CineWorld's End of Year

Hey guys,

Some of you may know my Dad works in the city. He’s forwarded to me Cineworld’s end of year report (its publically accessible to everyone on request, often on their website).

Its quite big, but for those interested, it tells of their biggest films and their big film predictions, plus where they make their money.

I suggest skimming to bits that look interesting if you do wanna read! :roll:

[quote]RNS Number : 2998R

Cineworld Group plc

19 August 2010

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CINEWORLD GROUP plc interim results for 26 week period ended 1 July 2010



Good growth in revenue and EBITDA despite World Cup. Key strategic deals

       announced for digital rollout and further estate expansion

Cineworld Group plc (“Cineworld” or “the Group”) is pleased to announce its

interim results for the 26 week period ended 1 July 2010.

Financial

· Group revenue of GBP162.0m, up 3.8% against 20091 (flat vs reported 20092

of GBP161.9m);

· EBITDA3 up 5.2% to GBP24.4m versus 20091 (1.2% higher against reported

20092);

· Operating profit at GBP14.8m (20091: GBP15.2m);

· Net debt reduced to GBP115.5m from GBP121.4m in June 2009;

· Reported EPS: 5.6p on basic earnings (20092: 7.3p) and proforma adjusted

EPS of 6.8p (20091:6.0p);

· Interim dividend of 3.4p per share (2009: 3.2p per share).

Operational

· Box office receipts up 4.1% at GBP111.7m against 20091 (0.2% against

reported 20092);

· Average ticket price at GBP4.93 per ticket (2009: GBP4.59);

· Average retail spend per person remained firm at GBP1.71 (2009: GBP1.71);

· Market share increased during the period to 24.2% (2009: 23.6%) (source:

Rentrak/EDI);

· Admissions at 22.7m, down 3.0% against 20091 as expected, principally due

to football World Cup (6.6% lower against reported 20092);

· Major deal agreed on 14 June 2010 with Arts Alliance Media to convert the

rest of the estate to digital;

· Acquisition of the cinema operations in the O2 Centre in London on 25

June 2010;

· Strong start to the second half of 2010.

Commenting on these results, Stephen Wiener, Chief Executive Officer of

Cineworld Group plc, said:

"We are pleased to announce good growth in first half revenues and EBITDA

despite the impact of the World Cup which, as anticipated, resulted in a quiet

June. We have had a busy first half strategically and announced important news

for both our customers and shareholders. We signed a transformational deal with

Arts Alliance Media to roll out digital screens across our entire estate which

will enable us to offer our customers greater choice, both in 2D and 3D films,

as well as exhibiting a wider range of alternative content. We also expanded

our estate and now operate the cinema at the O2 Centre in London, and have

announced plans to be part of the major Wembley development scheduled to open in

The second half of the financial year has started strongly for the Group, with

an excellent range of blockbusters and 3D films. The fourth quarter looks

equally strong and brings an exciting line up of releases with titles such as

“Wall Street: Money Never Sleeps” and “Little Fockers”, as well as a promising

3D film slate including “Harry Potter - Deathly Hallows 1”, the first 3D film in

this franchise and “Chronicles of Narnia: Voyage of the Dawn Treader”.

The strong film line up in the second half, coupled with our solid first half

performance, underpins our confidence in performing in line with market

expectations for the year and delivering further value to shareholders."

CHIEF EXECUTIVE OFFICER’S REVIEW

Total Group revenues in the first half were up 3.8% on the prior year1. Box

office was up 4.1% which compares favourably with a UK market figure of c2.7%.

Admissions were down 3.0% compared with the equivalent period last year, which

was to be expected given the diversion of the football World Cup tournament.

Our market share in the UK and Ireland increased to 24.2% (2009: 23.5%).

The first half started very strongly, driven by “Avatar” with its outstanding

box office success, grossing countrywide in excess of GBP90m since release in

late December 2009. The film was overwhelmingly popular in 3D, with over 80% of

national box office derived from this format and has played an important part in

establishing 3D with the mainstream cinema audience.

Avatar was followed by “Alice in Wonderland”, another 3D success, which grossed

in excess of GBP40m at the UK and Ireland box office. There were other notable

releases in the period including “Clash of the Titans” (in 3D), “Iron Man 2” and

“Sex and the City 2”. The top ten highest grossing films accounted for over

half of Cineworld’s box office during the period compared with 35% for the same

period in the previous year.

Whilst blockbusters and 3D films delivered the majority of revenues in the first

half, we continued to offer our customers the broadest range of films available,

recognising the contribution that non-blockbuster films make to our overall box

office, and played 180 film titles in the period. During the period we screened

a number of mid-range films including “Kick Ass”, “I Love You Phillip Morris”,

“The Crazies” and “Date Night” and also a number of foreign language films

including “Girl With the Dragon Tattoo” and “The Prophet”. We remained the

leading exhibitor of Bollywood product in the UK, with films such as "My Name is

Khan", “Housefull” and “Kites”, helping maintain our box office market share of

55%.

The Group’s average ticket price rose to GBP4.93 (2009: GBP4.59), facilitated

largely by the premium pricing on 3D performances and also due to the audience

mix during the period. This was despite our customers continuing to benefit from

our ‘Bargain Tuesdays’ and ‘Orange Wednesdays’ promotion days.

Retail revenue fell by 3.3% reflecting the lower admissions. However, retail

spend per person remained unchanged from the previous year at GBP1.71. We

remain mindful of the fact that our customers seek value from their

entertainment spend and we continue to focus on attractive retail propositions.

Digital is central to our strategy of offering our customers the very best in

cinema entertainment with increased choice as well as enhanced quality of films.

There were 7 films released in 3D during the period compared with 5 last year

and we expect 18 films to be shown in 3D in the second half of the year. Over

20% of Cineworld’s admissions for the first half was attributable to 3D films

compared with c8% in H1 2009. At the end of June 2010 we had a total of 268

screens set up for digital projection of which 252 were 3D enabled.

On 14 June 2010, we announced our partnership with Arts Alliance Media (“AAM”)

to roll out digital projection facilities across the remainder of our cinema

estate. This deal will transform Cineworld and will enable us to convert

fully to digital within three years. The roll out will cost approximately

GBP30m, in addition to the GBP10m already spent in 2009 and in the first half of

this year, although we expect to recoup a substantial proportion of this

investment as described below.

As part of the AAM deal, Cineworld will retain full control over the

acquisition, installation and operation of digital projectors, while benefitting

from AAM’s established systems, technical capabilities and strong track record

of administering Virtual Print Fee (VPF) agreements with film distributors and

exhibitors. The VPF deal covers a ten year period during which AAM will collect

VPFs from film studios on behalf of Cineworld whenever a film is played in

digital rather than in 35mm. VPFs are expected to refund a substantial

proportion of the total conversion cost of GBP40m over a 7-10 year period before

taking into account the associated benefits of 3D and digital. Under this deal,

we expect to rollout approximately 150 additional digital projectors in the

second half enabling the Group to capitalise on the 3D film slate through to the

end of the year.

Furthermore, digital conversion will enable us to strengthen our alternative

content offering in opera, theatre, music and sport. In the first half we

screened, live in 3D, two England games from the Six Nations rugby and, more

recently, a number of games from the later stages of the football World Cup.

Customer reaction to these screenings has been positive and we plan to expand

the range of live 3D screenings in order to bring a greater array of

entertainment to our customers.

Digital Cinema Media (“DCM”), our joint venture screen advertising business, has

made substantial progress in the period, significantly widening its range of

advertisers. Whilst we are not yet seeing the significant revenue growth

reported in other, earlier cycle, advertising sectors, DCM achieved similar

revenue levels to the same period in 2009 and there are early signs of recovery,

with recent bookings showing an improvement on last year. These results do not

include bookings secured during the latter part of the period which will produce

revenue in the second half of the year. In addition, with the introduction of

the first generation of 3D advertising and the greater flexibility for

advertisers afforded by the transition to digital, we are increasingly confident

in the medium term growth prospects for cinema advertising.

Our Unlimited card continued to build its membership which was 8% higher than

the previous year. It now has a subscriber base of 245,000 people. This

service is unique in the market and continues to offer excellent value to

regular film goers whilst encouraging visits at off-peak times. In addition, our

participation in the Tesco Clubcard programme has continued to expand in the

first half of 2010.

Our consumer website consistently receives over 1 million hits per week, putting

it in the top 50 most visited websites in the UK. The ‘My Cineworld’ membership

on the website continues to expand with over 65,000 new members added since the

start of the year taking the total membership to 265,000. The growth of this

portal is important as it enables us to engage further with our customers. This,

in turn, should enable us to improve our offer helping to promote retention and

to encourage more frequent visits to our cinemas. Our corporate website was

upgraded and relaunched in May 2010 as part of our plan to introduce electronic

communications with our shareholders in due course thereby reducing our

environmental impact.

We continue to look for opportunities to expand our estate. On 25 June we agreed

a 25 year lease with the Waterfront Limited Partnership, part of the Anschutz

Entertainment Group (“AEG”), to operate the multiplex cinema at The O2 in

London. This deal increased our estate to 78 cinemas and 801 screens with just

over a third being digital. The O2 is the world’s most popular music venue by

ticket sales (Source: Pollstar listed ticket sales) and the cinema is an 11

screen multiplex seating a total of 2844people with gross box office revenues of

GBP4.1 million in 2009 (source: Rentrak/EDI). On 24 May we announced an

agreement for a 25 year lease for a new nine screen cinema at the Wembley City

retail and leisure development which will seat 1800 people in total and is

scheduled to open in 2013.

FINANCIAL PERFORMANCE

±----------------------±-----------±-----------±-----------±-----------+

| | 26 week | 26 week | 27 week | 53 week |

| | period | pro-rated | period | period |

| | ended | 2 July | ended | ended |

| | 1 July | 2009 | 2 July | 31 |

| | 2010 | | 2009 | December |

| | | | | 2009 |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

| Admissions | 22.7m | 23.4m | 24.3m | 49.1m |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

| | GBPm | GBPm | GBPm | GBPm |

±----------------------±-----------±-----------±-----------±-----------+

| Box office | 111.7 | 107.3 | 111.4 | 230.9 |

±----------------------±-----------±-----------±-----------±-----------+

| Retail | 38.7 | 40.0 | 41.5 | 84.4 |

±----------------------±-----------±-----------±-----------±-----------+

| Other | 11.6 | 8.7 | 9.0 | 18.1 |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | ______ |

±----------------------±-----------±-----------±-----------±-----------+

| Total revenue | 162.0 | 156.0 | 161.9 | 333.4 |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

| EBITDA3 | 24.4 | 23.2 | 24.1 | 55.7 |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

| Operating profit | 14.8 | 15.2 | 15.9 | 39.6 |

±----------------------±-----------±-----------±-----------±-----------+

| | | | | |

±----------------------±-----------±-----------±-----------±-----------+

Revenue

Total revenue was GBP162.0m, 3.8% higher than the prior year1 (GBP156.0m) and

flat on the reported prior period2. Whilst the diversion of the football World

Cup tournament depressed cinema going during the latter part of the period,

overall we maintained a good level of trade during the first half. This was

driven by strong 3D film product which helped to achieve higher prices and

offset the fall in admissions. Average ticket prices of GBP4.93 were 7.4% higher

than last year, resulting in box office of GBP111.7m being up 4.1% on last

year1of GBP107.3m (0.2% higher than reported in 20092).

Our retail sales continue to experience tough trading conditions. Whilst retail

spend per customer of GBP1.71 remained unchanged from last year, a lower level

of admissions has meant that retail sales of GBP38.7m were 3.3% lower than last

year1 and 6.7% lower compared with last year on the reported basis2. Through

continual improvements in our retail offer, in particular our value for money

offers such as combo promotions, we aim to improve our retail performance for

the rest of the year despite the challenging consumer environment.

Other revenue, which includes screen advertising, ticket booking income, screen

hires, sponsorships, games machine income and sales of 3D glasses, was up 34.5%

to GBP11.6m against 20091 of GBP8.7m. Screen advertising revenues reflect the

continuing stabilisation in advertising bookings and were 2.4% up on the

previous year1… The level of bookings showed an improvement against last year.

Non screen advertising revenues, whilst being the smaller constituent of this

line, were 100% higher than the previous year. This reflects the good progress

made in developing ancillary revenues such as screen hires and from the sale of

3D glasses.

EBITDA3 and Operating profit

EBITDA3 was 5.2% higher at GBP24.4m against 20091 of GBP23.2m (2009 reported2 :

GBP24.1m). A provision of GBP0.8m was made in the period to cover potential

increases in dilapidations for two non trading properties where the Group

believes it probable that it will exit the leases and was charged to

administrative expenses, thereby resulting in operating profit of GBP14.8m

against GBP15.2m last year1 (2009 reported2 : GBP15.9m). It also included higher

depreciation which was mainly due to the expenditure on digital projectors in

2009 and early 2010.

Financing costs

The interest expense of GBP3.0m in the first half of 2010 (2009: GBP4.1m) has

fallen due to a reducing loan balance and lower interest rates.

Taxation

The overall tax charge of GBP3.8m consists of a current tax charge of GBP3.0m

and a deferred tax charge of GBP0.8m in respect of capital allowances. The total

tax charge is based on a forecast effective tax rate for the 2010 full year of

32.0%, reflecting a proportion of disallowable expenditure.

Earnings

Overall profit before tax was higher at GBP11.8m against 2009 of GBP11.6m. Basic

earnings per share was 5.6p (2009: 7.3p2) due to the dilapidations charge in the

period and the low tax charge in 2009. Using a more comparable adjusted

pro-forma basis, earnings per share was 6.8p compared to 6.0p in 20091. There

were no share dilutions at the end of the period.

Cash flow and Balance Sheet

The Group continued to be cash generative at the operating level during the

first half. Cash generated from operations of GBP6.0m was much lower than the

equivalent period in 2009 of GBP18.6m. The significantly lower trading levels

during June 2010 compared with June 2009, meant lower creditor levels at the

half year end in 2010 compared with 2009. This together with the settlement

during the period of the large creditor balances at the end of 2009 inevitably

resulted in an outflow of working capital. Trade and other payables at the end

of June 2010 included GBP9.6m in respect of the 2009 final dividend. Further

details can be found in note 6 of the interim financial statements. The strong

recovery in trading since the end of the half year has helped to reverse the

short term outflow of operating cash in June and it will improve further in line

with continued strong trade.

Capital cash expenditure for the first six months was GBP10.1m and was higher

than the equivalent period last year. Included in this expenditure was GBP2.8m

in relation to the purchase of digital projectors (the balance of the cost of

GBP5.0m was paid after the period) and GBP4.1m for new sites including expenses

for the acquisition of the cinema at the O2. The balance of other capital

expenditure of GBP3.2m was for replacements and refurbishments.

Net debt continued to fall, from GBP121.4m in June 2009 to GBP115.5m and bank

debt at the period end was less than two times the EBITDA of 2009. In addition,

the achievement of financial targets at the start of the year meant that the

Group was able to benefit from a lower margin on its bank debt of 0.7% above

three month LIBOR.

The employee benefits liability of GBP1.4m relates to the Group’s defined

benefit pension scheme. The deficit has increased since the end of 2009 mainly

due to the lower discount rate assumptions included in the actuarial valuation

which increased the value of the liabilities and by the wider economic

conditions affecting investment values.

1 Relates to a pro-rated 26 week basis for 2009

2 Reported basis for 2009 is 27 weeks ended 2 July 2009.

3EBITDA is defined as operating profit before depreciation and amortisation,

impairment charges, adjustments to goodwill, onerous lease and other

non-recurring and non-cash property charges, transaction and reorganisation

costs and profit on disposal of cinema sites.

RISKS AND UNCERTAINTIES

The Board has overall responsibility for the establishment and oversight of the

Group’s risk management framework. The Board has an established, structured

approach to risk management, which includes continuously assessing and

monitoring the key risks and uncertainties of the business. The key risks are

identified as follows:

Availability of film content

Poor film scheduling

Digital conversion

Alternative media and reductions in release windows

Advancement of technology

Film piracy

Falling screen advertising revenue

Poor location selection

UK and global economic cycles

Lack of availability of capital

Existing and new competitors

Loss of key management (or failure to attract or retain the talent required for

its business)

Failure of IT systems and suppliers

Governance regulations and actions

Terrorism

A description of these risks and the actions taken by the Group to mitigate them

are set out on pages 16 to 17 of the Group’s Annual Report for 2009, a copy of

which is available from our website www.cineworldplc.com. Despite the current

uncertainty in the economic environment, these risks and uncertainties and the

factors which mitigate them, have not significantly changed in the period since

the Annual Report was published and are not expected to change materially in the

remainder of the year.

RELATED PARTY TRANSACTIONS

Details of related party transactions described in the annual report for the 26

weeks to 1 July 2010 are set out in note 11 of the interim financial statements.

GOING CONCERN

The Group meets its day to day working capital requirements through its bank

facilities which consist of a GBP106.5 million term loan plus a GBP30 million

revolver which matures in 2012. The current economic conditions continue

tocreate uncertainty particularly over (a) the level of demand for the Group’s

products; and (b) the availability of bank finance for the foreseeable future.

The Group’s forecasts and projections, taking account of reasonably possible

changes in trading performance, show that the Group should be able to operate

within the level of its current facilities.

After making enquiries, the directors have a reasonable expectation that the

Group has adequate resources to continue in operational existence for the

foreseeable future. Accordingly, the Group continues to adopt the going concern

basis in preparing its consolidatedinterim financial statements.

DIVIDENDS

The Board is declaring an interim dividend of 3.4p per share (2009: 3.2p),

reflecting the solid performance in the first half of the year. The dividend

will be paid on 8 October 2010 to ordinary shareholders on the register at the

close of business on 10 September 2010.

APPOINTMENT OF DIRECTORS

On 2 July 2010, Martina King and Rick Senat were appointed to the Board as

independent non-executive directors. Martina King was the first managing

director of Yahoo! UK and Ireland before becoming the managing director of

Yahoo! Europe. Rick Senat has sat on the Boards of a number of film companies

and worked for 24 years at Warner Bros. Martina King and Rick Senat were also

appointed to the Remuneration and Audit Committees respectively. Both directors

bring with them a wealth of experience in areas particularly relevant to

Cineworld’s activities, and will undoubtedly make a significant contribution to

the Board.

CURRENT TRADING AND OUTLOOK

The second half has started strongly for the Group given the excellent range of

blockbusters and 3D films released since the half year end.

“Shrek Forever After (3D)” performed well as the first major film of July and

this has been followed by strong performances from “The Twilight Saga: Eclipse”,

“Inception” and “Toy Story 3 (3D)”. August has a very fullprogrammeof film

releases appealing to a broad audience which started with “The A Team” and

Jackie Chan’s new film “Karate Kid”.

The fourth quarter brings a strong line up of releases with titles such as "Wall

Street: Money Never Sleeps" and “Little Fockers” as well as a promising 3D film

slate including “Harry Potter - Deathly Hallows 1” (the first 3D film in this

franchise), “Chronicles of Narnia: Voyage of the Dawn Treader”, “Tron Legacy”,

and “Gulliver’s Travels”. Our deal with Arts Alliance Media to roll out

additional digital screens across our estate will enable us to take greater

advantage of these films.

The strong film line up in the second half, coupled with our solid first half

performance, underpins our confidence in performing in line with market

expectations for the year and delivering further value to shareholders.

Stephen Wiener

Chief Executive[/quote]