The owner of multi-award-winning Brown Bag Films recorded worsening pre-tax losses last year as the business continued to be hit by the downturn in the animation industry.
New consolidated accounts filed by Scholastic Ireland Holdings Ltd show the group’s pretax losses of €4.62 million were a 31 per cent increase on fiscal 2023.
Pretax losses increased as revenues almost halved to €30.18 million.
However the revenues figures are skewed as the accounts are for a 10 month period to the end of May last year compared to a prior 12 month period.
The group recorded losses of €3.17 million and exceptional costs of €1.44 million concerning redundancy costs and impairment resulted in the pretax loss of €4.6 million.
Numbers employed by the group reduced from 264 to 202 during the year as staff costs declined from €20 million to €15 million.
On the exceptional €1.44 million cost, the directors state that the cost “reflects changes in the industry which left the Group with the unfortunate course of action to reduce its headcount”.
The directors state that in the prior year, a decision was announced to restructure operations by downsizing which the directors feel “will allow the group to achieve efficiencies and boost profitability over the long term”.
The accounts show that the company – which operates studios in Dublin, Toronto and Bali – paid out a dividend of €1.74 million last year.
The group did record a trading profit for the year after combined non-cash depreciation and amortisation costs of €8.9 million are taken into account.
The Brown Bag business was founded in Dublin in 1994 by Cathal Gaffney and Darragh O’Connell. It as was acquired by Canadian based 9 Story Media Group in 2015. 9 Story Media was purchased by the US based Scholastic for $185m in March of last year.
In an interview on RTÉ Radio 1’s The Business in March 2024, Mr Gaffney spoke about the downturn in the industry.
He said: “The market has softened quite a bit. For the last 10 years all the streamers, Apple, Netflix, Prime were all commissioning tonnes and tonnes of children’s animation.
“Now that has pulled quite a bit ... they are cutting both costs and content that they produce. It is a tricky time globally, but it will bounce back, it always does.
“We are somewhat insulated in the work that we do is in both service and IP (Intellectual Property) work. It is not as busy as it was.”
Some of the studio’s global hit TV shows include Doc McStuffins, Daniel Tiger’s Neighborhood, Henry Hugglemonster, Bing, Peg + Cat, Peter Rabbit, Wild Kratts, Olivia, Noddy in Toyland, The Magic School Bus: Rides Again, and Octonauts.
