Leone Film S p A : Aggiornamento Piano Strategico 2020 – 2021 pdf

2019 Results and 2020 - 2021 business plan

29th September, 2020

AGENDA

1 The Group

2 Key Facts

3 Our Roadmap

4 Distribution	5 Production	6 2018 Results and
		2021 targets

2

1. THE GROUP

Two mainstream areas of activity

Distribution	Production
•	Theatrical	•	Production
•	Free-TV	•	Co-production
•	Pay-Tv	•	Executive production
•	Home Video	•	International co-production
•	Digital	•	TV series production
		• International TV series co-production
		•	International executive production
			service	4

A History of Growth

2001

2002

2007

2009

2013

2014

2015

2016

2017

2018

2019

2020

IPO

Bulgari becomes

Big Hits:

relevant shareholder

First Theatrical

La La Land

Big Hit:

Wonder

Established

Distribution:

The Wolf of

The Post

Traffic

1989

First Movie

Wall Street

Big Hits:

Production:

First Acquisition

Big Hit:

Green Book

Generazione

The Hateful Eight

After

1000 Euro

First TV Format:

First Executive

First International

Knives Out

Big Hits:

Executive Production:

Big Hits:

Indovina chi Viene

Productions:

1917

Established

John Wick 2

Perfetti Sconosciuti

a Cena

Amiche Mie

1996

Gli anni

First

La Pazza Gioia

Amore 14

più belli

First TV Format:

Co -Productions:

First TV Series

Ti sposo ma non troppo

Viaggio in Italia

Production:

(Ballarò)

Ti Ricordi di Me

Immaturi

5

Italy's largest independent distributor

	Box Office 2016 - All Market - LFG pro forma		Box Office 2017 - All Market - LFG pro forma			Box Office 2018 - All Market - LFG pro forma
	Distributor	Market Share		Distributor	Market Share			Distributor	Market Share
	Warner Bros Italia SpA	18,7%		Warner Bros Italia SpA	19,8%			WARNER BROS ITALIA	19,4%
	Medusa Film SpA	12,3%		Universal Srl	18,5%			WALT DISNEY S.M.P. ITALIA	14,8%
	Walt Disney SMP Italia	13,7%		Walt disney SMP Italia	14,0%			UNIVERSAL	14,7%
	Universal Srl	11,7%		20th Century FOX italia SpA	9,8%			20TH CENTURY FOX ITALIA	12,0%
	20th Century FOX italia SpA	10,4%		Leone Film Group SpA	7,6%			LEONE FILM GROUP S.P.A.	7,5%
	Leone Film Group SpA	7,7%		01 Distribution	6,1%			LUCKY RED DISTRIB.	5,1%
	01 Distribution	4,6%		Lucky Red	4,4%			MEDUSA FILM	4,3%
	Lucky Red	5,4%		Medusa Film SpA	4,1%			01 DISTRIBUTION	4,1%
	Eagle Pictures	3,2%		Eagle Pictures	1,9%			VISION DISTRIBUTION	3,2%
	BIM Distribution Srl	1,7%		Videa CDE SpA	1,9%			EAGLE PICTURES	3,1%
	Notorious Pict. SpA	1,6%		Notorious Pict. SpA	1,9%			NOTORIOUS PICT.	2,5%
	M2 Pictures Srl	1,4%		Nexo Digital SpA	1,2%			NEXO DIGITAL	1,4%
	Others	7,6%		Others	8,8%			Others	8,0%
	Total	100,0%		Total	100,0%			Total	100,0%
	Box Office 2016 - Italian - LFG pro forma		Box Office 2017 - Italian - LFG pro forma			Box Office 2018 - Italian - LFG pro forma
	Distributor	Market Share		Distributor	Market Share			Distributor	Market Share
	Medusa Film SpA	27,1%		Leone Film Group SpA	20,0%			LEONE FILM GROUP S.P.A.	19,3%
	Leone Film Group SpA	16,9%		01 Distribution	16,2%			LUCKY RED DISTRIB.	12,9%
	01 Distribution	10,0%		Lucky Red	11,6%			MEDUSA FILM	10,9%
	Lucky Red	11,8%		Medusa Film SpA	10,9%			01 DISTRIBUTION	10,6%
	Eagle Pictures	7,1%		Eagle Pictures	5,1%			VISION DISTRIBUTION	8,2%
	BIM Distribution Srl	3,8%		Videa CDE SpA	5,0%			EAGLE PICTURES	7,8%
	Notorious Pict. SpA	3,4%		Notorious Pict. SpA	5,0%			NOTORIOUS PICT.	6,3%
	M2 Pictures Srl	3,2%		Nexo Digital SpA	3,1%			NEXO DIGITAL	3,5%
	Others	16,7%		Others	23,1%			Others	20,5%
	Total	100,0%		Total	100,0%			Total	100,0%

Box Office 2019 - All Market - LFG pro forma

Distributor	Market Share
WALT DISNEY S.M.P. ITALIA	26,8%
WARNER BROS ITALIA	21,6%
01 DISTRIBUTION	6,8%
LEONE FILM GROUP S.P.A.	5,8%
20TH CENTURY FOX ITALIA	5,3%
UNIVERSAL	5,1%
MEDUSA FILM	5,1%
VISION DISTRIBUTION	5,0%
LUCKY RED DISTRIB.	4,9%
EAGLE PICTURES	3,0%
NOTORIOUS PICT.	2,7%
NEXO DIGITAL	1,2%
M2 PICTURES	0,8%
Others	6,0%
Totale	100,0%
Box Office 2019 - ITA Distributors - LFG pro forma
Distributor	Market Share
01 DISTRIBUTION	16,5%
LEONE FILM GROUP S.P.A.	14,0%
EAGLE PICTURES	7,4%
MEDUSA FILM	12,3%
VISION DISTRIBUTION	12,2%
LUCKY RED DISTRIB.	11,8%
NOTORIOUS PICT.	6,3%
Others	19,5%
Totale	100,0%

Source: Cinetel Annual Report 2014, 2015, 2016, 2017; LFG estimates including Executive Productions

6

Two companies creating strong synergies

National Distribution

Co-Production

National Movie Production

Executive Production

National TV Series Production

International TV Series Production

International Co-Production

International Executive Production

•	Connect production and distribution	•	Expand and diversify client base	7
•	Leverage on same distribution partnerships	•	Stronger management team

Leone Film Group Top Hits since IPO 1/2

Wonder (2017)

Box Office (1)

12,4

The Wolf of Wall Street (2013)

12,0

Green Book (2019)

The Hateful Eight (2016)

La La Land (2017)

10,1

8,5

8,3

8

(1) Source: Cinetel, data as of June 15th 2020 in € ml

Leone Film Group Top Hits since IPO 2/2

Box Office (1)

1917 (2020)

6,7

The Post (2018)

After (2019)

Mia & the white lion (2019)

6,5

6,4

5,7

Cena con delitto - Knives Out (2019)

5,2

9

(1) Source: Cinetel, data as of June 15th 2020 in € ml

Leone Film Group Library

• Top independently owned Italian library
• Almost 500 movies
• Mostly composed of recent titles

10

Snapshot on Sergio Leone's library

• Cult movies on which LFG commercializes perpetual distribution rights (1)

(1) With the exception of 'Once Upon a Time in America' whose rights expire in 2035

11

Lotus Top Hits

Perfetti Sconosciuti (2016)											Box Office (1)
									17,4
		Immaturi (2011)											15,2

Immaturi - Il Viaggio (2012)

A Casa Tutti Bene (2018)

Tutta Colpa di Freud (2014)

11,8

9,2 7,9

La Pazza Gioia (2016)

6,2

(1) Source: Cinetel, data as of June 15th 2020 in € ml

12

Lotus - TV Series Production

TUTTA COLPA DI FREUD

La Serie

Rolando Ravello

SHOOTING

Under Development

A CASA TUTTI BENE - LA SERIE	UONDERBOYS	VERMICINO
Gabriele Muccino	Barbara Petronio & Gabriele	(Working Title)
	Galli

13

Sales Distribution Cycle

Theatrical	Home Video	Pay Per View/TVOD	1st Pay TV	2st Pay TV		Free TV	2st Pay TV	Library
Start	105 days	105 days	180 days	(1st window)	25	th	Month	(2nd window)	…til the end
19th Month		49 Month

Past

now

14

Out Goals:

Maintaining the leadership among Italians Independent movie producers and distributors

Scaling our successful business model

Distribute top US	Produce top	Continue
independent	commercial and	expanding our
blockbusters	high-quality movie,	production and
	TV series, along	distribution
	top-notch Italian	agreements
	directors

Infrastructure		Content		Brand

15

2. KEY FACTS

Key highlights

Content

Acquisition

Strong relationships with all US independent producers, including Lionsgate, Amblin and others.

Acquisition team devoted to select and negotiate the best movies on the market

Content

Distribution

Multi-year agreement with RAI for at least 10 movies per year

Long-term sales output deal with Amazon and Telecom Italia

Sales to Sky, NETFLIX, Telecom Italia, iTunes, Google Play, etc.

Content

Production

Signed agreements with top directors and screen players like Paolo Genovese, Gabriele Muccino, Maccio Capatonda, Giuseppe Tornatore, Rolando Ravello

17

2019 - 2020 Main Releases - Distribution

Title	Box Office (1)
Green Book	10.1 M€

1917

6.7 M€

After

6.4 M €

Mia and the white lion

5.7 M €

Knives Out

5.2 M €

18

(1) Source: Cinetel, data as of August 31st 2020 in € ml

3. OUR ROADMAP

Distribution - Titles snapshot

(1/2)

AFTER 2

Director: Roger Kumble

Cast: Josephine Langford, Hero Fiennes Tiffin

KILLER OF THE FLOWERS MOON

Director: Martin Scorsese

Cast: Leonardo Di Caprio

THE MARKSMAN

Director: Robert Lorenz

Cast: Liam Neeson, Katheryn Winnick

BIOS

Director: Miguel

Sapochnik

Cast: Tom Hanks

INSTRUMENTAL

Director: James Marsh

Cast: Andrew Garfield

LET THERE BE ROCK

Director: TBD

Cast: Anthony Hopkins

THE GENTLEMEN

Director: Guy Ritchie

Cast: Matthew

McConaughey, Collin

Farrel, Hugh Grant

MISSING LINK

Director: Chris Butler

Cast: Hugh Jackman, Zach Galifianakis

UNHINGED

Director: Derrick Borte

Cast: Russell Crowe

20

Distribution - Titles snapshot

(2/2)

CASH TRUCK

Director: Guy Ritchie

Cast: Jason Statham,

Scott Eastwood, Josh

Hartnett

THE GOOD HOUSE

Director: Maya Forbes, Wallace Wolodarsky

Cast: Morena Baccarin,

Sigourney Weaver, Kevin

Kline

CHAOS WALKING

Director: Doug Liman

Cast: Tom Holland, Daisy

Ridley

COME AWAY

Director: Brenda Chapman

Cast: Angelina Jolie,

Michael Caine

LOUIS WAYN

Director: Will Sharpe

Cast: Benedict Cumberbatch,

Claire Foy, Andrea

Riseborough

355

Director: Simon Kinberg

Cast: Jessica Chastain, Penelope Cruz, Lupita

Nyong'o, Diane Kruger

HYPNOTIC

Director: Robert Rodriguez

Cast: Ben Affleck

THE WOLF AND THE LION

Director: Gilles de Maistre

Cast: Graham Greene

21

Production - selection of Movies completed or in post- production

TUTTA COLPA DI FREUD - LA SERIE

Director: Rolando Ravello

Cast: Claudio Bisio

SUPEREROI

Director: Paolo Genovese

Script: Paolo Genovese

Cast: Jasmine Trinca, Alessandro

Borghi

THE LAND OF DREAMS

Director: Nicola Abbatangelo

Cast: Caterina Shulha,

George Blagden, Edoardo

Pesce

22

Production - Italian and International Movies in production Snapshot

IL RAGAZZO BLU

Director: Marco Pontecorvo

Cast: Anna Foglietta

MIO FRATELLO, MIA SORELLA

Script: Paola Mammini, Roberto Capucci

Director: Roberto Capucci

Cast: Alessandro Preziosi, Claudia Pandolfi

PER TUTTA LA VITA

Script: Paolo Genovese, Paolo Costella

Director: Paolo Costella

Cast: Fabio Volo, Ambra Angiolini

23

Production - Italian and International Movies Under Development Snapshot

IL NUOVO FILM DI PAOLO GENOVESE		IL NUOVO FILM DI GABRIELE MUCCINO

IL NUOVO FILM DI STEFANO SOLLIMA		IL NUOVO FILM DI PAOLO VIRZÌ

24

4. DISTRIBUTION

5. DISTRIBUTION

Business structure

Content Acquisition

DISTRIBUTION

Acquisition of new rights for 15-25 years

Theatrical release highly relevant to set movie revenues along right exploitment period

After first exploitment (about 3 years) transition to "library"

The high growth of the past years is keeping the Library

'young' with many years of

exploitment ahead

Library

Right management

Acquisition of direct-to- video movies

Resilient cash generation

Asset rotation as value driver

26

Theatrical Distribution structure

Acquisition

DreamWorks

Summit

Amblin

Red Granite

Voltage

IM Global

Bloom

Film Nation

Sierra

STX

Leone Film Group

Theatrical co-distribution: joint decisions on marketing plan

01	The Space	Universal	Medusa	Eagle	Lucky Red
Distribution

Theatres

Free TV

RAI, Mediaset,

Discovery,

CIELO, RSI

Pay TV

SKY, AXN

Digital

Netflix,

Telecom,

iTunes,

Amazon, Chili,

Wuaki, Infinity

27

Theatrical Distribution market update

Tickets by Months

14.000.000

12.000.000

10.000.000							Total Box Office 2019: 635,5 ml
						(+14,35% vs 2018)
8.000.000
6.000.000
4.000.000							Total Tickets 2019: 97,6 ml
2.000.000
						(+13,55% vs 2018)
-
JAN FEB MAR APR MAY	JUN JUL AGO SEP OCT NOV DEC
			2019 Tickets			2018 Tickets

Tickets by Day

25.000.000

20.000.000

15.000.000

10.000.000

5.000.000

0

Mon	Thu		Wed		Thu	Fri	Sat	Sun
			2019 Tickets		2018 Tickets
	Source: Cinetel Annual Report 2019			28

5. PRODUCTION

Lotus business model hedges its risks pre- covering production budgets

Production

Project identification

Cost coverage

Commercialization

Production

and co-production

Cost covered by pre-sales of rights, international sales, tax credit, governmental and regional incentives, equity

Perpetual sale of content across all distribution channels

Library build-up as rights are retained

Selection of director

and cast

Executive Production

Sign agreements

with all key players

Costs entirely up-fronted by the client

Lotus receives a fee and a bonus depending on box office (plus other incentives)

No balance sheet nor P&L risk

Sale of the entire product to a single client

Little or no rights are retained

Executive Production services for international

producers

Many projects already completed

30

Our investment criteria in movie production

Stand-out

We focus on products which can be immediately recognized by the audience (director, cast, story, etc.)

Financial discipline

No cash-out until all movie costs are covered

Marketability

Commercial appeal is the key driver

Internationalization

Products that can be sold outside national borders are of particular interest

31

A Solid contracted pipeline

Paolo

Genovese

• Exclusivity agreement as screenwriter and director

Gabriele

Muccino

• Exclusivity agreement as screenwriter and director

Paolo

Virzì

• Exclusivity agreement as screenwriter and director

Nicola Abbatangelo

• Exclusivity agreement as director

Stefano

Sollima

• Exclusivity agreement as director

32

6. 2019 RESULTS AND 2020 -

2021 TARGETS

2019 Financial highlights

	(€/m)	2019E (1)	2019A (2)		Δ%
	Revenues	65,3	70,2	4,9	7,5%
	EBITDA	25,9	29,0	3,1	12,0%
	EBIT	6,6	2,2	-4,4	-66,9%
	Net Income	4,3	1,0	-3,3	-76,0%
	Net Financial Position/(Cash)	57,6	65,3	7,7	13,4%
	Net Debt / EBITDA	2,2	2,3	0,0	1,2%
	Total releases (#)	19,0	17,0	-2,0	-10,5%
	Distribution	16	15	-1,0	-6,3%
	Production	3	2	-1,0	-33,3%
	Investments	29,9	35,6	5,7	19,1%

(1) IFRS, audited

34

2019 EBITDA and EBIT generation(1)

€ ml

(1) IFRS, audited

EBITDA: 29 ml

EBIT: 2,2 ml

35

2019 financial structure (1)

€ ml

Net working capital	Equity

Advances

Assets

Net debt

Other debt

(1) IFRS, audited

36

Our targets for 2021

	(€/m)	2020E			2021E	CAGR
	Revenues	62,0		100,2		9%
	EBITDA	27,6			50,4		15%
	EBIT	1,2			6,5		31%
	Net Income	-0,9			4,2		42%
	Net Financial Position/(Cash)	69,7			73,0
	Net Debt / EBITDA	2,5			1,4
	Total releases (#)	7	21		4%
	Distribution	6		15		0%
	Production	1			6		19%
	Investments	34,0	54,1		24%

The Group assumes a situation of the Covid 19 pandemic substantially stable in 2020 and normalizing in 2021. This is reflected in the hypothesis of low theatrical revenues in 2020 and average theatrical revenues in 2021. It is also assumed that there are no impacts on the productions. If, on the other hand, the pandemic were to continue in an important form also in 2021 and if the productions were to be severely impacted by Covid, this would worsen the Group's result.

37

2021 targets by business

	(€/m)	2020E	2021E
	Revenues	62,0	100,2
	Distribution	22,4	30,1
	Production	39,6	70,1
	Ebitda	27,6	50,4
	Distribution	14,7	20,4
	Production	12,9	30,0
	Ebit	1,2	6,5
	Distribution	-0,1	3,2
	Production	1,3	3,4

38

Comparison with 2019 business plan

		previous business plan	current business plan
(€/m)	2019A	2020E	2021E	2020E	2021E
Revenues	70,2	91,1	105,9	62,0	100,2
Distribution	36,0	37,7	44,1	22,4	30,1
Production	34,2	53,4	61,8	39,6	70,1
Ebitda	29,0	42,6	47,9	27,6	50,4
Distribution	20,9	20,9	26,4	14,7	20,4
Production	8,1	21,6	21,4	12,9	30,0
Ebit	2,2	9,1	10,8	1,2	6,5
Distribution	1,7	3,1	3,0	-0,1	3,2
Production	0,5	6,0	7,8	1,3	3,4

The drop in revenues, Ebitda and Ebit in 2020 compared to the 2019 business plan is mainly due to Covid 19, which delayed the production activities and reduced the revenues both for the production activities and the distribution activities. In 2021 revenues, Ebitda and Ebit in Distribution are expected to be lower than in 2019 Business Plan, again due to the Covid 19, which affected not only the theatrical revenues, but also the other channels revenues. Production revenues and Ebitda in 2021 are higher compared to the 2019 business plan, due to production in 2021 of activities initially expected in 2020, 2021 Production Ebit is lower due to the impact of Covid 19 on margins (lower sale of tickets and higher production costs).

39

Distribution

	(€/m)		2020E		2021E
	Theatrical Releases (#)	6	15
	Theatrical Revenues	4,0	7,1
	Sale of Rights	1,9	2,1
	Free TV	5,2	7,6
	Digital + Pay-TV	10,0	12,4
	Home Video	0,9	0,6
	Others	0,4	0,4
	Revenues	22,4	30,1
	P&A and Other Costs	(7,6)	(9,7)
	EBITDA	14,7	20,4
	Amortizations		(14,8)		(17,3)
	EBIT	-0,1	3,2

40

Production

	(€/m)	2020E	2021E
	Productions	1	6
	Revenues	39,6	70,1
	Production, Corporate & P&A costs	(26,7)	(40,1)
	EBITDA	12,9	30,0
	D&A	(11,6)	(26,7)
	EBIT	1,3	3,4

41

Executive Production

Our 2020 - 2021 expected theatrical releases

	2020		2021
	o 1917		o	355
o	Missing Link		o	Bios
	o	Instrumental
o After 2
o	o	Rich Old Broads
Saw Legacy
o	Unhinged		o	Larry
o Words Written on a bathroom		o	Ruin
	o Let There Be Rock
Distribution	Walls
	o	Come Away
	o	The Minute Man

o Hipnotic

o The Wolf and the Lion

o Chaos Walking

o Cash Truck

o Luis Wain

o Gunpowder

	o Gli anni più belli	o	Supereroi
		o	Matrimoni
Production	o The Land of Dreams
o Tutta Colpa di Freud - La Serie
	o	Alfredino Rampi
	o Primo Giorno Della Mia Vita

42

A lifetime commitment

DISCLAIMER

This presentation contains certain forward-looking statements that reflect Leone Film Group S.p.A. ("LFG") management's current views with respect to future events and financial and operational performance of the company and its subsidiaries. These forward-looking statements are based on LFG's current expectations and projections about future events. Because these forward- looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of LFG to control or estimate precisely, including changes in the regulatory environment, future market developments and other risks. You are cautioned not to place undue reliance on the forward-looking

statements contained herein, which are made only as of the date of this

presentation. LFG does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation does not constitute a recommendation regarding the securities of LFG.