6th Mar 2014 10:22
LONDON (Alliance News) - Cineworld Group PLC said pretax profit dropped 19.3% for the year after the firm was hit by increasing costs, and acquisition-related expenses.
The UK's solely listed cinema chain said pretax profit was down 19.3% on 2012 at GBP30.8 million. Group revenue came in 13.2% higher than 2012 at GBP406.1 million for the year.
In its results for the 52 weeks to December 26, 2013, the firm declared a final dividend of 10.1 pence per share, up 6.3% on 2012.
On a divisional basis, the firm said Cineworld revenues rose 3.7% to GBP369.5 million and its Picturehouse brand - which the firm acquired in 2012 - has now been integrated with the company for more than a year, generated revenues of GBP36.6 million, up 7.6%, in line with expectations.
Cineworld said gross profit margins were hit during the year. "While the film hire rate remained flat on average, there has been an increase in concession costs and higher royalties paid following the relative success of IMAX and 3D films during the period," it said.
The firm also notes that escalating energy and property costs as well as general increases in other operating costs, have hit its bottom line.
During the last quarter of 2013, Cineworld incurred GBP6.1 million in transaction costs relating to the acquisition of Cinema City Holdings N.V..
Profits have also taken a battering due to further transaction and reorganisation costs of GBP1.2 million related to an investigation by the Competition Commission into the acquisition of Picturehouse and other restructuring costs incurred during the year.
As a result of the investigation, and as ordered by the body, the Group is in the process of disposing of sites in Aberdeen, Bury St Edmunds and Cambridge, these disposals must legally be complete by July 31, 2014.
Cineworld notes that a goodwill impairment of GBP0.7 million in respect of Picturehouse goodwill allocated by cinema has been recognised in respect of this divestment. Other asset impairments resulting from the annual impairment review by cinema also resulted in GBP1.2 million asset write-downs at weaker performing cinemas.
The firm said group admissions for the 52 weeks were 1.4% higher than 2012 on a pro-forma basis [taking the Picturehouse acquisition into consideration], and that the average ticket price per admission was also up, 2.8% higher for the year at GBP5.43 from GBP5.28 last year. It also recorded a higher average retail spend per person at GBP1.83 versus GBP1.73.
During the year, Cineworld opened a new nine screen cinema in Wembley, replaced its existing six screen cinema in Gloucester with a new ten screen cinema at Gloucester Quay and expanded its IMAX offering further by reopening the Glasgow Science Centre IMAX as a Cineworld Cinema.
The AIM-listed firm last week completed its combination with the cinema operations of Global City Holdings, and made a number of changes to its management board, including the departure of Stephen Wiener as Chief Executive Officer and as a director of the Board. Weiner has been replaced by Moshe Greidinger after he stepped down from his previous role as CEO at GCH, he now holds a non-executive role at his former firm.
Cineworld issued just over 65 million new fully paid ordinary shares to GCH, representing 24.9% of the company.
Anthony Bloom, Chairman of Cineworld Group said of the results, "I am pleased with the overall progress made in 2013, with revenues up despite a small national decline in box office revenues, and adjusted pro-forma diluted EPS up 7.1% from 2012. As a result, we are proposing a full year dividend of 10.1p... Unfortunately, the Competition Commission has determined that we need to dispose of three sites, however the Group [has] reacted positively and we are excited to be expanding the both Cineworld and Picturehouse brands further in 2014 with the planned opening of three new Cineworld Cinemas and two new Picturehouse sites."
Looking ahead, Bloom remains confident of Cineworld's prospects after 2014 began in line with the cinema chain's expectations and it completed a further acquisition. "On 10 January 2014 we were pleased to announce the combination with the cinema business of Cinema City International N.V. which completed last week. The combined Group is now the second largest cinema exhibitor in Europe (by number of screens) with 201 sites and 1,852 screens. The combination spells an exciting new chapter for the Group and I look forward to delivering continued growth and further value to Shareholders in the forthcoming year," said Bloom.
Shares in Cineworld were trading up 0.83% at 311.813 pence per share Thursday morning.
By Alice Attwood; [email protected]; @AliceAtAlliance
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