ODEON & UCI CINEMAS GROUP

Transcription

1 ODEON & UCI CINEMAS GROUP Odeon & UCI Finco plc Financial Results for the three months to 30 September 2012

2 Contents Page Commentary on Results 3 Unaudited Condensed Consolidated Financial Statements: Profit & Loss Account 8 Cashflow Statement 8 Balance Sheet 9 Notes to the Financial Statements 10 Presentation of Financial Data This report summarises consolidated financial and operating data derived from the unaudited consolidated financial statements of Odeon & UCI Bond Midco Ltd ( Odeon Midco ). The summary financial information provided has been derived from our records for the accounting periods to September 2012, which are maintained in accordance with UK GAAP. These interim results are not necessarily indicative of results to be expected for the full year. The report includes the period prior to the closing of the notes offering by Odeon & UCI Finco plc, which took place on 24 May 2011 ( closing ). On that day, Odeon Midco became the parent company of the trading entities in the Odeon & UCI Cinemas operating group. Merger accounting under UK GAAP is applied in these accounts with regard to the 2012 information presented. Prior to closing, the group owed shareholder debt to Odeon and UCI Cinemas Group Limited ( OUCGL ). Interest on the shareholder debt was accrued by the acquired group up to 24 May Following closing, Odeon Midco group has no shareholder debt and thus no shareholder interest payable. A summarised corporate structure chart was presented in the Offering Memorandum, showing the structure subsequent to 24 May We have presented certain non-gaap information in this quarterly report. This information includes EBITDA, which represents earnings before interest, tax, depreciation, amortisation and one-off exceptional and strategic items. Our management believes that EBITDA is meaningful for investors because it provides an analysis of our operating results, profitability and ability to service debt and because EBITDA is used by our chief operating decision makers to track our business evolution, establish operational and strategic targets and make important business decisions. In addition, we believe that EBITDA is a measure commonly used by investors and other interested parties in our industry. Some information presented in this report is described as Like-For-Like ( LFL ). This information excludes any cinemas trading in the group in the period or the comparative period but not in both. DISCLAIMER THIS DOCUMENT HAS BEEN PREPARED BY ODEON & UCI FINCO PLC ( ODEON ). BY REVIEWING THIS DOCUMENT OR PARTICIPATING IN THE CONFERENCE CALL THAT PRESENTS IT, YOU AGREE TO BE BOUND BY THE FOLLOWING CONDITIONS. THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ODEON. FURTHERMORE, IT DOES NOT CONSTITUTE A RECOMMENDATION BY ODEON OR ANY OTHER PARTY TO SELL OR BUY SECURITIES IN ODEON OR ANY OTHER SECURITIES. ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO ODEON OR PERSONS ACTING ON THEIR BEHALF ARE QUALIFIED IN THEIR ENTIRETY BY THESE CAUTIONARY STATEMENTS. Odeon & UCI Finco plc Group Financial Results for 2012 Q3 2

3 Commentary on Results Odeon & UCI Cinemas Group is pleased to announce its results for the third quarter of The film slate in the quarter was weaker than the previous year, with release schedules generally avoiding the sporting events in Q3 and focusing the big titles in Q4. Market volume * was down 12% in Q3, but in Q4 to date is up 23%. Year on year change Q3 Q4 to date o Market volumes * (12%) +23% Paid attendance (13%) +29% Group turnover (1) (14%) +26% Q3 had one major blockbuster, The Dark Knight Rises, which performed well but not comparable to Harry Potter in the third quarter of There was also the unexpected success of Ted, but it did not reach the same level as The Inbetweeners in Results were impacted by the Olympic and Paralympic games, which captured the interest of the public even more than had been expected. The European football championships also impacted cinema attendance in the early part of the quarter: teams from 3 of our 4 main markets were in the semi-finals, with Spain and Italy going all the way to the final. A lower proportion of customers bought 3D tickets in Q3 this year compared to 2011, largely because the biggest film this year, The Dark Knight Rises, was a 2D title, whereas Harry Potter in 2011 was a huge success in 3D. The lower level of 3D premia led to a lower Average Ticket Price this year. Retail performance was strong, with revenue per-head up 6.7% LFL, benefiting partly from the lower volume but mostly showing the benefit of investment in new facilities, such as Costa Coffee. Cost control was strong, with successful downwards flexing of variable costs in response to lower markets. The ongoing benefits of capital investment and firm control of the cost base mean that we are well placed to profit from increased market volumes. Q4 volumes to date are very encouraging, with strong performances so far for Madagascar, Skyfall, Twilight and the Spanish title Lo Imposible. O provisional data * weighted average of our markets Odeon & UCI Finco plc Group Financial Results for 2012 Q3 3

4 Commentary on Results (cont) Three months ended 30 Sept % change Paid Attendance (millions) (12.7%) Group turnover (1) ( millions) (14.4%) Average ticket price (2) (2.8%) Retail revenue per head (2) % EBITDA (1) (3) ( millions) (65.3%) EBITDA (3) ( millions) (66.2%) Like-for-like (LFL) comparisons (4) Paid Attendance LFL (millions) (13.8%) Group turnover LFL (1) ( millions) (15.6%) Average ticket price LFL (2) (1.1%) Retail revenue per head LFL (2) % EBITDA LFL (1) (3) ( millions) (68.8%) EBITDA LFL (3) ( millions) (69.6%) KPIs Paid attendance was down 13%, slightly more than the reduction in market volumes. In general, our estate performs better in stronger volume. Average ticket price (2) ( ATP ) of 5.84 (LFL) was 1.1% behind year on year, impacted by lower 3D mix, whilst the ATP on total estate was 2.8% behind year on year as the acquisitions, before full profit improvement, dilute the estate average. Retail revenue per head (2) ( RPH ) of 2.06 was 6.7% ahead LFL. Total RPH in 2012 was 4.8% higher than in 2011 because of the increase in the mix of the acquisitions, which dilute the average. The following comments relate to the financial statements set out on pages 8 to 10. Profit & Loss Account (page 8) Total turnover was down 14.4% at constant foreign exchange rates ( fx ), reflecting the lower volumes, or down 18.8% at actual historic fx. LFL turnover was down 15.6% at constant fx. Gross profit margin (LFL) improved to 63.0% from 61.7% because of lower film hire on the smaller films. Operating costs in the LFL estate, at constant fx, increased by 0.8%, demonstrating firm cost control despite inflationary pressures. Excluding utilities, total costs were down 0.7% LFL. Total operating costs for the quarter increased by 1.5% because of acquisitions. Q3 EBITDA was 8.6m (down 66%, or 65% at constant fx) and LFL was 7.6m (down 70%, or 69% at constant fx). The lower volume on partly fixed cost base caused a fall in EBITDA margin**, down from 13.1% to 5.3%. LFL EBITDA margin** decreased from 13.1% to 4.8%. (1) At constant fx rates. (2) Comparatives stated at constant fx rates and constant territory weighting, for major territories. (3) Earnings before interest, tax, depreciation, amortisation and one-off exceptional and strategic items. (4) LFL information excludes any cinemas trading in the group in the period or the comparative period but not in both. Odeon & UCI Finco plc Group Financial Results for 2012 Q3 4

5 Profit & Loss Account (page 8) (cont) One-off costs were 1.8m in the quarter. These include costs that relate to the trial or development of potential new business, pre-opening costs of new sites, staff restructuring resulting from the digital roll-out and integration costs resulting from acquisitions. Depreciation and amortisation of 16.5m increased by 1.1m principally because of the increased size of the estate following acquisitions and investment in capital expenditure. Interest reported in the profit & loss account contained both cash-payable and non-cash elements. The cash-payable element in the quarter was primarily 11.1m on the senior secured notes and commitment fees, plus local bank charges and finance lease interest. The non-cash element was primarily amortisation of capitalised issue costs relating to the senior secured notes and revolving credit facility and the unwinding of discounts on provisions. Interest payable on shareholder debt was nil in both 2011 Q3 and 2012 Q3. Following closing on 24 May 2011, Odeon Midco group has no shareholder debt and thus no shareholder interest payable. The tax credit for the quarter was 0.4m. Cashflow Statement (page 8) Total interest paid in the quarter was 19m representing one quarter s Euro note and the halfyearly Sterling note interest payments. Last year there was no Sterling payment because of a long initial period. The cash flow on working capital was negative 6m in the quarter, reflecting the mid-year seasonal trading cycle. The working capital movement was significantly better than last year, which included the unwind of some advance ticket sales for summer showings, which was not repeated this year. Net debt increased by 24m in the quarter. Closing cash was 15m. Balance Sheet (page 9) Despite the larger size of the group, current liabilities were similar year-on-year as September 2011 included deferred income from advance ticket sales, which were not repeated in 2012, whilst September 2012 included an increase due to a 7m utilisation of the RCF. Non-current liabilities increased by 24m year-on-year for a combination of reasons, principally: senior secured notes decreased by 13m, principally due to the impact of different foreign exchange rates on the Euro senior secured notes. other non-current liabilities increased by 37m, principally in the deferred income category, which includes non-cash accounting balances relating to externally funded digital assets, as described in the audited statutory accounts. ** Constant fx rates. Odeon & UCI Finco plc Group Financial Results for 2012 Q3 5

6 Estate Development Activity Refurbishments and expansion Took over the BFI IMAX site, the most successful IMAX screen in the world Acquired the AMC cinema in Birmingham. Retail Innovation 4 additional Costas added in Q3, to bring total estate in UK and Ireland to 37. Launched two Danone frozen yoghurt offers in Spain, bringing the total to 4. Farggi coffee shop opened at Zubiarte in Bilbao, bringing the total to 5 in Spain. Big Screen and Big Sound Innovation Opened 4 additional proprietary isens offers; two in Germany, one in Spain and one in Austria. At the end of September we had 17 isens locations. Installed Dolby s new Atmos sound platform at Diagonal Mar in Spain, one of the first such installations in Europe. At the end of September, the group operated 2,153 screens at 232 cinemas. Odeon & UCI Finco plc Group Financial Results for 2012 Q3 6

7 Outlook Management are confident about the group s prospects. Although Q3 was a weak quarter because of low market volumes, Q4 to date is up strongly year on year and could be the Group s best ever quarter. In particular, Skyfall is forecast to become comfortably the biggest film of all time in the UK. We are watching carefully the economic situation due to the current uncertainty in the Eurozone and the resulting austerity measures, as well as the effect of increased VAT on ticket prices, in Spain. The continuing investments to expand and improve the estate and firm cost control position us well to benefit from higher market volumes. In Q4 we have already opened new sites at Llanelli and Dorchester in the UK, and at Zaragoza and Santiago in Spain. Two further sites are scheduled to be added in The acquisitions of 2010/2011 are well integrated and will provide further opportunity for growth in turnover and EBITDA and, in the medium to long term, the underlying strength of the industry and the group s number one position in Europe provide significant opportunities. Odeon & UCI Finco plc Group Financial Results for 2012 Q3 7

8 Unaudited Condensed Consolidated Profit & Loss Account millions Three months Nine months ended 30 September ended 30 September Group turnover Cost of sales (76.5) (60.1) (190.3) (173.6) Gross profit Operating costs (65.2) (61.8) (184.5) (185.4) Rent (a) (32.6) (31.7) (91.6) (96.1) EBITDA Strategic one-off costs (0.5) (0.8) (1.4) (1.6) Depreciation and amortisation (15.4) (16.5) (44.2) (51.1) Operating profit/(loss) before exceptional items 9.7 (8.7) 15.8 (15.6) Exceptional costs (0.7) (0.9) (2.5) (2.3) Operating profit/(loss) 9.0 (9.6) 13.2 (17.8) Share of operating profit/(loss) of joint ventures 0.2 (0.1) (0.0) (0.3) Profit/(loss) on disposal of properties (0.0) - (0.1) (0.1) Profit/(loss) on ordinary activities before interest and taxation 9.1 (9.7) 13.1 (18.3) Interest receivable from related parties Interest payable and similar charges (a) (14.4) (14.3) (38.2) (42.6) Interest payable on shareholder debt (b) - - (35.0) - Profit/(loss) on ordinary activities before taxation (5.3) (24.0) (60.0) (60.9) Taxation (0.7) 0.4 (2.4) (0.6) Profit/(loss) on ordinary activities after taxation (6.0) (23.6) (62.4) (61.5) (a) (b) (c) Included above are P&L charges in relation to PropCo group leases as follows: - within Rent (operating leases) within Finance cost (finance leases) Interest on shareholder debt was accrued up to 24 May 2011 by the group acquired by Bond Midco. The Bond Midco group has no shareholder debt or associated interest subsequent to 24 May See further explanation on page 2. Includes defined benefit pension scheme funding. Unaudited Condensed Consolidated Cashflow Statement millions Three months Nine months ended 30 September ended 30 September 2011 (a) (a) 2012 EBITDA Movement in working capital (33.4) (5.7) (17.6) (8.2) Movement in provisions and similar items (c) (4.7) (4.0) (15.5) (11.9) Net cash flows from capital expenditure and sale of fixed assets (18.5) (2.1) (36.2) (29.5) Acquisitions and disposals 0.7 (0.5) (87.5) (0.3) Net interest paid (5.1) (19.1) (18.0) (48.5) Financing fees paid (1.3) (0.5) (21.6) (1.2) Taxation paid (0.9) (1.1) (1.5) (1.8) Share capital issued (Increase)/decrease in net debt (37.6) (24.4) (136.5) (64.2) Borrowing (repayment)/drawdown Net increase/(decrease) in cash (37.6) (17.4) 55.0 (57.2) Cash balance, beginning of period Foreign exchange movements (0.7) (0.4) 0.7 (1.1) Cash balance, end of period Odeon & UCI Finco plc Group Financial Results for 2012 Q3 8

9 Unaudited Condensed Consolidated Balance Sheet millions At 30 September Note Fixed assets Intangible assets Tangible assets Investments Current assets excluding cash Cash Debtors due after more than one year Current liabilities 2 (145.4) (145.6) Total assets less current liabilities Non-current liabilities 3 (578.2) (602.5) Net (liabilities)/assets 41.4 (30.0) Capital and reserves Share capital and premium Reserves (510.9) (579.1) 41.4 (30.0) Odeon & UCI Finco plc Group Financial Results for 2012 Q3 9

10 Unaudited Condensed Notes to the Financial Statements millions Note 1 - Current assets excluding cash At 30 September Stocks Prepayments and accrued income Other debtors due within one year Note 2 - Current liabilities At 30 September Bank loans and overdrafts Trade creditors Finance leases Other creditors, accruals and deferred income Note 3 - Non-current liabilities At 30 September Bank loans and overdrafts - - Finance leases Loan notes due to shareholders - - Senior secured notes Other creditors, accruals and deferred income Senior secured notes are stated net of unamortised issue costs of 19.4m at September Senior secured notes are stated net of unamortised issue costs of 17.3m at September Note 4 - Net debt summary At 30 September Senior secured notes Note Unamortised issue costs Note Bank loans and overdrafts Note Finance leases (current liabilities) Note Finance leases (non-current liabilities) Note Cash (91.9) (14.7) Net Debt Odeon & UCI Finco plc Group Financial Results for 2012 Q3 10