LONDON (Alliance News) - Cineworld Group PLC Thursday reported a sharp drop in profits for the first half of its financial year, partially due to acquisition costs of Cinema City, but said the acquisition of the cinema chain helped drive a 33% increase in revenue, boosted by the release of 'The Lego Movie' and the X-Men and Spiderman sequels.
The group raised its interim by 2.7% to 3.8 pence per share.
The cinema chain - which operates under the brands Cineworld, Picturehouse, Cinema City, and Yes Planet - reported strong revenue growth in the period, up 33% to GBP268.6 million compared with GBP201.6 million a year earlier, boosted by the recent acquisition of Cinema City. Box office revenue and admissions on the other hand were lower, due to the World Cup, as people opted to watch football rather than head to the cinema.
However, the group's pretax profit fell by almost 16% to GBP13.9 million, down from GBP16.5 million in the first half of 2013, hit by a number of higher costs it booked during the period, including acquisition costs and "an increase in other provisions in respect of dilapidations and litigation".
Stripping out non-recurring costs and amortisation, the group's adjusted pretax profit rose 46% to GBP25.3 million.
Cineworld said that while the football World Cup, which started in June and ended in mid-July, had hit cinema admissions in recent weeks, it is positive for the second half of the year due to a strong slate of upcoming film releases, including the new marvel film "Guardians of the Galaxy", and franchises "The Hunger Games: Mockingjay Part 1", and "The Hobbit: The Battle of the Five Armies".
"Trading in the opening weeks of the third quarter, as expected, has been lower than the prior period due to the impact of the final stages of the World Cup and the phasing of film release dates. Overall, the strength of the film line up in the second half, coupled with our solid first half performance, gives us confidence and we are on track with our plans for the year," said Chief Executive Officer Moshe Greidinger in a statement.
Cineworld said it expects trading in the third quarter to be in line with last year.
The group also said it now expects to generate synergies of GBP5 million per year over the next three years from the Cinema City combination, GBP2 million of which it said it has already achieved.