The Best Place to Watch a Movie”

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The Best Place to Watch a Movie” Cineworld Group plc Group Cineworld Annual Report and Accounts 2018 and Accounts Annual Report Annual Report and Accounts 2018 THE BEST PLACE TO WATCH A MOVIE OUR PURPOSE To provide our customers with a choice of how to watch a movie, in modern state-of-the-art cinemas with the latest technology and a variety of retail offerings, all underpinned by great customer service. OUR BUSINESS AT A GLANCE We are an international cinema chain operating in ten different countries with 790 sites and 9,518 screens. We are focused on providing our customers with the best possible cinema experience, offering a variety of movies, as well as different formats using the latest technologies. Our vision is always to be “The Best Place to Watch a Movie”. OUR GLOBAL THEATRE OPERATIONS: 10 COUNTRIES, 790 SITES, 9,518 SCREENS UK & Ireland Poland Czech Republic Slovakia Hungary Romania Bulgaria United States Israel Read more about our Regal acquisition page 6 PLF 130 53 116 19 Number of Number of Number of Number of IMAX screens 4DX screens PLF(1) screens ScreenX screens No. of screens No. of No. of No. of Total no. Total no. opened 4DX IMAX ScreenX Country of sites of screens in 2018 screens screens screens US 555 7,269 59 8 95 9 UK & Ireland 124 1,119 43 21 21 8 Poland 34 377 – 6 6 – Romania 26 237 6 5 2 – Hungary 17 153 – 3 1 1 Czech Republic 14 133 – 3 1 – Israel 11 136 – 4 3 1 Bulgaria 6 65 – 2 1 – Slovakia 3 29 – 1 – – Total 790 9,518 108 53 130 19 A BRIEF HISTORY 2018 HIGHLIGHTS Group pro-forma(2) Adjusted pro-forma(2) 1995 revenue $m EBITDA(2) $m Cineworld Group plc was founded. 4,711.4 1,072.4 (3) (+7.2%) (+9.4%) Adjusted profit after tax(3) $m Profit after tax(3) $m 2007 The Group listed on the London 345.3 284.3 Stock Exchange (+148.4%) (+119.5%) in May 2007. Adjusted diluted EPS(3) Diluted EPS(3) (rights adjusted) $c (rights adjusted) $c 2012 27.2 22.4 The Group acquired (+20.4%) (+7.1%) the arts chain of cinemas, Picturehouse. DPS(3) Pro-forma(2) (rights adjusted) $c admissions m 15.0 308.4 2014 (+17.6%) (+2.6%) Completed combination with Cinema City Total Shareholder Return International 1,000 N.V. 800 600 2018 400 Completed 200 acquisition of Regal Entertainment 0 Group. Total Shareholder Return (rebased to 100) Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cineworld FTSE 250 FTSE All-Share Travel & Leisure OUR BRANDS Screens Screens Screens Screens Screens 7,269 1,038 994 81 136 SItes SItes SItes SItes SItes 555 100 100 24 11 (1) PLF is defined as Premium Large Format and includes RPX screens in the US and Superscreen screens in the UK and ROW. (2) Pro-forma results reflect the Group and US performance had Regal been consolidated for the entirety of the period from 1 January 2018. For the purposes of percentage movements, the same comparative period has been applied. Performance against the comparative period has been calculated by taking the Regal performance, converted to IFRS, for the same period from 1 January 2017 to 31 December2017, to present the consolidated performance as if Regal had been acquired on 1 January 2017. (3) Adjusted EBITDA is defined as Operating profit plus share of profits from joint ventures using the equity accounting method net of tax adjusted for depreciation and amortisation, onerous lease charges and releases, impairments and reversals of impairments, transaction and reorganisation costs, gains/losses on disposals of assets and subsidiaries, share based payment charges, and share of profits received from associates in excess of distributions or any undistributed such profits. Adjusted profit before tax is calculated by adding back amortisation of intangible assets (excluding acquired film distribution rights), and certain non-recurring or non-cash items and foreign exchange difference arising on monetary assets and liabilities as set out in Note 6. Adjusted profit before tax is an internal measure used by management, as they believe it better reflects the underlying performance of the Group and therefore a more meaningful comparison of performance from period to period. Adjusted profit after tax is arrived at by applying an effective tax rate to taxable adjustments and deducting the total from adjusted profit before tax. Part I Part II Part III Report I: Strategic Part Strategic Report Corporate Governance Financial Statements 02 36 74 Chairman’s Letter Chairman’s Introduction Independent Auditor’s Report to Governance 04 83 Chief Executive Officer’s Review 38 Consolidated Statement Board of Directors of Profit or Loss 10 Market Drivers 40 84 Leadership Consolidated Statement of 12 Other Comprehensive Income Our Business Model 43 Effectiveness 85 Consolidated Statement of 14 Financial Position Strategy in Action 46 Nomination Committee Report 86 22 Consolidated Statement of Risk Management 48 Changes in Equity Accountability Governance II: Corporate Part 23 Principal Risks and Uncertainties 87 50 Consolidated Statement Audit Committee Report of Cash Flows 28 Resources and Relationships 55 Directors’ Remuneration Report 88 Notes to the Consolidated 31 Financial Statements Chief Financial Officer’s Review 67 Directors’ Report 130 Company Statement of 73 Financial Position Statement of Directors’ Responsibilities 131 Company Statement of Changes in Equity 132 Notes to the Company Financial Statements 140 Shareholder Information Part III: Financial Statements Part Visit our website For more information visit: www.cineworldplc.com Cineworld Group plc Annual Report and Accounts 2018 01 CHAIRMAN’S LETTER A TRANSFORMATIVE YEAR Anthony Bloom CHAIRMAN OVERVIEW The Group’s UK and ROW operations also continued to perform 2018 was a transformative year for the Cineworld Group. well, against a bar set very high by 2017’s record year in Europe. The acquisition of Regal Entertainment Group (“Regal”) I am pleased to report that the UK achieved revenue growth of on 28 February made us into a global operator and the 3.3% with the figure for ROW revenue growth being 3.6%. second largest cinema chain in the world. By the end of 2018, Following the combination with Cinema City International N.V. the Group was operating 9,518 screens in 790 sites across (“Cinema City”) in 2014, the Board and Executive Management 10 countries. This significant achievement would have been Team adopted a Strategic Operating Plan which consists of: difficult to imagine when we began operations in 1996. — the opening of new cinemas in areas considered to have the Since that time, both profits and dividends have increased potential for double digit growth rates; each year, and in the UK alone over 5,000 jobs have been created. The Group is very proud of this record and I am — the pursuit of suitable acquisition opportunities; confident its growth will continue in the future. — the refurbishment of the existing estate by introducing So it gives me great pleasure to present shareholders with state-of-the-art design and installing the latest cutting this Annual Report, being the Group’s first inclusive of the edge screening and other technology; results of our US operations. As you will see, the acquisition — a consistent focus on cost reduction; has proved very successful commercially as regards the integration of the business. — the implementation of a programme to continuously optimise the customer experience; and Group Pro-forma revenue for the year increased by 7.2% to $4,711.4m (2017:$4,394.5m), and Adjusted Pro-forma EBITDA — always living up to our vision to be “The Best Place rose to $1,072.4m (2017: $979.9m). The growth was driven to Watch a Movie”. by the inclusion of the US operations, where on a Pro-forma During this landmark year in the Group’s development, this basis, revenue and Adjusted EBTIDA for the Regal business Strategic Operating Plan remained the focus for generating grew by 8.6% and 13.2% respectively. further success. These broad objectives remain relevant for The US now represents 74.8% of revenue on a Pro-forma the Group and going forward will be extended to encompass basis with the UK representing 14.8% and the Rest of the operations of Regal. the World (“ROW”) 10.4%. As the US is by far the largest segment of the Group’s operations, the Board has decided that the Group’s results should be reported in US dollars to provide a more meaningful picture of its activities; this Annual Report is the first in that currency. 02 Cineworld Group plc Annual Report and Accounts 2018 While mentioning Regal, I would like to acknowledge the — Camela Galano was appointed to the Board as an Independent Part I: Strategic Report I: Strategic Part tremendous work undertaken by the management and staff Non-Executive Director. Camela began her career at New Line on both sides of the Atlantic with regard to the integration Cinema, progressing to the role of President of International and development of the Regal business and cinema estate. Sales, Marketing & Distribution, where she oversaw the I am delighted with the results achieved, but those results in international distribution of innumerable titles, including the no way diminish the significant challenge the task presented. blockbuster trilogy “The Lord of the Rings”. Subsequently, Of course, the acquisition remains a significant opportunity for Camela became the President of International Film Acquisitions us and I believe that with the strength and experience of our for Warner Bros. Following her time at Warner Bros. she people, the Group is well positioned to make the most of it.
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