Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.
"If there had to be a slump in advertising - what better year to have it than one where we had a great product line-up," says Cineworld chief executive Stephen Weiner. So, despite a 33 per cent decline in screen advertising revenues, cinema operator Cineworld was still able to post strong revenue growth largely due to the runaway success of Slumdog Millionaire.
Advertising
These results cover the 27-week period to 2 July, but even on a 26-week pro-rated basis, revenues grew by almost 14 per cent. Mr Weiner attributes this to the successful movie line-up, which included blockbusters such as Star Trek and Angels and Demons. There is also a strong pipeline of releases in the second half, including Sherlock HolmesHolmes, a sequel to Twilight and a remake of Fame, as well as 3D movies Final Destination 4 and Avatar.
Admissions rose 12.6 per cent over the six-month period, and coupled with a 5.8 per cent hike in average ticket prices to £4.59, this has propelled box office revenues up 24.3 per cent to £114m, or 19.8 per cent on a pro-rated basis. Retail revenue was up 16.6 per cent, with average retail spend per customer broadly flat at £1.71. This was primarily the result of a change in focus to drive greater mid-week admissions, when retail spend is usually lower.
Cineworld was, however, hit by the Bollywood strike in India, which resulted in delays to the release of Bollywood movies overseas. So, revenues from Bollywood movies - which account for 5 per cent of group revenues - fell 60 per cent in the first half. The dispute has since been resolved and a return to normal trading patterns is expected.
Cazenove Research expect full-year pre-tax profits of £29m, giving EPS of 14.8p (13.6p in 2008), rising to £32.6m and 16.5p, respectively, in 2010.
CINEWORLD (CINE) |
||||
|---|---|---|---|---|
| ORD PRICE: | 163p | MARKET VALUE: | £231m | |
| TOUCH: | 162-164p | 12-MONTH HIGH: | 170p | LOW:92.5p |
| DIVIDEND YIELD: | 5.8% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 96p* | NET DEBT: | 81% | |
| 26 weeks to 26 Jun |
Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 137 | 8.7 | 4.2 | 3.2 |
| 2009** | 162 | 11.6 | 7.3 | 3.2 |
| % change | +18 | +33 | +74 | - |
Ex-div: 2 Sep Payment: 2 Oct *Includes intangible assets of £216.8m, or 153p a share **27 weeks to 2 Jul |
||||
More analysis of company results
Cineworld has a strong pipeline of releases for the rest of the year, and with Bollywood back on track and signs of stabilisation in advertising bookings and interest from new advertisers, prospects look good. Trading on 10.5 times earnings estimates, and yielding almost 6 per cent, the shares offer medium-term upside even after their recent run. Good value.
Last IC view: Good value, 116p, 12 Mar 2009
Free access to financial data, charts, portfolio tools and more - registration is quick, secure and free!
Profit from IC share tips; discover the benefits of IC Advantage and sign up for a free trial.
© The Financial Times Limited 2010. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
v6.2.10.5 running on www.investorschronicle.co.uk
