FFI Holdings Plc (ISE:FFI)

FFI Holdings Plc (ISE:FFI)


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FFI Holdings Plc RNS Release

Half-year Report


RNS Number : 9017K
FFI Holdings PLC
19 December 2018
 

 

 

                                                                                                    

FFI Holdings PLC

 

("FFI" or "the Company")

 

Interim results for the six months ended 30 September 2018

 

London, 19 December 2018 - FFI Holdings PLC (AIM: FFI), a world-leading provider in the provision of diversified services across the entertainment industry, is pleased to present its unaudited financial results for the six months ended 30 September 2018 (H1 2019).

 

Financial Highlights:

-      Revenue up 91% to $45.6m (H1 2018: $24.0m), comprised of:

Completion Contract revenues of $16.8m (H1 2018: $18.9m)

Editing Equipment Rental revenues of $9.9m (H1 2018: $5.0m)

Insurance Agency revenues of $10.9m, following acquisition of Reel Media in Dec 2017

Technical Services revenues of $2.8m, following acquisition of Buff Dubs in Dec 2017

Content Distribution revenues of $5.2m, following acquisition of Signature in April 2018

-      Gross profit of $28.3m, an increase of 53% (H1 2018: $18.5m)

-      Underlying EBIT of $6.0m down 15% (H1 2018: $7.1m)*

-      Reported EBIT of $4.6m (H1 2018: -$2.1m)

-      Pre-tax profit of $4.7m (H1 2018: - $2.1m)

-      After-tax profit from continuing operations of $3.4m (H1 2018: -$3.7m)

-      Underlying FD EPS of 3.0c (H1 2018: 3.9c)

-      Underlying operating cash flow of $4.9m (H1 2018: $7.5m)

-      Cash at 30 September of $16.0m (H1 2018: $44.0m)

 

* Represents operating income, adjusted for exceptional costs of $1.0m, acquisition-related amortisation of $0.9m, less gain from sale of minority interest investment of $0.5m

 

Mid-Year Operational Highlights:

 

-     Completion Contracts: Volume grew by 2% (77 titles in H1 2018 as compared to 74 titles in H1 2017). The Group maintained its average fee of production budgets. During H1 2019, fewer large budget productions resulted in the average budget per new order decreasing by 14% to $11.2 million in the period (H1 2018: $12.9m), which resulted in lower revenue despite providing more completion contracts in the period. The Group's pipeline shows more larger budget titles likely in H2 2019.

 

-      Editing Equipment Rental: Pivotal Post and EPS-Cineworks continue to meet expectations, with growth in available editing suites and steady utilization rates.

 

-   Insurance Agency: Reel Media continued to ramp up its business during H1 2019.  The Group is experiencing more consistent cash flows with particularly strong growth expected in H2 2019. Reel Media is expected to exceed the Board's expectations through the end of the year.   

 

-      Technical Services: Buff Dubs is benefiting from strong demand from its streaming clients resulting from growth in Australia and Asia.

 

-      Content Distribution: Signature Entertainment is experiencing an uptick in licensing deals, as it continues to meet demand for content from its distribution channels and streaming companies.   IMAX Pandas documentary continues to receive rave reviews from viewers and critics. The roll out of the film has been slower than anticipated, with the Chinese release anticipated to occur in 2019. As previously disclosed, the ultimate timing of cash flows will be dependent on theatre availability and is subject to IMAX's release schedule, in particular the Group is awaiting schedule release dates for China. The Group now expects to start generating significant income from Panda in FY 2020 after recouping its initial distribution costs. 

 

Commenting on the Group's results, Steven Ransohoff, CEO of FFI, said:

 

"We began the first half of fiscal 2019 with a diverse mix of revenues from across our platform. Our transformation reflects the successful acquisition strategy which began in 2017. This strategy, coupled with the rising demand for content, positions us well for future growth. FFI's deep industry knowledge, expertise and broad network of services provides us with a significant market advantage across our business verticals and uniquely positions us to capitalise on the opportunities available for servicing the diverse needs of content creators globally.

The businesses we acquired since the IPO have performed in accordance with and in some cases beyond our expectations. Equipment Rental, Insurance, Technical Services and Content have all performed very well and are expected to grow into the future. Whilst Completion Contracts continue to be an important part of our business, performance has been muted. Whilst we are involved with more productions in H1 2018, the films have lower budgets and we have experienced higher claims activity than in the last two years. Based on the pipeline of projects we expect the balance of the year should produce better performance in the Completion Contract business.

H1 numbers have begun to reflect the broadening of our sales mix, with material revenue contributions seen from our equipment rental, insurance agency and content distribution verticals, and we remain focused on continuing to grow these diversified business segments which have been performing at or above expectations. As has been historically the case, we expect a busy second half to our fiscal year, as we are seeing a strong completion contracts and entertainment insurance agency pipeline."

Steven Ransohoff, CEO

19 December 2018

 

About FFI Holdings PLC

 

FFI Holdings PLC is the holding company of Film Finances Inc., a leading provider of diversified services across the entertainment industry. FFI was formerly focused on completion contracts to the entertainment industry, and over successive decades, has grown globally to become a trusted, iconic brand at the centre of the film industry.

 

Founded in the 1950s, FFI soon established itself as the world leader in completion guarantees to the entertainment industry, offering assurance to financiers that productions will be completed on time and on budget. These guarantees serve to offload risks to production budgets and timelines for financiers, as well as for FFI through long-standing insurance relationships.

 

FFI listed on the AIM market in June 2017 and has diversified its business beyond completion contracts to provide services across the broader entertainment landscape. FFI is also present in China, where it provides a growing range of entertainment-related services including completion contracts to the domestic film making industry.

 

Headquartered in Los Angeles, USA, FFI has 11 offices globally, including in London, Stockholm, Toronto, New York, Cape Town, Cologne and Shanghai.

  

ENQUIRIES:                                                                             

Hawthorn Advisors (Public Relations)                       

Victoria Ainsworth                                                         

+44 (0) 20 3745 3815                                          

 

FFI Holdings PLC

David Sasso, Head of Investor Relations

+1 310 275 7323

  

Liberum (Nominated Adviser and Corporate Broker) 

Steve Pearce

Joshua Hughes

+44 (0) 3100 2000

 

This announcement contains inside information.

 

Review of Operations

 

Group Overview

 

Group revenue for the first six months of the financial year increased by 91% YOY to $45.6m (H1 2018: $24.0m), as contributions from acquisitions in FY18 were realised. Adjusting for exceptional costs of $1.0m, acquisition-related amortisation of $0.9m, less gain from sale of minority interest investment of $0.5m, underlying EBIT for the Group was $6.0m (H1 2018: $7.1m). Reported EBIT was up to $4.6m versus a loss of $2.1m last year. The Group recorded an after-tax profit of $3.4m, up from a loss of $3.7m in H1 2018.

The Group reported positive operating cash flow in the period of $4.2m (H1 2018: -$4.9m). Cash decreased to $16.0m (H1 2018: $44.0m) due primarily to costs associated with acquisitions.

Whilst Completion Contract revenues continued to deliver the largest segmental contribution to Group sales, making up 37% of total revenue, this is down from 79% of total revenue last year.  This reflects a significant broadening of FFI's sales mix, with new revenue contributions from Editing Equipment Rental, Technical Services, Insurance Agency and Content Distribution business segments.

Despite an increase in the number of new orders, Completion Contracts revenues reduced by 11% to $16.8m (H1 2018: $18.9m) as a result of a decrease in average film budgets in the period. Editing Equipment Rental revenues increased 97% to $9.9m (H1 2018: $5.0m), contributing to 22% of Group total, largely as a result of the acquisition of EPS-Cineworks. The acquisition of Buff Dubs in December 2017 resulted in revenues of $2.8m related to Technical Services (6% of total revenue). Insurance Agency comprised 24% of total Group revenue, at $10.9m, following the acquisition of Reel Media in December 2017. The addition of Signature Entertainment in April 2018 resulted in a Content Distribution contribution of 11% of overall Group revenues, at $5.2m for the period.

By geography, North America continued to be FFI's biggest market in terms of revenue (65% of total) increasing 71% to $29.9m from the previous year (H1 2018: $17.5m). This was followed by Europe which delivered revenue of $7.8m (17% of total), up from $2.9m last year and Asia, with $3.1m in revenues representing 7% of total revenue (H1 2018: $2.5m).

 

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Asia

                3,149,915

                2,519,290

                5,302,189

Australia

                4,729,384

                   912,472

                2,964,810

Europe

                7,801,268

                2,858,199

                6,357,528

Middle East & Africa

                      69,747

                   139,541

                   146,179

North America

              29,890,003

              17,526,218

              41,828,666

South America

                               -  

                               -  

                2,000,000

 

              45,640,317

              23,955,720

              58,599,372

 

Completion Contracts

Despite an increase in the number of new orders (77 in H1 2019 versus 74 in H1 2018), the Group's Completion Contract business delivered reduced revenues of $16.8m for the period (H1 2018: $18.9m), including China revenues.  This was primarily due to a reduction in the average film budget size from $12.9m (H1 2018) to $11.2m (H1 2019), as some larger projects started later than expected.  New order fees were $13.9m (H1 2018: $15.2m). With the new captive insurance arrangement, gross insurance costs fell to 24.0% of net completion guarantee fees, excluding China (H1: 2018: 40.0%).  Claims expense of $1.6m (H1 2018: $0.2m) was higher due to claim reserves on two projects.

 

Completion Contract New Order Fees*

 

H1 2018

H1 2017

Number of New Orders

77

74

Total Net Fees ($mn)

13.9

 15.2

Total Bonded Budgets ($mn)

 859.7

962.5

 

 

 

Average Budget per New Order ($mn)

11.2

      13.0

 

 

 

* Excludes revenue related to China licensing arrangement

Editing Equipment Rental

Revenues from Pivotal Post (acquired in February 2017) and EPS-Cineworks (acquired in November 2017) made a contribution of $9.9m to the Group's revenue performance over the six-month period, representing an almost twofold increase from the previous year (H1 2018: $5m Pivotal Post only), in line with estimates. This has been supported by an increase in the average number of available equipment and suite rental units, at 521 and 289, respectively (up from 275 and 112 in H1 2018 - related to Pivotal only).

Technical Services

Buff Dubs was acquired by FFI in December 2017 and is a post-production services company based in Australia, with capabilities in encoding, transcoding, media duplication, and mastering for film and television productions. This is still a new operating segment for the Group, contributing $2.8m of revenue (6% of Group revenue).

Insurance Agency

 

The Group made two acquisitions in the area of entertainment insurance risk in FY18, including that of Reel Media (December 2017) and the motorsports book of business from All Risks Ltd (January 2018).  In addition, FFI also signed a strategic partnership with Allianz Global Corporate & Speciality (January 2018).  FFI's Insurance Agency segment delivered revenues of $10.9m in H1 2019, representing 24% of Group revenue. The division delivered total net commissions of $6.4m, and, with a strong pipeline for the rest of the year, is tracking to the Board's full year estimates.

Content Distribution

FFI's Content Distribution segment delivered revenues of $5.2m in the six-month period, representing 11% of total revenue, primarily from the acquisition of Signature Entertainment in April 2018. Signature is a film distributor in the UK and acts as an aggregator for streaming companies.

Outlook

 

The Board is pleased with the progress and integration of acquired businesses and operations in our Editing & Equipment Rental, Technical Services, and Insurance Agency businesses. These businesses are all trading in line with or even ahead of our original expectations. In that light, it is disappointing to report that Underlying EBIT for the Group for the full year is expected to be below previous expectations because of the impact of delays in the timing of revenues from certain larger budget titles within the Completion Contracts business and of revenues associated with the Pandas Documentary within the Content Distribution business. The Board looks forward to providing updates in this regard in due course. Separately, the Board is clearly disappointed by the Company's poor share price performance since IPO and is committed exploring the options to address this issue.

 

FFI Holdings Plc

 

 

 

 

Consolidated statement of comprehensive income

 

 

 

for the period ended 30 September 2018

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

6 months

6 months

year

 

 

ended

ended

ended

 

 

30 September

30 September

31 March

 

 

2018

2017

2018

 

Note

USD

USD

USD

Continuing operations

 

 

 

 

Revenue

3

             45,640,317

             23,955,720

             58,599,372

Costs related to revenue

 

           (17,322,622)

             (5,438,706)

           (14,034,127)

Gross profit

 

             28,317,695

             18,517,014

             44,565,245

 

 

 

 

 

Administrative and other expenses

 

           (23,338,105)

           (11,932,789)

           (29,427,829)

Exceptional costs

4

                (961,072)

             (8,874,975)

           (10,698,413)

Other income

 

                  606,823

                  197,668

                  588,403

Operating profit/(loss)

 

               4,625,341

             (2,093,082)

               5,027,406

 

 

 

 

 

Financing income

 

                  102,169

                    36,369

                    35,959

Finance costs

 

                  (24,166)

                    (1,034)

                  (76,695)

 

 

               4,703,344

             (2,057,747)

               4,986,670

 

 

 

 

 

Net profit from joint venture

 

                    11,777

-

                    25,723

Profit/(loss) before taxation

 

               4,715,121

             (2,057,747)

               5,012,393

 

 

 

 

 

Taxation

6

             (1,277,380)

             (1,687,389)

             (3,678,363)

Profit/(loss) for the period from continuing operations

               3,437,741

             (3,745,136)

               1,334,030

 

 

 

 

 

Discontinued operations

 

 

 

 

Profit for the period from discontinued operations

20

                    45,371

                  136,994

                  157,679

Profit/(loss) for the period

 

               3,483,112

             (3,608,142)

               1,491,709

 

 

 

 

 

Total profit/(loss) for the period attributable to:

 

 

 

 

     Owners of the Company

 

               3,498,470

             (3,682,918)

               1,428,769

     Non-controlling interest

 

                  (15,358)

                    74,776

                    62,940

Other comprehensive (loss)/income from continuing
   operations, net of income tax

 

               3,483,112

             (3,608,142)

               1,491,709

Exchange difference on translating foreign
   operations attributable to Owners of the Company

 

                (214,991)

                  106,238

                  237,075

Total other comprehensive income from continuing
   operations attributable to Owners of the Company

 

                (214,991)

                  106,238

                  237,075

Exchange difference on translating foreign
   operations attributable to non-controlling interests

 

                    (2,901)

                      7,591

                      8,815

Total comprehensive income/(loss) for the 
   period from continuing operations

 

               3,265,220

             (3,494,313)

               1,737,599

 

 

 

 

 

Total comprehensive income/(loss) attributable to:

 

 

 

 

     Owners of the Company

 

               3,283,479

             (3,576,680)

               1,665,844

     Non-controlling interest

 

                  (18,259)

                    82,367

                    71,755

 

 

               3,265,220

             (3,494,313)

               1,737,599

 

 

 

 

 

Earnings/(loss) per share attributable to owners of the parent

 

 

 

Total

 

 

 

 

   Basic (cents)

7

                        2.22

                      (2.51)

                        0.94

   Diluted (cents)

7

                        2.21

                      (2.48)

                        0.93

 

 

 

 

 

Continuing operations

 

 

 

 

   Basic (cents)

7

                        2.18

                      (2.56)

                        0.88

   Diluted (cents)

7

                        2.18

                      (2.52)

                        0.87

 

 

FFI Holdings Plc

 

 

 

 

Consolidated statement of financial position

 

 

 

as at 30 September 2018

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

30 September

30 September

31 March

 

 

2018

2017

2018

 

Note

USD

USD

USD

Assets

 

 

 

 

Non-current

 

 

 

 

Goodwill

11

             35,283,256

               9,871,423

             31,215,954

Intangible assets

12

             21,620,441

               7,579,951

             15,468,359

Film rights, net

13

               5,803,590

                            -  

                            -  

Investments

 

                            -  

                  283,113

                  283,113

Investment in a joint venture

 

                  422,500

                            -  

                  410,723

Other non-current assets

 

               2,271,342

                  909,220

               1,490,890

Property, plant and equipment

 

               5,882,762

               2,929,589

               4,647,389

Deferred tax assets

 

               1,702,744

               1,954,389

               1,626,893

Non-current assets

 

             72,986,635

             23,527,685

             55,143,321

 

 

 

 

 

Current

 

 

 

 

Trade and other receivables

14

             33,563,129

               7,779,423

             18,512,663

Other current assets

 

               3,792,767

               2,595,298

               2,631,936

Restricted cash

15

             73,633,959

             62,604,967

             68,382,153

Cash and cash equivalents

 

             15,994,381

             43,967,107

             23,552,491

 

 

           126,984,236

           116,946,795

           113,079,243

Assets classified as held for sale

 

                            -  

                  216,044

                            -  

Current assets

 

           126,984,236

           117,162,839

           113,079,243

Total assets

 

           199,970,871

           140,690,524

           168,222,564

 

 

 

 

 

Liabilities

 

 

 

 

Current

 

 

 

 

Trade and other payables

16

             55,100,703

             21,289,930

             28,004,345

Income tax payable

 

               1,022,196

               2,949,990

                  316,323

Payable to productions

 

             54,338,329

             50,557,951

             56,119,649

Provision for losses

 

               2,121,203

                  663,749

                  609,556

Borrowings

17

                  107,114

               1,954,137

               3,783,419

Current liabilities

 

           112,689,545

             77,415,757

             88,833,292

 

 

 

 

 

Non-current

 

 

 

 

Borrowings

17

                  432,661

                  486,629

                  379,415

Other payables

18

             19,731,450

               1,709,000

             15,208,995

Deferred tax liabilities

 

               1,641,339

               4,667,661

               1,631,578

Non-current liabilities

 

             21,805,450

               6,863,290

             17,219,988

Total liabilities

 

           134,494,995

             84,279,047

           106,053,280

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

               2,045,666

               2,035,570

               2,035,570

Share premium

 

             38,539,508

             38,539,508

             38,539,508

Other reserve

 

             14,731,074

             14,731,074

             14,731,074

Merger reserve

 

           (16,384,976)

           (16,384,976)

           (16,384,976)

Foreign exchange

 

                (302,283)

                (218,129)

                  (87,292)

Share based payment reserve

 

               1,257,354

               3,174,652

               3,807,511

Retained earnings

 

             25,467,156

             14,312,291

             19,423,978

Total equity attributable to owners of the Company

             65,353,499

             56,189,990

             62,065,373

Non-controlling interests

 

                  122,377

                  221,487

                  103,911

Total equity

 

             65,475,876

             56,411,477

             62,169,284

  

 

FFI Holdings Plc

 

 

 

 

Consolidated statements of cash flows

 

 

 

 

for the period ended 30 September 2018

 

 

 

 

 

 

Unaudited

Unaudited

Audited

 

 

six months

six months

year

 

 

ended

ended

ended

 

 

30 September

30 September

31 March

 

 

2018

2017

2018

 

Note

USD

USD

USD

Cash flows from operating activities

 

 

 

 

Profit/(loss) before taxation including discontinued
   operations

 

               4,760,492

             (1,920,753)

               5,144,349

Adjustments for:

 

 

 

 

Share based payments

10

                  281,270

               3,174,652

               3,807,511

Depreciation

 

                  981,997

                  569,883

               1,680,328

Amortisation of intangible assets

12

                  963,094

                  129,503

                  643,513

Finance costs

 

                            -  

                            -  

                    99,643

Gain on sale of financial assets

 

                (516,887)

                            -  

                            -  

(Gain)/loss on disposal of subsidiary

 

                  (45,371)

                  136,994

                  157,679

Net foreign exchange (gain)/loss

 

                (217,892)

                  113,829

                  245,890

 

 

               6,206,703

               2,204,108

             11,778,913

Increase in working capital:

 

 

 

 

Increase in restricted cash

15

             (7,033,126)

             (7,915,180)

             (6,851,698)

(Increase)/decrease in accounts receivable

 

           (10,989,944)

               1,391,696

                (640,836)

(Increase)/decrease in other assets

 

                (570,328)

               1,434,291

               2,202,656

Increase in film rights, net

 

             (1,147,047)

                            -  

                            -  

Increase/(decrease) in trade and other payables

 

             16,464,329

                  694,956

             (2,511,781)

Increase/(decrease) in provision for losses

 

               1,511,647

                (113,497)

                (167,690)

Increase/(decrease) in deferred revenue

 

                  148,003

             (1,086,779)

             (1,218,839)

Cash generated from operations

 

               4,590,237

             (3,390,405)

               2,590,725

Interest paid

 

                  (24,166)

                  (22,298)

                  (67,733)

Income taxes paid

 

                (391,500)

             (1,503,696)

             (8,420,884)

Net cash generated from/(used in) operating activities

               4,174,571

             (4,916,399)

             (5,897,892)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Proceeds on sale of financial assets

 

                  800,000

                            -  

                  216,044

Purchases of intangible assets

 

             (2,269,376)

             (2,236,466)

             (3,897,010)

Purchase of property, plant and equipment

 

             (2,024,847)

                (542,036)

             (1,502,812)

Loan amounts advanced to employees

 

                            -  

                            -  

                            -  

Loan repayments by employees

 

                    34,818

               3,224,491

               3,275,871

Net cash outflow on acquisition of subsidiary

 

             (4,391,367)

                            -  

           (18,223,228)

Net cash (used in)/generated from investing activities

             (7,850,772)

                  445,989

           (20,131,135)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Net proceeds from issue of share capital

 

                            -  

             38,811,676

             38,811,676

Distribution of capital to non-controlling interests

 

                            -  

                            -  

                (106,964)

Net cash used in settlement of share options

 

                (183,850)

                            -  

                            -  

Acquisition of non-controlling interest

 

                  (75,000)

                            -  

                            -  

Proceeds from borrowings

17

                            -  

               1,750,000

               3,500,000

Repayment of borrowings

17

             (3,623,059)

             (5,271,030)

             (5,770,065)

Net cash (used in)/generated by financing activities

             (3,881,909)

             35,290,646

             36,434,647

 

 

 

 

 

Net decrease in cash and cash equivalents

 

             (7,558,110)

             30,820,236

             10,405,620

Cash and cash equivalents at the beginning of the year

             23,552,491

             13,146,871

             13,146,871

Cash and cash equivalents at the end of the year

             15,994,381

             43,967,107

             23,552,491

 

 

 

FFI Holdings Plc

Consolidated statements of changes in equity

for the period ended 30 September 2018

 

Equity attributable to owners of the parent

 

 

 

 

Share

Share

Treasury

Other

Merger

Foreign

Share

Retained

Total equity

Non-

Total

 

capital

premium

shares

reserve

reserve

exchange

based

earnings

attributable

controlling

equity

 

 

 

 

 

 

 

payment

 

to owners of

interest

 

 

 

 

 

 

 

 

reserve

 

the parent

 

 

 

USD

USD

USD

USD

USD

USD

USD

USD

USD

USD

USD

Balance at 31 March
   2017 (Audited)

      1,763,402

                  -  

                  -  

    14,731,074

  (16,384,976)

       (324,367)

                  -  

    17,995,209

     17,780,342

         139,120

    17,919,462

(Loss)/profit for the period

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

    (3,682,918)

     (3,682,918)

           74,776

    (3,608,142)

Other comprehensive
   income for the period

                  -  

                  -  

                  -  

                  -  

                  -  

         106,238

                  -  

                  -  

          106,238

             7,591

         113,829

Total comprehensive
   income/(loss) for the
   period

                  -  

                  -  

                  -  

                  -  

                  -  

         106,238

                  -  

    (3,682,918)

     (3,576,680)

           82,367

    (3,494,313)

Issue of shares during the
   period

         272,168

    40,553,072

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

    40,825,240

Issuance costs

                  -  

    (2,013,564)

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

     (2,013,564)

                  -  

    (2,013,564)

Equity settled share based
   payments

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

      3,174,652

                  -  

                  -  

      3,174,652

Balance at 30 September
   2017 (unaudited)

      2,035,570

    38,539,508

                  -  

    14,731,074

  (16,384,976)

       (218,129)

      3,174,652

    14,312,291

     56,189,990

         221,487

    56,411,477

Profit/(loss) for the period

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

      5,111,687

       5,111,687

         (11,836)

      5,099,851

Other comprehensive
   income for the period

                  -  

                  -  

                  -  

                  -  

                  -  

         130,837

                  -  

                  -  

          130,837

             1,224

         132,061

Total comprehensive
   income/(loss) for the
   period

                  -  

                  -  

                  -  

                  -  

                  -  

         130,837

                  -  

      5,111,687

       5,242,524

         (10,612)

      5,231,912

Equity settled share based
   payments

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

         632,859

                  -  

                  -  

         632,859

Disposal of subsidiary

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                    -  

           (1,930)

           (1,930)

Distribution of capital to
   non-controlling interests

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

       (105,034)

       (105,034)

Balance at 31 March
   2018 (Audited)

      2,035,570

    38,539,508

                  -  

    14,731,074

  (16,384,976)

         (87,292)

      3,807,511

    19,423,978

     62,065,373

         103,911

    62,169,284

Profit for the period

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

      3,498,470

       3,498,470

         (15,358)

      3,483,112

Other comprehensive
   loss for the period

                  -  

                  -  

                  -  

                  -  

                  -  

       (214,991)

                  -  

                  -  

        (214,991)

           (2,901)

       (217,892)

Total comprehensive
   income/(loss) for the
   period

                  -  

                  -  

                  -  

                  -  

                  -  

       (214,991)

                  -  

      3,498,470

       3,283,479

         (18,259)

      3,265,220

Discontinued
   operations (note 20)

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

         (38,275)

         (38,275)

Acquisition of subsidiary with
   non-controling interest
   (note 19)

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                    -  

           75,000

           75,000

Net settlement of share options

           10,096

                  -  

                  -  

                  -  

                  -  

                  -  

              -

(286,719)

        (276,623)

                  -  

       (276,623)

Adjustment to share based
   payment reserve

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

(2,831,427)

(2,831,427)

                  -  

                  -  

Equity settled share based
   payment reserve

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

         281,270

                  -  

                  -  

         281,270

Balance at 30 September
   2018 (Unaudited)

      2,045,666

    38,539,508

                  -  

    14,731,074

  (16,384,976)

       (302,283)

      1,257,354

    25,467,156

     65,353,499

         122,377

    65,475,876

         

  

 

Notes to the Consolidated Interim report

For the six months ended 30 September 2018

1.  Nature of operations and general information

FFI Holdings Plc (the "Company") is the holding company of a group of companies (the "Group"), which collectively serves as a diversified service provider to the film and entertainment industry with activities across completion contracts, editing equipment and editing suite rentals, post production technical services, insurance services and content distribution.

The address of FFI Holdings Plc's registered office and principal place of business is 9000 Sunset Boulevard, Suite 1400, Los Angeles, CA 90069, United States. 

FFI Holdings Plc's shares are listed on the London Stock Exchange's AIM market. 

FFI Holdings Plc's consolidated financial statements are presented in US Dollars, which is the functional currency of the operating subsidiaries. 

2.  Accounting policies

2.1 Basis of preparation

The condensed consolidated interim financial information for the half year ended 30 September 2018 was approved by the Board of Directors and authorised for issue on 19 December 2018.  The condensed consolidated interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies at Companies House. The auditor's report on the statutory accounts for the year ended 31 March 2018 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006. The comparative information for the year ended 31 March 2018 presented in these condensed consolidated interim financial statements has been extracted from those accounts.

The consolidated annual financial statements for the year ended 31 March 2018 were prepared in accordance with IFRS adopted for use in the European Union (IFRS). Accordingly, these condensed, consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of IFRS and using accounting policies consistent with those which were adopted by the Group in the financial statements for the year ended 31 March 2018 and which will be used in the preparation of the financial statements for the year ended 31 March 2019.  

IFRS 9 'Financial Instruments' became effective for annual periods beginning on or after 1 January 2018. This new standard introduces a classification and measurement approach for a variety of financial assets of which, except for trade receivables and borrowings, the Group has no dealings. For receivables, IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss' (ECL model), which is to be calculated based on actual historical credit losses, of which the Group has had a negligible amount. The Group continues to evaluate the impact of IFRS 9 across all segments and does not believe that the new classification requirements will have a material impact on its account for trade receivables or loans that are managed on a fair value basis.

IFRS 15 'Revenue Recognition' became effective for accounting periods beginning on or after 1 January 2018.  The majority of the Group's contracts with customers are not complex, with revenue being fixed and earned over a certain period of time.  The Group continues to evaluate the impact of IFRS 15 across all operating segments and believes that all policies are in accordance with IFRS 15 and that there is no impact on revenue from the adoption of this standard. 

There were no other new relevant standards or interpretations to be adopted for the six months ended 30 September 2018. 

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  Thus, they continue to adopt the going concern basis of accounting in preparing their half-yearly financial statements. 

2.2 Capital reorganisation

On 30 June 2017 FFI Holdings Plc entered into a share for share agreement with the ultimate beneficiaries of Film Finances, Inc. and Subsidiaries, whereby 136,043,872 new ordinary shares of £0.01 each were issued to the ultimate beneficiaries of Film Finances, Inc. and Subsidiaries in exchange for their shares in Film Finances, Inc. and Subsidiaries in the same proportion as their shareholding in Film Finances, Inc. and Subsidiaries.  The transaction has been treated as a capital reorganisation and merger accounting principles applied in consolidating the results of FFI Holdings Plc and Film Finances, Inc. and Subsidiaries. 

 

The comparatives used within the consolidated interim financial statements reflect the financial performance and position of Film Finances, Inc. and Subsidiaries. The impact of merger accounting is to reflect the group as though it had always been in existence.  Therefore the prior periods comparatives reflect those of Film Finances, Inc. and Subsidiaries.  In the current period, the results reflect those of the whole group for the whole period.  The only change to the reported balance sheet position is to reflect the share capital of FFI Holdings Plc rather than that of Film Finances, Inc. and Subsidiaries.  The difference between the nominal value of the shares issued by FFI Holdings Plc in consideration for the share capital of Film Finances, Inc. and Subsidiaries and the share capital of Film Finances, Inc. and Subsidiaries is taken to the merger reserve. 

At 15 June 2018, the Group settled share options on a net basis in accordance with the amendment to IFRS 2 'Share-based Payment.'  The group issued shares equal to the fair market value of shares vested at date exercised less the employee's tax obligation due to this transaction, see note 10. 

3.  Segmental Information

For management purposes, the Group is organised into five operating segments; completion contracts, editing equipment rentals, technical services, insurance agency, and content distribution.  The tax credit financing segment was discontinued during the period, see note 20.  These segments are the basis on which the Group reports internally to the Directors, who have been identified as the chief operating decision makers.    

Revenue and costs not included in one of these operating segments, for example corporate overhead, have not been allocated to an operating segment in line with the way they are reported to the chief operating decision makers. 

The principal activities of the operating segments are as follows:

Completion Contracts

The main segment of the Group is to provide completion contracts to financers and distributors in connection with the production of film and television content.

Editing Equipment Rental

A segment of the Group provides film editing equipment and editing suite rentals.  The Group acquired EPS-Cineworks, Inc. on 10 November 2017 to expand the editing equipment rentals segment.  EPS-Cineworks, Inc. provides post-production equipment rental and software services with a focus on theatrical and television productions in North America.  

Technical Services

Buff Dubs was acquired on 1 December 2017 and is a post-production services company in Australia with capabilities in encoding, transcoding, media duplication, and mastering for film and television productions.  DAMSmart was acquired on 3 July 2018 to expand the technical services of the Group, see note 19. 

Insurance Agency

Reel Media LLC was acquired on 20 December 2017 and is an insurance agency that helps provide insurance agency services for a variety of entertainment events including film, television, theatre, and concerts. 

Content Distribution

A segment of the Group acquires and distributes film content.  Signature Entertainment, a film distribution company based in the United Kingdom, was acquired on 24 April 2018 to expand the Group's content distribution segment, see note 19. Liquid Light was acquired during the period on 10 April 2018, see note 19.

 


For the six months
   ended 30 
   September 2018

Completion
Contracts

USD

Editing
Equipment
Rental
USD

Technical
Services

USD

Insurance
Agency

USD

Content
Distribution

USD

Unallocated
Corporate
Expenses
USD

Group


USD

Total revenue

16,837,358

9,851,405

2,769,479

10,945,241

5,236,834

-

45,640,317

Gross profit

12,573,699

5,445,449

1,513,209

6,630,115

2,155,223

-

28,317,695

Operating
   Profit/(loss)

1,427,423

1,360,563

355,261

1,769,403

673,763

(961,072)

4,625,341

Finance income

92,795

-

1,024

8,350

-

-

102,169

Finance costs

(2,027)

(16,776)

(5,363)

 

 

-

(24,166)

 

1,518,191

1,343,787

350,922

1,777,753

673,763

(961,072)

4,703,344

Net profit from
   joint venture

-

-

-

11,777

-

-

11,777

Profit before
   taxation

1,518,191

1,343,787

350,922

1,789,530

673,763

(961,072)

4,715,121

 

 


For the six months
   ended 30
   September 2017

Completion
Contracts

USD

Editing
Equipment
Rental
USD

Technical
Services

USD

Insurance
Agency

USD

Content
Distribution

USD

Unallocated
Corporate
Expenses
USD

Group


USD

Total revenue

    18,950,593

      5,005,127

                  -  

                  -  

                  -  

                  -  

    23,955,720

Gross profit

    15,659,691

      2,857,323

                  -  

                  -  

                  -  

                  -  

    18,517,014

Operating
Profit/(loss)

      5,590,050

      1,191,843

                  -  

                  -  

                  -  

    (8,874,975)

    (2,093,082)

Finance income

           36,369

                  -  

                  -  

                  -  

                  -  

                  -  

           36,369

Finance costs

           (1,034)

                  -  

                  -  

                  -  

                  -  

                  -  

           (1,034)

 

      5,625,385

      1,191,843

                  -  

                  -  

                  -  

    (8,874,975)

    (2,057,747)

Net profit from
joint venture

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

                  -  

Profit before  taxation

      5,625,385

      1,191,843

                  -  

                  -  

                  -  

    (8,874,975)

    (2,057,747)

 

3.  Segmental Information (continued)



For the year ended 31 March 2018

Completion
Contracts

USD

Editing
Equipment
Rental
USD

Technical
Services

USD

Insurance
Agency

USD

Content
Distribution

USD

Unallocated
Corporate
Expenses
USD

Group


USD

Total revenue

    39,527,383

    13,806,215

      1,073,939

      2,191,835

      2,000,000

                  -  

    58,599,372

Gross profit

    34,284,721

      7,551,319

         460,909

      1,268,296

      1,000,000

                  -  

    44,565,245

Operating
   Profit/(loss)

    13,695,762

      2,430,585

       (203,971)

    (1,196,557)

      1,000,000

  (10,698,413)

      5,027,406

Finance income

           31,784

                  -  

                  -  

             4,175

                  -  

                  -  

           35,959

Finance costs

         (33,421)

         (41,617)

           (1,657)

                  -  

                  -  

                  -  

         (76,695)

 

    13,694,125

      2,388,968

       (205,628)

    (1,192,382)

      1,000,000

  (10,698,413)

      4,986,670

Net profit from
   joint venture

                  -  

                  -  

                  -  

           25,723

                  -  

                  -  

           25,723

Profit before
   taxation

    13,694,125

      2,388,968

       (205,628)

    (1,166,659)

      1,000,000

  (10,698,413)

      5,012,393

 

Geographical segments

The Group's revenue from continuing operations from external customers by location of operations are detailed below:

 

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Asia

                  3,149,915

                  2,519,290

                  5,302,189

Australia

                  4,729,384

                     912,472

                  2,964,810

Europe

                  7,801,268

                  2,858,199

                  6,357,528

Middle East & Africa

                       69,747

                     139,541

                     146,179

North America

                29,890,003

                17,526,218

                41,828,666

South America

                              -  

                              -  

                  2,000,000

 

                45,640,317

                23,955,720

                58,599,372

 

 

4.  Expenses

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Exceptional costs

 

 

 

Initial public offering costs (note 5)

                              -  

                  8,874,975

                  8,874,084

Equity settled share based payments

                     281,270

                              -  

                     632,859

Acquisition costs

                     679,802

                              -  

                  1,191,470

 

                     961,072

                  8,874,975

                10,698,413

 

5.  Initial public offering

On 30 June 2017 the Group published its AIM Admission Document following its successful $38.8m fundraising.  Its ordinary shares of £0.01 each were admitted to trading on the AIM market on 30 June 2017. 

The Group issued 157,041,248 shares at a price of $1.94 per share, valuing the group at approximately $306m on issue and raising $40.8m before expenses.  Total expenses of the Initial public offering ('IPO') and fundraising were $10,888,539, of which $2,013,564 were directly attributable to the issue of the new shares and have been charged to the Share Premium account.  The balance of $8,874,957 has been charged to the Consolidated Income Statement and included within administrative expenses in the period ended 30 September 2017.  . 

To facilitate the IPO, FFI Holdings Plc was incorporated on 30 May 2017 and acquired the entire issued share capital of Film Finances, Inc. and Subsidiaries under a share for share exchange on 30 June 2017.

5.  Initial public offering (continued)

A number of one-off and non-cash items are summarised in the following table. 

 

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Initial public offering costs

 

 

 

Expenses of the IPO - one off

                              -  

                  5,700,323

                  5,699,432

Equity settled share based payment
   transactions - non-cash

                              -  

                  3,174,652

                  3,174,652

 

                              -  

                  8,874,975

                  8,874,084

 

6.  Taxation

The underlying tax charge is based on the expected effective tax rate for the full year to 31 March 2019.  It is estimated that the tax charge in the period will be $1,277,380. 

7.  Earnings per share

Basic earnings per share has been calculated on the earnings after tax for the period and the weighted average number of ordinary shares in issue during the period.  

 

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Weighted average number of shares in issue

            157,430,746

            146,542,561

            151,791,904

Profit for the year attributable to owners of the Company

                3,498,470

               (3,682,918)

                1,428,769

Total basic earnings/(loss) per ordinary share (cents)

                         2.22

                        (2.51)

                         0.94

 

 

 

 

Weighted average number of shares in issue

            157,430,746

            146,542,561

            151,791,904

Share options

                   595,191

                1,918,219

                1,918,219

Weighted average fully diluted number of shares in issue

            158,025,937

            148,460,780

            153,710,123

Total fully diluted earnings/(loss) per share (cents)

                         2.21

                        (2.48)

                         0.93

 

 

 

 

Continuing earnings/(loss) for the year

                3,437,741

               (3,745,136)

                1,334,030

Continuing basic earnings/(loss) per share (cents)

                         2.18

                        (2.56)

                         0.88

Continuing fully diluted earnings/(loss) per share (cents)

                         2.18

                        (2.52)

                         0.87

 

8.  Dividends

No dividends have been paid by the Group in any of the periods presented. 

9.  Share capital

 

Unaudited

Unaudited

Unaudited

 

Number of

Number of

Total

 

ordinary shares

redeemable shares

USD

At 30 May 2017 on incorporation

                             1

                            -  

                            -  

Issued on 30 June 2017

                            -  

                    50,000

                    64,810

Cancellation of shares 30 June 2017

                            -  

                  (50,000)

                  (64,810)

Issued on 30 June 2017 related to share for share agreement

           136,043,872

                            -  

               1,763,402

Issued on 30 June 2017 related to IPO

             20,997,375

                            -  

                  272,168

At 30 September 2017 and 31 March 2018

           157,041,248

                            -  

               2,035,570

Issued on 15 June 2018

                  778,995

                            -  

                    10,096

At 30 September 2018

           157,820,243

                            -  

               2,045,666

 

10.  Share-based payments

On 30 June 2017, the date of admission, the Group granted to two directors and one employee executive options to subscribe for ordinary shares.  All options are equity settled.  The executive options have an exercise price $0.40 per share. 

The table below shows the number of executive options granted to each recipient:

 

Kevin Hyman

President of Rainbow Production Services, LLC

 557,780

Timothy Trankina

Chief Financial Officer

 1,020,329

Antony Mitchell

Chief Operating Officer

 1,020,329

All executive options for Kevin Hyman and Timothy Trankina became fully vested and exercisable at the date of admission.  In the case of Antony Mitchell, one-third of his executive options became fully vested and exercisable at the date of admission, and one-third will vest and become exercisable on each of the first two anniversaries of such date thereafter. 

The executive options were exercised in full or in part by the recipient by following the procedures established by the Group. With respect to the executive options granted to Timothy Trankina, 765,247 of the executive options were exercised on 15 June 2018 and 255,082 of the executive options expire on the fifth anniversary of the date of grant.  All executive options granted to Kevin Hyman were exercised on 15 June 2018.  With respect to the executive options granted to Antony Mitchell, 340,110 of the executive options were exercised on 15 June 2018 and 680,219 expire no later than 15 June following the year in which such portion of his executive options vest.  In each case, if the recipient's employment is terminated, all executive options must be exercised within 90 days after the date of termination, or the date on which such executive options otherwise expire.

At 30 June 2017, the date of admission, the Group had charged $3,174,652 as a share-based payment expense for all executive options fully vested and exercisable at the date of admission.  At 31 March 2018, the Group charged an additional $632,859 as a share-based payment expense for the additional shares for Antony Mitchell that became fully vested and exercisable.  At 31 March 2018 the Group had charged an aggregate amount of $3,807,511 as a share-based payment expense for all executive options fully vested and exercisable. 

At 15 June 2018, the Group settled share options on a net basis by issuing shares equal to the fair market value of shares vested at date exercised less the employee's tax obligation due to this transaction.  As a result, 1,663,137 in executive options were exercised in exchange for 778,995 ordinary shares.  This reduced the share based payment reserve by $2,831,427.  At 30 September 2018, the Group charged an additional $281,270 as a share-based payment expense for the additional shares for Antony Mitchell that became fully vested and exercisable.  At 30 September the Group has charged an aggregate amount of $4,088,781 as a share-based payment expense for all executive options fully vested and exercisable. 

Options were valued using a Black-Scholes model and will be charged through the profit and loss account over the vesting period.  Volatility has been determined based on the historical common stock price volatility of selected guideline public companies over the last three years, as there is no historical stock price volatility for the Group.  The risk-free rate represents the yield on US Treasury noted with a maturity that approximates the expected term of each series of options. 

The assumptions used in valuing the executive options are a risk-free rate range of 1.23% - 1.45%, volatility range of 29% - 30.3%, and an expected life between 0.96 years and 2.5 years.  The weighted average remaining contractual life of the options is 1 year.  The fair value of the series of options has been calculated as $1.65 - $1.66. 

11.  Goodwill

 

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Cost

                31,215,954

                  8,540,934

                  9,871,423

Additional amount recognised from business combinations
   occurring during the period (note 19)

                  4,067,302

                  1,330,489

                21,644,531

Reallocation

                              -  

                              -  

                   (300,000)

Balance at end of period

                35,283,256

                  9,871,423

                31,215,954

 

12.  Intangibles

 

 

Film Distribution Rights
USD

Capitalised
Film
Costs
USD

Trade Name


USD

Non-Competition Agreement
USD

Customer Relationships

USD

Software


USD

Total


USD

Cost

 

 

 

 

 

 

 

At 1 April 2017

       1,000,000

       1,989,016

          220,000

          250,000

       2,280,000

                    -  

       5,739,016

Additions

                    -  

       2,236,466

                    -  

                    -  

                    -  

                    -  

       2,236,466

At 30 September 2017

       1,000,000

       4,225,482

          220,000

          250,000

       2,280,000

                    -  

       7,975,482

Amortisation

 

 

 

 

 

 

 

At 1 April 2017

                    -  

                    -  

            (3,667)

            (3,472)

        (258,889)

                    -  

        (266,028)

Charge for period

                    -  

                    -  

          (22,000)

          (20,833)

          (86,670)

                    -  

        (129,503)

At 30 September 2017

                    -  

                    -  

          (25,667)

          (24,305)

        (345,559)

                    -  

        (395,531)

Net carrying amount at
   30 September 2017

       1,000,000

       4,225,482

          194,333

          225,695

       1,934,441

                    -  

       7,579,951

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

At 1 October 2017

       1,000,000

       4,225,482

          220,000

          250,000

       2,280,000

                    -  

       7,975,482

Additions

                    -  

       1,660,544

                    -  

                    -  

                    -  

                    -  

       1,660,544

Acquired in business combination

                    -  

                    -  

       1,133,941

          907,029

       9,973,441

          122,096

     12,136,507

Disposal

     (1,000,000)

                    -  

                    -  

                    -  

                    -  

                    -  

     (1,000,000)

Reclass to receivable

 

     (4,394,633)

                    -  

                    -  

                    -  

                    -  

     (4,394,633)

At 31 March 2018

                    -  

       1,491,393

       1,353,941

       1,157,029

     12,253,441

          122,096

     16,377,900

Amortisation

 

 

 

 

 

 

 

At 1 October 2017

                    -  

                    -  

          (25,667)

          (24,305)

        (345,559)

                    -  

        (395,531)

Charge for period

                    -  

                    -  

          (93,597)

          (80,731)

        (333,868)

            (5,814)

        (514,010)

At 31 March 2018

                    -  

                    -  

        (119,264)

        (105,036)

        (679,427)

            (5,814)

        (909,541)

 

 

 

 

 

 

 

 

Net carrying amount at
   31 March 2018

                    -  

       1,491,393

       1,234,677

       1,051,993

     11,574,014

          116,282

     15,468,359

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

At 1 April 2018

                    -  

       1,491,393

       1,353,941

       1,157,029

     12,253,441

          122,096

     16,377,900

Additions

                    -  

       2,269,376

                    -  

                    -  

                    -  

                    -  

       2,269,376

Acquired in business combination

                    -  

                    -  

          719,968

          121,272

       4,004,560

                    -  

       4,845,800

At 30 September 2018

                    -  

       3,760,769

       2,073,909

       1,278,301

     16,258,001

          122,096

     23,493,076

Amortisation

 

 

 

 

 

 

 

At 1 April 2018

                    -  

                    -  

        (119,264)

        (105,036)

        (679,427)

            (5,814)

        (909,541)

Charge for period

                    -  

                    -  

        (179,578)

        (131,748)

        (642,776)

            (8,992)

        (963,094)

At 30 September 2018

                    -  

                    -  

        (298,842)

        (236,784)

     (1,322,203)

          (14,806)

     (1,872,635)

Net carrying amount at
   30 September 2018

                    -  

       3,760,769

       1,775,067

       1,041,517

     14,935,798

          107,290

     21,620,441

 

 

13.  Film rights, net

The Group acquired all the assets and liabilities of Signature Entertainment on 25 April 2018, see note 19.  As part of the acquisition the Group acquired film content licenses, which are part of Signature Entertainment's core business.  The film rights are prepaid content costs paid by Signature Entertainment for the distribution rights primarily in the United Kingdom territories.  These costs are capitalised and amortised over the expected life of the film. 

 

 

 

 

Unaudited

 

 

 

Six months ended

 

 

 

30 September

 

 

 

2018
USD

Film rights acquired, see note 19

 

 

                  4,656,545

Additions

 

 

                  2,926,029

Total costs

 

 

                  7,582,574

 

 

 

 

Less: Amortisation

 

 

                (1,778,984)

Balance at end of period

 

 

                  5,803,590

 

Amortisation is charged through cost related to revenues. 

                    

14.  Trade and other receivables

Trade and other receivables consist of the following:

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Trade receivables

                14,361,468

                  1,450,046

                  4,684,233

Rebate receivable

                  3,093,077

                  5,817,911

                  3,122,784

Insurance receivable

                     986,136

                     312,558

                     723,524

Insurance agency receivable

                13,312,032

-

                  4,353,349

Film costs receivable

                     673,553

-

                  4,394,633

Due from joint venture

                     430,143

-

                     430,143

Due from related parties

                     488,301

                     198,908

                     498,941

Other receivables

                     218,419

-

                     305,056

Total

                33,563,129

                  7,779,423

                18,512,663

 

15.  Restricted cash

Restricted cash consist of the following:

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Held in fiduciary capacity for production (i)

                54,338,329

                50,557,951

                56,119,649

Insurance premiums held in escrow (ii)

                     100,121

                  5,343,115

                  2,656,910

Insurance agency (iii)

                10,153,018

                              -  

                  1,782,127

Captive (iv)

                  8,883,847

                  6,703,901

                  7,823,467

Certificate of deposit

                     158,644

                              -  

                              -  

 

                73,633,959

                62,604,967

                68,382,153

 

 

(i)     The Group acts in a fiduciary capacity on behalf of certain financiers of films.  The Group receives cash, which is restricted in use for the production of films.  The Group is required to fund the production of the related films according to the production funding agreement.  The amounts are recorded in restricted cash with the corresponding payable recorded as payable to productions. 

(ii)    For periods prior to 1 October 2017, the Group reserved for approximately 9 percent of net bond fees as insurance premiums to be held in escrow to satisfy insurance premiums in the event that actual claims expense exceed stipulated levels.  To the extent actual claims result in additional insurance premiums due, that incremental premium amount is carried forward to future insurance periods to offset rebates that would otherwise be payable to the Group and, in certain situations, the incremental premium amount is immediately due.

(iii)   The insurance agency restricted cash is related to monies collected by Reel Media, LLC, which are due to underwriters.

(iv)   The captive restricted cash is the cash held by FFI Insurance Limited to cover any potential claims. 

 

 

 

 

 

16.  Trade and other payables

Trade and other payables consist of the following:

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Trade payables

                  6,199,873

                     232,688

                  1,286,475

Accruals

                  3,780,766

                  2,494,482

                  2,125,479

Deferred revenue

                  6,636,145

                  5,397,539

                  5,265,479

No-claim bonus payable

                  2,754,093

                  3,802,376

                  2,609,726

Insurance payable

                  2,749,772

                  8,649,255

                  5,187,468

Insurance agency

                23,131,691

                              -  

                  6,040,900

Other payables

                  9,848,363

                     553,590

                  5,328,818

Due to related parties

                              -  

                     160,000

                     160,000

Total

                55,100,703

                21,289,930

                28,004,345

 

17.  Borrowings

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Non-Current

 

 

 

Term Loan (related party) 2-5 years

                     432,661

                     486,629

                     379,415

 

                     432,661

                     486,629

                     379,415

Current

 

 

 

Term Loan (for funding of capitalised film costs)

                              -  

                  1,750,000

                              -  

Term Loan (related party)

                     107,114

                     204,137

                     210,338

Equipment loans

                              -  

                              -  

                       73,081

Production loan

                              -  

                              -  

                  3,500,000

 

                     107,114

                  1,954,137

                  3,783,419

Total Borrowings

                     539,775

                  2,440,766

                  4,162,834

 

 

18.  Other payables

Other payables consist of the following:

 

 

Rainbow Production Services, LLC
USD

Buff Dubs Pty., Ltd.

USD

Reel Media, LLC

USD

Signature Entertainment

USD

Liquid Light


USD

Total


USD

Balance

 

 

 

 

 

 

At 1 April 2017

       1,709,000

                       -  

                    -  

                    -  

                    -  

       1,709,000

Additions

                    -  

                       -  

                    -  

                    -  

                    -  

                    -  

Reclassification to current

                    -  

                       -  

                    -  

                    -  

                    -  

                    -  

At 30 September 2017

       1,709,000

                       -  

                    -  

                    -  

                    -  

       1,709,000

Additions

                    -  

              877,565

     13,153,000

                    -  

                    -  

     14,030,565

Reclassification to current

        (530,570)

                       -  

                    -  

                    -  

                    -  

        (530,570)

At 31 March 2018

       1,178,430

              877,565

     13,153,000

                    -  

                    -  

     15,208,995

Additions

                    -  

                       -  

                    -  

       4,232,455

          290,000

       4,522,455

Reclassification to current

                    -  

                       -  

                    -  

                    -  

                    -  

                    -  

At 30 September 2018

       1,178,430

              877,565

     13,153,000

       4,232,455

          290,000

     19,731,450

 

19.  Business Combinations

Subsidiaries acquired

 

Principal activity

Date of acquisition

Proportion of voting equity interest acquired

Consideration transferred
USD

Signature Entertainment

Content distribution

25 April 2018

100%

                13,560,004

DAMSmart

Technical services

3 July 2018

100%

                  1,512,432

Liquid Light

Content distribution

10 April 2018

80%

                     375,000

 

 

 

 

                15,447,436

 

Signature Entertainment and Liquid Light were acquired to expand the Group's content distribution segment.   

 DAMSmart was acquired to expand the Group's activities within technical services segment.  

Consideration transferred

 

2018

Signature Entertainment
USD

DAMSmart

USD

Liquid Light

USD

Total

USD

Cash

                  4,808,000

                  1,512,432

                       10,000

                  6,330,432

Contingent consideration

                  6,251,000

                              -  

                     290,000

                  6,541,000

Non-controlling interest

                              -  

                              -  

                       75,000

                       75,000

Deferred consideration

                  2,501,000

                              -  

                              -  

                  2,501,000

 

                13,560,000

                  1,512,432

                     375,000

                15,447,432

 

19.  Business Combinations (continued)

Recognised amounts of identifiable assets acquired and liabilities assumed

2018

Signature Entertainment
USD

DAMSmart

USD

Liquid Light

USD

Total

USD

Current assets

 

 

 

 

Cash and cash equivalents

1,729,478

134,591

-

                  1,864,069

Trade and other receivables

4,465,530

73,568

-

                  4,539,098

Other current assets

-

2,009

-

                         2,009

 

6,195,008

210,168

-

                  6,405,176

Non-current assets

 

 

 

 

Plant and equipment

-

                     192,523

-

                     192,523

Deposits

                     935,670

                         1,295

-

                     936,965

Film costs

                  4,656,545

-

-

                  4,656,545

Identifiable intangible assets

                  4,274,000

                     556,800

15,000

                  4,845,800

 

                  9,866,215

                     750,618

15,000

                10,631,833

Current liabilities

 

 

 

 

Trade and other payables

                (2,491,674)

                       (8,705)

-

                (2,500,379)

Accrued liabilities

                (2,759,158)

                   (152,390)

-

                (2,911,548)

Taxes payable

                   (197,175)

                     (47,773)

-

                   (244,948)

 

                (5,448,007)

                   (208,868)

-

                (5,656,875)

Net balance acquired

                10,613,216

                     751,918

                       15,000

                11,380,134

 

The receivables acquired (which principally comprise trade receivables) in these transactions have a fair value equal to the contractual amount.  There are no contractual cash flows that are not expected to be collected as of the acquisition date.

Goodwill arising on acquisition

The fair value of identifiable net assets is based upon a preliminary assessment.

 20.  Discontinued operations

In September 2018, the Group discontinued the tax credit financing segment with the dissolution of KSD Holdings LLC and DSK Ventures Limited. 

The tax credit financing segment was not previously classified as held for sale or as a discontinued operation. The comparative condensed consolidated statement of profit or loss has been restated to show the discontinued operation separately from continuing operations. 

 

 

Unaudited

Unaudited

Audited

 

Six months ended

Six months ended

Year ended

 

30 September

30 September

31 March

 

2018
USD

2017
USD

2018
USD

Revenue

-

                     283,245

                     290,370

Expenses

                         7,096

                      (22,906)

                      (33,709)

Profit before tax

                         7,096

                     260,339

                     256,661

 

 

 

 

Attributable income tax expense

-

                    (123,345)

                      (88,110)

Profit after tax

                         7,096

                     136,994

                     168,551

 

 

 

 

Non-controlling interests

                       38,275

-

-

Net gain on disposal

                       38,275

-

-

 

 

 

 

Profit for the period from discounted operations of KSD
   Holdings LLC and DSK Ventures Limited

                       45,371

                     136,994

                     168,551

 

 

 

 

Loss for the period from discounted operations of Film
   Finances Scandinavia APS and Nordic Capital Media

-

-

                      (10,872)

Profit for the period from discontinued operations

                       45,371

                     136,994

                     157,679

 

21.  Post balance sheet events

In November 2018, the Group closed on a $1.8m term loan facility under its Signature Entertainment subsidiary.  The loan has a maturity date of October 2019 and an interest rate of 4.5% per annum.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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