CINE.L Regulatory News (CINE)

11 August 2016

CINEWORLD GROUP plc interim results for 6 months ended 30 June 2016

Cineworld Group plc ("the Group") is pleased to announce its interim results for the 6 months period ended 30 June 2016

Financial Highlights

· Group revenue growth of 8.4% on a statutory basis and 6.8% on a constant currency basis1;

- UK & Ireland revenue growth of 3.0%,

- ROW4 revenue growth of 13.9% on a constant currency;

· EBITDA growth of 9.0% on a statutory basis and 7.2% on a constant currency basis;

· Adjusted profit after tax increased by 5.5% to £32.7m;

· Adjusted profit before tax remains broadly flat at £39.4m;

· Statutory profit after tax decreased to £24.4m, predominantly due to:

- a £6.4m one-off gain on a disposal in the prior year period, and

- adverse currency movements of £6.1m compared to an exchange rate gain of £8.9m in the prior year period;

· Adjusted diluted EPS growth of 5.2% to 12.2p;

· Interim dividend increased by 4.0% to 5.2p;

· Net cash generated from operating activities of £44.4m; and

· Net debt broadly flat at £250.3m compared to £245.2m at 31 December 2015.

Operational Highlights

· Admissions growth of 2.7% to 46.1m;

· Strategic expansion continued with four more site openings, taking the Group to 2053 screens;

· Estate management progressing well, with six major refurbishments to be completed by the end of 2016;

· Driving technological innovation with the first 4DX screen in Slovakia and first IMAX Sound Experience in the UK; and

· CEO, Mooky Greidinger awarded the Global Achievement Award in Exhibition at Cinemacon 2016.

Post balance sheet acquisition

· Acquisition post-period end of five cinemas from Empire Cinema Limited, including the Empire in Leicester Square.

Commenting on these results, Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said:

"We are delighted to have continued the Group's strategic expansion with the opening of four new sites, 45 screens, during the six months to 30 June 2016. The acquisition announced on 28 July 2016, of five cinemas from Empire Cinema Limited, is an exciting development and reinforces our commitment to growth by operating high quality cinemas.

The results for the first half of the year are in-line with our expectations. We have achieved growth in admissions, box office revenue, and retail sales, with a particularly strong performance in our Rest of the World segment, achieving double digit growth in admissions. The strongest titles released during the period were "The Jungle Book", "Deadpool" and "Captain America: Civil War". Our solid performance has resulted in constant currency revenue growth of 6.8%, and EBITDA growth of 7.2%. The Board is pleased to declare an increased interim dividend of 5.2p (2015: 5.0p).

The film release programme for the second half of the year is promising, with a number of family titles scheduled during the summer including "The Secret Life of Pets", "The BFG" and "Finding Dory" as well as "Star Trek Beyond", "Jason Bourne", "Bridget Jones Baby", "Fantastic Beasts and Where to Find Them" and "Star Wars: Rogue One" later in the year. We are currently contracted to open a further 6 sites, 47 screens, before the end of the year. Based on the film slate in the second half and our first half results, we remain confident of delivering a performance for the year as a whole in line with current market expectations."

1 To provide information on a comparable basis, where % change vs. prior period information includes performance generated in currencies other than sterling, the % is presented on a constant currency basis. Constant currency movements have been calculated by applying the 2016 average exchange rates to 2015 performance.

2 EBITDA is defined as profit before depreciation and amortisation, onerous leases and other non-recurring charges, impairments and reversals of impairments, transaction and reorganisation costs, profit on disposals of assets.

3 Adjusted profit before tax is calculated by adding back amortisation of intangible assets (excluding acquired movie distribution rights), and certain non-recurring, non-cash items and foreign exchange as set out in Note 5. Adjusted profit after tax is arrived at by applying an effective tax rate to adjusted profit before tax.

4 ROW is defined as Rest of the World and includes Poland, Israel, Romania, Hungary, Czech Republic, Bulgaria and Slovakia.

The results presentation can be viewed online and is accessible via a listen-only dial-in facility. The appropriate details are stated below:

Chief Executive Officer's Review

Overview

We have continued with the Group's vision to be "The best place to watch a movie", expanding our estate, enhancing existing cinemas and providing a variety of formats of how to watch a movie, as well as a wide choice of retail offerings.

The film slate for the first half of 2016 was solid, but significant events such as the Euro 2016 Football Championships impacted the timing of important movie releases. In the comparative period last year there was a particularly strong slate, including "Jurassic World", which was released in June and became the 10th biggest film of all time in the UK in terms of admissions (Source: UK Cinema Association).

Our results reflect the benefit of operating in nine different territories, particularly in growth markets such as Romania and Poland, where there was strong growth in admissions, box office and retail revenues, compared to more mature markets such as the UK. The later saw a comparative decline in admissions as a result of the comparatively weaker film slate.

Whilst we remain vigilant, we do not believe the result of the EU referendum will have a significant impact on the underlying trading performance of the Group going forward based on the nature of our business which has a proven consumer appeal throughout all economic cycles.

We continued to focus on expansion, with four new sites, 45 screens, being opened in the period to 30 June 2016. Two sites were opened in the UK; Yate (6 screens) and Loughborough (8 screens), one in Romania; Timishoara Nepi (13 screens) and one in Israel; Beer Sheeva (18 screens). We are currently contracted to open a further six cinemas, 47 screens across the Group during the second half of the year, three in the UK and three in the ROW. Two projects originally planned for 2016 in the ROW were postponed until early next year.

We pro-actively focus on the management of our estate, with an extensive refurbishment programme which is progressing well. We plan to complete three major refurbishments in the UK by the end of the year, in Crawley, Stevenage and Glasgow Renfrew Street, and three in ROW, AuPark and Polus in Slovakia and Compana in Hungary. One four-screen site in the UK, Hammersmith, was closed during the period and a further two sites, Liverpool and Staples Corner will close in the second half of the year.

Ensuring that our cinemas have the latest digital and technological innovations is an important part of our strategy. During the period we opened the first 4DX screen in Slovakia, as well as our fourth 4DX screen in the UK and a further two 4DX screens in the ROW. At the 30 June 2016 we have a total of 18 4DX screens and 30 IMAX screens throughout the Group. We installed the first IMAX Sound Experience in the UK in May.

We have continued to expand the retail offerings across the circuit, opening a further two Starbucks coffee outlets during the period, in Stevenage and Loughborough, taking the total number to 19 at 30 June 2016. We have a further five openings planned for the second half of 2016. The launch of our VIP experience in the UK in Sheffield at the end of 2015 is proving popular and we are due to open the second one in Glasgow during the second half of the year. Our "Unlimited" programme was launched in Poland at the end of 2015 and is performing in line with expectations.

An important development was the acquisition of fives cinemas (64 screens) from Empire Cinemas which was announced on 28 July 2016. This will complement our existing estate and enhance our London presence, with the acquisition of the iconic Empire Leicester Square cinema in the heart of London's West End. The EBITDA of the acquired cinemas for the twelve months to 31 March 2016 (based on unaudited results) was £9.0m, which only included a partial contribution from 9 screens at Hemel Hempstead and the UK's first IMAX Laser (in Leicester Square) which were only opened part way through the period. The acquisition is expected to complete on 12th August 2016.

I would like to express my thanks to the whole Cineworld team for all their continued hard work, for without them I would not have been able to receive the Global Achievement Award in Exhibition at Cinemacon 2016. Teamwork remains the key to our future.

Current trading and outlook

The film release programme for the second half of the year includes strong family titles during the summer such as "The Secret Life of Pets", "The BFG" and "Finding Dory". The performance for July was encouraging with the UK market box office increasing 21.7% in the period 1 July 2016 - 7 August 2016 compared to the comparative period (Source: Rentrak). Other key releases include "Star Trek Beyond", "Jason Bourne", "Bridget Jones Baby", "Fantastic Beasts and Where to Find Them" and "Star Wars: Rogue One". Based on the film slate in the second half and our solid first half results, we remain confident of delivering a performance for the year as a whole in line with current market expectations."

Group Performance Overview

Cineworld Group plc results for the 6 months period ended 30 June 2016 reflect the trading and financial position of Cineworld Cinemas, Picturehouse, Cinema City and Yes Planet (the "Group").

Where percentage movements are given, they reflect performance on a constant currency basis to allow a year on year assessment of the performance of the business eliminating the impact of changes in exchange rates over time. Constant currency movements have been calculated by applying the 2016 average exchange rates to 2015 performance.

The Group's box office revenue is driven by admissions, which depend on the number, timing, format and popularity of the movies we are able to show in our cinemas. Admissions in turn drive the other main revenues for the Group, which are retail revenue (the sale of food and drink for consumption within our cinemas) and screen advertising income (revenue from advertisements shown on our screens prior to feature presentations).

Total revenue in the 6 month period ended 30 June 2016 was £356.7m. On a constant currency basis, this equates to an increase of 6.8%. Overall admissions increased by 2.7%, with box office revenues increasing 3.1%. The impact of the film mix during the period and the success of premium offerings such as IMAX and 4DX resulted in average ticket prices increasing by 0.5% to £4.92. Retail spend per person increased by 6.2% to £1.84 resulting in retail revenue growth of 9.0%. Other revenues increased by 23.8% largely as a result of our advertising activity, which was stronger during the first half of 2016 than the comparative period reflecting the attractiveness of film titles to prospective advertisers.

UK & Ireland

The results below for the UK & Ireland include the two cinema chain brands in the UK, Cineworld and Picturehouse.

Box Office

Box office admissions and box offices revenues decreased by 4.0% and 0.3% respectively which is reflective of the film slate during the first half of 2016 compared to 2015. The total UK box offices admissions for the six month period was 4.9% lower compared to the prior period (Source: UK Cinema Association). In the UK and Ireland as a whole the top three movies in the first six months of 2016 were, "The Jungle Book", "Deadpool" and "Captain America: Civil War" which grossed £120.0m compared to the first half of 2015 which was underpinned by the success of "Jurassic World", "Avengers: The Age of Ultron" and "Fast and Furious 7"which grossed over £138.0m in the UK and Ireland.

The average ticket price achieved in the UK and Ireland increased to £6.25 (2015: £6.02). The increase reflects the increased availability and popularity of premium offerings and price rises. The top three movies in the first half were all available in the IMAX, 3D and 4DX format.

Retail

Retail revenue was 5.7% higher than the comparative period. Retail spend per person increased by 10.0% to £2.23 (2015: £2.02). Spend per person has been positively impacted by the nature of the film mix in the first half, as well as our broader range of retail offerings, including Starbucks and our VIP experience alongside modest price rises. During the first half of the year we have opened a further two Starbucks outlets, one in our new Loughborough cinema, and one in Stevenage.

Other Income

Other income includes all other revenue streams outside of box office and retail. Included within other income is screen advertising. Trading at Digital Cinema Media ("DCM"), our joint venture screen advertising business, was stronger during the first half of 2016, increasing by 12.5% compared to the comparative period. Other key drivers for the increase in other income include revenue from the online booking fee where there is a continuation of the trend to book online and the hire of our cinemas for event space.

Rest of the World

The results below for the Rest of the World ("ROW") includes Poland, Israel, Romania, Hungary, Czech Republic, Bulgaria and Slovakia.

Box Office

Total admissions and box office revenue in the ROW increased by 11.1% and 10.6% respectively compared to the prior period on a constant currency basis. Romania, Poland, Hungary, and the Czech Republic experienced double digit growth in admissions with Romania increasing 23.0%. Admissions have increased in these territories as a result of the continued improvements in the local economies as well our new sites. During 2015, there were five new sites opened in Romania, two in Poland and one in Israel with a further 2 sites opened in the first half of 2016, Timishoara Nepi (Romania) and Beer Sheeva (Israel). Slovakia also experienced admissions growth with Israel and Bulgaria experiencing marginal declines.

The average ticket price remained broadly flat at £3.48 on a constant currency basis. Although there were small increases in certain territories due to the expansion of our premium offerings and some inflationary increases the main factor affecting the price was film mix during the period. 

As with the UK, movie performance for the first half of the year was underpinned by the success of "Deadpool" and the "Jungle Book" as well as the family movie "Zootopia". Locally produced movies continue to be popular in the ROW, in Poland "Planeta Singli" and "Pitbull. Nowe porzadki" were the top two performing movies for the period.

RetailRetail spend per person increased to £1.41 during the period - an increase of 3.8% with increases in most territories. The growth was driven by a combination of an expanded retail offering across the region, inflationary price increases, and the film mix.

Other income

Other income includes distribution, advertising and other revenues and represents 17.3% (2015: 15.7%) of the total revenues. Forum Film operates across the ROW region and distributes movies on behalf of the major Hollywood studios as well as owning the distribution rights to certain independent movies. Key titles distributed in the period include "Star Wars: The Force awakens" at the start of 2016, "Zootopia", "The Jungle Book" and "Me Before You". New Age Media, Cinema City's advertising and sponsorship arm also performed very strongly during the period.

Statutory Financial Performance

(1) EBITDA is defined as reported in the Consolidated Statement of Profit and Loss as Operating profit before depreciation and amortisation, onerous leases and other non-recurring charges, impairments and reversals of impairments, transaction and reorganisation costs, profit on disposals of assets.

EBITDA and Operating Profit

Group EBITDA has increased by 9.0% to £70.5m (2015: £64.7m).

EBITDA generated by the UK & Ireland of £37.7m has decreased by 5.8% compared to the prior period (2015: £40.0m). The EBITDA margin of 16.7% represents a 1.6% decline from 2015. The ROW generated EBITDA of £32.8m (2015:£24.7m), on a constant currency basis this represents growth of 27.7%. The ROW EBITDA margin of 25.1% is an improvement of 2.6% compared to the prior period. The key driver for the movements in both segments has been the change in admission levels year on year with a reduction in the UK due to the weaker film slate and the improvement in the ROW as a result of the growing economies and popular locally produced movies.

The Group is exposed to exchange rate fluctuations. In the majority of instances, income and expenditure is received and settled in local currency to mitigate realised exchange losses. However, there are translation exchange differences arising when presenting the year on year performance of the ROW in the reporting currency of the Group. During the period EBITDA of £70.5m was £1.6m higher than it would have been had it been translated by applying the exchange rates at the start of the year and £1.4m higher based on the average rate for the comparable 2015 period.

Operating profit at £41.8m was 4.6% lower than the prior period (2015: £43.8m). During the period there have been impairments of £0.7m (2015: £3.2m) relating to the write off of capital expenditure on loss making sites and £1.0m in respect of reorganisation costs (2015: £0.4m). In 2015 operating profit included a £6.4m profit on disposal in respect of the Cambridge Cineworld site.

The total depreciation and amortisation charge (included in administrative expenses) in the period totalled £27.0m (2015: £23.7m). Of this, £12.8m related to the UK & Ireland and £14.2m related to the ROW. The charge has increased from the prior period result of the number of new sites opened across the Group, particularly in the ROW. Amortisation of £3.0m was incurred in respect of intangible assets recognised as part of the acquisition of Picturehouse and the combination with Cinema City and £1.8m was incurred in respect of acquired movie distribution rights.

Net financing costs

Net financing costs totalled £11.1m during the period (2015: £3.3m income).

Finance income of £0.5m (2015: £9.6) mainly related to interest income of £0.3m (2015: £0.6m) and finance income on assets held by defined benefit pension schemes of £0.2m (2015: £0.1m).

Finance expense of £11.6m (2015: £6.3m) included £4.3m in respect of interest on bank loans and overdrafts (2015: £4.4m), and £6.1m of movement on foreign exchange, primarily relating to the translation of the Euro Term loan at the balance sheet date (2015: gain of £8.9m). Other net finance costs of £1.2m (2015: £1.9m) included amortisation of prepaid finance costs of £0.7m (2015: £0.9m), £0.3m (2015: £0.4m) in respect of the unwind of the discount and interest charges on property-related leases and £0.2m (2015: £0.6m) of other financial costs.

Taxation

The overall tax charge during the period was £6.2m giving an overall effective tax rate of 20.2% (Full year 2015: 18.5%). The net increase in the effective tax rate results from a non tax-deductible loss on the translation of the Euro Term loan partially offset by changes in the proportions of total profit generated in each territory where there are varying levels of applicable tax rate. Excluding the impact of the Euro Term loan adjustment the effective tax rate is 17.0%.

EarningsProfit on ordinary activities after tax in the period was £24.4m, compared to the comparative period (2015: £36.9m). The decrease year on year is primarily attributable to no one-off gains on disposals in the period, such as Cineworld Cambridge in the prior year for £6.4m, the loss incurred on the Euro Term loan and other exchange movements of £6.1m compared to a gain of £8.9m in the prior period and impairments of £0.7m compared to £3.2m in 2015. Basic earnings per share amounted to 9.2p (2015: 14.0p).

Eliminating the one-off, non-trade related items (relating to £4.7m of cost items and net foreign exchange losses of £4.1m), adjusted diluted earnings per share were 12.2p (2015: 11.6p).

Cash Flow and Balance Sheet

Overall, net assets have increased by £82.5m, to £617.2m since 31 December 2015. Movements in foreign exchange rates since the 2015 balance sheet has resulted in an in increase in the translated carrying value of goodwill by £33.7m.

The Group continued to be cash generative at the operating level. Total net cash generated from operations in the period was £44.4m (2015: £51.3m). Capital expenditure during the period was £38.6m.

Net debt of £250.3m at the period end is broadly in-line with the balance at 31 December 2015 of £245.2m. Of the net increase of £5.1m, £2.1m related to the decrease in cash during the period (after taking into account all capital expenditure and financing), £1.2m net foreign exchange losses on cash held and bank debt denominated in currencies other than sterling and £1.8m of other non-cash movements.

Risks and uncertainties The Board retains ultimate responsibility for the Group's Risk Management Framework, and continues to undertake on-going monitoring to review the effectiveness of the Framework and ensure the principal risks of the Group are being appropriately mitigated in line with its risk appetite.

The principal risks and uncertainties which could impact the Group for the remainder of the current financial year remain those detailed on pages 22-28 of the Group's Annual Report for 2015, a copy of which is available from the Group's website www.cineworldplc.com. A summary of the principal risks is included after the Independent Review Report.

Related party transactions

Details of related party transactions are set out in Note 10 of the interim financial statements.

Going concern

On 29 July 2015 the Group signed an amendment and extension to its existing banking facility which was effective immediately upon signing and extended the facility to June 2020. As a result, the term loans were reduced from £157.5m and €126.0m to £130.0m and €63.0m. The Group now has a single currency revolving credit facility of £190m.

The facility remains subject to the existing two covenants: the ratio of EBITDA to net debt and the ratio of EBITDAR (pre‐rent EBITDA) to net finance charges. A margin, determined by the results of the covenant tests at a given date is added to LIBOR or EURIBOR. The margins currently applicable to Group are 1.65% on the term loans and 1.40% on the revolving credit facility.

At 30 June 2016 the Group had drawn down £105.0m of the RCF and the term loans outstanding were £122.5m and €57.0m. The Group has been in compliance with the covenants throughout the period and at the period end. Post the period end the RCF has been extended by £25.0m to partly finance the Empire acquisition.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within its current facility, including compliance with the bank facility covenants. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in preparing its consolidated interim financial statements.

Dividends

The Board is declaring an interim dividend of 5.2p per share (2015: 5.0p per share), reflecting the solid performance in the first half of the year. The dividend will be paid on 9 September 2016 to ordinary shareholders on the register at the close of business on 19 August 2016.

Post balance sheet events

On 28 July 2016 the Group announced the acquisition of five cinemas from Cinema Holdings Limited, the holding company of Empire Cinema Limited. The acquisition complements and expands the Group's portfolio and is in-line with the Group's strategy to expand the existing estate, adding 64 screens to the UK portfolio. The cinemas acquired include Empire Leicester Square, Basildon, Hemel Hempstead, Poole (all of which will take on Cineworld branding) and Bromley which will become a Picturehouse to make the best use of its size and location.

The total consideration for the acquisition is expected to be £94.0m which will be settled 50% in cash and 50% in Cineworld plc ordinary shares. The Cineworld Haymarket site will also be included as part of the consideration. The shares will be issued in five installments during a 12 month period, based on an issue price reflecting 20 days' average trading price prior to the date of each issuance. The acquisition is expected to complete on 12th August 2016.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the period ended 30 June 2016

The notes on pages 13 to 18 are an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2016

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

for the period ended 30 June 2016

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (CONTINUED)

for the period ended 30 June 2016

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 30 June 2016

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

Reporting entity

Cineworld Group plc (the "Company") is a company domiciled in the United Kingdom. The interim condensed consolidated financial statements of the Company as at and for the period ended 30 June 2016 comprises the Company and its subsidiaries (together referred to as the "Group") and the Group's interests in jointly controlled entities.

The consolidated financial statements of the Group as at and for the year ended 31 December 2015 are available upon request from the Company's registered office at Power Road Studios, 114 Power Road, Chiswick W4 5PY.

Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed set of financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2015. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2015.

The comparative figures for the financial year ended 31 December 2015 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Significant accounting policies

These condensed consolidated interim financial statements are unaudited and, have been prepared on the basis of accounting policies consistent with those applied in the consolidated financial statements for the year ended 31 December 2015.

Reclassification of items in the consolidated statement of profit or loss

To ensure the cost allocations within the consolidated statement of profit or loss are consistent with the operations of the Group, the classification of items between administrative expenses and cost of sales have been reviewed.

Two reclassifications have been made to the comparative results for the period ended 2 July 2015 and the year ended 31 December 2015.

Overall there is no impact on EBITDA, operating profit, the profit after tax or the net assets for the Group.

2. Operating segments

Determination and presentation of operating segments

The Group has determined that is has two operating segments: UK and Ireland aggregation and the Rest of the World aggregation.

3. Taxation

The taxation charge has been calculated by reference to the expected effective corporation tax rates in the UK for the year ending on 31 December 2016 applied against the profit before tax for the period ended 30 June 2016. Recognised in the income statement:

4. Finance income and expense

5. Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, after excluding the weighted average number of non-vested ordinary shares held by the employee ownership trust. Adjusted earnings per share is calculated in the same way except that the profit for the period attributable to ordinary shareholders is adjusted by adding back the amortisation of intangible assets and other one-off income or expense and then adjusting for the tax impact on those items which is calculated at the effective tax rate for the current period. The performance of adjusted earnings per share is used to determine awards to Executive Directors under the Group Performance Share Plan ("PSP"). Diluted earnings per share is calculated by dividing the profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, after excluding the weighted average number of any non-vested ordinary shares held by the employee share ownership trust and after adjusting for the effects of dilutive options.

1Amortisation of intangible assets includes amortisation of the fair value placed on brands, customer lists, distribution relationships, and advertising relationships as a result of the Picturehouse acquisition and Cinema City business combination. It does not include amortisation of purchased distribution rights.

2 Net foreign exchange losses included within earnings comprises of £5.7m foreign exchange loss recognised on translation of the Euro term loan at 30 June 2016 and £1.6m foreign exchange losses recognised on translating overseas operations into the reporting currency of the Group.

6. Dividends

The Directors have declared an interim dividend of 5.2p per share (2015: 5.0p), amounting to £13.8m (2015:£13.3m), which will be paid on 9 September 2016 to ordinary shareholders on the register at the close of business on 19 August 2016. In accordance with IAS 10, this will be recognised in the reserves of the Group when the dividend is paid.

7. Analysis of net debt

Fair Value Hierarchy of Financial Instruments:

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:

· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2: inputs other than quoted prices included within Level 1 that are observable for the assets or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

· Level 3: inputs for the assets or liability that are not based on observable market data (unobservable inputs).

There have been no transfers between levels in 2016 (2015: no transfers). No other financial instruments are held at fair value.

The carrying amount of the Group's financial assets and liabilities are generally the same as their fair value, with the exception of the interest rate swaps which have a fair value liability as disclosed above.

8. Property, plant and equipment

During the period to 30 June 2016, the Group purchased assets of £40.6m (period ended 2 July 2015: £47.3m; year ended 31 December 2015: £99.6m).

9. Capital commitments

Capital commitments at the end of the financial period for which no provision has been made were £35.9m (2 July 2015: £53.7m and 31 December 2015: £35.0m, relating primarily to new cinema sites). Capital commitments at 30 June 2016 related primarily to new sites (£19.4m), cinema equipment and leasehold improvements (£15.0m) and distribution rights (£1.5m).

10. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.

Total compensation for the Directors during the period to 30 June 2016 was £1.6m (2 July 2015 was £0.9m; year ended 31 December 2015: £4.2m). At 30 June 2016 the balance owed to directors was £nil (2 July 2015: £nil; 31 December 2015: £nil).

Digital Cinema Media (DCM) is a joint venture between the Group and Odeon Cinemas Holdings Limited set up on 10 July 2008. Revenue receivable from DCM in the period to 30 June 2016 was £7.7m (period ended 2 July 2015 £7.0m and year ended 31 December 2015: £18.4m) and as at 30 June 2016 £nil was due from DCM in respect of trade receivables (2 July 2015: £1.7m; 31 December 2015 £nil). In addition the Group has a working capital loan outstanding from DCM of £0.5m (2 July 2015: £nil; 31 December 2015 £0.5m).

Global City Holdings N.V (formerly Cinema City International N.V. and its subsidiary companies ("Global City Group") are considered to be related parties of the Cineworld Group as Global City Group own 28.97% of the Cineworld Group. As part of its business the Global City Group leases commercial properties to various Cineworld Group companies. Rent payable on these properties for the period to 30 June 2016 totalled £3.7m (2 July 2015: £3.3m; 31 December 2015: £6.9m)). At 30 June 2016 the balance owing to the Global City Group was £nil (2 July 2015: £0.5m; 31 December 2015: £nil), and the balance receivable from the Global City Group was £1.6 (2 July 2015: £nil; 31 December 2015: £nil).

11. Events after the balance sheet date

On 28 July 2016 the Group announced the acquisition of five cinemas from Cinema Holdings Limited, the holding company of Empire Cinema Limited. The acquisition complements and expands the Group's portfolio and is in-line with the Group's strategy to expand the existing estate, adding 64 screens to the UK portfolio. The cinemas acquired include Empire Leicester Square, Basildon, Hemel Hempstead, Poole all of which will take on Cineworld branding and Bromley which will become a Picturehouse to make the best use of its size and location.

The total consideration for the acquisition is expected to be £94.0m which will be settled 50% in cash and 50% in Cineworld plc ordinary shares. The Cineworld Haymarket site will also be included as part of the consideration. The shares will be issued in five installments during a 12 month period, based on an issue price reflecting 20 days' average trading price prior to the date of each issuance. The acquisition is expected to complete on 12th August 2016.

INDEPENDENT REVIEW REPORT TO CINEWORLD GROUP PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the interim results announcement for the six months ended 30 June 2016 which comprises the Condensed Consolidated statement of Profit or Loss and Other Comprehensive Income, Condensed Consolidated Statement of Financial Position, Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows and the related explanatory notes. We have read the other information contained in the interim results announcement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim results is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim results in accordance with the DTR of the UK FCA.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this interim results announcement has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim results based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim results announcement for the six months ended 30 June 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Hugh Green

for and on behalf of KPMG LLP

Chartered Accountants

15 Canada Square

London

E14 5GL

11 August 2016

RISKS AND UNCERTAINTIES

A summary of the Principal Risks which are set out in detail on pages 22-28 of the Group's Annual Report for 2015, a copy of which is available from the Group's website www.cineworldplc.com.