We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Cineworld Group Plc | LSE:CINE | London | Ordinary Share | GB00B15FWH70 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.381 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMCINE
RNS Number : 5893N
Cineworld Group plc
10 August 2017
10 August 2017
CINEWORLD GROUP plc interim results for 6 months ended 30 June 2017
Cineworld Group plc ("the Group") is pleased to announce its interim results for the 6 month period ended 30 June 2017
Hot Features
Premium
6 months 6 months v 2016
ended ended (statutory v 2016
30 June 30 June basis) (constant
2017 2016 currency
basis)
(1)
Group revenue GBP420.2m GBP356.7m + 17.8% + 12.4%
EBITDA(2) GBP84.3m GBP70.5m + 19.6% + 12.9%
Profit before tax GBP48.2m GBP30.6m + 57.5%
+22.4
Adjusted profit before tax(3) GBP50.2m GBP41.0m %
+65.2
Profit after tax GBP40.3m GBP24.4m %
+23.5
Adjusted profit after tax(3) GBP42.0m GBP34.0m %
Diluted EPS 14.8p 9.1p + 62.6%
+21.3
Adjusted diluted EPS 15.4p 12.7p %
+ 15.4
Interim dividend per share 6.0p 5.2p %
Key Financial Highlights
-- Revenue growth of 17.8% on a statutory basis and 12.4% on a constant currency basis(1) ;
o UK & Ireland revenue growth of 11.5%;
o ROW(4) revenue growth of 28.7% on a statutory basis and 13.7% on a constant currency basis, with double digit growth in Israel, Poland, Romania, Bulgaria and Slovakia;
-- Group EBITDA(2) growth of 19.6%, 12.9% on a constant currency basis; -- Adjusted profit after tax increased by 23.5% to GBP42.0m; -- Statutory profit after tax increased 65.2% to GBP40.3m; -- Adjusted diluted EPS increased by 21.3% to 15.4p; -- Interim dividend increased by 15.4% to 6.0p; -- Net cash generated from operating activities of GBP65.9m (2016: GBP44.4m); and
-- Net debt increased to GBP309.1m following the early payment of the final 2016 dividend (GBP282.3m at 31 December 2016).
--
Operational Highlights
-- Admissions growth of 10.0% to 50.7m; -- Acquisition of the 16 screen Empire Newcastle site completed;
-- Opening of two new sites, Ely in the UK (six screens) and Zichron in Israel (12 screens) taking the Group to 2,136 screens at 30 June 2017;
-- Eleven further site openings planned for the second half of 2017, and;
-- Refurbishment programme progressing well creating next generation cinemas of a high quality with the latest audio and visual technology.
1 To provide information on a comparable basis, where % change vs. prior period information includes trading in currencies other than sterling, the % is presented on a constant currency basis. Constant currency movements have been calculated by applying the 2017 average exchange rates to 2016 performance.
2 EBITDA is defined as operating profit before depreciation and amortisation, onerous leases and other non-recurring charges, impairments and reversals of impairments, transaction and reorganisation costs, profit on disposals of assets and the settlement of the defined benefit pension liability.
3 Adjusted profit before tax is calculated by adding back amortisation of intangible assets (excluding acquired film distribution rights), and certain non-recurring, non-cash items and foreign exchange as set out in Note 5. Adjusted profit before tax is an internal measure used by management, as they believe it better reflects the underlying performance of the Group and therefore a more meaningful comparison of performance from period to period. Adjusted profit after tax is arrived at by applying an effective tax rate to taxable adjustments and deducting the total from adjusted profit before tax.
4 ROW is defined as Rest of the World and includes Poland, Israel, Romania, Hungary, Czech Republic, Bulgaria and Slovakia.
Commenting on these results, Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said:
"We are very pleased to report our results for the first half of 2017 - showing strong growth in admissions, revenues, EBITDA and profit after tax.
I believe that the six months results clearly reflect our strategy and a good quality of film slate. Our strategy is based on our strong belief in the cinema experience, emphasizing our efforts on creating our cinemas in a way that will give our customers "the best way to watch a movie". We have continued opening new sites as well as refurbishing our top cinemas around the estate and taking great consideration to create better sightlines, bigger screens, better sound and great comfort around the halls in the public areas. These cinemas are being embraced by our customers and give a clear message that we believe in the theatrical experience and expect our customers to come to the cinemas again and again. This strategy combined with great blockbusters such as "Beauty and the Beast", "Guardians of the Galaxy vol. 2", "The Fate of the Furious" and more were the key reasons for this six months success.
During the period, we acquired the Empire in Newcastle (16 screens), opened new sites in Ely in the UK and Zichron in Israel with 11 more sites to come before the end of the year. We continue to enlarge our offer by implementing more IMAX, more 4DX and more VIP in order to give our customers the choice of not only which movie they want to watch, but also the choice of how they want to watch it.
We have achieved constant currency revenue growth of 12.4% and EBITDA growth of 12.9%. The Board is pleased to declare an increased interim dividend of 6.0p (2016: 5.2p).
The film release programme for the second half of the year includes a number of strong titles. The biggest titles in the summer months so far have been "Dunkirk", "Despicable Me 3" and "Spider-Man: Homecoming". Significant releases still to come in the remainder of 2017 include "Justice League", "Paddington 2", "Thor: Ragnarok", "Kingsman: The Golden Circle" and "Star Wars: Episode VIII". Based on the film slate in the second half and our first half results, we remain confident of delivering a performance for the year as a whole in line with current market expectations."
Cautionary note concerning forward looking statements
Certain statements in this announcement are forward looking and so involve risk and uncertainty because they relate to events, and depend upon circumstances that will occur in the future and therefore results and developments can differ materially from those anticipated. The forward looking statements reflect knowledge and information available at the date of preparation of this announcement and the Group undertakes no obligation to update these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.
The results presentation is accessible via a listen-only dial-in facility and the presentation slides can be viewed online. The appropriate details are stated below:
Date: 10 August 2017 Time: 10.00am Dial in: UK Number: 020 3059 8125
All other locations: +44 20 3059 8125
Participant Instructions: Please state "Cineworld Interim results" and state your name and company
Webcast link: https://secure.emincote.com/client/cineworld/cineworld005
Enquiries: Cineworld Bell Pottinger
Group plc
Israel Greidinger 8th Floor, Vantage Elly Williamson Holborn Gate
Nisan Cohen London Zara de Belder 330 High Holborn
Great West Road London WC1V
Brentford 7QD
TW8 9AG +44(0) 203 772
+44(0) 208 987 2597
5000
Chief Executive Officer's Statement
Overview
The results from the first six months demonstrate that we have continued to deliver our strategy and drive value for our shareholders. The film slate was strong and we saw a positive impact of our new openings in the prior year along with the improved results from our ongoing refurbishment programme.
The film slate for the first half of 2017 began particularly well compared to 2016. The top performing titles during the period in the UK and Ireland were "Beauty and the Beast", "Guardians of the Galaxy Vol. 2" and "The Fate of the Furious". Some of the Oscar nominated films such as "La La Land" also performed ahead of expectation in the UK. Local films continue to be popular in the ROW, especially in Poland where "The Art of Loving: Story of Michalina Wislocka" was the highest grossing film for the period.
As part of our strategy to expand our estate we are always looking for appropriate acquisition opportunities and we were pleased to acquire the Empire Newcastle cinema in June. This 16 screen cinema is situated in a prime central location, in a city where we were not previously represented. We plan to commence the refurbishment of the cinema and introduce 4DX and a Superscreen by the end of 2017.
We have also opened two new sites, 18 screens, in the period to 30 June 2017. One site was opened in the UK - Ely (six screens) and one in Israel - Zichron (12 screens). We remain on track to open a further eleven cinemas, (totalling 105 screens) across the Group during the second half of the year, one of which we opened in July, Ruislip in the UK (11 screens).
As planned, we closed two sites during the period, Chelsea (UK - four screens), and MOM Park (Hungary - six screens). As part of the agreed consideration for the five Empire sites acquired in 2016, the Haymarket site (UK - three screens) was transferred to Cinema Holdings Limited during the financial period.
We made good progress with our refurbishment programme to provide high quality cinemas with the latest technology across the estate. In the UK refurbishments have started at the O2 in London, Ipswich, Northampton and Solihull. One year on from the acquisition of the five Empire cinemas we have completed the refurbishment of Hemel Hempstead, which now includes a Starbucks. The refurbishment has begun at Basildon, which now has a 4DX screen. We expect to start work on the Leicester Square site by the end of the year, which will also include a 4DX screen and new foyer area. Following the completion of the refurbishments and the new openings in the period we now have a total of 28 4DX screens and 33 IMAX screens at 30 June 2017.
We continued to expand our retail offerings across the Group to ensure we provide our customers with a wide choice of products. As at 30 June 2017 we now have a total of 25 Starbucks sites in the UK and a further four are planned to open by the end of the year. Our new Zichron cinema includes a VIP auditorium, bringing the total in the Group to ten.
Without the hard work of our employees - across all departments and territories, we would not be able to continue delivering on our vision to be "The best place to watch a movie". I would like to thank them all for their continued dedication to Cineworld.
Current trading and outlook
The film release programme for the second half of the year includes a number of strong titles. The UK market box office in July performed well, increasing 6.3% compared to the comparative period (Source: Rentrak). The key titles in the summer months so far have been "Despicable Me 3", "Spider-Man: Homecoming" and "Dunkirk". Key releases still to come include "Justice League", "Paddington 2", "Thor: Ragnarok", "Kingsman: The Golden Circle" and "Star Wars: Episode VIII", and many more. Based on the film slate in the second half and our first half results, we remain confident of delivering a performance for the year as a whole in line with current market expectations.
Group Performance Overview
6 months 6 months v. 2016
to to
30 June 2017 30 June 2016 v. 2016 (constant currency)
(statutory
basis)
Admissions 50.7m 46.1m + 10.0%
GBPm GBPm
Box office 267.2 227.0 + 17.7% + 12.6%
Retail 103.3 84.7 + 22.0% + 16.3%
Other income 49.7 45.0 + 10.4% + 3.5%
-------------- ------------- ------------- ------------ --------------------
Total revenue 420.2 356.7 + 17.8% + 12.4%
-------------- ------------- ------------- ------------ --------------------
Cineworld Group plc results are presented for the period ended 30 June 2017 and reflect the trading and financial position of the UK and Ireland and the Rest of the World ('ROW') operating segments (the 'Group'). The Newcastle Empire cinema acquired from Cinema Holdings Limited became part of the Group on 15 June 2017 and its results post acquisition have been included within the UK and Ireland operating segment.
Unless explicitly referenced, all percentage movements which are given reflect performance on a constant currency basis to allow a year-on-year assessment of the performance of the business without the impact of fluctuations in exchange rates over time. Constant currency movements have been calculated by applying the 2017 average exchange rates to 2016 performance.
The principal income for the Group is box office revenue. Box office revenue is a function of the number of admissions and the ticket price per admission, less VAT. In addition, the Group operates membership schemes which provide customers with access to screening in exchange for subscriptions fees, and this revenue is also reported as part of box office. Admissions (one of the Group's key performance indicators), depend on the number, timing and popularity of the films the Group are able to show in our cinemas.
Admissions are also a key driver for the two other main revenue streams for the Group. These are retail revenue, the sale of food and drink for consumption within our cinemas and screen advertising income, from advertisements shown on our screens prior to feature presentations.
Total revenue for the period ended 30 June 2017 was GBP420.2m, an increase of 17.8% on a statutory basis, and 12.4% on a constant currency basis. Total box office revenues increased by 12.6% driven by admissions which increased by 10.0%, and the average ticket prices increased by 2.4% to GBP5.27. Retail spend per person increased by 5.8% to GBP2.04 combined with the increase in admissions resulting in retail revenue growth of 16.3%. Other revenues increased by 3.5%.
UK & Ireland
The results below for the UK & Ireland include the two cinema chain brands in the UK, Cineworld and Picturehouse.
6 months 6 months
to to
30 June 2017 30 June 2016 v. 2016
(statutory
basis)
Admissions 26.3m 24.0m + 9.6%
GBPm GBPm
Box office 167.7 150.0 + 11.8%
Retail 60.8 53.5 + 13.6%
Other income 23.4 22.4 +4.5%
-------------- ------------- ------------- ------------
Total revenue 251.9 225.9 + 11.5%
-------------- ------------- ------------- ------------
Box Office
Box office admissions and box office revenue increased by 9.6% and 11.8% respectively during the six month period to 30 June 2017. This is reflective of the strength of the film slate during the first half of 2017 compared to 2016 as well as the addition of the five Empire cinemas acquired in the prior year. The total UK industry box offices admissions for the six month period were 6.4% higher compared to the prior period (Source: UK Cinema Association). In the UK and Ireland as a whole the top three films in the first six months of 2017 were, "Beauty and the Beast", "Guardians of the Galaxy Vol. 2" and "The Fate of the Furious" which together grossed GBP143.0m. This compares to the first half of 2016 where the top three titles were "The Jungle Book", "Deadpool" and "Captain America: Civil War" and grossed GBP120.0m (Source: Rentrak).
The average ticket price achieved in the UK and Ireland increased 2.1% to GBP6.38 (2016: GBP6.25). The increase reflects inflationary price increases and the increased availability and popularity of premium offerings such as 4DX. The top three films in the first half were available in a range of formats - IMAX, 3D and 4DX.
Retail
Retail revenue increased by 13.6% from the prior period. Retail spend per person increased by 3.6% to GBP2.31 (2016: GBP2.23). Spend per person has been positively impacted by the nature of the film mix in the first half, as well as the broader range of retail offerings, including Starbucks and our VIP experience. At the end of June 2017 in the UK the Group had 25 Starbucks sites, an additional six sites compared to the prior year, and two VIP auditoriums.
Other Income
Other income includes all other revenue streams outside of box office and retail. The main driver for the increase in other income increasing by 4.5% was the advertising business performing strongly compared to the comparative period. Advertising performance is impacted by the nature of the film slate and the level of admissions. In February the Group disposed of a small element of the Group's distribution arm in Picturehouse. This distribution income is recorded in other income and therefore has reduced the overall growth from the prior period.
Rest of the World
The results below for the Rest of the World ("ROW") includes Poland, Israel, Romania, Hungary, Czech Republic, Bulgaria and Slovakia.
6 months 6 months v. 2016
to to
30 June 2017 30 June 2016 v. 2016 (constant currency)
(statutory
basis)
Admissions 24.4m 22.1m + 10.4%
GBPm GBPm
Box office 99.5 77.0 + 29.2% + 14.1%
Retail 42.5 31.2 + 36.2% + 20.4%
Other income 26.3 22.6 + 16.4% +2.7%
-------------- ------------- ------------- ------------ --------------------
Total revenue 168.3 130.8 + 28.7% + 13.7%
-------------- ------------- ------------- ------------ --------------------
Box Office
Box office admissions and box office revenue in the ROW increased by 10.4% and 14.1% respectively compared to the prior period on a constant currency basis. Israel, Poland, Romania and Slovakia experienced double digit growth in admissions with Romania increasing 21.0% and Slovakia 23.3% respectively. Only Hungary experienced a slight decline in admissions as a result of two site closures, one in the period and one in the prior year, however on a like for like basis growth was achieved. Admissions have increased in these territories as a result of the opening of new sites in the prior year, investment in the latest technologies, the strong film slate for the period and also the growth in the local economies. During 2016, there were four new sites opened in the ROW, three in Romania, and one in Israel with a further site opened in June 2017 in Israel, Zichron.
The average ticket price increased by 3.3% to GBP4.08 on a constant currency basis. The increase has been driven by a mixture of expanding our premium offerings, inflationary price increases alongside the growth of the local economies and the film slate. Film performance for the first half of the year was underpinned by the success of films that also performed strongly in the UK, however other titles such as "Wonder Woman" also performed well. Locally produced films continue to contribute strongly to box office revenues - in Poland "The Art of Loving: Story of Michalina Wislocka" was the highest grossing film for the period.
Retail
Retail spend per person increased to GBP1.74 during the period - an increase of 9.0% on a constant currency basis. The growth was driven by a combination of retail initiatives, inflationary price increases and the nature of the film slate.
Other income
Other income includes distribution, advertising and other revenues and represents 15.6% (2016: 17.3%) of the total revenues. Forum Film is the Group's distribution business for the ROW and distributes films on behalf of the major Hollywood studios as well as owning the distribution rights to certain independent fims. Key titles distributed in the period included "Beauty and the Beast", "Guardians of the Galaxy Vol. 2" and "Pirates Of The Caribbean: Salazar's Revenge". Advertising revenues have increased but not at the same rate as admissions due to the nature and timing of the contracts.
Statutory Financial Performance
6 month
period
ended
6 month period ended 30 June 30 June
2017 2016
Total
UK & Ireland ROW Total Group Group
Admissions 26.3m 24.4m 50.7m 46.1m
GBPm GBPm GBPm GBPm
Box office 167.7 99.5 267.2 227.0
Retail 60.8 42.5 103.3 84.7
Other Income 23.4 26.3 49.7 45.0
------------------------------------- ------------ ----- ----------- --------
Total revenue 251.9 168.3 420.2 356.7
------------------------------------- ------------ ----- ----------- --------
EBITDA(1) 40.0 44.3 84.3 70.5
Operating profit 51.9 41.8
------------------------------------- ------------ ----- ----------- --------
Finance income 1.4 0.5
Finance expenses (5.0) (11.6)
Net finance costs (3.6) (11.1)
------------------------------------- ------------ ----- ----------- --------
Share of loss from joint venture (0.1) (0.1)
------------------------------------- ------------ ----- ----------- --------
Profit on ordinary activities
before tax 48.2 30.6
Tax on profit on ordinary activities (7.9) (6.2)
------------------------------------- ------------ ----- ----------- --------
Profit for the period attributable
to equity holders of the Company 40.3 24.4
------------------------------------- ------------ ----- ----------- --------
(1) EBITDA is defined as Operating Profit before depreciation and amortisation, onerous leases and other non-recurring charges, impairments and reversals of impairments, transaction and reorganisation costs, profit on disposals of assets and the settlement of the defined benefit pension liability.
EBITDA and Operating Profit
Group EBITDA has increased by 19.6% to GBP84.3m (2016: GBP70.5m). The Group EBITDA margin of 20.1% is 0.3% higher than the comparative period.
EBITDA generated by the UK & Ireland of GBP40.0m has increased by 6.1% compared to the prior period (2016: GBP37.7m). The EBITDA margin of 15.9% represents a slight decline of 0.8% from 2016. The margin in the UK was impacted by the cessation of the VPF income in the second half of 2016 and increases in business rates. The ROW generated EBITDA of GBP44.3m, (2016: GBP32.8m) on a constant currency basis representing growth of 19.7%. The EBITDA margin of 26.3% for the ROW is an improvement of 1.2% compared to the prior period, driven by the increase in admission levels due to the film slate, including the popularity of locally produced films and the growing economies.
There are translation exchange differences arising when presenting the year on year performance of the ROW in the reporting currency of the Group. During the period EBITDA of GBP84.3m was GBP0.8m higher than it would have been had it been translated by applying the exchange rates at the start of the year and GBP5.0m higher based on the average rate for the comparable 2016 period.
Operating profit at GBP51.9m was 24.2% higher than the prior period (2016: GBP41.8m). Operating profit included a number of non-recurring and non-trade related items that have a net positive impact of GBP0.3m (2016: negative GBP1.7m). These primarily related to:
-- A charge of GBP0.6m (2016: GBPnil) for non-recurring
property costs;
-- Impairment costs of GBP0.6m (2016: GBP0.7m) during
the period;
-- A one off gain of GBP2.2m relating to the profit
on disposal of Picturehouse Entertainment of GBP1.8m
and the gain on the transfer of Haymarket of GBP0.4m
(2016: GBPnil); and
-- Transaction and reorganisation costs of GBP0.7m
(2016: GBP1.0m).
The total depreciation and amortisation charge (included in administrative expenses) in the period totaled GBP32.7m (2016: GBP27.0m). Of this, GBP16.4m related to the UK & Ireland and GBP16.3m related to the ROW. The charge continues to increase primarily as a result of the number of new sites across the Group.
Net finance costs
Net financing costs totaled GBP3.6m during the period (2016: GBP11.1m).
Finance income of GBP1.4m (2016: GBP0.5m) mainly related to interest income of GBP0.4m (2016: GBP0.3m) and GBP1.0m of foreign exchange gains on monetary assets. In the prior period there was a GBP0.2m gain in respect of the defined benefit pension scheme.
The finance expense of GBP5.0m (2016: GBP11.6m) included GBP3.6m in respect of interest on bank loans and overdrafts (2016: GBP4.3m). In the prior year there was a GBP6.1m negative impact on foreign exchange, primarily relating to the translation of the Euro Term loan at the balance sheet date. In the second half of 2016 the Group entered into a net investment hedge in respect of the Euro Term loan and the gains and losses are now recognised directly in other comprehensive income, in line with current accounting practice and standards. Other net finance costs of GBP1.4m (2016: GBP1.2m) included amortisation of prepaid finance costs of GBP0.7m (2016: GBP0.7m), GBP0.5m (2016: nil) in respect of the unwind of the discount and interest charges on property-related leases and GBP0.2m (2016: GBP0.3m) of other financial costs.
Taxation
The overall tax charge during the period was GBP7.9m giving an overall effective tax rate of 16.4% (Full year 2016: 16.5%). The effective tax rate has remained consistent overall, however, the charge reflects an increase due to non-tax deductible one off transaction costs which are offset by the initial recognition of deferred tax assets on brought forward tax losses which are now expected to be utilised against future profits.
Earnings
Profit on ordinary activities after tax in the period was GBP40.3m, an increase of GBP15.9m compared to the comparative period (2016: GBP24.4m). The increase year on year is primarily attributable to increased admissions across the Group generating additional EBITDA of GBP13.8m. The depreciation and amortization charge has increased by GBP5.7m year on year predominantly as a result of new sites in the Group. The one off items in the period generated income of GBP0.3m compared to a charge of GBP1.7m in 2016 and there are no losses on the Euro Term loan in the period compared to the loss of GBP6.1m in the prior period. Basic earnings per share amounted to 14.9p (2016: 9.2p). Eliminating the one-off, non-trade related items totaling GBP2.0m, adjusted diluted earnings per share were 15.4p (2016: 12.7p).
Business Combinations
On the 15 June 2017 the Group completed the acquisition of the Newcastle cinema from Cinema Holdings Limited by means of an acquisition of 100% of the shares. Cash consideration was paid on acquisition and there is also an element of contingent consideration to be paid based on the performance of the site over a 24 month period post completion of the refurbishment.
Disposals
On the 7 February 2017 the Group sold 100% of the shares in Picturehouse Entertainment Limited, a Company which operated an element of the Group's distribution arm in the UK. The consideration received was GBP2.0m, resulting in a gain on disposal of GBP1.8m.
Cash Flow and Balance Sheet
Overall, net assets increased by GBP52.2m, to GBP715.6m since 31 December 2016. Total assets increased by GBP26.9m of which the main elements were property, plant and equipment additions and increases to goodwill as a result of the Empire Newcastle acquisition in the period and movements in the in foreign exchange rates since the 2016 balance sheet date.
The Group continued to be cash generative at the operating level. Total net cash generated from operations in the period was GBP65.9m (2016: GBP44.4m). Net cash outflows in investing activities were GBP49.5m during the period (2016: GBP38.4m).
Net debt of GBP309.1m at the period end is higher than the balance at 31 December 2016 of GBP282.3m. Of the net increase of GBP26.8m, GBP24.3m related to the decrease in cash during the period as a result of the capital expenditure, financing and payment of dividends in the period. The remaining movement relates to GBP0.6m net foreign exchange losses on cash held and bank debt denominated in currencies other than sterling and GBP1.9m of other non-cash movements.
Risks and uncertainties
The Board retains ultimate responsibility for the Group's Risk Management Framework, and continues to undertake on-going monitoring to review the effectiveness of the Framework and ensure the principal risks of the Group are being appropriately mitigated in line with its risk appetite.
The principal risks and uncertainties which could impact the Group for the remainder of the current financial year remain those detailed on pages 22-27 of the Group's Annual Report for 2016, a copy of which is available from the Group's website www.cineworldplc.com. A summary of the principal risks is included after the Independent Review Report.
Related party transactions
Details of related party transactions are set out in Note 11 of the interim financial statements.
Going concern
The Group has a single currency revolving credit facility of GBP215.0m and two term loans, one in sterling and one in Euros. The facility remains subject to two covenants: the ratio of EBITDA to net debt and the ratio of EBITDAR (pre--rent EBITDA) to net finance charges. A margin, determined by the results of the covenant tests at a given date is added to LIBOR or EURIBOR. The margins currently applicable to Group are 1.40% on the term loans and 1.15% on the revolving credit facility.
At 30 June 2017 the Group had drawn down GBP162.0m of the RCF and the term loans outstanding were GBP115.0m and EUR51.0m. The Group has been in compliance with the covenants throughout the period and at the period end.
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 its current facility, including compliance with the bank facility covenants. 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 consolidated interim financial statements.
Dividends
The Board is declaring an interim dividend of 6.0p per share (2016: 5.2p per share), reflecting the strong performance in the first half of the year and the strength of the Balance Sheet. The dividend will be paid on 21 September 2017 to ordinary shareholders on the register at the close of business on 25 August 2017.
Mooky Greidinger Chief Executive Officer
Cautionary note concerning forward looking statements
Certain statements in this announcement are forward looking and so involve risk and uncertainty because they relate to events, and depend upon circumstances that will occur in the future and therefore results and developments can differ materially from those anticipated. The forward looking statements reflect knowledge and information available at the date of preparation of this announcement and the Group undertakes no obligation to update these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the period ended 30 June 2017
Period Period Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
Note (unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue 420.2 356.7 797.8
Cost of sales (316.4) (267.7) (584.8)
Gross profit 103.8 89.0 213.0
Other operating income 1.5 1.2 2.7
Administrative expenses (53.4) (48.4) (102.9)
Operating profit 51.9 41.8 112.8
------------------------------------ ---- ------------ ------------ ------------
Analysed between:
EBITDA as defined in note
1 84.3 70.5 175.8
- Depreciation and amortisation (32.7) (27.0) (58.6)
- Onerous leases and other
non-recurring charges (0.6) - 1.5
- Impairments and reversals
of impairments (0.6) (0.7) 0.4
- Profit on disposal of assets
and liabilities 2.2 - -
- Transaction and reorganisation
costs (0.7) (1.0) (1.5)
-Settlement of defined benefit
pension liability - - (4.8)
------------------------------------ ---- ------------ ------------ ------------
Finance income 4 1.4 0.5 3.0
Finance expenses 4 (5.0) (11.6) (17.6)
Net financing costs (3.6) (11.1) (14.6)
Share of loss of jointly controlled
entity using equity accounting
method, net of tax (0.1) (0.1) -
Profit before tax 48.2 30.6 98.2
Taxation 3 (7.9) (6.2) (16.2)
Profit for the period attributable
to equity holders of the Company 40.3 24.4 82.0
Other comprehensive income
Items that will not subsequently
be reclassified to profit
or loss
Re-measurement of the defined
benefit asset - 1.5 (5.1)
Income tax (charge)/credit
recognised on other comprehensive
income - (0.3) 1.0
Items that will subsequently
be reclassified to profit
or loss
Foreign exchange translation
gain 27.4 57.0 88.2
Movement in fair value of
cash flow hedges 1.0 (0.9) 0.5
Net change in fair value of
cash flow hedges recycled
to profit or loss - - (1.9)
Movement in fair value of
net investment hedge (1.3) - (1.3)
Other comprehensive income
for the period, net of income
tax 27.1 57.3 81.4
Total comprehensive income
for the period attributable
to equity holders of the company 67.4 81.7 163.4
Basic earnings per share 14.9p 9.2p 30.8p
Diluted earnings per share 14.8p 9.1p 30.4p
The notes on pages 13 to 19 are an integral part of these condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
30 June 2017 30 June 2016 31 December
2016
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm GBPm GBPm GBPm
Non-current assets
Property, plant and
equipment 481.3 380.3 445.4
Goodwill 674.4 573.0 650.6
Other intangible
assets 51.4 53.4 54.2
Investment in equity-accounted
investee 1.0 0.7 0.9
Other receivables 6.2 6.5 6.0
Employee benefits - 12.8 -
Total non-current
assets 1,214.3 1,026.7 1,157.1
Current assets
Inventories 10.8 9.7 9.8
Trade and other receivables 68.3 65.8 74.0
Cash and cash equivalents 30.2 32.5 55.8
Total current assets 109.3 108.0 139.6
Total assets 1,323.6 1,134.7 1,296.7
Current liabilities
Interest--bearing
loans, borrowings
and other financial
liabilities (15.4) (17.8) (16.8)
Trade and other payables (138.0) (119.2) (175.8)
Current taxes payable (15.6) (9.6) (10.5)
Bank overdraft (1.1) - -
Provisions (7.2) (5.9) (6.3)
Total current liabilities (177.3) (152.5) (209.4)
Non--current liabilities
Interest--bearing
loans, borrowings
and
other financial liabilities (322.9) (265.0) (321.3)
Other payables (86.6) (70.2) (76.5)
Employee benefits (1.9) (1.4) (1.8)
Provisions (8.8) (17.8) (11.6)
Deferred tax liabilities (10.5) (10.6) (12.7)
Total non-current
liabilities (430.7) (365.0) (423.9)
Total liabilities (608.0) (517.5) (633.3)
Net assets 715.6 617.2 663.4
Equity attributable
to equity holders
of the Company
Share capital 2.7 2.7 2.7
Share premium 327.5 295.9 306.4
Translation reserve 66.3 7.7 38.9
Merger reserve 207.3 207.3 207.3
Hedging reserve (2.7) (0.6) (2.4)
Retained earnings 114.5 104.2 110.5
Total equity 715.6 617.2 663.4
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
for the period ended 30 June 2017
Issued Share Merger Reserve Translation Hedging Retained Total
capital premium reserve reserve earnings
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2017 2.7 306.4 207.3 38.9 (2.4) 110.5 663.4
Profit for the period - - - - - 40.3 40.3
Other comprehensive
income
Items that will
subsequently
be reclassified to
profit or loss
Movement in fair value
of cashflow hedges - - - - 1.0 - 1.0
Retranslation of
foreign
currency denominated
subsidiaries - - - 27.4 - - 27.4
Movement in net
investment
hedge - - - - (1.3) - (1.3)
Contributions by and
distributions to owners
Dividends - - - - - (37.4) (37.4)
Movements due to
share-based
compensation - - - - - 1.1 1.1
Issue of shares* - 21.1 - - - - 21.1
Balance at 30 June
2017 2.7 327.5 207.3 66.3 (2.7) 114.5 715.6
*Within the issue of shares during the period, GBP21.0m relates to the deferred consideration for the 2016 Empire acquisition
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (CONTINUED)
for the period ended 30 June 2017
Issued Share Merger Reserve Translation Hedging Retained Total
capital premium reserve reserve earnings
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2016 2.7 295.7 207.3 (49.3) 0.3 78.0 534.7
Profit for the period - - - - - 24.4 24.4
Other comprehensive
income
Items that will not
subsequently be
reclassified
to profit or loss
Re-measurement of
the defined benefit
asset - - - - - 1.5 1.5
Tax recognised on
items that will not
be reclassified to
profit or loss - - - - - (0.3) (0.3)
Items that will
subsequently
be reclassified to
profit or loss
Movement in fair value
of cashflow hedges - - - - (0.9) - (0.9)
Retranslation of
foreign
currency denominated
subsidiaries - - - 57.0 - - 57.0
Tax recognised on
items that will be - - - - - - -
subsequently
reclassified
to profit or loss
Contributions by and
distributions to owners
Dividends - - - - - - -
Movements due to
share-based
compensation - - - - - 0.6 0.6
Issue of shares - 0.2 - - - - 0.2
Balance at 30 June
2016 2.7 295.9 207.3 7.7 (0.6) 104.2 617.2
Balance at 1 January
2016 2.7 295.7 207.3 (49.3) 0.3 78.0 534.7
Profit for the year - - - - - 82.0 82.0
Amounts reclassified
from equity to profit
and loss in respect
of cash flow hedges (1.9) (1.9)
Other comprehensive
income
Items that will not
subsequently be
reclassified
to profit or loss
Re-measurement of
the defined benefit
asset - - - - - (5.1) (5.1)
Tax recognised on
items that will not
be reclassified to
profit or loss - - - - - 1.0 1.0
Items that will
subsequently
be reclassified to
profit or loss
Movement in fair value
of cash flow hedge - - - - 0.5 - 0.5
Movement in net
investment
hedge - - - - (1.3) - (1.3)
Retranslation of
foreign
currency denominated
subsidiaries - - - 88.2 - - 88.2
Contributions by and
distributions to owners
Dividends - - - - - (47.0) (47.0)
Movements due to
share-based
compensation - - - - - 1.6 1.6
Issue of shares* - 10.7 - - - - 10.7
Balance at 31 December
2016 2.7 306.4 207.3 38.9 (2.4) 110.5 663.4
*Within the issue of shares during the period, GBP10.5m relates to the deferred consideration for the 2016 Empire acquisition
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 30 June 2017
Period Period Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash flows from operating
activities
Profit for the period 40.3 24.4 82.0
Adjustments for:
Financial income (1.4) (0.5) (3.0)
Financial expense 5.0 11.6 17.6
Taxation charge 7.9 6.2 16.2
Share of loss of equity-accounted
investee 0.1 0.1 -
Operating profit 51.9 41.8 112.8
Depreciation and amortisation 32.7 27.0 58.6
Non-cash property, pension
and remuneration credit/(charges) 0.6 (1.2) (0.1)
Impairments and reversals
of impairments 0.6 0.7 (0.4)
Surplus of pension contributions
over current service cost - (0.8) (0.8)
Decrease/(increase) in trade
and other receivables 5.3 1.4 (6.0)
Increase in inventories (1.1) (0.5) (0.6)
Decrease in trade and other
payables (17.1) (20.3) (2.0)
(Decrease)/increase in provisions
and employee benefits (1.4) (0.1) (1.6)
Cash generated from operations 71.5 48.0 159.9
Tax paid (5.6) (3.6) (9.8)
Net cash flows from operating
activities 65.9 44.4 150.1
Cash flows from investing
activities
Interest received 0.4 0.2 0.7
Acquisition of subsidiaries
net of acquired cash (7.0) - (47.0)
Acquisition of property,
plant and equipment and
intangible assets (44.9) (38.6) (83.7)
Proceeds from sale of property,
plant and equipment 2.0 - -
Investment in equity accounted
investee - - (0.3)
Net cash flows used in investing
activities (49.5) (38.4) (130.3)
Cash flows from financing
activities
Proceeds from share issue 0.1 0.1 0.3
Dividends paid to shareholders (37.4) - (47.0)
Interest paid (3.6) (4.0) (7.8)
Repayment of bank loans (5.1) (36.1) (6.4)
Proceeds from bank loans 4.3 - 28.0
Payment of finance lease
liabilities (1.0) (0.5) (1.0)
Net cash used in financing
activities (42.7) (40.5) (33.9)
Net decrease in cash and
cash equivalents (26.3) (34.5) (14.1)
Effect of exchange rate
fluctuations on cash held 0.7 4.5 7.4
Cash and cash equivalents
at start of period 55.8 62.5 62.5
Cash and cash equivalents
at end of period 30.2 32.5 55.8
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
Reporting entity
Cineworld Group plc (the "Company") is a company domiciled in the United Kingdom. The interim condensed consolidated financial statements of the Company as at and for the period ended 30 June 2017 comprises the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in jointly controlled entities.
The consolidated financial statements of the Group as at and for the year ended 31 December 2016 are available upon request from the Company's registered office at 8(th) Floor, Vantage London, Great West Road, Brentford,TW8 9AG.
Statement of compliance
These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2016. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2016.
The comparative figures for the financial year ended 31 December 2016 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
Significant accounting policies
These condensed consolidated interim financial statements are unaudited and, have been prepared on the basis of accounting policies consistent with those applied in the consolidated financial statements for the year ended 31 December 2016.
Use of non-GAAP Profit and Loss Measures
The Group believes that along with operating profit, the following measures, provide additional guidance to the statutory measures of the performance of the business during the financial year:
-- EBITDA -- Adjusted profit before tax -- Adjusted profit after tax
The Group defines EBITDA as reported in the Consolidated Statement of Profit and Loss as Operating profit before depreciation and amortisation, onerous leases and other non-recurring charges, impairments and reversals of impairments, transaction and reorganisation costs, profit on disposals of assets and the settlement of the defined benefit pension liability. EBITDA is considered an accurate and consistent measure of the Groups trading performance, items adjusted to arrive at EBITDA are considered to be outside the Groups ongoing trading activities.
Adjusted profit before tax is calculated by adding back amortisation of intangible assets (excluding acquired film distribution rights), and certain non-recurring, non cash items and foreign exchange as set out in Note 5. Adjusted profit before tax is an internal measure used by management, as they believe it better reflects the underlying performance of the Group and therefore a more meaningful comparison of performance from period to period.
Adjusted profit after tax is arrived at by applying an effective tax rate to taxable adjustments and deducting the total from adjusted profit before tax.
2. Operating segments
Determination and presentation of operating segments
The Group has determined that is has two operating segments: UK and Ireland aggregation and the Rest of the World aggregation.
UK and Rest of Total
Ireland the World
GBPm GBPm GBPm
Period ended 30 June 2017
Total revenues(1) 251.9 168.3 420.2
EBITDA as defined in Note 1 40.0 44.3 84.3
Segmental operating profit 24.4 27.5 51.9
Net finance costs (5.0) 1.4 (3.6)
Share of loss of jointly controlled
entities using equity method,
net of tax (0.1) - (0.1)
Depreciation and amortisation 16.4 16.3 32.7
Transaction and reorganisation
costs 0.7 - 0.7
Profit before taxation 19.3 28.9 48.2
Segmental total assets 540.6 783.0 1,323.6
Period ended 30 June 2016
Total revenues(1) 225.9 130.8 356.7
EBITDA 37.7 32.8 70.5
Segmental operating profit 15.1 26.7 41.8
Net finance costs 10.3 0.8 11.1
Share of loss of jointly controlled
entities using equity method,
net of tax (0.1) - (0.1)
Depreciation and amortisation 13.6 13.4 27.0
Transaction and reorganization
costs 1.0 - 1.0
Profit before taxation 4.6 26.0 30.6
Segmental total assets 483.6 651.1 1,134.7
Year ended 31 December 2016
Total revenues(1) 494.0 303.8 797.8
EBITDA as defined in Note 1 97.1 78.7 175.8
Segmental operating profit 60.2 52.6 112.8
Net finance costs 13.4 1.2 14.6
Depreciation and amortisation 28.9 29.7 58.6
Transaction and reorganisation
costs 1.5 - 1.5
Profit before taxation 46.8 51.4 98.2
Segmental total assets 571.4 725.3 1,296.7
(1) All revenues are from third parties
3. Taxation
The taxation charge has been calculated by reference to the expected effective corporation tax rates in the UK for the year ending on 31 December 2017 applied against the profit before tax for the period ended 30 June 2017. Recognised in the income statement:
Period Period ended Year ended
ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Current year tax expense
Current period 10.4 3.8 16.5
Adjustments in respect
of prior periods - - (4.1)
Total current year tax
expense 10.4 3.8 12.4
Deferred tax (credit)/charge
Current period (2.5) 2.4 1.3
Adjustments in respect
of prior periods - - 2.5
Total deferred tax (credit)/expense (2.5) 2.4 3.8
Total tax charge in the
income statement 7.9 6.2 16.2
Effective tax rate 16.4% 20.2% 16.5%
Current year effective
tax rate 16.4% 20.2% 18.1%
4. Finance income and expense
Period ended Period ended Year ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Interest income 0.4 0.3 0.7
Defined benefit pension
scheme net finance income - 0.2 0.4
Net foreign exchange gain 1.0 - -
Amounts reclassified from
equity to profit or loss
in respect of settled cash
flow hedges - - 1.9
Financial income 1.4 0.5 3.0
Interest expense on bank
loans and overdrafts 3.6 4.3 7.8
Amortisation of financing
costs 0.7 0.7 1.4
Unwind of discount on onerous
lease provision 0.1 0.3 0.6
Unwind of discount on finance
lease liability 0.5 - 0.7
Unwind of discount on market
rent provision 0.1 - 0.4
Other financial costs - 0.2 -
Net foreign exchange loss - 6.1 6.7
Financial expense 5.0 11.6 17.6
Net financial expense 3.6 11.1 14.6
5. Earnings per share
Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, after excluding the weighted average number of non-vested ordinary shares held by the employee ownership trust.
Adjusted earnings per share is calculated in the same way except that the profit for the year attributable to ordinary shareholders is adjusted by adding back the amortisation of intangible assets recognised as part of business combinations and other one-off income or expense and then adjusting for the tax impact on those items which is calculated at the effective tax rate for the current year. The performance of adjusted earnings per share is used to determine awards to Executive Directors under the Group Performance Share Plan ("PSP"). Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders by weighted average number of any non-vested ordinary shares held by the employee share ownership trust and after adjusting for the effects of dilutive options.
Period Period Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Profit after tax for the period attributable
to ordinary
shareholders 40.3 24.4 82.0
Adjustments:
Amortisation of intangible assets(1) 2.3 3.0 4.6
Transaction and reorganisation costs 0.7 1.0 1.5
Impairments and reversals of impairments 0.6 0.7 (0.4)
Onerous lease cost and other non-recurring
charges 0.6 - (1.5)
Settlement of defined benefit pension
scheme - - 4.8
Impact of foreign exchange translation
gains and losses(2) - 5.7 6.1
Profit on disposal of assets (2.2) - -
Exceptional finance credit - - (1.9)
Total adjustments 2.0 10.4 13.2
Adjusted profit 42.3 34.8 95.2
Tax effect of above items (0.3) (0.8) (1.4)
Adjusted profit after tax 42.0 34.0 93.8
Number Number Number
of shares of shares of shares
m m m
Weighted average number of shares in
issue 269.3 265.4 266.2
Basic and adjusted earnings per share
denominator 269.3 265.4 266.2
Dilutive options 2.6 1.8 4.4
Diluted earnings per share denominator 271.9 267.2 270.6
Shares in issue at period end 271.4 265.6 267.6
Pence Pence Pence
Basic earnings per share 14.9 9.2 30.8
Diluted earnings per share 14.8 9.1 30.3
Adjusted basic earnings per share 15.6 12.8 35.2
Adjusted diluted earnings
per share 15.4 12.7 34.7
(1) Amortisation of intangible assets includes amortisation of the fair value placed on brands, customer lists, distribution relationships, and advertising relationships as a result of the Cinema City business combination. It does not include amortisation of purchased distribution rights.
(2) Exceptional finance credits of GBP1.9m in 2016 were made up of the net change in fair value of cash flow hedges reclassified from equity, no such charges were incurred in 2017.
(3) In 2016 net foreign exchange gains and losses included within earnings comprises of GBP6.1m foreign exchange loss recognised on translation of the Euro term loan at 30 June 2016. No such gains or losses were recognized in 2017 as a result of the net investment hedge taken out in the second half of 2016 in respect of the Euro term loan. Adjusted EPS has been amended as at 30 June 2016 as it previously included GBP1.6m in foreign exchange gains recognised on translating overseas operations into the reporting currency of the Group. From 31 December 2016 Management no longer considered these movements should be excluded.
6. Dividends
A final dividend of 13.8p per share was paid on 22 June 2017 to ordinary shareholder (2016: 12.5p paid on 7 July 2016). The board have declared an interim dividend of 6.0p per share (2016: 5.2p). This will result in total cash payable of approximately GBP16.3m (2016:GBP13.8m) on 21 September 2017 to ordinary shareholders on the register at the close of business on 25 August 2017. In accordance with IAS 10, this will be recognised in the reserves of the Group when the dividend is paid.
7. Analysis of net debt
Cash at bank Bank Bank Finance Interest Net
and in hand overdrafts loans leases rate swaps debt
GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1 January
2017 55.8 - (322.0) (15.0) (1.1) (282.3)
Cash flows (26.3) (1.1) 2.1 1.0 - (24.3)
Non cash movement - - (0.7) (2.2) 1.0 (1.9)
Effect of movement
in foreign exchange
rates 0.7 - (1.3) - - (0.6)
Balance at 30 June
2017 30.2 (1.1) (321.9) (16.2) (0.1) (309.1)
Fair Value Hierarchy of Financial Instruments:
The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:
-- Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities;
-- Level 2: inputs other than quoted prices included
within Level 1 that are observable for the assets
or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices);
-- Level 3: inputs for the assets or liability that are
not based on observable market data (unobservable
inputs).
Level Level Level
1 2 3 Total
GBPm GBPm GBPm GBPm
--------------------------------- ----- ----- ----- -----
30 June 2017
Derivative financial instruments - 0.1 - 0.1
--------------------------------- ----- ----- ----- -----
30 June 2016
Derivative financial instruments - 2.5 - 2.5
--------------------------------- ----- ----- ----- -----
31 December 2016
Derivative financial instruments - 1.1 - 1.1
--------------------------------- ----- ----- ----- -----
There have been no transfers between levels in 2017 (2016: no transfers). No other financial instruments are held at fair value.
The carrying amount of the Group's financial assets and liabilities are generally the same as their fair value, with the exception of the interest rate swaps which have a fair value liability as disclosed above.
8. Property, plant and equipment
During the period to 30 June 2017, the Group purchased assets of GBP51.1m (period ended 30 June 2016: GBP40.6m; year ended 31 December 2016: GBP76.5m).
9. Business combinations
2016 Acquisition of five Empire cinemas
On 28 July 2016 Cineworld Group Plc (the "Group") announced the acquisition of five Cinemas from Cinema Holdings Limited by means of an acquisition of 100% of the shares, including all of the voting rights.
Consideration Transferred
The acquisition was completed on 11 August 2016, at which point the consideration equated to GBP94.5m which would be settled equally in cash, and in Cineworld Group plc ordinary shares in addition to the transfer of the trade and assets of the Group's Haymarket cinema to Cinema Holdings Limited. The shares were to be issued in five instalments during a 12 month period, based on an issue price reflecting 20 days' average trading price prior to the date of each issuance. The first three issues of shares took place on 18 November 2016, 13 February 2017 and 12 May 2017.
Fair Value of Consideration Transferred
GBPm
---------------------------------------------- ----
Cash consideration 47.0
Share consideration 47.0
Transfer of cinema assets 0.5
---------------------------------------------- ----
Total fair value of consideration transferred 94.5
---------------------------------------------- ----
Identifiable Assets Acquired and Liabilities Assumed
At the time of the 2016 Annual Report, management were in the final stages of assessing the fair value of the acquired identifiable property, plant and equipment and finance lease liabilities and as a result their respective value were measured on a provisional basis. This exercise is now complete. The finalisation of the fair values reflects new information obtained about factors and circumstances that existed at the acquisition date which has resulted in an increase in the value of property, plant and equipment and finance lease liabilities by GBP1.5m.
Identifiable Assets Acquired and Liabilities Assumed
GBPm
Fair value of total net identifiable
assets upon acquisition
Property, plant and equipment: 43.7
Finance lease liability (9.7)
Deferred tax provisions (0.2)
Provisions for liabilities (0.5)
Working capital 0.6
Total net identifiable assets 33.9
Goodwill 60.6
Consideration transferred 94.5
-------------------------------------- -----
The Key Judgments considered were as follows:
Property and leases
The fair value of property, plant and equipment of GBP43.7m included a number of adjustments. Old cinema equipment and assets which were previously held at their residual value of GBP3.2m were fully depreciated as the residual value is not expected to be realised. A fair value adjustment of GBP3.0m was made in respect of the Bromley site in recognition of the residual value in the sellers books being below the current market value.
As well as considering the fair value of acquired property, plant and equipment, management also considered the lease contract for each of the cinemas. Where leases include options to extend beyond the existing contracted term this was taken into consideration. Two leases held on the Leicester Square site were classified as finance leases and a liability for the fair value of the minimum expected lease payments on each recognized, a corresponding asset was recognized in respect of the fair value of the lease within Property, Plant and Equipment.
Tax
The acquired deferred tax liability of GBP0.2m reflects taxable temporary differences on fixed assets at acquisition.
No income tax liability is recognised on acquisition as future tax charges are not expected to arise in respect of tax positions open at the date of acquisition.
Identifiable Intangible Assets
There were no identifiable intangible assets recognized on acquisition. Management consider the residual Goodwill of GBP60.6m to represent a number of factors including the strategic location of the sites acquired, the established benefit of an established site, the value the acquired sites can add to Cineworld's existing brand and products as well as synergies expected to be realised post acquisition. None of the goodwill is expected to be deductible for income tax purposes.
2017 Acquisition of Empire Newcastle Cinema
On the 15 June 2017 the Group completed the acquisition of the Newcastle cinema from Cinema Holdings Limited by means of an acquisition of 100% of the shares. Cash consideration was paid on acquisition and there is also an element of contingent consideration to be paid based on the performance of the site over a 24 month period post completion of the refurbishment.
10. Capital commitments
Capital commitments at the end of the financial period for which no provision has been made were GBP56.9m (30 June 2016: GBP35.9m and 31 December 2016: GBP44.7m). Capital commitments at 30 June 2017 related primarily to new sites (GBP27.2m), cinema equipment and leasehold improvements (GBP28.5m) and distribution rights (GBP1.2m).
11. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
Total compensation for the Directors during the period to 30 June 2017 was GBP1.6m (30 June 2016 was GBP1.6m; year ended 31 December 2016: GBP5.3m). At 30 June 2017 the balance owed to directors was GBPnil (30 June 2016: GBPnil; 31 December 2016: GBPnil).
Digital Cinema Media (DCM) is a joint venture between the Group and Odeon Cinemas Holdings Limited Revenue receivable from DCM in the period to 30 June 2017 was GBP9.0m (period ended 30 June 2016 GBP7.7m and year ended 31 December 2016: GBP18.3m) and as at 30 June 2017 GBP1.5m was due from DCM in respect of trade receivables (30 June 2016: GBPnil; 31 December 2016 GBPnil). In addition the Group has a working capital loan outstanding from DCM of GBP0.5m (30 June 2016: GBP0.5m; 31 December 2016 GBP0.5m).
During the year the Group incurred property charges of GBP4.3m (30 June 2016: GBP3.7m; 31 December 2016: GBP7.8m) from companies under the ownership of Global City Holdings N.V. ("GCH"), which is considered a related party of the Group as Moshe Greidinger and Israel Greidinger are directors of both groups.
INDEPENT REVIEW REPORT TO CINEWORLD GROUP PLC
Conclusions
We have been engaged by the company to review the condensed set of financial statements in the interim results announcement for the six months ended 30 June 2017 which comprises the Condensed Consolidated statement of Profit or Loss and Other Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim results announcement for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the interim results announcement and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The interim results announcement is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the interim results announcement in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim results announcement based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Hugh Green
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
10 August 2017
RISKS AND UNCERTAINTIES
A summary of the Principal Risks which are set out in detail on pages 22-27 of the Group's Annual Report for 2016, a copy of which is available from the Group's website www.cineworldplc.com.
1. Technology Critical system interruption and or breach
and Data Control (cyber or otherwise) of data protection
rules or security measures surrounding
the storage of confidential and proprietary
information.
---------------------- -------------------------------------------------
2. Availability Quality of the distributors' film slates,
and Performance the timeliness of their release and the
of Film Content appeal of such films to our customers.
---------------------- -------------------------------------------------
3. Expansion Expansion of operations through the development
and Growth of of new sites or acquiring existing cinemas.
Our Cinema Estate
---------------------- -------------------------------------------------
4. Viewer Experience Maintaining the quality services from
and Competition the ease of booking, the technology we
use, to a friendly farewell on departure.
---------------------- -------------------------------------------------
5. Revenue from Reduction in admissions and or changes
Retail/Concession in customer preferences, decreased disposable
Offerings income or other economic and cultural
factors.
---------------------- -------------------------------------------------
6. Cinema operations Ensuring management understand their local
market (film scheduling, pricing and retail
offerings), effectively manage their employees,
maintain service standards, and are able
to react to incidents should they occur.
---------------------- -------------------------------------------------
7. Regulatory The Group's business and operations are
Breach affected by regulations covering such
matters as planning, the environment,
health and safety (cinemas and construction
sites), licensing, food and drink retailing,
data protection and the minimum wage.
---------------------- -------------------------------------------------
8. Strategy Delivery of our long-term objectives requires
and Performance effective setting, communicating, monitoring
and executing a clear strategy.
---------------------- -------------------------------------------------
9. Retention The Group's ability to recruit, develop
and Attraction and retain senior management and other
of Senior Management key employees.
and Key Employees
---------------------- -------------------------------------------------
10. Governance Maintaining corporate governance standards
and Internal and an effective and efficient risk management
Control and internal control system proportionate
to the needs of the Group.
---------------------- -------------------------------------------------
11. Terrorism Civil unrest or terrorist acts/threats,
and Civil Unrest resulting in the public avoiding going
to the cinemas.
---------------------- -------------------------------------------------
RESPONSIBILITY STATEMENT OF THE DIRECTORS' IN RESPECT OF THE INTERIM REPORT
The directors confirm that to the best of our knowledge:
The condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
The Chief Executive Officer's Review report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules,
being an indication of important events that have
occurred during the first six months of the financial
year and their impact on the condensed set of financial
statements; and a description of the principal risks
and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules,
being related party transactions that have taken
place in the first six months of the current financial
year and that have materially affected the financial
position or performance of the entity during that
period; and any changes in the related party transactions
described in the last annual report that could do
so.
The directors of Cineworld Group plc are listed on the Cineworld Group plc website (www.cineworldplc.com).
By order of the Board
Moshe Greidinger Israel Greidinger Director Director
10 August 2017
Shareholder Information
Registered and Head Office
8(th) Floor
Vantage London
Great West Road
Brentford
TW8 9AG
Telephone Number
0208 987 5000
Website
www.cineworldplc.com
Company Number
Registered Number: 5212407
Place of incorporation
England and Wales
Joint Brokers
Barclays Bank plc
1 Churchill Place
London
E14 5HP
Investec Bank plc
2 Gresham Street
London
EC2V 7QP
Legal Advisers to the Company
Slaughter and May
1 Bunhill Row
London
EC1Y 8YY
Auditor
KPMG LLP
15 Canada Square
London
E14 5GL
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KKLFBDVFFBBF
(END) Dow Jones Newswires
August 10, 2017 02:01 ET (06:01 GMT)
1 Year Cineworld Chart |
1 Month Cineworld Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
