Entertainment One plans to ease off on acquisitions and let Peppa Pig bring home the bacon
Entertainment One (EOne) is planning to ease off on acquisitions and let Peppa Pig lead its growth.
The FTSE 250 company's chief executive told City PM 2016 is likely to be quieter in terms of M&A. His statement comes after a shareholder last week condemned the board's acquisitions strategy.
EOne chief executive Darren Throop also today talked down the possibility ITV could take over the company.
Read more: Peppa Pig maker snorts in the face of takeover rumours
The company today reported group revenue growth of two per cent to £803m in the year to 31 March. Its pre-tax profit, meanwhile, was up nine per cent to £48m.
Its film division had a worse year, with revenues down seven per cent to £553m and underlying earnings before interest, taxation, depreciation and amortisation (Ebitda) down 28 per cent to £53m.
Throop said the film division had underperformed partly because several movies had disappointed.
“Quite frankly we had some movies that just did not perform as well as we thought they would,” he said. “We see a strong recovery in film this year.” He pointed to The BFG and The Girl on the Train as two films expected to perform well this year.
EOne said it is “on track” to double in size by 2020 following strategic investments and acquisitions in 2016.
This included increasing its stake in Peppa Pig from 50 per cent to 85 per cent in October. The company said today that it believes global retail sales in Peppa Pig can be grown from $1.1bn to $2bn in the medium term.
Setting out his vision for organic growth, Throop said it was “fair to assume” less acquisition activity is planned this year.
But he added: “That doesn’t mean if we [saw] an attractive acquisition in one of our different verticals that we thought was well priced and strategically sound, and would unlock more shareholder value, that we wouldn’t taken that opportunity. But we’ve got enough on our hands right now.”
Read more: Entertainment One reassures after share price tumble
He was speaking shortly after Livermore Partners managing director David Neuhauser said in an interview with Reuters that his fund could push for a share buyback if the company does not act on its demands to slow down the pace of acquisitions and improve cash flow. Livermore Partners also wants EOne to add directors with more media and financial expertise.
Throop said: “Everybody’s entitled to their opinion. Obviously we take any comments about our business seriously. I haven’t spoken to him personally.”
On rumours of an ITV takeover, Throop said: “No, there’s no truth to it. We are not for sale. We’re building the business. Anybody can make an approach for the public company, but there is no process. We haven’t put ourselves up for sale and we’ve never received an approach.”