EUROPACORP (EPA:ECP) - 2017/2018 half-year results

Transparency directive : regulatory news

15/12/2017 18:15

Press release

2017/2018 half-year results

> As previously announced, first semester 2017/2018 marked by losses:
  o Revenues up to EUR138.1 M versus EUR60.6 M in N-1, thanks to the sales
    generated byValerian and the City of a Thousand Planets
  o Half-year loss of EUR(70.6) M, due to underperformance of the films
    distributed in the United States during the period and accounting of
    impairment of assets with no cash impact
> First reduction in overheads by 13%
> The Company continues its actions to reinforce financial capacities and
  reduce overheads

Saint-Denis, December 15th, 2017 - EuropaCorp, producer and distributor of
films and TV series, announces today its revenue and consolidated half-year
results as at 30 September 2017.

Half-year results - 1st  semester 2017/18

Consolidated results - in EUR million
                        Sept. 30, 2017 Sept. 30, 2016  Variation
                           (6 months)    (6 months)
Revenue                       138.1          60.6        +77.5
Cost of sales                -170.6         -70.4       -100.2
Operating margin              -32.5          -9.8        -22.7
% CA                             -23.5%         -16.2%
Operating profit (loss)       -65.7         -33.6        -32.1
% CA                             -47.6%         -55.4%
Financial income              -10.2          -7.4         -2.8
Net income (Group share)      -70.6         -27.6          -43
% CA                             -51.1%         -45.5%

To be compliant with IFRS 5, the Music Publishing and French Television
Production activities - sold or held for sale - have been restated within the
consolidated half-year 2017-2018 financial statement above. The net income for
those specific lines of business as of September 30th, 2017 (+EUR10.4 M) has
been booked directly in " Net Income - Group Share ". Idem for the activity
Multiplexes in 2016/17 with a result of EUR(1.8) M as of September 30th, 2016.

> Revenues of 138.1 MEUR, up by +78 MEUR (+128%) compared to the first semester
  of last financial year

Foreign Sales amounted to 70.1 MEUR, or more than 50% of total revenue. They
are up by +44.5 MEUR compared to N-1, thanks to the international deliveries of
Valerian and the City of a Thousand Planets.

Revenue from Theatrical Distribution increased to 35.5 MEUR versus 8.6 MEUR in
N-1, or +26.9 MEUR, with 13.6 MEUR from France and 21.9 MEUR from the US. The
activity was marked by the release of Valerian and the City of a Thousand
Planets, scoring more than 4 million admissions in France and earning 40.5 M$
at the domestic box- office (US and Canada).

The Video & VOD segment in France and the United States represented 6.5% of the
half-year revenue, coming in at 8.9 MEUR, or an increase of around +5.6 MEUR
compared with HY1 2016/2017. This turnover was mainly driven by the video sales
(physical and VOD) in the US, for 7.8 MEUR.

The main sales concerned:
- For the films of the line-up:
  o The Circle, released in DVD on August 1st, 2017 in the US;
- For the films from the catalogue:
  o Miss Sloane, released in March 2017 in the US and July 2017 in France;
  o Shut In (" Oppression "), February 2017 in the US and April 2017 in France;
  o Nine Lives (" Ma vie de chat "), November 2016 in the US and December 2016
    in France;

Television & SVOD sales in France and the United States amounted to 13.2 MEUR
for the first semester 2017/2018, down by (1.6) MEUR (-11%) compared with N-1.
This decrease is mainly due to the accounting of larger SVOD sales in the US in
N-1 (notably for The Transporter Refueled).
In France, revenue for the period is linked to the opening of broadcasting
rights windows for films from the catalogue, in particular Taken 3, Bis and
Shut In.

Revenue from the TV Series production activity amounted to 4 MEUR (excluding
the French TV production activity, held for sale), up by +3.7 MEUR. This growth
is largely due to the delivery to NBC of the 2 last episodes of the first
season of the international TV series Taken, as well as the international
exploitation of this same series.

> Half-year loss of 70.6 MEUR, versus a loss of 27.6 MEUR for the 1st semester
  of the previous year

Consolidated net loss was (70.6) MEUR, versus (27.6) MEUR during the 1st
semester of the previous financial year. This degradation is due to (i) poor
performance in theaters of the acquisitions for the US market, The Circle and
Their Finest ; (ii) disappointing US box-office revenues for Valerian and the
City of a Thousand Planets ; (iii) impairment of assets with no cash impact,
namely:
(a) write down of films not yet released, for an amount of 4.7 MEUR, to reflect
    the current revenue estimates;
(b) partial impairment of the US deferred tax asset, for an amount of 9.2 MEUR,
    given the revision of the perspectives to recover this asset;
(c) impairment of the intangible asset relating to the distribution of films in
    the US, for an amount of 13  MEUR, given the revision of the forecasted net
    future receipts generated by this activity.

The operating margin was (32.5) MEUR versus (9.8) MEUR in N-1, or a decrease of
-22.7 MEUR. This decrease is partially offset by the accounting of the sale of
the music catalogue (+12 MEUR), and by savings in overheads (savings of 3 MEUR
versus N-1) due mainly to the restructuration of the US distribution and the
disappearance of overheads relating to activities previously sold
(Multiplexes).

Half-year financial income was (10.2) MEUR, versus (7.4) MEUR in N-1, and
consisted essentially of financial interests incurred over the period, notably
on the Secondary line of credit, as well as foreign exchange effects.

After taking into account taxes for (4.5) MEUR (versus +15.4 MEUR in N-1),
half-year Net income (Group share) was (70.6) MEUR.

> Cash-flows

The net operating cash flows amounted +74.8 MEUR up from (6.0) MEUR for the
first semester of the previous financial year. This high increase is due to the
cashing of the Minimums Garantis relating to the delivery of the film Valerian
and the City of a Thousand Planets to foreign distributors as well as the
significant French theatrical receipts for this film.

During this first semester, the Company invested 54.1 MEUR in the production of
films and series, versus 97.5 MEUR during the first semester 2016/2017. This
decrease is due to the large investments in Valerian and the City of a Thousand
Planets last year. HY1 2017/2018 investments were mainly on the production of
English-language and French-language films (including Taxi 5, Carbone...) and
English-language TV series (Taken season 2...).

> Key events since the beginning of the 2017/2018 financial year

Two major transactions have been concluded since the beginning of FY 2017/2018
in order to refocus the Company on its core business, allowing EuropaCorp to
get supplementary financial resources to implement its strategy, that is to say
producing and distributing films and TV series with international potential.
These transactions are:
- Sale of the catalogue of music copyrights (for around EUR15 million) to
  Sony/ATV group ;
- Agreement for the sale of French TV production activity (for EUR11 million),
  under finalization, to Thomas Anargyros, current CEO of EuropaCorp
  Television.

> Financial structure

As of September 30th, 2017, net debt was 230 MEUR versus 301 MEUR in N-1. This
decrease is due to the almost full reimbursement, as at September 30th, 2017,
of the production debt relating to the film Valerian and the City of a Thousand
Planets. This debt was fully reimbursed in November 2017.
The next maturity dates relating to the Company's debt are in October 2019 for
the senior and April 2020 for the secondary.

Sales of non-strategic assets realized during this semester reinforced the
financial capacity of the Company. As recently announced, other sales of
non-strategic assets may occur in the short or medium term.

> Outlook

As clarified with the last press release about its priority strategic
objectives, the Company pursues its strategy of refocus on its core business,
namely the production of English-language feature films of up to 2 to 3 films
per year, production of French-language feature films of 2 films per year,
production of English-language TV series, distribution of films and
international sales.

* Films

The line-up for the second semester 2017/2018 includes the theatrical releases
of:
- CoeXister: comedy by and starring Fabrice Eboué. Co-starring Ramzy Bedia,
  Guillaume de Tonquédec and Audrey Lamy. Film produced by EuropaCorp. The film
  was released on October 11th, 2017 in France and has had 650k admissions to
  date.
- Carbone: directed by Olivier Marchal, starring Benoît Magimel and Laura
  Smet, film coproduced by EuropaCorp. The film was released on November 1st in
  France and has had 700k admissions to date.
- Sparring: directed by Samuel Jouy starring Mathieu Kassovitz and Olivia
  Merilahti, and coproduced by EuropaCorp. The film is completed and is
  scheduled for release in France on January 31st, 2018.
- Eva: directed by Benoît Jacquot, starring Isabelle Huppert, Gaspard Ulliel
  and Richard Berry. Film coproduced by EuropaCorp. The film is in
  post-production and is scheduled for release in France on February 21st,
  2018.

Considering the loss recorded on the first semester and the rest of the line-up
for the second one, EuropaCorp will recognize, as already announced, a FY
2017/2018 significantly in deficit.

FY 2018/2019 will be marked by the return to the distribution of films better
aligned with the typology of films which has made EuropaCorp's success:
- Taxi: the 5th instalment of the successful saga, by and starring Franck
  Gastambide, with Malik Bentalha, will be released on April 11th, 2018 in
  France. The film is in post-production.
- Kursk: directed par Thomas Vinterberg, nominated at the Academy Awards for
  The Hunt, starring Matthias Schoenaerts, Colin Firth and Léa Seydoux.
- Anna: directed by Luc Besson, starring Sasha Luss, Cillian Murphy, Luke Evans
  and Helen Mirren. Film produced by EuropaCorp. The film is currently
  shooting.

EuropaCorp also acquired the French distribution rights of The Old Man and the
Gun, directed by David Lowery, starring Robert Redford and Casey Affleck. The
film is in post-production and will be released in France during  FY
2018/2019.

* TV series

As for the TV series activity, the Company continues to produce and distribute
English-language TV series, such as the series Taken whose second season is
currently in production and will be broadcasted in the US on NBC from January
12th, 2018, and then on SFR Play in France.

Other English-language projects are currently under development, such as the
series The French Detective, whose pilot will be directed by Luc Besson. The
series is an adaptation of James Patterson's novels for the network ABC in the
US, with Jean Dujardin attached to star as the French detective Luc Moncrief.

Following the sale of the French TV production activity, the Company is then
focusing on the development and production of English-language TV series with
strong international potential.

ABOUT EUROPACORP
Founded in 1999, EuropaCorp has become one of Europe's leading film and
television studios.
The company's global activities span the entire film value chain with expertise
in production, theatrical distribution, video and VOD sales, international
sales, soundtrack publishing, and television sales. By directly managing the
production and distribution process, EuropaCorp is able to maintain quality and
creativity throughout the lifecycle of a film or television project. The
company has produced or coproduced over 110 films, distributed nearly 160 films
in French cinemas, and owns a catalogue of more than 500 French and English
language titles. Since 2000, the company has produced 8 of France's 20 highest
grossing films based on worldwide box-office. Starting in 2010, the company has
been active in producing television movies and episodic television series for
platforms around the world.
EuropaCorp was founded by French director, screenwriter and producer Luc
Besson.
For more information, go to www.europacorp-corporate.com

Contacts

EuropaCorp Group
Lisa Reynaud | Investor relations | investors@europacorp.com
Régis Lefèbvre | Communication | rlefebvre@europacorp.com
Tel: 01 55 99 50 00

NewCap
Pierre Laurent | NewCap
plaurent@newcap.fr | Tel : 01 44 71 94 94

           EuropaCorp is listed in Compartment C of Euronext Paris
                  ISIN code: FR0010490920 - Ticker: ECP

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