Losses increase at Brown Bag Films, in part due to redundancy costs

Pretax losses at the owner of award-winning Brown Bag Films last year increased by 31 per cent to just under €6.1 million as the business continued to be hit by the downturn in the animation content industry.

New consolidated accounts filed by Scholastic Ireland Holdings Ltd show that the group’s losses of €6.06 million followed pretax losses of €4.62 million in 2024.

Revenues last year increased by 24 per cent to €37.4 million though the revenue figures are skewed as the 2024 number was for a nine-month period.

The directors stated that the group recorded €3.6 million in exceptional costs during the year, which primarily related to impairment of content and a redundancy programme.

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This followed a cost of €1.5 million under the same heading for the prior year.

The directors said “this reflects changes in the industry which left the group with the unfortunate course of action to reduce its headcount”.

A note concerning the €3.6 million exceptional cost discloses that €2.17 million arose from redundancy and other costs, while impairment charge totalled €1.44 million.

The note states 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”.

Numbers employed by the group reduced from 202 to 194 during the year though staff costs increased from €15 million to €17.73 million.

The loss takes account of combined non-cash amortisation and depreciation costs of €4.5 million along with €647,472 in trademark write-off costs, and €291,241 in the write-off of a financial asset.

The accounts show that the group – which operates studios in Dublin, Toronto and Bali – paid out a dividend of €1.68 million last year.

The Brown Bag business was founded in Dublin in 1994 by Cathal Gaffney and Darragh O’Connell.

Brown Bag Films was acquired by Canada-based 9 Story Media Group in 2015. 9 Story Media was purchased by the US-based Scholastic for $185 million in March 2024.

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.

Shareholder funds at the end of May last year totalled €43.1 million, which included accumulated profits of €1.19 million.

Cash funds declined from €11.5 million to €7.6 million.