PJ Masks catching Peppa

Entertainment One 21 November 2017 Update
Download PDF

Entertainment One

PJ Masks catching Peppa

Interim results

Media

21 November 2017

Price

290p

Market cap

£1,249m

Net debt (£m) at 30 September 2017

313

Shares in issue

429.6m

Free float

68%

Code

ETO

Primary exchange

LSE (FTSE 250)

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

0.5

20.4

20.1

Rel (local)

2.3

20.4

9.7

52-week high/low

297.1p

214.5p

Business description

Entertainment One is an international entertainment company. Through its strategic partnerships and global distribution network, it produces, develops and acquires film, television, music and family content for distribution around the world. Its headquarters are in Canada and it has more than 1,300 employees. Approximately 55% of revenues are derived from North America, 30% from Europe and the balance from RoW.

Next events

Trading update

March 2018

Analysts

Bridie Barrett

+44 (0)20 3077 5700

Fiona Orford-Williams

+44 (0)20 3077 5739

Entertainment One is a research client of Edison Investment Research Limited

eOne’s H118 results delivered a 36% increase in EBITDA driven by an outstanding performance in Family with Peppa Pig making its mark in China and the rapid global roll out of PJ Masks establishing it as a global brand. Management has reiterated that the company is on track to deliver full year expectations; we have updated our forecasts for mix effects but leave our overall EBITDA forecast unchanged.

Year end

Revenue (£m)

EBITDA (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

03/16

802.7

129.1

104.1

19.4

1.2

14.9

0.4

03/17

1,082.7

160.2

129.9

20.0

1.3

14.5

0.4

03/18e

1,076.1

175.1

146.1

22.1

1.4

13.2

0.5

03/18e

1,172.1

196.6

164.1

24.1

1.5

12.0

0.5

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Strong growth in profitability

eOne’s strategy to build a more balanced content and brand business paid dividends in the first half with an outstanding performance from Family (revenues +64%) and Television (+17%), offsetting the impact of a weak release slate in the Film division (-29%). Overall revenues, broadly flat, saw the mix swing significantly in favour of these higher-margin divisions, enabling a 36% increase in adjusted EBITDA to £51m and a 53% increase in adjusted PBT to £36m. Differences in the timing of major releases in Film compared to last year meant that cash conversion remained weak resulting in an increase in net debt to £312.8m.

PJ Masks joins Peppa as a global Family brand

The successful global roll out of PJ Masks saw its revenues increase 600% to contribute a third of Family revenues, rapidly catching Peppa, which also performed well (+18%) due to its early success in China. A solid performance at eOne Television and an excellent result at MGC, buoyed by the success of Designated Survivor, drove the strong growth in Television. Against a strong period last year, Film’s relatively weak first half slate took its toll on the top line, with revenues down 29%. However, initiatives to realign the cost base enabled profitability to be maintained at last year’s level with the group on track to deliver the £10m targeted savings this year. With 82% of the current year’s budgeted profits already committed or greenlit, the outlook in Television remains robust. PJ Masks’ roll-out and Peppa’s expansion in China should drive further growth in Family, and with a better slate and a further £8m of cost savings identified as part of the merger of the film and television studios, Film’s margins should also recover in H218.

Valuation: Sum-of-the-parts of up to 362p

Despite the c 25% increase in the share price since the FY17 results in May, eOne is trading on an EV/EBIT discount of c 30% to its closest Film and Family peers. Evidence of continued expansion in the Television and Family divisions, along with a stabilisation of cash flows within Film could see the shares moving closer to our 362p sum-of-the-parts (SOTP) valuation.

H118 results highlights

Mix shift underpins strong EBITDA growth

H117 revenues decreased by 1% to £396m with very strong growth in Family (+64%) and Television (+17%) offsetting declines in Film (-29%). On a constant currency basis, revenues decreased 5%. While revenues were broadly stable, the mix effects of the shift in group revenues towards higher-margin divisions meant that adjusted EBITDA increased by 36% to £51m, and despite a higher adjusted finance charge flowing from last year’s re-financing of £13.1m (H117: £11.5m), adjusted PBT increased by 53% to £36m and adjusted EPS by 85% to 4.8p. Reported PBT of £0.8m (H117: £2.5m loss) includes £3.3m of one-off charges, mainly relating to the set up costs of its new Film venture MAKEREADY, contingent consideration related to the Renegade 83 acquisition and the re-shaping of the Film and Television divisions. It also includes a one-off finance charge of £6.5m relating to losses on currency hedges. The group’s policies have subsequently been tightened as £5.2m of these losses related to contracts that were not in compliance with the group’s policy.

Net debt was £312.8m and production finance £141.8m, up from £187m and £118m, respectively, as at end March 2017.

Exhibit 1: Summary H118 results

Summary results (£m)

 

H117

H217

FY17

H118

y-o-y change 

FY18e

Total revenues

401.0

674.4

1,082.7

395.7

(1%)

1,076.1

Total adjusted EBITDA

37.7

122.5

160.2

51.4

36%

175.1

EBITDA margin (%)

9.4%

18.2%

14.8%

13.0%

16.3%

PBT – adjusted

23.8

106.1

129.9

36.4

53%

146.1

EPS – adjusted (p)

2.6

17.4

20.0

4.8

85%

22.1

EPS – reported (p)

(0.5)

3.0

(1.4)

12.6

Investment in content and productions

198.4

209.7

408.1

229.8

16%

473.0

Net debt

263.3

187.4

312.8

223.4

IPF

 

152.3

141.8

183.8

Source: eOne (historics), Edison Investment Research (forecasts)

Divisional highlights and outlook

Exhibit 2: H1 results – divisional

Revenues (£m) 

H117

H217

FY17

H118

y-o-y % growth

Television

144.5

350.4

502.2

168.5

17%

Family

37.9

50.7

88.6

62.1

64%

Film division revenues

242.0

352.2

594.2

171.8

(29%)

Eliminations

(23.4)

(78.9)

(102.30

(6.7)

(71%)

Total revenues

 

401.0

681.7

1,082.7

395.7

(1%)

Television EBITDA

18.5

44.3

62.8

20.6

11%

Family EBITDA

24.7

30.9

55.6

38.1

54%

Film EBITDA

(2.3)

55.0

52.7

(2.6)

13%

Group costs

(3.2)

(7.7)

(10.90

(4.7)

47%

Total adjusted EBITDA

 

37.7

122.5

160.2

51.4

36%

EBITDA margin (%)

9.4%

18.0%

14.8%

13.0%

EBITDA margin – Television (%)

12.8%

12.6%

12.5%

12.2%

EBITDA margin – Family (%)

65.2%

60.9%

62.8%

61.4%

EBITDA margin – Film (%)

(1.0%)

15.6%

8.9%

(1.5%0

Film Investment

94.0

48.6

142.6

93.4

(1%)

Television Investment

102.1

158.1

260.2

131.5

29%

Family Investment

2.3

3.0

5.3

5.0

126%

Total investment

198.4

209.7

408.1

229.8

16%

Source: eOne

Television (43% H1 revenues, 40% EBITDA)

Television revenues increased by 17%, supported by a 29% increase in investment. EBITDA increased by 11% with margins down slightly to 12.2% (H117: 12.8%) due to a lower margin at eOne Television, as well as mix effects with a greater proportion of MGC revenues now derived under an independent studio model. Across the three sub-divisions:

eOne Television revenues increased by 22%. International sales benefited from the distribution of third-party content as well as the newer MGC productions. Although the number of half hours of content produced decreased (301 vs 360 in H117), overall investment increased as the emphasis has shifted to the production of higher profile titles. However, EBITDA margins decreased from 7.2% to 6.6% due to a weaker performance for the Canadian unscripted business. While this means eOne now expects to deliver fewer half hours of content than last year (900), the outlook for the remainder of the year appears well underpinned; 82% of the full year expected profits have been committed or greenlit, and the group still expects to invest over £40m in acquired content and £160m in production spend.

Having increased sevenfold last year, MGC revenues increased by a further 82% in H118, driven by the delivery of season 1 and initial episodes for season 2 of Designated Survivor. These shows are sold on an independent studio model basis (rather than receiving a participation payment from its network partner, ABC). Consequently they are higher grossing but lower-margin sales. The EBITDA margin at 19% (H117: 32%) was consequently lower. MGC has a good pipeline of shows in production and development along with a number of film projects. In H218 it expects to deliver season two of Designated Survivor, a new teen drama Youth and Consequences (for YouTube Red) and the venture’s first film since joining eOne – Molly’s Game (which will also be distributed by eOne in its territories outside the US). 91% of this year’s expected profits are committed or greenlit.

Music revenues decreased by 9% against a strong comparison last year, which included the number one album Cleopatra from the Lumineers. Despite this, EBITDA increased by 16% as the division continued to benefit from last year’s outsourcing of physical sales activities. By continuing to focus on digital distribution and artist management, while at the same time leveraging its content across the group, eOne believes it can continue to improve the profitability of this division.

Family (16% H1 revenues, 74% EBITDA)

Revenues increased by 64% driven by an exceptional performance from Peppa and PJ Masks. Peppa generated £37.4m of revenues (+18% y-o-y) with growth driven by the brand’s performance in China where licensing and merchandising increased by over 700%. Asia remains a key growth opportunity; the number of licensing arrangements in China is expected to grow from 20 (end FY17) to 60 by the end of FY18. A further 117 episodes are in production for delivery over the three years to December 2021 and its addition to Merlin Entertainments’ theme parks (first ones to be opened in 2018), as well as the success of last year’s film support the fact that the Peppa brand remains on a firm footing in its more mature markets, and signal that it has achieved evergreen status.

PJ Masks has had a stellar performance and is fast approaching Peppa’s scale, but in a much shorter period of time. Revenues increased over 600% to £22.3m in H118 and PJ Masks now accounts for more than a third of divisional revenues. This growth was largely driven by the global roll-out by master toy partner Just Play and new licensing deals. Building on this early momentum, deals are being signed across Europe, Australia and Asia with a full launch in China planned for next year. It is broadcasting in all key territories on Disney Junior and France TV. A second season (52 episodes) is in production and a third has been greenlit.

Film (44% H1 revenues, -5% EBITDA)

The Film division’s revenues were affected by a weaker cinema slate (theatrical revenues -45%), which featured fewer high-profile films (H117 included Spielberg’s The BFG) as well as the generally challenging marketplace across all other distribution channels (home entertainment revenues -39%, broadcast and digital -28%). Growth was also affected by the group’s retrenchment from physical distribution of music in the US. The pipeline for the second half of the year is stronger, including Spielberg’s The Post, A Bad Moms Christmas and Molly’s Game. Nevertheless, the £150m spend targeted for investment in acquired content at the start of the year has been reduced to £130m, while investment in productions is still expected to increase year-on-year.

The re-shaping of the Film division started in 2016 and has seen the division move away from physical distribution towards digital, and has now delivered the targeted £10m run rate of savings, which meant that the EBITDA performance was broadly maintained despite the weaker top line. Management has also identified a further £8m of savings, to be delivered by 2020 as a result of the integration of the Film and Television studios, announced at the end of last year.

Cash conversion and balance sheet

Net debt of £312.8m was reported (year to March 2017: £187m) and production finance of £141.8m (£118m).

The level of production finance is broadly in line with our expectations. The group invested £229.8m in content and productions, a 16% increase on H117 with the vast majority of the increase seen in the Television division. Almost two-thirds of this now relates to produced rather than acquired content (H117: 45%), in line with the group’s strategy to create a more balanced content business and to move closer to the creative process. This is reflected in the greater use of production financing, which we view as a positive signal that the group is delivering to its strategy.

The increase in net debt (corporate debt) was higher than we expected. Cash conversion was affected by the £41m exceptional costs announced in 2017 related to the restructuring of the Film division. In addition, variance in the timing of major film releases in the Film division compared to FY17 resulted in a £36m investment in content gap as well as a working capital outflow of £25m. This should reverse in part in the second half of the year although management now expects year end gearing to be approximately 1.3x EBITDA (up from its previous guidance of 1.2x).

Exhibit 3: H118 cash flow

(£m)

Non IPF funded business 

 

IPF funded business 

 

TV

Family

Film

plc

Total

TV

Family

Film

plc

Total

EBITDA

18.5

38.4

(2.7)

(4.7)

49.5

2.1

(0.3)

0.1

1.9

Production IIC gap

3.1

(0.8)

(36.1)

(33.8)

(60.7)

(1.9)

(16.9)

(79.5)

Content IIC gap

(12.3)

(0.8)

1.0

(12.1)

(0.1)

 

Working capital

0.0

(10.4)

(25.4)

0.3

(35.5)

58.7

(0.1)

28.9

87.5

JV movements

0.0

0.0

Adjusted cash flow

9.3

26.4

(63.2)

(4.4)

(31.9)

0.1

(2.3)

12.1

 

9.9

Cash conversion

50%

69%

N/A

94%

N/A

5%

N/A

N/M

500%

Capital expenditure

(1.5)

0.0 

Tax paid

(21.7)

(1.0) 

Net interest paid

(11.5)

(0.7) 

Free cash flow

 

 

 

 

(66.6)

 

 

 

 

8.2

One-off items

(41.2)

(1.8)

Acquisitions

(3.2)

0.0

Other

0.0

0.0

Dividends paid

(10.0)

Foreign exchange/ other

(4.4)

4.1

Movement

 

 

 

 

(125.4)

 

 

 

10.5

Net financing/debt at the start of the period

(187.4)

(152.3)

Net financing/debt at the end of the period

(312.8)

(141.8)

Source: eOne

Forecasts updated for mix effects

With 82% of Television budgeted margins committed or greenlit for the year, strong momentum being generated by PJ Masks and Peppa around the world, and a better slate in the second half in Film, management has confirmed that the company remains on track to deliver its full year expectations.

We have updated our forecasts to reflect the lower anticipated investment in content in Film and Television, as well as for revenue mix effects (raising our estimates for Family, offset by lower Film). This results in a reduction in our revenue forecasts, but at the EBITDA level overall we leave our forecast broadly unchanged. We raise our year-end net debt forecast to £223m (from £204m).

Exhibit 4: Summary forecast changes

(£m)

2018e

2019e

Previous

New

Change

Previous

New

Change

Revenues

1,180.2

1,076.1

(9%)

1,280.1

1,172.1

(8%)

EBITDA

175.0

175.1

0%

199.9

196.6

(2%)

Investment in content

483.0

473.0

(2%)

550.0

530.0

(4%)

PBT – normalised

146.0

146.1

0%

167.4

164.1

(2%)

EPS (p)

22.0

22.1

0%

24.7

24.1

(2%)

Net debt

204.4

223.5

9%

160.6

189.8

18%

IPF

185.6

183.8

(1%)

210.0

204.3

(3%)

Source: Edison Investment Research

Valuation: SOTP indicates upside to 362p

A straight EBITDA peer comparison in this sector is complicated by the fact that while eOne and some of its larger Film peers include amortisation of programming costs in their definition of EBITDA, the smaller film companies, television and brand licensing groups do not. We believe an EBIT comparison is a more consistent metric. On this basis, eOne trades on a 10.8x EV/EBIT multiple in FY18e and 9.5x in FY19e (this is based on a more conservative definition of EV that includes the value of IPF debt. Excluding this financing, the EV/EBIT multiple is 10.0x and 8.9x in FY18e and FY19e, respectively).

While the shares have increased by c 25% since the FY17 results in May, eOne’s valuation rating remains at a considerable discount to its peer group average of 14.6x FY18 EV/EBIT and 12.5x FY19e.

Given the diversity of content it now produces and distributes, as well as the differing margins and performance of each division, a sum-of-the-parts valuation is appropriate. There are considerable synergies now being generated across the group and we do not believe that a discount to this value is deserved. On this basis, we believe the share could be worth up to 362p.

Exhibit 5: Sum-of-the-parts

(£m)

FY18e

FY19e

Comment

EBIT multiples (x)

Film

10

8

25% discount to US peers (reflecting smaller scale and European media sector ratings discount)

eOne Television

12

11

In line with TV groups and majors

MGC

13

12

In line with other TV groups and majors

Music

9

9

Average sector multiple

Family

15

14

Growth multiple attached to strong brands. Align to DHX peer

Plc costs

9

9

Relatively fixed costs – align to low growth divisions

Implied enterprise values (£m)

Film

500

408

eOne Television

399

444

MGC (51%)

175

182

Music

50

53

Family

1,072

1,136

Plc costs

(153)

(162)

Other minority adjustments

(25)

(20)

Total EV, £m

2,018

2,041

Corporate debt, £m

321

321

IPF, £m

142

142

Implied equity value, £m

1,558

1,581

NOSH (m)

429

429

Implied value per share (p)

362

368

Source: Edison Investment Research

Exhibit 6: Financial summary

£m

2015

2016

2017

2018e

2019e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

785.8

802.7

1,082.7

1,076.1

1,172.1

Cost of Sales

(578.0)

(610.1)

(822.9)

(817.9)

(890.8)

Gross Profit

207.8

192.6

259.8

258.3

281.3

EBITDA

107.3

129.1

160.2

175.1

196.6

Operating Profit

103.6

124.7

155.3

169.6

190.1

Amortisation of intangibles

(22.2)

(27.4)

(41.9)

(40.0)

(40.0)

Exceptional items

(17.9)

(16.6)

(47.1)

(3.3)

0.0

Share-based payment charge

(3.4)

(5.7)

(5.0)

(5.0)

(5.0)

JV tax, finance costs, dep'n

0.1

(1.6)

0.0

0.0

0.0

Operating Profit

60.2

73.4

61.3

121.3

145.1

Net Interest

(14.8)

(20.6)

(25.4)

(23.5)

(26.0)

Exceptional finance items

(1.4)

(6.5)

1.3

(6.5)

0.0

Profit Before Tax (norm)

88.8

104.1

129.9

146.1

164.1

Profit Before Tax (FRS 3)

44.0

47.9

37.2

91.3

119.1

Tax (reported)

(2.7)

(7.7)

(12.3)

(20.1)

(27.4)

Tax (adjustment for normalised earnings)

(16.8)

(16.8)

(16.1)

(12.1)

(10.4)

Profit After Tax (before non-controlling interests) (norm)

69.3

79.6

101.5

114.0

126.4

Profit After Tax (before non-controlling interests) (FRS3)

41.2

40.2

24.9

71.2

91.7

Non-controlling interests

0.0

(3.7)

(11.9)

(17.5)

(19.9)

Average Number of Shares, Diluted (m)

332.9

379.8

433.4

437.5

442.0

EPS – normalised (p)

20.8

19.4

20.0

22.1

24.1

EPS – FRS 3 (p)

12.7

9.8

3.0

12.6

16.8

Dividend per share (p)

1.1

1.2

1.3

1.4

1.5

Gross Margin (%)

26.4

24.0

24.0

24.0

24.0

EBITDA Margin (%)

13.7

16.1

14.8

16.3

16.8

Operating Margin (before GW and except) (%)

13.2

15.5

14.3

15.8

16.2

BALANCE SHEET

Non-current Assets

538.4

890.7

972.7

969.3

947.5

Intangible Assets (incl Investment in programmes)

473.9

808.2

870.6

869.7

854.4

Tangible Assets

6.1

60.1

72.8

78.3

81.8

Deferred tax/Investments

58.4

22.4

29.3

21.3

11.3

Current Assets

634.3

752.0

928.3

917.8

989.0

Stocks

52.0

51.1

48.6

48.6

48.6

Investment in content rights

221.1

241.3

269.8

297.8

302.4

Debtors

289.9

351.3

476.5

496.4

563.0

Cash

71.3

108.3

133.4

75.0

75.0

Current Liabilities

(488.3)

(568.7)

(679.4)

(637.6)

(634.5)

Creditors

(398.7)

(470.7)

(574.6)

(532.8)

(529.7)

Short term borrowings

(89.6)

(98.0)

(104.8)

(104.8)

(104.8)

Long Term Liabilities

(319.6)

(413.6)

(464.6)

(473.7)

(460.5)

Long term borrowings

(295.9)

(309.1)

(368.3)

(377.4)

(364.2)

Other long term liabilities

(23.7)

(104.5)

(96.3)

(96.3)

(96.3)

Net Assets

364.8

660.4

757.0

775.7

841.5

CASH FLOW

Operating Cash Flow

271.9

320.1

438.4

484.2

623.1

Net Interest

(13.4)

(31.0)

(25.0)

(23.5)

(26.0)

Tax

(10.8)

(17.7)

(18.4)

(24.1)

(32.9)

Capex

(4.8)

(8.6)

(3.8)

(11.0)

(10.0)

Acquisitions/disposals

(104.3)

(226.0)

(7.5)

(10.0)

0.0

Investment in content rights and TV programmes

(280.8)

(218.5)

(408.1)

(473.0)

(530.0)

Proceeds on issue of shares

0.0

194.6

0.0

0.0

0.0

Dividends

(2.9)

(4.0)

(8.3)

(10.0)

(11.0)

Net Cash Flow

(145.1)

8.9

(32.7)

(67.4)

13.3

Opening net debt/(cash)

165.1

314.2

299.0

339.7

407.3

Movements in exchangeable notes

0.0

0.0

0.0

0.0

0.0

Other including forex

(4.0)

6.3

(8.0)

(0.1)

0.0

Closing IFRS debt/(cash)

314.2

299.0

339.7

407.3

394.0

ANALYSIS OF NET DEBT

Production finance

89.3

118.0

152.3

183.8

204.3

Net debt

224.9

181.0

187.4

223.5

189.8

Source: eOne (historics), Edison Investment Research (forecasts)

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Entertainment One and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investments Pty Ltd (Corporate Authorised Representative (ACH 161 453 872) of Myonlineadvisers Pty Ltd (AFSL: 427484) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Entertainment One and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investments Pty Ltd (Corporate Authorised Representative (ACH 161 453 872) of Myonlineadvisers Pty Ltd (AFSL: 427484) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in