FFI Holdings lowers earnings expectations as film insurance revenues struggle

FFI Holdings dropped on Wednesday after the entertainment industry services provider lowered full-year underlying EBIT expectations following a sub-par performance from its film insurance business.

For the six months ended 30 September revenues from tailored insurance policies, known as completion contracts, came in at $16.8m, down from $18.9m at the same point last year, due to a reduction in the average film budget size from $12.9m to $11.2m.

Claims on these contracts increased, jumping from $0.2m last year to $1.6m, while the company’s Panda documentary suffered a slower roll out than anticipated, with significant revenue not expected from the project until distribution costs are recouped in FY2020.

On the back of the input of spate of acquisitions, total revenues increased by 91% to $45.6m, but underlying profits dropped to $6m from $7.1m.

Steven Ransohoff, chief executive of FFI, said: "We began the first half of fiscal 2019 with a diverse mix of revenues from across our platform. Our transformation reflects the successful acquisition strategy which began in 2017."

Insurance Agency revenues were bolster by the full session contribution from Reel Media, which was acquired in December 2017, while the Technical Services and Content Distribution divisions enjoyed contributions from Buff Dubs and Signature which were acquired in December last year and April respectively.

Cash and cash equivalents at 30 September stood at $16m, down from $44m.

"As has been historically the case, we expect a busy second half to our fiscal year, as we are seeing a strong completion contracts and entertainment insurance agency pipeline," said Ransohoff.

FFI Holdings’ shares were down 6.45% at 29.00p at 1120 GMT.