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Hexam I am happy to help. Regarding H2 2021. The Gross Profit was at $532M and the Adj EBITDA at c. $520M. The first thing you need to know is that investors looked at mainly at the Gross Margin & the EBITDA (those reflects if the company can generate cash). It was positive for Cine in the period. After the EBITDA you have 2 major costs the D&A (Depreciation & Amortisation) and the financial expenses (interest charges from debts, loans and the lease). But you need to know from here that only the financial expenses are a real costs. There is no cash out from the D&A. If you buy let’s say new Lasers for the screens so it’s an asset but you need to depreciate it for 5 years (if my memory is good from accounting at the Uni). So you will say that my assets have been depreciated for xxxM of dollar but it’s not a real costs it’s not a cash out I would say. So you need to be focus on EBITDA minus the financial expense it’s still positive so we are good. Cine didn’t need extra cash for H2 2021 only for H1 2021 because they were closed. The positive thing with a big D&A it will put our net income before tax in the negative territory and we will have a tax credit from the government. If you add the tax credit in 2020 and in 2021 we are almost at $580m. Don’t be surprised to see a negative income for 2022 as well. So once we will be in the positive territory we won’t need to pay taxes for that amount but instead the lenders without affecting the balance sheet of Cine.
Hexam in 2018 the net income was negative -$460M. In 2018 Cine’s net income was positive $280M (without taking into account Regal). During the last 5 years the Gross Margin of Cine stands at 30% vs. 0.66% for Debenhams. In 2018 the operating margin was at -21.14% and for Cine in 2021 (knowing that it was closed almost half year) was positive 0.88%. Even if the shop is open you need to look at the income statement and Balance Sheet.
Debenhams was in difficulty even before Covid. Cine was profitable. I am working in risk and the rule is that a high yield bonds have more chance to default the first two years after the crisis. After 2 years the probability decrease sharply. Well it’s been more than 2 years already:)
Yesterday I saw Doctor Strange in 4DX at Wembley with popcorn and hot hotdog. Spent £64 with glasses. The trailer for Top gun in the 4DX was longer and awesome. During the time I waited to enter in the screen there were 150 people at least to order popcorn and buying tickets. The SP at this price is a pure joke. One more question if Cine collapse most studios will follow
Yuri, I agree with you on paper. But Cine could negotiate with the existing investors for a hair cut like the EU have done with Greece. Would you prefer having 60/90% loss if I go into administration or a hair cut of 15/20%?they are in stake with almost $10bn not a couple of hundreds of million. Don’t forget that 40% of Cine’s debt is due to acquisitions even the issue with Plex. One more Q4 2021 generated positive cash flow so do the Q2 2022 for 2022 no need to raise more cash for our operating expenses apart for Plex. And Box Office is growing diversification has been implemented by lots of cinema chain and as well as cost cutting. What I meant is that investors know that Cinemas are not dead and they will make profits in coming years so don’t you think they would prefer waiting rather than losing 90% of their money?
The real question I think is for Plex. How they are going to see their money if they are asking for $1bn and Cine value is at $315m with $8bn debt? I am betting for an out of court resolution.
Why selling off the European Business it is he most profitable in terms of margin compare to the UK and US. Look at the balance sheet as of 2019.
Meanwhile The Batman is doing really well with over $768M worldwide knowing that it has been on HBO Max for a couple of weeks!
Don’t be surprise to see a negative message Income for 2022 just to have a negative tax (income). They will keep the D&A as much higher as possible in order to have a tax income. We will be able to pay back a portion of our debt with that :)
Apologies if the question has already been raised but I have a question with regards the Gross Profit and Adj. EBITDA for 2019. Why do we have a different Gross profit and EBITDA for 2019 in both 2021 & 2019 Financial Reports? $1,634m vs $1,088m
Cheers
Sorry I meant don’t worry about the SP because it doesn’t represent the firm. With a crisis we are coping to a systematic risk which refers to the entire market (market risk). It doesn’t represent the firm specific risk. As we are open B.O. is growing and we are fully open if you compare to last year.
Honestly the only thing I am worried about is the appeal - otherwise with regards the Box Office or the cinema sector I am more and more confident. Thanks to blockbusters many people return to the cinema and with the trailers they want to see the other small movies.
As I said today I saw Everything everywhere at once all and saw the trailer for Black Phone that I really want to see it same with where the crawdads sing.
Just saw Everything everywhere all at once is awesome. Honestly the film had a great message behind. A must see movie. Saw it with wife at Leicester Square the theatre was 85% full. It was a good evening :)
We need to find out what could be Cineworld’s strategy if we still need to pay this huge amount to Plex. Could Cine ask to have a judgement in the US or the UK to be more neutral? I thought that the judgement would take place in 2023 so we could have better cash in hands as B.O. is growing up. So it’s in a short period of time
Cruis I quite like your comments but the title of your discussion made me confused. There’s a difference between shutting cinemas or managing the cost by closing the less profitable sites. Lol - have a good day mate
Yea please that will be interesting to know. Thanks a lot Mountainous!
Are they in relation with the studios in order to increase the number of release each month? That’s the main question. We know that demand is here but the number of movies is too low and we have no information if this is going to grow in the coming months or years.
Thank you
Salem1973 during a recession the correlation is the highest look at the airlines or Carnival or even Airbnb Tesla…
I made a linear regression with the US Box Office and the turnover of Cine. And the relation is 0.4025.
2021 US B.O. $4,484mn Cine $1,804.9mn
2022 forecast $7,700/$8,000mn Cine $3,100mn/$3,220mn
2023 B.O. forecast $9,000mn Cine $3,622mn
2024 B.O. forecast 11,000mn Cine $4,427mn
So Cine will be able to pay its debt back from the end of 2023. They have the same strategy of Airlines with a 75% of 2019 level trying to break even and survive. That’s why they postponed Regal shareholders payment in 2024. Their strategy makes sense.
I hope this help and my forecast on both B.O. and Cine turnover is on the lowest level.
I think it’s on the way to the minimum support level at 24.76 reached on 12th October 2020. After that it went to 124 so hold on. The SP is not looking good but we have good cash flows for the following months which will enable Cine to survive.
Lol reincarnation McColls share price collapsed in 2018 look at the graph because of Amazon or Asda these kind of companies didn’t make enough money even pre pandemic. Cineworld was doing lots of money paying half of billion of dividends and buying cinema chains around the world. Don’t worry about Cineworld it’s a difficult time I agree with that but it is a lucrative sector
And the interest rate is only 1% it will increase to 4/5% easy to counter inflation and then you will see the real drop. I am long on Cine. It I think we will need to hold it much longer now