Strong performances across all Entertainment One Ltd's (LON:ETO) (eOne’s) divisions underpinned 19% reported revenue growth in H117. With a significant proportion of its slate commissioned or contracted in Television, a good roster of films and strong momentum internationally in Family, the full year is on track to meet management’s expectations. We maintain our forecasts and believe the shares, trading at a considerable discount to peers, do not yet reflect the more balanced structure of the group, or its stronger operational performance.
Strong revenue growth across all divisions
As indicated at the recent trading update, the first half was good operationally for eOne. Reported revenue growth of 19% reflects continued strong performances from Television (+34%) and Family (+16%) and the recovery in Film (+9%), which was buoyed by a strong box office performance. The upfront minimum guarantees (MGs) and advertising associated with the cinematic release of major titles resulted in considerable margin compression in Film and a reduction in overall EBITDA year-on-year. However, this is entirely consistent with the usual cash flow characteristics of a film’s release and eOne will reap the benefits in the second half of the year as these titles move to the more profitable secondary windows.
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