Kishore Lulla
Chairman & CEO

I am delighted to report that Eros has consistently delivered earnings growth for our shareholders since listing in 2006. This year has seen a 9.9% increase in revenues, 14.5% increase in EBITDA and 12.6% increase in profit before tax reflecting our growth and increased margins.

Consistent cash generation from business activities combined with the successful listing of the Indian subsidiary on the one hand as well as greater economies of scale have helped in maintaining downward pressure on costs that have resulted in a substantial 30.2% reduction in net debt therefore strengthening the overall balance sheet. Our unparalleled content and global distribution strategy built on a successful track record of over three decades is the foundation of our dominant market leadership position.

I am pleased to announce another year of excellent results for Eros International plc. During 2010/11, we improved our performance across all our main financial and operational benchmarks: increasing revenue, profits and margins; reducing net debt and materially increasing visibility of our future film slate and corresponding revenues.

One of the key highlights of the year was the strengthening of the balance sheet through the significantly successful flotation of our Indian subsidiary, Eros International Media Ltd, on the Bombay and National Stock Exchanges in India. The other initiative that greatly excites me is the opportunity presented by the digital space and the positive steps the Company has taken such as implementing a Digital Asset Management system for our content library which will support monetisation of the library via web, mobile and other new media platforms.

We reported pre-tax profits of US$55.8 million up 12.6% year-on-year, and US$126.4 million of EBITDA, a 14.5% rise on last year, on sales up 10% to US$164.6 million. We also generated cash from operations US$116.9 million and Net debt was reduced significantly from US$104.3 million to US$72.8 million.

I am particularly pleased that this is the fifth consecutive year of increased profits for Eros as a Stock Exchange listed company. This consistent track record of achievement has been during a period which has seen the global financial crisis and an uncertain global macro- economic environment and is testament to the strong fundamentals that the Company and its business is based upon.

The strong performance of a majority of our films in the box office demonstrates our ability to consistently pick winners. We have taken advantage of the buoyant television demand and secured significant pre-sales for our 2012 slate. Our films of 2010/11 have brought wide audience appeal and with a wide range in the genres such as musical romances, comedies and “larger than life” cinema, have thereby been rated very well on television and augurs well for their continued monetisation through the years. We have seen stronger revenues from music propelled by the digital growth and our cable SVOD services have internationally continued to give us a major competitive advantage. EyeQube, our VFX division is poised to leapfrog into the major league based on the quality of work it is able to produce. The major point to be highlighted is that we are not dependent on any particular format of distribution, any particular set of customers, any particular geography, or any particular film for our revenues. We truly have built a business model around monetising a portfolio of new and library content across diversified revenue streams in over 50 different countries around the world.

We are gearing up to invest further in new and library content which is a key driver for our growth. We are consciously moving our mix to more high profile Hindi films as they have a larger global appeal and sustainable long-term revenues from television and digital distribution channels. Through pre-sales we are able to integrate risk and maximise margins through effective use of our strong cash flows. Another area of focus is to expand into regional content beyond existing the Tamil, Marathi and Punjabi that we market and tap into incremental audience segments.

Since Eros listed on the Alternative Investment Market of the London Stock Exchange in 2006, Eros has invested over US$603.1 million in content. I am delighted to announce that we have recouped over 100% of this investment, with over US$164 million of content yet to be released. This underlines Eros’ three decades of experience within the industry and clearly shows our focus on return of investment, our discipline in maintaining our portfolio strategy and ability to take advantage of our core competencies and sustain our leadership position.

Jyoli Deshpande, the Group CEO and Managing Director announced her sabbatical in December 2010 and subsequently stepped down from the Board in May 2011. Jyoli has been an integral part of the Group’s growth and while we are sorry to see her move on, I wish her all the best for the future.

As Chairman and CEO of the Group I will continue to lead from the front while Vyay Ahuja will take over responsibility as COO.

Outlook
According to the 2011 Federation of Indian Chambers of Commerce & Industry (“FICCI”) report* on the Indian media and entertainment industry which includes the film sector, the industry is set to grow by 14% a year. This is supported by other FICCI-identified trends such as: digital demand being underpinned by increased broadband penetration and the rollout of 3G, India’s “Direct-To-Home” net subscriber base growing annually by 75%, increasing regionalisation in Indian media consumption and regulatory moves by the Indian government to make it mandatory to convert to digital infrastructure by 31 March 2015.

Eros is ideally positioned to exploit these macro trends within India as well as the growing demand for Indian films from new markets around the world using the size and quality of our library and our ability to distribute content globally and across many entertainment mediums. Our strong cash flows and balance sheet gives us a great competitive advantage to capture growth. We continue to grow our management team to support our growth and new initiatives and are well poised to consolidate our leadership position within the Indian film and entertainment industry. Eros aspires to build on its core strengths and be a dominant player in the Indian media and entertainment arena through a combination of organic and inorganic growth over a three to five year horizon.

We look positively to the year ahead with a strong slate enhanced by high profile films that augur a promising theatrical response, as well as revenues underpinned by strong television and music pre-sales with special emphasis on new digital media to showcase our content library on exciting new distribution channels not only in India but also in new markets around the world.


Kishore Lulla
Chairman and CEO
*“Hitting the High Notes” - FICCI-KPMG Indian Media and Entertainment Industry Report 2011.