ODEON & UCI CINEMAS GROUP. Odeon & UCI Finco plc Financial Results 2013 Q1

Transcription

1 ODEON & UCI CINEMAS GROUP Odeon & UCI Finco plc Financial Results 2013 Q1

2 Contents Page Operating and Financial Review 3 Unaudited Condensed Consolidated Financial Statements: Profit & Loss Account 7 Cashflow Statement 7 Balance Sheet 8 Notes to the Financial Statements 9 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 March 2013, which are maintained in accordance with UK GAAP. These interim results are not necessarily indicative of results to be expected for the full year. 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 2013 Q1 2

3 Operating and Financial Review Odeon & UCI Cinemas Group is pleased to announce its results for the first quarter of Strong growth compared to a relatively weak first quarter in 2012, with higher volumes from increased market share, a favourable calendar (*) and Easter being two weeks earlier. Market volume increased 6% year-on-year, as a weighted average of our territories, with the UK and Germany up over 10%, whilst Italy and Spain were close to flat. Market share increased in all territories. Attendance of 21.3m was up 11% and LFL of 20.8m was up 10%. Turnover (1) of 186 million was up 11% and LFL of 181 million was up 10%, in line with the attendance growth. EBITDA (3) of 20.9 million was up 43% and LFL of 20.5 million was up 47%. Film product and market volumes in Q1 Market volumes were stronger in the UK and Germany compared to the first quarter last year. Les Miserables was the most successful title in the UK, supported by Wreck-It Ralph, Django Unchained and the long-running successes of Life of Pi and The Hobbit carrying over from Towards the end of the quarter, The Croods was a strong family film over the Easter period: it was the top title in March across all our major territories. In the German market, Django Unchained was particularly successful in the quarter, as were two local titles, Kokowääh 2 and Schlussmacher. Life of Pi and The Hobbit also played well through long runs in Germany. Market performance in Spain and Italy was more mixed, with no break-out films, and attendance volumes spread across a number of titles. Weighted average attendance for our markets in the quarter was up 6%. Three months ended 31 Mar % change Total Estate Paid Attendance (millions) % Group turnover (1) ( millions) % Average ticket price (2) (0%) Retail revenue per head (2) % EBITDA (1) (3) ( millions) % EBITDA (3) ( millions) % Like-for-like (LFL) comparisons (4) Paid Attendance LFL (millions) % Group turnover LFL (1) ( millions) % Average ticket price LFL (2) % Retail revenue per head LFL (2) % EBITDA LFL (1) (3) ( millions) % EBITDA LFL (3) ( millions) % (1) At constant fx rates. (2) 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. The results in this report are stated after charging rent payable to Odeon Property Group LLP ( PropCo ). See page 7 for details. (4) LFL information excludes any cinemas trading in the group in the period or the comparative period but not in both. (*) Q1 from 1 st Jan to 4 th April 2013, vs from 1 st Jan to 29 th March in Odeon & UCI Finco plc Group Financial Results for 2013 Q1 3

4 Operating and Financial Review (cont) KPIs Attendance was up 11% in the quarter, with LFL attendance up 10%. Market volume was strong because of the favourable calendar (*), including Easter in March this year, April last year. Group attendance increased more than the market because of an increase in market share across all territories. In general, in higher volume periods, our market share is stronger. In addition, in Southern Europe, which is heavily impacted by economic conditions, we are starting to gain share as other exhibitors cinemas close or we take them over. Average ticket price (1) ( ATP ) was broadly flat year-on-year overall, due to the net effect of increased ticket premia (UK and Germany) and discount promotions to stimulate attendance volume (Spain and Italy). Retail revenue per head (1) ( RPH ) was up 3% (LFL) in the quarter, showing the benefit of investment in retail facilities, in particular in the UK and Germany. The following comments relate to the financial statements set out on pages 7 to 9. Profit & Loss Account (page 7) Turnover in Q1 was up 13% at historic foreign exchange ( fx ) rates, and up 11% at constant fx. LFL turnover was up 10% at constant fx. Gross profit margin in Q1 declined, primarily from higher film hire rates, due to the higher proportion of blockbuster product, and lower screen advertising (LFL down 4%) and one-off income (LFL down 8%) than in Control over operating costs was firm, particularly over staff costs, with LFL indirect costs just 0.2% higher despite inflationary increases. Excluding utilities, LFL indirect costs decreased by 0.9% year on year despite the higher volumes. Q1 EBITDA was 20.9m (up 43%) and LFL was 20.5m (up 47%, or 45% at constant fx) against a relatively weak first quarter in Strategic costs were 0.6m in the quarter. These costs relate to the development of potential new business. Some of these activities lead to ongoing new business, some are aborted. Depreciation and amortisation of 16.1m decreased by 0.9m. amortisation of goodwill. Of the total, 3.1m was Exceptional costs of 0.3m in the quarter were primarily redundancy costs related to digital projection roll-out. Interest reported in the profit & loss account contained both cash and non-cash elements. The cash-payable element was primarily interest on the senior secured notes, commitment and other fees, local bank charges and finance lease interest. The non-cash items ( 1.5m) were primarily the amortisation of capitalised loan issue costs and the discount unwind on the onerous lease provision. Certain FX movements were also included. Odeon & UCI Finco plc Group Financial Results for 2013 Q1 4

5 Operating and Financial Review (cont) Cashflow Statement (page 7) Net debt increased 44.7m in the quarter (2012: 43.9m increase). There was a working capital outflow in Q1, as film hire and other costs generated by the strong trading at the previous year end were settled. Net capital expenditure in Q1 was 10m, as the group continued to invest in new sites and the development of the existing estate. This was lower than the previous year, which included expenditure on digital assets, mostly refunded later in the year. Finance costs paid in the quarter included one quarter s interest on the Euro notes and one halfyear s interest on the Sterling notes. The figure was unusually high in 2012 because of the timing of the first Sterling notes interest payment. Net debt finished the quarter at 499.8m (including finance leases). Balance Sheet (page 8) Net assets declined from 16m to (25)m following an accounting loss in 2012 of 45m, after charging 74m of non-cash depreciation/amortisation and 7m of non-cash finance costs. Year-on-year, the change in the FX rate has resulted in Euro denominated assets and liabilities being 1.3% higher when expressed in Sterling. Tangible fixed assets increased as a result of group funded capital expenditure, externally funded digital assets capitalised and accounting for landlord contributions as lease incentives (see 2012 statutory accounts for description). These increases were net of depreciation and fx movements. The increase in NBV was 48m. Current liabilities increased by 20m, principally bank loans and overdrafts for working capital management. Net current assets are naturally favourable (negative) in this business, because revenues are collected from customers close to the day of attendance, whereas most direct costs and expenses are paid after a period of credit. Non-current liabilities increased by 69m year-on-year, principally in the deferred income category, which includes non-cash accounting balances relating to externally funded digital assets and landlord contributions. Senior secured notes increased by 5m, due to the impact of different foreign exchange rates on the Euro senior secured notes and amortisation of capitalised issue costs. Odeon & UCI Finco plc Group Financial Results for 2013 Q1 5

6 Outlook Management are confident about the group s prospects. The film slate for 2013 looks more balanced than in established franchises and a good range of IMAX and 3D titles. There are no major sport events to interrupt the 2013 release schedule. It includes several sequels to We are monitoring the Spanish market closely since the 13% VAT increase in September 2012, in order to assess the impact on attendance. Initial analysis shows volume impact of between 4% and 5%. The group continues to invest in a wide range of development projects, including new sites, refurbishments and development initiatives on the existing estate, which will grow earnings for the future. Odeon & UCI Finco plc Group Financial Results for 2013 Q1 6

7 Unaudited Condensed Consolidated Profit & Loss Account millions Three months ended 31 Mar Group turnover Cost of sales (55.1) (66.1) Gross profit Operating costs (62.8) (65.4) Rent (a) (32.8) (33.6) EBITDA Strategic one-off costs (0.3) (0.6) Depreciation and amortisation (17.0) (16.1) Operating profit/(loss) before exceptional items (2.6) 4.1 Exceptional costs (0.7) (0.3) Operating profit/(loss) (3.3) 3.8 Share of operating profit/(loss) of joint ventures (0.2) (0.1) Profit/(loss) on disposal of properties (0.0) - Profit/(loss) on ordinary activities before interest and taxation (3.5) 3.7 Interest payable and similar charges (a) (13.8) (14.5) Profit/(loss) on ordinary activities before taxation (17.3) (10.8) Taxation (0.5) (0.3) Profit/(loss) on ordinary activities after taxation (17.9) (11.1) (a) Included above are P&L charges in relation to PropCo group leases as follows: - within Rent (operating leases) within Finance cost (finance leases) (b) (c) Includes LT debtors and LT creditors relating to digital and landlord contribution accounting. Includes refinancing fees and pension deficit reduction costs. Unaudited Condensed Consolidated Cashflow Statement millions Three months ended 31 Mar EBITDA Movement in working capital and other (b) (13.6) (31.5) Net capital expenditure (17.2) (9.8) Provisions and one offs (3.1) (3.1) Finance costs (c) (24.5) (20.8) Tax (0.0) (0.2) Acquisitions and disposals (0.1) (0.1) (Increase)/decrease in net debt (43.9) (44.7) Borrowing (repayment)/drawdown Net increase/(decrease) in cash (43.9) (25.5) Cash balance, beginning of period Foreign exchange movements (0.0) 1.1 Cash balance, end of period Odeon & UCI Finco plc Group Financial Results for 2013 Q1 7

8 Unaudited Condensed Consolidated Balance Sheet millions Note Fixed assets Intangible assets Tangible assets Investments Current assets excluding cash Cash Debtors due after more than one year Current liabilities 2 (144.4) (164.5) Total assets less current liabilities Non-current liabilities 3 (595.9) (665.2) Net (liabilities)/assets 16.0 (24.6) Capital and reserves Share capital and premium Reserves (533.1) (572.0) 16.0 (24.6) Odeon & UCI Finco plc Group Financial Results for 2013 Q1 8

9 Unaudited Condensed Notes to the Financial Statements millions Note 1 - Current assets excluding cash Stocks Prepayments and accrued income Other debtors due within one year Note 2 - Current liabilities Bank loans and overdrafts Trade creditors Finance leases Other creditors, accruals and deferred income Note 3 - Non-current liabilities Bank loans and overdrafts - - Finance leases Senior secured notes (net of unamortised issue costs) Other creditors, accruals and deferred income Note 4 - Net debt summary Senior secured notes (net) Note Unamortised issue costs Note Senior secured notes (gross) Bank loans and overdrafts Note Finance leases (current liabilities) Note Finance leases (non-current liabilities) Note Cash (29.1) (27.8) Net Debt Odeon & UCI Finco plc Group Financial Results for 2013 Q1 9