Interim Management Statement and Strategic Update

Entertainment One Ltd.

Interim Management Statement and strategic update

Entertainment One Ltd., the international entertainment group, presents its Interim Management Statement for the period since 1 October 2011.

·; EBITDA margins improved with full year results expected to be in line with consensus

·; Strong performance in Film business with significant growth in digital sales and excellent forthcoming film slate

·; Substantial growth in Television revenues driven by increased investment in content and continued success in Family

·; Review of strategic options focused on acquisitions rather than outright sale of Company

Overview

The Group has delivered another successful quarter and expects to report full year results in line with market consensus. EBITDA margins have improved as the mix of profit is more heavily weighted to the Film and Television businesses, which have performed strongly and have seen 100% year on year growth in digital revenues, offsetting the impact of a decline in physical distribution consistent with the transition of the market towards on-line exploitation of content.

Update on review of strategic options

As part of the Company's review of strategic options, the Board has considered various proposals that have been made for all or parts of the Group and has concluded that these do not adequately reflect the Company's value. As such, the Board is no longer considering the outright sale of the business. However, through the continuing review of strategic options, the Board, advised by Credit Suisse and JP Morgan, continues to evaluate a number of acquisition opportunities and further announcements will be made in due course, as required.

Film

The Film business continued to make strong progress. Last year's comparatives included the release of The Twilight Saga: Eclipse on DVD in November 2010. The DVD for the fourth instalment of the Twilight franchise, The Twilight Saga: Breaking Dawn - Part 1, will only be released in the final quarter of this financial year. Adjusting for this impact, Film revenues for the nine month period to 31 December 2011 were 15% higher than the prior year on a constant currency and pro-forma basis.

The Group has released 116 movies theatrically in the financial year to date including The Twilight Saga: Breaking Dawn - Part 1, which reached number one at the box office in November in both the UK and Canada. Other theatrical releases in the third quarter included The Ides of March, Midnight in Paris, The Whistleblower, Killer Elite and The Rum Diary.

The increasing strength of the Group's release slate has resulted in films distributed by eOne receiving seventeen nominations for this year's forthcoming Academy Awards, including Midnight in Paris, Tinker, Tailor, Soldier, Spy, Tree of Life, Monsieur Lazhar, Albert Nobbs and A Better Life. The business continues to invest in quality content with recent film acquisitions including Rush (the Ron Howard directed biopic of Formula 1 champion Niki Lauda), 12 Years a Slave (starring Michael Fassbender and Brad Pitt), The Comedian (directed by Sean Penn and starring Robert De Niro), Dead Man Down (Colin Farrell) and action movie Now You See Me (Jesse Eisenberg, Morgan Freeman and Woody Harrelson). In addition the US Film business has acquired action movie Special Forces (starring Diane Kruger and Djimon Hounsou) and Dustin Lance Black's Virginia which will be released under its new theatrical initiative.

The slate in the final quarter of the financial year includes The Grey, Man on a Ledge, Ghost Rider: Spirit of Vengeance, Goon, Monsters in Paris, Hunky Dory, We Need to Talk About Kevin and One for the Money.

Commercial developments in the period included the expansion of the Group's international film sales business, with the appointment in November of a managing director in the UK to lead this initiative, and in December the Group acquired Vivendi's home entertainment business in Canada. In the UK a new deal was signed for the free television window with Channel 4 including movies such as The Twilight Saga: New Moon, The Twilight Saga: Eclipse, RED, Letters to Juliet, Remember Me, I Love You Philip Morris, Love Happens and Astroboy.

Digital sales, which now represent over 13% of total revenues, continue to grow and have doubled compared to the prior year, reflecting benefits from the Group's UK deal with LOVEFiLM and other initiatives taken to ensure that the Group is positioned to take advantage of the long-term market trend towards on-line consumption of entertainment content.

Television

Television revenues (including Family) continue to be significantly ahead of the prior year, with 39% growth in the year to date.

Canada

Shows delivered in the third quarter included: the remaining episodes in the first season of epic railroad series Hell on Wheels, which became the second highest watched show ever on AMC (behind eOne-distributed The Walking Dead); completion of delivery of the third season of comedy Hung; and the second season of mystery drama Haven. In addition the first episodes of The Firm were delivered to broadcasters in December and premiered in Canada and the US in January.

Recent commissions include a second season of Hell on Wheels and a new hospital drama, Saving Hope (produced in conjunction with the same co-producer as successful cop drama Rookie Blue). For the full year the business expects to deliver a similar number of half hours of production compared to the prior period, with investment in programming significantly ahead highlighting the increasing quality and scale of the Television production slate.

Family

In Family Peppa Pig's viewing figures remain strong, particularly in the US. In Australia and Spain it is now the number one pre-school broadcast show while in Eastern/ Central Europe, following a deal with number one pre-school channel Minimax in 2011, broadcast has recently commenced in territories including Hungary, the Czech Republic and Romania. In the UK Peppa Pig held its position as the number one pre-school toy license for the second year running while licensing and merchandising sales were robust during the holiday season in the face of difficult market conditions. Good progress is continuing towards the launch of a range of toys in the US for the 2012 Christmas season.

Distribution

Sales in the Distribution division were behind the prior year. Although this was partly due to the expected impact of the closure of the Group's retail chain in March 2011, trading over the Christmas period was disappointing as the physical home entertainment market in Canada continued to contract, particularly in the rental segment. After adjusting for the closure of Retail, revenues for the 9 months to 31 December 2011 were 14% lower than the prior year, ahead of market trends, but reflecting the long-term transition of the market from physical to digital channels.

Financing

Adjusted net debt at 31 December 2011 was lower than the corresponding point in the prior year and in line with management expectations. Year end adjusted net debt is expected to be slightly higher than market consensus reflecting increased film content investment in the final quarter. However, the Group expects to maintain its net debt to EBITDA leverage ratio at below one times EBITDA, and continues to enjoy access to significant additional capital through its undrawn debt facilities to take advantage of new investment opportunities. The Group's short term Television Production financing was higher than the prior year reflecting increased investment in an expanding production slate.

Outlook

The Group expects to report full year results in line with market expectations with the continuing strong performance of the Entertainment businesses more than offsetting the impact on earnings of weaker results in Distribution.

Notes to Editors:

Entertainment One Ltd. (LSE:ETO) is a leading international entertainment company that specialises in the acquisition, production and distribution of film and television content. The company's comprehensive network extends around the globe including Canada, the U.S., the UK, Ireland, Benelux, France, Germany, Scandinavia, Australia, New Zealand and South Africa. Through established Entertainment and Distribution divisions, the company provides extensive expertise in film distribution, television and music production, family programming and merchandising and licensing. Its current rights library is exploited across all media formats and includes more than 20,000 film and television titles, 2,500 hours of television programming and 45,000 music tracks.

Further information is available at www.entertainmentonegroup.com or email Redleaf at [email protected]