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): ☐
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): ☐
This Report on Form 6-K (other than Part II, Item 1.B hereof) shall be
incorporated by reference into the Registrant's Form F-3 Registration Statement (File No. 333-219708), as filed with the Securities
and Exchange Commission, to the extent not superseded by documents or reports subsequently filed or furnished by the Registrant
under the Securities Act of 1933 or the Securities Act of 1934, in each case as amended.
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
The accompanying notes are integral part of these unaudited
condensed consolidated financial statements.
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements.
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements
The accompanying notes are an integral part of these
unaudited condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
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 First Names House, Victoria Road, Douglas, Isle of Man IM2 4DF.
These unaudited 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, filed with the U.S. Securities and Exchange Commission on August 14, 2019 for the fiscal year ended March 31,
2019 (the “Annual Report”). 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, 2019 other than the new standard adopted.
The unaudited condensed consolidated interim financial statements for the six months ended September 30, 2019 were approved by
the Board of Directors of Eros and authorized for issue on May 20, 2020.
The Group experienced significant net losses in recent
years. For six month ended September 30, 2019, year ended March 31, 2019 and year ended March 31, 2018, the Group incurred net
loss of $23,030, $410,453 and $9,745 respectively.
The Group is also dependent upon external borrowings
for its working capital needs and investment in content and film rights. As at September 30, 2019, Group’s borrowings were
$ 211,902. During the current period, there has been a credit rating downgrade of our Indian listed subsidiary due to delay
in payment of loan interest for the month of April and May 2019 which has been subsequently cured.
Despite these uncertainties, and uncertainties
arising from the Covid-19 pandemic, which have been explained in detail in Note 18, the management continues to adopt the
going concern basis in preparing the condensed consolidated financial statements as of September 30, 2019 in accordance
with IFRS as issued by the IASB, which assumes that the Group will be able to discharge its liabilities, including mandatory repayment
of the banking facilities, as disclosed in Note 8 as they fall due as:
|
|
a)
|
On September 26, 2019, the Group entered
into a definitive agreement with an institutional investor to procure additional
funding of $25 million through the issuance of senior convertible notes, resulting
enhanced liquidity to the Group. Subsequent to the reporting period, the Company issued
share capital in lieu of senior convertible notes payable
|
|
|
b)
|
On April 17, 2020, the Group entered
into an Agreement and plan of merger with STX Filmworks, Inc, a Delaware corporation
(“STX”) – a Company that specializes in producing, financing, distributing
and marketing film, television and digital content. This merger will help create a pre-eminent
global media company, which can develop local and international premium content at scale
and across many platforms. As the result of this merger, new investors and existing
STX equity investors are expected to contribute incremental equity financing of $125
million. The group expects the combined company to be uniquely positioned to benefit
from the accelerating consumption of premium digital content in the world’s most
important growth markets with robust capital structure and experienced management team.
The combined company is also expected to generate operating synergies within 24 months
of closing of the merger transaction, stemming from integration and scale benefits, optimization
of global content distribution and enhanced monetization of the Eros Now platform.
|
|
|
c)
|
The Group’s cash and bank balance
as at September 30, 2019 was $99,442 and the net monetary assets and liabilities
position as at September 30, 2019, March 31, 2019 and March 31, 2018 are positive.
|
|
|
d)
|
The Group have generated positive operating cash flow before incurring capital expenditures for
the period/year ended September 30, 2019, March 31, 2019 and March 31, 2018, respectively .
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
3.
|
NEW STANDARDS ADOPTED AS AT APRIL 1, 2018
|
Adoption of IFRS 16, "Leases"
Effective April 1, 2019, the Company adopted IFRS
16, Leases, which specifies how to recognize, measure, present and disclose leases. The standard provides a single accounting
model, requiring the recognition of assets and liabilities for all major leases previously classified as “operational leases”.
The company applied Modified Retrospective Approach on the date of initial application. The Company recognizes a right-of-use
asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, based on the
initial amount of the lease liability. The assets are depreciated to the earlier of the end of the useful life of the right-of-use
asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the
future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain
to exercise that option. In addition, the right-of-use asset is periodically adjusted for certain re-measurements of the lease
liability. There is no impact on transition in opening balance of retained earnings as at April 1, 2019.
Operating leases
The Company has decided to use the approach that allows
the right-of-use asset to be recognized at an amount equal to the liability as at the date of initial application. Based on such
approach the Right-to-use (ROU) asset and lease liability as at April 1, 2019 have been created at $ 2,475 and $ 2,475, respectively.
Unwinding of lease liability amounting $74 and amortization of Right-to-use asset amounting $ 681 have been recorded
for the six months ended September 30, 2019 as against lease rent expenses recorded in the prior period/s. The weighted average
incremental borrowing rate of 12% (for India) and 7.45% (for other locations) have been applied to lease liabilities recognized
in the statement of financial position at the date of initial application.
Finance leases
As of April 01, 2019, Equipment amounting $ 243 has
been reclassified to ROU from property and equipment and long-term and short-term borrowing amounting $153 and $ 98, respectively,
have been reclassified to lease liabilities in relation to these finance lease. The Company has continued to discount the lease
rental at interest rate implicit in these lease agreements, with unwinding of lease liability amounting $ 14 and amortization of
ROU over the useful life amounting $ 59 for the six months ended September 30, 2019.
Future minimum lease payments
Future minimum lease payments due as of September
30, 2019 is as below:
|
|
|
Lease payments
|
|
|
Interest
|
|
|
Net present
value
|
|
|
Within than one year
|
|
$
|
1,111
|
|
|
$
|
147
|
|
|
$
|
964
|
|
|
1 - 3 years
|
|
|
1,097
|
|
|
|
124
|
|
|
|
973
|
|
|
3 - 5 years
|
|
|
198
|
|
|
|
4
|
|
|
|
194
|
|
|
|
|
$
|
2,406
|
|
|
$
|
275
|
|
|
$
|
2,131
|
|
Future minimum lease payments due as of March 31,
2019 is as below:
|
|
|
Lease payments
|
|
|
Interest
|
|
|
Net present
value
|
|
|
Within than one year
|
|
$
|
1,537
|
|
|
$
|
199
|
|
|
$
|
1,338
|
|
|
1 - 3 years
|
|
|
1,166
|
|
|
|
169
|
|
|
|
997
|
|
|
3 - 5 years
|
|
|
401
|
|
|
|
18
|
|
|
|
383
|
|
|
|
|
$
|
3,104
|
|
|
$
|
386
|
|
|
$
|
2,718
|
|
Accounting and reporting pronouncements not
yet adopted
Certain new standards, interpretations and
amendments to existing standards have been published that are mandatory for the Company’s accounting periods beginning on
or after April 1, 2020 or later periods. Those which are considered to be relevant to the Company’s operations are set
out below.
|
i.
|
In October 2018, the IASB issued amendments to IFRS 3 “Business Combinations” regarding the definition of a “Business.” The amendments:
|
|
|
•
|
|
clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;
|
|
|
•
|
|
narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;
|
|
|
•
|
|
add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;
|
|
|
•
|
|
remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and
|
|
|
•
|
|
add an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.
|
The above amendments are effective for business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
January 1, 2020.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
The Company is currently evaluating the
impact of these amendments on its consolidated financial statements.
|
ii.
|
In October 2018, the IASB issued amendments to IAS 1 “Presentation of Financial Statements” (“IAS 1”) and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors ” (“IAS 8”) which revised the definition of “Material.” Three aspects of the new definition should especially be noted, as described below:
|
|
|
•
|
|
Obscuring. The existing definition only focused on omitting or misstating information, however, the Board concluded that obscuring material information with information that can be omitted can have a similar effect. Although the term obscuring is new in the definition, it was already part of IAS 1 (IAS 1.30A);
|
|
|
•
|
|
Could reasonably be expected to influence. The existing definition referred to “could influence” which the Board felt might be understood as requiring too much information as almost anything “could influence” the decisions of some users even if the possibility is remote;
|
|
|
•
|
|
Primary users. The existing definition referred only to ‘users’ which again the Board feared might be understood too broadly as requiring them to consider all possible users of financial statements when deciding what information to disclose.
|
The amendments highlight five ways in which
material information can be obscured:
|
|
•
|
|
if the language regarding a material item, transaction or other event is vague or unclear;
|
|
|
•
|
|
if information regarding a material item, transaction or other event is scattered in different places in the financial statements;
|
|
|
•
|
|
if dissimilar items, transactions or other events are inappropriately aggregated;
|
|
|
•
|
|
if similar items, transactions or other events are inappropriately disaggregated; and
|
|
|
•
|
|
if material information is hidden by immaterial information to the extent that it becomes unclear what information is material.
|
The new definition of material and the accompanying
explanatory paragraphs are contained in IAS 1. The definition of material in IAS 8 has been replaced with a reference
to IAS 1. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application
is permitted.
The Company is currently evaluating the impact of these
amendments on its consolidated financial statements.
The Group’s 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.
|
5.
|
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 - fair value measurement derived from unadjusted quoted prices in active markets for identical assets or liabilities;
|
|
|
•
|
Level 2 - fair value measurement 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 - fair value measurement derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
The table below presents assets and liabilities
measured at fair value on a recurring basis, which are all category Level 2:
|
|
|
|
|
|
As at September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
Trade and other receivables
|
|
|
142,026
|
|
|
|
—
|
|
|
|
142,026
|
|
|
Investments at FVTPL
|
|
|
200
|
|
|
|
—
|
|
|
|
200
|
|
|
Investments at FVTOCI
|
|
|
2,000
|
|
|
|
—
|
|
|
|
2,000
|
|
|
Total
|
|
$
|
144,226
|
|
|
|
—
|
|
|
$
|
144,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Borrowings at fair value
|
|
|
53,797
|
|
|
|
—
|
|
|
|
53,797
|
|
|
Total
|
|
$
|
53,797
|
|
|
|
—
|
|
|
$
|
53,797
|
|
|
|
|
|
|
|
As at March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Trade and other receivables
|
|
|
125,229
|
|
|
|
—
|
|
|
|
125,229
|
|
|
Investments at FVTPL
|
|
|
1,042
|
|
|
|
—
|
|
|
|
1,042
|
|
|
Investments at FVTOCI
|
|
|
2,650
|
|
|
|
—
|
|
|
|
2,650
|
|
|
Total
|
|
$
|
128,921
|
|
|
|
—
|
|
|
$
|
128,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
620
|
|
|
|
—
|
|
|
|
620
|
|
|
Borrowings at fair value
|
|
|
68,349
|
|
|
|
—
|
|
|
|
68,349
|
|
|
Total
|
|
$
|
68,969
|
|
|
|
—
|
|
|
$
|
68,969
|
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
Financial assets and liabilities subject to offsetting
enforceable master netting arrangements or similar agreements as at March 31, 2019 are as follows:
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
Average
contract rate
|
|
|
Notional
principal
amount
|
|
|
Fair value of
derivative
instruments
|
|
|
Fair value of
derivative
instrument
|
|
|
Cross currency swap
|
|
|
6.4%
|
|
|
|
10,040
|
|
|
|
—
|
|
|
|
(620
|
)
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
(620
|
)
|
None of the above derivative instruments is designated
in a hedging relationship. A net loss of $Nil (loss in 2019: $902) in respect of the above derivative instruments has been recognised
in the consolidated statements of income within other gain/(loss), net. Fair value of interest rate derivative involving interest
rate options and cross currency swap is estimated as the present value of the estimated future cash flows based on observable yield
curves using an option pricing model.
Management uses valuation techniques in measuring the
fair value of financial instruments, where active market quotes are not available. In applying the valuation techniques, management
makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable
data that market participants would use in pricing the instrument.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
Where applicable data is not observable, management
uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices
that would be achieved in an arm’s length transaction at the reporting date.
There were no transfers between any Levels in any of
the years.
|
6.
|
INTANGIBLE ASSETS – CONTENT
|
|
|
|
Gross
Content
Assets
|
|
|
Accumulated
Amortization
|
|
|
Impairment
Loss
|
|
|
Content
Assets
|
|
|
As at September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Film and content rights
|
|
$
|
1,703,797
|
|
|
$
|
(968,619
|
)
|
|
$
|
(366,703
|
)
|
|
$
|
368,475
|
|
|
Content advances
|
|
|
395,182
|
|
|
|
—
|
|
|
|
(38,832
|
)
|
|
|
356,350
|
|
|
Film productions
|
|
|
14,764
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,764
|
|
|
Non-current content assets
|
|
$
|
2,113,743
|
|
|
$
|
(968,619
|
)
|
|
$
|
(405,535
|
)
|
|
$
|
739,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Film and content rights
|
|
$
|
1,675,406
|
|
|
$
|
(954,628
|
)
|
|
$
|
(366,703
|
)
|
|
$
|
354,075
|
|
|
Content advances
|
|
|
378,268
|
|
|
|
—
|
|
|
|
(38,832
|
)
|
|
|
339,436
|
|
|
Film productions
|
|
|
13,061
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,061
|
|
|
Non-current content assets
|
|
$
|
2,066,735
|
|
|
$
|
(954,628
|
)
|
|
$
|
(405,535
|
)
|
|
$
|
706,572
|
|
Changes in the content assets are as follows:
|
|
|
As At ended
|
|
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
|
|
|
(in thousands)
|
|
|
Film productions
|
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
13,061
|
|
|
$
|
10,867
|
|
|
Additions
|
|
|
1,831
|
|
|
|
3,413
|
|
|
Exchange difference
|
|
|
(128
|
)
|
|
|
(775
|
)
|
|
Transfer to film and content rights
|
|
|
—
|
|
|
|
(444
|
)
|
|
Closing balance
|
|
$
|
14,764
|
|
|
$
|
13,061
|
|
|
|
|
|
|
|
|
|
|
|
|
Content advances
|
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
339,436
|
|
|
$
|
349,568
|
|
|
Additions(*)
|
|
|
65,129
|
|
|
|
261,002
|
|
|
Reclassifications
|
|
|
—
|
|
|
|
(65
|
)
|
|
Exchange difference
|
|
|
(4,178
|
)
|
|
|
(12,314
|
)
|
|
Impairment loss
|
|
|
(3,610
|
)
|
|
|
(38,832
|
)
|
|
Transfer to film and content rights
|
|
|
(40,427
|
)
|
|
|
(219,923
|
)
|
|
Closing balance
|
|
$
|
356,350
|
|
|
$
|
339,436
|
|
|
|
|
|
|
|
|
|
|
|
|
Film and content rights
|
|
|
|
|
|
|
|
|
|
Opening balance
|
|
$
|
354,075
|
|
|
$
|
638,108
|
|
|
Amortization
|
|
|
(24,269
|
)
|
|
|
(130,155
|
)
|
|
Exchange difference
|
|
|
(1,758
|
)
|
|
|
(7,542
|
)
|
|
Impairment loss
|
|
|
—
|
|
|
|
(366,703
|
)
|
|
Transfer from film productions and content advance
|
|
|
40,427
|
|
|
|
220,367
|
|
|
Closing balance
|
|
$
|
368,475
|
|
|
$
|
354,075
|
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
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.
Film and content rights with a carrying amount of $303,489
(March 31, 2019: $310,996) have been pledged against secured borrowings (refer note 8).
(*) Includes transfer from inventory amounting to
$ 435 (March 31, 2019: Nil)
|
7.
|
TRADE AND OTHER RECEIVABLES
|
|
|
|
As at
|
|
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
|
Trade accounts receivables (net of credit impairment loss)
|
|
|
|
|
|
|
|
Trade accounts receivables at fair value
|
|
$
|
142,026
|
|
|
|
125,229
|
|
|
Trade accounts receivables at amortised cost
|
|
|
47,774
|
|
|
|
71,129
|
|
|
Total Trade accounts receivables
|
|
$
|
189,800
|
|
|
$
|
196,358
|
|
|
Other receivables at amortised cost
|
|
|
16,067
|
|
|
|
18,852
|
|
|
Total Trade and other receivables
|
|
|
205,867
|
|
|
|
215,210
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
193,444
|
|
|
|
205,145
|
|
|
Non-current
|
|
|
12,423
|
|
|
|
10,065
|
|
|
|
|
$
|
205,867
|
|
|
$
|
215,210
|
|
The age of account receivables net of credit of credit impairment loss are
past due but not impaired were as follows:
|
|
|
As at
|
|
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
|
Not more than three months
|
|
$
|
37,308
|
|
|
$
|
44,687
|
|
|
More than three months but not more than six months
|
|
|
47,104
|
|
|
|
15,948
|
|
|
More than six months but not more than one year
|
|
|
43,353
|
|
|
|
15,310
|
|
|
More than one year
|
|
|
7,126
|
|
|
|
8,796
|
|
|
|
|
$
|
134,891
|
|
|
$
|
84,741
|
|
The movement in the allowances for expected credit losses is as follows:
|
|
|
Period ended
|
|
|
|
|
September 30, 2019
|
|
|
|
|
Trade
Receivables
|
|
|
Other
Receivables
|
|
|
Total
Receivables
|
|
|
Balance as on April 1, 2019
|
|
$
|
41,335
|
|
|
$
|
447
|
|
|
$
|
41,782
|
|
|
Charged to operations
|
|
|
26,653
|
|
|
|
68
|
|
|
|
26,721
|
|
|
Unwinding of expected credit loss (included in finance income)
|
|
|
(5,649
|
)
|
|
|
—
|
|
|
|
(5,649
|
)
|
|
Reversal of expected credit loss (included in other gains/(losses))
|
|
|
(3,274
|
)
|
|
|
—
|
|
|
|
(3,274
|
)
|
|
Translation adjustment
|
|
|
(628
|
)
|
|
|
—
|
|
|
|
(628
|
)
|
|
Bad debts
|
|
|
(2,648
|
)
|
|
|
(68
|
)
|
|
|
(2,716
|
)
|
|
Balance as at September 30, 2019
|
|
$
|
55,789
|
|
|
$
|
447
|
|
|
$
|
56,236
|
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
|
|
Year ended
|
|
|
|
|
March 31, 2019
|
|
|
|
|
Trade
Receivables
|
|
|
Other
Receivables
|
|
|
Total
Receivables
|
|
|
Balance on April 1, 2018
|
|
$
|
10,193
|
|
|
$
|
—
|
|
|
$
|
10,193
|
|
|
Impact of adoption of IFRS 9
|
|
|
18,050
|
|
|
|
447
|
|
|
|
18,497
|
|
|
Balance as on April 1, 2018
|
|
|
28,243
|
|
|
|
447
|
|
|
|
28,690
|
|
|
Charged to operations
|
|
|
60,208
|
|
|
|
7,284
|
|
|
|
67,492
|
|
|
Unwinding of expected credit loss (included in finance income)
|
|
|
(13,227
|
)
|
|
|
—
|
|
|
|
(13,227
|
)
|
|
Reversal of expected credit loss (included in other gains/(losses))
|
|
|
(20,698
|
)
|
|
|
—
|
|
|
|
(20,698
|
)
|
|
Translation adjustment
|
|
|
(160
|
)
|
|
|
—
|
|
|
|
(160
|
)
|
|
Bad debts
|
|
|
(13,031
|
)
|
|
|
(7,284
|
)
|
|
|
(20,315
|
)
|
|
Balance at the March 31, 2019
|
|
$
|
41,335
|
|
|
$
|
447
|
|
|
$
|
41,782
|
|
Trade and other receivables with a net carrying amount
of $66,563 (March 31, 2019: $83,991) have been pledged against secured borrowings (Refer Note 8).
An analysis of long-term borrowings is shown in the table below.
|
|
|
Nominal
|
|
|
|
|
|
As at
|
|
|
|
|
Interest Rate
|
|
|
Maturity
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
Asset backed borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vehicle loan
|
|
|
2.5 - 9.5%
|
|
|
|
2017-22
|
|
|
$
|
207
|
|
|
$
|
382
|
|
|
Term loan
|
|
|
MCLR +3.2% - 4.50%
|
|
|
|
2019-22
|
|
|
|
10,352
|
|
|
|
12,947
|
|
|
Term loan
|
|
|
BR + 2.75%
|
|
|
|
2020-21
|
|
|
|
873
|
|
|
|
1,083
|
|
|
Term loan
|
|
|
10.39% - 13.75%
|
|
|
|
2020-23
|
|
|
|
—
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,432
|
|
|
$
|
14,663
|
|
|
Unsecured borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail bond
|
|
|
6.50%
|
|
|
|
2021-22
|
|
|
|
61,508
|
|
|
|
65,215
|
|
|
Convertible notes(2)
|
|
|
14.23%
|
|
|
|
2020-21
|
|
|
|
20,997
|
|
|
|
68,349
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
82,505
|
|
|
$
|
133,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of unamortised costs
|
|
|
|
|
|
|
|
|
|
|
(518
|
)
|
|
|
(691
|
)
|
|
Instalments due within one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible notes(2)
|
|
|
|
|
|
|
|
|
|
|
(20,997
|
)
|
|
|
(68,349
|
)
|
|
Others
|
|
|
|
|
|
|
|
|
|
|
(7,371
|
)
|
|
|
(7,267
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
65,051
|
|
|
$
|
71,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term borrowings at fair value
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Long-term borrowings at amortised cost
|
|
|
|
|
|
|
|
|
|
$
|
65,051
|
|
|
$
|
71,920
|
|
Bank Prime Lending Rate (“BPLR”) and Marginal
Cost based Lending Rate (“MCLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and
floating charges over certain Group assets.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
Analysis of short-term borrowings
|
|
|
Nominal
|
|
As at
|
|
|
|
|
Interest rate (%)
|
|
September, 30
2019
|
|
|
March 31,
2019
|
|
|
|
|
|
|
(in thousands)
|
|
|
Asset backed borrowings
|
|
|
|
|
|
|
|
|
|
|
|
Export credit, bill discounting and overdraft
|
|
MCLR +.40% to 4.60%
|
|
$
|
39,864
|
|
|
$
|
32,078
|
|
|
Export credit, bill discounting and overdraft
|
|
Base Rate + 0.5% to 1%
|
|
|
3,572
|
|
|
|
3,533
|
|
|
Export credit, bill discounting and overdraft
|
|
6.01% - 15.25%
|
|
|
28,083
|
|
|
|
26,719
|
|
|
Convertible notes(1)
|
|
9.96%
|
|
|
32,800
|
|
|
|
—
|
|
|
Short- term loan(3)
|
|
3.25% - 15.75%
|
|
|
14,164
|
|
|
|
70,962
|
|
|
|
|
|
|
$
|
118,483
|
|
|
$
|
133,292
|
|
|
Unsecured borrowings
|
|
|
|
|
|
|
|
|
|
|
|
Instalments due within one year on long-term borrowing
|
|
|
|
|
28,368
|
|
|
|
75,616
|
|
|
|
|
|
|
$
|
146,851
|
|
|
$
|
208,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings at fair value
|
|
|
|
|
53,797
|
|
|
|
68,349
|
|
|
Short-term borrowings at amortised cost
|
|
|
|
$
|
93,054
|
|
|
$
|
140,559
|
|
|
1.
|
|
Eros International Plc. (“issuer”) issued Senior Convertible Notes (SCN
or convertible notes) on December 06, 2017 amounting to $122,500 principal amount and option to purchase warrants up to 2,000
of A ordinary share for a term of 6 months at an offer price of $100,000 by private placement. The notes are payable in equal
installments of $3,500 per month for 35 months starting December 31, 2017. The installments can be paid either in cash or can
be converted into A ordinary equity shares of the issuer at the option of the issuer as per the terms of the arrangement.
|
|
2.
|
|
Eros International Plc. (“issuer”) issued Senior Convertible Notes (SCN
or convertible notes) on September 25, 2019 amounting to $27,500 principal amount. The maturity date of convertible is September
26, 2020. The installments will be converted into A ordinary equity shares of the issuer at the option of the issuer as per the
terms of the arrangement.
|
The holder of the notes can defer the payment
of the amount due on any instalment dates to another instalment date as well as has the right to accelerate the payment on the
notes as per the terms of the agreement
The Company has classified the instrument
as a financial liability at fair value through profit or loss. The Company has used the Black – Scholes option pricing model
to value the share warrants exercisable within six months and the Monte-Carlo simulation model to obtain the fair value of the
convertible notes. Fair value of the financial liability outstanding as at the date of reporting is $53,797 (2019: $68,349)
The mark-to-market loss for the six months
ended September 30, 2019, amounting to $9,157 (September 30,2018: $19,743) and interest expenses for the six months ended September
30, 2019, amounting to $3,968 (September 30,2018: $5,689) have been recognized within other gain/(losses) and net finance cost,
respectively, net in the Statement of Income.
|
3.
|
|
Secured by pledge of shares held in the Group’s majority owned subsidiary,
Eros International Media Limited, India.
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
|
4.
|
For the six months ended September 30, 2019 capitalization rate of interest was 10.65% (March 31,2019: 10.21%)
|
Fair value of the long-term borrowings as at September 30,
2019 is $80,911 (March 31, 2019: $140,968). Fair values of long-term financial liabilities except retail bonds and convertibles
notes 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, 2019, the fair value of retail bond amounting to $48,961 (March
31, 2019: $59,313) has been determined using quoted prices from the London Stock Exchange and the fair value of senior convertible
notes has been determined at $53,797 (March 31, 2019: $68,349) by an independent valuation expert using Monte-Carlo simulation
model. Carrying amount of short-term borrowings are considered a reasonable approximation of fair value.
Reconciliation of fair value measurement of convertible notes:
|
|
|
September 30,
2019
|
|
|
Particulars
|
|
(in thousands)
|
|
|
As at March 31,2019
|
|
$
|
68,349
|
|
|
Interest
|
|
|
3,968
|
|
|
‘A’ ordinary shares issued in lieu of convertible notes
|
|
|
(52,677
|
)
|
|
Receipt from convertible notes
|
|
|
25,000
|
|
|
Loss on fair value of convertible notes
|
|
|
9,157
|
|
|
As at September 30,2019
|
|
$
|
53,797
|
|
|
|
|
September, 30
|
|
|
March, 31
|
|
|
|
|
2019
|
|
|
2019
|
|
|
|
|
(in thousands)
|
|
|
Payable under the film financing arrangements
|
|
$
|
1,981
|
|
|
$
|
8,366
|
|
|
|
|
$
|
1,981
|
|
|
$
|
8,366
|
|
Acceptances comprise of short – term credit availed
from financial institutions for payment to film producers for film co-production arrangement entered by the group. The carrying
value of acceptances are considered a reasonable approximation of fair value
|
|
|
Number of
Shares
|
|
|
GBP
|
|
|
Authorized
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares of 30p each at March 31, 2019
|
|
|
150,000,000
|
|
|
|
45,000
|
|
|
Ordinary shares of 30p each at September 30, 2019 (*)
|
|
|
200,000,000
|
|
|
|
60,000
|
|
(*) The Company increased authorized number of shares to 200,000,000
on September 25, 2019.
|
|
|
Number of Shares
|
|
|
USD
|
|
|
Allotted, called up and fully paid
|
|
A Ordinary
30p Shares(*)
|
|
|
B Ordinary
30p Shares(*)
|
|
|
(in thousands)
|
|
|
As at March 31, 2018
|
|
|
55,718,423
|
|
|
|
9,712,715
|
|
|
$
|
35,334
|
|
|
Issue of shares in the quarter ended June 30, 2018
|
|
|
2,747,645
|
|
|
|
—
|
|
|
|
1,138
|
|
|
Issue of shares in the quarter ended September 30, 2018
|
|
|
3,773,385
|
|
|
|
—
|
|
|
|
1,471
|
|
|
Issue of shares in the quarter ended December 31, 2018
|
|
|
1,659,767
|
|
|
|
—
|
|
|
|
641
|
|
|
Transfer of B Ordinary to A Ordinary share
|
|
|
1,500,000
|
|
|
|
(1,500,000
|
)
|
|
|
—
|
|
|
Issue of shares in the quarter ended March 31, 2019
|
|
|
1,892,518
|
|
|
|
—
|
|
|
|
742
|
|
|
As at March 31, 2019
|
|
|
67,291,738
|
|
|
|
8,212,715
|
|
|
$
|
39,326
|
|
|
Issue of shares in the quarter ended June 30, 2019
|
|
|
4,192,459
|
|
|
|
—
|
|
|
|
1,598
|
|
|
Issue of shares in the quarter ended September 30, 2019
|
|
|
25,956,283
|
|
|
|
7,044,210
|
|
|
|
12,276
|
|
|
|
|
|
97,440,480
|
|
|
|
15,256,925
|
|
|
|
53,200
|
|
(*) Each A ordinary shares is entitled to
one vote on all matters and each B shares is entitled to ten votes.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
The Company issued A and B Ordinary shares as follows:
|
|
|
A Ordinary
|
|
B Ordinary
|
|
|
|
As at
|
|
As at
|
|
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
September 30,
2019
|
|
|
March 31,
2019
|
|
Issuance to Founders Group(1)(7)
|
|
|
—
|
|
|
|
1,769,911
|
|
|
4,878,050
|
|
|
|
—
|
|
Issuance towards settlement of Convertible notes(2)
|
|
|
29,203,396
|
|
|
|
4,411,359
|
|
|
—
|
|
|
|
—
|
|
Exercise against Restricted Share Unit/ Management scheme (3)(6)
|
|
|
813,333
|
|
|
|
770,541
|
|
|
2,166,160
|
|
|
|
—
|
|
Issuance towards Reliance Industries Limited (4)
|
|
|
—
|
|
|
|
3,111,088
|
|
|
—
|
|
|
|
—
|
|
2015 Share Plan (5)
|
|
|
132,013
|
|
|
|
10,416
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
30,148,742
|
|
|
|
10,073,315
|
|
|
7,044,210
|
|
|
|
—
|
(1) Average price of A ordinary
shares at $NIL price (March 2019: $14.69) and B ordinary shares at $1.64 (March 2019: Nil)
(2) Average exercise price of A ordinary
shares $1.80 (March 2019: $11.28)
(3) 713,333 A ordinary shares
(March 2019: 183,000) exercised at NIL price (March 2019: $0.39) and 2,166,160 B ordinary shares exercised at Nil price
(March 2019: Nil)
(4) Average exercise price of A ordinary
shares NIL (March 2019: $15)
(5) Average exercise price of A ordinary
shares $2.23 (March 2019: $7.92)
(6) Include payable settled by
issuance 100,000 A ordinary shares issued to a consultant at an average exercised price at $2.23 (March 2019: NIL)
(7) Include 4,451,210 B ordinary
shares issued against advance received ($6,150) and amount payable ($1,150) as of March 31, 2019.
|
11.
|
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 ended
September 30,
|
|
|
Six months ended
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPO India Plan
|
|
$
|
48
|
|
|
$
|
351
|
|
|
$
|
171
|
|
|
$
|
779
|
|
|
2014 Share Plan
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47
|
|
|
2015 Share Plan
|
|
|
1,116
|
|
|
|
2,345
|
|
|
|
1,211
|
|
|
|
2,352
|
|
|
Other share option awards (*)
|
|
|
1,344
|
|
|
|
1,894
|
|
|
|
2,009
|
|
|
|
3,355
|
|
|
Management scheme (staff share grant)
|
|
|
3,209
|
|
|
|
2,096
|
|
|
|
5,992
|
|
|
|
4,583
|
|
|
|
|
$
|
5,717
|
|
|
$
|
6,686
|
|
|
$
|
9,383
|
|
|
$
|
11,116
|
|
(*) includes Restricted Share Unit (RSU)
and Other share option plans
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
12.
|
EARNINGS PER SHARE (EPS)
|
|
|
|
Three
months ended September 30,
|
|
|
Six
months ended September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
Basic
|
|
|
Diluted
|
|
|
Basic
|
|
|
Diluted
|
|
|
Basic
|
|
|
Diluted
|
|
|
Basic
|
|
|
Diluted
|
|
|
Earnings/(loss) attributable to the equity holders of the parent
|
|
$
|
(27,900
|
)
|
|
$
|
(27,900
|
)
|
|
$
|
12,569
|
|
|
$
|
12,569
|
|
|
$
|
(21,788
|
)
|
|
$
|
(21,788
|
)
|
|
$
|
(1,022
|
)
|
|
$
|
(1,022
|
)
|
|
Potential dilutive effect of convertible notes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,109
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Potential dilutive effect related to share based compensation scheme in subsidiary undertaking
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(36
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(142
|
)
|
|
Adjusted earnings/(loss) attributable to equity holders of the parent
|
|
$
|
(27,900
|
)
|
|
$
|
(27,900
|
)
|
|
$
|
12,569
|
|
|
$
|
13,642
|
|
|
$
|
(21,788
|
)
|
|
$
|
(21,788
|
)
|
|
$
|
(1,022
|
)
|
|
$
|
(1,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
|
|
|
99,484,350
|
|
|
|
99,484,350
|
|
|
|
71,000,987
|
|
|
|
71,000,987
|
|
|
|
87,496,672
|
|
|
|
87,496,672
|
|
|
|
69,174,427
|
|
|
|
69,174,427
|
|
|
Potential dilutive effect related to share based compensation plan
|
|
|
—
|
|
|
|
8,490,553
|
|
|
|
—
|
|
|
|
9,457,270
|
|
|
|
—
|
|
|
|
5,977,031
|
|
|
|
—
|
|
|
|
2,034,547
|
|
|
Adjusted weighted average number of shares
|
|
|
99,484,350
|
|
|
|
107,974,903
|
|
|
|
71,000,987
|
|
|
|
80,458,257
|
|
|
|
87,496,672
|
|
|
|
93,473,703
|
|
|
|
69,174,427
|
|
|
|
71,208,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings/(loss) attributable to the equity holders of the parent per share (cents)
|
|
|
(28.0
|
)
|
|
|
(28.0
|
)
|
|
|
17.7
|
|
|
|
17.0
|
|
|
|
(24.9
|
)
|
|
|
(24.9
|
)
|
|
|
(1.5
|
)
|
|
|
(1.5
|
)
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
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 six months ended September 30, 2019, 1,085,000 shares were not included in diluted earnings per share (September 30, 2018:
1,847,035) Further, the Company have excluded convertible notes 19,125,832 shares because their effect was anti-dilutive
(September 30, 2018:7,197,804). During the three months ended September 30, 2019, 2,482,431 shares were not included in diluted
earnings per share (September 30, 2018: 1,847,035) Since there is loss for the period, and for the quarter, the potential
equity shares resulting from dilutive options are not considered as dilutive and hence, the Diluted EPS is same as Basic EPS.
|
13.
|
OTHER GAINS/(LOSSES), NET
|
|
|
|
Three months ended
September 30,
|
|
|
Six months ended
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Foreign exchange (loss)/gain,net
|
|
$
|
1,894
|
|
|
$
|
328
|
|
|
$
|
3,690
|
|
|
$
|
3,689
|
|
|
(Loss) on sale of property and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
—
|
|
|
Reversal of expected credit (loss)
|
|
|
1,987
|
|
|
|
5,982
|
|
|
|
3,274
|
|
|
|
10,563
|
|
|
Net losses on derecognition of financial assets measured at FVTPL(*)
|
|
|
(726
|
)
|
|
|
(1,464
|
)
|
|
|
(996
|
)
|
|
|
(2,768
|
)
|
|
Loss of investments measured at FVTPL
|
|
|
(33
|
)
|
|
|
—
|
|
|
|
(842
|
)
|
|
|
—
|
|
|
Credit from Government of India
|
|
|
—
|
|
|
|
—
|
|
|
|
760
|
|
|
|
—
|
|
|
(Loss)/Gain on financial liability (convertible notes) measured at FVTPL
|
|
|
(14,142
|
)
|
|
|
1,580
|
|
|
|
(9,157
|
)
|
|
|
(19,743
|
)
|
|
Change in fair value of receivables
|
|
|
(306
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
$
|
(11,326
|
)
|
|
$
|
6,426
|
|
|
$
|
(3,275
|
)
|
|
$
|
(8,259
|
)
|
(*) Arising on assignment and novation of trade receivables and
trade payables with no-recourse. Derecognition of aforesaid financial assets/liabilities measured at amortized cost is to mitigate
both credit risk and liquidity risk
|
14.
|
NON-CASH EXPENSE/(INCOME)
|
Significant non-cash expenses except loss on sale of
assets, share based compensation, depreciation, derivative interest and amortization were as follows:
|
|
|
Six months ended September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Unrealised foreign exchange loss / (gain)
|
|
$
|
(3,774
|
)
|
|
$
|
(3,776
|
)
|
|
Credit impairment loss, net
|
|
|
15,082
|
|
|
|
3,571
|
|
|
Loss of available- for – sale measured at fair value through profit and loss
|
|
|
842
|
|
|
|
—
|
|
|
Net losses on de-recognition of financial assets measured at amortized cost, net
|
|
|
996
|
|
|
|
2,768
|
|
|
Loss on financial liability (convertible notes) measures at fair value through profit and loss
|
|
|
9,157
|
|
|
|
19,743
|
|
|
Impairment loss on advances content vendors and others
|
|
|
6,326
|
|
|
|
—
|
|
|
Others
|
|
|
194
|
|
|
|
154
|
|
|
|
|
$
|
28,823
|
|
|
$
|
22,460
|
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
|
|
|
|
|
As at
September 30, 2019
|
|
|
As at
March 31,2019
|
|
|
|
|
Details of
|
|
(in thousands)
|
|
|
|
|
Transaction
|
|
Liability
|
|
|
Asset
|
|
|
Liability
|
|
|
Asset
|
|
|
Red Bridge Group Limited
|
|
President fees
|
|
$
|
648
|
|
|
$
|
—
|
|
|
$
|
648
|
|
|
$
|
—
|
|
|
550 County Avenue
|
|
Rent/Deposit
|
|
|
156
|
|
|
|
—
|
|
|
|
499
|
|
|
|
135
|
|
|
NextGen Films Private Limited(*)
|
|
Purchase/Sale
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
41,470
|
|
|
Everest Entertainment LLP
|
|
Purchase/Sale
|
|
|
561
|
|
|
|
—
|
|
|
|
574
|
|
|
|
—
|
|
|
Beech Investments Limited
|
|
Advance
|
|
|
500
|
|
|
|
—
|
|
|
|
500
|
|
|
|
—
|
|
|
Lulla Family
|
|
Rent/Deposit
|
|
|
337
|
|
|
|
405
|
|
|
|
243
|
|
|
|
841
|
|
|
Lulla Family
|
|
Salary
|
|
|
4,485
|
|
|
|
—
|
|
|
|
3,279
|
|
|
|
—
|
|
|
Lulla Family
|
|
Advance
|
|
|
—
|
|
|
|
—
|
|
|
|
6,150
|
|
|
|
—
|
|
|
Lulla Family
|
|
Advance
|
|
|
693
|
|
|
|
—
|
|
|
|
500
|
|
|
|
—
|
|
|
Xfinite Global Plc(**)
|
|
Sale
|
|
|
8,449
|
|
|
|
—
|
|
|
|
13,087
|
|
|
|
—
|
|
|
Key Management Compensation
|
|
Three months ending
September 30,
|
|
|
Six months ending
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
$
|
943
|
|
|
$
|
957
|
|
|
$
|
1,984
|
|
|
$
|
1,923
|
|
|
Share based compensation
|
|
|
4,583
|
|
|
|
3,506
|
|
|
|
7,412
|
|
|
|
6,219
|
|
|
Pension
|
|
|
5
|
|
|
|
2
|
|
|
|
12
|
|
|
|
5
|
|
|
|
|
$
|
5,531
|
|
|
$
|
4,465
|
|
|
$
|
9,408
|
|
|
$
|
8,147
|
|
The Lulla family refers to Mr. Kishore Lulla, Mr. Sunil Lulla, Mrs. Manjula
Lulla, Mrs. Krishika Lulla, Mrs. Rishika Lulla Singh, and Ms. Riddhima Lulla.
Mrs. Manjula Lulla, the wife of Kishore Lulla, is an
employee of Eros International Plc. and is entitled to a salary of $72 for six months ended September 30, 2019.
Mrs. Krishika Lulla, the wife of Sunil Lulla, is an
employee of Eros India and is entitled to a salary of $61 for six months ended September 30, 2019 and Ms Ridhima Lulla, the daughter
of Kishore Lulla, is an employee of an entity and is entitled to a salary of $150 for six months ended September 30, 2019.
(*) With effect from September 19, 2019, NextGen
Films Private Limited ceased to be a related party having a balance of $50,388 towards film content advances.
(**) The Group has engaged in transactions with Xfinite
Global Plc, a subsidiary of Eros Investments Limited on which it has significant influence.
|
16.
|
NON-CONTROLLING INTERESTS
|
Details of subsidiary that have material non-controlling
interests
The Group has a number of subsidiaries held directly
and indirectly which operate and are incorporated around the world. The non-controlling interests that are material to the Group
relate to Eros International Media Limited whose principal place of business is in India.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
The table below shows the summarized financial information
of Eros International Media Limited and its subsidiaries (EIML) as at September 30, 2019, non-controlling interests held an economic
interest by virtue of shareholding of 37.61% (March 2019: 37.61%).
|
|
|
Period ended September 30
|
|
|
|
|
(in thousands)
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Current assets
|
|
$
|
193,552
|
|
|
|
151,237
|
|
|
Non-current assets
|
|
|
371,377
|
|
|
|
381,610
|
|
|
Current liabilities
|
|
|
(174,815
|
)
|
|
|
(158,843
|
)
|
|
Non-current liabilities
|
|
|
(38,729
|
)
|
|
|
(50,775
|
)
|
|
Total net assets attributable
|
|
$
|
351,385
|
|
|
|
323,229
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to owners interests
|
|
$
|
218,530
|
|
|
|
192,991
|
|
|
Equity attributable to non-controlling of the Group
|
|
$
|
132,855
|
|
|
|
130,238
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
57,154
|
|
|
|
67,209
|
|
|
Expenses
|
|
|
(60,010
|
)
|
|
|
(55,030
|
)
|
|
Profit for the period
|
|
$
|
(2,856
|
)
|
|
|
12,179
|
|
|
Profit attributable to the owners of the Group
|
|
$
|
(1,614
|
)
|
|
|
7,231
|
|
|
Profit attributable to non-controlling interests
|
|
$
|
(1,242
|
)
|
|
|
4,948
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss)/income during the period
|
|
$
|
(4,098
|
)
|
|
|
(23,678
|
)
|
|
Total comprehensive (loss)/income during the period
|
|
|
(6,954
|
)
|
|
|
(11,499
|
)
|
|
Total comprehensive income attributable to the owners of the Group
|
|
|
(4,215
|
)
|
|
|
(6,940
|
)
|
|
Total comprehensive income attributable to non-controlling interests
|
|
|
(2,739
|
)
|
|
|
(4,559
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash inflow from operating activities
|
|
$
|
15,488
|
|
|
|
36,248
|
|
|
Net cash outflow from investing activities
|
|
|
(10,723
|
)
|
|
|
(25,274
|
)
|
|
Net cash inflow from financing activities
|
|
|
(9,396
|
)
|
|
|
(8,809
|
)
|
|
Net cash (outflow)/inflow
|
|
$
|
(4,631
|
)
|
|
|
2,165
|
|
|
17.
|
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.
|
|
|
Three months ended
September 30,
|
|
|
Six months ended
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Revenue by customer's location
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
India
|
|
$
|
7,028
|
|
|
$
|
30,952
|
|
|
$
|
22,534
|
|
|
$
|
56,783
|
|
|
Europe
|
|
|
20,555
|
|
|
|
144
|
|
|
|
44,730
|
|
|
|
456
|
|
|
North America
|
|
|
635
|
|
|
|
1,060
|
|
|
|
2,139
|
|
|
|
2,409
|
|
|
Rest of the world
|
|
|
4,156
|
|
|
|
31,269
|
|
|
|
6,482
|
|
|
|
63,989
|
|
|
Total Revenue
|
|
$
|
32,374
|
|
|
$
|
63,425
|
|
|
$
|
75,885
|
|
|
$
|
123,637
|
|
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
During the three months ended September 30, 2019 revenue of $67
(September 30, 2018: $20,923) from the United Arab Emirates is included within Rest of the world and revenue of $15,715 (September
30, 2018: $ 97) from the United Kingdom is included under Europe in the above table. In each period no revenue arose in the Isle
of Man. During the six months ended September 30, 2019 revenue of $475 (September 30, 2018: $35,733) from the United Arab
Emirates is included within Rest of the world and revenue of $35,263 (September 30, 2018: $193) from the United Kingdom is included
under Europe in the above table. In each period no revenue arose in the Isle of Man.
|
|
|
Three months ended
September 30,
|
|
|
Six months ended
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Revenue by group's operation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
India
|
|
$
|
2,826
|
|
|
$
|
25,451
|
|
|
$
|
22,063
|
|
|
$
|
47,405
|
|
|
Europe
|
|
|
3,701
|
|
|
|
15,582
|
|
|
|
5,114
|
|
|
|
30,878
|
|
|
North America
|
|
|
170
|
|
|
|
449
|
|
|
|
396
|
|
|
|
746
|
|
|
Rest of the world
|
|
|
25,677
|
|
|
|
21,943
|
|
|
|
48,312
|
|
|
|
44,608
|
|
|
Total Revenue
|
|
$
|
32,374
|
|
|
$
|
63,425
|
|
|
$
|
75,885
|
|
|
$
|
123,637
|
|
During the three months ended September 30, 2019 revenue of $20,145 (September
30, 2018: $16,193) from the United Arab Emirates is included within Rest of the world and revenue of $3,701 (September 30, 2018:
$ 15,582) from the United Kingdom and Isle of Man are included under Europe in the above table. During the six months ended September
30, 2019, revenue of $42,632 (September 30, 2018: $32,482) from the United Arab Emirates is included within Rest of the world and
revenue of $5,114 (September 30, 2018: $30,878) from United Kingdom and Isle of Man are included under Europe in the above table.
Revenue disaggregated by revenue source for the three and six months
ended September 30, 2019 and 2018, consists of the following:
|
|
|
Three months
ended
September 30,
|
|
|
Six months
ended
September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
Revenue by source
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Theatrical
|
|
$
|
3,575
|
|
|
$
|
18,829
|
|
|
$
|
4,064
|
|
|
$
|
33,721
|
|
|
Satellite Content licensing
|
|
|
857
|
|
|
|
17,495
|
|
|
|
5,474
|
|
|
|
36,146
|
|
|
Digital and other ancillary
|
|
|
27,942
|
|
|
|
27,101
|
|
|
|
66,347
|
|
|
|
53,770
|
|
|
Total Revenue
|
|
$
|
32,374
|
|
|
$
|
63,425
|
|
|
$
|
75,885
|
|
|
$
|
123,637
|
|
|
|
|
Total
|
|
|
India
|
|
|
North
America
|
|
|
Europe
|
|
|
Rest of the
World
|
|
|
Assets by geographical area
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2019
|
|
$
|
755,264
|
|
|
$
|
332,801
|
|
|
$
|
2
|
|
|
$
|
33,741
|
|
|
$
|
388,720
|
|
|
As of March 31, 2019
|
|
$
|
722,043
|
|
|
$
|
336,431
|
|
|
$
|
4
|
|
|
$
|
34,217
|
|
|
$
|
351,391
|
|
(*) Non-current assets include property and equipment, intangibles assets
(tradename, content and others) goodwill and restricted deposit by geographic area.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share
data)
COVID 19
In December 2019, a novel strain of coronavirus (COVID-19)
emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant
disruptions to its economy, it has now spread to several other countries, and infections have been reported globally including
India, United Kingdom, United States, Dubai, Singapore and Australia where the group through its offices distributes the films
theatrically. In response to the public health risks associated with the COVID-19, the Government of the aforesaid countries has
announced nation-wide lockdown which resulted in the closure of all the theatres in the respective geographies and caused disruptions
in the production and availability of content, including delayed, or in some cases, shortened or cancelled theatrical releases.
The lockdown has affected the Group’s ability to generate revenues from the monetization of Indian film content in various
distribution channels through agreements with commercial theatre operators.
The extent of the adverse impact on the Group’s
financial and operational results will be dictated by the length of time that such disruptions continue, which will, in turn, depend
on the currently unknowable duration of COVID-19 and among other things, the impact of governmental actions imposed in response
to the pandemic and individuals’ and companies’ risk tolerance regarding health matters going forward. The Group’s
business also could be significantly affected even after reopening of certain operations, should the disruptions caused by the
COVID-19 lead to changes in consumer behaviour (such as social distancing), which the Group currently believes will be temporary.
The Group is monitoring the rapidly evolving situation and its potential impacts on the Group’s financial position, results
of operations, liquidity, and cash flows.
MERGER
On April 17, 2020, Eros International Plc (“Eros”)
entered into the Merger Agreement with STX Filmworks, Inc., a Delaware corporation (“STX”). Pursuant to closing of
the merger, STX will merge with a newly formed subsidiary of Eros and will survive as a wholly owned subsidiary of Eros.
As merger consideration, Eros will issue to the former stockholders of STX a number of A ordinary shares equal in the aggregate
to the total number of Eros ordinary shares outstanding on a fully diluted basis as of immediately prior to the effective time
of the merger.
STX Entertainment is a fully integrated global media company
specializing in the production, marketing, and distribution of talent-driven motion picture, television and multimedia content.
It is the first major entertainment and media company to be launched at this scale in Hollywood in more than twenty
years.
The group expects that the combined company will be uniquely positioned
to benefit from the accelerating consumption of premium digital content in the world’s most important growth markets with
robust capital structure and experienced management team. The combined company is also expected to generate an operating
synergies within 24 months of closing of the merger transaction, stemming from integration and scale benefits, optimization
of global content distribution and enhanced monetization of the Eros Now platform. In connection with the merger, $125 million of
incremental equity will also be contributed to the combined company by new equity investors and existing STX equity investors.
The Merger Agreement was approved unanimously by the Boards of Directors
of both companies and the closing of the merger is subject to regulatory approvals and other customary closing conditions.
The Company is in the process of evaluating accounting
implication in respect of the aforesaid merger transaction.
Item 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
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 millions)
|
|
2019
|
|
|
2018
|
|
|
% change
|
|
|
2019
|
|
|
2018
|
|
|
% change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
32.3
|
|
|
$
|
63.4
|
|
|
|
(49.1
|
)
|
|
$
|
75.9
|
|
|
$
|
123.6
|
|
|
|
(38.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
15.5
|
|
|
|
25.3
|
|
|
|
(38.7
|
)
|
|
|
42.4
|
|
|
|
49.0
|
|
|
|
(13.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit/(loss)
|
|
|
(13.6
|
)
|
|
|
8.4
|
|
|
|
(261.9
|
)
|
|
|
(12.6
|
)
|
|
|
18.8
|
|
|
|
(167.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
$
|
7.8
|
|
|
$
|
27.5
|
|
|
|
(71.6
|
)
|
|
$
|
26.4
|
|
|
$
|
55.0
|
|
|
|
(52.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.
|
Financial Results for the Three and Six Months Ended September 30, 2019
Revenue
In the three months ended September 30, 2019, the Eros
film slate was comprised of 11 films of which 11 were low budget as compared to 17 films in the three months ended September 30,
2018, of which four were medium budget and 13 were low budget.
In the three months ended September 30, 2019, the Company’s
slate of 11 films comprised of two Hindi film and 9 regional films as compared to the same period last year where its slate of
17 films comprised five Hindi films and 11 regional films and one Tamil/Telugu regional films.
In the six months ended September 30, 2019, the Eros
film slate was comprised of 23 films of which 23 were low budget films as compared to 31 films in the six months ended September
30, 2018, of which five films were medium budget, 26 were low budget. In addition Eros Now released five original series titled
Modi: Journey of a Common Man, My name is Sheela, A Monsoon Date, That Man In The Picture and Maunn
during the six months ended September 30, 2019.
In the six months ended September 30, 2019, the Company’s
slate of 23 films comprised of three Hindi films and 20 regional films as compared to the same period last year where its slate
of 31 films comprised of eight Hindi films, two Tamil/Telugu films and 21 regional films.
|
Three months ended
|
|
High
|
|
|
Medium
|
|
|
Low
|
|
|
Total
|
|
|
September 30, 2019
|
|
|
0
|
|
|
|
0
|
|
|
|
11
|
|
|
|
11
|
|
|
September 30, 2018
|
|
|
0
|
|
|
|
4
|
|
|
|
13
|
|
|
|
17
|
|
|
Six months ended
|
|
High
|
|
|
Medium
|
|
|
Low
|
|
|
Total
|
|
|
September 30, 2019
|
|
|
0
|
|
|
|
0
|
|
|
|
23
|
|
|
|
23
|
|
|
September 30, 2018
|
|
|
0
|
|
|
|
5
|
|
|
|
26
|
|
|
|
31
|
|
For the three months
ended September 30, 2019, aggregate revenues from decreased by 49.1% to $32.3 million from $63.4 million for the three months
ended September 30, 2018 mainly due to lower syndication revenue for the three months ended September 30, 2019, partially offset
by increase in revenues from the digital and ancillary business for the three months ended September 30, 2019.
For the six months ended
September 30, 2019, aggregate revenues from decreased by 38.6% to $75.9 million from $123.6 million for the six months ended September
30, 2018 mainly due to lower syndication revenue for the six months ended September 30, 2019, partially offset by increase in
revenues from the digital and ancillary business sfor the six ended September 30, 2019.
Cost of sales
For the three months ended September 30, 2019, cost
of sales decreased by 55.6% to 16.9 million compared to $38.1 million in the three months ended September 30, 2018 and
in the six months ended September 30, 2019, cost of sales decreased by 55.2% to $33.5 million, compared to $74.7 million for the
six months ended September 30, 2018. The decrease was mainly due to lower amortization costs.
Gross profit
For the three months ended September 30, 2019, gross
profit decreased by 38.7% to $15.5million, compared to $25.3 million in the three months ended September 30, 2018. The decrease
was mainly due to lower amortization, marketing, advertising and distribution costs for the three months ended September 30, 2019
which is partially offset by increase in administrative cost.
In the six months ended September 30, 2019, gross profit
decreased by 13.5% to $42.4 million, compared to $49 million for the six months ended September 30, 2018. The decrease was mainly
due to decrease in amortization costs for the six months ended September 30, 2019.
Administrative cost
For the three months ended September 30, 2019, administrative
cost increased by 72.2% to $29.1 million compared to $ 16.9 million in the three months ended September 30, 2018. For the six months
ended September 30, 2019, administrative cost increased by 83.1% to $ 55.1 million, compared to $30.1 million for the six months
ended September 30, 2018. The increase was mainly due to increase in expected credit loss accounted as per default method under
IFRS 9.
Adjusted EBITDA (Non- GAAP)
For the three months
ended September 30, 2019, Adjusted EBITDA decreased by 58.3% to $7.8 million compared to $18.7 million in the three
months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to expected
credit loss expense accounted as per default method under IFRS 9.
In the six months ended
September 30, 2019, adjusted EBITDA decreased by 33.7% to $ 26.4 million, compared to $39.8 million for the
six months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to
expected credit loss expense accounted as per default method under IFRS 9.
Net finance costs
For the three months ended September 30, 2019, net
finance costs increased by 866.7% to $ 2.3 million, compared to $(0.3) million in the three months ended September 30, 2018 mainly
due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.
In the six months ended September 30, 2019, net finance
costs increased by 109.5% to $4.4 million, compared to $2.1 million for the six months ended September 30, 2018 mainly due to increase
in finance costs and reduction in interest income on account of unwinding of credit impairment loss.
Income tax expense
For the six months ended September 30, 2019, income
tax expenses decreased by 41.3% to $2.7 million, compared to $4.6 million in the six months ended September 30, 2018. Effective
income tax rates were 16.8% and 11.6% for September 30, 2019 and September 30, 2018, respectively excluding non-deductible share-based
payment charges and gain/loss on fair valuation of derivative liabilities. The change in effective rate principally reflects a
change in the mix of the profits earned from taxable and non- taxable jurisdictions.
Trade Receivables
As of September 30, 2019, Trade Receivables decreased
to $189.8 million from $196.4 million as of March 31, 2019 after considering expected credit loss reserve upon adoption of accounting
standards during the period.
Net Debt
As of September 30, 2019, net debt decreased by 22.3%
to $112.6 million from $145.0 million as of March 31, 2019 primarily on account of repayment of loans.
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 and gross adjusted EBITDA to evaluate operating performance. Adjusted EBITDA is defined as EBITDA adjusted for (gains)/impairments
of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives), transactions
costs relating to equity transactions, share based payments, loss/(gain) on sale of property and equipment, Loss on de-recognition
of financial assets measured at amortized cost, net, Credit impairment loss, net, component loss on financial liability (convertible
notes) measured at fair value through profit and loss, Loss on deconsolidation of a subsidiary and Impairment of goodwill. Gross
Adjusted EBITDA is defined as Adjusted EBITDA adjusted for amortization of intangible films and content rights
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.
|
See the supplemental financial schedules, which presents a reconciliation of our Adjusted EBITDA to net income.
Adjusted EBITDA
|
|
|
Three months ended September 30,
|
|
|
Six months ended September 30,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
(in thousand)
|
|
|
Profit/(loss) for the period
|
|
$
|
(28,097
|
)
|
|
$
|
13,416
|
|
|
$
|
(23,030
|
)
|
|
$
|
3,926
|
|
|
Income tax expense
|
|
|
891
|
|
|
|
1,711
|
|
|
|
2,725
|
|
|
|
4,590
|
|
|
Net finance costs
|
|
|
2,253
|
|
|
|
(284
|
)
|
|
|
4,400
|
|
|
|
2,064
|
|
|
Depreciation
|
|
|
454
|
|
|
|
279
|
|
|
|
845
|
|
|
|
527
|
|
|
Amortization(1)
|
|
|
224
|
|
|
|
288
|
|
|
|
448
|
|
|
|
759
|
|
|
EBITDA (Non- GAAP)
|
|
|
(24,275
|
)
|
|
|
15,410
|
|
|
|
(14,612
|
)
|
|
|
11,866
|
|
|
Share based payments(2)
|
|
|
5,717
|
|
|
|
6,686
|
|
|
|
9,383
|
|
|
|
11,116
|
|
|
Credit impairment losses/(gains)
|
|
|
13,089
|
|
|
|
2,657
|
|
|
|
23,894
|
|
|
|
4,576
|
|
|
Reversal of credit impairment losses/(gains)
|
|
|
(1,987
|
)
|
|
|
(5,982
|
)
|
|
|
(3,274
|
)
|
|
|
(10,563
|
)
|
|
Net losses on de-recognition of financial assets measured at amortized cost, net
|
|
|
726
|
|
|
|
1,464
|
|
|
|
996
|
|
|
|
2,768
|
|
|
Loss/(Gain) on financial liability (convertible notes) measured at FVTPL
|
|
|
14,142
|
|
|
|
(1,580
|
)
|
|
|
9,157
|
|
|
|
19,743
|
|
|
Closure of derivative asset
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
249
|
|
|
Loss on sale of property and equipment
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
Fair value of receivables
|
|
|
306
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Net losses/(gains) of available- for- sale measured at FVTPL
|
|
|
33
|
|
|
|
—
|
|
|
|
842
|
|
|
|
—
|
|
|
Adjusted EBITDA (Non-GAAP)
|
|
$
|
7,751
|
|
|
$
|
18,655
|
(*)
|
|
$
|
26,390
|
|
|
$
|
39,755
|
(*)
|
|
Amortizaton of intangible and content rights
|
|
|
12,392
|
|
|
|
31,828
|
|
|
|
24,269
|
|
|
|
60,323
|
|
|
Gross Adjusted EBITDA
|
|
$
|
20,143
|
|
|
$
|
50,483
|
|
|
$
|
50,659
|
|
|
$
|
100,078
|
|
(1) Includes only amortization of intangible assets other than intangible
content assets.
(2) Consists of compensation costs recognized with respect to all outstanding
plans and all other equity settled instruments.
(*) The Company has discontinued disclosure of adjustment
towards significant discounting component and accordingly comparatives have been changed
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In the normal course of business, we experience routine
claims and legal proceedings. It is the opinion of our Management, based on information available at this time, that none of the
current claims and proceedings will have a material adverse effect on our consolidated financial position, results of operations
or cash flows. For details, see the audited consolidated financial statements and related notes included within our Annual Report.
|
|
•
|
Beginning on November 13, 2015, the Company 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. On May 17, 2016, the putative class actions filed in New Jersey were transferred to the United States
District Court for the Southern District of New York where they were subsequently consolidated with the other two actions. The
Court-appointed lead plaintiffs filed a single consolidated complaint on July 14, 2016 and amended on October 10, 2016. The amended
consolidated complaint alleged that the Company and certain individual defendants violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, but did not assert certain claims that had been asserted in prior complaints. The remaining claims were primarily
focused on whether the Company and individual defendants made material misrepresentations concerning the Company’s film library
and materially misstated the usage and functionality of Eros Now, our digital OTT entertainment service. On September 25, 2017,
the United States District Court for the Southern District of New York entered a Memorandum & Order dismissing the putative
class action with prejudice. On October 23, 2017, lead plaintiffs filed a Notice of Appeal. On August 24, 2018, the United States
Court of Appeals for the Second Circuit issued a summary order affirming the district court’s earlier dismissal, with prejudice.
On September 29, 2017, the Company filed a lawsuit
against Mangrove Partners, Manuel P. Asensio, GeoInvesting, LLC, and other individuals and entities alleging the defendants and
other co-conspirators disseminated material false, misleading, and defamatory information about the Company and are engaging in
other misconduct that has harmed the Company. On May 31, 2018, the Company filed an amended complaint that added two new defendants
and expanded the scope of the Company’s initial allegations. The amended complaint alleges that Mangrove Partners and many
of its co-conspirators held substantial short positions in the Company’s stock and profited when its share price declined
in response to their multi-year disinformation campaign. The Company seeks damages and injunctive relief for defamation, civil
conspiracy, and tortious interference, including but not limited to interference with its customers, producers, distributors, investors,
and lenders. On March 12, 2019, the Supreme Court of the State of New York entered a Decision and Order granting defendants’
motions to dismiss. On March 13, 2019, the Company filed a Notice of Appeal. The matter is ongoing.
Beginning on June 21, 2019, the Company was named a
defendant in three substantially similar putative class action lawsuits filed in federal court in California and New Jersey by
purported shareholders of the Company. The lawsuits allege that the Company and certain individual defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and/or misleading statements regarding the Company’s
accounting for trade receivables. On September 27, 2019, the putative class action filed in California was transferred
to the United States District Court for the District of New Jersey. On April 14, 2020, the three putative class actions
were consolidated and a lead plaintiff was appointed. We expect that the court-appointed lead plaintiff will file a
consolidated complaint. The Company expects to file a motion to dismiss any consolidated complaint.
|
ITEM 1A. Risk Factors
See “Risk Factors” and certain updated
business and related information regarding the Company and its subsidiaries as set forth under the audited consolidated financial
statements and related notes included within our Annual Report.