Business
EuropaCorp : Half-yearly financial report to September 30, 2024 (translation)
EuropaCorp : Half-yearly financial report to September 30, 2024
About this update from Europacorp Sa
HALF-YEAR FINANCIAL REPORT TO SEPTEMBER 30, 2024 1 A - BUSINESS REPORT FOR THE FIRST HALF OF 2024/2025 1. EuropaCorp Group results The first half of the 2024/2025 fiscal year was marked by the release of Weekend à Taipei on September 25, 2024 in France , a film by George Huang co-written by Luc Besson, and the sustained exploitation of the catalog. As a reminder, deliveries to international distributors of Weekend in Taipei had taken place in part by March 31, 2024, and part of the International Sales revenue was therefore booked in the previous fiscal year; the remainder is booked in this half-year, with the French exhibition business. The EuropaCorp Group's IFRS consolidated financial statements for the first half of the 2024/2025 financial year show consolidated sales of 11.4 million euros, compared with 13.4 million euros for the first half of the previous year (-15%). Better international sales (+0.6 million euros), linked in particular to the delivery of the film Weekend in Taipei , were weighed down by lower TV/SVOD sales (-1.9 million euros), mainly in the United States. As a general rule, 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 can lead to significant variations in sales by channel from one half-year to the next. Half-year sales and earnings are therefore no guarantee of full-year sales and earnings. Due to lower sales and the presence of fresh films with higher amortization costs than catalog films, particularly when results require a downward adjustment to future revenues (additional amortization on Weekend in Taipei ), the operating margin fell to 6%, down to 0.7 million euros from 3.7 million euros (28%) in the first half of the previous year. Overheads came to (3.7) million euros for the six months ended September 30, 2024, a significant improvement on the previous year's first-half level of (4.9) million euros. This is due to various savings, notably on rental expenses following the relocation of the Group's headquarters from the Cité du Cinéma in Paris. Other operating income and expenses were negligible (8 thousand euros), compared with 2.3 million euros, mainly due to exceptional restructuring items in the first half of the previous year. After taking these items into account, operating income came to (3.0) million euros, compared with 1.1 million euros for the six months to September 30, 2023. Net financial income of (1.9) million euros for the first half of 2024/2025 breaks down as follows: (2.1) million: cost of financial debt linked to the Senior debt, spread over 9 years under the Safeguard Plan; 0.6 million in interest received from cash investments; (0.9) million euros: a negative foreign exchange impact due to changes in the €/$ exchange rate over the period; 0.4 million: other financial costs, notably the rent expense reclassified as financial interest (IFRS 16), offset by the capitalization of interest on films. Income before tax and exceptional items came to (4.9) million euros, and with no significant tax charge booked in the first half, Group share of net income for the period was also (4.9) million euros. Cash flow from operations for the half-year came to +12.4 million euros, an improvement on the previous year's first-half figure of +8.2 million euros. 2 2. Activities 2.1 Motion picture production and distribution 2.1.1 International Sales International sales amounted to 6.0 million euros, or around 53% of total sales. They were up 0.6 million euros on the first half of the previous year, due in particular to international deliveries of Weekend in Taipei , partially offset by a drop in royalties received from American studios. 2.1.2 Distribution Rooms Theatrical sales, marked by the release of Weekend in Taipei on September 25, 2024, recorded revenues of 0.2 million euros. The film drew around 110,000 admissions in France. 2.1.3 Video and VOD distribution Video & VOD sales in France and the United States totaled 0.5 million euros, unchanged from the previous year, and mainly concerned VOD revenues in France. 2.1.4 Sales of television rights Television & SVOD sales in France and the United States totaled 3.4 million euros in the first half of 2024/2025, or 30% of sales. They were down by 1.9 million euros compared with the first half 2023/2024, due in particular to a major sale of the film Valérian et la Cité des mille planètes in the United States during the previous year. 2.1.5 Production and distribution of TV movies and series No sales were recorded for the TV Series business following the settlement received for the Taken series, compared with 0.3 million euros for the same series at September 30, 2023. 2.2 Other activities Revenues from Other Group activities amounted to 1.3 million euros, compared with 1.5 million euros in the first half of the previous year. This item comprises revenues from partnership, licensing and music publishing contracts. 3. Cost of sales Cost of sales (operating expenses excluding overheads) amounted to (10.7) million euros, compared with (9.7) million euros for the first half of the 2023/2024 financial year. The 1.0-million-euro increase in this item is mainly due to the 2.4-million-euro increase in amortization and depreciation charges, which stood at (8.1) million euros versus (5.7) million euros at September 30, 2023, mainly linked to the film Weekend in Taipei . Distribution costs fell by 1.0 million euros, due in particular to the French distributor (Apollo Films) taking over distribution costs for Weekend in Taipei , compared with those for Dogman borne by the Company last year, and third-party participation costs fell by 0.3 million euros. The operating margin is down to 6% from 28% at September 30, 2023. 4. Investments made With regard to co-production investments, the Group invested 15.4 million euros, mainly on the films 3 Dracula and Hell in Paradise , compared with 11.2 million euros (mainly Weekend in Taipei ) in the first half of 2023/2024. 5. Financial structure At September 30, 2024, net debt stood at 30.7 million euros, compared with 24.9 million euros at March 31, 2024. This increase is mainly due to investments in new films, in particular Dracula , partially covered by cash flows generated by operations. The Group also paid the fourth instalment under the Safeguard Plan for the repayment of senior debt, amounting to 5.7 million euros. The Group's cash position therefore stood at 35.6 million euros at September 30, 2024 (compared with 46.3 million at March 31, 2024). 6. Significant events of the period Release of the film Weekend in Taipei The film Weekend in Taipei , written by Luc Besson and directed by George Huang ( Swimming with Sharks ), with Luke Evans in the lead role, was released in French cinemas on September 25, 2024, distributed by Apollo Films. It attracted around 110,000 admissions in France. Capital increase following the allocation of bonus shares to Group employees Following the decision taken on July 15, 2021 by EuropaCorp's Board of Directors, making use of an authorization granted by the Extraordinary General Meeting of Shareholders of September 28, 2020, to proceed with bonus share issues to employees and corporate officers, the Board of Directors noted, on September 17, 2024, following the Group's General Meeting, the fulfillment of the conditions of allotment and consequently the issue of 2.295,623 new shares, each with a par value of thirty-four (34) euro cents. The Company's share capital is thus increased to 42,642,802.04 euros, divided into 125,420,006 shares, each with a par value of thirty-four (34) euro cents. 7. Significant events since the balance sheet date N/A 8. Risk factors and related party transactions Risk factors are similar to those described in Chapter 3 of the Annual Report, and have not changed significantly. Amounts relating to financial and market risks at September 30, 2024 are set out in note 3.11 "Financial instruments" to the interim consolidated financial statements in this report. Transactions with related parties are described in note 5.2 to the interim consolidated financial statements. 9. Outlook Shooting of Dracula: A Love Tale , written and directed by Luc Besson, was completed in November 2024. It reunites Luc Besson and Caleb Landry Jones for their second collaboration, with the participation of Christoph Waltz and Guillaume de Tonquédec. The film centers on the tragic love story between Prince Vlad II, Count of Drācul, and his wife, Princess Elisabeta, transposed to the iconic Paris of the late 19 th century. It is produced by LBP in co-production with EuropaCorp. The Group is also co-producing with LBP the film Hell in Paradise , a thriller featuring a combative heroine with Nora Arnezeder in the lead role, directed by Leïla Sy ( Banlieusards 1 et 2, Yo Mama ). Shooting began on May 13 in Thailand, and the film is produced by Virginie Besson-Silla. 4 Written by Karine Silla ( Un baiser papillon), Hell in Paradise tells the story of Nina, a young French woman who leaves her native Marseille and takes her first job as a receptionist in a luxury hotel on a beautiful island, in the hope of a better life. But when tragedy strikes the hotel, Nina is propelled into a relentless spiral of lies and manipulation. Wrongly accused and facing life imprisonment, she has no choice but to outwit the traps and escape this paradise turned hell. In the autumn, EuropaCorp also began shooting the film Disorder in Bulgaria, written by Luc Besson and Dylan Sprayberry from an original idea by Dylan Sprayberry. It is directed by Barthélémy Grossmann, with Dylan Sprayberry and Thalia Besson in the lead roles. The film tells the story of how, after committing a crime, Parker Decker is presented with a choice that will determine the rest of his life: prison or an all-boys correctional facility. Choosing what seems to be the best option, Parker arrives at Farm-Dale, a facility that bills itself as a place of rehabilitation. He soon discovers that behind this promising façade lies an oppressive environment, populated by emotionally distressed youngsters, where violence and disillusionment reign supreme. EuropaCorp has also signed co-development/coproduction agreements with a number of partners; these projects will go into production shortly, once the associated financing has been secured. Other projects are at a less advanced stage of development, for both films and series, taking into account both EuropaCorp's DNA and the evolution of the market, with projects destined for both cinema and platforms. 5 B - IFRS-COMPLIANT CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AT SEPTEMBER 30, 2024 CONSOLIDATED INCOME STATEMENT Year ended (amounts in thousands of euros, except number of shares and per share data) Sales figures Operating income Cost of sales Operating margin Overheads Other operating income and expenses Operating income Income from financial investments / (Cost of financial debt) Other financial income and expense Net financial income Profit before tax and exceptional items Income tax Share of profit of associates Net income Of which: Net income - Minority interests Net income - Group share Basic earnings per share Diluted earnings per share Number of shares used to calculate basic EPS Number of shares used to calculate diluted EPS September 30 September 30 2024 2023 Note 4.1 11 399 13 366 Note 4.1 11 399 13 366 (10 690) (9 655) Note 4.2 709 3 712 Note 4.3 (3 713) (4 939) Note 4.4 8 2 331 (2 995) 1 104 (1 482) (1 579) (421) 531 Note 4.5 (1 904) (1 048) (4 899) 56 Note 4.6 (50) 24 Note 3.5 0 0 (4 948) 80 (15) 21 (4 934) 59 Note 2.22 (0,04) 0,00 Note 2.22 (0,04) 0,00 123 112 326 123 060 681 123 112 326 125 356 304 Operating income (EBIT) at September 30, 2024 includes 8,099 thousand euros of amortization charges, compared with 5,733 thousand euros at September 30, 2023. Operating income before amortization of films and series therefore came to 5 104 thousand euros at September 30, 2024, compared with 6,837 thousand euros at September 30, 2023. 6 STATEMENT OF COMPREHENSIVE INCOME 30.09.2024 30.09.2023 Net income (4 948) 80 Income and expenses recognized directly in equity - Change in net investments - Conversion differences (232) 202 - Available-for-sale assets - Cash flow hedges - Asset revaluation - Actuarial gains and losses - QP in other comprehensive income of associates - Tax on items recognized directly in equity Total comprehensive income recognized in equity (232) 202 Total comprehensive income for the period (5 181) 282 Breakdown of comprehensive income for the period 30.09.2024 30.09.2023 Shareholders of the entity (5 166) 261 Minority interests (15) 21 Total comprehensive income for the period (5 181) 282 7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated statement of changes in shareholders' equity number (amounts in thousands of euros, except number of shares) of common shares Balance at March 31, 2024 123 124 383 Appropriation of profit to reserves Transfer of part of the additional paid-in capital to reserves Dividend distribution Share-based payments Net change in treasury shares Impact of changes in the scope of consolidation Conversion reserve Net income at 09/30/2024 Total income and expenses for the period Capital increases Expenses related to the capital increase Bonus share plan Capital Share premium 41 862 135 192 781 (781) Other Reserves comprehensive income (180 409) 5 336 857 0 (232) 0 (232) Own Net shares income 857 (857) 0 (4 934) 0 (4 934) Shareholders' equity Group share 2 792 0 0 0 0 0 0 (232) (4 934) (5 166) 0 0 0 Minority Total interests shareholders' equity 438 3 230 0 0 0 0 0 0 0 (232) (4 948) (5 181) 0 0 0 Balance at September 30, 2024 123 124 383 42 643 134 412 (179 552) 5 103 8 (46) (4 934) (2 373) 423 (1 951) CONSOLIDATED BALANCE SHEET (amounts in thousands of euros) 30-Sep-24 31-Mar-24 Brut Amortisations / Net Net ASSETS Provisions Non-current assets : Goodwill Note 3.1 12 936 (12 936) 0 0 Intangible assets Note 3.2 1 489 126 (1 450 262) 38 863 31 856 Property and Equipment Note 3.3 594 (421) 173 193 Other financial assets Note 3.4 3 751 0 3 751 3 624 Investments in associates Note 3.5 0 0 0 0 Deferred taxes assets 0 0 0 0 Right-of-use leased assets Note 3.10 4 079 (491) 3 587 3 814 Total non-current assets 1 510 484 (1 464 110) 46 374 39 488 Current assets : Inventory 229 (154) 76 42 Trade accounts receivable Note 3.6 17 490 (2 051) 15 440 22 108 Other accounts receivable Note 3.7 11 058 (7 424) 3 634 4 139 Other current assets Note 3.13 1 237 0 1 237 1 109 Cash and cash equivalents 35 642 0 35 642 46 313 Total current assets 65 657 (9 628) 56 029 73 712 TOTAL ASSETS 102 404 113 200 30 sept 31 mars 2024 2024 LIABILITIES Equity - Group share Issued capital 42 643 41 862 Retained earnings and reserves (45 016) (39 070) Total equity - Group share Note 3.8 (2 373) 2 792 Minority interests 423 438 Non-current liabilities : Provisions for pensions and similar 577 482 Deferred taxes liabilities 0 0 Long term borrowings and financial debts Note 3.9 53 397 64 148 Deposits and guarantees received Note 3.9 98 98 Lease liability - long term (> 1 year) Note 3.10 3 215 3 487 Other non-current liabilities Note 3.13 5 311 7 418 Total non-current liabilities 62 597 75 632 Current liabilities : Short term borrowings and financial debts Note 3.9 12 832 6 933 Lease liability - short term (< 1 year) Note 3.10 623 530 Provisions for risks and expenses 113 130 Trade accounts payable Note 3.12 18 005 18 525 Other financial liabilities Note 3.12 3 906 6 201 Other current liabilities Note 3.13 6 277 2 018 Total current liabilities 41 756 34 337 TOTAL LIABILITIES 102 404 113 200 9 CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended September 30, (amounts in thousands of euros) 2024 2023 Operations Net income - Group share without discontinued operations (4 934) 59 Net income - Minority share (15) 21 Depreciation and amortization 8 610 7 168 Unrealised gains and losses relating to changes in fair value 0 0 Change in the fair value of securities-related liabilities 0 0 Capital gains or losses on the disposal of assets (0) 146 Share of income from associates consolidated using the equity method 0 0 Income and expenses due to share-based payments and similar 0 82 Operating cash flow after net financial debt cost and taxes 3 661 7 476 (Income from financial investments) / Cost of financial debt 2 353 1 000 Taxes (Income) / Cost 50 (24) Operating cash flow before net financial debt cost and taxes 6 064 8 452 Change in working capital requirement : Inventory (33) 1 Trade accounts and notes receivable 7 136 4 460 Deferred costs (129) 491 Trade notes and accounts payable (4 759) (4 471) Deferred income 4 110 (779) Tax paid 0 0 Net cash flow from operations Note 5.1 12 388 8 155 Investment activities Acquisition of intangible assets (15 449) (11 197) Acquisition of other intangible assets 0 0 Acquisition of property and equipment (4) (4 173) Income on disposal of intangible assets and property, plant and equipment 99 57 Net change in financial assets (131) 89 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 (15 485) (15 225) Financing activities Dividends paid 0 0 Increase in capital 0 0 Capital increase expenses 0 0 Net increase in bank borrowings and overdrafts 0 4 612 Net decrease in bank borrowings and overdrafts (5 753) (9 288) Decrease in lease liability (179) (1 595) Net change in treasury shares 0 0 Interest expenses paid (1 180) (1 534) Interest income received and net gain/loss from disposals (267) 682 Net cash flow from financing activities Note 5.1 (7 380) (7 124) Overall change in cash position (10 476) (14 193) Incidence of foreign exchange rate change (190) 76 Opening cash position 46 308 55 688 Cash position at the end of period 35 642 41 571 broken down into: Marketable securities 0 649 Cash and cash equivalents 35 642 40 923 Overdraft 0 ( 0) 10