Member Info for HNS_77

@Hexam -the broader point is they should have been more transparent about this given the material impact it has had on their bottom line rather then us having to constantly guess what is causing this variance.

@Hexam that was a consideration of mine - i.e. they may have certain volume discounts to use an easy analogy if they only expect to sell x tons of popcorn then it comes at a higher unit cost then if they were to purchase y tons

this is still concern as it means there is a threshold of revenue they have to hit in order to maintain profit margins at an acceptable level - this is where the real discussion will be had i.e. if for example they will only ever hit 3.5bn revenue what does there GP look like in those circumstances

Thanks Srini - Had to put in an appearance for results day! - do you have any theories as to why the gross profits are down here are the numbers I am referring to

2022 - H1 1515 (rev) 1090 (costs) - 28% GP
2019 H1 - 2151 (rev) 1356 (costs) - 36% GP

Why has this reduction occurred I wonder ?

This is what I wrote in a previous post before Chap 11 and any figures were released purely on the back of extrapolating Box office Mojo figures with previous financial reports

2022 "I have them at 63% (both the forecast and my calcs have them at a small operating loss)"

In other words I was pretty much spot on in terms of forecasting what the position would be as they have reported it was 61% of 2019.

I am not posting this to pat myself on the back but shows we can reliably forecast revenues. What was however a surprise to me that hasn't been mentioned is that the cost of sales (which impacts gross profit) has gone up by 8% compared to 2019. To give a sense of scale this would on a full year have means CINE has a reduced gross profit of about $300m. This is significant given that is more then the annual interest on debt and equates to a significant proportion of rent payments

One might simply say "inflation" but this cant explain it all away particularly as it contradicts the statements in their latest report that says they increased ticket prices and spend per customer has increased.

If there is no reasonable explanation for this and is this a trend or a temporary blip as to why cost of sales were so much higher then it is a worry - of course assuming they have a thumping H2 and 2023 then it might go some way to cover this but it signals there is a systemic problem in operations if gross margins are being squeeze to this extent - it is a double whammy i.e. if they have reduced admissions plus the profit they make on those reduced admissions is lower.

Would be interested in others insights on this aspect

Blue Buxton hope you are well and thanks for sharing that interesting link. I was marking off the days until the appeal date and I assume lots of others on here were doing the same hence I thought this was worth returning to post the update

Could CW repeat something similar to what happened with hertz? — anything is possible - from the info he presented it relied on retail to boost the sp.

We know Cine have secured liquidity to continue trading ($785) This should last through the expected upswing in film releases and enable us to see if Cine can consistently deliver at base case eg 85% or higher admissions.

I am still holding out hope it can do that and stay as the current CW as this is a preferable outcome for Mooky to preserve his 20% shareholding to recover

Thanks for chipping in Wellington - as I read the documents it looks like this really is the default position due to the automatic stay- so yes assume there must be some reciprocal arrangements around litigation for companies in C11

I thought I’d interrupt my break from this forum to give the heads up on this as the penny didn’t drop until I read the docket requesting the judge to “allow” the appeal to go ahead - if he decides not to allow the motion ( and I can’t see why he would ) the status quo that there is no appeal in October and no clear idea when it will resurface

I’ve been mulling this over and have mixed feelings about whether I am glad about this it’s now likely to end up in the long grass - I think I am ok with it all things considered and hopefully gives Cine the “breathing space” to get on and focus on making a success of the c11 process and make the most out of the upcoming box office

@Salem , I had interpreted it as “the appeal can go ahead but that the potential result of it (the award to cineplex if they successful defended it) could not be enforced

Clearly it doesn’t mean that as it sounds like the appeal will not be heard while c11 is going on - unless the judge makes a decision in favour of CP to reverse this

My impression from all this now is that if the automatic stay on the CP appeal persists as CW would like it to then whatever happens in terms of trading upticks in q4 or next year that the CP cloud is going to be on the horizon for a long while yet

So with that said and given what Israel said in his statement about the impact of the CP litigation on the state CW is currently in means they are content with this albatross remaining around their neck for the foreseeable future or rather they see it as a lesser of two evils compared with the distraction of dealing with and potentially losing the appeal and incurring costs to appeal further ie Supreme Court as they mention in their response to docket 218

Thanks would also interested to know if I was an n=1 of thinking that the default position was that the appeal is being heard - it seems as if he default is that the appeal is not going to go ahead In October (unless the c11 judge rules otherwise ) contrary to the shared understanding on this board

For fellow LTHs that have been following this I am returning to the board share this update. I realise the discussions on this board has descended into a handbags at dawn mostly and looking through the recent threads not seen mention of this given it’s potential importance

Chapter 11 “automatic stay” provisions allow for a pause in the litigation which covers the upcoming appeal

We have all been working on the assumption that the October appeal would go ahead but reading docket 218 where CP request an emergency release of the stay for the appeal to proceed. Cineworld response on 23/9 shows that they DO NOT want the appeal to go ahead on the scheduled date

I was quite surprised by this - surely a bullish CW would also want get the stay lifted in order to knock this out of the way if they felt the appeal would be an easy win?

What am I missing here? Are they running scared or is there another tactical reason they might want the appeal kicked into the long grass? The arguments they assert in their submission seem a little weak to me eg it will be a distraction from the chapter 11 process or will encourage other unsecured creditors to ask for waivers of the stay.

Good to hear sensible reflections on this

137. While no payment has been required or made by Cineworld to Cineplex based on the pendency of the appeal, the Canadian Court’s judgment has already had a significant negative impact on the Group. Among other things, current and prospective financing sources have cited the judgment in refusing to provide the Group with additional liquidity or flexibility, and Cineworld’s stock price has been impacted and depressed by the overhang caused by the judgment and ongoing appeal.

As I stated in a previous post and is clear as anything how Cineplex’s greed and Judge Barbara’s ridiculous and ruling has played a major part in Cine’s undoing and has now backfired on CP with their share price continually falling and no prospect of recovering any money with only exorbitant legal fees to show for it

I will try and take comfort in Israel’s heart felt words that their interests as major shareholders are aligned with ours “ 146. Every great film has an element of adversity, an obstacle to be overcome on the path to a happy ending. Cineworld’s story is not yet finished.

I have enjoyed exchanges with a number of good people on this board and hearing different perspectives as we have gone through our individual journeys with this share.

I will remain a holder but this will be my last contribution on here as for a long while as I put my focus elsewhere. I wish genuine holders well and as Israel set out in his statement I do not believe this story is over for them or us because of this process and that there is every chance we come out of this perhaps not at the levels we had hoped for but certainly emerge better then where we are now

All the best,

HNS_77

@quiggers

You can find it all here - it was £850m not 1bn because unlike the hypothetical situation where there is no debt they had to still deduct for interest payments

https://www.cineworldplc.com/sites/cineworld-plc/files/2020-03/2019-full-year-presentation_0.PDF

Quiggers - using your analogy if someone bought Cine for £1 and had to settle the £5bn debt they would be buying a business for $5bn (plus the £1) that generates $1.5bn of EBITDA on a normal year with no covid interruptions or film delays. Less rent that’s a cool $1bn every year of pure cash

That’s a pretty healthy return on that $5bn outlay isn’t it? Even if they paid I don’t know $6bn even $7bn perhaps ?

Unless someone is convinced this will never return to its 2019 revenues

Cine was a bright, bubbly ambitious company, recently hitched to Regal, decided to have night out on the tiles to celebrate by getting completely drunk on their favourite tipple call debt.

Not the cleverest of ideas granted, but on the way home Cine got caught out and missed the last train/cab home due to Covid, stumbling in the dark, broke a heel, threw up and fell over a hedge in a really poor way. A few shorters and market manipulators, out looking for an easy screw saw Cine now poor and helpless decided to slip in and leave it on the pavement, underwear around the ankles, with a bloodied lip and a black eye.

A few onlookers called Motley Fool, the FT and Sunday Times pointed and laughed at their misfortune and even went on to say they were asking for it because they chose to get drunk so of course it was inevitable this would happen. Worse still they called up their mates to tell them to have a go while Cine was still powerless and reeling and on the ground.

Now Cine is at its lowest ebb but after taking all this abuse still has some energy left, the night is coming to an end and with a last effort to pick itself up with the little dignity left hoping to find a safe place to shelter,

How the story ends no one really knows, but shame on those who revel in its misery and profit from such an unfortunate set of circumstances that have put them in this position.

So Following the tweet by Shabba Ranks (I am not on twitter but I think that's their name?) Perhaps there was some truth to it after all Cine did put out an RNS saying they were considering Chapter 11 as an option.

What concerned me was the detail about Mooky being "wiped out" and "replaced" which sounded as if they had been informed of what the final outcome of the Chapter 11 would be and the wreckless way this was published without even getting comment back or verifying with any official source.

Perhaps we will get an RNS today and perhaps we wont - this "journalist" has there own paymasters anyone who thinks these types of messages are put out in the public interest or in pursuit of some greater truth are deluded.

Yes it beggars belief - All the info has been verified and was passed on to Cineworld a couple of months ago - whether they already knew or not I have no idea but if it is something they are able to use they are in full possession of the facts

@AJ Jones

It’s really quite a simple equation

Canadian Company + Canadian Judge + Husband of Judge working for a Theatre Businessman (who is also his brother in law!) who is best friends and business associates with the Chair of Cineplex Boards and noted as a close friend of other Cineplex executives

Of course it’s just a conspiracy theory, move along nothing to see here….

I have never been happier to disappoint the kiddos today as both of our local cineworlds had sold out of showings for rise of gru today (they settled for our local odeon but Cine has a Nando’s nearby which they were hoping to tag on to the visit - for the record our odeon was packed solid on a film that has been out for while is saying something

Do I think this will reverse the fortunes of Cine? - of course not - but if the admission numbers I observed are replicated across it has to give further evidence for Mooky and creditors pause for thought that with the right level of demand (be that films slate or promo’s) people will show up in large numbers to watch films on the big screen buying all those high margin concessions

It would be silly to pull the rug now just as the business is getting back on track and today was as strong evidence of that as anyone could hope for

@Bonkers ,

I don't doubt for a second that they have discussed a settlement internally and with CP - the fact that they were having "without prejudice" discussions highlighted in court during the period the sale was falling apart shows there is always a back channel where ideas are floated.

My guess is as is the way with these things it is probably down to the sums of money on the table i.e. CP might want something north of $500m and Cine have perhaps proposed $50m obviously we will never know as we aren't in the negotiating room but that can only ever be the sticking point here

So do I think it will influence CP or CW to settle - I highly doubt it but then I think mountainous was in the mode of "lets give it a go anyway" which is where I was at when I compiled the dossier of information on Judge Babs' links to the CinePlex Board - so to send an email to IR will take much less time then that so I will ping an email over even though I am fully expecting very little to come of it.

My only hope now is the simple fact that Mooky (no matter what is promised in any restructured entity) is not going to see $500m of wealth returned to his family in shares that are now worth about $12m - that is an eyewatering sum of generational wealth to lose even if you still have millions tucked away in salary or other investments - my hope is this is his incentive to fight hard to secure Cine's future not for nobody's like me or you but for the future generations of his that wont remember their father/grandfather/great grand father as the loser that lost them everything!

@mountainous

Huge respect for you and any ideas or attempts to bring sanity into this situation are to be welcomed and supported. Despite my whole hearted belief that CP deserve nothing in return, I think some form of settlement is the right way forward.

I don't expect there is a mechanism for a co-ordinated effort other then simply posting this or CP boards and relying on the initiative of shareholders to put forward this same request via IR.

The only thing I would say is that perhaps Cine see no strategic benefit in settling know as even if the appeal doesn't go Cine's way there is no real additional leverage for CP as they already know their chances of securing a pay out is $0 due to their place and status in the queue of creditors.

In that situation it may suit CW to chance their arm on the appeal (both due to the poor conclusions on synergies calculations but also given our previous research on the Judge and her clear potential for bias and conflict of interest in this) in case they walk away as winners and $0 owed.

If they lose they can offer a small very sum of compensation as part of a package agreed and that will sure up confidence with creditors now that the whole legal episode will be over.