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    CINE   GB00B15FWH70

CINEWORLD GROUP PLC

(CINE)
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Cineworld : Interim Results for the 6 month period ended 30 June 2021

08/12/2021 | 02:21am EDT

CINEWORLD GROUP plc

Interim Results for the period ended 30 June 2021

Cineworld Group plc ("the Group"), a leading cinema operator in 10 countries including the United States and the United Kingdom with 759 sites and 9,269 screens globally, presents its interim results for the six-month period ended 30 June 2021. These results are presented in US Dollars.

Cineworld has delivered a resilient performance in a very challenging market, strengthening its liquidity position and continuing to demonstrate tight control over its operating costs and cash usage. The Group is in a strong position to benefit from the expected industry recovery.

Summary

  • The Group's results for the period include a period of temporary closures from January to April/May 2021 due to COVID- 19 restrictions and limited film slate
  • Group revenue of $292.8m (H1 2020: $712.4m) and Group Adjusted EBITDA loss of $21.1m (H1 2020: profit of $53.0m) for the period was severely impacted by these closures
  • Operating loss of $208.9m (H1 2020: loss of $1,340.9m) which has been reduced by asset impairment reversals of $95.6m resulting from lease modifications
  • Cash burn(4) of $271.0m during the period, averaging approximately $45.0m per month, supported by positive working capital in June. Total period cash burn of $66.6m after tax receipt of $204.4m in the US
  • Net external borrowings less cash were $4,632.9m up from $4,552.0m at 31 December 2020
  • Cash of $436.5m at June 2021, further strengthened by an additional term loan with principal value of $200m raised in July 2021

Outlook

  • Estate now reopened and majority of capacity restrictions lifted in the US and in the UK since 21 July
  • Gradual recovery of admissions and demand since re-opening, supported by strong retail sales
  • Anticipate strong trading in Q4 supported by a strong film slate and pent-up demand for affordable out-of-home entertainment, subject to COVID-19 situation
  • Decisive action taken during the pandemic to ensure Cineworld emerges as a stronger business well placed for the future

Key Financial Information

Reported results for

Reported results for

2021

the 6 months ended

the 6 months ended

Reported

30 June 2021

30 June 2020

results

(under IFRS 16)

(under IFRS 16)

vs.2020

Non-statutory

results for the 6 months ended 30 June 2021 (under IAS 17)(2)

Non-statutory

results for the 6 months ended 30 June 2020 (under IAS 17)

Admissions

14.1m

47.5m

(70.3%)

14.1m

47.5m

Revenue

$292.8m

$712.4m

(58.9%)

$292.8m

$712.4m

Adjusted EBITDA(1)

($21.1m)

$53.0m

(139.8%)

($268.6m)

($237.0m)

Adjusted EBITDAaL(3)

($103.4m)

($113.3m)

Loss before tax

($576.4m)

($1,644.7m)

Adjusted loss before tax(1)

($658.5m)

($567.7m)

Loss after tax

($515.2m)

($1,582.5m)

Adjusted loss after tax(1)

($581.8m)

($436.0m)

Basic EPS

(37.5c)

(115.3c)

Diluted EPS

(37.5c)

(115.3c)

Adjusted diluted EPS(1)

(42.4c)

(31.8c)

  1. Refer to Notes 2 and 6 for the full definition and reconciliation.
  2. IAS 17 measures are presented as certain performance and reporting obligations continue to be tested on this basis.
  3. Adjusted EBITDAaL is defined as Adjusted EBITDA less payment of lease liabilities in the period.
  4. Cash burn is defined as cash used in operations net of; payment of lease liabilities, cash flows from acquisition of property, plant and equipment, landlord contributions received, interest paid and interest received.

Alicja Kornasiewicz, Chair of Cineworld Group plc, said:

"Cineworld has continued to deliver strong operational and cash control despite the challenging trading conditions we have been faced with in light of COVID-19. Our teams have given their utmost during periods where we have been able to open, and I would like to thank them for their commitment and dedication. I look forward to continuing to work with the Board, the management team and all our employees, as we return to delivering sustainable growth as the market recovers, for the benefit of all our stakeholders."

Commenting on these results, Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said:

"Despite the challenges, the actions we have taken have ensured that Cineworld has emerged a more focused business with significant liquidity and a clear vision for the future. Trading has been encouraging since we started to re-open our sites in April and it has been great to have our teams back, doing what they do best, and welcoming customers back into our cinemas. Cineworld is in the position it is today thanks to the great dedication and commitment of the Cineworld team around the world and I sincerely thank each and every member of the team for their loyalty and contribution. I am confident that the business is in a strong position to execute its strategy and deliver a return to growth as we recover from the pandemic and capitalise on the forthcoming strong film slate alongside clear pent-up consumer demand."

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.

Details for analyst presentation

The results presentation is accessible via a listen-onlydial-in facility and the presentation slides can be viewed online. The appropriate details are stated below:

Date:

12 August 2021

Time:

09:30am

Webcast link:

https://secure.emincote.com/client/cineworld/cineworld017/

Conference Call:

https://secure.emincote.com/client/cineworld/cineworld017/vip_connect

CHIEF EXECUTIVE OFFICER'S REVIEW

While during most of the period under review our cinemas were closed, we were very excited to start reopening on 2nd April 2021 and were open across all territories in June. Looking at our performance since early June, it is clear that our customers have missed the big screen experience as well as the social event of watching a movie with others. In addition, our latest refurbishments and new cinemas are being embraced with great enthusiasm.

While our results still carry the effect of COVID and related lack of product, we are encouraged by the upcoming line-up of big releases, especially for the upcoming four months. This will include four new Marvel movies as well as Top Gun Maverick, the new Bond, Matrix, Dune and many more. Nonetheless, we will need to remain alert to any new COVID-related developments - currently, it appears that the booster vaccination is on its way but as we have seen in the past, we need to be reactive and ready to handle all scenarios.

Strategy

Our strategy has always been focused on our customers, and we remain committed to giving them the best experience combined with the most COVID-safe environment. We are carefully following all of the requirements of the relevant authorities with regards to sanitation, mask-wearing, social distancing (where needed) and more.

As for the cinematic experience itself, we continue to offer our customers big screens, stadium seating accompanied by the great technology of our special formats, IMAX, 4DX, Screen-X, SuperScreen, RPX and more, as well as upgrading to the use of laser projectors. Across the business we refurbished 6 cinemas and opened 4 new sites in the period, which have been welcomed by our customers with great enthusiasm. Most of these projects were under construction prior to the onset of COVID-19, and the decision not to put them on hold paid off. While our development plans slowed somewhat, we believe that we will be able to progress again soon and when appropriate to do so.

Industry fundamentals and respect for the theatrical window

The main topic in focus throughout the pandemic was the length of the theatrical window. In view of the situation related to COVID-19, the studios entered into various experiments which we believe ultimately will lead to a situation whereby there is a theatrical window but it is shorter than in the past and dependent on the theatrical revenue potential of the movie itself. Currently, movies are being released with windows that are anywhere between 0-60 days. We expect that by 2022, the window will stabilise to somewhere between 20 and 60 days, but subject to each movie's potential.

A point which has also become clear is the influence of high-quality pirated copies of movies from PVOD day and date releases, which can affect a movie's total revenue in a big way, not only in cinemas but also in ancillary markets. As the most affordable out-of-home entertainment option, we believe that cinemas will be back and continue to be the main locomotive of the industry, as they have been so many times in the past despite the arrivals of new technologies, such as TV, Video, DVD and others.

Outlook

Trading since our cinemas have reopened has been encouraging and increasingly improving, and with our customers showing their appreciation for our high quality offering and team. We expect this progress to continue as vaccination programs continue to successfully roll out and as restrictions ease into the second half of 2021. The strong film slate, in particular for Q4, gives us great confidence in our ability to continue to rebound strongly, with a clear focus on driving growth and underpinned by our team of great people.

Following the acquisition of Regal in 2018, Cineworld derives the substantial majority of its revenues and profits from the US, which remains a key market for future growth. US equity capital markets are the largest and most liquid in the world and include a large number of publicly listed cinema companies including peer group companies. These companies are typically covered by a significant number of North American equity analysts with a wide domestic investor following. The Board is therefore considering options to maximise shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or a partial listing of Regal in the US. The Board will evaluate these options over the coming months and will consult with shareholders in due course if any formal proposals are to be made.

There can be no certainty around the recovery from COVID-19 in the short term, however we are encouraged by our return to trading, the positive reaction of our customers and the success of vaccination programs in our key operating territories. We look forward to a strengthening film slate and we hope to continue our recent recovery and the recovery of the industry as a whole. Having said that, we acknowledge the uncertainty and have highlighted certain matters with regard to them within our going concern statement in this document.

I would like to conclude by expressing my deep appreciation and gratitude to all the members of the Cineworld team. This has been, and continues to be, an extremely challenging time both for the Group and for each one of the team individually. We have a great team, and we are all committed to continue to be THE BEST PLACE TO WATCH A MOVIE.

Moshe (Mooky) Greidinger

Chief Executive Officer

12 August 2021

Financial Review

Group Revenue

6 months to

6 months to

30 June 2021

30 June 2020

Movement

Admissions

14.1m

47.5m

(70.3%)

$m

$m

Box office

140.4

391.3

(64.1%)

Retail

79.8

203.6

(60.8%)

Other Income

72.6

117.5

(38.2%)

Total revenue

292.8

712.4

(58.9%)

Cineworld Group plc (the "Group") results are presented for the six months ended 30 June 2021 and reflect the trading and financial position of the US, UK and Ireland ("UK&I") and the Rest of the World ("ROW") reporting segments. As widely reported, the industry has continued to be significantly impacted by the global COVID-19 pandemic, which had an adverse effect on the Group's results for the period and the comparative period in 2020. During the six months ended 30 June 2021, the Group began to resume operations, with cinemas beginning to open in April. As of 30 June 2021, the Group had reopened across all territories, with the exception of a small number of sites, serving customers and continuing to recover from the impact of the pandemic.

Total admissions decreased by 70.3% during the six months ended 30 June 2021, reflecting the temporary closures of the cinemas across the Group due to COVID-19 in the respective periods and a lack of major film releases since the beginning of the pandemic. Total revenue for the six months ended 30 June 2021 was $292.8m, a decrease of 58.9% from the six months ended 30 June 2020. The overall decrease in total revenue was due primarily to the 70.3% decline in admissions, partially offset by increases in average ticket prices and spend per person ("SPP") across all territories, as well as a lesser decline in other income due to the contractual advertising revenue in the US.

The principal revenue stream for the Group is box office revenue, which made up 48.0% (June 2020: 54.9%) of total revenue. Box office revenue is a function of the number of admissions and the ticket price per admission, less sales tax. Admissions (one of the Group's Key Performance Indicators) depend on the number, timing and popularity of the movies the Group is able to show in its cinemas. In addition, the Group operates membership schemes which provide customers with access to screenings in exchange for subscriptions fees, and this revenue is reported within box office.

The Group's second most significant revenue stream is from retail sales of food and drink for consumption within cinemas, which made up 27.3% (June 2020: 28.6%) of total revenue. Retail revenue across the Group is driven by admissions trends within each operating territory. During the six months ended 30 June 2021, SPP increased across all territories due to an increase in the percentage of our customers making retail purchases.

Other Income represents 24.8% (June 2020: 16.5%) of total Group revenue. Other Income is made up of all income other than box office and retail, predominantly revenue from advertisements shown on screen prior to film screenings and revenue from booking fees associated with the purchase of tickets online. The Group also generates distribution revenue in the UK and ROW, which is included within Other Income.

1

US Revenue

The results below show the Group's performance in the United States ("US") under the Regal brand.

6 months to

6 months to

30 June 2021

30 June 2020

Movement

Admissions

8.8m

28.4m

(69.0%)

$m

$m

Box office

94.2

262.0

(64.0%)

Retail

57.0

150.2

(62.1%)

Other Income

60.0

89.1

(32.7%)

Total revenue

211.2

501.3

(57.9%)

Box office

In the US, during the six months ended 30 June 2021, cinemas remained temporarily closed until 2 April 2021. The Group reopened 77 cinemas during April 2021, reopened an additional 423 cinemas during May 2021, and reopened 7 cinemas during June 2021. As of 30 June 2021, the Group was operating 508 cinemas in the US representing 98% of the US circuit.

Box office revenue represented 44.6% (2020: 52.3%) of total revenue. Box office revenue decreased by 64.0% during the six months ended 30 June 2021 compared to the six months ended 30 June 2021, primarily due to a 69.0% decrease in admissions, partially offset by a 16.0% increase in average ticket price. The decrease in admissions was due to the impact of the temporary closure of our cinemas for significant periods during the six months ended 30 June 2021 and 30 June 2020, as well as a lack of major film releases as distributors delayed the release of major titles due to the COVID-19 pandemic.

The average ticket price in the US increased by 16.0% to $10.70 (2020: $9.23). The increase in average ticket price was a result of variability of ticket prices across the circuit and the timing the various regions reopened during the six months ended 30 June 2021, as well as the increased availability of premium format content during the six months ended 30 June 2021 as compared to 30 June 2020.

The total North American industry box office revenue for the six months ended 30 June 2021 was 41.9% lower compared with the comparative period (source: Comscore). The decrease in box office revenue for the Group was inconsistent with the industry, due to differing periods of operation, some cinema operators continuing to operate from January to May whilst the Group remained mostly closed, there were not any major Hollywood releases during this period. The top performing films during the six months ended 30 June 2021 were "Quiet Place Part II", "Godzilla vs. Kong" and "Fast and Furious 9" which grossed $327.9m versus "Bad Boys for Life", "1917" and "Sonic the Hedgehog" which grossed $509.8m in the comparative prior period (Source: Comscore). During the six months ended 30 June 2021, four new sites opened and 11 sites were closed. These openings and closures did not have a significant impact on the results during 2021.

Retail

Retail revenue represented 27.0% of total revenue (2020: 30.0%). Retail revenue decreased 62.1% during the six months ended 30 June 2021 primarily due to the decrease in admissions as a result of the temporary closures during the period. Retail spend per person increased by 22.5% to $6.48 (2020: $5.29), driven by an increase in overall purchase frequency.

Other Income

Other Income represented 28.4% of total revenue (2020: 17.8%). Other Income is made up of on-screen advertising revenue, corporate and theatre income and revenue from online booking fees charged on the purchase of tickets for screenings, which is driven by the demand for tickets and the propensity of customers to book tickets online. Screen advertising revenue is earned through the Group's agreements with National CineMedia ("NCM") and direct contracts with concession vendors and distributors. NCM operates on behalf of a number of United States exhibitors to sell advertising time prior to screenings. Advertising revenues are driven primarily by admissions levels and the value of advertising sold. Other Income also includes less significant elements related to the sale of gift cards and bulk ticket programs and the hire of theatres for events. Other income decreased by 32.7% due to the impact of the temporary closures during the period. The impact on other Income has not been as great due to certain contractual advertising revenues being recognised regardless of cinemas being closed.

2

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Cineworld Group plc published this content on 12 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 August 2021 06:20:04 UTC.


© Publicnow 2021
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Moshe Joseph Greidinger Chief Executive Officer & Non-Executive Director
Nisan Cohen Chief Financial Officer & Executive Director
Alicja Kornasiewicz Chairman
Matthew Eyre Chief Operating Officer
Arni Samuelsson Independent Non-Executive Director
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