Marwyn Value Investors’ 2014 results show the NAV rose by 14.5% over the year. The bulk of Marwyn’s net asset value is invested in Entertainment One (ETO). During the twelve month period to 31 December 2014, ETO’s share price increased from 259.2p to 322.4p, an increase of 24.38%. It is hard to tell from the accounts why Marwyn’s performance lagged that of ETO to such a degree. During the period they achieved a full exit from Breedon Aggregates and made an investment in Haversham Holdings (which subsequently acquired British Car Auctions). They paid their second regular return of capital in January 2015 – 8.255p per share (up from 8p in January 2014).
On 20 May 2014 ETO announced its results for the financial year ended 31 March 2014. Revenue growth of 30% to £819.6m and underlying EBITDA growth of 48% to £92.3m reflected a strong overall performance of the Group including the impact of the first full year of the Alliance acquisition. The directors of ETO announced an inaugural dividend of 1p per share. In June 2014 ETO acquired Phase 4 Films, a leading independent film and TV distributor based across Canada and the United States for C$27m (71% cash, 29% shares). Phase 4 generated unaudited revenues of C$51.7m and profit before tax of C$4.1m in the year to March 2014. On 1 August 2014 ETO announced its acquisition of Paperny Entertainment, a leading independent television producer operating across Canada and the US. Paperny generated C$17.6m of revenue and C$5.1m of profit before tax in the year to December 2013. The consideration for the acquisition was C$29.2m. On 29 August 2014 ETO also announced the acquisition of Force Four Productions, a Canadian television producer based in Vancouver. Details of the total consideration were not disclosed although it was noted that the deal was funded through a combination of cash and stock, with the stock element being worth c.£3m.
Darren Throop, ETO’s CEO is still aiming to double the size of the Group in the next 5 years. On 27 January 2015 ETO released its interim trading statement for the nine months to 31 December 2014. Full year earnings were reported as expected to be ahead of ETO’s management expectations with improved EBITDA margin across both film and television in the period and a strong Christmas performance ahead of expectations, while lower film revenues were driven by fewer ETO releases and a weaker theatrical market in comparison to the prior period. The acquisition of a 51% stake in the Mark Gordon Company gives ETO access to US television and film content with new projects exclusively distributed by ETO globally.
MVI : Strong year for entertainment One not fully reflected in Marwyn results