Cineworld : Preliminary Results

CINEWORLD GROUP plc

Preliminary Results for the year ended 31 December 2020

Cineworld Group plc ("the Group") presents its preliminary results for the year ended 31 December 2020. These results are presented in US Dollars.

Summary

•  The COVID-19 global pandemic has significantly impacted the industry and the Group's results for the period, with all sites across the Group being temporarily closed from mid-March 2020

•  All sites remain closed as at the date of these results, with re-opening in the US anticipated from 2 April 2021

•  Group revenue of $852.3m (2019: $4,369.7m) and Group Adjusted EBITDA (loss of $115.1m) (2019: profit of $1,580.3m) for the period was severely impacted by these closures

•  Management's main priorities have been the safety of customers and employees, liquidity, cash preservation and costs reduction

•  Operating loss of ($2,257.7m) (2019: profit of $724.7m) which has been impacted by asset impairments of $1,344.5m

•  Raised $810.8m additional liquidity during the period, including issuance of equity warrants

•  Obtained Group leverage covenant waivers until June 2022 and are currently operating under a minimum liquidity covenant

Additional Liquidity Secured

•  Announcement of a binding commitment from a group of institutional investors for a new $213m Convertible Bond due 2025

•  In parallel, the Group announces that it will today publish and post (or otherwise make available) to shareholders a circular (the "Circular") containing a Notice of General Meeting convening a general meeting to seek shareholder approval of a resolution temporarily suspending the borrowing limit in Cineworld's Articles of Association.

•  Together with the expected $200m US Cares Act Tax refund provides the Group with additional liquidity for reopening and any further closure periods

Outlook

•  Anticipated cinema re-opening from 2 April in the US, 17 May in the UK and May 2021 in ROW supported by a strong pipeline of movies and current indication that government restrictions will be lifted

•  Strong pent-up demand for affordable out-of-home entertainment anticipated post re-opening due to the COVID-19 pandemic as indicated by the theatrical industry performing well in re-opened markets such as China, Japan and Australia

•  There can be no certainty as to the future impact of COVID-19 on the Group. Governments strengthening of restrictions on social gathering may lead to closure of cinemas or studios delaying movie releases. This would have a negative impact on the Group's financial performance and likely require the need to raise additional liquidity. The material uncertainties, as well as some one-off cash flow impacts on the Group are highlighted within the going concern statement in these results

Key Financial Information

Statutory Year endedStatutory Year ended

31 December 2020

31 December 2019

(under IFRS 16)

(under IFRS 16)

2020 Statutory results vs.2019

Year ended

Year ended

31 December 2020

31 December 2019

(under IAS 17)

(under IAS 17)

Admissions

Revenue

Adjusted EBITDA(1)

54.4m $852.3m ($115.1m)

275.0m $4,369.7m $1,580.3m

(80.2%)

54.4m

275.0m

(80.5%)

$852.3m $4,369.7m

(107.2%) ($651.6m) $1,032.6m

(Loss) / profit before tax

($3,007.9m) $212.3m

Adjusted (loss) / profit before tax(1)

($1,326.9m) $355.4m

(Loss) / profit after tax

($2,651.5m) $180.3m

Adjusted (loss) / profit after tax(1)

($913.2m) $293.0m

Basic EPS

($193.2c) 13.1c

Diluted EPS

($193.2c) 13.1c

Adjusted diluted EPS(1)

($66.5c) 21.3c

(1)Refer to Notes 2 and 5 for the full definition and reconciliation.

Alicja Kornasiewicz, Chair of Cineworld Group plc, said:

"The Group has demonstrated resilience through what has been a very difficult year and I am extremely proud of the commitment our colleagues have shown during these exceptional times. Despite the significant challenges that COVID-19 continues to present, we look forward to reopening cinemas worldwide and welcoming our guests."

Commenting on these results, Mooky Greidinger, Chief Executive Officer of Cineworld Group plc, said:

"For all of us across the world, this has been an incredibly challenging year. COVID-19 has created a huge amount of stress and uncertainty, both in business and in our personal lives. At Cineworld, I never imagined a time that we would see the closure of our entire cinema estate, nor that varying restrictions would remain in place for so long as we continue to navigate our way through this crisis. I am immensely proud and inspired by the response of our people to these very difficult circumstances. We have worked hard to strengthen the long-term prospects of the business and, looking forward, Cineworld enters 2021 confident about the next chapter in our development; not least the intention to reopen our cinemas starting April 2nd."

Cautionary note concerning forward looking statements

Certain statements in this announcement are forward looking and so involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future and therefore results and developments can differ materially from those anticipated. The forward looking statements reflect knowledge and information available at the date of preparation of this announcement and the Group undertakes no obligation to update these forward-looking statements. Nothing in this announcement should be construed as a profit forecast.

Details for analyst presentation

The results presentation is accessible via a listen-only dial-in facility and the presentation slides can be viewed online. The appropriate details are stated below:

Date:	25 March 2021
Time:	09:30am
Webcast link:	https://secure.emincote.com/client/cineworld/cineworld016/
Conference Call:	https://secure.emincote.com/client/cineworld/cineworld016/vip_connect
Enquiries:
Cineworld Group plc	Media

Israel Greidinger Nisan Cohen Manuela Van Dessel

[e-mail]

James Leviton Rob Allen

[e-mail]

8th Floor, Vantage London Great West Road Brentford

[phone]

TW8 9AG

CHIEF EXECUTIVE OFFICER'S REVIEW

2020 was an extraordinarily difficult year for our sector. While short-term uncertainty remains, we have taken decisive actions to enable the Group to withstand the challenges presented, including raising $810.8m of new liquidity. We are well positioned to recover and reopen our cinemas when restrictions are eased and a pipeline of incredible content is in place. The rollout of the vaccine across our territories is clearly critical, with the US, UK reopening in April and May respectively, Israel hopefully close to reopening and we are convinced that the CEE market will be able to reopen soon too. I would like to thank the entire team at Cineworld for their loyalty, dedication and hard work during these hugely difficult times.

Looking ahead, we are excited about the next chapter in the Group's development and intend to reopen our cinemas starting April, 2nd subject to lifting of government restrictions. There is clear evidence that consumer demand for cinemas remains strong, and due to the long-term investment in our estate, which boasts high quality cinemas with the latest technology, we are well placed to leverage the market opportunities available to us over the medium to long term.

2020 Performance

The 2020 results were significantly impacted by the COVID-19 pandemic, with all our cinemas being temporarily closed for extensive periods from mid-March. During this time, our focus was on supporting our people, while also ensuring that our liquidity position was adequate and minimising cash burn.

Our high quality cinema estate is well placed to recover from the impact of the pandemic and take advantage of growth opportunities, underpinned by the four tenets of our strategy and culture: to give the best cinema experience to our customers; to be leaders in technology; to expand and enhance our estate; and to drive up value.

Our financial strategy continues to be focused on minimising cash burn and ensuring the business has sufficient liquidity throughout the closure period. However, we also remain focused on our long-term objective of debt reduction through cash flow generation and cost optimisation. In 2020, we raised over $800m of liquidity and accelerated our tax year closure to bring forward an expected tax refund of over $200m under the United States CARES Act, which we expect to receive by April 2021. Further details of our underlying and statutory earnings for the period are set out in the Financial Review on page 5.

Our COVID-19 response

In response to the closure of our cinemas in March, our focus was to minimise cash burn and to mitigate the effect of closures, whilst prioritising the welfare of our employees, customers and other stakeholders. Our efforts included:

• − Raising $810.8m of liquidity

• − Obtaining a Group leverage covenant waiver until June 2022, and currently operating under a minimum liquidity covenant

• − Negotiations with our landlords for material abatements and long-term rent deferrals

• − Discussions with all key suppliers to reduce costs and implement payment plans

• − Accessing government grants and employment schemes to support our part-time, hourly paid cinema employees and head office staff

• − Weekly review and approvals of invoices and payments

• − Curtailing all unnecessary capital expenditure

• − Suspension of Group dividends

• − Regular interaction with industry institutes and associations including the National Association of Theatre Owners ("NATO"), the Global

Cinema Federation ("GCF") and more

Most importantly, we would like to thank our teams for their perseverance through this challenging time. Through their fantastic efforts, when cinemas reopened for a short period during the summer, we provided our guests with a safe and enjoyable experience while ensuring we complied with safety and government guidelines.

Industry fundamentals and the respect for the theatrical window

Our industry has proved its resilience time and time again over many years, from the introduction of the first television to more recent innovations such as VHS, DVD, and now Video on Demand ("VOD"). These streaming services are going through a period of growth, highlighted by new entrants such as Netflix, Disney+, Apple TV+, HBO Max and more. However, we remain convinced that the cinema provides a clearly differentiated proposition to these at-home activities.

Seeing a blockbuster movie on the big screen compared to watching it at home on a TV or a mobile device is similar to how dining out at a restaurant and ordering a takeaway are very different consumer experiences. Against this backdrop, we believe that we offer excellent value interms of an out-of-home experience. People do not naturally want to stay at home seven days a week, and cinema-going is a very affordable and attractive alternative.

While we have seen changes to the theatrical release window policy in our industry during 2020, our position remains unchanged. We see the window as an essential part of our business and most of our studio partners remain committed to it as big supporters of the theatrical business. The window has clearly proven its benefits for both studios and movie theatres. By playing new films in movie theatres for a set time period, the studios can generate significant extra revenue, while benefiting from the value it adds to the overall marketing of that movie. This in turn brings additional revenue as the film moves through subsequent distribution channels. More importantly, it enables consumers to see movies as they were intended to be seen - on the big screen - with the best picture and sound quality, which add to the overall viewing experience. While the window may therefore be slightly shorter moving forward, I believe it is clear that a window of theatrical exclusivity should remain once business gets back to normal.

Cineplex

In June 2020, Cineworld terminated the arrangement agreement with Cineplex Inc. ("Cineplex") due to breaches by Cineplex and, accordingly, this transaction will no longer proceed. Cineplex denies that it breached the arrangement agreement and has initiated proceedings against Cineworld to seek damages for the termination and what it describes as breaches by Cineworld. Cineworld denies that it breached the arrangement agreement and has submitted a defence to the Cineplex claim. Cineworld has itself filed a counterclaim against Cineplex for

Cineworld's damages and losses suffered as a result of Cineplex's breaches and the termination of the arrangement agreement, including Cineworld's lost financing costs, advisory fees and other costs incurred.

Outlook

Following the second closure of cinemas in October and recent government restrictions, our estate of 767 cinemas currently remains closed. We continue to work to mitigate the effect of closures and minimise cash burn during this period, including continued furloughing of the majority of our employees, suspension of all new capex programmes, continuing discussions with landlords and the establishment of new payment plans with suppliers.

Looking forward, the outlook is more positive, with restrictions expected to ease in light of the vaccination programmes underway across our territories. Before COVID-19, the 2019 global box office reached an all-time record of $42.5bn, demonstrating the underlying strength of our industry around the world. Furthermore, the performance of the theatrical industry in countries which have broadly recovered from COVID-19 has been encouraging, in particular in China and Japan, where the industry has seen box office records. We believe that we can return to previous performance levels should the situation normalise, given that consumer demand remains strong - our guests want to go out and socialise, and we are confident they will do so as soon as they are permitted.

While uncertainty regarding the duration of the COVID-19 pandemic remains, the Group has assumed a base case scenario with cinemas reopening in May 2021. Under this scenario, the Group has sufficient headroom for 2021 and beyond, However, there are material uncertainties in respect of certain aspects of the forecast, details of which are included in Note 1 of the Financial Statements. In the event of a further delay to cinema reopenings, the Group expects to retain sufficient liquidity for a number of additional months but may require term loan lender support in order to deploy that liquidity.

Our roots go back 90 years in the cinema industry. Throughout our history, the industry has faced significant hurdles from time to time but has always come back fighting, still going from strength to strength. We remain extremely confident in the future of our sector, the high quality of the experience in our cinemas, and that we will continue to be THE BEST PLACE TO WATCH A MOVIE.

Moshe (Mooky) Greidinger

Chief Executive Officer

25 March 2021