UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant to Section 13(a) -16 or 15(d) - 16 of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2015
000-23697
(Commission file number)
EROS INTERNATIONAL PLC
(Exact name of registrant as specified in its charter)
________________________________________
550 County Avenue
Secaucus, New Jersey 07094
(201) 558-9021
(Address of principal executive office)
_______________________________________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☑ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☑
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
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EROS INTERNATIONAL PLC
Form 6-K
Table of Contents
Page Number | ||
Part I. | Financial Information | |
Item 1. | Financial Statements | |
Consolidated Statements of Financial Position as of September 30, 2015 and March 31, 2015 | 3 | |
Consolidated Statements of Income for the Three and Six Months Ended September 30, 2015 and 2014 | 4 | |
Consolidated Statements of Comprehensive Income/(Loss) for the Three and Six Months Ended September 30, 2015 and 2014 | 5 | |
Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2015 and 2014 | 6 | |
Consolidated Statements of Changes in Equity for the Six Months Ended September 30, 2015 and 2014 | 7 | |
Notes to Unaudited Consolidated Interim Financial Statements | 9 | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
Part II. | Other Information | 28 |
Item 1. | Legal Proceedings | 28 |
SIGNATURES | 29 |
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
As at September 30, | As at March 31, | |||||||||||
Note | 2015 (unaudited) | 2015 | ||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | $ | 9,878 | $ | 9,272 | ||||||||
Goodwill | 1,878 | 1,878 | ||||||||||
Purchase price pending allocation | 3 | 5,506 | — | |||||||||
Intangible assets – trade name | 14,000 | 14,000 | ||||||||||
Intangible assets – content | 5 | 758,500 | 719,214 | |||||||||
Intangible assets – others | 2,822 | 2,204 | ||||||||||
Available-for-sale financial assets | 4 | 30,147 | 29,917 | |||||||||
Trade and other receivables | 6 | 5,823 | 5,692 | |||||||||
Other non-current assets | 3,846 | 613 | ||||||||||
Deferred tax assets | 321 | 151 | ||||||||||
Total non-current assets | $ | 832,721 | $ | 782,941 | ||||||||
Current assets | ||||||||||||
Inventories | $ | 444 | $ | 475 | ||||||||
Trade and other receivables | 6 | 225,490 | 209,676 | |||||||||
Current tax receivable | 11 | 455 | ||||||||||
Cash and cash equivalents | 150,453 | 153,664 | ||||||||||
Restricted deposits held with banks | 1,364 | 2,322 | ||||||||||
Total current assets | $ | 377,762 | $ | 366,592 | ||||||||
Total assets | $ | 1,210,483 | $ | 1,149,533 | ||||||||
LIABILITIES | ||||||||||||
Current liabilities | ||||||||||||
Trade and other payables | $ | 45,462 | $ | 29,453 | ||||||||
Short-term borrowings | 7 | 102,846 | 96,397 | |||||||||
Current tax payable | 7,532 | 2,631 | ||||||||||
Total current liabilities | $ | 155,840 | $ | 128,481 | ||||||||
Non-current liabilities | ||||||||||||
Long-term borrowings | 7 | $ | 207,655 | $ | 218,273 | |||||||
Other long-term liabilities | 362 | 354 | ||||||||||
Derivative financial instruments | 4 | 20,368 | 19,284 | |||||||||
Deferred tax liabilities | 29,480 | 27,086 | ||||||||||
Total non-current Liabilities | $ | 257,865 | $ | 264,997 | ||||||||
Total liabilities | $ | 413,705 | $ | 393,478 | ||||||||
EQUITY | ||||||||||||
Share capital | 8 | $ | 30,762 | $ | 30,622 | |||||||
Share premium | 354,587 | 345,385 | ||||||||||
Reserves | 414,649 | 389,682 | ||||||||||
Other components of equity | (51,847 | ) | (43,881 | ) | ||||||||
JSOP reserve | (17,169 | ) | (24,474 | ) | ||||||||
Equity attributable to equity holders of Eros International Plc | $ | 730,982 | $ | 697,334 | ||||||||
Non-controlling interest | 65,796 | 58,721 | ||||||||||
Total equity | $ | 796,778 | $ | 756,055 | ||||||||
Total liabilities and shareholders’ equity | $ | 1,210,483 | $ | 1,149,533 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in thousands, except per share amounts)
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||
Note | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Revenue | 15 | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 | |||||||||||
Cost of sales | (53,575 | ) | (29,505 | ) | (86,531 | ) | (62,729 | ) | ||||||||||||
Gross profit | 45,216 | 20,410 | 62,303 | 32,548 | ||||||||||||||||
Administrative cost | (19,064 | ) | (11,935 | ) | (32,021 | ) | (21,901 | ) | ||||||||||||
Operating profit | 26,152 | 8,475 | 30,282 | 10,647 | ||||||||||||||||
Financing costs | (3,676 | ) | (1,970 | ) | (7,542 | ) | (4,443 | ) | ||||||||||||
Finance income | 1,127 | 1,255 | 2,850 | 2,108 | ||||||||||||||||
Net finance costs | (2,549 | ) | (715 | ) | (4,692 | ) | (2,335 | ) | ||||||||||||
Other losses | 11 | (5,016 | ) | (288 | ) | (940 | ) | (1,887 | ) | |||||||||||
Profit before tax | 18,587 | 7,472 | 24,650 | 6,425 | ||||||||||||||||
Income tax expense | (7,572 | ) | (3,148 | ) | (9,868 | ) | (4,689 | ) | ||||||||||||
Profit for the period | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of Eros International Plc | $ | 7,611 | $ | 2,923 | $ | 7,826 | $ | (936 | ) | |||||||||||
Non-controlling interest | 3,404 | 1,401 | 6,956 | 2,672 | ||||||||||||||||
Earnings/(loss) per share(cents) | ||||||||||||||||||||
Basic earnings/(loss) per share | 10 | 13.2 | 5.3 | 13.6 | (1.8 | ) | ||||||||||||||
Diluted earnings/(loss) per share | 10 | 12.3 | 5.2 | 12.7 | (2.0 | ) |
The accompanying notes are integral part of these unaudited condensed consolidated financial statements.
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(Unaudited; in thousands)
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Profit for the period | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||||||
Other comprehensive loss: | ||||||||||||||||
Items that will be subsequently reclassified to profit or loss | ||||||||||||||||
Exchange differences on translating foreign operations | (7,047 | ) | (4,551 | ) | (10,768 | ) | (5,738 | ) | ||||||||
Reclassification of the cash flow hedge to the statements of income | 201 | 201 | 402 | 402 | ||||||||||||
Total other comprehensive loss for the period | $ | (6,846 | ) | $ | (4,350 | ) | $ | (10,366 | ) | $ | (5,336 | ) | ||||
Total comprehensive income/(loss) for the period net of tax | $ | 4,169 | $ | (26 | ) | $ | 4,416 | $ | (3,600 | ) | ||||||
1 | ||||||||||||||||
Attributable to: | ||||||||||||||||
Equity holders of Eros International Plc | $ | 2,114 | $ | 89 | $ | (140) | $ | (4,741 | ) | |||||||
Non-controlling interest | 2,055 | (115 | ) | 4,556 | 1,141 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended September 30, | ||||||||||||
Note | 2015 | 2014 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Profit/(loss) before tax | $ | 24,650 | $ | 6,425 | ||||||||
Adjustments for: | ||||||||||||
Depreciation | 422 | 606 | ||||||||||
Share based payment | 9 | 16,276 | 10,248 | |||||||||
Amortization of intangible film and content rights | 64,181 | 50,450 | ||||||||||
Amortization of other intangibles assets | 464 | 247 | ||||||||||
Other non-cash items | 12 | 1,002 | 2,198 | |||||||||
Net finance costs | 4,692 | 2,335 | ||||||||||
Gain on sale of property, plant and equipment | (2 | ) | (3 | ) | ||||||||
Movement in trade and other receivables | (13,916 | ) | (18,004 | ) | ||||||||
Movement in inventories | (31 | ) | 12 | |||||||||
Movement in trade and other payables | 7,032 | (8,436 | ) | |||||||||
Cash generated from operations | 104,770 | 46,078 | ||||||||||
Interest paid | (12,299 | ) | (4,029 | ) | ||||||||
Income taxes paid | (1,242 | ) | (3,078 | ) | ||||||||
Net cash generated from operating activities | $ | 91,229 | $ | 38,971 | ||||||||
Cash flows from investing activities: | ||||||||||||
Advance given to an undertaking | $ | — | $ | (2,465 | ) | |||||||
Purchases of property, plant and equipment | (609 | ) | (312 | ) | ||||||||
Proceeds from disposal of property, plant and equipment | �� | — | 22 | |||||||||
Proceeds from restricted deposits held with banks (net) | 371 | — | ||||||||||
Acquisition of cash and cash equivalent in a subsidiary | 263 | — | ||||||||||
Purchase of available for sale investments | (230 | ) | — | |||||||||
Purchase of intangible film and content rights | (104,695 | ) | (102,508 | ) | ||||||||
Payment for other intangible assets | (1,107 | ) | — | |||||||||
Interest received | 1,672 | 1,059 | ||||||||||
Net cash used in investing activities | $ | (104,335 | ) | $ | (104,204 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issue of share capital | $ | 5,400 | $ | 92,337 | ||||||||
Proceeds from issue of shares by subsidiary | 80 | 1,126 | ||||||||||
Proceeds from issue out of treasury shares | 6,292 | — | ||||||||||
Proceeds in respect of prospective allotment of shares | — | 10,000 | ||||||||||
Proceeds/ (repayment) from short term debt with maturity less than three months (net) | 9,132 | (15,689 | ) | |||||||||
Proceeds from short term debt | 33,714 | 11,301 | ||||||||||
Repayment of short term debt | (34,103 | ) | — | |||||||||
Proceeds from long term borrowings | 2,374 | 12,284 | ||||||||||
Repayment of long term borrowings | (12,703 | ) | (14,099 | ) | ||||||||
Net cash generated from financing activities | $ | 10,186 | $ | 97,260 | ||||||||
Net decrease in cash and cash equivalents | $ | (2,920 | ) | $ | 32,027 | |||||||
Effect of exchange rate changes on cash and cash equivalents | (291 | ) | (811 | ) | ||||||||
Cash and cash equivalents, beginning of period | 153,664 | 145,449 | ||||||||||
Cash and cash equivalents, end of period | $ | 150,453 | $ | 176,665 |
During the three months ended September 30, 2015, the Company's subsidiary, Eros International Media Limited, issued 900,970 ordinary shares as consideration for the acquisition of Techzone. See Note 3 for details.
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIXMONTHS ENDED SEPTEMBER 30, 2015
(Unaudited; in thousands)
Other components of equity | Reserves | . | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Share premium account | Currency translation reserve | Available for sale investments | Revaluation reserve | Hedging reserve | Reverse acquisition reserve | Merger reserve | Retained earnings | JSOP reserve | Equity Attributable to Shareholders of EROS International PLC | Non- controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||
Balance as of April 1, 2015 | $ | 30,622 | $ | 345,385 | $ | (50,048 | ) | $ | 6,622 | $ | 1,528 | $ | (1,983 | ) | $ | (22,752 | ) | $ | 63,238 | $ | 349,196 | $ | (24,474 | ) | $ | 697,334 | $ | 58,721 | $ | 756,055 | ||||||||||||||||||||||
Profit for the period | — | — | — | — | — | — | — | — | $ | 7,826 | — | $ | 7,826 | $ | 6,956 | $ | 14,782 | |||||||||||||||||||||||||||||||||||
Other comprehensive/ (income) loss for the period | — | — | $ | (8,368 | ) | — | — | $ | 402 | — | — | — | — | $ | (7,966 | ) | $ | (2,400 | ) | $ | (10,366 | ) | ||||||||||||||||||||||||||||||
Total comprehensive loss for the period | — | — | $ | (8,368 | ) | — | — | $ | 402 | — | — | $ | 7,826 | — | $ | (140 | ) | $ | 4,556 | $ | 4,416 | |||||||||||||||||||||||||||||||
Issue of shares | $ | 140 | $ | 5,262 | — | — | — | — | — | — | — | — | $ | 5,402 | — | $ | 5,402 | |||||||||||||||||||||||||||||||||||
Share based compensation | — | $ | 4,953 | — | — | — | — | — | — | $ | 11,096 | — | $ | 16,049 | $ | 227 | $ | 16,276 | ||||||||||||||||||||||||||||||||||
Changes in ownership interests in subsidiaries that do not result in a loss of control | — | — | — | — | — | — | — | $ | 6,045 | — | — | $ | 6,045 | $ | 2,292 | $ | 8,337 | |||||||||||||||||||||||||||||||||||
Issue out of Treasury Shares | — | $ | (1,013 | ) | — | — | — | — | — | — | — | $ | 7,305 | $ | 6,292 | — | $ | 6,292 | ||||||||||||||||||||||||||||||||||
Balance as of September 30, 2015 | $ | 30,762 | $ | 354,587 | $ | (58,416 | ) | $ | 6,622 | $ | 1,528 | $ | (1,581 | ) | $ | (22,752 | ) | $ | 69,283 | $ | 368,118 | $ | (17,169 | ) | $ | 730,982 | $ | 65,796 | $ | 796,778 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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EROS INTERNATIONAL PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
(Unaudited; in thousands)
Other components of equity | Reserves | |||||||||||||||||||||||||||||||||||||||||||||||||||
Share capital | Share premium account | Currency translation reserve | Available for sale investments | Revaluation reserve | Hedging reserve | Reverse acquisition reserve | Merger reserve | Retained earnings | JSOP reserve | Equity Attributable to Shareholders of EROS International PLC. | Non- controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||||||
Balance as of April 1, 2014 | $ | 26,322 | $ | 223,333 | $ | (43,858 | ) | $ | 5,802 | $ | 1,528 | $ | (2,787 | ) | $ | (22,752 | ) | $ | 62,203 | $ | 303,405 | $ | (25,505 | ) | $ | 527,691 | $ | 50,350 | $ | 578,041 | ||||||||||||||||||||||
(Loss)/ Profit for the period | — | — | — | — | — | — | — | — | $ | (936 | ) | — | $ | (936 | ) | $ | 2,672 | $ | 1,736 | |||||||||||||||||||||||||||||||||
Other comprehensive (loss)/ income for the period | — | — | $ | (4,207 | ) | — | — | $ | 402 | — | — | — | — | $ | (3,805 | ) | $ | (1,531 | ) | $ | (5,336 | ) | ||||||||||||||||||||||||||||||
Total comprehensive (loss)/ income for the period | — | — | $ | (4,207 | ) | — | — | $ | 402 | — | — | $ | (936 | ) | — | $ | (4,741 | ) | $ | 1,141 | $ | (3,600 | ) | |||||||||||||||||||||||||||||
Issue of shares | $ | 3,510 | $ | 88,858 | — | — | — | — | — | — | — | — | $ | 92,368 | — | $ | 92,368 | |||||||||||||||||||||||||||||||||||
Share based compensation | — | $ | 6,514 | — | — | — | — | — | — | $ | 3,734 | — | $ | 10,248 | — | $ | 10,248 | |||||||||||||||||||||||||||||||||||
Changes in ownership interests in subsidiaries that do not result in a loss of control | — | — | — | — | — | — | — | $ | 791 | — | — | $ | 791 | $ | 335 | $ | 1,126 | |||||||||||||||||||||||||||||||||||
Balance as of September 30, 2014 | $ | 29,832 | $ | 318,705 | $ | (48,065 | ) | $ | 5,802 | $ | 1,528 | $ | (2,385 | ) | $ | (22,752 | ) | $ | 62,994 | $ | 306,203 | $ | (25,505 | ) | $ | 626,357 | $ | 51,826 | $ | 678,183 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION
Description of business
Eros International Plc (“Eros” and the "Company") and its subsidiaries’ (together “the Company” or “the Group”) principal activities include the acquisition, co-production and distribution of Indian films and related content. Eros International Plc is the Group’s ultimate parent company. It is incorporated and domiciled in the Isle of Man. The address of Eros International Plc’s registered office is Fort Anne, Douglas Isle of Man IM1 5PD.
These condensed interim consolidated financial statements are prepared in compliance with International Accounting Standard (IAS) 34, “Interim financial reporting” as issued by International Accounting Standards Board (“IASB”). They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards ("IFRS"), as issued by IASB and should be read in conjunction with the audited consolidated financial statements and related notes included within our annual report, as amended, filed with the U.S. Securities and Exchange Commission on August 20, 2015 for the fiscal year ended March 31, 2015 (the "Annual Report"). The condensed interim financial statements for the six months ended September 30, 2015 were approved by the Eros Board of Directors and authorized for issue on July 26, 2016.
The accounting policies applied are consistent with the policies that were applied for the preparation of the consolidated financial statements for the year ended March 31, 2015.
Accounting and reporting pronouncements not yet adopted
Standards, Amendments and Interpretations, relevant to the Company’s operations, which have not been applied in these financial statements and that were in issue but not yet effective, are as follows:
i) | In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers (“IFRS 15”). This standard provides a single, principle-based five-step model to be applied to all contracts with customers. Guidance is provided on topics such as the point at which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various other related matters. IFRS 15 also introduced new disclosure requirements with respect to revenue. |
The five steps in the model under IFRS 15 are : (i) identify the contract with the customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contracts; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
IFRS 15 replaces the following standards and interpretations:
· | IAS 11 “Construction Contracts” |
· | IAS 18 “Revenue” |
· | IFRIC 13 “Customer Loyalty Programmes” |
· | IFRIC 15 “Agreements for the Construction of Real Estate” |
· | IFRIC 18 “Transfers of Assets from Customers” |
· | SIC-31 “Revenue -Barter Transactions Involving Advertising Services” |
When first applying IFRS 15, it should be applied in full for the current period, including retrospective application to all contracts that were not yet complete at the beginning of that period. In respect of prior periods, the transition guidance allows an option to either:
· | apply IFRS 15 in full to prior periods (with certain limited practical expedients being available); or |
· | retain prior period figures as reported under the previous standards, recognizing the cumulative effect of applying IFRS 15 as an adjustment to the opening balance of equity as at the date of initial application (beginning of current reporting period). |
In April 2016, the IASB issued amendments to IFRS 15, clarifying some requirements and providing additional transitional relief for companies. The amendments do not change the underlying principles of IFRS 15 but clarify how those principles should be applied. The amendments clarify how to:
· | apply identify a performance obligation (the promise to transfer a good or a service to a customer) in a contract; |
· | accounting for licenses of intellectual property; and |
· | determine whether a company is a principal (the provider of a good or service) or an agent (responsible for arranging for the good or service to be provided) |
IFRS 15 is effective for fiscal years beginning on or after January 1, 2018. Earlier application is permitted. The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements.
9
ii) | In May 2014, the IASB issued two amendments with respect to IAS 16 “Property, Plant and Equipment”(“IAS 16”) and IAS 38 “Intangible Assets”(“IAS 38”) dealing with acceptable methods of depreciation and amortization. |
The amended IAS 16 prohibits entities from using a revenue based depreciation method for items of property, plant and equipment. Further the amendment under IAS 38 introduces a rebuttable presumption that revenue is not an appropriate basis for amortization of an intangible asset. However this presumption can only be rebutted in two limited circumstances:
i) | the intangible is expressed as a measure of revenue i.e. when the predominant limiting factor inherent in an intangible asset is the achievement of a contractually specified revenue threshold; or |
ii) | it can be demonstrated that revenue and the consumption of economic benefits of the intangible assets are highly correlated. In these circumstances, revenue expected to be generated from the intangible assets can be an appropriate basis for amortization of the intangible asset. |
The amendments apply prospectively and are effective for annual periods beginning on or after January 1, 2016, with earlier application permitted. The Company does not believe that this amendment will have a material impact on its consolidated financial statements.
iii) | In July 2014, the IASB finalized and issued IFRS 9 – Financial Instruments (“IFRS 9”). IFRS 9 replaces IAS 39 “Financial instruments: recognition and measurement, the previous Standard which dealt with the recognition and measurement of financial instruments in its entirety upon the former’s effective date. |
Key requirements of IFRS 9:
i. | Replaces IAS 39’s measurement categories with the following three categories: |
· | fair value through profit or loss (‘FVTPL’) |
· | fair value through other comprehensive income (‘FVTOCI’) |
· | amortized cost |
ii. | Eliminates the requirement for separation of embedded derivatives from hybrid financial assets, the classification requirements to be applied to the hybrid financial asset in its entirety. |
iii. | Requires an entity to present the amount of change in fair value due to change in entity’s own credit risk in other comprehensive income. |
iv. | Introduces new impairment model, under which the “expected”credit loss are required to be recognized as compared to the existing “incurred”credit loss model of IAS 39. |
v. | Fundamental changes in hedge accounting by introduction of new general hedge accounting model which: |
· | Increases the eligibility of hedged item and hedging instruments; |
· | Introduces a more principles–based approach to assess hedge effectiveness. |
IFRS 9 is effective for annual periods beginning on or after January 1, 2018.
Earlier application is permitted provided that all the requirements in the Standard are applied at the same time with two exceptions:
i. | The requirement to present changes in the fair value of a liability due to changes in own credit risk may be applied early in isolation; |
ii. | Entity may choose as its accounting policy choice to continue to apply hedge accounting requirements of IAS 39 instead of new general hedge accounting model as provided in IFRS 9. |
The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements.
iv) | In January 2016, IASB has issued a new standard, IFRS 16 “Leases”. The new standard sets out the principles for recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e. the lessee and the lessor. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance. IFRS 16 supersedes IAS 17 ‘Leases’ and related interpretations and is effective for periods beginning on or after 1 January 2019, with earlier adoption permitted in IFRS 15 ‘Revenue from Contracts with Customers’has also been applied. |
The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements.
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v) | In January 2016, the IASB issued amendments to IAS 12 – “Income taxes” to clarify the following: |
· | the carrying value of an asset does not limit the estimation of probable future taxable profits. |
· | estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible temporary differences. |
· | an entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type. The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. |
The Company does not believe that this amendment will have a material impact on its consolidated financial statements.
vi) | In January 2016, the IASB issued amendments in IAS 7- “Statement of Cash Flows” to clarify and improve information provided to users of financial statements about an entity’s financing activities. |
The IASB requires that the following changes in liabilities arising from financing activities to be disclosed (to the extent necessary):
· | changes from financing cash flows; |
· | changes arising from obtaining and losing control of subsidiaries or other businesses; |
· | the effect of changes of foreign exchange rates; |
· | changes in fair values; and |
· | other changes. |
The amendments are effective for annual periods beginning on or after January 1, 2017. Earlier application is permitted. Entities need not present comparative information when they first apply the amendments.
The Company is currently evaluating the effect of this amendment on its consolidated financial statements.
vii) | In June 2016, the IASB issued amendments to IFRS 2 – “Share-based Payment” to clarify the accounting for certain types of share-based payment transactions: |
The amendments, which were developed through the IFRS Interpretations Committee, provide requirements on the accounting for the following:
· | the effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments; |
· | share-based payment transactions with a net settlement feature for withholding tax obligations; and |
· | a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cash-settled to equity-settled |
The amendments are effective for annual periods beginning on or after January 1, 2018. Earlier application is permitted.
The Company does not believe that this amendment will have a material impact on its consolidated financial statements.
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2. SEASONALITY
The Groups’ financial position and results of operations for any period fluctuate due to film release schedules. Film release schedules take account of holidays and festivals in India and elsewhere, competitor film releases and sporting events.
3. ACQUISITION OF SUBSIDIARY
On August 1, 2015, Eros’ subsidiary Eros International Media Limited (“EIML”) acquired 100% of the shares and voting interests in Universal Power Systems Private Limited (“Techzone”). The Company expects that this acquisition will enable the Group to utilize Techzone’s billing integration and distribution across major telecom operators in India and will complement its existing ErosNow service.
In accordance with the terms of the agreement between the parties, EIML issued 900,970 equity shares to the shareholders of Techzone at an acquisition date fair value of INR 586 ($9.16) per share, calculated on the basis of traded share price of EIML on the date of acquisition.EIML has made an advance of $2.5 million to Techzone prior to the acquisition to provide working capital.
Acquisition related cost of $106,300 has been included in “Administrative costs” in the consolidated statements of income.
Pending completion of valuation of assets, including intangible assets, the purchase price has been allocated on a preliminary basis to net assets based on initial estimates.. As a result, values attributed to specified assets and liabilities including goodwill and other intangible assets may change. Finalization of the purchase price allocation is expected to be completed by July 31, 2016.
The following table summarizes the preliminary allocation of the purchase price:
As at August 1, 2015 | ||||
(in thousands) | ||||
Current assets | ||||
Cash | $ | 263 | ||
Trade and other receivables | 4,866 | |||
Non-current assets | ||||
Deferred tax assets | 134 | |||
Property, plant and equipment | 584 | |||
Purchase price pending allocation | 5,751 | |||
Other non-current assets | 2,585 | |||
Current liabilities | ||||
Trade and other payables | (3,338 | ) | ||
Short-term borrowings | (1,490 | ) | ||
Non-Current borrowings | ||||
Long-term borrowings | (992 | ) | ||
Other non-current liabilities | (112 | ) |
The trade receivables comprise gross contractual amounts due of $2.6 million and the Company, based on its best estimate at the acquisition date, expects to collect the entire amount.
Impact of the acquisition on the results of the Company
The acquisition of Techzone contributed $1.2 million to the Company’s revenue and $0.01 million to the Company’s profit for the three months and six months period ended September 30, 2015.
Had the acquisition occurred on 1 April 2015, consolidated revenue and profit after tax for the period would have been $152.9 million, and $14.9 million, respectively.
4. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants. Assets and liabilities carried at fair value are classified in the following three categories.
· | Level 1 - derived from unadjusted quoted prices in active markets for identical assets or liabilities; |
· | Level 2 - derived from inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and |
· | Level 3 - derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data. |
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The table below presents assets and liabilities measured at fair value on a recurring basis. They are all category Level 2:
As at September 30, 2015 (in thousands) | |||||
Description of type of financial assets | Gross amount of recognized financial assets | Gross amount of recognized financial liabilities offset in the statement of financial position | Net amounts financial assets presented in the statement of financial position | ||
Derivative assets | 538 | (538) | — | ||
Total | 538 | (538) | — |
Description of type of financial liabilities | Gross amount of recognized financial liabilities | Gross amount of recognized financial assets offset in the statement of financial position | Net amounts financial liabilities presented in the statement of financial position | ||
Derivative liabilities | (20,906) | 538 | (20,368) | ||
Total | (20,906) | 538 | (20,368) |
As at March 31, 2015 (in thousands) | |||||
Description of type of financial assets | Gross amount of recognized financial assets | Gross amount of recognized financial liabilities offset in the statement of financial position | Net amounts financial assets presented in the statement of financial position | ||
Derivative assets | 1,056 | (1,056) | — | ||
Total | 1,056 | (1,056) | — |
Description of type of financial liabilities | Gross amount of recognized financial liabilities | Gross amount of recognized financial assets offset in the statement of financial position | Net amounts financial liabilities presented in the statement of financial position | ||
Derivative liabilities | (20,340) | 1,056 | (19,284) | ||
Total | (20,340) | 1,056 | (19,284) |
Financial assets and liabilities subject to offsetting enforceable master netting arrangements or similar agreements as at September 30, 2015 are as follows:
Fair value as at | ||||||||
September 30, 2015 | March 31, 2015 | |||||||
(in thousands) | ||||||||
2012 Interest Rate Cap | $ | (538 | ) | $ | (1,056 | ) | ||
2012 Interest Rate Floor | 10,453 | 10,170 | ||||||
2012 Interest Rate Collar | 10,453 | 10,170 | ||||||
Total | $ | 20,368 | $ | 19,284 |
None of the above derivative instruments is designated in a hedging relationship. A loss of $1,084,000 (September 2014: a loss of $2,009,000) and 4,999,000 (September 2014: a gain of $396,000) for six and three months period ended September 31, 2015, respectively; in respect of the above derivative instruments has been recognized in the statement of income with other gains and losses. Fair value of interest rate derivatives involving interest rate options is estimated as the present value of the estimated future cash flows based on observable yield curves using an option pricing model.
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Reconciliation of Level 3 fair value measurements of financial assets
Available for sale financial assets | ||||
(in thousands) | ||||
As at March 31, 2015 | $ | 29,917 | ||
As at September 30, 2015 | $ | 30,147 |
In July 2015, Eros aquired a 2% stake in The Culture Trip (“TCT”), a website which is a global platform for local culture, showcasing the best art, culture, food and travel for every country in the world. The acquisition of stake in TCT has been classified as Available-for-Sale investment and recognized at the transaction price of USD 230,050.
Subsequently, on June 3, 2016, the company sold this investment for $287,781 recording a gain of $57,786 in the income statement.
There were no transfers between any Levels in any of the years.
5. INTANGIBLE CONTENT ASSETS
Gross Content Assets | Accumulated Amortization | Content Assets | ||||||||||
(in thousands) | ||||||||||||
As at September 30, 2015 | ||||||||||||
Film and content rights | $ | 1,091,232 | $ | (593,941 | ) | $ | 497,291 | |||||
Content advances | 260,012 | — | 260,012 | |||||||||
Film productions | 1,197 | — | 1,197 | |||||||||
Non-current content assets | $ | 1,352,441 | $ | (593,941 | ) | $ | 758,500 |
As at March 31, 2015 | ||||||||||||
Film and content rights | $ | 1,027,878 | $ | (548,920 | ) | $ | 478,958 | |||||
Content advances | 236,285 | — | 236,285 | |||||||||
Film productions | 3,971 | — | 3,971 | |||||||||
Non-current content assets | $ | 1,268,134 | $ | (548,920 | ) | $ | 719,214 |
Changes in the content assets are as follows:
As at | ||||||||
September 30, 2015 | March 31, 2015* | |||||||
(in thousands) | ||||||||
Film productions | ||||||||
Opening balance | $ | 3,971 | $ | — | ||||
Additions | 845 | — | ||||||
Exchange difference | (193 | ) | (15 | ) | ||||
Transfer (to)/from (film rights)/other content assets | (3,426 | ) | 3,986 | |||||
Closing balance | $ | 1,197 | $ | 3,971 |
Content advances | ||||||||
Opening balance | $ | 236,285 | $ | 180,022 | ||||
Additions (net of impairment loss of $400 (March 2015: $3,431)) | 116,056 | 267,940 | ||||||
Exchange difference | (6,345 | ) | (3,508 | ) | ||||
Transfer to film productions | — | (3,986 | ) | |||||
Transfer to film and content rights | (85,984 | ) | (204,183 | ) | ||||
Closing balance | $ | 260,012 | $ | 236,285 |
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Film and content rights | ||||||||
Opening balance | $ | 478,958 | $ | 397,682 | ||||
Amortization | (64,181 | ) | (117,254 | ) | ||||
Exchange difference | (6,896 | ) | (5,653 | ) | ||||
Transfer from film productions and other content assets | 89,410 | 204,183 | ||||||
Closing balance | $ | 497,291 | $ | 478,958 |
* Movements pertain to the year ended March 31, 2015.
The impairment loss on content advances relate to amounts advanced, to the extent not considered recoverable, for prospective film productions that are not being developed further or not considered viable.
6. TRADE AND OTHER RECEIVABLES
As at | ||||||||
September 30, 2015 | March 31, 2015 | |||||||
(in thousands) | ||||||||
Trade accounts receivables net | $ | 211,349 | $ | 197,816 | ||||
Other receivables | 13,620 | 12,567 | ||||||
Prepaid charges | 1,300 | 3,279 | ||||||
Unbilled revenues | 5,044 | 1,706 | ||||||
Trade and other receivables | $ | 231,313 | $ | 215,368 | ||||
Current Trade and other receivables | 225,490 | 209,676 | ||||||
Non-Current Trade and other receivables | 5,823 | 5,692 | ||||||
$ | 231,313 | $ | 215,368 |
The age of financial assets that are past due but not impaired were as follows:
As at | ||||||||
September 30, 2015 | March 31, 2015 | |||||||
(in thousands) | ||||||||
Not more than three months | $ | 30,516 | $ | 19,677 | ||||
More than three months but not more than one year | 34,140 | 11,726 | ||||||
More than one year | 5,970 | 5,906 | ||||||
$ | 70,626 | $ | 37,309 |
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7. BORROWINGS
An analysis of long-term borrowings is shown in the table below.
As at | ||||||||||||||
Nominal Interest Rate | Maturity | September 30, 2015 | March 31, 2015 | |||||||||||
(in thousands) | ||||||||||||||
Asset backed borrowings | ||||||||||||||
Term Loan | BPLR+1.8% | 2016-17 | 8,901 | 12,032 | ||||||||||
Term Loan | BPLR+2.75% | 2017-18 | 2,241 | 2,974 | ||||||||||
Term Loan | BPLR+2.85% | 2019-20 | 9,118 | 10,808 | ||||||||||
Term Loan | BPLR+2.85% | 2020-21 | 2,290 | — | ||||||||||
Term Loan | 10.0% - 13.0% | 2017-18 | $ | 267 | $ | 147 | ||||||||
$ | 22,817 | $ | 25,961 | |||||||||||
Retail bond | 6.5% | 2021-22 | $ | 75,574 | $ | 74,228 | ||||||||
Revolving facility | LIBOR +1.90% - 2.90% and Mandatory Cost | 2016-17 | 132,500 | 141,250 | ||||||||||
Other borrowings | 10.5% | 2021-22 | 7,513 | 8,013 | ||||||||||
$ | 215,587 | $ | 223,491 | |||||||||||
Nominal value of borrowings | $ | 238,404 | $ | 249,452 | ||||||||||
Cumulative effect of unamortized costs | (2,476 | ) | (2,940 | ) | ||||||||||
Installments due within one year | (28,273 | ) | (28,239 | ) | ||||||||||
Long-term borrowings — at amortized cost | $ | 207,655 | $ | 218,273 |
Bank prime lending rate (“BPLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and floating charges over certain Group assets.
Analysis of short-term borrowings
As at | ||||||||||
Nominal interest rate (%) | September 30, | March 31, 2015 | ||||||||
(in thousands) | ||||||||||
Asset backed borrowings | ||||||||||
Export credit and overdraft | BPLR+1-3.5% | $ | 9,243 | $ | 17,346 | |||||
Export credit and overdraft | LIBOR+3.5% | 27,404 | 25,144 | |||||||
$ | 36,647 | $ | 42,490 | |||||||
Unsecured borrowings | ||||||||||
Commercial paper | 10.0% - 13.0% | 29,765 | 25,668 | |||||||
Installments due within one year on long-term borrowings | 28,273 | 28,239 | ||||||||
Short term loan | 2.0% - 3.0% | 8,161 | — | |||||||
Short-term borrowings - at amortized cost | $ | 102,846 | $ | 96,397 |
Fair value of the long term borrowings as at September 30, 2015 is $228,061,000 (March 2015: $233,450,000). Fair values of long-term financial liabilities except retail bonds have been determined by calculating their present values at the reporting date, using fixed effective market interest rates available to the Companies within the Group. As at September 30, 2015, the fair value of retail bond amounting to $74,044,000 (March 2015: $74,813,000) has been determined using quoted prices from the London Stock Exchange. Carrying amount of short term borrowings approximates fair value.
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8. ISSUED SHARE CAPITAL
Number of Shares | GBP | |||||||
(in thousands) | ||||||||
Authorized | ||||||||
Ordinary shares of 30p each at September 30, 2015 and March 31, 2015 | 83,333,333 | 25,000 |
Number of Shares | USD | |||||||||||
Allotted, called up and fully paid | A Ordinary 30p Shares | B Ordinary 30p Shares | (in thousands) | |||||||||
As at March 31, 2014 | 23,519,340 | 25,555,220 | 26,322 | |||||||||
Issue of shares on July 15, 2014 | 6,675,000 | — | 3,434 | |||||||||
Issue of shares on July 23, 2014 | 112,445 | — | 58 | |||||||||
Issue of shares on September 9, 2014 | 36,000 | — | 18 | |||||||||
Issue of shares on November 24, 2014 | 331,551 | — | 156 | |||||||||
Issue of shares on November 25, 2014 | 668,449 | — | 315 | |||||||||
Issue of shares on December 1, 2014 | 487,500 | — | 246 | |||||||||
Issue of shares on January 16, 2015 | 18,600 | — | 9 | |||||||||
Issue of shares on March 10, 2015 | 133,603 | — | 64 | |||||||||
As at March 31, 2015 | 31,982,488 | 25,555,220 | 30,622 | |||||||||
Issue of shares on July 16, 2015 | 300,000 | — | 138 | |||||||||
Issue of shares on August 18, 2015 | 3,500 | — | 2 | |||||||||
As at September 30, 2015 | 32,285,988 | 25,555,220 | 30,762 |
As at September 30, 2015, none of the awards were forfeited.
On June 25, 2015, the Company received $5,400,000 in respect of an issue of 300,000 ‘A’ ordinary shares at $18.00 per share to a non-executive director. These shares were subsequently issued on July 16, 2015.
On June 5, 2014, the Board of Directors approved a grant of 525,000 ‘A’ ordinary share awards with a fair market value of $14.95 per option, to certain executive directors and members of senior management. These awards vest subject to certain share price conditions being met on or before May 31, 2015 and the employee remaining in service until May 31, 2015. 487,500 shares were issued on December 1, 2014. All these awards have since vested. As at March 31, 2016 except for 30,000 share awards, all shares have been issued.
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9. SHARE BASED COMPENSATION PLANS
The compensation cost recognized with respect to all outstanding plans and by grant of shares, which are all equity settled instruments, is as follows:
Three months ending September 30, | Six months ending September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
IPO India Plan | $ | 481 | $ | 49 | $ | 860 | $ | 98 | ||||||||
JSOP Plan | 599 | 359 | 889 | 862 | ||||||||||||
Option award scheme 2012 | 544 | — | 1,101 | — | ||||||||||||
2014 Share Plan | 850 | — | 1,103 | — | ||||||||||||
2015 Share Plan | 275 | — | 433 | — | ||||||||||||
Management scheme (staff share grant) | 2,063 | 5,058 | 6,739 | 9,288 | ||||||||||||
Other share option awards | 4,570 | — | 5,151 | — | ||||||||||||
$ | 9,382 | $ | 5,466 | $ | 16,276 | $ | 10,248 |
In its meeting dated June 9, 2015, the Board of Directors approved the following grants:
300,000 ‘A’ ordinary share awards to the Group CFO with a fair market value of $21.34 per share. Subject to continued employment, these awards with par value exercise price, vest annually from June 9, 2016 in three equal tranches. None of the awards were forfeited during the period.
580,000 ‘A’ ordinary share awards to certain executive directors with a fair market value of $21.34 per share. Subject to continued employment, these awards with Nil exercise price, vest over a period of three years.
10,000 'A' ordinary share awards to non-executive directors and a consultant each with a fair market value of $21.34 per share. Subject to continued term with the Company, these awards with par value exercise price, vest on June 9, 2016. These shares were issued on February 2, 2016 with restrictions.
On September 4, 2015, the Company entered into an employment exit agreement with an employee pursuant to which the Board approved a grant of 20,000 ‘A’ ordinary share awards with Nil exercise price and a fair market value of $33.66 per share.
The charge for the aforementioned awards has been accrued under 'Other share option awards'. None of the awards were forfeited during the period.
500,000 'A' ordinary share options were granted to a non-executive director with a fair market value of $8.44 per option. Subject to continued employment, these options with $18.00 exercise price, vest annually in five equal tranches beginning June 9, 2016. The charge for the grant has been accrued under 'Management scheme'.
300,000 'A' ordinary share options were granted to the Group CFO with a fair market value of $7.00 per option. Subject to continued employment, these options with $18.30 exercise price, vest annually in three equal tranches beginning June 9, 2016.
300,000 'A' ordinary share options were granted to a certain employee with a fair market value of at $6.90 per option. Subject to continued employment, these options with $18.50 exercise price, vest annually in three equal tranches beginning June 9, 2016.
The charge for the aforementioned grants has been accrued under '2014 Share Plan'. None of the options were forfeited during the period.
Following grants were approved in its subsequent meetings as under:
On August 4, 2015, the Company’s Employee Benefit Trust entered into a Joint ownership deed (the “2015 JSOP deed”) with certain employees in respect of 380,000 ‘A’ ordinary shares. These options issued at a strike price of $24.00 and fair market value of $15.66.
Subject to continued employment and market conditions set out in the 2015 JSOP deed, these options vest in May 2017. None of the options were forfeited during the period.
The vesting and service conditions of all other plans are consistent with the arrangements disclosed in the audited consolidated financial statements and related notes included within the Annual Report.
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10. EARNINGS PER SHARE
Three months ended September 30, | Six months ended September 30, | |||||||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||||||||
(in thousands, except number of shares and earnings per share) | ||||||||||||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||||||||
Earnings/(loss) attributable to the equity holders of the parent | $ | 7,611 | 7,611 | $ | 2,923 | 2,923 | $ | 7,826 | 7,826 | $ | (936 | ) | (936 | ) | ||||||||||||||||||
Potential dilutive effect related to share based compensation scheme in subsidiary undertaking | — | (180 | ) | — | (49 | ) | — | (299 | ) | — | (83 | ) | ||||||||||||||||||||
Adjusted earnings/(loss) attributable to equity holders of the parent | $ | 7,611 | 7,431 | $ | 2,923 | 2,874 | $ | 7,826 | 7,527 | $ | (936 | ) | (1,019 | ) | ||||||||||||||||||
Number of shares | ||||||||||||||||||||||||||||||||
Weighted average number of shares | 57,839,364 | 57,839,364 | 54,855,355 | 54,855,355 | 57,535,047 | 57,535,047 | 51,948,580 | 51,948,580 | ||||||||||||||||||||||||
Potential dilutive effect related to share based compensation scheme | — | 2,426,773 | — | 541,111 | — | 1,672,854 | — | — | ||||||||||||||||||||||||
Adjusted weighted average number of shares | 57,839,364 | 60,266,137 | 54,855,355 | 55,396,466 | 57,535,047 | 59,207,901 | 51,948,580 | 51,948,580 | ||||||||||||||||||||||||
Earnings/(loss)per share | ||||||||||||||||||||||||||||||||
Earnings attributable to the equity holders of the parent per share (cents) | 13.2 | 12.3 | 5.3 | 5.2 | 13.6 | 12.7 | (1.8 | ) | (2.0 | ) |
The above table does not split the earnings per share separately for the ‘A’ ordinary 30p shares and the ‘B’ ordinary 30p shares as there is no variation in their entitlement to participate in undistributed earnings.
The Company excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In the three and six months ended September 30, 2015, there were Nil shares (2014: 196,600 and 344,000, respectively) not included in diluted earnings per share.
11. OTHER LOSSES
Three months ended September 30, | Six months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
Gains on disposal of property, plant and equipment | $ | 2 | $ | — | 2 | $ | 3 | |||||||||
Net foreign exchange(losses)/gains | (19 | ) | (598 | ) | 142 | 205 | ||||||||||
Net gains /(losses) on held for trading financial liabilities | (4,999 | ) | 396 | (1,084 | ) | (2,009 | ) | |||||||||
Transaction costs related to equity transactions | — | (86 | ) | — | (86 | ) | ||||||||||
$ | (5,016 | ) | $ | (288 | ) | $ | (940 | ) | $ | (1,887 | ) |
The net (losses)/gains on held for trading financial liabilities in the three and six months ended September 30, 2015 and 2014, respectively, principally relate to derivative instruments not designated in a hedging relationship.
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12. OTHER NON-CASH ITEMS
Significant non-cash items except loss on sale of assets, share based compensation, depreciation, derivative (gains)/losses and amortization were as follows:
Six months ended September 30, | ||||||||
2015 | 2014 | |||||||
(in thousands) | ||||||||
Net losses on held for trading financial liabilities | $ | 1,084 | $ | 2,009 | ||||
Impairment loss on content advances and other advances | 400 | 830 | ||||||
Provisions for trade and other receivables | 179 | 247 | ||||||
Others | (661 | ) | (888 | ) | ||||
$ | 1,002 | $ | 2,198 |
13. RELATED PARTY
As at September 30, 2015 | As at March 31, 2015 | |||||||||||||||||
Details of | (in thousands) | |||||||||||||||||
Transaction | Liability | Asset | Liability | Asset | ||||||||||||||
Red Bridge Ltd | President fees | $ | 257 | $ | — | $ | 106 | $ | — | |||||||||
550 County Avenue | Rent/Deposit | 309 | 135 | 261 | 135 | |||||||||||||
Line Cross Limited | Rent/Deposit | 609 | 258 | 353 | 249 | |||||||||||||
NextGen Films Pvt Ltd | Purchase/Sale | — | 23,129 | — | 22,677 | |||||||||||||
Everest Entertainment Pvt. Ltd | Purchase/Sale | — | 112 | — | 98 | |||||||||||||
Lulla Family | Rent/Deposit | 160 | 1,053 | 155 | 1,130 |
Pursuant to an agreement the Group entered into with Redbridge Group Ltd. on June 27, 2006, the Group agreed to pay a fee of $77,000 and $154,000 for the three and six months ended September 30, 2015 respectively ($84,500 and $168,000 for the three and six months ended September 30, 2014 respectively), for the services of Arjan Lulla, the father of Kishore Lulla and Sunil Lulla, grandfather of Rishika Lulla Singh, uncle of Vijay Ahuja and Surender Sadhwani and an employee of Redbridge Group Ltd. The agreement makes Arjan Lulla honorary life president and provides for services including attendance at Board meetings, entrepreneurial leadership and assistance in setting the Group’s strategy. Redbridge Group Ltd. is an entity owned indirectly by a discretionary trust of which Kishore Lulla is a potential beneficiary.
Pursuant to a lease agreement that expires on March 31, 2020, the Group leased for U.S. corporate offices, the real estate property at 550 County Avenue, Secaucus, New Jersey, from 550 County Avenue Property Corp, a Delaware corporation owned by Beech Investments and of which our President of America Operations, Ken Naz, serves as a Director. The lease commenced on April 1, 2015, and requires the Group to pay $11,000 each month.
Pursuant to a lease agreement that expires in March 2018, the Group leases for U.K. corporate offices, the real property at 13 Manchester Square, London from Linecross Limited, a U.K. company owned indirectly by a discretionary trust of which Kishore Lulla is a potential beneficiary. The current lease commenced on November 19, 2009 and requires the Group to pay $151,000 each quarter.
The Group has engaged in transactions with NextGen Films Pvt Ltd., an entity owned by the husband of Puja Rajani, sister of Kishore Lulla and Sunil Lulla, each of which involved the purchase and sale of film rights. In the three and six months ended September 30, 2015 NextGen Films Pvt Ltd. sold film rights of $741,000 ($5,039,000 and $7,837,000 for the three and six months ended September 30, 2014 respectively) to the Group.
20
Everest Entertainment Pvt. Ltd. is an entity owned by the brother of Manjula K. Lulla, wife of Kishore Lulla, and is involved in the purchase and sale of film rights. In the three and six months ended September 30, 2015, no such transaction took place between Everest Entertainment Pvt. Ltd. and the Group (September 2014: $Nil). $14,000 was advanced towards content for production of a movie.
Pursuant to a lease agreement that expires on January 31, 2016, Eros International Media Limited leases apartments for studio use at Kailash Plaza, 3rd Floor, Opp. Laxmi Industrial Estate, Andheri (W), Mumbai, from Manjula K. Lulla, wife of Kishore Lulla. The lease commenced on March 1, 2015, and requires Eros International Media Limited to pay $5,000 each month under this lease.
Pursuant to a lease that expired in September 30, 2015, Eros International Media Limited leases for use as executive accommodations the property Aumkar Bungalow, Gandhi Gram Road, Juhu, Mumbai, from Sunil Lulla and requires Eros International Media Limited to pay $5,000 each month. The lease was renewed on October 1, 2015 for a further period of 3 years on the same terms.
Pursuant to a lease agreement that expires on January 4, 2020, Eros International Media Limited leases office premise for studio use at Supreme Chambers, 5th Floor, Andheri (W), Mumbai from Kishore and Sunil Lulla. Beginning January 2015, the lease requires Eros International Media Limited to pay $62,000 each month under this lease.
Mrs. Manjula Lulla, the wife of Kishore Lulla, is an employee of Eros International Limited - UK and is entitled to a salary of $77,000 (September 2014: $83,000) and $38,500 (September 2014: $42,000). Mrs. Krishika Lulla, the wife of Sunil Lulla, is an employee of Eros India and is entitled to a salary of $69,000 (2014: $57,000) and $25,000 (2016: $29,000). Ms. Riddhima Lulla, the daughter of Kishore Lulla, is an employee of Eros International Limited - UK and is entitled to a salary of $19,000 (2014: NIL) and $10,000 (2016: NIL), for six months and three months ended September 31, 2015.
All of the above amounts outstanding are unsecured and will be settled in cash.
14. CONTRACTUAL OBLIGATIONS
Eros' material contractual obligations are comprised of contracts related to content commitments.
Total | ||||
(in thousands) | ||||
As at September 30, 2015 | $ | 235,029 | ||
As at March 31, 2015 | $ | 260,573 |
The Group has provided certain stand-by letters of credit amounting to $96,290,000 (At March 2015: $96,196,000) which are in the nature of performance guarantees issued while entering into film co-production contracts and are valid until funding obligations under these contracts are met. These guarantees, issued in connection with the aforementioned content commitments, and included in the table above have varying maturity dates and are expected to fall due within a period of one to three years.
In addition, the Group has issued financial guarantees amounting to $3,107,000 (At March 2015: $3,014,000) in the ordinary course of business, and included in the table above, having varying maturity dates up to the next 24 months. The Group is only called upon to satisfy a guarantee when the guaranteed party fails to meet its obligations. The Group did not earn any fee to provide such guarantees. It does not anticipate any liability on these guarantees as it expects that most of these will expire unused.
15. BUSINESS SEGMENTAL DATA
The Group acquires, co-produces and distributes Indian films in multiple formats worldwide. Film content is monitored and strategic decisions around the business operations are made based on the film content, whether it is new release or library. Hence, Management identifies only one operating segment in the business, film content. We distribute our film content to the Indian population in India, the South Asian diaspora worldwide and to non-Indian consumers who view Indian films that are subtitled or dubbed in local languages. As a result of these distribution activities, Eros has identified four geographic markets: India, North America, Europe and the Rest of the world.
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Three months ended September 30, | Six months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue by region of domicile of customer's location | ||||||||||||||||
India | $ | 61,250 | $ | 17,329 | $ | 94,076 | $ | 42,183 | ||||||||
Europe | 5,768 | 7,412 | 8,209 | 14,827 | ||||||||||||
North America | 6,660 | 4,750 | 10,187 | 6,292 | ||||||||||||
Rest of the world | 25,113 | 20,424 | 36,362 | 31,975 | ||||||||||||
Total Revenue | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 |
Three months ended September 30, | Six months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
Revenue by region of domicile of group’s operation | ||||||||||||||||
India | $ | 61,381 | $ | 25,674 | $ | 94,558 | $ | 54,097 | ||||||||
Europe | 12,461 | 6,817 | 16,600 | 12,325 | ||||||||||||
North America | 6,660 | 1,509 | 9,895 | 2,800 | ||||||||||||
Rest of the world | 18,289 | 15,915 | 27,781 | 26,055 | ||||||||||||
Total Revenue | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 |
India | North America | Europe | Rest of the World | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
As of September 30, 2015 | $ | 289,899 | $ | 24 | $ | 27,337 | $ | 472,397 | ||||||||
As of March 31, 2015 | $ | 281,019 | $ | 653 | $ | 24,224 | $ | 440,672 |
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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s discussion and analysis of financial condition and results of operations is a supplement to and should be read in conjunction with the accompanying consolidated financial statements and related notes. This section provides additional information regarding Eros International Plc's (“Eros,” “Company,” “we,” “us,” or “our”) businesses, current developments, results of operations, cash flows and financial condition. Additional context can also be found in the Annual Report.
Cautionary Statement Concerning Forward-Looking Statements
Some of the information presented in this report and in related comments by Eros' management contains forward-looking statements. In some cases, these forward-looking statements are identified by terms and phrases such as “aim,” “anticipate,” “believe,” “feel,” “contemplate,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “future,” “goal,” “objective,” and similar expressions and include references to assumptions and relate to Eros' future prospects, developments and business strategies. Similarly, statements that describe Eros' strategies, objectives, plans or goals are forward-looking statements and are based on information available to Eros as of the date of this form. Forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant statement. Such risks and uncertainties include a variety of factors, some of which are beyond Eros' control, including but not limited to market conditions and economic conditions.
Information concerning these and other factors that could cause results to differ materially from those contained in the forward-looking statements is contained under the caption "Risk Factors" in Eros' Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission.
Eros undertakes no obligation to revise the forward-looking statements included herein to reflect any future events or circumstances, except as required by law. Eros' actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements.
Business Overview
We are a leading global company in the Indian film entertainment industry, and we co-produce, acquire and distribute Indian language films in multiple formats worldwide. Our success is built on the relationships we have cultivated over the past 30 years with leading talent, production companies, exhibitors and other key participants in our industry
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||||||||||
(dollars in thousands) | 2015 | 2014 | % change | 2015 | 2014 | % change | ||||||||||||||||||
Revenue | $ | 98,791 | $ | 49,915 | 97.9 | $ | 148,834 | $ | 95,277 | 56.2 | ||||||||||||||
Gross Profit | 45,216 | 20,410 | 121.5 | 62,303 | 32,548 | 91.4 | ||||||||||||||||||
Operating profit | 26,152 | 8,475 | 208.6 | 30,282 | 10,647 | 184.4 | ||||||||||||||||||
Adjusted EBITDA(1) | 36,038 | 13,888 | 159.5 | 47,588 | 21,956 | 116.7 |
(1) | A reconciliation of the non-GAAP financial measures discussed within this filing to our IFRS net income is shown on Pages 24 and 25 |
Constant comparable revenue for the three and six months ended September 30, 2014 is $43.9 million and $83.1 million respectively, based on the average rate of exchange for the three months ended September 30, 2015 which was INR 64.2 to US $1.00.
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Financial Results for three months and six months ended September 30, 2015
Revenue
Revenue increased by 97.9% to $98.8 million in the three months ended September 30, 2015, compared to $49.9 million in the three months ended September 30, 2014. For the six months ended September 30, 2015, revenue increased by 56.2% to $148.8 million compared to $95.3 million in the six months ended September 30, 2014. Eros released 36 new films in the six months ended September 30, 2015, compared to 30 films in the six months ended September 30, 2014, which were comprised of the following:
Three months ended | ||||||||
June 30, 2015 | September 30, 2015 | |||||||
High budget film releases | 2 | 3 | ||||||
Medium budget film releases | 3 | 3 | ||||||
Low budget film releases | 11 | 14 | ||||||
Total new film releases | 16 | 20 |
Three months ended | ||||||||
June 30, 2014 | September 30, 2014 | |||||||
High budget film releases | 1 | 1 | ||||||
Medium budget film releases | 3 | 3 | ||||||
Low budget film releases | 5 | 17 | ||||||
Total new film releases | 9 | 21 |
The Company’s primary revenue streams are derived from three channels: theatrical, television syndication and digital and ancillary. For the three months ended September 30, 2015, the aggregate revenues from theatrical, television syndication and digital and ancillary were $61.0 million (61.7% of revenues), $23.2 million (23.5% of revenues) and $14.6 million (14.8% of revenues), respectively, compared to $17.2 million (34.5% of revenues), $23.6 million (47.3% of revenues) and $9.1 million (18.2% of revenues), respectively, for the three months ended September 30, 2014.
For the six months ended September 30, 2015, the aggregate revenues from theatrical, television syndication and digital and ancillary were $94.7 million (63.7% of revenues), $33.2 million (22.3% of revenues) and $20.9 million (14.0% of revenues), respectively, compared to $36.3 million (38.1% of revenues), $39.1 million (41.0% of revenues) and $19.9 million (20.9% of revenues), respectively, for the six months ended September 30, 2014.
The total revenue increase of 97.9% in the three months ended September 30, 2015 compared to September 30, 2014 reflects the mix of films released in each period as reflected in the table above. The increase in theatrical revenues in the three months ended September 30, 2015 reflects the strong box performance of our three high budget films Bajrangi Bhaijaan (Hindi), Welcome Back (Hindi) and Srimanthudu (Telugu) as well as strong theatrical performance of our other films.
The total revenue increase of 56.2% in the six months ended September 30, 2015 from September 30, 2014 reflects the mix and total number of films released in each period as reflected in the table above. The substantial increase in theatrical revenues in the six months ended September 30, 2015 reflects the performance of our five high budget films: Hindi films Bajrangi Bhaijaan and Welcome Back, No.1 and No.4 respectively in the Indian box office for 2015, Tamil films Uttama Villian and Masss and Telugu film Srimanthudu, which is the second highest grossing Telugu film. Following the strong theatrical performance of these films, television and digital and ancillary revenues along with catalogue monetization also contributed towards the growth in revenues.
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Revenue from India increased 139.1% to $61.4 million in the three months ended September 30, 2015, compared to $25.7 million in the three months ended September 30, 2014. In the six months ended September 30, 2015, revenue from India increased by 74.8% to $94.6 million, compared to $54.1 million in the six months ended September 30, 2014. The increase reflects the strong theatrical performance of the films released in the quarter in the Indian box office.
Revenue from Europe increased 82.8% to $12.5 million in the three months ended September 30, 2015, compared to $6.8 million in the three months ended September 30, 2014. In the six months ended September 30, 2015, revenue from Europe increased by 34.7% to $16.6 million, compared to $12.3 million in the six months ended September 30, 2014. The increase reflects the strong theatrical performance of the films released in the quarter.
Revenue from North America increased 341.4% to $6.7 million in the three months ended September 30, 2015, compared to $1.5 million in the three months ended September 30, 2014. In the six months ended September 30, 2015, revenue from North America increased by 253.4% to $9.9 million, compared to $2.8 million in the six months ended September 30, 2014. The increase in revenues reflects the strong theatrical performance of the films in North America.
Revenue from the rest of the world increased 14.9% to $18.3 million in the three months ended September 30, 2015, compared to $15.9 million in the three months ended September 30, 2014. Theatrical revenues increased in rest of the world due to strong performance of our new release slate in those markets combined with catalogue monetization. In the six months ended September 30, 2015, revenue from the rest of the world increased by 6.6% to $27.8 million, compared to $26.1 million in the six months ended September 30, 2014.
Cost of sales
Cost of sales increased by 81.6% to $53.6 million in the three months ended September 30, 2015, compared to $29.5 million in the three months ended September 30, 2014, primarily due to an increase in amortization costs of $11.8 million from $24.2 million in the three months ended September 30, 2014 to $36.0 million for the three months ended September 30, 2015 due to a higher number of high budget films in the current quarter (3 films) as compared to the corresponding quarter (1 film) last year. The increase in direct cost was also attributable to higher advertising and distribution costs as well as accrued overages to co-producers on account of our hit films.
Cost of sales increased by 37.9% to $86.5 million in the six months ended September 30, 2014, compared to $62.7 million, primarily due to an increase in amortization costs of $13.7 million from $50.7 million in the six months to September 30, 2014 to $64.6 million for the six months ended September 30, 2015. The increase in amortization cost is due to higher number of films (36 films) including high budget films (5 films) in the current six month period as compared to the corresponding period last year, where the number of films (30 films) including high budget films (2 films) was lower. The increase in direct costs was also attributable to higher advertising and distribution costs as well as accrued overages to co-producers on account of our hit films.
Gross profit
Gross profit was $45.2 million in the three months ended September 30, 2015, compared to $20.4 million in the three months ended September 30, 2014. The increase is primarily attributable to increased revenues in proportion to costs generated by the new release slate, as well as increase in revenue from catalog sales. As a percentage of revenues, our gross profit margin was 45.8% in the three months ended September 30, 2015, compared to 40.9% in the three months ended September 30, 2014.
Gross profit was $62.3 million in the six months ended September 30, 2015, compared to $32.5 million in the six months ended September 30, 2014. The increase is primarily attributable to increased revenues in proportion to costs generated by the new release slate, as well as increase in revenue from catalog sales. As a percentage of revenues, our gross profit margin was 41.9% in the six months ended September 30, 2015, compared to 34.2% in the six months ended September 30, 2014.
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Income Taxes
The provisions for income taxes were $7.6 million and $3.1 million for the three months ended September 30, 2015 and 2014, respectively, and $9.9 million and $4.7 million for the six months ended September 30, 2015 and 2014, respectively. The increase in tax expense is due to a change in the Indian tax rate from 33.99% to 34.61% which created an additional tax charge in first quarter on re-measurement of opening deferred tax liability and higher profit earned during the three and six months period ended September 30 2015. Effective income tax rates were 24.1% and 25.1% for six months ended September 30, 2015 and 2014, respectively, excluding non-deductible share-based payment charges.
Adjusted EBITDA
Adjusted EBITDA increased by 159.5% to $36.0 million in the three months ended September 30, 2015, compared to $13.9 million in the three months ended September 30, 2014. In the six months ended September 30, 2015, Adjusted EBITDA increased by 116.7% to $47.6 million, compared to $22.0 million in the six months ended September 30, 2014.The increase reflects the strong performance of our new film release slate as well as catalog monetization across theatrical, television and digital platforms.
Content
Content investment comprises film and content rights of $497.3 million and content advances of $261.2 million as at September 30, 2015, compared to $479.0 million and $240.2 million, respectively, as at March 31, 2015.
Conventions used in this Report
High Budget films refer to Hindi films with direct production costs in excess of $8.5 million and Tamil as well as Telugu films with direct production costs in excess of $7.0 million. Low Budget films refer to Hindi, Tamil and Telugu films with less than $1.0 million in direct production costs. Medium Budget films refer to Hindi, Tamil and Telugu films within the remaining range of direct production costs.
Reconciliation of adjusted EBITDA
In addition to the results prepared in accordance with IFRS, the Company has presented Adjusted EBITDA. The Company uses Adjusted EBITDA along with other IFRSs measures to evaluate operating performance. Adjusted EBITDA is defined by the Company as net income before interest expense, income tax expense and depreciation and amortization (excluding amortization of capitalized film content and debt issuance costs) adjusted for impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives) share based payments and transaction costs related to equity transactions.
Adjusted EBITDA, as used and defined by us, may not be comparable to similarly-titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDA provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures and working capital changes or tax position. However, our management team believes that Adjusted EBITDA is useful to an investor in evaluating our results of operations because this measure:
• | is widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such, term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors; |
• | helps investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and |
• | is used by our management team for various other purposes, including in presentations to our board of directors, as a basis for strategic planning and forecasting. |
See the supplemental financial schedules for reconciliations to IFRSs measures in the table below, which presents a reconciliation of our Adjusted EBITDA to net income.
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Adjusted EBITDA
Three months ended September 30, | Six months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||||||
Income tax expense | 7,572 | 3,148 | 9,868 | 4,689 | ||||||||||||
Net finance costs | 2,549 | 715 | 4,692 | 2,335 | ||||||||||||
Depreciation | 243 | 364 | 422 | 606 | ||||||||||||
Amortization(1) | 278 | 181 | 464 | 247 | ||||||||||||
Share based payments(2) | 9,382 | 5,466 | 16,276 | 10,248 | ||||||||||||
Net losses/(gains) on held for trading financial liabilities | 4,999 | (396 | ) | 1,084 | 2,009 | |||||||||||
Transaction costs related to equity transactions | — | 86 | — | 86 | ||||||||||||
Adjusted EBITDA | $ | 36,038 | �� | $ | 13,888 | $ | 47,588 | $ | 21,956 |
(1) Includes only amortization of intangible assets other than intangible content assets.
(2) Consists of compensation costs recognized with respect to all outstanding plans.
Sources and uses of cash
Net cash from operating activities in the six months ended September 30, 2015 was $91.2 million compared to $39.0 million in the six months ended September 30, 2014, an increase of 134.1%, due to an increase in profit before tax of $18.2 million, as well as a increase in trade and other receivables of $13.9 million, and an increase in trade and other payables of $7.0 million, compared to a $18.0 million increase in trade and other receivables and a $8.4 million decrease in trade and other payables in the six months ended September 30, 2014.
Net cash used in investing activities in the six months ended September 30, 2015 was $104.3 million, compared to $104.2 million in the six months ended September 30, 2014, an increase of 0.1%, due to a higher investment in film content with an increase of $2.2 million and an increase in the purchase of other intangible assets of $1.1 million due to ErosNow capitalized costs, offset by the advance given to an undertaking in 2014 of $2.5 million.
Net cash from financing activities in the six months ended September 30, 2015 was $10.2 million, compared to $97.3 million in the six months ended September 30, 2014, a decrease of 89.5%, principally due to the proceeds from issue of share capital of $5.4 million in 2015, compared to $92.3 million in the six months ended September 30, 2014.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Beginning on November 13, 2015, Eros International Pic was named a defendant in five substantially similar putative class action lawsuits filed in federal court in New Jersey and New York by purported shareholders of the Company. The three actions in New Jersey were consolidated, and, on May 17, 2016, were transferred to the United States District Court for the Southern District of New York where they were then consolidated with the other two actions on May 27, 2016. In general, the plaintiffs allege that the Company, and in some cases also Company’s management, violated federal securities laws by overstating Company’s financial and business results, enriching the Company’s controlling owners at the expense of other stockholders, and engaging in improper accounting practices. On April 5, 2016, a lead plaintiff and lead counsel were appointed in the now-consolidated New York action. A single consolidated amended complaint was filed on July 14, 2016. The Plaintiffs have alleged that the Company and certain individual defendants — Kishore Lulla, Jyoti Deshpande, Andrew Heffernan, and Prem Parameswaran — have violated the federal securities laws, specifically Sections 10(b) and 20(a) of the Exchange Act. The amended consolidated complaint does not assert certain claims that had been asserted in prior complaints including (1) claims for violations of Sections 11 and 15 of the Securities Act and (2) claims against certain individual defendants, who are now not named defendants. The claims principally arise out of allegations that the Company and the individual defendants made material misrepresentations about the success, size, and financial performance of Eros Now, our streaming video service, and our film library. The Company expects to move to dismiss the consolidated amended complaint. Given the uncertainty inherent in these matters, based on assessment made after taking appropriate legal advice, the Company does not believe that the ultimate outcome of this matter will be unfavorable. Accordingly, no liability has been recorded in Group’s consolidated financial statements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: July 26, 2016 | Eros International Plc | |||
By: | /s/ Jyoti Deshpande | |||
Name: Jyoti Deshpande | ||||
Title: CEO and Managing Director | ||||
By: | /s/ Prem Parameswaran | |||
Name: Prem Parameswaran | ||||
Title: Chief Financial Officer |
29