CINE.L Regulatory News (CINE)

20 Sep 2007 07:02

Cineworld Group plc20 September 2007 20 September 2007 Embargoed for 7am release CINEWORLD GROUP plc Cineworld Group plc ("Cineworld" or "the Group") is pleased to announce itsmaiden interim results as a public company for the 26 weeks ended 28 June 2007. HIGHLIGHTS Financial •Group revenue up 4.1% to £135.7m (2006: £130.4m) and up 11.2% on a continuing basis (2006: £122.0m)(1); •EBITDA(2) up 24.7% to £21.7m (2006: £17.4m on a continuing basis)(1); •Operating profit increased to £18.0m (2006: £3.7m); •Operating cash flow before changes in working capital and provisions increased to £19.8m (2006: £15.9m); •Net debt reduced to £129.6m following IPO in May 2007 and debt refinancing (2006: £330.0m); •Reported EPS(3): 21.7p on basic earnings, 9.2p on adjusted pro-forma earnings (EPS based on shares at end of period: 10.4p on basic earnings, 4.4p on adjusted pro-forma earnings)(4); •Proposed interim dividend of 3p per share. Operational •Successful IPO on the main market of the London Stock Exchange raising £120.0m (before expenses) for the Group and selling shareholders; •Market share increased to 23.9% (2006: 23.4%) (source: EDI Neilsen); •Box office up 12.0% at £88.7m on a continuing basis (2006: £79.2m)(1); •Admissions up 8% at 21.7m on a continuing basis (2006: 20.1m)(1); •Average ticket price per admission up 3.5% to £4.09 (2006: £3.95 on a continuing basis)(1); •Average retail spend per person up 3.1% to £1.64 (2006: £1.59 on a continuing basis)(1); •New cinema opened at Didcot on 3 May 2007 and performing ahead of expectations. Commenting on these results, Stephen Wiener, Chief Executive Officer ofCineworld Group plc, said: "The first half of 2007 was transformational for the Group as we listed ourshares on the main market of the London Stock Exchange in May raising £120.0mbefore expenses for the Group and selling shareholders. It has been a strongfirst half performance for the Group and we're making good progress in growingsales and profitability across all fronts. This is a reflection of the strengthof our business proposition in delivering real value for money for our customerscombined with a quality cinematic experience. "We are successfully delivering the strategy outlined at IPO and remain onschedule with our investment plans to update our existing estate and roll outnew cinemas across the United Kingdom. The second half has started well for theGroup and we have some exciting new releases ahead of us in the remainder of theyear and beyond. This, combined with the quality of our estate, means we lookforward with confidence to delivering further growth and increased value to ourshareholders." Enquiries: Cineworld Group plc Stephen Wiener Power Road StudiosChief Executive Officer 114 Power RoadRichard Jones London W4 5PYChief Financial Officer + 44 (0) 208 987 5000 M Communications 1 Ropemaker StGeorgina Briscoe London, EC2Y 9HT +44 (0) 207 153 1548 Briscoe@MComGroup.com --------------------------(1) Continuing basis excludes sites disposed during 2006, see the financialperformance section(2) EBITDA is defined as per the financial performance section(3) Based on weighted average number of shares in the period of 68.1m. See note5 for calculation(4) Shares at 28 June 2007 is 141.7m CHIEF EXECUTIVE'S STATEMENT THE OPERATING ENVIRONMENT The first half of 2007 was transformational for the Group, as we listed ourshares on the main market of the London Stock Exchange in May, raising £120.0mbefore expenses for the Group and selling shareholders. At this time we set outa clear strategy for growth and I am delighted our maiden interim resultsindicate robust progress across all fronts. Market share grew to 23.9% from 23.4% in the same period last year and boxoffice increased 12% to £88.7m (2006: £79.2m) on a continuing basis. Admissionswere up 8% on the same period last year and the average ticket price peradmission increased by 3.5% to £4.09 (2006: £3.95). In addition, we drove retailspend per person by 3.1% from £1.59 to £1.64 in the same period. These resultsare testament to Cineworld's customer proposition with a national franchise ofquality mulitplex cinemas and a compelling mix of film and retail offering. The new financial period started well with a carryover of strong films from the2006 Christmas trading period, which continued well into the first half. Theseincluded A Night At The Museum and Casino Royale - the latter, though releasedin mid November 2006, continued to play through to February of this year and wasthe top performing film released in 2006 in the UK, grossing £54m in total. Theperiod's blockbuster sequels have all performed well, commencing with Spiderman3 in early May, followed by Pirates of the Caribbean 3 in June, Ocean'sThirteen, Fantastic Four and Shrek The Third, with the latter contributing threedays' box office for the period. In addition to Hollywood-based blockbuster successes, the UK film industryturned in good performances and Mr Bean's Holiday and Hot Fuzz were the thirdand fourth highest grossing films in the UK to June 2007, respectively. Weshould also note the contribution of other films to our overall box officewhich, whilst not blockbusters, have nonetheless been significant drivers of boxoffice takings. The most notable of these was 300, which was the sixth highestgrossing film in the UK over the period. Other films include Charlotte's Web,The Pursuit of Happyness, Music And Lyrics, 28 Weeks Later and Zodiac. RockyBalboa and Die Hard 4.0 were big success stories too and should give the filmstudios confidence to resurrect further titles. A key element of our strategy is our commitment to offering customers thebroadest range of films available. To this end we are delighted to havemaintained our strong presence and interest in other, less mainstream markets.We have been able to achieve a more constant and regular offering of Bollywoodfilms in the first half of the year than in previous years and a series ofsuccessful foreign language films have contributed favourably to our results.The most notable releases were The Lives of Others (2007 Oscar Winner in theforeign language category from Germany) and the French films Tell No One and LaVie En Rose. The release of the Tamil film Sivaji, over which we had limitedexclusivity, has opened up further exciting possibilities in this new andgrowing market. Our proposition is to offer our customers the most enjoyable cinematicexperience in the country. Almost all of our multiplex cinemas have a digitalprojection facility and as the film industry thrives on technologicaldevelopments, we feel well placed to capitalise on these initiatives. Moreover,our retail and marketing initiatives, including the Unlimited card andenhancements to the product offering such as Ben and Jerrys and Fanta Frozen,have helped us to maintain footfall whilst increasing retail spend per customer. At the time of the IPO, we stated our ambition to grow the estate throughselective new openings, expansions and acquisitions. I am delighted to reportthat in May 2007 we opened our first new cinema as a public company in Didcot,Oxfordshire and performing ahead of expectations. FINANCIAL PERFORMANCE 26 week period 26 week period 52 week period ended ended ended 28 June 2007 29 June 2006 28 December 2006 Total Total Continuing* Total Continuing* Admissions 21.7m 21.5m 20.1m 45.2m 42.9m £m £m £m £m £m Box Office 88.7 84.6 79.2 181.3 172.4Retail 35.5 34.2 31.9 73.3 69.4Other 11.5 11.6 10.9 23.9 22.8 _______________________________________________________Total revenue 135.7 130.4 122.0 278.5 264.6 _______________________________________________________EBITDA** 21.7 19.2 17.4 48.6 46.0 EBITDA aftertransaction andreorganisationcosts andprofit ondisposal ofcinema sites 27.8 15.5 14.1 48.0 42.6 Operatingprofit 18.0 3.7 2.9 20.5 15.1 _______________________________________________________ *Continuing operations basis excludes the results of cinemas sold during 2006 -namely Swindon (Greenbridge Park), Bishop's Stortford, Sunderland, Birmingham(Great Park, Rubery), Ealing, Wigan (Robin Way) and Slough (Queensmere Centre). ** EBITDA is defined as operating profit before depreciation and amortisation,impairment charges, onerous lease and other non-recurring property charges,transaction and reorganisation costs and profit on disposal of cinema sites. Revenues Total revenue was £135.7m, a rise of 4.1% on the prior period (2006: £130.4m).Revenue on a continuing basis was up 11.2% (2006: £122.0m), against weaker thanusual comparatives due to last year's World Cup and the very hot weather in theUK. As a result of strong product and the increase in market share described above,we have enjoyed very buoyant trade during the first half and box office was12.0% higher at £88.7m on a continuing basis (2006: £79.2m). Our subscription business, the Unlimited pass, continues to expand in line withour stated strategy and we currently have in excess of 160,000 subscribers atthe end of the period. The benefits of this initiative are twofold; first, itprovides the Group with a constant stream of box office revenue throughout theyear and second, it ensures repeat visits as our customers take advantage of thebenefits on offer to them with this scheme. Retail sales for the first half of the year were in line with expectations giventhe level of business and were up 11.3% at £35.5m on a continuing basis (2006:£31.9m) with the high grossing blockbuster films of May and June providing astrong spending customer base. A number of film tie-in retail promotions weredeveloped for the summer period and in the first half, a further twelve Ben &Jerrys outlets were opened, and Fanta Frozen was rolled out across the majorityof sites. Other revenues from screen advertising, ticket bookings, sponsorships, games andother machines etc, were up 5.5% to £11.5m (2006: £10.9m) on a continuing basis. EBITDA and Operating profit EBITDA on a continuing basis was up 24.7% to £21.7m against 2006 figures of£17.4m and operating profit increased to £18.0m (2006: £3.7m total, £2.9m on acontinuing basis). Included in the results for the first six months of 2007 wererates rebates received of £1.4m relating to prior years (2006: £0.3m), of whichapproximately £1.0m relates to the financial year 2006 (£0.5m to the first half)and £0.4m to 2005. Transaction and reorganisation costs of £1.9m were incurredduring the period, relating mainly to costs in connection with the IPO. Theprofit on disposal of £8.0 million in the first half results relates to the saleand leaseback transactions on our Swindon and Southampton cinemas. Financing costs The interest expense in the first half relates to interest on the pre-IPOfinancing arrangements on debt and bonds and to interest on post-IPO debt. Alsoincluded in the first half costs was the write-off of £1.0m financing feespreviously capitalised in the pre-IPO debt financing. On a pro-forma basis,assuming the post-IPO debt structure had been in place from 29 December 2006,net financing costs for the first half would be approximately £4.8m. Taxation The overall tax credit of £9.7m is due to the recognition of a deferred taxasset on the basis that the unclaimed capital allowances, being the differencebetween the tax written down value of the capital allowance and the net bookvalue of the underlying assets, are now forecast to be utilised against futureprofits. There is a £0.4m corporation tax charge for the first half of the year,which is based on a forecast effective tax rate for the 2007 full year of 8.0%. Earnings Overall profit before tax was £5.1m against a loss of £6.0m in 2006. Basic earnings per share amounted to 21.7p and adjusted pro-forma earnings pershare were 9.2p based on a weighted average number of shares over the period of68.1m, whereas the total number of shares in issue at the end of the period was141.7m, which would otherwise give a basic earnings per share of 10.4p andadjusted earnings per share of 4.4p. There were no share dilutions at the end ofthe period. CASHFLOW AND BALANCE SHEET The Group continued to be cash generative at the operating level during thefirst half. Total cash inflow from operations before changes in working capitalincreasing to £19.8m (2006: £15.9m). This reflects the healthy conversion rateof our profits into cash flow. The cash outflow from the reduction in workingcapital is due to payment of creditors, normally at its highest level at the endof December, reflecting the highest trading period in the year. Capital expenditure for the first six months amounted to £3.4m, of which £2.8mrepresented replacement and refurbishment expenditure and £0.6m being the costof opening the new five screen cinema at Didcot on 3 May 2007. We are makinggood progress with our capital expenditure programme with various refurbishmentscompleted at ten sites. The radical change from a net liability to a net asset position is the result ofthe share issue and de-leveraging of the business, the combination of which nowallows us more flexibility to meet future business challenges and opportunities. DIVIDENDS The Board is declaring an interim dividend of 3 pence per share, reflecting theBoard's confident outlook as well as the strong performance in the first half ofthe year. The dividend will be paid on 26 October 2007 to ordinary shareholderson the register at the close of business on 28 September 2007. CURRENT TRADING AND OUTLOOK Since the half-year end, attendances have continued to be strong, driven by thesuccess of a number of summer blockbusters. This, in combination with our strongfirst half performance, underpins our increased confidence in the outlook forthe year - although noting that year on year figures will reflect the strongclosing months of 2006. Looking forward to 2008, the ongoing initiatives to improve and expand ourestate, coupled with a film release schedule that includes blockbusterfranchises such as James Bond, Harry Potter, Batman and Chronicles of Narnia,make us confident in our continuing ability to grow the business and createvalue for our shareholders. -Ends- Stephen WienerChief Executive Officer20 September 2007 Consolidated income statement for the period ended 28 June 2007 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £mRevenue 135.7 130.4 278.5Cost of sales (102.3) (101.0) (211.3) _______________________________________________Gross profit 33.4 29.4 67.2Otheroperatingincome 8.3 1.2 3.1Administrativeexpenses (23.7) (26.9) (49.8) _______________________________________________Operatingprofit 18.0 3.7 20.5Analysed between: _______________________________________________Operatingprofit beforedepreciationandamortisation, 21.7 19.2 48.6impairment charges, onerous leaseand other non-recurringproperty charges and transactionand reorganisation costsand profit on disposal of cinemasites - Depreciation and amortisation (9.8) (11.8) (23.0) - Goodwill and impairment charges - - (2.2) - Onerous leases and other non-recurring property charges - - (2.3) - Profit/(loss) on disposal of cinema sites 8.0 (0.4) 2.8 - Transaction and reorganisation costs (1.9) (3.3) (3.4) ________________________________________________ Financialincome 0.9 11.2 14.4Financialexpenses (13.8) (20.9) (40.8) ________________________________________________Net financingcosts (12.9) (9.7) (26.4) ________________________________________________Profit/(loss)before tax 5.1 (6.0) (5.9)Taxation 9.7 - - ________________________________________________Profit/(loss)for the periodattributableto equityholders 14.8 (6.0) (5.9)of the Company ________________________________________________Basic anddilutedearnings/(loss) per share 21.7 p (17.4) p (17.1) p Consolidated balance sheet at 28 June 2007 28 June 2007 29 June 2006 (unaudited) 28 December 2006 (unaudited) (audited) £m £m £m £m £m £mNon-currentassetsProperty,plant andequipment 110.8 128.5 119.9Goodwill 204.3 204.3 204.3Otherintangibleassets 1.4 4.5 3.0Otherreceivables 0.9 0.9 0.9Deferred taxassets 15.4 8.4 5.3 __________________________________________________________________Totalnon-currentassets 332.8 346.6 333.4Current assetsInventories 1.4 1.6 1.6Otherfinancialassets 2.0 - -Trade andotherreceivables 19.5 17.6 18.1Cash and cashequivalents 8.8 5.3 27.7Assetsclassified asheld for sale - 13.5 - __________________________________________________________________Total currentassets 31.7 38.0 47.4 __________________________________________________________________Total assets 364.5 384.6 380.8CurrentliabilitiesInterest-bearing loans,borrowings andotherfinancialliabilities (6.5) (2.2) (1.0)Trade andother payables (45.1) (60.7) (51.5)Current taxespayable (0.4) - -Provisions (2.9) (2.4) (2.1) __________________________________________________________________Total currentliabilities (54.9) (65.3) (54.6)Non-currentliabilitiesInterest-bearing loans,borrowings and (133.9) (333.1) (340.9)otherfinancialliabilitiesTrade andother payables (19.0) (19.2) (19.4)Employeebenefits (4.6) (5.9) (4.6)Provisions (14.2) (14.9) (16.2)Deferred taxliabilities (4.4) (6.7) (3.9) __________________________________________________________________Totalnon-currentliabilities (176.1) (379.8) (385.0) __________________________________________________________________Totalliabilities (231.0) (445.1) (439.6) __________________________________________________________________Netassets/(liabilities) 133.5 (60.5) (58.8) __________________________________________________________________Equityattributableto equityholders of thecompanyShare capital 1.4 - -Share premium 173.0 - -Translationreserve 0.4 0.4 0.4Hedging 1.4 - -reserveRetaineddeficit (42.7) (60.9) (59.2) __________________________________________________________________Total equity 133.5 (60.5) (58.8) __________________________________________________________________ Consolidated cash flow statement for the period ended 28 June 2007 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £mCash flow from operatingactivitiesProfit/(loss) for theperiod 5.1 (6.0) (5.9)Adjustments for:Financial income (0.9) (11.2) (14.4)Financial expense 13.8 20.9 40.8Taxation - - - _____________________________________________________Operating profit 18.0 3.7 20.5Depreciation andamortisation 9.8 11.8 23.0Impairment charges - - 2.2Profit on disposal ofcinema sites (8.0) 0.4 (2.8) _____________________________________________________Operating cash flow beforechanges in working capitaland 19.8 15.9 42.9provisions(Increase) in trade andother receivables (1.1) (2.6) (0.7)Decrease/(increase) ininventories 0.2 - (0.1)(Decrease) in trade andother payables (6.4) (8.2) (2.3)(Decrease) in provisionsand employee benefits (0.9) (1.1) (0.5) _____________________________________________________Cash generated fromoperations 11.6 4.0 39.3Tax paid - - - _____________________________________________________Net cash flows fromoperating activities 11.6 4.0 39.3 _____________________________________________________Cash flows from investingactivitiesProceeds from the disposalof cinema sites 12.2 8.0 25.1Interest received 0.6 0.3 0.6Acquisition of property,plant and equipment (3.4) (4.1) (6.4)Surplus of pensioncontributions over currentservice cost (0.2) (0.2) (0.4) _____________________________________________________Net cash flows frominvesting activities 9.2 4.0 18.9 _____________________________________________________Cash flows from financingactivitiesProceeds from new loan 135.0 226.0 226.0Share issue proceeds 104.3 - -Interest paid (7.0) (9.7) (18.8)Repayment of bank loans (208.0) (235.0) (253.0)Repayment of bonds (54.3) - -Payment of finance leaseliabilities (0.5) (0.2) (0.5)Share issuance costs (7.8) -Debt issuance costs (1.4) (3.4) (3.8) _____________________________________________________Net cash from financingactivities (39.7) (22.3) (50.1) _____________________________________________________Net (decrease)/increase incash and cash equivalents (18.9) (14.3) 8.1Cash and cash equivalentsat start of period 27.7 19.6 19.6 _____________________________________________________Cash and cash equivalentsat end of period 8.8 5.3 27.7 _____________________________________________________ Consolidated statement of recognised income and expense for the period ended 28 June 2007 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £m Foreign exchange translation - - -gainActuarial gains and losseson defined benefit pensionschemes - 0.6 2.7Tax recognised on incomeand expenses recogniseddirectly (0.6) (0.2) (0.7)in equityMovement in fair value ofcash-flow hedge 2.0 - - _____________________________________________________Net income/(expense)recognised directly inequity 1.4 0.4 2.0Profit/(loss) for theperiod 14.8 (6.0) (5.9) _____________________________________________________Total recognised income andexpense for the period 16.2 (5.6) (3.9)attributable to equity holdersof the company _____________________________________________________ Notes to the Interim Consolidated Financial Statements 1. Basis of preparation This interim financial information has been prepared applying the accountingpolicies and presentation that were applied in the preparation of the Company'spublished consolidated financial statements for the 52 week period ended 28December 2006. The comparative figures for the 52 week period ended 28 December 2006 are notthe Company's statutory accounts for that financial period. Those accounts havebeen reported on by the Company's auditors and delivered to the registrar ofcompanies. The report of the auditors was (i) unqualified, (ii) did not includea reference to any matters to which the auditors drew attention by way ofemphasis without qualifying their report, and (iii) did not contain a statementunder section 237(2) or (3) of the Companies Act 1985. The group's key accounting policies are as follows: Measurement convention The financial statements are prepared on the historical cost basis except thatthe following assets and liabilities are stated at their fair value: derivativefinancial instruments and financial instruments classified as fair value throughthe income statement or as available-for-sale. Non-current assets and disposalgroups held for sale are stated at the lower of previous carrying amount andfair value less costs to sell. Basis of consolidation Subsidiaries are entities controlled by the Group. Control exists when the Grouphas the power, directly or indirectly, to govern the financial and operatingpolicies of an entity so as to obtain benefits from its activities. In assessingcontrol, potential voting rights that are currently exercisable or convertibleare taken into account. The financial information of subsidiaries is included inthe consolidated financial information from the date that control commencesuntil the date that control ceases. Derivative financial instruments and hedging Derivative financial instruments are recognised at fair value. The gain or losson remeasurement to fair value is recognised immediately in the income statementexcept where derivatives qualify for hedge accounting when recognition of anyresultant gain or loss depends on the nature of the item being hedged. The fair value of interest rate swaps is the estimated amount that the Groupwould receive or pay to terminate the swap at the balance sheet date, takinginto account current interest rates and the current creditworthiness of the swapcounterparties. The fair value of forward exchange contracts is their quotedmarket price at the balance sheet date, being the present value of the quotedforward price. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand impairment losses. Where parts of an item of property, plant and equipment have different usefullives, they are accounted for as separate items of property, plant andequipment. Leases in which the Group assumes substantially all the risks and rewards ofownership of the leased asset are classified as finance leases. Where land andbuildings are held under leases the accounting treatment of the land isconsidered separately from that of the buildings. Leased assets acquired by wayof finance lease are stated at an amount equal to the lower of their fair valueand the present value of the minimum lease payments at inception of the lease,less accumulated depreciation and impairment losses. Other leases are operating leases. These leased assets are not recognised in theGroup's balance sheet. Lease payments are accounted for as described below. Depreciation is charged to the income statement to write assets down to theirresidual values on a straight-line basis over the estimated useful lives of eachpart of an item of property, plant and equipment. The estimated useful lives areas follows: - Freehold buildings and long leasehold properties 30 years or life of lease ifshorter - Leasehold improvements life of lease - Plant and equipment 5 to 10 years - Fixtures and fittings 4 to 10 years No depreciation is provided on freehold land, assets held for sale or on assetsin the course of construction. Depreciation methods, residual values and theuseful lives of all assets are re-assessed annually. Intangible assets and goodwill All business combinations are accounted for by applying the acquisition method.Goodwill represents amounts arising on acquisition of subsidiaries. In respectof business acquisitions that have occurred since incorporation, goodwillrepresents the difference between the cost of the acquisition and the Group'sinterest in the fair value of the identifiable assets, liabilities andcontingent liabilities acquired. Identifiable intangibles are those which can besold separately or which arise from legal rights regardless of whether thoserights are separable. Goodwill is stated at cost less any accumulated impairment losses. Goodwill isallocated to cash-generating units and is not amortised but is tested annuallyfor impairment. Negative goodwill arising on an acquisition is recognised immediately in theincome statement. Other intangible assets that are acquired by the Group are stated at cost lessaccumulated amortisation and impairment losses. Identifiable intangibles arethose which can be sold separately or which arise from legal rights regardlessof whether those rights are separable. Amortisation is charged to the income statement on a straight-line basis overthe estimated useful lives of intangible assets unless such lives areindefinite. Intangible assets with an indefinite useful life and goodwill aretested annually for impairment at each balance sheet date. Other intangibleassets are amortised from the date they are available for use. The estimateduseful lives are as follows: - Brands 10 years - Customer relationships 3 years Trade and other receivables Trade and other receivables are recorded at fair value less amortised cost,using the effective interest rate method, less impairment losses. Inventories Inventories are stated at the lower of cost and net realisable value. The costof inventories is based on the FIFO principle. Cost comprises expenditureincurred in acquiring the inventories and bringing them to their existinglocation and condition, and net realisable value is the estimated selling pricein the ordinary course of business, less the estimated selling costs. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bankoverdrafts that are repayable on demand and form an integral part of the Group'scash management are included as a component of cash and cash equivalents for thepurpose only of the statement of cash flows. Interest-bearing borrowings Interest-bearing borrowings are recognised initially at fair value lessattributable transaction costs. Subsequent to initial recognition,interest-bearing borrowings are stated at amortised cost with any differencebetween cost and redemption value being recognised in the income statement overthe period of the borrowings on an effective interest basis. Provisions A provision is recognised in the balance sheet when the Group has a presentlegal or constructive obligation as a result of a past event, and it is probablethat an outflow of economic benefits will be required to settle the obligation.If the effect is material, provisions are determined by discounting the expectedfuture cash flows at a pre-tax rate that reflects current market assessments ofthe time value of money and, where appropriate, the risks specific to theliability. Revenue Revenue represents the total amount receivable for services rendered or goodssold, excluding sales related taxes and intra group transactions. Revenue isrecognised in the income statement at the point of sale for ticket andrefreshment sales. Income from other related activities is recognised in theperiod to which they relate. Expenses Operating lease payments Payments made under operating leases are recognised in the income statement on astraight-line basis over the term of the lease. Lease incentives received arerecognised in the income statement as an integral part of the total leaseexpense. Finance lease payments Minimum lease payments are apportioned between the finance charge and thereduction of the outstanding liability. The finance charge is allocated to eachperiod during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability. Net financing costs Net financing costs comprise interest payable, amortisation of financing costs,unwind of discount on onerous lease provisions, finance lease interest, net gain/loss on re-measurement of interest rate swaps, interest receivable on fundsinvested, foreign exchange gains and losses and finance costs for definedbenefit pension schemes. Sale and leaseback Where the Group enters into a sale and leaseback transaction whereby the risksand rewards of ownership of the assets concerned have not been substantiallytransferred to the lessor any excess of sales proceeds over the previouscarrying amount are deferred and recognised in the income statement over thelease term. Taxation Tax on the profit or loss for the period comprises current and deferred tax. Taxis recognised in the income statement except to the extent that it relates toitems recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the period,using tax rates enacted or substantively enacted at the balance sheet date, andany adjustment to tax payable in respect of previous periods. Deferred tax is provided on temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and the amounts usedfor taxation purposes. The following temporary differences are not provided for:the initial recognition of goodwill; the initial recognition of assets orliabilities that affect neither accounting nor taxable profit other than in abusiness combination, and differences relating to investments in subsidiaries tothe extent that they will probably not reverse in the foreseeable future. Theamount of deferred tax provided is based on the expected manner of realisationor settlement of the carrying amount of assets and liabilities, using tax ratesenacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. 2. Segmental information Geographic sector analysis Revenue by destination and by origin from countries other than the UK in allfinancial periods was not material. Business sector analysis The Group has operated in one business sector in all financial periods, beingcinema operations. 3. Taxation The taxation charge has been calculated by reference to the expected effectivecorporation tax rates for the full financial year to end on 27 December 2007applied against the profit before tax for the period ended 28 June 2007. Theunderlying effective full year corporation tax charge is 8% (2006: nil%) for theyear. Recognised in the income statement 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £m Current tax expenseCurrent year 0.4 - -Deferred tax (credit) (10.1) - -Origination and reversal oftemporary differences - - 4.6Benefit of tax lossesrecognised - - (4.6) _____________________________________________________Total tax (credit) inincome statement (9.7) - - _____________________________________________________ The deferred tax credit is due to the recognition of a deferred tax assetprincipally relating to unclaimed capital allowances, being the excess of thetax written down value of the capital allowance over the net book value of theunderlying assets, which are forecast to be utilised against future profits. Following the IPO in May 2007, the Group's debt was refinanced. The lowerinterest payments forecast from May 2007 and beyond mean that it is now likelythat these unclaimed capital allowances will be utilised. 4. Finance income and expense 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £m Interest income 0.6 0.3 0.6Net gain onswap 0.3 10.9 12.8Return ondefinedbenefitpension planassets - - 1.0 _____________________________________________________Financialincome 0.9 11.2 14.4 _____________________________________________________ Interest expense onbank loans andoverdrafts 7.3 9.3 18.4Interest accrued ondeep discountbonds 4.2 5.7 11.6Write off of financing fees on redemption of loans 1.0 3.3 3.1Amortisationof financingcosts 0.3 0.9 3.7Unwind ofdiscount ononerous lease 0.3 0.3 0.6Finance cost for defined benefitpension scheme 0.1 0.2 1.3Recognition ofexpense relating tocash settledshares - 0.2 0.9Other financialcosts 0.6 1.0 1.2 _____________________________________________________Financialexpense 13.8 20.9 40.8 _____________________________________________________ 5. Earnings/(loss) per share Basic earnings/(loss), adjusted earnings/(loss) and diluted earnings/(loss) pershare Basic earnings/(loss) per share is calculated by dividing the profit/(loss) forthe period attributable to ordinary shareholders by the weighted average numberof ordinary shares outstanding during the period, after excluding the weightedaverage number of non-vested ordinary shares held by the employee ownershiptrust. Adjusted earnings/(loss) per share is calculated in the same way exceptthat the profit for the period attributable to ordinary shareholders is adjustedby adding back the amortisation of intangible assets, the cost of share-basedpayments, applying a pro-forma interest charge on the new debt structure, otherone-off income or expense and the actual tax charge/(credit) and subtracting atax charge calculated at 30% of normalised earnings for the period. Diluted earnings/(loss) per share is calculated by dividing the profit for theperiod attributable to ordinary shareholders by the weighted average number ofordinary shares outstanding during the period, after excluding the weightedaverage number of non-vested ordinary shares held by the employee shareownership trust and after adjusting for the effects of dilutive options. 26 week period 26 week period 52 week period ended ended ended 28 June 29 June 28 December 2007 2006 2006 £m £m £m Profit/(loss) for theperiod attributable toordinary 14.8 (6.0) (5.9)shareholdersAdjustments:Amortisation of intangibleassets 1.6 1.5 3.1Share based payments 0.4 0.4 0.9Transaction andreorganisation costs 1.9 3.3 3.4Profit on disposal (8.0) 0.4 (2.8) _____________________________________________________Adjusted earnings 10.7 (0.4) (1.3)Normalised interest 8.0 - -Less tax credit (9.7) - - _____________________________________________________Adjusted pro-forma profit /(loss) before tax 9.0 (0.4) (1.3)Less tax at 30% (2.7) 0.1 0.4 _____________________________________________________Adjusted pro-forma profit/(loss) after tax 6.3 (0.3) (0.9) _____________________________________________________ Number of Number of Number of shares shares shares M M M Weighted averagenumber of shares inissue 68.1 34.6 34.6 _____________________________________________________Basic and adjustedearnings/(loss) pershare 68.1 34.6 34.6denominatorDilutive options - - - _____________________________________________________Dilutedearnings/(loss) pershare denominator 68.1 34.6 34.6 _____________________________________________________ Pence Pence PenceBasic and dilutedearnings/(loss) pershare 21.7 (17.4) (17.1)Adjusted basic anddilutedearnings/(loss) pershare 15.7 (1.2) (3.8)Adjusted pro-formabasic and dilutedearnings/(loss) 9.2 (0.8) (2.6)per share 6. Dividends The Directors have declared an interim dividend of 3 pence per share, amountingto £4.3 million, which will be paid on 26 October 2007 to ordinary shareholderson the register at the close of business on 28 September 2007. In accordancewith IAS 10, this will be recognised in the reserves of the group when thedividend is paid. 7. Other interest bearing loans and borrowings and otherfinancial liabilities 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £m Non- current liabilitiesDeep discounted bonds - 120.7 126.610% interest bearing unsecured bonds - 1.1 1.2Secured bank loans less issue costs 127.5 204.9 206.7Liabilities under finance leases 6.4 6.4 6.4 ___________________________________________ 133.9 333.1 340.9 ___________________________________________Current liabilitiesInterest rate swap - - 0.3Liabilities under finance leases 0.5 0.5 0.5Secured bank loans less issue costs 6.0 1.7 0.2 ___________________________________________ 6.5 2.2 1.0 ___________________________________________ On 26 April 2007 the bank loans were refinanced with a new loan of £135 millionfor a term of 5 years and interest charged at 1.35% above LIBOR. £6 million isrepayable on 31 December 2007, followed by repayments of £4.5 million every halfyear thereafter to 31December 2011, with the balance then to be fully repaid. The deep discounted bonds and unsecured bonds were repaid through £54 millioncash from the proceeds of the Global offer and the balance converted to shareson admission. Analysis of net debt Cash at bank Bank loans Deep discount Finance leases Interest Net debt and in hand bonds rate swap £m £m £m £m £m £m Balanceat 28 December2006 27.7 (206.9) (127.8) (6.9) (0.3) (314.2) Cash (18.9) 73.4 54.3 - - 108.8flows Non cashmovement - - 73.5 - 2.3 75.8 __________________________________________________________________________Balanceat 28 June 2007 8.8 (133.5) - (6.9) 2.0 129.6 __________________________________________________________________________ 8. Capital and reserves Reconciliation of movements in equity for the six months ended 28 June 2007 Issued capital Share premium Translation Hedging reserve Retained Total reserve deficit £m £m £m £m £m £m Balance at29 December 2006 - - 0.4 - (59.2) (58.8) Profit forthe period - - - - 14.8 14.8 Shares issued,net of relatedcosts 0.6 95.1 - - - 95.7 Bonds convertedto shares 0.5 77.9 - - - 78.4 Bonus shareissue 0.3 - - - - 0.3 Share basedpayments - - - - 1.7 1.7Movement infair valueof cash-flow hedge - - - 2.0 - 2.0 Deferred taxon swap revaluation - - - (0.6) - (0.6) __________________________________________________________________________Balance at28 June 2007 1.4 173.0 0.4 1.4 (42.7) 133.5 __________________________________________________________________________ Share capital Cineworld Group plc 28 June 29 June 28 December 2007 2006 2006 (unaudited) (unaudited) (audited) £m £m £m Authorised173,515 ordinary shares of £0.01 each - - -200,000,000 ordinary shares of £0.01each 2.0 - -48,272 redeemable preference shares - - -of £1 each ___________________________________Allotted, called up and fully paid172,815 ordinary shares of £0.01 each - - -141,721,509 ordinary shares of £0.01each 1.4 - -48,272 redeemable preference shares - - -of £1 each ___________________________________ On 26 April 2007 the authorised share capital was increased from £50,017.15 to£2,048,272 by the creation of 199,826,485 shares. On admission on 2 May 2007, the Company made the following share issues: 61,381,075 shares in connection with the Global offer 45,777,434 shares in connection with the conversion of outstanding bonds 34,390,185 bonus shares on the existing shares The redeemable shares were redeemed and cancelled from the Company's authorisedshare capital on 2 May 2007. Independent review report to Cineworld Group plc Introduction We have been engaged by the company to review the financial statements and thefinancial information for the twenty-six week period ended 28 June 2007 whichcomprises the Consolidated income statement, Consolidated balance sheet,Consolidated cash flow statement, Consolidated statement of recognised incomeand expense and the related notes. We have read the other information containedin the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the company forour review work, for this report, or for the conclusions we have reached Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards on Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the twenty-six weekperiod ended 28 June 2007. KPMG Audit PlcChartered Accountants8 Salisbury SquareLondon EC4Y 8BB20 September 2007 This information is provided by RNS The company news service from the London Stock Exchange