2015 q3 investor presentation - amazon s3€¦ · 2015 q3 investor presentation important...

2015 Q3 INVESTOR

PRESENTATION

ODEON & UCI CINEMAS GROUP 24 November 2015

ODEON & UCI CINEMAS GROUP

2015 Q3 INVESTOR PRESENTATION

IMPORTANT INFORMATION

DISCLAIMER

THIS DOCUMENT HAS BEEN PREPARED BY ODEON & UCI FINCO PLC (“ODEON”). BY REVIEWING THIS DOCUMENT OR PARTICIPATING IN THE CONFERENCE CALL THAT PRESENTS IT, YOU AGREE TO BE BOUND BY THE FOLLOWING CONDITIONS.

THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ODEON. FURTHERMORE, IT DOES NOT CONSTITUTE A RECOMMENDATION BY ODEON OR ANY OTHER PARTY TO SELL OR BUY SECURITIES IN ODEON OR ANY OTHER SECURITIES. ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO ODEON OR PERSONS ACTING ON THEIR BEHALF ARE QUALIFIED IN THEIR ENTIRETY BY THESE CAUTIONARY STATEMENTS.

Unaudited Information

This document contains financial

information regarding ODEON and its

fellow subsidiaries (the “Group”). Such

financial information may not have been

audited, reviewed or verified by any

independent accounting firm. The inclusion

of such financial information in this

document or any related presentation

should not be regarded as a representation

or warranty by ODEON, any of its

respective affiliates, advisors or

representatives or any other person as to

the accuracy or completeness of such

information‟s portrayal of the financial

condition or results of operations by the

Group.

Non-GAAP information

We have presented certain non-GAAP

information in this document. As used in

this document, this information includes

„„EBITDA‟‟, which represents earnings

before interest, tax, depreciation,

amortisation, exceptional items and

strategic costs. Our management believes

that EBITDA is meaningful for investors

because it provides an analysis of our

operating results, profitability and ability to

service debt and because EBITDA is used

by our chief operating decision makers to

track our business evolution, establish

operational and strategic targets and make

important business decisions. In addition,

we believe that EBITDA is a measure

commonly used by investors and other

interested parties in our industry.

Forward-Looking Statements

This document includes forward-looking

statements. When used in this document,

the words “anticipate”, “believe”,

“estimate”, “forecast”, “expect”, “intend”,

“plan” and “project” and similar

expressions, as they relate to ODEON, its

management or third parties, identify

forward-looking statements. Forward-

looking statements include statements

regarding ODEON‟s business strategy,

financial condition, results of operations,

and market data, as well as any other

statements that are not historical facts.

These statements reflect beliefs of

ODEON‟s management, as well as

assumptions made by its management and

information currently available to ODEON.

Although ODEON believes that these

beliefs and assumptions are reasonable,

the statements are subject to numerous

factors, risks and uncertainties that could

cause actual outcomes and results to be

materially different from those projected.

These factors, risks and uncertainties

expressly qualify all subsequent oral and

written forward- looking statements

attributable to ODEON or persons acting

on its behalf.

2



AGENDA

1 2015 Q3 and YTD highlights

2 Q3 markets & films

3 Future film slate

4 Strategic progress

5 Financial highlights

6 Current trading and outlook

7 Q&A

Paul Donovan

Group Chief

Executive Officer

Mark Way

Group Chief

Financial Officer

Ian Shepherd

Group Chief

Commercial Officer

3

2015 Q3 AND YTD HIGHLIGHTS

1



Q3 HIGHLIGHTS CONTINUED OUTPERFORMANCE DESPITE QUIETER QUARTER

Market Attendance1 up by 5.8% • Inside Out, Minions, Mission

Impossible – Rogue Nation performed

strongly across the Group

• Fack Ju Göhte 2 performed well in

Germany

ODEON & UCI Paid Attendance

up 12.4% • Market Share1 increased by 0.5% pts

vs. 2014

• Fourth quarter of market share

growth, aided by strategic actions

• Box Office Revenue2 increased by

12.9%

• 2.2m more guests attended than Q3

last year

Retail Revenue2 up 14.3% • Driven by Group-wide retail and

training initiatives

Total Revenue2 up 12.9%

EBITDA2 more than doubled

1 At constant territory weighting and includes all territories

2 At constant FX rate

5

Q3 Q3

2015 2014

Market Weighted Attendance1 (m) 5.8%

Odeon & UCI Paid Attendance (m) 19.8 17.6 12.4%

Total Market Attendance Share1 19.5% 19.0% 0.5% pts

Box Office Revenue2 (£m) 106.0 94.0 12.9%

Retail Revenue2 (£m) 41.4 36.2 14.3%

Total Revenue2 (£m) 159.4 141.2 12.9%

EBITDA2 (£m) 9.8 4.2 130.6%

Average Ticket Price1,2 (£) (ATP) 5.35 5.28 1.3%

Retail Revenue Per Head1,2 (£) (RPH) 2.09 2.03 3.2%

vs LY

Fav/(Adv)



Q3 YTD HIGHLIGHTS ATTENDANCE GROWTH CONTINUES TO BE HIGHER THAN MARKET

1 At constant territory weighting and includes all territories


6

Q3 YTD Q3 YTD

2015 2014

Market Weighted Attendance1 (m) 6.8%

Odeon & UCI Paid Attendance (m) 62.7 55.3 13.4%

Total Market Attendance Share1 19.2% 18.3% 0.9% pts

Box Office Revenue2 (£m) 343.0 295.4 16.1%

Retail Revenue2 (£m) 126.4 107.4 17.7%

Total Revenue2 (£m) 508.1 438.9 15.8%

EBITDA2 (£m) 47.1 22.7 107.4%

Average Ticket Price1,2 (£) (ATP) 5.47 5.38 1.7%

Retail Revenue Per Head1,2 (£) (RPH) 2.02 1.96 2.8%

Fav/(Adv)

vs LYMarket Attendance1 up by 6.8% • Strong film slate (including Jurassic

World, Fifty Shades of Grey,

Avengers: The Age of Ultron, Fast &

Furious 7, Honig im Kopf, Inside Out

and Minions )

ODEON & UCI Paid Attendance

up 13.4% • Outperformed market growth in all

quarters

• Market Share1 up 0.9% pts vs. 2014


16.1%

Retail Revenue2 up 17.7% • New combo deals

• Enhanced range

• Further training across the Group

Total Revenue2 up 15.8% • Driven by improved market volumes

and strategic actions across business

EBITDA2 more than doubled to

£47.1m

Q3 MARKETS AND FILMS

2



£19.5m

£21.2m

£27.9m

£32.7m

£33.4m

£14.3m

£16.3m

£21.0m

£31.6m

£37.9m

5

4

3

2

1

UK & IRELAND 2% MARKET GROWTH

• Strong family titles were top 2 films, performing well

throughout the quarter

• Overall Total Market Attendance +2% due to mixed

performance from other titles

• New team structures in cinemas and additional commercial

activities drove revenues and improved guest experience

Inside Out

The Inbetweeners 2

Minions

Dawn of the Planet of Apes

Mission: Impossible - Rogue Nation

Guardians of the Galaxy

Ant-Man

How to Train Your Dragon 2

Legend

Transformers: Age of Extinction

Q3 2015 GBOR

Q3 2014 GBOR

8



1.3m

1.6m

1.6m

2.1m

2.3m

1.0m

1.0m

1.4m

3.7m

4.2m

5

4

3

2

1

SPAIN STRONG IMPROVEMENT; MARKET ATTENDANCE UP +15%

Minions

El Niño

Inside Out

Dawn of the Planet Apes

Atrapa la Bandera


Mission: Impossible - Rogue...

Lucy

Pixels


Q3 2015 Market Attendance


9

Local titles in italic

• Outstanding outperformance from Minions and Inside Out

• Overall Total Market Attendance was +15% vs 2014 Q3

• Further evidence that improving consumer confidence is

leading to a sustained market recovery

• Increased marketing and CRM activity by Cinesa team to

stimulate guest attendance



1.6m

1.6m

2.4m

2.5m

2.8m

1.1m

1.1m

1.4m

5.4m

6.7m

5

4

3

2

1

GERMANY SOLID TOTAL MARKET ATTENDANCE UP 4% DRIVEN BY TOP FILMS

Minions

Qu'est-ce qu'on a fait au Bon Dieu?

Fack Ju Göhte 2


Mission: Impossible ...


Jurassic World

Lucy

Pixels




10

• Top 2 films Minions and Fack Ju Göhte 2 were much stronger

than prior year comparisons

• Total Market Attendance +4%

• New websites driving UCI Kinowelt profile and presence in

German market




0.6m

0.8m

0.9m

1.3m

1.4m

0.5m

0.5m

0.6m

2.5m

3.6m

5

4

3

2

1

ITALY TOTAL MARKET ATTENDANCE UP 17%

• Strong appeal of Minions and Inside Out to family audiences

• Total Market Attendance up 17%

• Consumer confidence providing positive indication that Italy

is pulling out of recession

• UCI commercial actions driving year on year share gain

Minions


Inside Out


Ant-Man

The Fault in our Stars

Mission: Imposs...

Dawn of the Planet of the Apes

Paper Towns

Lucy

11






Spectre

The Hunger Games: Mockingjay – Part 2

Star Wars Episode VII – The Force Awakens

The Good Dinosaur

Ocho Apellidos Catalanes

Q4 ON TRACK TO BE STRONGEST QUARTER OF THE YEAR

Q4

12



Finding Dory A Monster Calls

Fantastic Beasts and Where to Find Them The Secret Life of Pets

X-Men: Apocalypse Rogue One: A Star Wars Story

Ice Age 5 Batman v Superman: Dawn of Justice

Jungle Book Zootropolis

Captain America: Civil War Ghostbusters

2016

2016 LOOKING PROMISING

13



CONTINUED PROGRESS OF STRATEGIC CHANGE

Continued innovation in marketing and pricing

• Brand refresh in UK

• Exclusive pan-European partnerships with premiere of The

Martian, and launch of Maze Runner: Scorch Trials

• Expanding use of strategic pricing across all territories

Focus on guest experience in all cinemas

• Net Promoter Score action plans in all cinemas

• UK teams structured to focus on customer contact

• Investment in 32 cinemas, including:

• Luxury seating tests

• Retail counter upgrades

• Refurbishments to foyers & other guest service areas

• Launched re-engineered guest standards in UK cinemas

Improved digital offering

• Removal of online booking fee in UK driving year on year

growth

• Development of social media activity, including:

• Instagram competitions

• Facebook and Twitter communities growing fast

New retail initiatives and training

• Preparation training for Q4 peak period

• Extension of Make it Your Way concept after successful pilot

14

FINANCIAL HIGHLIGHTS

MARK WAY CFO

5



TOTAL REVENUE UP 12.9% IN Q3

2015 Q3 vs. 2014 Q3

• Market Share1 up 0.5%pts due to

Odeon & UCI Paid Attendance growth

outpacing Market Attendance growth

• Small improvement of 1.3% in ATP1,2

growth held back by the high film slate

mix of kids product


12.9%; More than double Weighted

Market Attendance1 growth of 5.8%

• Continued Group-wide focus on

effective retail initiatives resulted in

3.2% increase in RPH1,2 and 14.3%

increase in overall Retail Revenue2

• Screen Ads and Other Revenue2 up

8.1% driven by increased Odeon &

UCI attendance

• Total Revenue2 up 12.9%

1 At constant territory weighting


16

Q3 Q3 Q3 YTD Q3 YTD

2015 2014 2015 2014

Market Weighted Attendance1 (m) 5.8% 6.8%

Odeon & UCI Paid Attendance (m) 19.8 17.6 12.4% 62.7 55.3 13.4%

Total Market Attendance Share1 19.5% 19.0% 0.5% pts 19.2% 18.3% 0.9% pts

Average Ticket Price1,2 (£) (ATP) 5.35 5.28 1.3% 5.47 5.38 1.7%

Retail Revenue Per Head1,2 (£) (RPH) 2.09 2.03 3.2% 2.02 1.96 2.8%

Box Office Revenue2 (£m) 106.0 94.0 12.9% 343.0 295.4 16.1%

Retail Revenue2 (£m) 41.4 36.2 14.3% 126.4 107.4 17.7%

Screen Ads and Other Revenue2 (£m) 12.0 11.1 8.1% 38.7 36.1 7.0%

Total Revenue2 (£m) 159.4 141.2 12.9% 508.1 438.9 15.8%

vs LY

Fav/(Adv)

vs LY

Fav/(Adv)



EBITDA UP 130% IN QUARTER UP 107% YTD


17

Q3 Q3 Q3 YTD Q3 YTD

2015 2014 2015 2014

Gross Profit1 (£m) 102.0 90.8 12.4% 324.5 284.8 13.9%

Gross Profit Margin1 64.0% 64.3% (0.3%) pts 63.9% 64.9% (1.0%) pts

Operating Costs (Excluding Rent)1 (£m) 61.8 55.9 (10.5%) 187.0 170.6 (9.6%)

Operating Costs (Excluding Rent)1 as a

% of Total Revenue38.8% 39.6% 0.8% pts 36.8% 38.9% 2.1% pts

EBITDAR1 (£m) 40.2 34.9 15.4% 137.5 114.3 20.3%

Rent1 (£m) 30.4 30.6 0.6% 90.4 91.6 1.2%

EBITDA1 (£m) 9.8 4.2 130.6% 47.1 22.7 107.4%

EBITDA1 Margin 6.1% 3.0% 3.1% pts 9.3% 5.2% 4.1% pts

vs LY vs LY

Fav/(Adv) Fav/(Adv)

2015 Q3 vs. 2014 Q3

• Gross Profit Margin1 of 64.0% was

broadly in line with last year

• Slight improvement of 0.8% pts in

Operating Costs (Excluding Rent)1

as a % of Revenue

• Rent1 was broadly in line with last

year

• EBITDA1 increased by £5.6m driven

by increased market attendance,

higher market share and ongoing

cost control



LEVERAGE CONTINUES TO IMPROVE

• LTM EBITDA of £77m has reduced leverage to 6.0x, vs 8.7x in

prior year

• Seasonal outflow of Working Capital in the quarter, greater than

2014 due to high film hire payments on successful Q2 product.

YTD outflow is also seasonal and is significantly improved on prior

year

• YTD 2015 Capital Expenditure was higher than in 2014 due to

two new cinemas in Milton Keynes and Edinburgh and spend

related to strategic programmes. 2015 Q3 CAPEX was broadly in

line with prior year

• YTD Finance Costs related to the interest payments (three

quarterly Euro and two half-yearly Sterling), lower than last year

due to benefits of a different interest rate swap

• Acquisitions and Disposals reflects the proceeds from the

disposal of 4 cinemas that were sold to Everyman and completed

in the quarter

• During the quarter the Euro strengthened and therefore FX

includes the adverse foreign exchange impact on the value of the

Euro note. YTD 2015 remains favourable as the Euro exchange

rate remains weaker than at year end 2014

18

Q3 Q3 Q3 YTD Q3 YTD

£m 2015 2014 2015 2014

EBITDA before FX impact 9.8 4.2 47.1 22.7

FX impact 0.0 (0.4) 0.0 0.3

EBITDA 9.8 3.8 47.1 23.0

Working Capital and Other (9.8) (2.1) (23.8) (33.9)

Net Capital Expenditure (6.5) (6.8) (23.9) (16.4)

Provisions and One Offs (3.6) (3.2) 0.9 (10.5)

Finance Costs (17.0) (17.5) (38.8) (43.4)

Tax (Paid)/Received (0.2) 0.0 0.6 0.6

Acquisitions and Disposals 4.9 0.2 6.2 (0.4)

(22.5) (25.6) (31.9) (80.8)

Propco - - - 16.5

Cash Flow (22.5) (25.6) (31.9) (64.3)

FX (5.8) 3.6 9.0 11.7

Change in net debt (28.4) (21.9) (22.9) (52.6)

Net Debt 463.8 488.6

LTM EBITDA 76.7 56.2

Net Debt to LTM EBITDA 6.0x 8.7x

CURRENT TRADING & OUTLOOK

PAUL DONOVAN CEO

6



CURRENT TRADING AND OUTLOOK

Strong trading continues

• Record breaking Q4 slate

• Spectre

• The Hunger Games: Mockingjay - part 2

• Star Wars: The Force Awakens

• Ocho Apellidos Catalanes

• Strategic transformation continues:

• medium term strategic initiatives on track

• whole Group focussed on executing detailed commercial,

operational and retail plans effectively in Q4 with significantly

increased volumes

• Market share continuing to track ahead of Q4 last year

20



INVESTMENT FOR THE FUTURE

2015 capex in line with previous guidance

• State of the art new sites opened in Q3:

• Charlestown, Dublin (Ireland)

• Marcianise, Naples (Italy)

• Spain‟s first Dolby laser projector screen launched in Cinesa, Barcelona

• Continued investment in sites to enhance guest experience, improve

retail offer and upgrade seating

Long term business development

• Pipeline of innovative new sites confirmed, including:

2016: Orpington; Oldham (UK)

2017: Peterborough; Bournemouth, (UK); Roma Laurentino (Italy)

2018: Mercedes Benz Arena, Berlin (Germany); Islington Square

(UK); Westfield, Milan (Italy)

2019: West End, London (UK)

• Ongoing digital and multichannel investment

21

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QUESTIONS

AND ANSWERS

7 Further questions can be addressed to:

[email protected]

Financial PR:

[email protected]

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