Cineworld profits cool after pension scheme buyout but 2017 film slate looks strong

Actor Tom Hiddlestone  braves the rain for the King Kong: Skull Island premiere
Actor Tom Hiddleston outside Cineworld's Empire Leicester Square cinema for the Hong Kong: Skull Island European premiere

Some glitz and glamour was taken out of Cineworld’s shares in early trading after profits were knocked by the £4.8m buyout of its pension scheme.

This one-off cost related to the MGM defined benefit pension scheme contributed to pulling pre-tax profit down by 1.5pc to £98.2m even though sales rose by 13pc to £797.8m.

Cineworld's shares fell 1.7pc in early trade but later recovered ground to around 649p. The stock has had a strong year, rising a third to 645p, well above the nearly 14pc rise in the broader FTSE 250 index in which the company sits.

The company also saw adverse currency movements of £6.1m on a loan but these were more than counteracted by the fact the company benefited from sales in its rest of world division better translating into the now weaker pound.

The pace of growth remained most rapid in its ‘rest of world’ division, which encompasses Cinema City in central and eastern Europe and Yes Planet and Rav Chen in Israel.

Revenue rose 13.3pc on a constant currency basis to £303.8m with spending on drinks and snacks particularly buoyant - up 18pc to £73.3m.

The UK and Ireland remained solid with sales up 6pc to £494m.

Cineworld expects new releases such as Beauty and the Beast to attract audiences

The company refurbished six sites in the UK and three overseas with more major projects planned for this year. It also plans to open 13 cinemas in what it is dubbing a decent year for film releases with sequels such as Star Wars: Episode VIII, Despicable Me 3 and Paddington 2 as well as new releases of Beauty and the Beast and Wonder Woman.

It also continued to focus on other revenue opportunities including increasing the number of Starbucks concessions in its UK sites to 24 and expanding its VIP experience further across its estate. Three new VIP sites were opened during the year in Glasgow Renfrew Street, Beer Sheva in Israel and Bucharest Titan in Romania, taking the group’s VIP cinema tally to nine.

The company’s borrowings increased to £282.3m due to the acquisition of five Empire cinemas, pushing debt up from £245.2m at the end of December 2015.

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