Member Info for Hexam

@giantsquid - yes I'm invested in CINE but I've got more invested here. Two companies with huge revenues but each carrying large debts. Plenty of promise and potential pitfalls in both. I only mentioned debt here as the odd suggestion was made that the company should buy back shares. Not a prudent move for any company with sizeable debts so just trying to manage expectations a bit.

As to your ramping of CPI it is even more ridiculous than your de-ramping of CINE. I like to think I don't engage in either activity but you seem to like to indulge in both. A lot.

"Could we see another big company buy back of shares while cheap to support their company pension pot?"

Not likely. Why would a company with so much debt pay cash to buy back its own shares??? And how does this support the company pension pot?

It's just the box office mojo stats referred to previously which are updated daily (for the US).

https://www.boxofficemojo.com/date/?ref_=bo_nb_hm_secondarytab

@Beta

Apologies, March has been front-end loaded with Batman so I was looking at March as a whole, which unless The Lost City does some amazing numbers will fall far short of 2019 - even allowing for the extra weekend in 2019's figure. I share your optimism going forward though given the increased frequency that 'big' films are expected to land meaning the box office won't be reliant on just one or two blockbusters as it has this month.

"The £115m represents an increase in shareholder value of around 7p a share."

Of course it doesn't. The business is presumably worth around this amount so all that's happening is that this current value to the shareholder is being converted into a cash amount - which is certainly handy for the balance sheet but doesn't improve shareholder value by £115m, if at all.

"Key is to keep the box and retail revenues at current pace or even higher!"

I think the emphasis should be on the 'even higher' as the 'current pace' really isn't good enough. Batman has done really well but March overall will still be well down on where it needs to be and where CINE want it to be. They have revised their expectations to 85% of 2019 levels but March will not be close to that despite Batman's success as it hasn't had enough support from other films.

Thankfully though the big film releases are more frequent for the rest of the year so hopefully there is every chance the numbers will improve sufficiently to hit that 85% and maybe more.

Not that I'm aware of for CINE or the markets generally but I think the box office mojo stats are better anyway as they give daily box office revenue figures (which are more relevant than admissions) for the US market and they are a good proxy for CINE ticket revenues as that's where they get most of their business - plus they give good stats on international markets too.

So they provide a very good indicator of whether CINE are meeting their targets in their own base case scenario and what this might mean in terms of cash flow and profits.

@moutainous - I simply set my expectations and what we'd already been told, especially in the trading updates and what the widely available, up to date box office stats show. Some though were expecting all kinds of crazy things like positive cash flow, returns to profits or a positive announcement on dividends etc. Bound to end in disappointment.

I'm much more optimistic though about the interim results BUT it relies on admissions climbing much closer to 2019 levels, but again we'll know this before the results actually come out as there is such detailed info available daily on these.

@Mountainous - "If I was the CEO, I’d keep all of these big improvement projects and new cinema openings on pause"

I believe that's actually what he's doing. The report suggested (like the last one) no capital spend for the next six months and although they have done a few openings etc. recently they said these were already committed to (or words to that effect).

My reasoning as to why the appeal is not make or break rests on the assumption that it won't be clear what CINE's obligations will be until well into next year by which time if audiences are back to 2019 levels then it should be coverable - even if it is huge. If they don't return in enough numbers then the game will be up anyway.

Of course in the meantime there could be an advantageous out of court settlement - but again if audiences don't return then it matters little anyway.

So as I said before they came out I felt that the results were never going be great and were more of a hurdle to get over and I feel they have done that. It's all down to futures admissions now for me and for these I'm optimistic.

KTP/Mountainous - Nice posts. Not positive, but honest, reasonable and relatable.

For me though it comes down to a single, simple thing. Will admissions return to (or at least very close to) pre-pandemic levels. It's been slower than CINE themselves expected but I think a lot of that is simply because there hasn't been the depth of 'big' films yet - just one or two a month that have shown the obvious potential for audience return but they haven't been backed up by enough alternative, attractive options. The slate for the rest of the year is looking a lot more crowded with goodies though.

If the audiences do return then I think the outcome of the appeal becomes either good or a nasty one-off that can be dealt with.

If the audiences don't return than it doesn't matter - if the outcome is unfavourable then it will probably just put the company out of its misery a bit earlier.

Personally I think they will return in sufficient numbers and more, but like another poster said, will be watching the stats on box office mojo very closely.

Agreed!

Fun, I never said it was - just that they were potentially pursuing it. For them to explicitly mention it in a report, to me sends a clear signal, or at least shows much more intent than just having it as a possibility in the background that always exists.

So I think I, and others, have simply read more into it, rightly or wrongly, than you that’s all.

Whatever the likelihood then though I think it is off the radar now and personally it’s not something I’m too excited about anyway.

Fun, sorry to contradict, but CINE have talked previously about potentially pursuing a US listing so I’m not surprised it’s been a topic of conversation - though as I mentioned it’s understandable since the judgement that they’ve gone quiet about it.

This is from the last interim report:

“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.”

To be fair I didn’t think they had lately. I think they’ve been very quiet on it - especially since the original judgement.

KTP - I think the reason for your second point is your first. It is inconceivable to me that they could pursue a US listing with the court case hanging over them which, though I don't think it is as bad as 'make or break' for the company, it's enough of a cloud to put off such a move. Put it this way - I wouldn't want to be writing the prospectus for it, especially the risks section!

Unfortunately that's a bit misleading as, if doing that sort of comparison, then really ought to remove one-offs etc. that distort the results - which is exactly what CINE does by reporting adjusted profits.

Before tax these gave a £1,326.9m loss in 2020 and a £822.8m loss in 2021 - so a reduction of 38%. Still impressive but not quite so much. If something looks too good to be true then I'm afraid it usually is.

The main reason the gap is much smaller is due to a ton of impairments in 2020 (over £1bn) some of which have even reversed in 2021.

Yes, but it feels like you're using my bait!

"No talk of a breech to any of our financial agreements another positive."

Not strictly true as the following paragraph in a nutshell says they now know they would breach the covenant in June but it doesn't matter as they hope to pay it off instead. And stop misspelling breach - I know what you're up to ;-)

"Under the weighted base case scenario, the Group maintains headroom against available cash and debt facilities throughout the going concern assessment period. Financial covenants on the RCF would not be breached as the Group would have sufficient funds to pay down the facility such that the covenant is not applicable. It is noted however, that the ability to do this is sensitive to admission levels not being hit, any further film delays and any a material rent payment that has not been modelled. As such, there is considered to be a material uncertainty as to whether the Group will be able to pay down the RCF as at the June 2022 covenant testing date. In the event that it is not able to a covenant waiver for June 2022 would be required."

Must admit the results for me have been a bit of an anti-climax as it appears to be almost completely devoid any surprises - good or bad. There are some interesting bits but summing up from what I can see:

Good:

- Figures much better in H2 than H1 but hardly a shocker as we were closed for much of the first half of the year
- Similarly for 2021 vs 2020
- Concession spend per person up which is promising though will at least in part be due to people wanting to avoid wearing masks so may drop back a bit now
- Bullish about court case (but we sort of knew that anyway)

Not so good:

- Net debt up but only by the amount that should have been expected given the figures they'd already released on revenues, cash flows etc
- They have reduced their expectations in their base case scenario but again no surprise given figures so far this year plus a few movie delays
- They confirm they will need a waiver for the RCF covenant mid-year if they don't pay it off instead. Not a surprise they expect to need this given the above point but is a surprise they are considering avoiding breaching the covenant by simply repaying it!?
- Don't have liquidity to meet the claim if appeal unsuccessful (but sort of knew that anyway)

So all a bit of a damp squib (or squid) but I guess that's also not a surprise. The key thing is that attendances at least match their revised base case scenario and given the line up of films, especially the improving depth of films, there is every chance of that. Then we can have results to really look forward to. And a favourable appeal verdict would be nice too!

"Full year results last year were 29th April. That would be a long quiet period."

I would expect them to be much earlier this year. The 2021 interim results were out a month earlier than those in 2020 (9th Aug compared to 9th Sep) so would appear reporting timescales have accelerated (due to nasdaq)?

Would be good to know the date in advance though (which, after all, is the norm).