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FFI Holdings PLC: DEEP DIVE
OVERVIEW

FFI lowers expectations as film and insurance revenues slow

At the Completion Contract business there have been lower volumes and the average budget per film has reduced
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OVERVIEW: FFI The Big Picture
Contracts have been delayed into the next financial year

 

  • Difficult trading has continued for film insurance specialist

  • Underlying profits for the year to March will be between US$7.5mln to US$11.5mln

  • Forecasts had been for US$16.5mln

  • Company trying calculate claims for a number of films running over budget

 

How it’s doing

House broker Liberum says there are two main reasons for the lowered expectations at FFI Holdings PLC (LON:FFI).

At the Completion Contract business, there have been lower volumes and the average budget per film has reduced from US$14mln to US$12mln, resulting in a US$4mln reduction in expected operating profit.

At Reel Media, the Insurance Agency, there is a US$2mln reduction in EBIT as some films have been delayed into next year due to ending studio mergers.

The US$4mln range for operating profits reflects titles in the Completion Contract business running over budget, which might mean aggregate claims of up to $4mln by year end.

Liberum forecasts implies US$1.5mln of underlying profits in the second half of the year.

The broker expects US$15mln of net cash at the year end, with further US$10mln captive in the insurance business.

 

What it does

Completion contracts are tailored insurance policies to make sure films get finished and form the core of the business

Equipment rental comprises Pivotal and EPS-Cineworks following the latter’s acquisition in November last year.

Insurance agency Reel Media, bought in December 2017, provides cover for events such as death or disability of actors, fire and loss or damage to props, rather than completion contracts, and relates to both TV and films.

The most recent acquisition, Signature, saw FFI expand into the film distribution market.

FFI’s first piece of original content was a documentary about Pandas.

At 14p, FFI is valued at £35.5mln.

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