Company Announcements

Date:                          24 September 2019
On behalf of:              Entertainment One Ltd.

(the "Company", "eOne", "Entertainment One" or the "Group")

Embargoed until:        0700 hours

Entertainment One Ltd.

Trading update and publication of circular

1.       Trading update

Entertainment One Ltd. ("eOne", "the Company", "Entertainment One" or "the Group") provides the following update on the Group's trading performance for the period from 1 April 2019 to 23 September 2019.

Family & Brands

Revenue for the division over the period is anticipated to be consistent with the prior year period, despite a competitive preschool merchandise market. Across Family & Brands there are around 1,600 live licensing and merchandising contracts globally.

Peppa Pig maintained its momentum in core markets, with the brand's fifteenth anniversary providing the opportunity for a number of brand initiatives, including the Peppa Pig Festival of Fun film released in April/May (featuring 10 never-seen-before episodes); the 16-track Peppa Pig: My First Album music release (which recently surpassed 5 million streams globally); the Peppa Pig's Adventure live show tour which started in September in the US; and celebratory partnerships with children's charities including Save the Children, Tommy's and the Muddy Puddle Walk. The brand also won Best Preschool Licensed Property at the September 2019 UK Licensing Awards, underlining its enduring nature as an evergreen brand in the territory.

In China, there are currently 62 active Peppa Pig licensing and merchandising contracts, as eOne prepares for the migration from agency agreements with licensees to direct relationships with dedicated Family & Brands managers in the territory. We continue to roll out additional consumer products with master toy partner Alpha planning to launch 20 mass market shop keeping units ("SKUs") (of which 16 have already been launched) across its retail partners in the smaller Chinese tier 3 and 4 cities during calendar 2019, compared to the 16 SKUs it launched during calendar 2018. This will be supported by product launches in categories such as food and beverages (over 50 SKUs in the lacto, soya milk and juice drinks segment), clothing (43 SKUs planned for the current year), publishing (25 new storybook titles) and home furniture and kitchenware product rollouts. At the China Licensing Awards 2019 Peppa Pig won the Film/Television/Media Property of the Year in the animated category. The business remains on track to deliver 117 new episodes of Peppa Pig to air by 2023.

Merlin Entertainments now has three Peppa Pig World of Play centres in operation, located in Shanghai, Dallas and Auburn Hills, Michigan. Attendance continues to build and eOne won the Babytree Brilliant Awards 2019 Indoor Attraction for the Shanghai location. In addition, the two Peppa Pig Land formats which opened in March 2018 at Heide Park in Germany and Gardaland in Italy also achieved robust attendance numbers during the period (4 million visitors to date), expanding the brand experience of Peppa Pig across its audiences.

PJ Masks has been fully rolled out across the major global markets and remains a leading property in Canada and the US, where the brand was the second largest preschool toy property year to date to June 2019 according to NPD Group data. Strong additional broadcast slots beginning this September in key markets like the US, France, Italy, Spain, UK and Germany are helping to maximise brand awareness. Coupled with reduced hold-back periods, this should allow for a more rapid roll out on terrestrial broadcasters and related exposure during the current quarter in preparation for the important lead-up to the holiday retail period this year. The 2020 toy range for North America received a very positive reaction from retailers at the recent LA Toy Previews.

Ricky Zoom made a very strong global broadcast premiere in China on the Youku SVOD platform during the period, achieving 100 million views in the first 12 days and reaching the position of number three ranked pre-school property on the platform (behind Peppa Pig and local brand Boonie Bears). Confirmed broadcast partners for the September 2019 launch in the remaining territories around the world include Nickelodeon (US), Gulli (France), Super RTL (Germany), RAI (Italy), Discovery Kids (Latin America) and Clan (Spain). These launches will be accompanied by the availability of the Welcome to Wheelford companion app and the consumer products launch of the brand is anticipated to be spring/summer 2020.

Film, Television & Music

Revenues across the division for the period are anticipated to be slightly lower year on year. Strong growth in Music, supported by the recent Audio Network acquisition, was offset by a lower performance in Film and Television which was largely due to variances in the timing and mix of deliveries compared to the prior year period.

The scripted television market remains vibrant. Following the new series commissions highlighted at the year-end, production has now started on Deputy (for Fox), Nurses (which was commissioned for season 2 by Global TV in Canada before season 1 has been aired) and Run (HBO). New drama series recently announced include Philly Reign (produced in partnership with Mary J Blige for USA Network), original horror series Red Rose for BBC1 and a pilot for Anna K, a modern retelling of Tolstoy's Anna Karenina set in New York City.

As well as announcing new scripted series, eOne has produced a number of series recommissions. The Rookie was re-ordered by co-production partner ABC and season 2 is now in production, with eOne selling the show across 160 territories globally; two hours of the new series was delivered in the period. Other returning shows in production include: Mary Kills People (season 4), Cardinal (season 4) and You Me Her (season 5).

In unscripted television, eOne shows now air five times a week across different North American networks: Murder in the Thirst (Sundays on BET), Love and Listings (Mondays on VH1), Ex on the Beach (Tuesdays on MTV), Strong Man (Wednesdays on History), Growing Up Hip Hop Atlanta (Thursdays on WeTV). A new four-part documentary series, Ready for War, was commissioned by Showtime to examine the cause and effect of deporting US military veterans. The series was produced in partnership with David Ayer and Chris Long's Cedar Park, and executive produced by multiplatinum music artist Drake. The business further expanded its production footprint with the acquisitions of Daisybeck Studios in the UK (producer of unscripted shows including The Yorkshire Vet, Springtime on the Farm, Big Week at the Zoo and Made in Britain) and the US-based BLACKFIN (producer of Finding Escobar's Millions, I Am Homicide, Primal Instinct and Bad Henry for a number of major networks and platforms).

The transition across the Film operations is on track to be completed this financial year as eOne continues to focus on production activities. Notable film releases during the period included Scary Stories to Tell in the Dark, which was released in the US to a strong box office performance. eOne co-financed the film with CBS, has distribution in its territories and handled international sales through Sierra/Affinity. John Wick: Chapter 3 - Parabellum also performed well in eOne territories, generating box office revenues of C$15 million in Canada and €2.5 million in Spain.

Looking ahead, Queen and Slim, the first feature from Makeready, has completed production and is scheduled for release this November by eOne in its direct territories including the UK and Canada and by Universal in the US and internationally. eOne also announced that it will be co-financing two films with Paramount Pictures - the film of the classic US children's character Clifford The Big Red Dog and post-apocalyptic thriller Monster Problems. eOne will be distributing the releases in Canada and the UK and Paramount will be distributing in the US and the rest of world. eOne is also preparing for the release of 1917, a World War I epic from output partner Amblin.

Music has experienced significant growth from both organic growth and the acquisition of Audio Network in April this year. The business continued its strategy of diversifying its portfolio beyond recorded product to include music publishing and artist management, live touring/exhibition and, most recently, Audio Network creating music for film and television. The recorded catalogue from artists such as The Lumineers, Dr. Dre, DJ Khaled and Snoop Dogg continues to contribute significant margin as the streaming universe continues to grow. Other eOne artists include James Fortune, who had the Number One Billboard Gospel Album for Dream Again, and JJ Hairston and Jonathan McReynolds both of whom had top five Gospel albums. The Game, Brandy and The Lumineers will debut albums in the autumn of 2019.

Management client Jax Jones has sustained his radio success with his latest hit single You Don't Know Me, which has achieved over 500 million streams globally since release. The Group's live business, Round Room, announced new events during the period: the Baby Shark Live tour and the Rock the Rink Tour (a national tour featuring the Canadian Olympic Figure Skating team) and The Nelson Mandela Exhibit, set to launch in Berlin in October 2019 following a successful run in London. In addition, it continues to experience success with the PJ Masks: Time to be a Hero live show with sell-out dates across the US.

Corporate

The annual independent library valuation has been completed and the value of the Group's library assets has increased to US$2.1 billion as at 31 March 2019 (2018: US$2.0 billion). The value of the library has been impacted by more volatile foreign exchange movements than in previous years (predominantly the devaluation of the British Pound), but at constant currencies the 2019 valuation of the library would have increased by an additional US$100 million. The library valuation does not include library assets acquired as part of the Audio Network transaction.

2.       Transaction and Publication of Circular

On 22 August 2019, eOne and Hasbro, Inc. ("Hasbro") announced that they had entered into an arrangement agreement involving, amongst other things, the acquisition by a subsidiary of Hasbro of all the outstanding common shares of the Company (the "Common Shares"). The acquisition will be structured as a statutory plan of arrangement (the "Arrangement") pursuant to section 192 of the Canada Business Corporations Act.

The consummation of the Arrangement is subject to satisfaction or waiver of certain conditions, including, among other things, the approval of a special resolution with respect to the Arrangement (the "Arrangement Resolution") by at least two-thirds of the votes cast by shareholders of the Company ("Shareholders"), represented in person or by proxy at the Annual General and Special Meeting (the "Meeting"), to be held on 17 October 2019, see "Upcoming Shareholder Meeting" below. The Arrangement also requires the approval of the Ontario Superior Court of Justice (Commercial List). In addition to Shareholder and court approvals, the Arrangement is subject to receipt of certain foreign investment and antitrust approvals and the satisfaction of other closing conditions customary in transactions of this nature.

Upon the completion of the Arrangement, Shareholders will become entitled to receive:

for each Common Share  £5.60 in cash

(the "Consideration") in accordance with the terms of the Arrangement Agreement and Plan of Arrangement in respect of the Arrangement. See "The Arrangement" in the accompanying management proxy circular (the "Circular") for further details in relation to the Consideration.

The Consideration to be received by Shareholders pursuant to the Arrangement represents a premium of approximately:

·      31% over the Company's 30-day volume-weighted average trading price as of 22 August 2019, the last trading day before the public announcement of the Arrangement; and 

·      26% to the Company's last trading price on 22 August 2019.

Subject to obtaining court and other regulatory approvals, and the satisfaction or waiver of all other conditions precedent to the Arrangement, including Shareholders' approval of the Arrangement Resolution at the Meeting, it is anticipated that the Arrangement will be completed during the fourth quarter of 2019.

If the Arrangement becomes effective, it will be binding on all Shareholders, irrespective of whether or not they attended or voted at the Meeting.

Under the Arrangement Agreement, the Company has agreed to pay a termination fee to Hasbro totaling £29,031,569 if the Arrangement Agreement is terminated in certain circumstances (as permitted under the Listing Rules of the Financial Conduct Authority ("FCA")).

Further details in relation to the Arrangement and the Meeting, as well as the potential benefits, risks and uncertainties taken into consideration by the board of the Company, are set out in the Circular, which will today be mailed to Shareholders.

3.       Upcoming Shareholder Meeting

The Meeting  will be held at the offices of Osler, Hoskin & Harcourt LLP at 100 King Street West, 1 First Canadian Place, Suite 6300, Toronto, Ontario, Canada on Thursday, 17 October 2019 at 11:00 a.m. (Toronto time) / 4:00 p.m. (London time). The notice convening the Meeting is set out on pages 4 to 7 of the accompanying Circular. The Circular contains a detailed description of the Arrangement and other information relating to the Company and Hasbro. A copy of the circular will be available on the Company's website www.entertainmentone.com and will be mailed to the Shareholders along with other important proxy materials, including a form of proxy and a letter of transmittal. We urge you to consider carefully all of the information in the Circular and other proxy materials. If you require assistance, please consult your financial, legal, tax or other professional advisors. If you have any questions with regard to the procedures for voting or completing your transmittal documentation, please contact Georgeson, the Company's proxy solicitation agent, by telephone at +44 (0) 207 019 7032 or by email at ETOoffer@georgeson.com.

The principal purpose of the Meeting is for Shareholders to consider and, if thought advisable, approve, with or without variation, the Arrangement Resolution. As the Meeting is both an annual and special meeting, in addition to the Arrangement Resolution, Shareholders will also be asked to vote on the regular business items of the Company at its annual general meeting, including the election of directors to the board of the Company) and the appointment of auditors, as well as certain other business of the Company as described under "Annual Business" in the Circular.

Subject to the terms of the Arrangement Agreement and any applicable order of the Court, and if the Arrangement Resolution is approved by Shareholders at the Meeting in the manner required by the Interim Order, the Company intends to make an application to the Court for the Final Order. A copy of the Notice of Application in respect of the hearing of the Company's application for the Final Order is attached as Schedule E to the Circular. The hearing of the Company's application for the Final Order is expected to take place at 10:00 a.m. (Toronto time) on 21 October 2019 at 330 University Avenue, Toronto, Ontario, or at any other date and time as the Court may direct. 

The Arrangement will only become effective if all other conditions precedent to the Arrangement set out in the Arrangement Agreement, including Competition Act Approval, HSR Act Approval, Investment Canada Act Approval and Other Merger Control Approvals (as each such term is defined in the Circular,) have been satisfied or waived. For a description of the conditions precedent, see "The Arrangement Agreement - Conditions Precedent to the Arrangement" in the Circular and Schedule C to the Circular, which includes the Arrangement Agreement.

4.       Delisting of Common Shares

Prior to the Arrangement becoming effective, the Company intends to make applications to the FCA for the cancellation of the listing of the Common Shares on the Official List of the FCA and to the London Stock Exchange ("LSE") for the cancellation of the admission to trading of Common Shares on the main market of the LSE. It is expected that such delisting and cancellation of admission to trading would take effect on or shortly after the effective date of the Arrangement (the "Effective Date").

The last day of dealings in, and registration of transfers of, Common Shares on the LSE is expected to occur as soon as practicably permitted on or after the Effective Date, which is expected during the fourth quarter of calendar year 2019, and the Common Shares will be cancelled from the Official List of the FCA and from the LSE's main market for listed securities shortly thereafter.

5.       Information on the Company

The Company is a global independent studio that specialises in the development, acquisition, production, financing, distribution and sales of entertainment content. The Company's diversified expertise spans across film, television and music production and sales; family programming, merchandising and licensing; digital content; and live entertainment. Through its global reach and expansive scale, powered by deep local market knowledge, the Company delivers the best content to the world.

The Company's robust network includes international feature film distribution company Sierra/Affinity; Amblin Partners with DreamWorks Studios, Participant Media, and Reliance Entertainment; Makeready with Brad Weston; unscripted television production companies Whizz Kid Entertainment, Renegade 83, Daisybeck and Blackfin; live entertainment leaders Round Room Live; world-class music labels Dualtone Music Group and Last Gang; innovative music platform Audio Network; and award-winning emerging content and technology studio Secret Location.

IMPORTANT NOTICE

Not for release, publication or distribution in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

Forward-Looking Statements

Certain statements in this announcement contain "forward-looking statements" with respect to Entertainment One within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be accompanied by such words as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "project," "target," "will" and other words and terms of similar meaning. Among other things, these forward-looking statements include expectations concerning the proposed acquisition of Entertainment One; the expected timetable for completing the acquisition; and benefits and synergies of the transaction and future opportunities for the combined company. Entertainment One's actual actions or results may differ materially from those expected or anticipated in the forward-looking statements due to both known and unknown risks and uncertainties. The statements contained herein are based on Entertainment One's current beliefs and expectations and speak only as of the date of this announcement. Except as may be required by law, Entertainment One does not undertake any obligation to make any revisions to the forward-looking statements contained in this announcement or to update them to reflect events or circumstances occurring after the date of this announcement. You should not place undue reliance on forward-looking statements.

No profit forecasts or estimates

No statement in this announcement is intended to be or is to be construed as a profit forecast or profit estimate.

No offer or solicitation

This announcement is provided for informational purposes only and does not constitute an offer to sell, or an invitation to subscribe for, purchase or exchange, any securities or the solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law.