The increase was mainly due to increase in expected credit loss accounted as per default method under IFRS 9.

Adjusted EBITDA (Non- GAAP)

For the three months ended December 31, 2019, Adjusted EBITDA decreased by 38.5% to $22.0 million compared to $35.8 million in the three months ended December 31, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to decrease in gross margin, expected credit loss expense accounted under IFRS 9 and loss on account of fair valuation of senior convertible notes.

In the nine months ended December 31, 2019, adjusted EBITDA decreased by 46.7% to $ 48.4 million, compared to $90.8 million for the nine months ended December 31, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to decrease in gross margin, expected credit loss expense accounted under IFRS 9 and loss on account of fair valuation of senior convertible notes.

Net finance costs

For the three months ended December 31, 2019, net finance costs decreased by 69.2% to $ 1.2 million, compared to $3.9 million in the three months ended December 31, 2018 mainly due to decrease in finance costs which is offset by reduction in interest income on account of unwinding of credit impairment loss.

In the nine months ended December 31, 2019, net finance costs decreased by 6.7% to $5.6 million, compared to $6.0 million for the nine months ended December 31, 2018 mainly due to decrease in finance costs which is offset by reduction in interest income on account of unwinding of credit impairment loss.

Income tax expense

For the nine months ended December 31, 2019, income tax expenses decreased by 1.5% to $6.7 million, compared to $6.8 million in the nine months ended December 31, 2018. Effective income tax rates were 20.7% and 11.6% for December 31, 2019 and December 31, 2018, respectively excluding non-deductible share-based payment charges and gain/loss on fair valuation of derivative liabilities. The change in effective rate principally reflects a change in the mix of the profits earned from taxable and non- taxable jurisdictions.

Trade Receivables

As of December 31, 2019, Trade Receivables decreased to $186.4 million from $196.4 million as of March 31, 2019, partly due to a decline in syndication revenues associated with longer payment cycles.

Net Debt

As of December 31, 2019, net debt increased by 21.6% to $176.3 million from $145.0 million as of March 31, 2019 primarily on account of decrease in cash and cash equivalent.

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except share and per share data)

 

 

 

 

As at

 

 

 

Note

 

December 31, 2019

 

 

March 31, 2019

 

 

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

$

9,856

 

 

$

10,921

 

Right of use assets

 

 

 

 

1,138

 

 

 

 

Intangible assets — content

 

5

 

 

819,290

 

 

 

706,572

 

Intangible assets — others

 

 

 

 

3,105

 

 

 

3,794

 

Investments

 

 

 

 

2,000

 

 

 

2,650

 

Trade and other receivables — amortised cost

 

1

 

 

8,567

 

 

 

10,065

 

Income tax receivable

 

 

 

 

1,791

 

 

 

1,284

 

Restricted deposits

 

 

 

 

1,098

 

 

 

756

 

Deferred income tax assets

 

 

 

 

1,234

 

 

 

1,263

 

Total non-current assets

 

 

 

$

848,079

 

 

$

737,305

 

Current assets

 

 

 

 

 

 

 

 

 

 

Inventories

 

 

 

$

 

 

$

435

 

Trade and other receivables — fair value

 

1

 

 

86,892

 

 

 

125,229

 

Trade and other receivables — amortised cost

 

1

 

 

106,458

 

 

 

79,916

 

Investments

 

 

 

 

1,302

 

 

 

1,042

 

Cash and cash equivalents

 

 

 

 

44,933

 

 

 

89,117

 

Restricted deposits

 

 

 

 

5,390

 

 

 

55,858

 

Total current assets

 

 

 

 

244,975

 

 

 

351,597

 

Total assets

 

 

 

$

1,093,054

 

 

$

1,088,902

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

$

81,963

 

 

$

83,487

 

Acceptances

 

3

 

 

1,964

 

 

 

8,366

 

Short-term borrowings — fair value

 

2

 

 

40,800

 

 

 

68,349

 

Short-term borrowings — amortised cost

 

2

 

 

111,929

 

 

 

140,559

 

Derivative financial instruments

 

 

 

 

 

 

 

620

 

Lease liabilities

 

 

 

 

507

 

 

 

 

Current income tax payable

 

 

 

 

22,467

 

 

 

17,291

 

Total current liabilities

 

 

 

$

259,630

 

 

$

318,672

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

Long-term borrowings — amortised cost

 

2

 

 

68,508

 

 

 

71,920

 

Lease liabilities

 

 

 

 

748

 

 

 

 

Other long - term liabilities

 

 

 

 

14,756

 

 

 

13,898

 

Deferred income tax liabilities

 

 

 

 

25,970

 

 

 

27,427

 

Total non-current liabilities

 

 

 

$

109,982

 

 

$

113,245

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

$

369,612

 

 

$

431,917

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

 

 

Share capital

 

4

 

$

59,947

 

 

$

39,326

 

Share premium

 

 

 

 

642,619

 

 

 

580,013

 

Reserves

 

 

 

 

(30,529)

 

 

(2,202)

 

Other components of equity

 

 

 

 

(82,887)

 

 

(79,696

)

JSOP reserve

 

 

 

 

 

 

(15,985

)

Equity attributable to equity holders of Eros International Plc

 

 

 

$

589,150

 

 

$

521,456

 

Non-controlling interest

 

 

 

 

134,292

 

 

 

135,529

 

Total equity

 

 

 

$

723,442

 

$

656,985

 

Total liabilities and shareholder’s equity

 

 

 

$

1,093,054

 

 

$

1,088,902

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)

 

 

 

 

 

Three Months Ended
December 31,

 

 

Nine Months Ended
December 31,

 

 

 

Note

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

$

50,752

 

 

$

76,744

 

 

$

126,637

 

 

$

200,381

 

Cost of sales

 

 

 

 

(22,113)

 

 

(44,459)

 

 

 

(55,576)

 

 

(119,144)

 

Gross profit

 

 

 

 

28,639

 

 

 

32,285

 

 

 

71,061

 

 

 

81,237

 

Administrative cost

 

 

 

 

(19,784)

 

 

(19,130)

 

 

 

(74,836)

 

 

(49,243)

 

Operating (loss)/ profit

 

 

 

 

8,855

 

 

 

13,155

 

 

 

(3,775)

 

 

 

31,994

 

Financing costs

 

 

 

 

(3,959)

 

 

(7,352)

 

 

 

(15,539)

 

 

(16,674)

 

Finance income

 

 

 

 

2,801

 

 

 

3,427

 

 

 

9,981

 

 

 

10,685

 

Net finance costs

 

 

 

 

(1,158)

 

 

 

(3,925)

 

 

 

(5,558)

 

 

(5,989)

 

Other gains/(losses),net

 

8

 

 

(19,822)

 

 

 

7,462

 

 

 

(23,097)

 

 

(797)

 

Profit/(loss) before tax

 

 

 

 

(12,125)

 

 

 

16,692

 

 

 

(32,430)

 

 

 

25,208

 

Income tax

 

 

 

 

(3,991)

 

 

(2,218)

 

 

 

(6,716)

 

 

(6,808)

 

Profit/(loss) for the period

 

 

 

$

(16,116)

 

 

$

14,474

 

 

$

(39,146)

 

 

$

18,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

 

 

$

(18,971)

 

 

$

9,593

 

 

$

(40,759)

 

$

8,571

 

Non-controlling interest

 

 

 

$

2,855

 

 

 

4,881

 

 

 

1,613

 

 

 

9,829

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earning/(loss) per share(cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earning/(loss) per share

 

7

 

 

(15.5)

 

 

 

13.0

 

 

 

(41.1)

 

 

12.1

 

Diluted earning/(loss) per share

 

7

 

 

(15.5)

 

 

 

12.5

 

 

 

(41.1)

 

 

11.8

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Amounts in thousands, except share and per share data)

 

 

 

Three Months Ended

December 31,

 

 

Nine Months Ended

December 31,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/Profit for the period

 

$

(16,116)

 

 

$

14,474

 

 

$

(39,146)

 

 

$

18,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value loss on trade account receivable (FVTOCI)

 

 

968

 

 

 

 

 

 

2,193

 

 

 

 

Exchange differences on translating foreign operations

 

 

(2,075)

 

 

9,023

 

 

 

(6,268)

 

 

 

(14,927)

 

Total other comprehensive (loss) for the period

 

$

(1,107)

 

$

9,023

 

 

$

(4,075)

 

 

$

(14,927)

 

Total comprehensive (loss)/income for the period, net of tax

 

$

(17,223)

 

 

$

23,497

 

 

$

(43,221)

 

 

$

3,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

$

(18,750)

 

 

$

15,224

 

 

$

(41,880)

 

 

$

(241)

 

Non-controlling interest

 

 

1,527

 

 

8,273

 

 

 

(1,341)

 

 

 

3,714

 

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except share and per share data)

 

 

 

 

Nine Months Ended
December 31,

 

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Profit/(Loss) before tax

 

 

$

(32,430)

 

 

$

25,208

 

Depreciation and amortization

 

 

 

46,219

 

 

 

97,968

 

Non-cash charges

 

 

 

68,929

 

 

 

48,799

 

Changes in operating assets and liabilities

 

 

 

(76,471)

 

 

 

(131,387)

 

Net cash generated from operating activities

 

 

$

6,247

 

 

$

40,588

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Purchase of intangible film and content rights

 

 

 

(91,447)

 

 

 

(79,328)

 

Other investing activities, net

 

 

 

53,055

 

 

 

(46,884)

 

Net cash from/(used in) investing activities

 

 

$

(38,392)

 

 

$

(126,212)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Net cash generated from/(used in) financing activities

 

 

$

(11,948)

 

 

$

87,129

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

(44,093)

 

 

 

1,505

 

Effect of exchange rate changes on cash and cash equivalents

 

 

 

(91)

 

 

 

(1,049)

 

Cash and cash equivalents at beginning of period

 

 

 

89,117

 

 

 

87,762

 

Cash and cash equivalents at the end of period

 

 

$

44,933

 

 

$

88,218

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

1.

TRADE AND OTHER RECEIVABLES

 

 

As at

 

 

 

December 31,
2019

 

 

March 31,
2019

 

Trade accounts receivables (net of credit impairment loss)

 

 

 

 

 

 

 

 

Trade accounts receivables at fair value

 

$

86,892

 

 

 

125,229

 

Trade accounts receivables at amortised cost

 

 

99,493

 

 

 

71,129

Total Trade accounts receivables

 

$

186,385

 

$

196,358

 

Other receivables at amortised cost

 

 

15,532

 

 

 

18,852

 

Total Trade and other receivables

 

 

201,917

 

 

 

215,210

 

 

 

 

 

 

 

 

 

 

Current

 

 

193,350

 

 

 

205,145

 

Non-current

 

 

8,567

 

 

 

10,065

 

 

 

$

201,917

 

 

$

215,210

 

The age of account receivables net of credit impairment loss are past due but not impaired were as follows:

 

 

As at

 

 

 

December 31,
2019

 

 

March 31,
2019

 

Not more than three months

 

$

22,724

 

 

$

44,687

 

More than three months but not more than six months

 

 

27,759

 

 

 

15,948

 

More than six months but not more than one year

 

 

58,620

 

 

 

15,310

 

More than one year

 

 

8,799

 

 

 

8,796

 

 

 

$

117,902

 

 

$

84,741

 

The movement in the allowances for expected credit losses is as follows:

 

 

Year ended

 

 

 

December 31, 2019

 

 

 

Trade
Receivables

 

 

Other
Receivables

 

 

Total
Receivables

 

Balance as on April 1, 2019

 

$

41,335

 

 

$

447

 

 

$

41,782

 

Charged to operations

 

 

39,206

 

 

 

 

 

 

39,206

 

Unwinding of expected credit loss (included in finance income)

 

 

(8,059)

 

 

 

 

 

(8,059)

Reversal of expected credit loss (included in other gains/(losses))

 

 

(6,176)

 

 

 

 

 

(6,176)

Translation adjustment

 

 

(1,051)

 

 

 

 

 

(1,051)

Bad debts

 

 

(2,669)

 

 

 

 

 

 

(2,669)

 

Balance as at December 31, 2019

 

$

62,586

 

 

$

447

 

 

$

63,033

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

 

 

Year ended

 

 

 

March 31, 2019

 

 

 

Trade
Receivables

 

 

Other
Receivables

 

 

Total
Receivables

 

Balance on April 1, 2018

 

$

10,193

 

 

$

 

 

$

10,193

 

Impact of adoption of IFRS 9

 

 

18,050

 

 

 

447

 

 

 

18,497

 

Balance as on April 1, 2018

 

 

28,243

 

 

 

447

 

 

 

28,690

 

Charged to operations

 

 

60,208

 

 

 

7,284

 

 

 

67,492

 

Unwinding of expected credit loss (included in finance income)

 

 

(13,227

)

 

 

 

 

 

(13,227

)

Reversal of expected credit loss (included in other gains/(losses))

 

 

(20,698

)

 

 

 

 

 

(20,698

)

Translation adjustment

 

 

(160

)

 

 

 

 

 

(160

)

Bad debts

 

 

(13,031

)

 

 

(7,284

)

 

 

(20,315

)

Balance at the March 31, 2019

 

$

41,335

 

 

$

447

 

 

$

41,782

 

2

BORROWINGS

An analysis of long-term borrowings is shown in the table below.

 

 

Nominal

 

 

 

As at

 

 

 

Interest Rate

 

Maturity

 

December 31, 2019

 

 

March 31, 2019

 

 

 

 

 

 

 

(in thousands)

 

Asset backed borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Vehicle loan

 

2.5 - 9.5%

 

2017-22

 

$

169

 

 

$

382

 

Term loan

 

MCLR +3.2% - 4.50%

 

2019-22

 

 

8,321

 

 

 

12,947

 

Term loan

 

BR + 2.75%

 

2020-21

 

 

633

 

 

 

1,083

 

Term loan

 

10.39% - 13.75%

 

2020-23

 

 

 

 

 

251

 

 

 

 

 

 

 

$

9,123

 

 

$

14,663

 

Unsecured borrowings

 

 

 

 

 

 

 

 

 

 

 

 

Retail bond

 

6.50%

 

2021-22

 

 

66,339

 

 

 

65,215

 

Convertible notes

 

14.23%

 

2020-21

 

 

 

 

 

 

68,349

 

 

 

 

 

 

 

$

66,339

 

 

$

133,564

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative effect of unamortised costs

 

 

 

 

 

 

(493)

 

 

(691

)

Instalments due within one year:

 

 

 

 

 

 

 

 

 

 

 

 

Convertible notes

 

 

 

 

 

 

 

 

(68,349

)

Others

 

 

 

 

 

 

(6,461)

 

 

(7,267

)

 

 

 

 

 

 

$

68,508

 

 

$

71,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term borrowings at fair value

 

 

 

 

 

$

 

 

$

 

Long-term borrowings at amortised cost

 

 

 

 

 

$

68,508

 

 

$

71,920

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Analysis of short-term borrowings

 
 
Nominal As at
interest rate (%) December 31 2019 March 31, 2019
(in thousands)
Asset backed borrowings
Export credit, bill discounting and overdraft

MCLR +.40% to 4.60%

$

44,481

$

32,078

Export credit, bill discounting and overdraft

Base Rate + 0.5% to 1%

3,605

3,533

Export credit, bill discounting and overdraft

6.01% - 15.25%

43,768

26,719

Convertible notes

9.96%

40,800

Short- term loan

3.25% - 15.75%

13,614

70,962

$

146,268

$

133,292

Unsecured borrowings
Instalments due within one year on long-term borrowing

6,461

75,616

$

152,729

$

208,908

 
Short-term borrowings at fair value

40,800

68,349

Short-term borrowings at amortised cost

$

111,929

$

140,559

Bank prime lending rate and marginal cost lending rate (“BPLR” & “MCLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and floating charges over certain Group assets.

Eros International Plc.(“issuer”) issued Senior Convertible Notes ( convertible notes) on 25 September 2019 amounting to US$27,500 principal amount. The maturity date of convertible is September 26, 2020.

Reconciliation of fair value measurement of convertible notes:

 

 

December 31, 2019

 

Particulars

 

 

(in thousands)

 

As at March 31,2019

 

$

68,349

 

Interest

 

4,671

 

‘A’ ordinary shares issued in lieu of convertible notes

 

(82,967)

 

Receipt from convertible notes

 

 

25,000

 

Loss on fair value of convertible notes

 

25,747

 

As at December 31,2019

 

$

40,800

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

3.

ACCEPTANCES

 

 

December, 31

March, 31

 

 

 

2019

 

 

2019

 

 

 

(in thousands)

 

Payable under the film financing arrangements

 

$

1,964

 

 

$

8,366

 

 

 

$

1,964

 

 

$

8,366

 

Acceptances comprise of short – term credit availed from financial institutions for payment to film producers for film co-production arrangement entered by the group. The carrying value of acceptances are considered a reasonable approximation of fair value

4.

ISSUED SHARE CAPITAL

 

 

Number of
Shares

 

GBP

Authorized

 

 

 

(in thousands)

 

 

 

 

 

Ordinary shares of 30p each at March 31, 2019

 

150,000,000

 

45,000

Ordinary shares of 30p each at December 31, 2019(*)

 

200,000,000

 

60,000

(*) The Company increased authorized number of shares to 200,000,000 on September 25, 2019.

 

 

Number of Shares

 

 

USD

 

Allotted, called up and fully paid

 

A Ordinary
30p Shares(*)

 

 

B Ordinary
30p Shares(*)

 

 

(in thousands)

 

As at March 31, 2018

 

 

55,718,423

 

 

 

9,712,715

 

 

$

35,334

 

Issue of shares in the quarter ended June 30, 2018

 

 

2,747,645

 

 

 

 

 

 

1,138

 

Issue of shares in the quarter ended September 30, 2018

 

 

3,773,385

 

 

 

 

 

 

1,471

 

Issue of shares in the quarter ended December 31, 2018

 

 

1,659,767

 

 

 

 

 

 

641

 

Transfer of B Ordinary to A Ordinary share

 

 

1,500,000

 

 

 

(1,500,000

)

 

 

 

Issue of shares in the quarter ended March 31, 2019

 

 

1,892,518

 

 

 

 

 

 

742

 

As at March 31, 2019

 

 

67,291,738

 

 

 

8,212,715

 

 

$

39,326

 

Issue of shares in the quarter ended June 30, 2019

 

 

4,192,459

 

 

 

 

 

 

1,598

 

Issue of shares in the quarter ended September 30, 2019

 

 

25,956,283

 

 

 

7,044,210

 

 

 

12,276

 

Issue of shares in the quarter ended December 31, 2019

 

 

16,250,661

 

 

 

 

 

 

6,747

 

As at December 31, 2019

 

 

113,691,141

 

 

 

15,256,925

 

 

 

59,947

 

(*) Each A ordinary shares is entitled to one vote on all matters and each B shares is entitled to ten votes.

The Company issued A and B Ordinary shares as follows:

 

A Ordinary

 

B Ordinary

 

 

As at

 

As at

 

 

 

December
31, 2019

 

March 31,
2019

 

 

 

December
31,2019

 

 

March 31,
2019

 

Issuance to Founders Group(1)

 

 

1,769,911

 

 

 

 

4,878,050

 

 

 

 

Issuance towards settlement of Convertible notes(2)

 

45,254,213

 

4,411,359

 

 

 

 

 

 

 

Exercise against Restricted Share Unit/ Management scheme (3)

 

1,013,177

 

770,541

 

 

 

 

2,166,160

 

 

 

Issuance towards Reliance Industries Limited (4)

 

 

3,111,088

 

 

 

 

 

 

 

2015 Share Plan (5)

 

132,013

 

10,416

 

 

 

 

 

 

 

Total

 

46,399,403

 

10,073,315

 

 

 

 

7,044,210

 

 

 

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

(1) Average price of A Ordinary at NIL price (March 2019: $14.69)and B Ordinary at $1.64 (March 2019:Nil)

(2) Average exercise price of A Ordinary $1.83 (March 2019: $11.28)

(3) 1,013,177 A Ordinary shares (March 2019: 183,000) exercised at NIL price (March 2019: $0.39) and 2,166,160 B Ordinary shares exercised at Nil price (March 2019:Nil)

(4) Average exercise price of A Ordinary NIL (March 2019: $15)

(5) Average exercise price A Ordinary $2 (March 2019: $7.92)

5.

INTANGIBLE CONTENT ASSETS

 

 

Gross
Content
Assets

 

 

Accumulated
Amortization

 

 

Impairment
Loss

 

 

Content
Assets

 

As at December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Film and content rights

 

$

1,769,737

 

 

$

(984,027)

 

 

$

(366,703)

 

 

$

419,007

 

Content advances

 

 

427,853

 

 

 

 

 

 

(38,832)

 

 

 

389,021

 

Film productions

 

 

11,262

 

 

 

 

 

 

 

 

 

11,262

 

Non-current content assets

 

$

2,208,852

 

 

$

(984,027)

 

 

$

(405,535)

 

 

$

819,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Film and content rights

 

$

1,675,406

 

 

$

(954,628

)

 

$

(366,703

)

 

$

354,075

 

Content advances

 

 

378,268

 

 

 

 

 

 

(38,832

)

 

 

339,436

 

Film productions

 

 

13,061

 

 

 

 

 

 

 

 

 

13,061

 

Non-current content assets

 

$

2,066,735

 

 

$

(954,628

)

 

$

(405,535

)

 

$

706,572

 

6.

SHARE BASED COMPENSATION PLANS

The compensation cost recognized with respect to all outstanding plans and by grant of shares, which are all equity settled instruments, is as follows:

 

 

Three months ended
December 31,

 

 

Nine months ended
December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

IPO India Plan

 

$

95

 

 

$

252

 

 

$

266

 

 

$

1,031

 

2014 Share Plan

 

 

 

 

 

 

 

 

 

 

 

47

 

2015 Share Plan

 

 

36

 

 

 

607

 

 

 

1,247

 

 

 

2,959

 

Other share option awards (*)

 

 

1,141

 

 

 

800

 

 

 

3,150

 

 

 

4,155

 

Management scheme (staff share grant)

 

 

3,045

 

 

 

2,298

 

 

 

9,037

 

 

 

6,881

 

 

 

$

4,317

 

 

$

3,957

 

 

$

13,700

 

 

$

15,073

 

(*) includes Restricted Share Unit (RSU) and Other share option plans

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

7.

EARNINGS PER SHARE (EPS)

 

 

Three months ended December 31,

 

 

Nine months ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

Earnings/(loss) attributable to the equity holders of the parent

 

$

(18,971)

 

 

 

(18,971)

 

 

$

9,593

 

 

 

9,593

 

$

(40,759)

 

 

 

(40,759)

 

$

8,571

 

 

8,571

Potential dilutive effect of convertible notes

 

 

 

 

 

 

 

 

 

 

 

1,347

 

 

 

 

 

 

 

 

 

 

 

 

 

Potential dilutive effect related to share based compensation scheme in subsidiary undertaking

 

 

 

 

 

 

 

 

 

 

(38)

 

 

 

 

 

 

 

 

 

 

(186)

Adjusted earnings/(loss) attributable to equity holders of the parent

 

$

(18,971)

 

 

 

(18,971)

 

 

$

9,593

 

 

 

10,902

 

$

(40,759)

 

 

 

(40,759)

 

$

8,571

 

 

8,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

 

122,294,744

 

 

 

122,294,744

 

 

 

73,668,766

 

 

 

73,668,766

 

 

 

99,120,330

 

 

 

99,120,330

 

 

 

70,879,289

 

 

 

70,879,289

 

Potential dilutive effect related to share based compensation plan

 

 

 

 

 

9,590,380

 

 

 

 

 

 

13,510,251

 

 

 

 

 

 

6,755,221

 

 

 

 

 

 

46,075

 

Adjusted weighted average number of shares

 

 

122,294,744

 

 

 

131,885,124

 

 

 

73,668,766

 

 

 

87,179,017

 

 

 

99,120,330

 

 

 

105,875,551

 

 

 

70,879,289

 

 

 

70,925,364

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) attributable to the equity holders of the parent per share (cents)

 

 

(15.5)

 

 

 

(15.5)

 

 

 

13.0

 

 

 

12.5

 

 

(41.1)

 

 

 

(41.1)

 

 

12.1

 

 

11.8

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The above table does not split the earnings per share separately for the ‘A’ ordinary 30p shares and the ‘B’ ordinary 30p shares as there is no variation in their entitlement to participate in undistributed earnings.

The Company excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In the Nine months ended December 31, 2019, 764,470 shares were not included in diluted earnings per share (December 31, 2018: 1,957,035) Further, the Company have excluded convertible notes 7,660,167 shares because their effect was anti-dilutive (December 31, 2018:14,950,488). Since there is loss for the year, and for the quarter, the potential equity shares resulting from dilutive options are not considered as dilutive and hence, the Diluted EPS is same as Basic EPS.

8.

OTHER GAINS/(LOSSES), NET

 

 

Three months ended
December 31,

 

 

Nine months ended
December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Foreign exchange (loss)/gain,net

 

$

(4,484)

 

 

$

1,545

 

$

(794)

 

 

$

5,234

(Loss) on sale of property and equipment

 

 

(2)

 

 

 

(3)

 

 

 

(6)

 

 

 

(3)

Reversal of expected credit (loss)

 

 

2,902

 

 

 

3,895

 

 

 

6,176

 

 

 

14,458

 

Net losses on derecognition of financial assets measured at FVTPL(*)

 

 

(1,625)

 

 

(1,566)

 

 

(2,621)

 

 

(4,334)

Loss of investments measured at FVTPL

 

 

(23)

 

 

 

 

 

 

(865)

 

 

 

 

Credit from Government of India

 

 

 

 

 

2,328

 

 

 

760

 

 

 

2,328

 

(Loss)/Gain on financial liability (convertible notes) measured at FVTPL

 

 

(16,590)

 

 

 

1,263

 

 

 

(25,747)

 

 

(18,480)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(19,822)

 

 

$

7,462

 

$

(23,097)

 

 

$

(797)

 

(*) Arising on assignment and novation of trade receivables and trade payables with no-recourse. Derecognition of aforesaid financial assets/liabilities measured at amortized cost is to mitigate both credit risk and liquidity risk

9.

IFRS – 16 LEASES

Effective April 1, 2019, the Company adopted IFRS 16, Leases, which specifies how to recognize, measure, present and disclose leases. The standard provides a single accounting model, requiring the recognition of assets and liabilities for all major leases previously classified as “operational leases”. The company applied Modified Retrospective Approach on the date of initial application. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, based on the initial amount of the lease liability adjusted for prepaid balances existing as at March 31, 2019. The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the right-of-use asset is periodically adjusted for certain re-measurements of the lease liability. There is no impact on transition in opening balance of retained earnings as at April 1, 2019.

Operating leases

The Company has decided to use the approach that allows the right-of-use asset to be recognized at an amount equal to the liability as at the date of initial application. Based on such approach the Right-to-use (ROU) asset and lease liability as at April 1, 2019 have been created at $ 1,982 and $ 1,907, respectively. Unwinding of lease liability amounting $ 94 and amortization of Right-to-use asset amounting $1,046 have been recorded for the nine months ended December 31, 2019 as against lease rent expenses recorded in the prior period/s. The weighted average incremental borrowing rate of 12% (for India) and 7.45% (for other locations) have been applied to lease liabilities recognized in the statement of financial position at the date of initial application.

Finance leases

As of April 01, 2019, Equipment amounting $ 243 has been reclassified to ROU from property and equipment and long-term and short-term borrowing amounting $145 and $ 108, respectively, have been reclassified to lease liabilities in relation to these finance lease. The Company has continued to discount the lease rental at interest rate implicit in these lease agreements, with unwinding of lease liability amounting $ 17 and amortization of ROU over the useful life amounting $ 89 for the nine months ended December 31, 2019.

Non-GAAP Financial Measures

Net Income

The Company uses the term Net Income, as the International Financial Reporting Standards (“IFRS”) define the term as synonymous with profit for the period.

Reconciliation of Adjusted EBITDA

In addition to the results prepared in accordance with IFRS, the Company has presented Adjusted EBITDA. The Company uses Adjusted EBITDA along with other IFRSs measures to evaluate operating performance. Adjusted EBITDA is defined as EBITDA adjusted for (gains)/impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives), transactions costs relating to equity transactions, share based payments, loss/(gain) on sale of property and equipment, Loss on de-recognition of financial assets measured at amortized cost, net, credit impairment loss, net, component loss on financial liability (convertible notes) measured at fair value through profit and loss, Loss on deconsolidation of a subsidiary and exceptional items such as impairment of goodwill, trademark, film & content rights and content advances.

Adjusted EBITDA, as used and defined by us, may not be comparable to similarly-titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDA provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures and working capital changes or tax position. However, Eros’ management team believes that Adjusted EBITDA is useful to an investor in evaluating the Company’s results of operations because this measure:

  • is widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
  • helps investors to evaluate and compare the results of Eros’ operations from period to period by removing the effect of the Company’s capital structure from its operating structure.

See the supplemental financial schedules for reconciliations to IFRSs measures in the table below, which presents a reconciliation of Eros’ Adjusted EBITDA to net income.

Adjusted EBITDA

 

 

Three months ended December 31,

 

 

Nine months ended December 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

(in thousand)

 

Profit/(loss) for the period

 

$

(16,116)

 

 

$

14,474

 

 

$

(39,146)

 

 

$

18,400

 

Income tax expense

 

 

3,991

 

 

 

2,218

 

 

 

6,716

 

 

 

6,808

 

Net finance costs

 

 

1,158

 

 

3,925

 

 

 

5,558

 

 

 

5,989

 

Depreciation

 

 

415

 

 

 

296

 

 

 

1,260

 

 

 

823

 

Amortization(1)

 

 

224

 

 

 

228

 

 

 

672

 

 

 

987

 

EBITDA (Non- GAAP)

 

 

(10,328)

 

 

 

21,141

 

 

 

(24,940)

 

 

 

33,007

 

Share based payments(2)

 

 

4,317

 

 

 

3,957

 

 

 

13,700

 

 

 

15,073

 

Credit impairment losses

 

 

12,642

 

 

4,350

 

 

 

36,536

 

 

 

8,926

 

Reversal of credit impairment losses/(gains)

 

 

(2,902)

 

 

 

(3,895)

 

 

 

(6,176)

 

 

 

(14,458)

 

Adjustment towards arisen significant discounting, component

 

 

 

 

 

9,917

 

 

 

 

 

 

25,164

 

Net losses on de-recognition of financial assets measured at amortized cost, net

 

 

1,625

 

 

 

1,566

 

 

 

2,621

 

 

 

4,334

 

Loss/(Gain) on financial liability (convertible notes) measured at FVTPL

 

 

16,590

 

 

(1,263)

 

 

 

25,747

 

 

 

18,480

 

Closure of derivative asset

 

 

 

 

 

 

 

 

 

 

 

249

 

Loss on sale of property and equipment

 

 

2

 

 

 

3

 

 

 

6

 

 

 

3

 

Loss on available – for – sale measured at FVTL

 

 

23

 

 

 

 

 

 

865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (Non-GAAP)

 

$

21,969

 

 

$

35,776

 

 

$

48,359

 

 

$

90,778

 

Amortizaton of intangible and content rights

 

 

20,018

 

 

 

35,835

 

 

 

44,287

 

 

 

96,158

 

Gross Adjusted EBITDA

 

$

41,987

 

 

$

71,611

 

 

$

92,646

 

 

$

186,936

 

(1)

Includes only amortization of intangible assets other than intangible content assets.

(2)

Consists of compensation costs recognized with respect to all outstanding plans and all other equity settled instruments.

 

Mark Carbeck
Chief Corporate and Strategy Officer
Eros International PLC
mark.carbeck@erosintl.com
+44 207 258 9909

Source: Eros International Plc