ACQUISITION OF PICTUREHOUSE

RNS Number : 8629S

Cineworld Group plc

06 December 2012

 



6 December 2012

CINEWORLD GROUP PLC ANNOUNCES ACQUISITION OF PICTUREHOUSE

Cineworld Group plc ("Cineworld" or the "Group") today announces that it has acquired City Screen Group, which trades as Picturehouse ("Picturehouse"), for £47.3 million in cash. Picturehouse is the UK's leading independent cinema operator with 21 sites (60 screens), including The Duke's at Komedia in Brighton which opens today. As part of the transaction, Cineworld has also acquired Picturehouse Entertainment, the distribution arm of Picturehouse.

Transaction highlights

·      Strengthens Cineworld's position in a high value, high growth segment of the UK cinema market

·      Adds a complementary portfolio to Cineworld's existing footprint, from both a geographic and strategic perspective

·      This acquisition will enable Picturehouse to unlock more than 10 new locations already in the pipeline

·      Picturehouse will operate as a separate business entity within the Cineworld Group and will continue to be run by the existing Picturehouse management team

·      Builds Cineworld's food and beverage retail capabilities

·      High single digit enhancement to earnings per share expected in 2013

Commenting on the acquisition, Stephen Wiener, Chief Executive Officer of Cineworld, said:

"We are delighted to welcome Picturehouse to the Cineworld Group. This acquisition gives us an opportunity to accelerate our growth by reaching new audiences in a high value and growing part of the market. We recognise that Picturehouse is valued by its customers and we look forward to supporting the business through the next phase of its development."

Picturehouse is led by founder director Lyn Goleby, who is supported by a highly experienced team. Lyn Goleby and her team will continue to lead the development of the Picturehouse business under Cineworld's ownership. Lyn Goleby will continue in her role as Managing Director of Picturehouse.

Lyn Goleby said:

"The opportunity to be part of a public company is great news for Picturehouse and our customers. We are known for our high quality city centre cinemas and our distinctive, wide-ranging programming. The unique character of Picturehouse cinemas will remain and our team will continue to bring the widest range of film to customers. This acquisition by Cineworld will accelerate the development of further Picturehouse cinemas around the country."

Information on Picturehouse

For the year ended 31 December 2011, Picturehouse reported audited sales of £30.3 million, profit before tax of £2.5 million and gross assets of £35.0 million. Picturehouse reported audited sales of £26.5 million and £25.3 million in the years ended 31 December 2010 and 31 December 2009, respectively.

For the year ending 31 December 2012, Picturehouse is expected to generate EBITDA of approximately £5.0 million. In addition, Cineworld expects to be able to generate at least an additional £1.0 million per annum through integration benefits and the full year effect of new sites opened in 2012. As part of the transaction, Cineworld will acquire Picturehouse's freehold property assets, which were valued at £9.0 million (as at 31 December 2011).

Prior to today's announced transaction, Picturehouse's primary shareholders were Arts Alliance, Lyn Goleby and Albion Venture Capital Trust.

Transaction financing

The acquisition values Picturehouse at £47.3 million on a cash and debt free basis. Consideration for the acquisition is in cash, which is being funded from existing undrawn bank debt facilities, assumed debt and the cash proceeds from a proposed issue of up to 6.85 million new ordinary shares, representing approximately 4.8% of Cineworld's current issued ordinary share capital, mostly via a placing to institutional and certain other investors of up to 6.40 million new ordinary shares of one pence in the Company (representing approximately 4.5% of Cineworld's current issued share capital) (the "Placing"), also announced today.

Stephen Wiener, CEO of Cineworld, Philip Bowcock, CFO of Cineworld, and Non Executive Directors Martina King, David Maloney, Eric Senat and Peter Williams intend to subscribe for, in aggregate, approximately £250,000 of new ordinary shares in Cineworld in connection with the Placing. Separately, as part of the acquisition arrangements, Lyn Goleby has agreed with Cineworld to reinvest a portion of her sale proceeds by subscribing for £1.0 million of new ordinary shares in Cineworld at the price per ordinary share at which shares are placed with placees in the Placing.

Current trading

Cineworld continues to trade in line with market expectations for the financial year ending 27 December 2012.

Conference Call

A conference call for analysts and investors will be held at 8.00 a.m. GMT on 6 December 2012. A presentation will be available at http://www.cineworldplc.com/.

Dial-in details:

UK:                                                                                                                   [phone]

Confirmation Code:                                                                                            4771237

Participants will have to quote the above code when dialling into the conference.

Enquiries

Cineworld                                                                                                         [phone]

Steve Wiener, CEO

Philip Bowcock, CFO

M:Communications                                                                                           [phone]

Elly Williamson

Matthew Neal

Disclaimer

This Announcement contains certain "forward-looking statements" with respect to certain of the Company's plans and its current goals or expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. Forward looking statements are typically identified by the use of forward looking terminology such as 'aims', 'believes', 'expects', 'may', 'will', 'could', 'should', 'intends', 'estimates', 'plans', 'assumes' or 'anticipates' or the negative thereof or other words of similar meaning. Examples of such forward-looking statements include, among others, statements regarding the Company's business strategy, future plans, present or future events, or objectives for future operations that involve risks and uncertainties and are not historic fact. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's current beliefs and expectations about future events. Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement. No assurance can be given that such forward-looking statements results will be achieved. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, the following: global economic conditions, economic conditions in the jurisdictions in which the Company operates, the effects of continued volatility in credit markets, exchange rate fluctuations and legislative, fiscal and regulatory developments. The forward-looking statements contained in this Announcement speak only as of the date of this Announcement and the Company assumes no obligation to, and does not intend to update or revise publicly any of them whether as a result of new information, future events or otherwise, except to the extent required by the FSA, the London Stock Exchange or by applicable law, the Prospectus Rules, the Listing Rules and the Disclosure and Transparency Rules.

This Announcement is for information purposes only and shall not constitute or form part of an offer to buy, sell, issue, acquire, or subscribe for, or the solicitation of an offer to buy, sell, issue, acquire or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

This Announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Company or by J.P. Morgan Cazenove or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove and which is authorised and regulated in the United Kingdom by the FSA, is acting for the Company in connection with the Placing and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of J.P. Morgan Securities plc nor for providing advice in relation to the Placing or any other matter referred to in this Announcement.

The price of shares and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of the shares. Past performance is no guide to future performance and persons needing advice should consult an independent financial advisor. No statement in this Announcement is or is intended to be a profit forecast or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.

Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this Announcement.

 

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