Interim / Quarterly Report • Dec 28, 2015
Interim / Quarterly Report
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The EuropaCorp Group's consolidated financial statements for the first half of FY2015/2016, prepared in accordance with IFRS, show consolidated revenue of €76.6 million compared with €98.0 million for the first half of the previous financial year, a decrease of 21.8%.
As a reminder, the Group's revenue is generally dependent on the release of its films through various channels. Indeed, the timetable of these releases can give rise to significant fluctuations in the revenue earned by each channel from one half-year to another. Therefore, half-year revenue and profit are not necessarily indicative of annual revenue and profit.
Consolidated revenue for the first half reflects the customary significant contribution of International Sales, greatly buoyed by the international distribution of The Transporter – Refueled and by royalties from the film Lucy. The release schedule, which was lighter than in the first half of FY2014/2015, accounts for the falloff in consolidated revenue.
The consolidated operating margin stood at €20.7 million, or 27.1% of the half-year's revenue, compared with €28.9 million or 29.5% of revenue for the same period the previous year. Operating margin remained high (over 27%) primarily due to the significant contribution of International Sales during the half-year.
Overheads amounted to €(24.8) million for the half-year ended September 30, 2015 compared with €(20.5) million for the first half of the previous financial year. This change was largely due to major strategic investments by the Group in the United States via EuropaCorp Films USA and the RED platform.
Consolidated operating profit showed a loss of €4.1 million, as compared to a profit of €7.6 million for the first half of the previous financial year.
Financial income for the half was a loss of €7.6 million, as compared to a profit of €4.0 million at September 30, 2014, and was primarily affected by financial interest for the period, principally on the senior and secondary lines of credit as well as by the share of bank fees relating to the arrangement of credit lines and which are spread over the term of these facilities.
After taking into account the positive effect of income tax expense of €9.0 million, the half-year's net profit Group share showed a loss of €3.5 million, compared with a €7.3 million profit for the first half of the previous financial year.
The cash flows from operations amounted to €21.6 million over the first half year, compared with €70.3 million for the first half of the previous financial year. This change was the result of a markedly lighter film release schedule during the first half of 2015/2016, with three films in exhibition as compared to six in the first half of 2014/2015, and the success of the film Lucy during the first half of the previous financial year (with 5.2 million tickets sold in France).
For the half-year, International Sales totaled €36.4 million, or 47.5% of revenue, compared with €38.1 million for the first half of FY2014/2015 (i.e. 38.9% of the previous half-year's revenue). For the first half-year ended September 30, 2015, International Sales mainly consisted of the international deliveries of The Transporter – Refueled, along with the royalties earned on catalogue films, especially Lucy and Colombiana.
The revenue stemming from the Theaters business amounted to €8.1 million, compared with €16.5 million for the first half of the previous financial year, and consisted of €2.8 million for the business in France and €5.2 million for the United States.
During the first half-year, the films distributed in theaters were the following:
Revenue from the Video and VOD business amounted to €7.0 million, or 9.1% of the period's total revenue, compared with €3.7 million for the first half of FY 2014/2015. This business in France, highlighted mainly by the releases of Taken 3 and Bis, had revenue of €5.3 million. Video and VOD releases in the United States accounted for €1.7 million from the film Big Game, mainly on VOD.
Revenue from TV rights is recognized at the start of each broadcast schedule for a film. Over the half-year, the start of such schedules generated revenue of €11.1 million, or 14.5% of total revenue, compared with €9.2 million in the first half of FY2014/2015. This revenue mainly reflects the start of broadcast rights windows during the period for Lucy, Malavita (The Family) and It Boy in the French market and for Big Game in the U.S. market.
In the first half of FY2015/2016, TV Series generated revenue of €3.4 million, or 4.4% of the half year revenue, compared with €18.7 million for the first half of the previous financial year. The revenue recorded for the first half of FY2015/2016 mainly stemmed from the ongoing exploitation of Taxi Brooklyn and the delivery to France 3 of the TV movie Les Années Perdues. Key transactions in the second half-year will be the delivery of eight episodes of the series Section Zéro (an original production by Canal+), directed by Olivier Marchal, and by the delivery of singleepisode programs.
Over the first half of FY2015/2016, the Events segment generated revenue of €2.0 million, as compared to €1.4 million at September 30, 2014. This revenue mainly stemmed from the events held during the period, both on and off the Cité du Cinéma premises.
1 During this financial year, the EuropaCorp Group is booking its first revenues in the United States through its subsidiary EuropaCorp Films USA.
2 Domestic box office includes receipts within the borders of the United States and Canada.
The Multiplex business had revenue of €3.3 million for the first half of FY2015/2016 as compared to €2.7 million for the first half of the previous financial year, or an increase of 22%, due largely to higher attendance. For the period, the number of admissions rose to 338 thousand, as compared to 257 thousand in the first half of the previous financial year.
Revenue from Subsidies, chiefly generated by Production activities (including TV productions), Distribution in Theaters (France), Video releases (France) and Theatrical exploitation (France), was €2.4 million compared with €4.9 million in the first half of FY2014/2015.
For the first half-year, the « Other activities » segment generated revenue of €2.9 million, in line with the first half of the previous year. It mainly consisted of the income generated by partnership contracts, license agreements, music publishing and post-production activities. This revenue also included the income stemming from the Group's coproductions.
The « Cost of sales » (operating expenses excluding overheads) amounted to €(55.9) million, compared with €(69.1) million for the first half of FY2014/2015 as a result of lower activity during the period.
This item consists mostly of (i) amortization expense in the amount of €(18.0) million, (ii) theatrical distribution and marketing costs of €(29.0) million, primarily including the distribution and marketing expense of The Transporter: Refueled in the United States, distributed « directly » by EuropaCorp Films USA through the RED platform and (iii) the payments to third parties in the amount of €(6.7) million (or 12.0% of the cost of sales).
During this first half-year, the Group invested €84.6 million in the production of films and TV series, compared with €78.5 million during the first half of FY 2014/2015.
Investments during the half-year primarily focused on the production of English-language films with strong international potential, which will provide the line-up for the current and upcoming financial year (these films include Shut In, The Lake and Nine Lives).
The Group confirmed its strategy to develop its line-up of international productions through several projects with strong revenue potential.
During the half-year, there was no significant change in the Group's financial structure.
None.
The risk factors are of the same types as those laid out in Section 4 of the 2014/2015 Registration document and have not materially changed. The amounts relating to financial and market risks as of September 30, 2015 are stated in Note 3.11 « Financial instruments » to the half-year consolidated financial statements in this report.
Transactions between related parties are described in Note 5.2 to the half-year financial statements of this report.
Several high-potential films in English are currently in post-production:
The second half of the financial year will also see production start on Miss Sloane, directed by John Madden, with Jessica Chastain in the title role.
Moreover, the next science-fiction film directed by Luc Besson, Valerian and the City of a Thousand Planets, announced during the most recent Cannes Festival, is due to start shooting in France in January 2016 with a view to a release in the United States on July 21, 2017. Adapted from the graphic novel of the same name, it will feature Cara Delevingne, Dane DeHaan, Clive Owen, Rihanna, Ethan Hawke and Herbie Hancock.
With regard to films shot in French language, Stop Me Here, directed by Gilles Bannier and with Reda Kateb, Léa Drucker and Gilles Cohen, will open in French theaters January 6, 2016, while Hopefully, the next film starring Sandrine Kiberlain and directed by Benoît Graffin, will be released on January 27, 2016.
In terms of the TV Series business, the eight episodes of the series Section Zero, directed by Olivier Marchal will be delivered to Canal+ in the second half of the financial year. In addition, several single-episode programs will be put into production, including one from the Mary Higgins-Clark collection.
Lastly, three new English-Language TV series are in development and are under agreement with North American networks:
| September 30 | Fiscal year ended March 31 |
||
|---|---|---|---|
| 2015 | 2014 | 2015 | |
| (amounts in thousands of euros, except numbers of shares and per share data) | |||
| Revenue | 76 621 | 98 003 | 226 937 |
| Revenue from operations | 76 621 | 98 003 | 226 937 |
| Cost of sales | (55 881) | (69 119) | (155 424) |
| Operating margin | 20 740 | 28 883 | 71 513 |
| Overheads | (24 768) | (20 547) | (51 505) |
| Other operating income and expenses | (92) | (737) | (511) |
| Operating income (loss) | (4 120) | 7 599 | 19 497 |
| Income from investments / (Cost of financial debt) | (4 937) | (1 177) | (2 700) |
| Other financial income and expenses | (2 636) | 5 189 | 7 416 |
| Financial income (loss) | (7 573) | 4 013 | 4 716 |
| Current income before income tax (loss) | (11 693) | 11 612 | 24 214 |
| Income tax (expense) | 9 014 | (3 857) | (6 960) |
| Net profit (loss) from associates | (2 679) | 7 754 | 17 253 |
| Share in results of associates consolidated using the equity method | (833) | (480) | (1 055) |
| Net income (loss) | (3 513) | 7 274 | 16 199 |
| Net income - Minority interests | (41) | (30) | (49) |
| Net income excluding minority interests | (3 472) | 7 303 | 16 248 |
| Basic earnings per share Diluted earnings per share |
(0,12) (0,12) |
0,25 0,25 |
0,55 0,55 |
| 9/30/2015 | 9/30/2014 | |
|---|---|---|
| Net Income | (3 513) | 7 274 |
| Income or expenses recognised directly in equity | ||
| - Foreign currency translation differences | (6 747) | 2 183 |
| - Available-for-sale assets | ||
| - Cash flow hedges | ||
| - Revaluation of assets | ||
| - Actuarial gains and losses | ||
| - Share of other comprehensive income of associates | ||
| - Tax on items recognised directly in equity | ||
| Total comprehensive income recognised directly in equity | (6 747) | 2 183 |
| Total comprehensive income for the period | (10 259) | 9 457 |
| Breakdown of comprehensive income for the period | 30/09/2015 | 30/09/2014 |
|---|---|---|
| Shareholders of the entity | (10 218) | 9 486 |
| Minority interests | (41) | (30) |
| Total comprehensive income for the period | (10 259) | 9 457 |
The above comprehensive income items recognized under Equity will subsequently be reclassified as profit (loss).
| (amounts in thousands of euros) | September 30, 2015 | March 31, 2015 | ||
|---|---|---|---|---|
| ASSETS | Gross | Depreciation/Amortization | Net | Net |
| Non-current assets | ||||
| Goodwill | 32 010 | (3 100) | 28 910 | 28 910 |
| Intangible non-current assets | 1 540 297 | (1 269 488) | 270 809 | 208 164 |
| Tangible non-current assets | 51 070 | (21 756) | 29 314 | 28 679 |
| Other financial assets | 4 390 | (57) | 4 333 | 4 298 |
| Equity investments | 2 950 | 2 950 | 3 113 | |
| Deferred tax credits | 24 089 | 24 089 | 10 746 | |
| Other non-current assets | 10 916 | 10 916 | 12 553 | |
| Total non-current assets | 1 665 723 | (1 294 401) | 371 322 | 296 463 |
| Current assets: | ||||
| Inventories | 1 170 | (598) | 572 | 579 |
| Trade and other accounts receivable | 87 103 | (5 134) | 81 970 | 96 821 |
| Other receivables | 67 098 | (901) | 66 197 | 58 196 |
| Other current assets | 17 350 | 17 350 | 16 167 | |
| Cash and cash equivalents | 84 244 | 0 | 84 244 | 71 827 |
| Total current assets | 256 965 | (6 633) | 250 332 | 243 590 |
| Total assets | 621 654 | 540 052 | ||
| 30 September | 31 March | |||
| LIABILITIES | 2015 | 2015 | ||
| Shareholders' equity (parent company) | ||||
| Capital subscribed | 10 047 | 9 967 | ||
| Reserves and retained earnings | 164 444 | 174 691 | ||
| Total shareholders' equity (parent company) | 174 491 | 184 658 | ||
| Minority interests | -194 | -153 | ||
| Non-current liabilities: | ||||
| Provisions for pensions and other post-employment benefits | 935 | 860 | ||
| Deferred tax liabilities | 22 022 | 17 403 | ||
| Loans and other financial liabilities maturing in over one year | 2 112 | 2 230 | ||
| Deposits and guarantees received | 720 1 658 |
712 4 397 |
||
| Liabilities on acquisition of securities - part maturing in over one year Other non-current liabilities |
13 482 | 16 640 | ||
| Total non-current liabilities | 40 928 | 42 242 | ||
| Current liabilities: | ||||
| Loans and other financial liabilities maturing in less than one year | 241 339 | 154 426 | ||
| Loss and contingency provisions | 4 492 | 5 110 | ||
| Trade and other accounts payable | 55 263 | 54 987 | ||
| Liabilities on acquisition of securities | 2 832 | 1 539 | ||
| Other liabilities | 68 741 | 73 162 | ||
| Other current liabilities Total current liabilities |
33 762 406 429 |
24 081 313 306 |
||
| Total liabilities | 621 654 | 540 052 |
At September 30, 2015 investments in associates are presented before netting so as to show the negative contributions in "Other non-current liabilities" and the positive contributions in "Investments in associates." For the sake of consistency, the financial statements for the period ended March 31, 2015 are also presented in this manner in the above table.
| (amounts in thousands of euros, except numbers of shares) | number of ordinary shares |
Capital | Issue premium |
Reserves | Other elements of comprehen sive income |
Treasury shares |
Net income | Shareholders' equity (parent company) |
Minority interests |
Total shareholders' equity |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at March 31, 2014 | 29 315 154 | 9 967 | 51 732 | 94 582 | (202) | (107) | 200 | 156 172 | (105) | 156 067 |
| Allocation to reserves | 200 | (200) | 0 | 0 | ||||||
| Transfer of a part of the contribution premium to reserves | 0 | 0 | ||||||||
| Dividend distributions | 0 | 0 | ||||||||
| Share-based payments | 0 | 0 | ||||||||
| Net changes in treasury shares | 479 | (5) | 474 | 474 | ||||||
| Impact of changes in scope | 0 | 0 | ||||||||
| Currency translation reserve | 11 765 | 11 765 | 11 765 | |||||||
| Net income at 31/03/2015 | 16 248 | 16 248 | (49) | 16 199 | ||||||
| Total income and expenses for the period | 0 | 11 765 | 0 | 16 248 | 28 012 | (49) | 27 963 | |||
| Capital increase | 0 | 0 | ||||||||
| Costs related to Capital increase | 0 | 0 | ||||||||
| Balance at March 31, 2015 | 29 315 154 | 9 967 | 51 732 | 95 261 | 11 563 | (112) | 16 248 | 184 658 | (154) | 184 506 |
| Allocation to reserves | 16 248 | (16 248) | 0 | 0 | ||||||
| Transfer of a part of the contribution premium to reserves | 0 | 0 | ||||||||
| Dividend distributions | 0 | 0 | ||||||||
| Share-based payments | 0 | 0 | ||||||||
| Net changes in treasury shares and free shares | 90 | (39) | 5 1 | 5 1 | ||||||
| Impact of changes in scope | 0 | 0 | ||||||||
| Currency translation reserve | (6 747) | (6 747) | (6 747) | |||||||
| Net income at 30/09/2015 | (3 472) | (3 472) | (41) | (3 513) | ||||||
| Total des produits et charges de la période | 0 | (6 747) | 0 | (3 472) | (10 218) | (41) | (10 259) | |||
| Capital increase | 0 | 0 | ||||||||
| Costs related to Capital increase | 0 | 0 | ||||||||
| Free shares plan | 233 783 | 7 9 | (79) | 0 | 0 | |||||
| Balance at September 30, 2015 | 29 548 937 | 10 047 | 51 732 | 111 519 | 4 816 | (151) | (3 472) | 174 491 | (194) | 174 298 |
| September 30 | Fiscal year ended March 31 |
||
|---|---|---|---|
| (amounts in thousands of euros) | 2015 | 2014 | 2015 |
| Operating activities | |||
| Net income (excluding minorities) | (3 472) | 7 303 | 16 248 |
| Net income (minorities) | (41) | (30) | (49) |
| Depreciation and amortization | 19 076 | 56 113 | 111 274 |
| Unrealised gains and losses relating to changes in fair value | 1 133 | (1 653) | (1 302) |
| Changes in the fair value of securities-related liabilities | 0 | 123 | 311 |
| Capital gains or losses on the disposal of assets | 603 | (40) | (464) |
| Share of income from associates consolidated using the equity method | 833 | 480 | 1 055 |
| Expenses and income linked to share-based and equivalent payments Other |
0 0 |
0 0 |
479 0 |
| Net cash from operating activities after net financial debt and taxes | 18 132 | 62 296 | 127 551 |
| (Income from financial investments) / Cost of financial debt | 4 937 | 1 177 | 2 700 |
| (Income) / Tax expense | (9 014) | 3 857 | 6 960 |
| Net cash from operating activities before net financial debt and taxes | 14 055 | 67 330 | 137 211 |
| Changes in working capital requirement: | |||
| Inventories | 8 | 68 | 233 |
| Trade and other accounts receivable | 5 012 | 19 020 | 13 698 |
| Pre-paid expenses | (823) | 1 942 | (2 236) |
| Trade and other accounts payable | (3 529) | (18 665) | 528 |
| Pre-paid income Tax paid |
5 803 1 041 |
(645) 1 282 |
(5 976) 2 330 |
| Net cash flow from operating activities | 21 567 | 70 332 | 145 786 |
| Investment activities | |||
| Acquisition of intangible non-current assets | (84 581) | (78 549) | (102 872) |
| Acquisition of other intangible non-current assets | (85) | (2 110) | 1 791 |
| Acquisition of tangible non-current assets | (1 882) | (158) | 169 |
| Income from disposals of tangible or intangible non-current assets | 0 | 47 | 511 |
| Net change in long-term investments | (4 069) | 4 435 | 466 |
| Change in liabilities on long-term investments | (1 445) | (2 232) | (4 331) |
| Change in minority reserves | 0 0 |
0 0 |
0 0 |
| Impact of changes in scope | |||
| Net cash flow from investment activities | (92 063) | (78 566) | (104 268) |
| Financing activities | |||
| Dividends paid | 0 | 0 | 0 |
| Increases in capital | 0 | 0 | 0 |
| Costs related to increases in capital | 0 88 600 |
0 7 784 |
0 (27 667) |
| Net change in bank borrowings and overdrafts Net change in treasury shares and free shares |
51 | 218 | (5) |
| Interest paid | (5 763) | (1 877) | (5 136) |
| Interest received and net gain/loss from disposals | 26 | 26 | 79 |
| Net cash flow from financing activities | 82 914 | 6 151 | (32 730) |
| Overall change in cash position | 12 417 | (2 084) | 8 789 |
| Cash position at the start of the year | 71 827 | 63 038 | 63 038 |
| Cash position at the end of the year broken down into: |
84 244 | 60 954 | 71 827 |
| Available-for-sale securities | 0 | 4 468 | 1 000 |
| Cash and cash equivalents | 84 244 | 56 487 | 70 827 |
The core business of EuropaCorp, a Société Anonyme (public limited company) governed by French law, and its subsidiaries is the production and distribution of cinematographic work.
No change in scope of consolidation occurred between April 1, 2015 and September 30, 2015.
EuropaCorp's condensed consolidated financial statements for the half-year ended September 30, 2015 were prepared in accordance with IFRS as adopted by the European Union and applicable on that date. They were prepared in accordance with IAS 34 "Interim Financial Reporting".
These financial statements do not contain all the information required for the annual consolidated financial statements and should be read in conjunction with the Company's consolidated financial statements for the financial year ended March 31, 2015.
The accounting policies used are those detailed in the consolidated financial statements published on March 31, 2015 (please refer to Note 2 "Accounting Policies and Methods" to those financial statements on pages 230 et seq of the Registration Document), except for the newly applicable standards and interpretations detailed in the next section.
The condensed consolidated financial statements are presented in thousands of euros unless otherwise stated.
The half-year financial statements were reviewed by the Audit Committee on December 21, 2015 and were examined and approved by the Board of Directors on December 21, 2015.
The following standards and interpretations, effective from April 1, 2014, have had no significant impact on the Group's financial statements:
The Group elected not to make early application of the following standards and interpretations published by the IASB and adopted by the European Union:
The Group does not expect any significant impact from the implementation of these new standards.
The preparation of interim financial statements involves making estimates and assumptions regarding the valuation of certain assets and liabilities on the consolidated statement of financial position, as well as certain items on the income statement.
Assumptions and estimates that might result in a material adjustment to the carrying amount of assets and liabilities during the following period principally affect:
Since no impairment indicators were identified during the half-year, no impairment test was conducted and no goodwill depreciation was recognized during the first half of FY 2015/2016.
| (in thousands of euros) | 3/31/2015 | Acquisitions | Depreciation | 9/30/2015 |
|---|---|---|---|---|
| Dog Productions | 0 | 0 | ||
| Intervista | 0 | 0 | ||
| Ydéo | 0 | 0 | ||
| Roissy Films | 15,762 | 15,762 | ||
| EuropaCorp Television (ex-Cipango) | 11,984 | 11,984 | ||
| Blue Event | 0 | 0 | ||
| Blue Advertainment | 723 | 723 | ||
| Digital Factory | 442 | 442 | ||
| Total net value | 28,910 | 28,910 |
| (in thousands of euros) | 3/31/2015 | Movements of the period | 9/30/2015 | ||
|---|---|---|---|---|---|
| + | - | Other (1) | |||
| Films and audiovisual rights | 1,318,142 | 2,905 | (42) | 17,743 | 1,338,748 |
| Production costs | 34,002 | 77,369 | (17,099) | 94,272 | |
| Preliminary expenses | 20,334 | 4,280 | (603) | (643) | 23,368 |
| Other | 86,930 | 111 | (3,131) | 83,910 | |
| Gross amount | 1,459,407 | 84,666 | (645) | (3,131) | 1,540,297 |
| Films and audiovisual rights | (1,244,321) | (18,130) | 42 | (1,262,409) | |
| Other | (6,922) | (157) | (7,079) | ||
| Depreciation/Provisions | (1,251,244) | (18,287) | 42 | (1,269,488) | |
| Net amount | 208,164 | 66,379 | (603) | (3,131) | 270,809 |
| (1) Changes in scope, transfers between items and foreign exchange impact |
The financial costs capitalized over the period amount to €611 thousand.
The increase in the gross value of films and audiovisual rights over the period was mainly due to investments in current productions.
Films and TV productions in "productions in progress" at September 30, 2015 are principally The Lake, Nine Lives, Shut In and Section Zero.
Preliminary expenses that do not lead to a decision to shoot within 5 years from their first recognition are depreciated. However, this principle does not apply to projects having been recognized for more than 5 years, if there are specific production engagements or genuine expressions of interest, or when the company believes that the development timeframe does not call into question the start of shooting in the long term. The value of depreciation provisions is reviewed at each period end.
At September 30, 2015, the residual net book value of projects having had their first expense recognized for over 5 years stood at €3,287 thousand.
Films and audiovisual productions are amortized individually using the film forecast method, i.e. by applying to the
cost of the film the ratio resulting from the comparison of actual net revenues and total estimated net revenues. Total net receipts include (i) net receipts earned in the period, particularly including the revenue and distribution expense of films within the United States and (ii) the estimated projected net receipts for no more than 12 years from the time of the first screening.
As stated in Section 2.7.4 of the Notes to consolidated financial statements for the period ended March 31, 2015, the time horizon used to estimate future receipts is not fixed and can be revised if the future revenues from the international release or French TV are judged to be significant and are then spread over a longer period of time.
Given (i) that EuropaCorp now handles the distribution of its own films in North America, (ii) the sales history of TV rights in France and (iii) the practices of the Group's major competitors, using a 12 year maximum period for determining projected net receipts appears reasonable and in conformity with industry practice.
At September 30, 2015 aligning the horizon for recognizing future French TV receipts with the horizon for recognizing international receipts (i.e., 12 years maximum from the initial release date) has an impact on the net book value of film productions completed and released as at September 30, 2015 (i.e., €97.4 million), before recognizing the expense for the period, which carries a reduction of approximately 3.5%.
At September 30, 2015 "Other intangible assets" mainly consisted of the initial contribution paid as part of creating RED, the shared distribution and marketing platform, in the amount of \$30 million and the additional contribution of \$55 million paid during the 2014/2015 period (see the Notes to the yearly consolidated financial statements for the period ended March 31, 2015, Note 1.3.)
This intangible asset with an indefinite life is, by definition, non-depreciable and is tested annually via the impairment test performed on the Production and Distribution of films CGU.
| (in thousands of euros) | 3/31/2015 | Movements of the period | 9/30/2015 | ||
|---|---|---|---|---|---|
| + | - | Other (1) | |||
| Plant, machinery and equipment | 11,598 | 347 | 11,945 | ||
| Land, Buildings | 27,105 | 160 | 27,264 | ||
| Other property, plant and equipment | 7,543 | 332 | (16) | (9) | 7,849 |
| Property, plant and equipment in progress | 2,958 | 1,053 | 4,011 | ||
| Gross amount | 49,204 | 1,892 | (16) | (9) | 51,070 |
| Plant, machinery and equipment | (6,591) | (445) | (7,036) | ||
| Land, Buildings | (10,206) | (482) | (10,688) | ||
| Other property, plant and equipment | (3,728) | (323) | 16 | 3 | (4,032) |
| Property, plant and equipment in progress | |||||
| Depreciation/Provisions | (20,524) | (1,251) | 16 | 3 | (21,756) |
| Net amount | 28,679 | 641 | 0 | (6) | 29,314 |
| (1) Changes in scope, transfers between items |
Property, plant and equipment mainly include assets held by Digital Factory (buildings, facilities and technical equipment at the Normandy site), as well as those held by EuropaCorp Aéroville (development of the first EuropaCorp Cinémas multiplex).
Property, plant and equipment in progress mainly comprise investments linked to the auditorium project at the Cité du Cinéma, led by Digital Factory, as well as the EuropaCorp Cinemas project in Marseille led by EuropaCorp La Joliette.
Other financial assets mainly include deposits and guarantees maturing beyond 1 year and non-consolidated securities (held by Sofica EuropaCorp).
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Non-consolidated securities | 469 | 504 |
| Advances and down-payments on financial assets | 0 | 0 |
| Receivables relating to investments | 0 | 0 |
| Deposits and guarantees > 1 year | 3,864 | 3,793 |
| Net amount | 4,333 | 4,298 |
Deposits and guarantees maturing beyond one year mainly comprise commitments made by two Group entities:
Non-consolidated securities relate to a non-controlling interest held by Sofica EuropaCorp. They are recorded based on the historic purchase price of these holdings, corresponding to the best estimate of their market value at September 30, 2015.
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Pass Pass la Cam' | 15 | 8 |
| SCI Les Studios de Paris | 2,935 | 3,105 |
| Investments in associates | 2,950 | 3,113 |
The change is due to the loss posted by SCI Les Studios de Paris at September 30, 2015. The contribution from Société d'exploitation des Studios de Paris (€3,312 thousand) is shown in "Other noncurrent liabilities".
As a reminder, EuropaCorp holds a 40% stake in these two companies and does not control them. These companies are consolidated using the equity method in the Group's consolidated financial statements.
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Trade receivables - nominal value |
87,104 | 101,318 |
| Provisions for trade receivables depreciation | (5,134) | (4,497) |
| Net value of trade receivables | 81,970 | 96,821 |
Receivables are recognized at their nominal value after deducting the depreciation provisions for non-recoverable amounts. Doubtful receivables are estimated when it is no longer likely that the amount due will be recovered in full. Non-recoverable receivables are accounted under losses if identified as such.
Receivables beyond 1 year are due primarily by French television channels.
To secure the ongoing funding it needs for its business, EuropaCorp pledges part of these receivables as collateral for loans granted by lending institutions. However, the amounts due remain under trade receivables in the statement of financial position, as only settlement is transferred to the banks.
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Advances and down-payments on orders | 10,261 | 7,453 |
| Support funds & COSIP | 19,515 | 18,724 |
| Tax and social security credits | 12,354 | 13,982 |
| Other receivables | 24,968 | 18,938 |
| Gross amount | 67,098 | 59,097 |
| Depreciation provisions | (901) | (901) |
| Net amount | 66,197 | 58,196 |
At September 30, 2015, the CNC receivable broke down as follows: €9.9 million for a "Producer" support fund, €5.5 million for a "Distributor" support fund, €2.1 million for a "Video" publisher support fund, €0.5 million for an "Operator" support fund and €1.5 million for the audiovisual programming industry support account (COSIP).
The other receivables primarily include amounts owed by external co-producers. They have a maturity of less than 1 year.
Following the decision taken on May 22, 2013 by the Board of Directors of EuropaCorp to award free shares to employees, exercising the authority granted by the Extraordinary General Meeting of the shareholders on September 28, 2012, the Board noted, on May 22, 2015, that the conditions of the award had been met and proceeded to issue 233,783 new shares with a par value of thirty-four (34) euro cents each.
The Company's share capital is thus increased to €10,046,638.58, divided into 29,548,937 shares with a par value of thirty-four (34) euro cents each.
EuropaCorp's Senior Management aims to maintain a level of consolidated equity which ensures that:
However, this amount may vary, in particular should investments of strategic interest for the Group emerge.
The Group did not pay out any dividend during the period.
On September 1, 2015 the sole shareholder of EuropaCorp Television approved a restricted stock plan for the two Executive Officers of that company.
The purpose of the plan is to strengthen the existing bonds between the company and its executive officers by offering them deeper involvement in the company's growth and future performance.
For each beneficiary, the restricted shares awarded will vest at the end of a two-year vesting period, starting from the decision to make the award, which was made on September 1, 2015. They must be held in the name of one owner and cannot be transferred or sold for a two-year lockup period after they vest.
The Group's net financial debt comprises all financial liabilities, including financial instruments linked to financial investments and debt, minus cash and cash equivalents, and the associated financial instruments. The Company's net financial debt is as follows:
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Bonds > 1 year | 0 | 0 |
| Deposits and guarantees received |
720 | 712 |
| Other loans and related debt > 1 year | 2,112 | 2,230 |
| Total Loans maturing > 1 year | 2,832 | 2,942 |
| Bonds < 1 year | 0 | 0 |
| Bank loans | 13 | 145 |
| Other loans and related debt < 1 year | 0 | 5 |
| Production loans | 174,944 | 137,585 |
| Bank loans and overdrafts | 66,381 | 16,696 |
| Marketable securities | (144) | (1,000) |
| Cash and cash equivalents | (84,100) | (70,827) |
| Net debt | 159,926 | 85,541 |
The increase in the net debt is mainly due to the increased use of the credit line for the production of Englishlanguage films with a strong international potential.
More in particular, film production is funded with credit facilities allocated specifically to films by the Company (lines of credit, bank overdrafts, other, etc.). The actual costs incurred for the specific financing of the productions underway during the period are included in the capitalized cost of the films.
The debt amounts included in the net debt table above correspond to the no longer offset balances of the Group's various cash and cash equivalents accounts. They do not include the debt for the acquisition commitment concerning SOFICA EuropaCorp shares, which is included in "Equity investment liabilities".
The marketable securities that may be held by the Group are shares in open-ended investment companies (SICAV) or money market mutual funds. The target set for these investments is a level of profitability close to the EONIA. Their assets are mainly invested in money and interest rate markets; they are readily available. They are not exposed to a material risk of depreciation.
At September 30, 2015, the marketable securities consisted of shares in money market mutual funds.
Net currency balances are in US dollars (equivalent to €2,641 thousand), in Canadian dollars (equivalent to €4 thousand), or, if applicable, in the appropriate currency for films requiring investments in other currencies (Mexican pesos, Sterling pounds - negligible amounts).
Equity investment liabilities amounted to €4,490 thousand (of which €2,832 thousand for the current part). They correspond to the buyback guarantee given by EuropaCorp to the shareholders of Sofica EuropaCorp. The guaranteed buyback price for one share is €850, or 85% of the issue price. Each guarantee may be called upon for a period of six months after the shares have been held for eight years.
The third period authorizing subscribers to call on the buyback guarantee expired on June 30, 2015. It covered Sofica EuropaCorp shareholders who had subscribed for shares during the second capital increase in 2006.
The Group's cash requirements are covered by its operating cash flows, as well as authorized overdrafts, the factoring of sales receivables, and specialized production loans.
The table below compares the book and fair value of all of the Group's financial instruments by category:
| 9/30/2015 | Breakdown by category of instruments |
||||||
|---|---|---|---|---|---|---|---|
| Net book value in statement of financial position |
Fair value |
Fair value through profit or loss |
Available-for sale assets |
Loans and receivables |
Debt at amortize d cost |
||
| Non-consolidated equity holdings |
Non-consolidated equity holdings |
||||||
| Other non-current financial assets |
4,333 | 4,333 | 4,333 | Other non-current financial assets |
|||
| Other current financial assets |
953 | 953 | 953 | Other current financial assets | |||
| Derivative instruments - Assets |
Derivative instruments - Assets | ||||||
| Cash and cash equivalents |
84,244 | 84,244 | 84,244 | Cash and cash equivalents | |||
| Financial assets | 89,530 | 89,530 | 84,244 | 0 | 5,286 | 0 | Financial assets |
| Debt beyond one year | 2,832 | 2,832 | 720 | 2,112 | Debt beyond one year | ||
| Debt under one year | 243,088 | 243,088 | 1,749 | 241,339 | Debt under one year | ||
| Derivative instruments - Liabilities |
Derivative instruments - Liabilities |
||||||
| Financial liabilities | 245,920 | 245,920 | 1,749 | 0 | 720 | 243,451 | Financial liabilities |
| 3/31/2015 | Breakdown by category of instruments |
||||||
|---|---|---|---|---|---|---|---|
| Net book value in statement of financial position |
Fair value |
Fair value through profit or loss |
Available-for sale assets |
Loans and receivables |
Debt at amortize d cost |
||
| Non-consolidated equity holdings |
Non-consolidated equity holdings |
||||||
| Other non-current financial assets |
4,298 | 4,298 | 4,298 | Other non-current financial assets |
|||
| Other current financial assets |
569 | 569 | 569 | Other current financial assets | |||
| Derivative instruments - Assets |
Derivative instruments - Assets | ||||||
| Cash and cash equivalents |
71,827 | 71,827 | 71,827 | Cash and cash equivalents | |||
| Financial assets | 76,694 | 76,694 | 71,827 | 0 | 4,867 | 0 | Financial assets |
| Debt beyond one year | 2,942 | 2,942 | 712 | 2,230 | Debt beyond one year | ||
| Debt under one year | 154,426 | 154,426 | 154,426 | Debt under one year | |||
| Derivative instruments - Liabilities |
Derivative instruments - Liabilities |
||||||
| Financial liabilities | 157,369 | 157,369 | 0 | 0 | 712 | 156,656 | Financial liabilities |
Financial assets and liabilities are already measured at their fair value in the accounts.
The revised version of IFRS 7 – "Financial Instruments: Disclosures - Improving Disclosures about Financial Instruments" applies to assets and liabilities measured at their fair value and provides for a 3-level fair-value hierarchy:
The financial instruments used by EuropaCorp are all Level 1.
When carrying out its everyday business, the Group is exposed to interest rate and foreign exchange risks that may impact its net position.
Interest rate risk:
The interest rate risk affecting the Group is mainly generated by the amounts drawn down from revolving credit lines.
The principal credit line bears interest at LIBOR or EURIBOR plus a margin of 3.25%. The margin may be reduced by 25 basis points if the guarantees cover at least 150% of the outstanding credit.
The table below summarizes the maturities of financial assets and liabilities at September 30, 2015:
| Maturities | ||||
|---|---|---|---|---|
| 9/30/2015 | < 1 year | 1 - 5 years |
> 5 years | |
| Fixed-rate financial assets | ||||
| Variable rate financial assets | 84,244 | 84,244 | ||
| Financial assets not exposed | 5,286 | 953 | 4,333 | |
| Financial assets | 89,530 | 85,197 | 4,333 | 0 |
| Fixed rate financial liabilities | ||||
| Floating-rate financial liabilities | 243,451 | 241,339 | 2,112 | |
| Financial liabilities not exposed | 720 | 720 | ||
| Financial liabilities | 244,171 | 241,339 | 2,832 | 0 |
The following is a summary of the fluctuations in interest rate risk and sensitivity at September 30, 2015 (assumption used: 0.5-point increase interest rates):
| Fixed rate | Variable rate | Not exposed | TOTAL | |
|---|---|---|---|---|
| Financial assets |
84,244 | 5,286 | 89,530 | |
| Financial liabilities | 243,451 | 720 | 244,171 | |
| Net equity before hedging | 0 | (159,207) | 4,566 | (154,640) |
| "Hedging" | 0 | 0 | ||
| Net equity after hedging | 0 | (159,207) | 4,566 | (154,640) |
| Sensitivity | (796) | (796) |
The Group is exposed to translation risk for the financial statements of subsidiaries whose accounts are denominated in foreign currency and to transaction risk in the event of fluctuations in exchange rates for income generated outside the Eurozone. This risk also stems from production costs in foreign currencies relating to parts of certain films shot outside the Eurozone. If a significant portion of the revenues generated on international markets is in foreign currencies, material production costs may also be expressed in the same currencies. Thus, the Group benefits from natural hedging based on the value of flows in the opposite direction.
The Group may also use financial instruments to hedge the foreign exchange risk on cash flows, notably in relation to US\$/€ fluctuations. Consequently, when the Company settles significant expenses in foreign currencies, it may sign forward currency or currency option contracts with financial institutions as required.
In accordance with IAS 39, the Group chose not to apply hedge accounting; therefore, changes in the fair value of purchase transactions and forward sales in foreign currencies completed by EuropaCorp are accounted for under financial income. The fair value of these instruments, reported in assets or liabilities in the consolidated statement of financial position under "Other receivables" or "Other financial liabilities" is calculated based on their market value measured in accordance with the closing exchange rates.
At September 30, 2015, the fair value of currency hedging instruments stood at €49,828 thousand, corresponding to a valuation impact of €1,749 thousand versus the transaction value, as illustrated in the table below:
| Maturities | ||||||
|---|---|---|---|---|---|---|
| Liquidation value | 1 - 5 |
> 5 | Market | Fair value | ||
| 9/30/2015 | < 1 year | years | years | value | adjustment | |
| Outright sale EUR/USD | 0 | 0 | ||||
| Outright purchase EUR/USD | 51,577 | 51,577 | 49,828 | (1,749) | ||
| Total | 51,577 | 51,577 | 0 | 0 | 49,828 | (1,749) |
As previously stated, at March 31, 2015, the Group had not entered into forward exchange or options contracts requiring fair value measurement.
Thus, the net impact of the change in the fair value of currency hedging instruments on the period's financial income was equal to €1,749 thousand at September 30, 2015.
The liquidity risk EuropaCorp is exposed to concerns the production and distribution of cinematographic works. As a matter of fact, in general several months pass between the date investments are made to produce and promote a film, on the one hand, and the actual collection of broadcasting revenues. This time-lag may lead to the need for bank financing. Although EuropaCorp is committed to limit its financial exposure as far upstream as possible with a presale policy of distribution rights abroad and of the TV broadcasting rights for the films it produces, EuropaCorp cannot guarantee that it will always be able to implement this policy or that this will eliminate all of the liquidity risk.
To bridge the gap between the timing of investments and the collection of revenues from film distribution under optimum conditions, EuropaCorp has a Senior credit line for a total amount of \$400 million (of which 40% in dollars, i.e. \$160 million, and 60% in euros, i.e. €177.8 million). This Senior credit line is accompanied by an accordion clause that allows the amount of the credit to be raised, if necessary, by an additional \$150 million.
In addition, this credit line is supplemented by a second lien credit facility, which is subordinated for a total additional amount of USD 50 million.
The maturity of the senior credit line is 5 years, for a maturity date of 10/21/2019. It bears interest at the LIBOR or EURIBOR rate plus a margin of 3.25%. The margin may be reduced by 25 basis points if the guarantees cover at least 150% of the outstanding credit.
The maturity of the second lien credit facility of USD 50 million is 5 years and 6 months. This credit bears interest at the rate of 13%, of which 6% is payable quarterly, with the balance being capitalized and payable on the maturity date of the credit.
Credit risk:
The more significant loans concern the International Sales and TV Sales France businesses. The credit risk for TV Sales France is deemed low, taking into account the size of the broadcasters and the history and good relationships between them.
For international sales, the Group's policy is to choose, in each country where its films are distributed, preferred partners with whom it has worked on several occasions in the past, while still seeking to diversify its potential partners, particularly through regular contact with various foreign players at film markets such as Cannes (Marché du Film), Los Angeles (American Film Market) or Berlin (European Film Market).
Given that the credit risk is considered low, the EuropaCorp Group has not considered it necessary so far to arrange credit insurance.
The table below shows the overall credit risk, broken down in major asset categories as at September 30, 2015:
| 9/30/2015 | |
|---|---|
| Trade and other accounts receivable | 81,970 |
| Marketable securities | 0 |
| Other receivables exposed to credit risk | 0 |
| Total | 81,970 |
EuropaCorp generally invests its available cash in money market products in euros or secure products (certificates of deposit, commercial paper, term accounts, etc.). Consequently, the Company believes it is not exposed to any equity risk at September 30, 2015.
In addition, at September 30, 2015, EuropaCorp held 39,657 treasury shares with a value of €151 thousand.
| Other companies' or UCITS shares portfolio |
Treasury shares portfolio | |
|---|---|---|
| Assets position | Nil | 151 |
| Off balance sheet | Nil | 0 |
| Overall assets position | Nil | 151 |
| (in thousands of euros) | 9/31/2015 | 3/31/2015 |
|---|---|---|
| Trade payables | 55,263 | 54,987 |
| Equity investment liabilities | 2,832 | 1,539 |
| Advances and down-payments on orders | 3,940 | 2,886 |
| Taxes and social security contributions payable | 9,960 | 17,344 |
| Miscellaneous liabilities | 54,841 | 52,932 |
| Total other financial liabilities | 68,741 | 73,162 |
| Total operating liabilities | 126,836 | 129,688 |
Miscellaneous liabilities at September 30, 2015 are mainly expenses comprising repayments to rights-holders and costs incurred for ongoing productions, and the debt of €44,869 thousand (equivalent to \$54.5 million) used to finance the repurchase of the Group's initial obligations towards Relativity incurred during the period ended March 31, 2015. This operating liability was not discounted at September 30, 2015, given the uncertainty over the exact timing of the repayment.
Taxes and social security contributions primarily comprise collected VAT and expenses payable for miscellaneous taxes and social securities contributions.
All current liabilities have a maturity of less than 1 year.
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Other current assets | 17,350 | 16,167 |
| Other non-current assets | 10,916 | 12,553 |
Other current assets mainly consisted of prepaid expenses (amounting to €12,941 thousand at September 30, 2015) for productions yet to be released via the chosen media, as well as deposits and guarantees totaling €953 thousand. Other current assets also included the portion of bank commissions with maturity under 1 year (€3,456 thousand), spread over the life of the two credit lines set up.
Other non-current assets include €926 thousand corresponding to the portion of prepaid expenses with maturity beyond one year, €9,455 thousand in deferred expenses for bank commissions (spread out over the life of the credit lines), and €535 thousand in other receivables (maturity beyond one year).
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Other current liabilities | 33,762 | 24,081 |
| Other non-current liabilities | 13,482 | 16,640 |
Other current liabilities solely comprised deferred income corresponding to billed revenues reported as revenue based on an event that had not occurred at the end of the period. Deferred income is posted under non-current liabilities when the maturity for revenue recognition is beyond 1 year. At September 30, 2015, the portion of deferred income maturing under 1 year amounted to €33,762 thousand.
Deferred income (current and non-current) breaks down as follows:
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| TV rights items | 31,632 | 30,507 |
| Undelivered international sales | 9,551 | 4,330 |
| Subsidies | 585 | 1,175 |
| Sales of rights | 0 | 0 |
| Partnerships | 250 | 173 |
| Other deferred income | 1,414 | 1,445 |
| Total deferred income | 43,433 | 37,630 |
Other non-current liabilities include the portion of deferred income maturing beyond a year (€9,671 thousand).
| (in thousands of euros) | Financial year ended September 30 |
Year ended March 31 |
|
|---|---|---|---|
| 2015 | 2014 | 2015 | |
| - Production |
55,294 | 73,503 | 174,268 |
| - Distribution |
11,666 | 17,397 | 30,823 |
| - Video |
3,884 | 2,553 | 10,238 |
| - Events |
2,045 | 1,359 | 4,355 |
| - EuropaCorp Cinemas |
3,340 | 2,763 | 6,101 |
| - Miscellaneous |
393 | 427 | 1,152 |
| Total | 76,621 | 98,003 | 226,937 |
| Of which support funding generated (including COSIP) | 2,434 | 4,895 | 9,751 |
| Of which revenue from exports | 37,585 | 50,830 | 107,338 |
EuropaCorp Group's consolidated revenues totaled €76,621 thousand as at September 30, 2015, compared to €98,003 thousand at September 30, 2014, for a decrease of -22%.
Key events in The Video business (€3.9 million) included the video releases of Bis and Taken 3 along with continued sales from the film catalog.
As a reminder, the Group's revenue is generally dependent on the releases of its films through various channels. Indeed, the timetable of these releases can give rise to significant fluctuations in the revenue earned by each channel from one half-year to another. Therefore, half-year revenue and profit are not necessarily indicative of annual revenue and profit.
EuropaCorp Group's operating margin totaled €20,740 thousand (27% of revenue) at September 30, 2015, compared to €28,883 thousand (29% of revenue) at September 30, 2014.
The operating margin remained high primarily due to the significant contribution of International Sales during the half-year.
The change in overheads is largely due to the major strategic investments made by the Group in the United States through EuropaCorp Films USA and the RED platform. The change in overheads amounted to €24.8 million at September 30, 2015, versus €20.5 million for the period ended September 30, 2014.
It should be noted that the cost of the rent on La Cité du Cinéma is presented net, in the consolidated financial statements of the Group at September 30, 2015, of the re-invoicing of share of rent paid by Front Line in order to reflect the net rent charge that the EuropaCorp Group supports.
| (in thousands of euros) | Financial year ended September 30 |
|
|---|---|---|
| 2015 | 2014 | |
| Net financial debt | (4,937) | (1,177) |
| Other financial income and expenses | (2,636) | 5,189 |
| Financial income | (7,573) | 4,013 |
Financial income for the half was a loss of €7.6 million, as compared to a profit of €4.0 million at September 30, 2014, and was primarily affected by financial interest for the period, principally on the senior and secondary lines of credit as well as by the share of bank fees relating to the arrangement of credit lines (including expenses for lines that were refinanced) and which are spread over the term of these facilities.
As stated previously, these fees were paid in full during previous reporting periods.
"Other financial income and expenses" also include the impact from the discounting of the debt on Sofica EuropaCorp securities and the period-end valuation of foreign exchange hedging instruments and payables and receivables denominated in foreign currencies.
| (in thousands of euros) | Financial year ended September 30 |
||
|---|---|---|---|
| 2015 | 2014 | ||
| Current tax | 81 | 113 | |
| Deferred tax | 8,933 | (3,970) | |
| Total tax income/(expense) | 9,014 | (3,857) |
Given the company's volume projections at the time the interim consolidated financial statements were prepared, the carryable tax losses were capitalized as at September 30, 2015.
The deferred tax asset recognized as a result of carryable tax losses by EuropaCorp Films USA was €13.7 million, of which €11.8 million was capitalized for the period.
The business forecasts used and updated in November 2015 to recognize these liabilities apply to a five-year period from the year ended March 31, 2015.
At September 30, 2015 deferred tax assets net of deferred tax liabilities were €2.1 million.
During the financial year ended September 30, 2015, the Group generated net cash flow of €21,567 thousand, a decrease of €48,765 thousand compared to September 30, 2014. This change is the result of low volume in the first half of the year and to the success of Lucy in the first half of the previous year.
The change in working capital requirement amounted to €6,471 thousand in the first half of 2015, compared to €(1,720) thousand in the first half of 2014.
At September 30, 2015, net cash flows from investments totaled €(92,063) thousand, compared to €(78,566) thousand at September 30, 2014.
The increase in these cash flows is a direct consequence of continued investment in big-budget film and television productions with great international potential.
As at September 30, 2015, net cash from financing totaled €82,914 thousand. The increased investment in the halfyear as compared to the first half of the previous year has resulted in a greater use of lines of credit, which is reflected in a corresponding increase in debt.
Agreements signed with related parties were identified in the 2014/2015 Registration Document filed with the French Financial Markets Authority (AMF) on July 20, 2015, in Chapter 19 "Related-Party Agreements" and Note 5.2 "Related-Party Transactions."
Besides those described in the 2014/2015 Registration Document there were no new agreements with related parties made during the first half of 2015.
The table below summarizes flows and balances of related party transactions.
| (in thousands of euros) | 9/30/2015 | 3/31/2015 |
|---|---|---|
| Receivables | ||
| Trade receivables and other operating receivables | 3,025 | 972 |
| Debit balances and other current financial receivables | - | - |
| Debt | ||
| Other non-current financial liabilities | 585 | 579 |
| Trade payables and other operating liabilities | 750 | 187 |
| Financial current accounts receivable | - | - |
| Revenue | 41 | 23 |
| Operating expenses | (966) | (1,616) |
| Financial expenses | (14) | - |
| Financial income | - | - |
| The Group off-balance sheet commitments at September 30, 2015 are as follows (in thousands of euros): | |
|---|---|
| ------------------------------------------------------------------------------------------------------- | -- |
| Commitments given to third parties (in thousands of euros) | Sept 30, 2015 | March 31, 2015 |
|---|---|---|
| Financial commitments for leases* | 56,009 | 58,856 |
| Financial commitments for cinematographic investments | 3,95 | 7,134 |
| Total commitments given | 59,959 | 65,989 |
| Commitments in favor of EuropaCorp (in thousands of euros) | Sept 30, 2015 | March 31, 2015 |
| Commitments from clients | ||
| • For the cinematographic business | 61,718 | 26,698 |
| • Support funds for audiovisual activities | 4,084 | 3,579 |
| Financial commitments for leases** | 19,122 | 19,809 |
| Total commitments received | 84,924 | 50,087 |
* Relates to the lease agreement for the Cité du Cinéma business park, with a term of 12 years starting from April 6, 2012.
** Relates to the sub-lease agreement entered into with Front Line for the Cité du Cinéma business park, with a term of 12 years.
The increase in off-balance sheet commitments received in connection with operations refers to sales contracts signed on feature-length films with great international potential.
In the dispute with a third-party co-producer, the company, which had been ordered by the first-instance court to pay €1.5 million, was finally ordered to pay the third party the sum of €0.4 million, on condition that the thirdparty co-producer issued a repayment guarantee for €0.25 million. The Paris Court of Appeal has appointed an independent expert to provide the court with all the necessary information for it to draw up the parties' accounts. The expert's report has to be filed before May 31, 2016 (see Notes to the annual consolidated financial statements of March 31, 2015, Note 3.11.1).
Nil.
Under IFRS 8, the Group must disclose information "to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates."
As a consequence, the Group defined its operating segments in compliance with the standard's criteria to present separate information by segment.
An operating segment is a component of the company:
As such and taking into account the approach set out by IFRS 8, operating segments have been identified based on internal reporting.
The Group tracks its performance by monitoring its activities and businesses.
Following the acquisition of the Blue Group, the EuropaCorp Group now operates in 4 different areas constituting as many "operating segments" under IFRS 8, detailed below:
The measurement and presentation method for the figures relating to each operating segment is compliant with the accounting policies and methods described for the preparation of consolidated financial statements.
| 9/30/2015 | Production and distribution of films |
Production and distribution of TV films and series |
Events | Multiplexes | Other | Non allocated items |
Total |
|---|---|---|---|---|---|---|---|
| Net goodwill | 16,926 | 11,984 | 0 | 0 | 0 | 28,910 | |
| Net intangible assets | 246,347 | 23,703 | 743 | 16 | 0 | 270,809 | |
| Net Property, Plant and Equipment | 13,157 | 38 | 68 | 16,045 | 6 | 29,314 | |
| Other net financial assets | 2,455 | 0 | 3 | 1,875 | 0 | 4,333 | |
| Investments in associates | 15 | 0 | 0 | 0 | 2,935 | 2,950 | |
| Deferred tax assets | 23,115 | 943 | 0 | 0 | 32 | 24,089 | |
| Other net non-current assets | 9,990 | 926 | 0 | 0 | 0 | 10,916 | |
| Total non-current assets | 312,005 | 37,594 | 814 | 17,937 | 2,972 | 371,322 | |
| Inventory | 470 | 0 | 0 | 102 | 0 | 572 | |
| Net trade receivables | 76,502 | 3,835 | 1,118 | 232 | 282 | 81,970 | |
| Other net receivables | 54,471 | 8,584 | 12 | 2,937 | 193 | 66,197 | |
| Other net current assets | 16,247 | 138 | 30 | 933 | 2 | 17,350 | |
| Cash and cash equivalents | 83,476 | 466 | 63 | 134 | 105 | 84,244 | |
| Total current assets | 231,167 | 13,023 | 1,223 | 4,338 | 581 | 250,332 | |
| TOTAL ASSETS | 543,172 | 50,617 | 2,037 | 22,275 | 3,553 | 0 | 621,654 |
| Equity-Group share | 174,491 | 174,491 | |||||
|---|---|---|---|---|---|---|---|
| Non-controlling interests | 0 | 0 | (194) | 0 | 0 | (194) | |
| Provisions for pensions and other post-employment benefits | 935 | 0 | 0 | 0 | 0 | 935 | |
| Deferred tax liabilities | 21,100 | 557 | 202 | 159 | 4 | 22,022 | |
| Bonds and financial liabilities > 1 year | 2,125 | (13) | 0 | 0 | 0 | 2,112 | |
| Deposits and guarantees received | 720 | 0 | 0 | 0 | 0 | 720 | |
| Liabilities on acquisition of securities – part maturing in over | |||||||
| one year | 1,658 | 0 | 0 | 0 | 0 | 1,658 | |
| Other non-current liabilities | 8,644 | 1,406 | 62 | 0 | 3,370 | 13,482 | |
| Total non-current liabilities | 35,182 | 1,950 | 264 | 159 | 3,374 | 0 | 40,928 |
| Bonds and financial liabilities < 1 year | 230,260 | 11,078 | 0 | 0 | 0 | 241,339 | |
| Provisions for risks and expenses | 4,410 | 0 | 0 | 0 | 81 | 4,492 | |
| Trade payables | 48,064 | 1,870 | 544 | 4,317 | 468 | 55,263 | |
| Equity investment liabilities | 2,832 | 0 | 0 | 0 | 0 | 2,832 | |
| Other financial liabilities | 65,112 | 2,842 | 96 | 411 | 280 | 68,741 | |
| Other current liabilities | 25,939 | 7,641 | 5 | 177 | 0 | 33,762 | |
| Total current liabilities | 376,618 | 23,432 | 645 | 4,905 | 829 | 0 | 406,429 |
| TOTAL LIABILITIES | 411,799 | 25,382 | 715 | 5,064 | 4,204 | 174,491 | 621,654 |
| Films and audiovisual rights investments | 76,422 | 8,147 | 12 | 84,581 | |||
|---|---|---|---|---|---|---|---|
| ------------------------------------------ | -------- | ------- | -- | ---- | -- | -- | -------- |
| Production and | Production and | Non | |||||
|---|---|---|---|---|---|---|---|
| 3/31/2015 | distribution of | distribution of TV | Events | Multiplexes | Other | allocated | Total |
| films | films and series | items | |||||
| Net goodwill | 16,926 | 11,984 | 0 | 0 | 0 | 28,910 | |
| Net intangible assets | 188,580 | 18,792 | 786 | 5 | 0 | 208,164 | |
| Net Property, Plant and Equipment | 12,149 | 48 | 79 | 16,397 | 7 | 28,679 | |
| Other net financial assets | 2,414 | 0 | 8 | 1,875 | 0 | 4,298 | |
| Investments in associates | 8 | 0 | 0 | 0 | 3,105 | 3,113 | |
| Deferred tax assets | 9,860 | 855 | 0 | 0 | 30 | 10,746 | |
| Other net non-current assets | 11,627 | 926 | 0 | 0 | 0 | 12,553 | |
| Total non-current assets | 241,564 | 32,606 | 873 | 18,278 | 3,142 | 296,463 | |
| Inventory | 467 | 0 | 0 | 113 | 0 | 579 | |
| Net trade receivables | 89,080 | 5,472 | 1,443 | 281 | 545 | 96,821 | |
| Other net receivables | 44,269 | 10,463 | 189 | 2,907 | 367 | 58,196 | |
| Other net current assets | 14,942 | 211 | 72 | 941 | 1 | 16,167 | |
| Cash and cash equivalents | 70,368 | 422 | 0 | 1,037 | 0 | 71,827 | |
| Total current assets | 219,126 | 16,569 | 1,704 | 5,279 | 913 | 243,590 | |
| TOTAL ASSETS | 460,689 | 49,174 | 2,577 | 23,557 | 4,055 | 0 | 540,052 |
| Equity-Group share | 184,658 | 184,658 | |||||
|---|---|---|---|---|---|---|---|
| Non-controlling interests | 0 | 0 | (153) | 0 | 0 | (153) | |
| Provisions for pensions and other post | |||||||
| employment benefits | 860 | 0 | 0 | 0 | 0 | 860 | |
| Deferred tax liabilities | 16,491 | 557 | 222 | 128 | 4 | 17,403 | |
| Bonds and financial liabilities > 1 year | 2,375 | (145) | 0 | 0 | 0 | 2,230 | |
| Deposits and guarantees received | 712 | 0 | 0 | 0 | 0 | 712 | |
| Liabilities on acquisition of securities – | |||||||
| part maturing in over one year | 4,397 | 0 | 0 | 0 | 0 | 4,397 | |
| Other non-current liabilities | 12,274 | 1,633 | 62 | 0 | 2,672 | 16,640 | |
| Total non-current liabilities | 37,109 | 2,045 | 284 | 128 | 2,676 | 0 | 42,242 |
| Bonds and financial liabilities < 1 year | 137,333 | 16,933 | 22 | 0 | 138 | 154,426 | |
| Provisions for risks and expenses | 4,984 | 45 | 0 | 0 | 81 | 5,110 | |
| Trade payables | 47,122 | 1,921 | 387 | 4,893 | 664 | 54,987 | |
| Equity investment liabilities | 1,539 | 0 | 0 | 0 | 0 | 1,539 | |
| Other financial liabilities | 68,147 | 3,905 | 391 | 288 | 431 | 73,162 | |
| Other current liabilities | 23,149 | 697 | 36 | 199 | 0 | 24,081 | |
| Total current liabilities | 282,274 | 23,500 | 837 | 5,380 | 1,314 | 0 | 313,306 |
| TOTAL LIABILITIES | 319,383 | 25,545 | 967 | 5,508 | 3,991 | 184,658 | 540,052 |
| Films and audiovisual rights investments | 76,696 | 26,169 | 7 | 102,872 | |
|---|---|---|---|---|---|
| 9/30/2015 | Production and distribution of films |
Production and distribution of TV films and series |
Events | Multiplexes | Other | Total |
|---|---|---|---|---|---|---|
| Revenue | 65,960 | 4,526 | 2,045 | 3,340 | 751 | 76,621 |
| Cost of sales | (47,376) | (3,597) | (2,154) | (2,738) | (16) | (55,881) |
| Operating margin | 18,584 | 929 | (109) | 602 | 735 | 20,740 |
| General and administrative expenses | (21,222) | (1,235) | (232) | (1,781) | (298) | (24,768) |
| Other op. income & expenses | 51 | (82) | 0 | (14) | (47) | (92) |
| Operating profit (loss) | (2,588) | (387) | (342) | (1,193) | 390 | (4,120) |
| Financial income | (7,435) | (136) | (1) | (1) | 0 | (7,573) |
| Income tax | 9,136 | 83 | 20 | (31) | (195) | 9,014 |
| Share of net income of associates | 7 | 0 | 0 | 0 | (841) | (833) |
| Share of non-controlling interests | 0 | 0 | (41) | 0 | 0 | (41) |
| Profit (loss) attributable to owners of the parent company |
(879) | (440) | (282) | (1,224) | (646) | (3,472) |
| 3/31/2015 | Production and distribution of films |
Production and distribution of TV films and series |
Events | Multiplexes | Other | Total |
|---|---|---|---|---|---|---|
| Revenue | 178,841 | 36,324 | 4,355 | 6,102 | 1,316 | 226,937 |
| Cost of sales | (115,609) | (31,461) | (3,546) | (4,817) | 9 | (155,424) |
| Operating margin | 63,233 | 4,863 | 808 | 1,284 | 1,325 | 71,513 |
| General and administrative expenses | (43,609) | (2,990) | (825) | (3,268) | (814) | (51,505) |
| Other op. income & expenses | (506) | (57) | 55 | 13 | (15) | (511) |
| Operating profit (loss) | 19,118 | 1,816 | 38 | (1,970) | 496 | 19,497 |
| Financial income | 4,483 | 226 | 0 | 8 | (1) | 4,716 |
| Income tax | (6,481) | (137) | 51 | (95) | (298) | (6,960) |
| Share of net income of associates | 5 | 0 | 0 | 0 | (1,060) | (1,055) |
| Share of non-controlling interests | 0 | 0 | (49) | 0 | 0 | (49) |
| Profit (loss) attributable to owners of the parent company |
17,125 | 1,906 | 138 | (2,058) | (863) | 16,248 |
This is a free translation into English of the statutory auditors' report on the interim financial statements issued in the French language and is provided solely for the convenience of English speaking readers. The report must be read in conjunction and construed in accordance with French law and French auditing professional standards.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the shareholders,
In compliance with the assignment entrusted to us by your General shareholder's meetings, and in application of Article L.451-1-2 III of the French Monetary and Financial Code ("Code Monétaire et financier"), we have performed:
These condensed interim consolidated financial statements were prepared under the responsibility of the Board of Directors. Our responsibility is to express our conclusion on these financial statements, based on our limited review.
We have conducted our limited review in accordance with professional standards applicable in France.
A limited review mainly consists of interviewing management in charge of accounting and financial matters and applying analytical procedures. These procedures are less broad in scope that those required for an audit performed in accordance with French auditing standards. Accordingly, a limited review only provides moderate assurance, which is less assurance than that provided by an audit, that the financial statements taken as a whole are free of material misstatements.
Based on our limited review, nothing has come to our attention that cause us to presume that the interim condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34, the IFRS – standard relating to interim financial reporting adopted by the European Union.
We have also verified the information presented in the half-yearly management report commenting on the interim condensed consolidated financial statements that were the subject of our limited review.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
________________ ________________
Paris and Lyon, December 21, 2015
French original signed by The Statutory auditors,
Auditeurs & Conseils Associés Premier Monde Olivier Juramie Arnaud Malivoire
I certify that, to my knowledge, the condensed interim consolidated financial statements are prepared in accordance with applicable accounting standards and give a true and fair view of the assets and financial position and results of EuropaCorp, or all of the companies included in the scope of consolidation, and that the interim management report accurately presents the significant events that occurred during the first six months of the financial year and their impact on the interim condensed consolidated financial statements, the principal risks and uncertainties for the remaining six months of the fiscal year and the main transactions between related parties.
Saint-Denis, December 22, 2015
________________ Christophe Lambert Chief Executive Officer
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