March 6, 2014 / 3:05 PM / in 4 years

UPDATE 1-Acquisition costs dent Cineworld earnings

* Full-year pretax profit falls 19 pct

* Revenue rises 13.2 pct to 406.1 mln stg

* Company sees “satisfactory” 2014

* Expects 2015 to be the next big year for movie business

By Noor Zainab Hussain

March 6 (Reuters) - Cineworld Group Plc reported a 19 percent drop in pretax earnings for 2013 as a result of costs related to acquisitions including Poland’s Cinema City group, a deal that made it Europe’s second-biggest operator of movie theatres.

Revenue rose 13.2 percent to 406.1 million pounds ($679.4 million), with the company’s Picturehouse chain - which it bought in late 2012 - contributing 36.6 million pounds.

The UK’s biggest cinema operator, floated in 2007 by Blackstone Group, said it expected a “satisfactory” 2014.

“Once again, there are no obvious blockbusters but the film slate as a whole is more than reasonable and should deliver another satisfactory year,” Chairman Anthony Bloom said in a statement on Thursday.

Cineworld shares were up 0.9 percent at 312 pence at 1407 GMT.

The company, which operates 1,852 screens in nine countries, said total admissions rose 1.4 percent from 2012, while average ticket prices rose 2.8 percent.

Cineworld’s earnings were reduced by 7.3 million pounds as a result of its purchase of the theatre business of Poland’s Cinema City International in January and the independent Picturehouse chain in Britain at the end of 2012.

Cineworld, the only UK-listed movie theatre chain, said in January it would buy the Polish business for just over 500 million pounds, doubling the number of its cinemas.

The company said it incurred 6.1 million pounds of transaction costs from the deal in the last quarter of 2013.

Chief Financial Officer Philip Bowcock said the costs booked in 2013 represented a proportion of the total projected cost.

Cineworld’s profit was reduced by another 1.2 million pounds by costs related to an order by the Competition Commission that the company sell three sites after its purchase of Picturehouse for 47.3 million pounds.


Bowcock said Cineworld expected 2015 to be the next big year for the movie business.

“There are no real stars (in 2014), unlike 2015 (when) you’ve got three big films - a ”Bond“ film, ”Star Wars“ and also the second ”Avengers“ movie, each of which you would expect to do in excess of 50 million pounds,” he told Reuters.

“(2013) was a year where the UK film industry saw admissions as a whole down, just over 4 percent,” Bowcock said, though he added that Cineworld had significantly outperformed the market.

Cineworld said its UK and Ireland box office market share increased to 27.4 percent in 2013, from 26.4 percent in 2012. Box office revenue rose 10.8 percent to 279.9 million pounds, accounting for 69 percent of the total revenue.

N+1 Singer analyst Sahill Shan agreed that 2014 would likely mirror 2013 in terms of ticket receipts for the industry, but maintained his “buy” rating on Cineworld’s stock.

Cineworld’s pretax profit fell to 30.9 million pounds in the year ended Dec. 26, from 38.3 million pounds a year earlier.

The company announced a full-year dividend of 10.1 pence, which it said represented an increase of 6.3 percent for shareholders who took up their rights as part of an 8-for-25 rights issue on Feb. 14 that raised a net 105 million pounds.

Cineworld’s shares have risen about 23 percent in the past year.

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