Interim / Quarterly Report • Dec 15, 2021
Interim / Quarterly Report
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HALF-YEARLY FINANCIAL REPORT SEPTEMBER 30, 2021
The first half of the 2021/2022 fiscal year was marked by the preparation of several shoots and the exploitation of the catalog, which generated the cash needed to meet the deadlines of the Safeguard Plan while maintaining the Group's cash level.
The consolidated financial statements for the first half of the 2021/2022 fiscal year of the EuropaCorp group, prepared in accordance with IFRS, show consolidated revenues of €17.3 million, compared to €26.2 million for the first half of the previous fiscal year. This 34% decrease is mainly explained by the erosion of the catalog in the absence of new project releases.
In general, the Group points out that its revenues are linked to the release schedule of its films under different modes of exploitation, the timing of which may lead to significant variations in revenues per channel from one half-year to the next. Revenues and earnings for a given half-year are therefore not indicative of annual revenues and earnings.
Due to the decline in revenues, the operating margin decreased by 16% to €9.0 million compared with €10.6 million in the first half of the previous year. However, the margin rate is up significantly to 52% compared with 41% in the first half of 2020/2021. This improvement is mainly due to lower depreciation on catalog films.
Overhead costs amounted to €(6.7) million for the six months ended September 30, 2021, slightly higher than the level of overhead costs for the first half of the previous year at €(6.1) million. This increase of €0.6 million compared to September 30, 2020 (+9%) is explained in particular by the IFRS restatement related to free share plans.
Other operating income and expenses amounted to €0.4 million (reversal of provisions for contingencies and losses) compared with €(2.4) million in the first half of the previous year, which included fees related to the debt restructuring finalized in the summer of 2020.
After taking these items into account, operating profit was positive at €2.7 million, representing a margin rate of 16%, compared with 2.1 million euros and 8% respectively for the six months ended September 30, 2020.
The financial result for the first half of the year amounted to €(1.4) million, compared with €133 million in the first half of 2020/2021. The financial result for the first half of the previous year was impacted by a "technical" profit of €134.9 million linked to the two consecutive capital increases of the July 2020 debt restructuring. In accordance with IFRIC 19, the conversion of the second and third lien Vine and Falcon debt into equity was recognized at the fair value of the shares issued on July 28, 2020. Excluding this exceptional item, financial income amounted to €(1.9) million.
The financial result for the first half of 2021/2022 of (1.4) million euros breaks down as follows
The current income before taxes is thus positive at €1.3 million or 8% of the turnover.
After considering a tax charge of €(3.2) million (including deferred taxes related to temporary differences in depreciation and amortization of €(2.4) million), compared to €(11.2) million at September 30, 2020, the net result for the first half of the year, Group share, showed a loss of €(1.9) million.
Cash flow from operations for the first half of the year amounted to €10.5 million compared to €(3.9) million for the first half of the previous year. This €14.4 million increase is mainly due to the end of the financial restructuring that had burdened cash flow last year with the payment of significant fees upon approval of the Safeguard Plan in July 2020 (lawyers, advisors, etc.).
International sales amounted to €5.8 million, or approximately 33% of total revenues. They decreased by €4 million compared to the first half of the previous fiscal year, which included pre-financing related to the last deliveries on Kursk and Braqueurs d'élite. During the first half of the year, they included royalties on the films Lucy and Taken 3.
No revenues were generated by the Theatrical distribution, as no releases took place during the half-year, compared with €0.2 million in the first half of 2020/2021.
Video & VOD activities in France and the United States amounted to €0.7 million, compared to €0.4 million last year, and mainly concerned VOD in France.
Television & SVOD sales in France and the United States amounted to €10.0 million in the first half of 2021/2022, or 58% of revenues, a decrease of (1.2) million (-11%) compared with the first half of 2020/2021. They include the opening of new rights windows in France, notably for Valerian and the City of a Thousand Planets.
Revenues from the TV Series business amounted to €(0.3) million (statements on the Taken series), compared with €3.3 million at September 30, 2020.
Revenues from other Group activities amounted to €1.2 million compared to €1.3 million in the first half of the previous year. This item includes revenues from partnership and licensing agreements, music publishing and post-production activities.
Cost of sales" (operating expenses excluding overheads) amounted to €(8.3) million, compared with €(15.5) million for the first half of FY 2020/2021.
The decrease in this item of €7.2 million is mainly explained by the decrease in depreciation and amortization for €3.6 million to €(6.5) million compared to €(10.1) million as of September 30, 2020, to be compared with the decrease in revenues for the period. The operating margin rate thus increased from 41% to 52%.
As regards investments in films, the Group invested €1.1 million.
As of September 30, 2021, net debt amounted to €37.2 million compared to €43.6 million as of March 31, 2021. This decrease is mainly due to the payment of the first instalment under the Safeguard Plan concerning the repayment of the Senior debt for €6 million. Thanks to the cash flows generated by the catalog and cost control, the Group's cash position increased by €1.7 million to €48.6 million at September 30, 2021.
Following the decision taken on October 26, 2020, by the Board of Directors of EuropaCorp, using an authorization given by the Extraordinary General Meeting of Shareholders of September 28, 2020, to proceed with free allocations of shares to employees and corporate officers, the Board of Directors noted, on October 26, 2021, the fulfillment of the conditions of allocation and consequently the issuance of 585,787 new shares with a par value of thirty-four (34) euro cents each.
Similarly, following the decision taken on November 16, 2020, by the Board of Directors of EuropaCorp to proceed with free allocations of shares to employees, the Board of Directors noted, on November 30, 2021, the fulfillment of the conditions of allocation and consequently the issuance of 436,365 new shares with a par value of thirty-four (34) euro cents each.
These shares will be unavailable for a period of one year, starting on October 26, 2021, and November 16, 2021, respectively, and will be immediately assimilated to the old shares.
In accordance with Article L. 225-197-4 of the French Commercial Code, a special report will be presented to the next Annual General Meeting.
The Company's share capital is thus increased to 41,862,290.22 euros, divided into 123,124,383 shares of thirty-four (34) euro cents each.
The listing of EuropaCorp shares was transferred to the Euronext Growth Paris market on November 18, 2021.
This transfer aims to enable EuropaCorp to be listed on a market more appropriate to its size and offering a regulatory framework better suited to SMEs. The transfer of the listing of EuropaCorp's shares is intended to simplify the administrative obligations imposed on the Company and to reduce the costs related to its listing, while allowing it to continue to benefit from the attractiveness of the financial markets.
EuropaCorp will continue to deliver accurate, precise and truthful information, making public any insider information concerning the Group, in accordance with the provisions of Regulation (EU) No. 596/2014 of 16 April 2014 on market abuse ("MAR").
The risk factors are of the same nature as those set out in Chapter 3 of the Universal Registration Document (pages 8 to 15) and do not present any significant changes.
As regards the COVID-19 epidemic, and pending the results of the vaccination campaign against the new variants of the virus, the Group believes that it could generate a risk of delay in the production and/or theatrical release of films that are to be produced by the Company. The Company also anticipates a decline in movie theater attendance due to the strict sanitary conditions that the government has put in place as part of its management of the health crisis.
Amounts relating to financial and market risks as of September 30, 2021, are set out in note 3.11 Financial instruments to the interim consolidated financial statements in this report.
Related party transactions are described in note 5.2 to the interim consolidated financial statements in this report.
The Group intends to shortly put several significant projects already developed into production, as soon as the associated financing is secured. These projects, which are currently being pre-financed, concern films, series, and documentaries, considering both EuropaCorp's DNA and the evolution of the market.
As a reminder, the Group already has a revolving credit facility for the financing of the production costs of its upcoming projects, which can be reused, allowing it to mobilize receivables linked to sales contracts for a maximum amount of 100 million dollars.
| Year Ended September 30, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| (amounts in thousands of euros, except for the number and data per share) | ||||
| Turnover | Note 4.1 | 17 320 | 26 159 | |
| Revenue | Note 4.1 | 17 320 | 26 159 | |
| Cost of sales | (8 349) | (15 521) | ||
| Operating margin | Note 4.2 | 8 971 | 10 638 | |
| Overheads | Note 4.3 | (6 664) | (6 091) | |
| Other income and expenses | Note 4.4 | 400 | (2 409) | |
| Operating profit (loss) | 2 707 | 2 138 | ||
| Income from financial investments / (Cost of financial debt) | (1 514) | (3 020) | ||
| Other financial income and expenses | 139 | 1 099 | ||
| Net gain from debt restructuring | 0 | 134 921 | ||
| Financial income | Note 4.5 | (1 375) | 133 000 | |
| Current income before income tax | 1 332 | 135 138 | ||
| Tax | Note 4.6 | (3 245) | (11 190) | |
| Equity in net earnings of associated companies | Note 3.5 | 0 | (451) | |
| Net income | (1 914) | 123 497 | ||
| Including: Net Income – Minority share |
(8) | 9 | ||
| Net Income – Group share | (1 905) | 123 488 | ||
| Basic net income per share | Note 2.5 | (0,02) | 1,01 | |
| Diluted net income per share | Note 2.5 | (0,02) | 1,01 |
Operating income (EBIT) at September 30, 2021 includes €6,470 thousand of depreciation and amortization expenses, compared with €10,051 thousand at September 30, 2020. Operating income before depreciation and amortization on films and series at September 30, 2021 was therefore €9,177 thousand, compared with €12,189 thousand at September 30, 2020.
| 30.09.2021 | 30.09.2020 | |
|---|---|---|
| Net income | (1 914) | 123 497 |
| Income and expenses directly recognized in equity | ||
| - Net investments change | ||
| - Currency translation differences | 14 | 2 686 |
| - Available-for-sale assets | ||
| - Cash flow hedges | ||
| - Reevaluation of assets | ||
| - Actuarial gains and losses | ||
| - Share of other comprehensive income of associates | ||
| - Tax on items recognized directly in equity | ||
| Comprehensive net income total accounted in Equity | 14 | 2 686 |
| Total comprehensive income for the period | (1 899) | 126 183 |
| Comprehensive income breakdown for the period | 30.09.2021 | 30.09.2020 |
| Shareholders of the entity | (1 891) | 126 174 |
| Minority interest | (8) | 9 |
Total comprehensive income for the period (1 899) 126 183
| (amounts in thousands of euros, except for the number of shares) |
Common shares |
Capital | Share premium |
Reserves | Other elements of the comprehensive income |
Treasury shares |
Net income |
Equity Group share |
Minority interest |
Total Equity |
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2021 balance | 122 102 231 | 41 515 | 135 540 | (321 739) | 4 451 | (58) | 122 606 | (17 685) | 350 | (17 335) |
| Net income appropriation in reserves | 122 606 | (122 606) | 0 | 0 | ||||||
| Transfer of a part of the share premium in reserves | 0 | 0 | ||||||||
| Dividends distribution | 0 | 0 | ||||||||
| Share-based payments | 520 | 520 | 520 | |||||||
| Net variation of treasury shares and stock dividends | (8) | (8) | (8) | |||||||
| Impact of the changes in the scope of consolidation | 0 | (0) | (0) | |||||||
| Currency translation reserve | 14 | 14 | 14 | |||||||
| 09/30/2021 net income | (1 905) | (1 905) | (8) | (1 914) | ||||||
| Total of income and costs of the period | 0 | 14 | 0 | (1 905) | (1 891) | (8) | (1 899) | |||
| Capital increase | 0 | 0 | ||||||||
| Capital increase expenses | 0 | 0 | ||||||||
| Free shares allocation plan | 0 | 0 | ||||||||
| September 30, 2021 balance | 122 102 231 | 41 515 | 135 540 | (198 613) | 4 466 | (65) | (1 905) | (19 064) | 342 | (18 722) |
| (amounts in thousands of euros) | 30-Sep-21 | 31-Mar-21 | |||
|---|---|---|---|---|---|
| ASSETS | Gross | Amortisations / Provisions |
Net | Net | |
| Non-current assets : | |||||
| Goodwill | Note 3.1 | 17 037 | (17 037) | 0 | 0 |
| Intangible assets | Note 3.2 | 1 520 425 | (1 486 181) | 34 243 | 39 685 |
| Property and Equipment | Note 3.3 | 14 607 | (11 335) | 3 272 | 3 445 |
| Other financial assets | Note 3.4 | 8 989 | 0 | 8 989 | 8 961 |
| Investments in associates | Note 3.5 | 0 | 0 | 0 | 0 |
| Deferred taxes assets | 75 | 0 | 75 | 502 | |
| Right-of-use leased assets | Note 3.10 | 16 100 | (9 575) | 6 525 | 7 830 |
| Total non-current assets | 1 577 232 | (1 524 129) | 53 104 | 60 423 | |
| Current assets : | |||||
| Inventory | 500 | (277) | 223 | 192 | |
| Trade accounts receivable | Note 3.6 | 26 583 | (6 552) | 20 031 | 22 949 |
| Other accounts receivable | Note 3.7 | 23 238 | (16 460) | 6 778 | 7 558 |
| Other current assets | Note 3.13 | 2 212 | 0 | 2 212 | 2 691 |
| Cash and cash equivalents | Note 3.12 | 48 595 | 0 | 48 595 | 46 952 |
| Total current assets | 101 128 | (23 288) | 77 840 | 80 343 | |
| TOTAL ASSETS | 130 943 | 140 765 | |||
| 31 March | |||||
| 30 September | |||||
| LIABILITIES | 2021 | 2021 | |||
| Equity - Group share | |||||
| Issued capital | 41 515 | 41 515 | |||
| Retained earnings and reserves | (60 578) | (59 199) | |||
| Total equity - Group share | Note 3.8 | (19 063) | (17 684) | ||
| Minority interests | 342 | 350 | |||
| Non-current liabilities : | |||||
| Provisions for pensions and similar | 435 | 411 | |||
| Deferred taxes liabilities | 2 735 | 334 | |||
| Long term borrowings and financial debts | Note 3.9 | 73 158 | 83 862 | ||
| Deposits and guarantees received | Note 3.9 | 514 | 613 | ||
| Lease liability - long term (> 1 year) | Note 3.10 | 6 345 | 7 819 | ||
| Other non-current liabilities | Note 3.13 | 5 094 | 4 987 | ||
| Total non-current liabilities | 88 281 | 98 025 | |||
| Current liabilities : | |||||
| Short term borrowings and financial debts | Note 3.9 | 12 169 | 6 102 | ||
| Lease liability - short term (< 1 year) | Note 3.10 | 3 206 | 2 628 | ||
| Provisions for risks and expenses | Note 3.11 | 637 | 684 | ||
| Trade accounts payable | Note 3.12 | 29 700 | 30 614 | ||
| Other financial liabilities | 9 368 | 9 588 | |||
| Other current liabilities | Note 3.13 | 6 303 | 10 458 | ||
| Total current liabilities | 61 383 | 60 074 | |||
| TOTAL LIABILITIES | 130 943 | 140 765 |
| (amounts in thousands of euros) | 2021 | 2020 | |
|---|---|---|---|
| Operations | |||
| Net income - Group share without discontinued operations | (1 905) | 123 488 | |
| Net income - Minority share | (8) | 9 | |
| Depreciation and amortization | 7 599 | 10 987 | |
| Unrealised gains and losses relating to changes in fair value | 0 | (134 921) | |
| Change in the fair value of securities-related liabilities | 0 | 0 | |
| Capital gains or losses on the disposal of assets | (3) | 77 | |
| Share of income from associates consolidated using the equity method | 0 | 451 | |
| Income and expenses due to share-based payments and similar | 520 | 0 | |
| Operating cash flow after net financial debt cost and taxes | 6 202 | 92 | |
| (Income from financial investments) / Cost of financial debt | 1 436 | 5 155 | |
| Taxes (Income) / Cost | 0 | 0 | |
| Operating cash flow before net financial debt cost and taxes | 7 638 | 5 247 | |
| Change in working capital requirement : | |||
| Inventory | (31) | 1 | |
| Trade accounts and notes receivable | 6 484 | 7 153 | |
| Deferred costs | 344 | (73) | |
| Trade notes and accounts payable | (1 050) | (8 083) | |
| Deferred income | (2 883) | (8 188) | |
| Tax paid | 0 | 0 | |
| Net cash flow from operations | Note 5.1 | 10 503 | (3 943) |
| Investment activities | |||
| Acquisition of intangible assets | (1 051) | (52) | |
| Acquisition of other intangible assets | (0) | (172) | |
| Acquisition of property and equipment | (27) | (55) | |
| Income on disposal of intangible assets and property, plant and equipment | 3 | 1 500 | |
| Net change in financial assets | (19) | 280 | |
| Change in liabilities on long-term investment | 0 | 0 | |
| Change in minority reserves | 0 | 0 | |
| Impact of the changes in the scope of consolidation | 0 | 0 | |
| Net cash flow from investment activities | Note 5.1 | (1 094) | 1501 |
| Financing activities | |||
| Dividends paid | 0 | 0 | |
| Increase in capital | 0 | 0 | |
| Capital increase expenses | 0 | 0 | |
| Net increase in bank borrowings and overdrafts | 332 | 1 432 | |
| Net decrease in bank borrowings and overdrafts | (5 739) | (998) | |
| Decrease in lease liability | (1 258) 58 |
(5 570) 12 |
|
| Net change in treasury shares | |||
| Interest expenses paid Interest income received and net gain/loss from disposals |
(1 550) 476 |
(4 590) 28 |
|
| Note 5.1 | |||
| Net cash flow from financing activities | (7 681) | (9 685) | |
| Overall change in cash position | 1 728 | (12 126) | |
| Incidence of foreign exchange rate change | 9 | 2 154 | |
| Opening cash position | 46 858 | 50 246 | |
| Cash position at the end of period | 48 595 | 40 274 | |
| broken down into: | |||
| Marketable securities | 658 | 678 | |
| Cash and cash equivalents | 47 938 | 40 028 | |
| Overdraft | ( 0) | ( 432) |
EuropaCorp, a limited liability company governed by the provisions of French law, and its subsidiaries, have as their principal activity the production and distribution of cinematographic works.
The Group's accounts were restructured between April 1, 2021, and September 30, 2021, with the transfer of assets and liabilities from Valerian SAS to Valerian Holding SAS. This change in the scope of consolidation has no impact on the interim financial statements.
The EuropaCorp group points out that its results are linked in particular to the number and timing of film releases and television series deliveries, as well as to the financing structure of its works. These factors can lead to significant variations in results from one period to another. The half-year consolidated results are therefore not representative of future annual results.
The condensed consolidated interim financial statements of EuropaCorp for the nine months ended September 30, 2021, have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted in the European Union and applicable at that date. They have been prepared in accordance with IAS 34 "Interim Financial Reporting".
These financial statements do not include all the information required for annual consolidated financial statements and should be read in conjunction with the Company's consolidated financial statements for the year ended March 31, 2021.
The accounting policies used are identical to those described in the published consolidated financial statements for the year ended March 31, 2021 (see in particular Note 2 "Accounting policies" of these financial statements, pages 181 to 193 of the Registration Document filed with the AMF on July 23, 2021, under number D.21-0726), with the exception of the new standards and interpretations that apply and are described in the following paragraph.
The condensed consolidated financial statements are presented in thousands of euros unless otherwise indicated.
The interim financial statements were reviewed and approved by the Board of Directors on December 14, 2021. These interim financial statements have not been subject to a limited review by the statutory auditors.
In accordance with IAS 1.25, management is required to make an assessment of the entity's ability to continue as a going concern, and where there are significant uncertainties related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern, the entity is required to disclose those uncertainties. In making these assessments, management considers all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period to September 30, 2022.
Given the evolution of the health situation linked to Covid-19 and its various variants at the date of closing of the accounts, the Group considers that there is a risk of delay in the production and/or theatrical release of films.
The Company is therefore not in a position to accurately assess all of the factors that could impact the financial statements for the 2022/2023 financial year. Nevertheless, despite the impacts that may arise, the Group's ability to continue as a going concern is not called into question in view of the information available at the date of closing of these interim financial statements, the Group's cash position and the possibility of mobilizing receivables related to contracts for a maximum amount of USD 100 million. In addition, the repayment deadlines set out in the Safeguard Plan have been met.
In particular, the IFRS standards of the IASB and the interpretations of the IFRIC, as adopted by the European Union (available on the website of the European Commission http://ec.europa.eu/internal_market/accounting/ias_fr.htm#adopted-commission) for financial years beginning on or after April 1, 2021, have been applied by the Company and have not resulted in any significant change in the methods of valuation and presentation of the accounts.
The new standards, amendments to existing standards and interpretations that are mandatory for financial years beginning on or after January 1er2021 did not have a material impact on the financial statements, mainly as follows
As of September 30, 2021, the IASB has issued standards and interpretations that have not yet been adopted by the European Union as of September 30, 2021; they are not applied as of that date.
As of September 30, 2021, the IASB published standards and interpretations adopted by the European Union as of September 30, 2021, which are applicable for accounting periods beginning on or after January 1, 2022. These standards and interpretations have not been applied early.
The impacts of the draft standards and interpretations currently being studied by the IASB have not been anticipated in these consolidated financial statements and cannot be reasonably estimated at this time.
The preparation of interim financial statements requires the use of estimates and assumptions that affect the valuation of certain assets and liabilities reported in the consolidated balance sheet and certain income statement items.
Assumptions and estimates that could result in a material adjustment to the carrying amount of assets and liabilities within the next reporting period mainly relate to:
In accordance with IAS 33 - Earnings per Share, basic earnings per share are calculated by dividing net income for the year attributable to ordinary shares by the weighted average number of ordinary shares outstanding during the year. Treasury shares are not considered as outstanding shares and therefore reduce the number of shares taken into account for the calculation of net earnings per share.
Diluted earnings per share are determined by adjusting, where appropriate, the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all potentially dilutive instruments (i.e. those that have the effect of reducing earnings per share). For the Group, the only potentially dilutive instruments are bonus shares granted.
The main assumptions used to calculate the earnings per share presented in the financial statements are as follows:
| Number of shares comprising the share capital as of July 28, 2020, | 122 102 231 |
|---|---|
| Number of treasury shares held as of September 30, 2021 | 86 049 |
| Dilutive effect of the bonus share plan | |
| Number of shares granted on October 26, 2020 (effective October 26, 2021) | 585 787 |
| Number of shares granted on November 16, 2020 (effective November 16, 2021) | 436 365 |
| Maximum number of performance shares granted on July 15, 2021 | 2 932 915 |
| Weighted average number of shares as of September 30, 2021 (excluding treasury shares) | 122 016 182 |
| Weighted average number of shares as of September 30, 2021 (dilutive) (excluding treasury shares) |
124 272 402 |
No change in the net value of goodwill as of September 30, 2021. Goodwill is fully impaired.
| Movements during the period 31.03.2021 |
|||||
|---|---|---|---|---|---|
| (in thousands of euros) | + | - | Other (1) | 30.09.2021 | |
| Films and audiovisual rights | 1 423 158 | 15 | 169 | 1 423 341 | |
| Production costs | 35 | 974 | 12 | 1 022 | |
| Preliminary expenses | 16 588 | 50 | (12) | 16 626 | |
| Other | 78 522 | 250 | (188) | 852 | 79 436 |
| Gross amount | 1 518 303 | 1 289 | (188) | 1 021 | 1 520 425 |
| Films and audiovisual rights | (1 400 189) | (6 481) | (169) | (1 406 839) | |
| Other | (78 428) | (62) | (852) | (79 342) | |
| Depreciation/Provisions | (1 478 618) | (6 543) | - | (1 021) | (1 486 181) |
| Net amount | 39 685 | (5 254) | (188) | - | 34 243 |
(1) Changes in the scope of consolidation, transfers from one item to another, foreign exchange impact
As of September 30, 2021, the net book values of intangible assets are as follows
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Preliminary expenses | 961 | 963 |
| Production costs | 1 022 | 35 |
| Completed films | 32 166 | 38 593 |
| Other intangible assets | 94 | 94 |
| TOTAL INTANGIBLE ASSETS | 34 243 | 39 685 |
The decrease in the net value of intangible assets over the period is mainly due to the amortization of films in the amount of €6.5 million.
Preliminary costs that have not resulted in a decision to shoot a film within five years of their first activation are written down. However, this principle does not apply to projects that have been capitalized for more than five years, where there are specific production commitments or genuine expressions of interest, or where the company considers that the duration of development does not call into question the likelihood of the project being filmed at term. As of September 30, 2021, the residual net book value of projects for which the first expenditure has been capitalized for less than 5 years amounts to €961 thousand.
The company points out that films and audiovisual productions are amortized for each film or audiovisual production using the estimated revenue method, which consists of applying to the cost of the film the ratio resulting from the comparison between net earned revenues and total estimated net revenues, as specified in paragraph 2.7.4 of the notes to the consolidated financial statements for the fiscal year ending March 31, 2021. Total net revenues include (i) net earned revenues for the period, considering revenues and distribution costs of films in the US, and (ii) estimated net revenues for a maximum of 12 years from the date of first exhibition. The timeframe used remains the same as that used for the closing of the annual accounts on March 31, 2021.
As of September 30, 2021, "other intangible assets" mainly include the initial contribution paid in connection with the creation of the joint US film distribution and marketing platform, EuropaCorp Distribution LLC
(formerly "RED"), for \$30 million and the additional contribution of \$55 million paid during fiscal year 2014/2015 to settle the Group's obligations to Relativity. The total investment as of September 30, 2021, amounts to 78 million euros representing the equivalent of 85 million dollars. This investment has enabled the Group to conclude important contracts with Fox (Video), Amazon (SVOD / Pay TV) and Lionsgate (Video) during the previous years. This intangible asset, representing an entry fee, has an indefinite life and is, by definition, non-depreciable and is tested annually. This intangible asset has been fully impaired since March 31, 2019.
| Movements during the period | |||||
|---|---|---|---|---|---|
| (in thousands of euros) | 31.03.2021 | + | - | Other (1) | 30.09.2021 |
| Plant, machinery and equipment | 7 326 | - | - | - | 7 326 |
| Land, buildings | 5 427 | 4 | - | - | 5 431 |
| Other property, plant and equipment | 1 874 | 17 | (50) | - | 1 841 |
| Gross amount | 14 627 | 21 | (50) | - | 14 598 |
| Plant, machinery and equipment | (6 867) | (77) | - | - | (6 945) |
| Land, buildings | (2 644) | (111) | - | - | (2 755) |
| Other property, plant and equipment | (1 671) | (12) | 50 | (3) | (1 636) |
| Depreciation/Provisions | (11 182) | (200) | 50 | (3) | (11 335) |
| Net amount | 3 445 | (179) | - | (3) | 3 263 |
(1) Changes in the scope of consolidation, transfers from one item to another, foreign exchange impact
Property, plant and equipment mainly comprise the assets held by Digital Factory (buildings, installations and technical equipment at the Saint-Denis site).
Other financial assets consist mainly of deposits and guarantees with a maturity of more than one year and non-consolidated securities (held by EuropaCorp SA).
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Non-consolidated securities | 500 | 500 |
| Loans and other receivables | 610 | 610 |
| Deposits and guarantees due > 1 year | 7 879 | 7 793 |
| Net amount | 8 989 | 8 903 |
Deposits and guarantees mainly include guarantees paid to the Guilds for 4.8 million euros as well as the guarantee deposit paid to the lessor by EuropaCorp for an amount of 3.1 million euros within the framework of the commercial lease agreement for the Cité du Cinéma premises.
Non-consolidated investments correspond mainly to a minority stake held by EuropaCorp SA in the company ELZEVIR FILMS. These investments are recorded at their net value, which corresponds to the acquisition value of these shares less any depreciation calculated on the basis of the valuation of the subsidiary's film inventory.
Les Studios de Paris closes its accounts on December 31. For the purposes of closing the annual and halfyearly financial statements of the EuropaCorp group, the company has prepared a situation as of March 31, 2021, and September 30, 2021. Thus, the share of earnings recognized in EuropaCorp's consolidated financial statements corresponds to the company's operations from April 1, 2021 to September 30, 2021. EuropaCorp holds a 40% stake in this company and does not control it.
| The Studios of Paris | ||||
|---|---|---|---|---|
| (in thousands of euros) | 30.09.2021 | 31.03.2021 | ||
| Control % | 40,00% | 40,00% | ||
| Book value of net assets held (in thousands of euros) | (3 397) | (3 331) | ||
| Share of profit (loss) | (69) | (1 019) | ||
| Contribution to consolidated equity | (9 443) | (9 377) | ||
| Statement of financial position | 9 653 | 10 287 | ||
| Revenue | 3 080 | 3 014 | ||
| Net income | (173) | (2 547) |
Since March 31, 2021, the Group's share in the accumulated losses of Les Studios de Paris exceeds the carrying amount of its investment in the company. In accordance with IAS 28.38, the EuropaCorp Group has not recognized any share of the profit or loss as at September 30, 2021, in view of the losses incurred during the period. When Les Studios de Paris subsequently generates profits, the EuropaCorp group will only resume recognizing its share of the profits when this share is equal to or greater than its share of the unrecognized net losses. This share of unrecognized net losses amounts to 509,643 euros at September 30, 2021.
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Trade receivables - nominal value | 16 393 | 21 703 |
| Provision for trade receivables depreciation | (6 552) | (6 596) |
| Net value of trade receivables | 9 842 | 15 107 |
| Contract assets | 10 190 | 7 842 |
| Total trade receivables | 20 031 | 22 949 |
Receivables are recorded at their face value less provisions for impairment of uncollectible amounts. An estimate of the amount of doubtful receivables is made when it is no longer probable that the entire receivable will be recovered. Bad debts are recognized as losses when they are identified as such.
Receivables due in more than one year are mainly held with French television channels.
When the Group has production credits, EuropaCorp allocates a portion of these receivables as collateral for the credits granted by the lending institutions. The receivables are nevertheless maintained in the balance sheet under trade receivables, as only the payment is delegated to the banks.
The decrease in trade receivables should be seen in the context of the decrease in revenues over the period.
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Advances and down-payments to suppliers | 2 620 | 2 425 |
| Support funds (CNC) | 9 585 | 9 585 |
| Tax and social security credits | 3 368 | 4 199 |
| Other receivables | 7 665 | 7 735 |
| Gross amount | 23 238 | 23 944 |
| Depreciation provisions | (16 460) | (16 385) |
| Net amount | 6 778 | 7 558 |
The receivable from the CNC at September 30, 2021 breaks down into €7.1 million of producer subsidy, €1.6 million of distributor subsidy, €0.5 million of video publisher subsidy and €0.4 million of export subsidy. As of September 30, 2021, this receivable was impaired to the extent of €9.1 million in view of the change of nationality of the majority shareholder on July 28, 2020 (impairment recorded in fiscal year 2019/2020).
Other receivables consist mainly of receivables from co-producers. All these receivables are due within one year.
As of September 30, 2021, the Company's share capital amounted to 41,514,758.54 euros, divided into 122,102,231 ordinary shares with a par value of 0.34 euros each, all of the same class and fully paid up.
As of the date of publication of this report, the Company's capital stock was increased to 41,862,290.22 euros, divided into 123,124,383 shares with a par value of thirty-four (34) cents each (see Activity Report, 6.1. Capital increases linked to free share issues).
The Group did not pay a dividend during the period.
The Combined Shareholders' Meeting of September 28, 2020, authorized the Board of Directors to make bonus share grants to employees and officers of the Company.
The Board of Directors has decided to proceed on July 15, 2021, with the allocation of free performance shares to all employees of the Company and its French subsidiaries and to its Chief Executive Officer. The Board of Directors considered that this was to align the interests of employees and the Chief Executive Officer with the Company's performance. The definitive allocation of these free shares is conditional on the beneficiaries' presence in the Company as of March 31, 2024, and on a performance criterion relating to the achievement of a profit target (95%) and a non-financial target (5%).
The Group defines net financial debt as all financial debts, including financial instruments linked to debts and financial investments, less cash, cash equivalents and related financial instruments.
The company's net financial debt is as follows
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Bonds > 1 year | ||
| Deposits and guarantees received | 514 | 613 |
| Other loans and related debt > 1 year | - | - |
| Production credits | 73 158 | 83 862 |
| Total Loans Maturing > 1 year | 73 672 | 84 475 |
| Bonds < 1 year | ||
| Bank loans | ||
| Other loans and related debt < 1 year | ||
| Production credits | 12 169 | 6 008 |
| Bank loans and overdrafts | 93 | |
| Marketable securities | (658) | (658) |
| Cash and cash equivalents | (47 938) | (46 294) |
| Net debt | 37 246 | 43 625 |
This decrease in net debt since March 31, 2021 is mainly due to the payment of the first instalment under the Safeguard Plan concerning the repayment of the main credit line available to the Company, for 6 million euros.
The financing of film production is achieved in particular through credit facilities that the company specifically allocates to films (credit lines, bank overdrafts, etc.). The actual costs incurred in respect of the specific financing allocated to the productions during the period are included in the capitalized cost of the films.
The amounts of indebtedness shown in the net financial debt table above correspond to the decompensated balances of the Group's various cash accounts.
The marketable securities held by the Group are money-market mutual funds. These securities seek a return close to the EONIA. They are mainly invested in the money and interest rate markets. They do not present a significant risk of loss of value.
At September 30, 2021, marketable securities consisted of money market funds.
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Right to use leased property | 6 525 | 7 830 |
| Lease liabilities - portion due in more than one year | (6 345) | (7 819) |
| Lease liabilities - current portion | (3 206) | (2 628) |
| Total lease liabilities | (3 026) | (2 616) |
The Group's cash requirements are covered by its operating cash flow, supplemented by overdraft facilities, sales contracts and specialized production credits.
The table below provides a comparison by category of the carrying amounts and fair values of all the Group's financial instruments:
| 30.09.2021 | Breakdown by instrument category | ||||||
|---|---|---|---|---|---|---|---|
| (in thousands of euros) | Net book value in the balance sheet |
Fair value | Fair value by income |
Available for-sale assets |
Loans and receivables |
Debts at amortized cost |
Derivative instruments |
| Non-consolidated equity investments | |||||||
| Other non-current financial assets | 8 989 | 8 989 | 8 989 | ||||
| Other current financial assets | |||||||
| Derivative instruments - assets | |||||||
| Cash and cash equivalents | 48 595 | 48 595 | 48 595 | ||||
| Financial assets | 57 584 | 57 584 | 48 595 | - | 8 989 | - | - |
| Financial debts of more than 1 year | 73 158 | 73 158 | 73 158 | ||||
| Financial debts of less than 1 year | 12 683 | 12 683 | - | 12 683 | |||
| Derivative instruments - liabilities | |||||||
| Financial liabilities | 85 842 | 85 842 | - | - | - | 85 842 | - |
| 31.03.2021 | Breakdown by instrument category | ||||||
|---|---|---|---|---|---|---|---|
| (in thousands of euros) | Net book value in the balance sheet |
Fair value | Fair value by income |
Available for-sale assets |
Loans and receivables |
Debts at amortized cost |
Derivative instruments |
| Non-consolidated equity investments | |||||||
| Other non-current financial assets | 8 961 | 8 961 | 8 961 | ||||
| Other current financial assets | |||||||
| Derivative instruments - assets | |||||||
| Cash and cash equivalents | 46 952 | 46 952 | 46 952 | ||||
| Financial assets | 55 912 | 55 912 | 46 952 | - | 8 961 | - | - |
| Financial debts of more than 1 year | 83 862 | 83 862 | 83 862 | ||||
| Financial debts of less than 1 year | 6 715 | 6 715 | - | 6 715 | |||
| Derivative instruments - liabilities | |||||||
| Financial liabilities | 90 577 | 90 577 | - | - | - | 90 577 | - |
IFRS 7 requires the classification of assets and liabilities measured at fair value into three levels:
The financial instruments used by EuropaCorp are all level 1.
In the normal course of business, the Group is exposed to interest rate and currency risks that may have an impact on its net worth.
• Interest rate risk:
The Group's exposure to interest rate risk relates mainly to the portion drawn down on revolving credit lines. The main credit line bears interest at EURIBOR plus a margin of 3.25%.
The maturity schedule of financial assets and liabilities as at September 30, 2021 is as follows:
| Maturities | ||||
|---|---|---|---|---|
| (in thousands of euros) | 30.09.2021 | < 1 year | 1-5 years | > 5 years |
| Fixed rate financial assets | - | |||
| Variable rate financial assets | 48 595 | 48 595 | ||
| Financial assets not exposed | 8 989 | - | 8 379 | 610 |
| Financial assets | 57 584 | 48 595 | 8 379 | 610 |
| Fixed rate financial liabilities | - | |||
| Floating-rate financial assets | 85 842 | 12 725 | 38 510 | 34 607 |
| Financial liabilities not exposed | - | |||
| Financial liabilities | 85 842 | 12 725 | 38 510 | 34 607 |
The monitoring of interest rate risk and sensitivity can be summarized as follows as of September 30, 2021 (assumption used: 0.5-point increase in interest rates):
| (in thousands of euros) | Fixed rate | Variable rate |
Not exposed | Total |
|---|---|---|---|---|
| Financial assets | 48 595 | 8 989 | 57 584 | |
| Financial liabilities | 85 842 | - | 85 842 | |
| Net equity before hedging | - | (37 246) | 8 989 | (28 258) |
| "Hedging" | - | - | ||
| Net equity after hedging | - | (37 246) | 8 989 | (28 258) |
| Sensitivity | - | (186) | (186) |
The Group is exposed to financial statement translation risk for subsidiaries whose accounts are denominated in foreign currencies, and to transactional risk of exchange rate fluctuations for revenues generated outside the euro zone. This risk also applies to production costs denominated in foreign currencies relating to the portion of certain films shot outside the euro zone. When a significant portion of revenues generated in international markets is denominated in foreign currencies, significant production costs may be denominated in the same currencies. Thus, the Group may benefit from a natural hedge, depending on the respective importance of these flows in the opposite direction.
The Group may also use various financial instruments to hedge foreign exchange risks on cash flows, particularly with regard to fluctuations in the US dollar against the euro. For example, when the company is committed to paying significant expenses in foreign currencies, it may sign forward exchange contracts or currency options with financial institutions.
In accordance with IAS 39, as the Group has chosen not to apply hedge accounting, changes in the fair value of forward purchases and sales in foreign currencies carried out by EuropaCorp are recognized in financial income or loss. The fair value of these instruments, recorded as assets or liabilities in the consolidated balance sheet under "Other receivables" or "Other payables", is determined on the basis of their market value valued according to the closing exchange rates.
As at September 30, 2021, the Company has no hedging instruments measured at fair value.
The liquidity risk to which EuropaCorp is subject is inherent to the business of producing and distributing cinematographic works. In fact, several months generally separate the investments required for the production and promotion of a film from the receipt of operating revenues. This time lag can make it necessary to resort to bank financing. Although EuropaCorp endeavors to limit its financial exposure as far upstream as possible through a policy of pre-selling international distribution rights and television broadcasting rights for the films it produces, EuropaCorp cannot guarantee that it will always be able to implement such a policy, nor that it will be exempt from all liquidity risk.
In order to cope with the time lag between investments and the receipt of film revenues, EuropaCorp had a Senior reusable line of credit enabling it to mobilize receivables linked to contracts for a maximum total amount equivalent to \$190 million.
As of March 31, 2020, 85.6 million euros had been drawn down on the main credit line.
This Senior credit facility was to be repaid at the end of a five-year period, i.e. by October 21, 2019 at the latest. Under the Safeguard Plan, approved on July 24, 2020 by the Bobigny Commercial Court, and extended from seven to nine years following the Covid-19 epidemic and its impact on the Group's productions, the following payment schedule has been defined:
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
|---|---|---|---|---|---|---|---|---|---|
| of reimbursement | 5,8% | 11,8% | 10,6% | 6,7% | 12,4% | 12,4% | 12,1% | 14,6% | 13,6% |
On July 30, 2020, EuropaCorp Pictures LLC as Borrower, EuropaCorp Finance LLC as Parent, the Lenders and Comerica Bank, acting as Agent, entered into a credit agreement entitled Credit, Security, Guaranty and Pledge Agreement.
This new reusable line of credit allows the Company to mobilize receivables related to sales contracts for a maximum amount of \$100 million, which can be increased by mutual agreement by an additional \$25 million. Most of this financing is provided directly or indirectly by a new generation of Vine funds (Funds IV) separate from the current shareholder Vine Funds. The balance of the financing may be provided by some of the Vine Funds.
The purpose of this financing is to pay the costs associated with the production, the financing fees and interest and, if necessary, the working capital requirement. This new financing facility has a term of 5 years from the date of signature and bears interest at 8% per annum (for more details, see the chapter "Material Contracts" of the 2020/2021 Universal Registration Document, pages 169 to 171).
The most significant receivables concern the International Sales and TV Sales France activities. For TV sales in France, the credit risk is considered low given the size of the broadcasters and the history and quality of the relationships maintained with them.
As far as international sales are concerned, the EuropaCorp Group's policy consists of choosing reference partners in each country where its films are distributed, with whom it has worked on several occasions in the past, while seeking to diversify its potential partners, in particular through regular contacts with the various foreign players at film markets such as Cannes (Marché du Film), Los Angeles (American Film Market), or Berlin (European Film Market).
Given the fact that the credit risk is considered low, the EuropaCorp Group has not deemed it appropriate, at this time, to take out credit insurance.
The table below shows the total amount of credit risk, broken down by major asset class as of September 30, 2021:
| (in thousands of euros) | 30.09.2021 |
|---|---|
| Trade receivables | 20 031 |
| Marketable securities | - |
| Other receivables exposed to credit risk | - |
| Total | 20 031 |
EuropaCorp generally invests its available cash in monetary products in euros or in secured products (certificates of deposit, commercial paper, term accounts, etc.). It therefore considers that it is not exposed to any equity risk at September 30, 2021.
In addition, as of September 30, 2021, EuropaCorp held 86,049 of its own shares, valued at 65 thousand euros.
| (in thousands of euros) | Third-party equity portfolio or equity mutual funds |
Treasury shares portfolio |
|---|---|---|
| Asset position | None | 65 |
| Off balance sheet | None | - |
| Overall net position | None | 65 |
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Trade payables | 29 700 | 30 614 |
| Equity investment liabilities | - | - |
| Advances and down-payments on orders | 1 451 | 1 084 |
| Taxes and social security contributions payable | 4 522 | 5 556 |
| Miscellaneous liabilities | 3 395 | 2 948 |
| Total other financial liabilities | 9 368 | 9 588 |
| Total operating liabilities | 39 069 | 40 202 |
Trade payables as of September 30, 2021, mainly comprise accrued expenses consisting of repayments due to third parties (participation and residuals).
Tax and social security liabilities consist mainly of VAT collected and accrued expenses on taxes and various contributions.
All current liabilities are due within one year.
Other current assets consist mainly of prepaid expenses of €1.1 million as of September 30, 2021 for expenses incurred on productions not yet exploited on the media concerned.
Other current liabilities consist solely of deferred income in respect of invoiced revenues for which the event giving rise to recognition of the corresponding revenue has not occurred by September 30, 2021. Deferred income is classified as non-current liabilities when the revenue recognition date is more than one year. The current portion of deferred income amounts to €6,303 thousand.
Other liabilities (current and non-current) break down as follows:
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Subsidies | - | - |
| Other deferred income | 933 | 204 |
| Total deferred income | 933 | 204 |
| TV rights items | 5 031 | 9 613 |
| Undelivered international sales | 1 914 | 942 |
| Total contract liabilities | 6 945 | 10 555 |
| Total other | 3 520 | 4 687 |
| Total other current and non-current liabilities | 11 397 | 15 445 |
| (in thousands of euros) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| Production | 16 122 | 24 477 |
| Distribution | 14 | 204 |
| Video | 694 | 437 |
| Events | - | (25) |
| Miscellaneous | 490 | 1 067 |
| Sales figures | 17 320 | 26 159 |
| Of which financial support generated (including | ||
| Cosip) | - | - |
| Of which revenues generated from exports | 7 468 | 11 312 |
The EuropaCorp Group's consolidated revenues amounted to 17.3 million euros, compared to 26.2 million euros for the first half of the previous fiscal year, a decrease of 34%.
International sales amounted to €5.8 million, or approximately 33% of total revenues. They decreased by €3.8 million compared to the first half of the previous fiscal year (which included the last deliveries on Kursk and Braqueurs d'élite). In the first half of this year, they included royalties on the films Lucy and Taken 3.
Television & SVOD sales in France and the United States amounted to €10.0 million in the first half of 2021/2022, or 58% of revenues, a decrease of (1.2) million (-11%) compared with the first half of 2020/2021. They include the opening of new rights windows in France, notably for Valerian and the City of a Thousand Planets.
Revenues from the TV Series business amounted to €(0.3) million (statements on the Taken series), compared with €3.3 million at September 30, 2020.
Revenues from derivative rights (partnerships, licenses, etc.), post-production and co-productions signed by the Group totaled €1.2 million for the first half of the fiscal year, compared to €1.3 million for the first half of the previous fiscal year.
No revenues were generated by the Theatrical distribution, as no releases took place during the half-year, compared with €0.2 million in the first half of 2020/2021.
Video & VOD activities in France and the United States amounted to €0.7 million, compared to €0.4 million last year, and mainly concerned VOD in France.
In general, the Group points out that its revenues are linked to the release schedule of its films under different modes of exploitation, the timing of which may lead to significant variations in revenues per channel from one half-year to the next. Revenues and earnings for a given half-year are therefore not indicative of annual revenues and earnings.
Due to the decline in revenues, the operating margin decreased by 16% to €9.0 million compared with €10.6 million in the first half of the previous year. However, the margin rate is up significantly to 52% compared with 41% in the first half of 2020/2021. This improvement is mainly due to lower depreciation and amortization on catalog films.
Overhead costs amounted to €(6.7) million for the six months ended September 30, 2021, slightly up on the level of overhead costs for the first half of the previous fiscal year at €(6.1) million. This increase of €0.6 million compared to September 30, 2020 (+9%) is explained in particular by the IFRS adjustment related to free share plans.
| (in thousands of euros) | 30.09.21 | 30.09.20 |
|---|---|---|
| Other operating income and expenses | 400 | (2 409) |
Other operating income and expenses amounted to €0.4 million (reversal of provisions for contingencies and losses) compared with €(2.4) million in the first half of the previous year, which included fees related to the debt restructuring finalized in the summer of 2020.
| (in thousands of euros) | 30.09.2021 | 30.09.2020 |
|---|---|---|
| Financial result of net indebtedness | (1 436) | (3 020) |
| Other financial income and expenses | 61 | 1 099 |
| Net gain from debt restructuring | - | 134 921 |
| Financial result | (1 375) | 133 000 |
The financial result for the first half of the previous year was impacted by a "technical" profit of €134.9 million linked to the two consecutive capital increases resulting from the July 2020 debt restructuring (application of IFRIC 19). Excluding this exceptional item, financial income amounted to €(1.9) million. The financial result for the first half of 2021/2022 of (1.4) million euros breaks down as follows:
the period and;
Breakdown of tax expense by type:
| (in thousands of euros) | 30.09.21 | 30.09.20 |
|---|---|---|
| Tax payable | (849) | (3) |
| Deferred tax | (2 396) | (11 187) |
| Total tax income / (expense) | (3 245) | (11 190) |
The tax charge for the first half of the year corresponds mainly to deferred tax resulting from a decrease in deferred tax assets related to temporary differences in depreciation.
At September 30, 2021, operating activities generated net cash flow of €10.5 million, compared with €(3.9) million at September 30, 2020. This increase is mainly due to the end of the financial restructuring that had burdened cash flows last year with the payment of significant fees upon approval of the safeguard plan in July 2020 (lawyers, advisors, etc.).
As of September 30, 2021, net cash used in investing activities amounted to €(1.1) million compared to €1.5 million as of September 30, 2020, an increase of €2.6 million explained mainly by investments in films of €(1.1) million during the first half of 2021/2022 compared to the disposal of the assets held by Digital Factory in Normandy which generated €1.5 million during the first half of 2020/2021.
As of September 30, 2021, net cash used in financing activities amounted to €(7.7) million, including mainly the repayment of the first instalment under the Safeguard Plan concerning the Senior credit facility for approximately €5 million and the associated interest for approximately €1 million.
Agreements with related parties have been identified in the Universal Registration Document 2020/2021, filed with the Autorité des Marchés Financiers on July 23, 2021, in chapter 17 "Related party transactions" and in note 5.2 "Relations with related companies".
Other than those described in the 2020/2021 Universal Registration Document, there were no new agreements with related parties during the first half of 2021.
The table below summarizes the flows and balances of transactions with related companies:
| (in thousands of euros) | 30.09.2021 | 31.03.2021 |
|---|---|---|
| Statement of financial position | ||
| Receivables | ||
| Trade receivables and other operating receivables | 799 | 888 |
| Debit balances and other current financial receivables | - | - |
| Debt | - | |
| Other non-current financial liabilities | - | - |
| Trade payables and other operating liabilities | 7 | 7 |
| Financial current accounts receivables | - | - |
| - | ||
| Profit and loss statement | - | |
| Revenue | 6 | 311 |
| Operating expenses | - | (78) |
| Financial expenses | - | - |
| Financial income | - | - |
The analysis of the Group's off-balance sheet commitments as of September 30, 2021 is as follows (in thousands of euros):
| Commitments received in favor of EuropaCorp (in thousands of euros) |
30.09.2021 | 31.03.2021 | |
|---|---|---|---|
| Commitments received from customers | |||
| For the film activity | 1 758 | 2 240 | |
| Audiovisual Support Fund | 2 105 | 2 105 | |
| Financial commitments for leases* | 2 502 | 4 754 | |
| Total commitments received | 6 366 | 9 099 |
* Relating to sub-lease agreements on the Cité du Cinéma's tertiary building.
| Commitments given in favor of third parties (in thousands of euros) |
30.09.2021 | 31.03.2021 | |
|---|---|---|---|
| Financial commitments for leases** | 0 | 0 | |
| Vine Participation | 0 | 0 | |
| Financial commitments on film investments | 0 | 0 | |
| Total commitments given | 0 | 0 |
** Relating to the lease entered into for a term of 12 years and which commenced on April 6, 2012 on the Cité du Cinéma tertiary building.
| Total Net commitments (received - given) | 6 366 | 9 099 |
|---|---|---|
Off-balance sheet commitments received in respect of the business mainly arise from the signing of sales contracts for feature films.
Following the decision taken on October 26, 2020, by the Board of Directors of EuropaCorp, using an authorization given by the Extraordinary General Meeting of Shareholders of September 28, 2020, to proceed with free allocations of shares to employees and corporate officers, the Board of Directors noted, on October 26, 2021, the realization of the conditions of allocation and consequently the issuance of 585,787 new shares of thirty-four (34) euro cents each in par value.
In the same way, following the decision taken on November 16, 2020, by the Board of Directors of EuropaCorp to proceed with free allocations of shares to employees, the Board of Directors noted, on November 30, 2021, the fulfillment of the conditions of allocation and consequently the issuance of 436,365 new shares with a par value of thirty-four (34) eurocents each
These shares will be unavailable for a period of one year, starting on October 26, 2021, and November 16, 2021, respectively, and will be immediately assimilated to the old shares.
In accordance with Article L. 225-197-4 of the French Commercial Code, a special report will be presented to the next Annual General Meeting.
The Company's share capital is thus increased to 41,862,290.22 euros, divided into 123,124,383 shares of thirty-four (34) euro cents each.
The listing of EuropaCorp shares was transferred to the Euronext Growth Paris market on November 18, 2021.
This transfer aims to enable EuropaCorp to be listed on a market more appropriate to its size and offering a regulatory framework better suited to SMEs. The transfer of the listing of EuropaCorp's shares is intended to simplify the administrative obligations imposed on the Company and to reduce the costs related to its listing, while allowing it to continue to benefit from the attractiveness of the financial markets.
EuropaCorp will continue to deliver accurate, precise and truthful information, making public any insider information concerning the Group, in accordance with the provisions of Regulation (EU) No. 596/2014 of 16 April 2014 on market abuse ("MAR").
As part of the application of IFRS 8, the Group is required to provide information that enables "users of its financial statements to evaluate the nature and financial effects of the activities in which it is engaged and the economic environments in which it operates.
The Group has therefore defined its operating segments that meet the criteria of the standard for separate segment reporting.
An operating segment is defined as a component of the company:
Accordingly, given the approach adopted by IFRS 8, operating segments have been identified on the basis of internal reporting.
Performance monitoring within the Group is organized around its activities and businesses.
Following the acquisition of the Blue Group, the EuropaCorp Group now operates in 4 distinct business areas which constitute "operating segments" in accordance with the criteria of IFRS 8 and which are detailed as follows
• Production and distribution of cinematographic films:
This sector corresponds to the entirety of the means of exploitation of a cinematographic film, i.e.: theatrical distribution, video broadcasting, television sales, international sales, partnerships and licenses, executive production, co-production revenues...
• Production and Distribution of TV movies/series:
This sector corresponds to all the means of exploitation of television films / series and is declined within the subsidiaries EuropaCorpTelevision (ex-Cipango), wholly owned since July 30, 2014 by EuropaCorp and EuropaCorp TV.
The length of the production cycles, the means of financing and the components of the margin differ from the "film production and distribution" sector, which justifies the existence of a separate operating sector.
• Events :
This segment corresponds to all event operating resources within and outside La Cité du Cinéma and includes the activity of Blue Event, fully consolidated as of February 28, 2013 following the capital increase through a contribution in kind.
• Other: This sector includes all the ancillary activities not directly linked to the exploitation of cinematographic or television films, namely: literary publishing, various receipts...
The methodology used to measure and present the figures for each operating segment complies with the accounting principles and methods described for the preparation of the consolidated financial statements.
| 09.30.2021 | Production and Distribution of films |
Production and Distribution of TV films and series |
Events | Other | Non allocated items | Total |
|---|---|---|---|---|---|---|
| Net goodwill | 0 | 0 | 0 | 0 | 0 | |
| Net intangible assets | 29 414 | 4 829 | 0 | 0 | 34 243 | |
| Property, Plant and Equipment (net) | 3 267 | 0 | 0 | 5 | 3 272 | |
| Other financial assets (net) | 8 628 | 361 | 0 | 0 | 8 989 | |
| Investments in associates | 0 | 0 | 0 | 0 | 0 | |
| Deferred tax assets | 75 | 0 | 0 | 0 | 75 | |
| Other non-current assets (net) | 6 525 | 0 | 0 | 0 | 6 525 | |
| Total non-current assets | 47 909 | 5 190 | 0 | 5 | 53 104 | |
| Inventory | 223 | 0 | 0 | 0 | 223 | |
| Net trade receivables | 19 231 | 784 | 2 | 14 | 20 031 | |
| Other net receivables | 5 384 | 130 | 10 | 1 255 | 6 778 | |
| Other net current assets | 2 212 | 0 | 0 | 0 | 2 212 | |
| Cash and cash equivalent | 36 185 | 12 244 | 123 | 44 | 48 595 | |
| Total current assets | 63 235 | 13 158 | 135 | 1 312 | 77 840 | |
| TOTAL ASSETS | 111 144 | 18 348 | 135 | 1 317 | 130 943 | |
| Equity - Group share | (19 063) | (19 063) | ||||
| Non-controlling interests | 342 | 342 | ||||
| Provisions for pensions and other post-employment benefits | 435 | 0 | 0 | 0 | 435 | |
| Deferred tax liabilities | 2 735 | 0 | 0 | 0 | 2 735 | |
| Bonds and financial liabilities > 1 year | 6 345 | 0 | 0 | 0 | 6 345 | |
| Lease liability - long term (> 1 year) | 73 157 | 1 | 0 | 0 | 73 158 | |
| Deposits and guarantees received | 514 | 0 | 0 | 0 | 514 | |
| Equity investment liabilities > 1 year | 0 | 0 | 0 | 0 | 0 | |
| Other non-current liabilities | 5 016 | 27 | 51 | 0 | 5 094 | |
| Total non-current liabilities | 88 202 | 2 8 | 5 2 | 0 | 88 281 | |
| Bonds and financial liabilities < 1 year | 12 169 | 0 | 0 | 0 | 12 169 | |
| Lease liability - short term (< 1 year) | 3 206 | 0 | 0 | 0 | 3 206 | |
| Provisions for risks and expenses | 637 | 0 | 0 | 0 | 637 | |
| Trade payables | 25 909 | 1 578 | 56 | 2 158 | 29 700 | |
| Equity investment liabilities < 1 year | 0 | 0 | 0 | 0 | 0 | |
| Other financial liabilities | 7 118 | 2 205 | 1 | 44 | 9 368 | |
| Other current liabilities | 6 303 | 0 | 0 | 0 | 6 303 | |
| Total current liabilities | 55 342 | 3 783 | 5 7 | 2 202 | 61 383 | |
| TOTAL LIABILITIES | 143 543 | 3 811 | 109 | 2 202 | 130 943 | |
| Films and audiovisual rights investments | 1 051 | 1 051 |
| 09.30.2021 | Production and Distribution of films |
Production and Distribution of TV films and series |
Events | Other | Total |
|---|---|---|---|---|---|
| Revenue | 17 092 | ( 315) | 0 | 544 | 17 320 |
| Cost of sales | (8 416) | ( 20) | 0 | 87 | (8 349) |
| Operating margin | 8 675 | ( 335) | 0 | 630 | 8 971 |
| General and administrative expenses | (6 634) | ( 15) | ( 3) | ( 13) | (6 664) |
| Other operating income and expenses | 400 | 0 | 0 | 0 | 400 |
| Operating profit (loss) | 2 441 | ( 349) | ( 3) | 618 | 2 707 |
| Financial income | (1 537) | 162 | 0 | 0 | (1 375) |
| Income tax | (3 245) | 0 | 0 | 0 | (3 245) |
| Share in results of associates consolidated using the equity method | 0 | 0 | 0 | 0 | 0 |
| Share of non-controlling interests | 0 | ( 6) | ( 2) | 0 | ( 8) |
| Net income - Group share | (2 341) | ( 181) | ( 1) | 618 | (1 905) |
I hereby certify that, to the best of my knowledge, the interim condensed consolidated financial statements have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of EuropaCorp, and all of the companies included in the scope of consolidation, and that the half-yearly activity report presents a true and fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main transactions between related parties and a description of the main risks and uncertainties for the remaining six months of the financial year
Saint-Denis, December 15, 2021
__________________ Axel Duroux Chief Executive Officer
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