ANNUAL REPORT AND ACCOUNTS 2021

The Best Place to

Watch a Movie

Cineworld Group plc Annual Report and Accounts 2021

2021 has been another challenging year

forCineworld. Despite COVID-19 causing

doubtsabout the industry, our recovery only

strengthens our belief in our business’ future.

There is a clear demand and desire among our

customers to go out when there is great content

and it is safe to do so. We offer a superior

entertainment experience with the latest

technology and this offer will be more important

than ever when the crisis is over. We are proud

of our journey and unwavering vision to be

TheBest Place to Watch a Movie.

Our Purpose

To provide our customers with a choice of how to

watch a movie, in modern state-of-the-art cinemas

with the latest technology and a variety of retail

offerings, all underpinned by great customer service.

Our Vision

to be The Best Place to Watch a Movie

Our Values

Integrity, respect and fairness

THE BEST PLACE TOWATCH A MOVIE

CONTENTS

Strategic Report

p01–35

02 Chair’s Letter

04 Chief Executive Officer’s Review

06 Market Drivers

08 Our Business Model

10 Strategic Priorities and KPIs

14 Risk Management

15 Principal Risks and Uncertainties

20 Task force on Climate related

Financial Disclosures

23 Viability Statement

25 Responsible Business

30 Chief Financial Officer’s Review

Corporate Governance

p36–83

36 Chair’s Introduction

toGovernance

39 Board of Directors

42 Corporate Governance

Statement

53 Nomination CommitteeReport

56 Audit Committee Report

60 Remuneration Committee

61 Directors’ Remuneration Report

(including Remuneration Policy)

76 Directors’ Report

83 Statement of Directors’

Responsibilities

Financial Statements

p84–177

84 Independent Auditors’ Report

to the Members of Cineworld

Group Plc

94 Consolidated Statement

ofProfitorLoss

95 Consolidated Statement

ofComprehensive Income

96 Consolidated Statement

ofFinancial Position

97 Consolidated Statement

ofChangesinEquity

98 Consolidated Statement

ofCashFlows

99 Notes to the Consolidated

FinancialStatements

164 Company Statement

ofFinancialPosition

165 Company Statement

ofChangesinEquity

166 Notes to the Company

FinancialStatements

179 Shareholder Information

2021 HIGHLIGHTS

For more information visit:

www.cineworldplc.com

Footnotes:

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

(2) Refer to Notes 2 and 7 for the full definition and reconciliation.

Sites

751

2020: 766

Screens

9,189

2020: 9,311

Admissions

95.3m

2020: 54.4m

Group Revenue

$1,804.9m

2020: $852.3m

Adjusted EBITDA

(1)

$454.9m

2020: ($115.1m)

(Loss) After Tax

($565.8m)

2020: ($2,651.5m)

Adjusted (Loss) AfterTax

(2)

($655.7m)

2020: ($913.2m)

Diluted EPS

(41.2¢)

2020: (193.2¢)

Adjusted Diluted EPS

(2)

(47.8¢)

2020: (66.5¢)

Dividend Per Share

–

2020: –

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

This financial year was dominated by

COVID-19 which provided an enormous

challenge for our business, our people

and our partners. I am very proud of

how the business has met these

challenges, delivering tothe very best

of our abilities for allour stakeholders.

The impact of the pandemic over

thepast two years has been well-

documented, with our business

subjected to mandatory closures and

restrictions across the period which is

reflected in our 2021 financial results.

We are now focused on getting our

cinemas back to pre-pandemic trading

levels supported by a strong backlog

ofmovies to be released. The Group

finished the year in as strong a position

as it could given current circumstances,

although material uncertainty remains

with regards to the Group’s ability to

continue as a going concern (as

disclosed in Note 1 to the

Financial Statements).

Our people and culture

It has been another challenging year

forour colleagues across the Group and

I am sincerely grateful for their ongoing

contribution. We have a very strong

team at Cineworld and this year has

proven that despite the many challenges

we have faced, we have outstanding

talent to lead our business. I would like

to thank all Cineworld’s employees

andmanagement for their loyalty and

support during the closure periods

andtheir determination and efforts

toreopen our cinemas starting

from April.

Our people are our greatest asset, and

this has never been more evident than

during the period of the pandemic.

The positivity, resilience, flexibility and

care shown by our staff have set new

standards, demonstrating the team

culture which exists within the

organisation. We support them with a

strong values-based culture, ongoing

training and development, and a solid

foundation of responsible business

governance, policies and programmes.

The Board and the Executive team,

wholead the organisation, have also

responded magnificently, dealing with

the complex operational and financial

challenges caused by the pandemic

calmly and efficiently. Although the

environment remains uncertain, we will

continue to endeavour to support our

people, with health, wellbeing and

financial security being the most

important aspects of that support.

Financial results

Our financial performance has been

impacted by closure of cinemas from

January to April/June. Since reopening,

our performance has continued to

improve and had a positive impact on

the Group’s performance in the second

half of the financial year.

As a result, our revenue for the year

increased by 111.8% to $1,804.9m

andadjusted EBITDA was $454.9m.

In addition, we continued our efforts

tominimise cash burn during cinema

closures and to protect our liquidity

with$424.9m raised through new debt,

a$203m US CARES Act tax refund

received in May 2021 and our agreement

with the Regal dissenting shareholders

signed in September to partially

postpone our $262m payment.

Whilst uncertainty and challenges still

remain, we are encouraged by the

demand that we have seen since

reopening, supporting a return to

profitability and cash generation in

Q4 2021.

Details of our financial performance

canbe found on pages 30 to 35.

CHAIR’S LETTER

Strong foundations

forthe future

“ I would like to thank our people for

theirloyalty and support during the

closureperiods and their determination

andefforts to reopen our cinemas starting

from April.”

Alicja Kornasiewicz

Chair

Cineworld Group plc

Annual Report and Accounts 2021

Section 172(1) statement

The Board actively considers the interests of the Group’s employees and

otherstakeholders, including the impact of its activities on the community,

environment, and the Group’s reputation, when making decisions. In addition,

while acting fairly between members and in good faith, the Board closely

takes into account what is most likely to promote the success of the Group

forits shareholders in the long term.

Read more about:

− how the views and interests of all our stakeholders were represented in the

Boardroom, together with how we responded, on pages 46 to 49;

− the Group’s strategy and business model on pages 8 to 13;

− how we manage risk on pages 14 to 24; and

− our approach to Corporate Governance on pages 36 to 52.

Corporate responsibility

andsustainability

Despite these challenging times,

managing our business in a sustainable

manner remains a key element of our

culture and strategy. Our customers

benefit from our affordable, safe, out

ofhome entertainment which allows

access to a high quality, diverse and

cultural offering that is essential to

our communities.

Our ongoing engagement with

employees has been vital during periods

of closure and we have maintained a

strong focus on our people’s wellbeing.

Through our open and inclusive culture,

we aim to create an environment which

allows our people to develop and thrive.

We are proud of the training and

development opportunities we offer

andstrive to provide progression

opportunities to all of our people.

Separately, we are always looking

forways to minimise the impact of

ouroperations on the environment,

exercising tight control on energy and

food waste, limiting the use of single-

use plastic, and through refurbishments

and installation of new energy initiatives.

We recognise that our people are critical

to our ability to achieve our goals in a

responsible and sustainable manner.

We also have exceptional leaders and

are proud of what we have achieved to

date in gender diversity. Although there

is more to do, as of year end we had

36.4% female representation on the

Cineworld Group Board and 43.8% on

the Senior Executive Team.

Cineplex

On 6 July 2020 the Group confirmed

that Cineplex had initiated proceedings

against it in relation to its termination

on12 June 2020 of the Arrangement

Agreement relating to its proposed

acquisition of Cineplex (the “Acquisition”).

The proceedings alleged that the

Groupbreached its obligations under

the Arrangement Agreement and/or

duty ofgood faith and claimed

damagesof up to C$2.18 billion less

thevalue of Cineplex shares retained

byCineplex shareholders.

The Group defended these proceedings

on the basis that it had terminated the

Arrangement Agreement because

Cineplex breached a number of its

covenants and counter-claimed against

Cineplex for damages and losses

suffered as a result of these breaches

and the acquisition not proceeding,

including the Group’s financing costs,

advisory fees and other costs.

The Ontario Superior Court of Justice

has now handed down its judgment.

It granted Cineplex’s claim, dismissed

the Group’s counter-claim and awarded

Cineplex damages of C$1.23 billion

forlost synergies to Cineplex and

C$5.5 million for lost transaction costs.

The Group strongly disagrees with this

judgment and has appealed the

decision. Cineplex has submitted a

cross-appeal to Cineworld’s own appeal.

The Group does not expect damages to

be payable whilst any appeal is ongoing.

No liability has been recognised in

respect of the judgement.

Outlook

We were so pleased to see the increase

inattendance in the second half of the

year as a reflection of both pent-up

demand, and also as a direct result

ofthe time and investment which

management has given to driving our

customer offering and ensuring we

offera safe and fun environment where

guests can enjoy amazing experiences.

We continue to operate cautiously,

aware that the risk of COVID-19 has

notyet vanished, but continue to be

pleasantly satisfied with the return to

normal trading.

Alicja Kornasiewicz

Chair

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Our strategy is to:

Provide the best

cinema experience

Be technological

leaders in theindustry

Expand and enhance

ourestate

Drive value for

shareholders

Read more page 10

Whilst our cinemas were partially closed

during the period under review, we were

very excited to start reopening from 2nd

April 2021 and finished opening across

our territories by June. Looking at our

performance since early June, it is clear

that our customers have missed the big

screen experience as well as the social

event of watching a movie with others.

In addition, our latest refurbishments

and new cinemas are being embraced

with great enthusiasm.

Our results still carry the effect

ofCOVID-19 and related lack of

productbut we are encouraged by

theupcoming line-up of big releases in

2022. This will include Avatar, Top Gun

Maverick, Jurassic World: Dominion,

Minions: The Rise of Gru, Doctor Strange

in the Multiverse of Madness, Thor: Love

and Thunder, Black Panther: Wakanda

Forever, Bullet Train, Spider-Man: Across

the Spider-Verse, Pixar’s Lightyear,

Fantastic Beast, Elvis and many more.

Nonetheless, we will need to remain

alert to any new COVID-related

developments – currently, itappears

that cases are slowly decreasing in our

territories and we may be entering

theendemic phase of this pandemic.

2021 performance

Our 2021 results reflect the recovery

from the pandemic’s impact on our

business. Our revenue in 2021 increased

by 111.8% to $1,804.9m as the pandemic

continued to impact our revenues and,

throughout the year, lockdowns and

restrictions were imposed and relaxed

across our markets.

Throughout 2021, we continued to

minimise and control our expenses,

including resizing the cost base and

increasing levels of labour flexibility.

These actions, along with continued

contract renegotiations, focus on

procurement, as well as general cost

control, minimised our cash burn during

the cinema closures and increased our

margins in H2 2021. Adjusted EBITDA

increased by 495.2% to $454.9m and

margin was 25.2%.

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, described in more detail on

pages10 to 13.

“ We were delighted to reopen our cinemas starting

fromApril and despite the challenges of COVID-19, the

business has made good progress as we continue to see

recovery across our business. I am immensely proud and

inspired by the response of our people over the past

year.We have worked hard to strengthen the long-term

prospects of the business and, looking forward,

Cineworldenters 2022 confident about the next

chapterin our development”

Moshe (Mooky) Greidinger

Chief Executive Officer

CHIEF EXECUTIVE OFFICER’S REVIEW

The Best Place to

Watch a Movie

Cineworld Group plc

Annual Report and Accounts 2021

As the most affordable out-of-home

entertainment option, we believe that

cinemas will continue to be the main

driver of the industry, as they have been

for so many decades despite the arrivals

of new technologies, such as TV, Video,

DVD and others.

Cineplex

On 6 July 2020 the Group confirmed

that Cineplex had initiated proceedings

against it in relation to its termination

on12 June 2020 of the Arrangement

Agreement relating to its proposed

acquisition of Cineplex (the “Acquisition”).

The proceedings alleged that the Group

breached its obligations under the

Arrangement Agreement and/or duty

ofgood faith and claimed damages

ofup to C$2.18 billion less the value

ofCineplex shares retained by

Cineplex shareholders.

The Group defended these proceedings

on the basis that it had terminated the

Arrangement Agreement because

Cineplex breached a number of its

covenants and counter-claimed against

Cineplex for damages and losses

suffered as a result of these breaches

and the Acquisition not proceeding,

including the Group’s financing costs,

advisory fees and other costs.

The Ontario Superior Court of Justice

has now handed down its judgment.

It granted Cineplex’s claim, dismissed

the Group’s counter-claim and awarded

Cineplex damages of C$1.23 billion

forlost synergies to Cineplex and

C$5.5 million for lost transaction costs.

The Group strongly disagrees with

thisjudgment and has appealed the

decision. Cineplex has submitted a

cross-appeal to Cineworld’s own appeal.

The Group does not expect damages to

be payable whilst any appeal is ongoing.

No liability has been recognised in

respect of the judgement.

Outlook

Trading since our cinemas reopened

hasbeen encouraging and increasingly

improving, and our customers have

been expressing their appreciation for

our high quality offering and team.

We expect this progress to continue

asCOVID-19 reduces in significance.

The strong film slate gives us great

confidence in our ability to continue

torebound strongly, with a clear focus

on driving growth which will be

underpinned by our team of

great people.

Although the COVID-19 pandemic

continues to impact our global

operations, we are encouraged by

ourreturn to trading, the continued

recovery seen across our industry and

the return to profitability and cash flow

generation in Q4 2021. The success of

Spiderman – No Way Home which is

now the 6th biggest movie of all time

globally and 3rd biggest movie in the US

while Omicron was emerging across the

globe demonstrates the love and loyalty

to the big screen. Having said that, we

acknowledge the uncertainty and have

highlighted certain matters with regard

to them within our going concern

statement in this document.

I would like to conclude by expressing

my deep appreciation and gratitude to

all the members of the Cineworld team

as we continue our commitment to be

THE BEST PLACE TO WATCH A MOVIE.

Moshe (Mooky) Greidinger

Chief Executive Officer

17 March 2022

Our financial strategy continues to be

focused on cash flow generation and

ensuring the business has sufficient

liquidity. However, we also remain

focused on our long-term objective

ofdebt reduction through cash flow

generation and cost optimisation.

In 2021, we raised over $424.9m of

liquidity and received $203m under

theUnited States CARES Act tax refund.

Our net debt (ex. lease liabilities)

increased by $492.7m from $4,344.5m

to$4,837.2m. Further details of our

underlying and statutory earnings for

the period are set out in the Financial

Review on pages 30 to 35.

Strategy

Our strategy has always been focused

on our customers, and we remain

committed to giving them the best

experience combined with the most

COVID-safe environment. As for the

cinematic experience itself, we continue

to offer our customers big screens,

stadium seating accompanied by the

great technology of our special formats,

IMAX, 4DX, Screen-X, SuperScreen, RPX

and more, as well as upgrading to the

use of laser projectors. These special

formats provides our customer with

anenhanced experience, incremental

revenues for the group and are the first

viewing to sell-out

Across the business we closed 25

underperforming sites in the period,

refurbished 7 cinemas and opened 10

new sites, which have been welcomed

by our customers with great enthusiasm.

Most of these projects were under

construction prior to the onset of

COVID-19, and the decision to continue

with these projects during COVID-19

paid off. While our development plans

slowed somewhat, we believe that we

will be able to progress again soon and

when appropriate to do so.

Industry fundamentals

and respect for the

theatrical window

The main topic in focus throughout

thepandemic was the length of the

theatrical window. In light of COVID-19,

the studios tried various experiments

which led to a shortening of the

theatrical window and is dependent on

the theatrical revenue potential of each

movie. In 2022, we anticipate movies

willbe released with windows that are

anywhere between 20 to 60 days

andsubject to each movie’s potential.

The influence of high-quality pirated

copies of movies from PVOD day and

date releases can also significantly

affect a movie’s total revenue not only

incinemas but also in ancillary markets.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Market driver

TECHNOLOGY AND

INNOVATION

PROPERTY MARKET

ANDDEVELOPMENT

GDP AND THE

ECONOMIC

ENVIRONMENT

MARKET

MATURIT Y

COMPETING MEDIA

AND LEISURE

ACTIVITIES

CONSOLIDATION

OFTHEINDUSTRY

CINE MATIC

WINDOW

Developments in technology

have brought new innovative

audio and visual experiences

tothe cinema industry.

The rate of new cinema openings

is often dependent onlocal

market conditions. Planning

laws, the economic environment

and the ability of developers to

finance their projects are factors

which impact cinema location.

The cinema industry is dependent

on the customer choosing to

spend disposable income on

watching a movie.

Where a market is in

thematurity phase

thisimpacts the level

andtrend of cinema

admissions per capita.

Throughout the decades the

cinema industry has always

faced competition from

other forms of media

delivering content, for

example streaming, premium

video ondemand (“PVOD”),

DVD and Blu-ray.

The cinema industry

globallyhas recently seen

anincrease in acquisition

activity and consolidation

within the market.

Ongoing changes in the

cinematic window, the

period between the release

of a film in acinema and on

any otherplatform.

The impact

Technology impacts the

whole customer journey from

booking tickets to purchasing

concessions, as well as the

audioand visual experience.

The digitalisation of cinemas

has resulted in both a greater

range of films being offered

and the showing of alternative

content such as opera, live

events, theatre and ballet.

Local market conditions and

planning laws impact the rate and

feasibility of new openings as well

as which sites can be refurbished.

Value for money remains an

important factor and cinema

hastended to be one of the most

affordable forms of entertainment

in the wider leisure market in which

the cinema industry competes.

Historical trends and patterns

show that cinema attendance is

most closely related to the quality

of the movies rather than the gross

domestic product (“GDP”) of

a territory.

The more mature

markets such as the

US, UK and Israel tend

to be characterised by

higher admissions per

capita, higher average

ticket prices and a lower

population per screen ratio.

Growth markets have the

opposite characteristics and

provide great expansion

potential for the Group.

Although online streaming

and PVOD at home are

increasingly popular, in

particular during 2020 and

2021 due to COVID-19 and

cinema closures, an outing to

the cinema provides a unique

experience which cannot be

replicated at home, especially

with superior experiences

offered by technologies such

as IMAX, 4DX and ScreenX.

A trip to the cinema is a social

occasion and watching a

movie on a large state-of-the-

art screen with superb sound

is attractive to all age groups.

Visiting the cinema remains a

convenient, affordable out-of-

home activity, especially when

compared with other leisure

activities such as concerts and

sporting events.

We continued to see M&A

activity within the industry.

In 2021 AMC acquired four

former Pacific & Arclight

locations, following the

bankruptcy ofPacific cinema.

In the United States, outside of

the top three chains, the rest

of the market is represented

by smaller, independent

cinema chains.

There are currently ongoing

changes in the cinematic

window. In view of the

situation related to COVID-19,

the studios entered into

various experiments over

thepast two years.

Cineworld has shown in

our theatres releases with a

window ranging for 0 days to

75+ days depending on the

movie and studios.

A material reduction in the

cinematic window could

potentially reduce cinema

admissions but may provide

the opportunity for more

content to be shown in

cinemas and fee structure

tobe amended.

How our

strategy is

optimised

torespond

Investment in technology is a

key pillar of the Group’s strategy

– we want to be leaders in this

field. The Group continues

to invest in premium formats

globally such as 4DX, ScreenX,

IMAX and Premium Large

Formats every year. We are also

investing in next-generation

laser projectors.

The Group is also evolving its IT

systems to provide customers

with the ability to book tickets

and pre-order concessions

online more easily and through

mobile applications. The Group

is continually reviewing and

analysing the latest technology

available to ensure the right and

safest technology is selected.

The Group has been successful

managing our estate portfolio by

closing 25 sites, in particular in the

United States, and opening 10 new

sites over the past year.

The Group operates a

predominantly leasehold estate.

As the estate is generally older in

the mature markets, refurbishment

of the existing estate, in particular

in the US and the UK, is a key

focus for the Group.

The Group monitors local and

national markets to ensure ticket

and concession prices remain

a competitively priced form of

entertainment. The Group invests

in both the estate and technology

to ensure customers receive a

premium experience during every

visit while getting value for money.

The geographic spread

of the Group provides

diversification benefits

and opportunities across

both the more mature

and growth markets.

This includes the

opportunity to open new

sites as well as refurbish

older sites, particularly in

the more mature markets

where the estate is

generally older. We have

started our extensive

refurbishment programme

in the United States with 14

sites already refurbished

and more to be refurbished

in the future.

Due to COVID-19, our

capex programme has

been reduced until trading

returns tonormalised levels.

The Group understands the

shift during 2020 and 2021

of certain movie releases

from theatrical to PVOD

is temporary and due to

the cinema closures and

COVID-19 situation in major

markets such as the United

States. In addition, the Group

continues to invest in new

technology to ensure a

premium and differentiated

experience while remaining

an affordable activity for the

whole family. We also offer a

subscription programme in

three of our territories which is

a great value option for movie

enthusiasts. Going to the

cinema has also become more

than just watching a movie,

and that is why the Group has

invested in its retail offerings

across our estate such as

Starbucks, Lavazza, alcohol

bars, premium food and our

VIP offering.

The Group’s strategy includes

identifying potential profitable

opportunities to grow and

expand the business.

In 2021, the company

acquired one theatre:

ArclightSherman Oaks.

In 2020 the proposed

acquisition of Cineplex

was terminated.

Most of the major studios are

committed to the cinematic

window as it benefits both

the film studios and the

movie theatres financially.

We expect in 2022, the

window will stabilise to

somewhere between 20 and

60 days, but subject to each

movie’s potential.

PVOD day and date releases

(the release of a film on

multiple platforms at the same

time) have been affected by

high-quality pirated copies of

movies which has affected a

movie’s total revenue.

The Group continually

monitors the status of this and

engages with the distributors

and studios to discuss

the subject and preserve

the theatrical experience,

while adapting to changing

consumer behaviour.

Addressing our biggest opportunities and challenges

MARKET DRIVERS

Cineworld Group plc

Annual Report and Accounts 2021

Market driver

TECHNOLOGY AND

INNOVATION

PROPERTY MARKET

ANDDEVELOPMENT

GDP AND THE

ECONOMIC

ENVIRONMENT

MARKET

MATURIT Y

COMPETING MEDIA

AND LEISURE

ACTIVITIES

CONSOLIDATION

OFTHEINDUSTRY

CINE MATIC

WINDOW

Developments in technology

have brought new innovative

audio and visual experiences

tothe cinema industry.

The rate of new cinema openings

is often dependent onlocal

market conditions. Planning

laws, the economic environment

and the ability of developers to

finance their projects are factors

which impact cinema location.

The cinema industry is dependent

on the customer choosing to

spend disposable income on

watching a movie.

Where a market is in

thematurity phase

thisimpacts the level

andtrend of cinema

admissions per capita.

Throughout the decades the

cinema industry has always

faced competition from

other forms of media

delivering content, for

example streaming, premium

video ondemand (“PVOD”),

DVD and Blu-ray.

The cinema industry

globallyhas recently seen

anincrease in acquisition

activity and consolidation

within the market.

Ongoing changes in the

cinematic window, the

period between the release

of a film in acinema and on

any otherplatform.

The impact

Technology impacts the

whole customer journey from

booking tickets to purchasing

concessions, as well as the

audioand visual experience.

The digitalisation of cinemas

has resulted in both a greater

range of films being offered

and the showing of alternative

content such as opera, live

events, theatre and ballet.

Local market conditions and

planning laws impact the rate and

feasibility of new openings as well

as which sites can be refurbished.

Value for money remains an

important factor and cinema

hastended to be one of the most

affordable forms of entertainment

in the wider leisure market in which

the cinema industry competes.

Historical trends and patterns

show that cinema attendance is

most closely related to the quality

of the movies rather than the gross

domestic product (“GDP”) of

a territory.

The more mature

markets such as the

US, UK and Israel tend

to be characterised by

higher admissions per

capita, higher average

ticket prices and a lower

population per screen ratio.

Growth markets have the

opposite characteristics and

provide great expansion

potential for the Group.

Although online streaming

and PVOD at home are

increasingly popular, in

particular during 2020 and

2021 due to COVID-19 and

cinema closures, an outing to

the cinema provides a unique

experience which cannot be

replicated at home, especially

with superior experiences

offered by technologies such

as IMAX, 4DX and ScreenX.

A trip to the cinema is a social

occasion and watching a

movie on a large state-of-the-

art screen with superb sound

is attractive to all age groups.

Visiting the cinema remains a

convenient, affordable out-of-

home activity, especially when

compared with other leisure

activities such as concerts and

sporting events.

We continued to see M&A

activity within the industry.

In 2021 AMC acquired four

former Pacific & Arclight

locations, following the

bankruptcy ofPacific cinema.

In the United States, outside of

the top three chains, the rest

of the market is represented

by smaller, independent

cinema chains.

There are currently ongoing

changes in the cinematic

window. In view of the

situation related to COVID-19,

the studios entered into

various experiments over

thepast two years.

Cineworld has shown in

our theatres releases with a

window ranging for 0 days to

75+ days depending on the

movie and studios.

A material reduction in the

cinematic window could

potentially reduce cinema

admissions but may provide

the opportunity for more

content to be shown in

cinemas and fee structure

tobe amended.

How our

strategy is

optimised

torespond

Investment in technology is a

key pillar of the Group’s strategy

– we want to be leaders in this

field. The Group continues

to invest in premium formats

globally such as 4DX, ScreenX,

IMAX and Premium Large

Formats every year. We are also

investing in next-generation

laser projectors.

The Group is also evolving its IT

systems to provide customers

with the ability to book tickets

and pre-order concessions

online more easily and through

mobile applications. The Group

is continually reviewing and

analysing the latest technology

available to ensure the right and

safest technology is selected.

The Group has been successful

managing our estate portfolio by

closing 25 sites, in particular in the

United States, and opening 10 new

sites over the past year.

The Group operates a

predominantly leasehold estate.

As the estate is generally older in

the mature markets, refurbishment

of the existing estate, in particular

in the US and the UK, is a key

focus for the Group.

The Group monitors local and

national markets to ensure ticket

and concession prices remain

a competitively priced form of

entertainment. The Group invests

in both the estate and technology

to ensure customers receive a

premium experience during every

visit while getting value for money.

The geographic spread

of the Group provides

diversification benefits

and opportunities across

both the more mature

and growth markets.

This includes the

opportunity to open new

sites as well as refurbish

older sites, particularly in

the more mature markets

where the estate is

generally older. We have

started our extensive

refurbishment programme

in the United States with 14

sites already refurbished

and more to be refurbished

in the future.

Due to COVID-19, our

capex programme has

been reduced until trading

returns tonormalised levels.

The Group understands the

shift during 2020 and 2021

of certain movie releases

from theatrical to PVOD

is temporary and due to

the cinema closures and

COVID-19 situation in major

markets such as the United

States. In addition, the Group

continues to invest in new

technology to ensure a

premium and differentiated

experience while remaining

an affordable activity for the

whole family. We also offer a

subscription programme in

three of our territories which is

a great value option for movie

enthusiasts. Going to the

cinema has also become more

than just watching a movie,

and that is why the Group has

invested in its retail offerings

across our estate such as

Starbucks, Lavazza, alcohol

bars, premium food and our

VIP offering.

The Group’s strategy includes

identifying potential profitable

opportunities to grow and

expand the business.

In 2021, the company

acquired one theatre:

ArclightSherman Oaks.

In 2020 the proposed

acquisition of Cineplex

was terminated.

Most of the major studios are

committed to the cinematic

window as it benefits both

the film studios and the

movie theatres financially.

We expect in 2022, the

window will stabilise to

somewhere between 20 and

60 days, but subject to each

movie’s potential.

PVOD day and date releases

(the release of a film on

multiple platforms at the same

time) have been affected by

high-quality pirated copies of

movies which has affected a

movie’s total revenue.

The Group continually

monitors the status of this and

engages with the distributors

and studios to discuss

the subject and preserve

the theatrical experience,

while adapting to changing

consumer behaviour.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

OUR BUSINESS IS UNDERPINNED BY:

WHAT WE DELIVER

Everything that we do is to

deliver onourvision... to be

“The Best Place toWatch

a Movie”

OUR ASSETS

Our financial strength

We have taken steps to reinforce our financial position by adding

significant liquidity during the year. Focus on cost and revenue

initiatives enables us to minimise cash burn during cinema closure

andgenerate healthy margins when operating while continuing to

invest in our estate. This continued investment ensures that we are

able to reach as many customers as possible with the high quality

experience we believe in. We manage investment in ourestate in

conjunction with the maintenance of a financially secure business.

Our knowledge and know-how

The wealth of knowledge and know-how which has been built up

across the Group over the past nine decades has enabled us to

designand build the latest state-of-the art cinemas and operate

themefficiently through optimal management structures.

Investing inour people to ensure that we drive performance,

innovation from agrowing talent base. While we do not have control

over the content, our close and long-standing relationships with the

film distributors are fundamental to providing the best and most

varied selection of moviesfor our customers at the right time.

Our estate and brands

The geographic spread of our business reduces exposure

tovolatility inindividual markets. It also provides opportunities

across both mature and growth markets. We have established

brands in each of the territories in which we operate. We have

focused on developing and optimising the estate through our

refurbishment and construction programme which is at the heart

ofour strategy.

Our technology

We are technological leaders in the industry, offering our customers

the latest audio and visual technology. We have seven different

formats in which our customers can watch a movie: regular screens,

3D, 4DX, IMAX, ScreenX, Premium Large Format(Superscreen and

RPX) and VIP auditoriums. We set our prices according to the

format the customer chooses andtype of movie.

Regulation and responsible business

We are committed to ensuring that all of our teams comply

with local and national industry laws and business regulations

andstrive to attain the highest levels of health and safety

standards across the Group.

Following the FRC Climate Thematic Review 2020, the Group

has considered the impact of climate change on its business

model. During 2021 the impact of climate change is still

considered an emerging risk for ongoing review by

management and is also considered to represent a principle

risk to the Group’s operations and success, full details are set

out on page 21.

HOW WE CREATE VALUE

Customers

Customer experience

Operational excellence

Our offering

We create value through providing our

customers with achoice of where and how to

watch a movie along with a variety of concession

products. The Group’s knowledge andknow-how

ensures we achieve operational excellence across

the estate while providing our customers with a

superior experience every time they visit one of

our cinemas.

OUR BUSINESS MODEL

Delivering on our vision

Cineworld Group plc

Annual Report and Accounts 2021

THE VALUE WE CREATE

Customers

By delivering our vision to be “The Best Place to Watch

aMovie”, we are ensuring that our customers enjoy the

experience, and will want to return to our cinemas again

and again. As well as our estate and product offerings we

believe that it is the “Tiny Noticeable Things” our people

do and our customer-centred culture which make

the difference.

Employment

Operating in ten countries, we create direct jobs

andcareer opportunities for over 28,000 people.

Through our open and inclusive culture, we aim to create

an environment which allows our people to develop and

thrive. The investment we make in our people, particularly

through learning and development, and the way we

operate is key to maintaining our happy and motivated

workforce. We also create a number of indirect jobs – for

example, through our construction and refurbishment

programmes as well as security and cleaning.

Shareholders

We aim to deliver returns, long-term value and dividend

growth to our shareholders. When cinemas are operating,

this is achieved through driving revenues, increasing

earnings, and re-investing in the business. When cinemas

were closed, this was achieved by prudently managing

our cash position and minimising costs.

Wider stakeholders

We give back to our communities through a range of

activities and initiatives. This includes events run both at

anational level and in our local communities. We partner

with distributors to provide charity screenings, and

arrange events for local schools and organisations.

Governance

Our experienced and diverse Board and Committees

provide effective governance and oversight to the

whole Group.

Read more about our approach to Corporate Governance

on pages 36 to 52

Risk management

Maintaining and monitoring an effective system of risk

management and internal control ensures that our business,

people and assets are safeguarded and that material financial

errors and irregularities are prevented or detected. The Group

uses its KPIs to continually monitor its risk management

effectiveness although no formal targets are set, they are

reviewed by the board a regular basis.

Read more about on how we manage risk on pages 14 to 24

Customer

experience

Our

offering

Operational

excellence

Customers

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Provide the best cinema

experience…

…to give our customers a choice of how to

watcha movie, with a variety of retail offerings,

allunderpinned by the best customer service

Our people continue to be pivotal in delivering our vision to

be“The Best Place to Watch a Movie”. It’s the “Tiny Noticeable

Things” our people do which differentiate our customers’

experience. Therefore, recruiting high quality employees

andinvesting in their training is at the heart of our strategy.

Providing our customers with choice is key – this includes

themovies they can watch, how they watch them, the type

ofvenue they watch them in and a variety of retail offerings

provided to cater for all demographics.

What we achieved

− Reopened our estate starting from April 2021

− Raised over $424.9m of liquidity to support the

business during closure and re-opening

− 54% online booking penetration in the United States

from 40% in 2019

− Continued enhancement of our online offering and app

Priorities for 2022

− Health and safety of employees and customers

− Sustain concession spending level and selected ticket

price increase

− Continue to enhance online offering and number of

tickets sold through our website and app

Measuring our progress

Admissions Average ticket price $ Retail spend per person $

95.3m

2020: 54.4m

$10.03

2020: $8.25

$5.80

2020: $4.27

Risks

− COVID-19government restrictions and limitation

on operations

− Quality and availability of films and PVOD releases

− People planning and development

− Business continuity and crisis management

− Changes in customer preferences

− IT and website disruption

Sustainability drivers

− Employee wellbeing and health and safety

− Customer satisfaction and brand loyalty

− Enhance tailored content depending on

local demographic

− Promote and distribute smaller and locally

produced movies

− Offer healthier retail and concession alternatives

− Energy efficient business processes and behaviours

Read more page 14 Read more page 25

STRATEGIC PRIORITIES AND KPIs

Cineworld Group plc

Annual Report and Accounts 2021

Be technological leaders...

…in the industry to offer the latest audio

andvisual technology

We want to be at the forefront of providing the latest

technology to our customers. We continue to strengthen

anddeepen our partnerships and relationships with our

technology partners.

What we achieved

− We are one of the largest operators of IMAX screens

inthe United States and across Europe

− The Group is the only provider of 4DX in the UK

andanextensive provider in the United States

and Europe

− By the year end we had installed a total of 2,039 laser

projectors across the estate and they are nearly four

times more energy efficient than older projectors

Priorities for 2022

− Continue our investment in providing a range

ofpremium formats

− Rollout of laser projectors across the estate

Measuring our progress

Number of premium formats

132

IMAX screens

(2020: 134)

4DX screens

(2020: 88)

ScreenX

(2020: 57)

120

PLF

(2020: 125)

Risks

− Availability of content tailored for specific technology

− Change in technology

− Strength of relationship with technology partners

− Environment and sustainability

Sustainability drivers

− Energy saving through rollout of laser projectors

− Ensure safety requirement of stakeholders

− Maintain long-term relationship with our

technology partners

Read more page 14 Read more page 25

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Expand, enhance and

optimise our estate…

…to provide consistent, sustainable, high quality,

modern cinemas

When selecting new sites for development or sites for

refurbishment, we consider the location, accessibility,

competition, and other local economic factors. We also have

aselective site closure programme when the lease terms

haveexpired and it is not commercially beneficial or feasible

to renew these leases.

What we achieved

− Opening of 10 new sites: seven in the United States,

twoin the UK and one in Romania

− Completed seven refurbishments; six in the United

States; one in the UK

− Closure of 23 underperforming sites in the United

States, onesite in the UK and one site in Poland

− Emissions intensity ratio impacted by low revenue

Priorities for 2022

− Further optimise our estate through closure of

lossmaking sites and selective site opening

− Reduce our environmental impact through

refurbishments including installation of new

energy initiatives

Measuring our progress

Number of new sites Number of major refurbishments

completed

Emissions intensity tonnes CO

per $1m revenue

2020: 2

2020: 9

102.1

2020: 302.4

Risks

− Quality of the cinemas

− State and maintenance of the theatres

− Opening and refurbishment dependent on

planninglaws and building permits

Sustainability drivers

− Durability of refurbishment

− Collaboration with local authorities

− Energy efficient new builds

Read more page 14 Read more page 25

Cineworld Group plc

Annual Report and Accounts 2021

STRATEGIC PRIORITIES AND KPIs CONTINUED

Drive value for shareholders...

…by delivering our growth plans in an efficient,

sustainable and effective way

To be able to reward our shareholders we remain focused on

driving revenues, increasing earnings and prudently managing

our cash position.

What we achieved

− Minimised cash burn during cinema closures and cash

flow generation in Q4 2021

− Raised $424.9m during the year to support the

business through the pandemic

− Deferred $92m to H1 2022 out of the $262m dissenting

shareholder payment

− Continued focus on driving efficiencies across

the Group

− Group financial covenant waiver through June 2022

and we are currently operating under a $100m

minimum liquidity covenant

Priorities for 2022

− Cash flow generation from operations

− Commitment to reduce debt

− Employee engagement

Measuring our progress

Revenue

Adjusted EBITDA

Adjusted diluted EPS

Net Debt (ex. lease liabilities)

$1,804.9m

2020: $852.3m

$454.9m

2020: ($115.1m)

(47. 8¢)

2020: (66.5¢)

$4,837. 2m

2020: $4,344.5m

Risks

− Retain strategic employees

− Deliver on strategic initiatives and performance

− Availability of film content in theatres

− Financial covenants

Sustainability drivers

− Effective and proactive estate management

− Engagement with local communities and charities

− Employee support

− Reduction of food waste and single-use plastics

Read more page 14 Read more page 25

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

PRINCIPAL RISKS

Risk Strategic relevance Trend Owner

1. Technology and Data Control



Deputy CEO

2. Availability and Performance of Film Content



CCO

3. Provision of Next-Generation Cinemas



CEO

4. Viewer Experience andCompetition



CCO

5. Revenue from Retail/Concession Offerings



CCO

6. Cinema Operations



CEO

7. Regulatory Breach



CFO

8. Strategy and Performance



Deputy CEO

9. Retention and Attraction



Deputy CEO

10. Governance and InternalControl



CFO

11. Major Incident



CEO

12. Treasury Management



CFO

13. Climate Change (TCFD)



CCO

Provide the best

cinemaexperience

Be technological

leaders in the industry

Expand and

enhance our estate

Drive value for

shareholders

Supporting growth through effective risk management

RISK MANAGEMENT

Principal risks and uncertainties

Operating as a cinema chain in ten

different countries presents a number

ofrisks and uncertainties that continue

tobethe focus of the Board’s

ongoingattention.

Risk management approach

The Group’s approach to risk

management and internal control is

designed to manage risk at all levels.

Where possible, the Group has

implemented appropriate mitigation

strategies to reduce the overall risk

exposure in line with the Board’s risk

appetite, including the introduction of a

new Environment Committee as set out

in more details on page 44. For further

details please seethe Group approach

to risk management set out on pages 50

to 52.

Principal risk assessment

The Board has undertaken a robust

assessment of the principal risks facing

the Group during the year, including

those that would threaten its business

model, future performance, solvency

and liquidity. Emerging risks, including

those related to climate change, are

identified through the boards liaison

with its Risk Committee as well as the

Group’s risk and assurance teams.

The Board also leverages external

thinking and research as considered

necessary where specific risks are

identified. Their potential impacts are

presented to and monitored by

the Board.

The time-frame horizon for

consideration of the principal risks is

aligned to the three-year period used

when considering the future viability of

the Group. For further details, please

see the Group’s Viability Statement on

pages 23 and 24.

After the Board’s review of existing risk,

the Board believes the existing principal

risks continue to reflect the Group’s risk

profile. The Board’s review of emerging

risks resulted in an additional risk being

added to the principal risks list related

to the effects and future impact of

climate change to the Company.

The Board has evaluated the current

and future impact of COVID-19 and we

are taking measures to ensure we are

prepared for all eventualities. We expect

conditions to improve; however, if

conditions do not improve, we have

measures available to reduce the impact

on our business including capital

expenditured delay and further

cost reduction.

Appetite

The Board undertook a formal review of

risk appetite to ensure that the view it

has established for each of the principal

risks reflects its current perspective and

willingness to accept risk in pursuit of

the strategic objectives of the Group.

For further details please see the Group

approach to risk management set out

on pages 50 to 52.

Viability

In addition, the Directors’ viability

assessment has taken into consideration

the potential impact of the principal

risks in the business model, future

performance, solvency and liquidity

over the period, including principal

mitigating actions such as reducing

capital expenditure. More details about

the viability assessment may be found

on pages 23 and 24.

Cineworld Group plc

Annual Report and Accounts 2021

Key

1 2 3

TECHNOLOGY

AND DATA CONTROL

AVAILABILITY AND

PERFORMANCE OF

FILMCONTENT

PROVISION OF NEXT-

GENERATION CINEMAS

A critical system interruption

ormajor IT security breach

encountered.

Lack of access to high quality,

diverse and well publicised

movieproduct.

Maintaining/refurbishing

existing sites and/or

developing new sites fails

to provide a circuit of

next-generation cinemas.

Link to strategy Link to strategy Link to strategy

Risk owner

Deputy CEO

Risk owner

CCO

Risk owner

CEO

Impact

Any critical system interruption for a sustained

period could have a significant impact on

the Group’s performance. In addition, any

breach (cyber or otherwise) of data protection

rules or security measures surrounding

the storage of confidential and proprietary

information (including movie content)

could result in unauthorised access, loss or

disclosure of this information. This could lead

to claims, regulatory penalties, disruption

of operations of the Group and ultimately

reputational damage.

Impact

Underpinning the overall success of the Group

is the quality of the movie slate, the timeliness

of release, the release window and the appeal

of such movies to our customers. Where the

movie studios do not produce sufficiently

attractive movies, or movies underperform,

this has a direct impact on cinema attendance

and, therefore, box office revenue for the

Group may decline.

Impact

Ensuring our cinemas are of state-of-the-

art design and have the latest cutting-edge

cinema experience technology are both key

for our strategy to provide “The Best Place to

Watch a Movie”. A deviation from this could

have a direct impact on admissions and the

financial health of the Group.

Mitigation activity

− The Group IT function monitors, manages

and optimises our systems, including

ensuring their resilience through regular

back-ups and the implementation of

security measures.

− External experts are employed where

necessary to oversee and help manage

major projects involving the upgrading or

replacement of key systems.

− Under the direction of the Group Data

Protection Officer there is a Data Privacy/

Security Committee (supported by

external professional advisers) that drives

the programme of data protection across

the Group.

Mitigation activity

− We work closely with distributors to

acquaint ourselves, as early as possible,

with the upcoming film slate in order to

forecast likely movie performance.

− Although access to the latest movie slate

is reliant on our relationship with the

distributors, the Group’s strategy is to show

a wide range of movies over and above

the traditional Hollywood blockbusters.

This allows us to capitalise on specific

local area demand for type and content of

movies shown.

− While we have no control over the

availability of film content, in order to

reduce this risk, we are remaining active in

industry associations and maintaining our

studio relationships to ensure theatrical

release remains priority for delayed and

future releases.

Mitigation activity

− We perform a site prioritisation analysis for

the selection of refurbishments, new sites

and/or closures.

− Project management expertise that allows

the unique position of renovating without

cinema closures.

− Ensuring access to the latest cutting-edge

technology through our ability to secure

agreements with key suppliers.

− Maintaining long-term working

relationships with key contractors to

ensure continued access to knowledge

and experience.

Changes in the year

− Threat protection tools have been

standardised across the Group.

− During the pandemic, IT environments have

been scaled accordingly with no disruption

to security patch cycles, vulnerability scans

or account audits.

− Remote working capabilities have

been hardened.

− Oversight of Group data initiatives have

continued to ensure we remain compliant.

Changes in the year

− As pandemic related restrictions have

eased (e.g., social distancing requirements)

across the group, there has been a marked

improvement in the availability of high

quality film content as compared with 2020.

− Studios are honouring longer theatrical

windows and are moving away from day

and date releases.

Changes in the year

− There continues to be a very strong

pipeline of Cinema openings and

refurbishments planned in the UK and US.

− 7 new theatres opened in the US in 2021

and more are scheduled for 2022.

− 2 new cinemas opened in the UK in 2021

and more are scheduled for 2022.

− 1 new cinema opened in the ROW in 2021

and more are scheduled for 2022.

− There were also a number of

refurbishments completed in 2021 with

more scheduled for 2022.

For further details see the Chief Executive

Officer’s Review on pages 04 to 05.

Opportunity

− Continuing the programme of investment

in systems and ensuring our processes

are robust will strengthen the day-to-day

operations across the Group.

Opportunity

− Enhance tailored content depending on

local demographic.

− Continue to grow event cinema business

to satisfy customers’ appetite for

alternative content.

− There is a strong film slate for 2022 forward.

Opportunity

− Further optimise our estate through

closure of loss making sites and selective

site opening.

− Continue long-term refurbishment

programme in the US and UK.

  

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

PRINCIPAL RISKS AND UNCERTAINTIES

4 5 6

VIEWER EXPERIENCE

ANDCOMPETITION

REVENUE FROM

RETAIL/CONCESSION

OFFERINGS

CINEMA OPERATIONS

Failure to deal with competition

effectively by not offering quality

products and services that meet the

needs of the customer and deliver an

enhanced viewer experience.

Delivery of a retail/concession

offering that does not meet the

requirements and preferences

ofourcustomers.

Failure to maintain and operate well

run and cost-effective cinemas.

Link to strategy Link to strategy Link to strategy

Risk owner

CCO

Risk owner

CCO

Risk owner

CEO

Impact

Although cinema admissions are

predominantly driven by the quality and

availability of films, ensuring that the Group

continually enhances the viewer experience

is crucial. Any decrease in the quality of the

services we offer, from the ease of booking

and the technology we use to a friendly

farewell on departure, could result in loss

of customers to competitors and/or other

leisure/entertainment attractions.

Impact

Retail/concession sales generally fluctuate

in line with admissions and the genre of film

on show. Therefore, if admissions were to

fall, revenue from retail sales could decrease.

Retail spend may also decrease due to

changes in customer preferences, decreased

disposable income or other economic and

cultural factors. In addition, the cost of items

such as energy and foodstuffs, as well as the

introduction of the Soft Drinks Industry Levy,

has a direct impact on price.

Impact

Operating cinemas well is pivotal to the

overall success of the Group. The key is to

ensure that cinema management understand

the local market (film scheduling, pricing

and retail offerings), effectively manage

employees, maintain service standards

and increased COVID-related health and

safety requirements, and are able to react

to incidents should they occur. A reduction

in performance in any area can directly

affect overall viewer experience, reputation

of cinemas, and ultimately the Group’s

financial performance.

Mitigation activity

− Our strategy is focused on continually

improving the quality of services we offer

to customers and making a visit to our

cinemas a unique experience.

− This includes increasing the efficiency

of online booking, cutting edge cinema

design, removing clutter from the foyers,

investing in technical innovation and

premium offerings (ScreenX, 4DX and other

large screen formats), upgrading seating

options, further rollout of the VIP offering

and improving retail offers.

− We also focus on our approach to customer

interaction with the Group outside of the

cinema environment.

Mitigation activity

− Monitor various metrics, including spend

per person, in order to understand and

react quickly to changing customer needs.

− A key strategy for the Group is to maintain

a strong relationship with the principal

retail suppliers.

− We run targeted promotions and bring

in different ranges of products to meet

changing customer demand.

− We work closely with our drinks partners

to mitigate the potential impact of the Soft

Drinks Industry Levy by broadening our

ranges of diet and sugar free options along

with water and are trialling innovation with

reformulated products while still providing

consumer choice based on preferences.

− Brexit risk identification and mitigation

planning to respond to any impact on our

retail supply chain. We remain focused to

ensure potential operational disruption is

mitigated as effectively as possible.

Mitigation activity

− Cinema management continually

monitor their staffing requirements,

making adjustments to scheduling based

on customer demand, forecasts and

film scheduling.

− On a monthly basis detailed operational and

financial reviews are undertaken by cinema

management to ensure performance

matches expected targets.

− Ongoing evolution and updating of cinema

operational processes and procedures.

− Monitoring health and safety requirements

to ensure we have implemented sufficient

health and safety measures.

Changes in the year

− Due to the global pandemic all cinemas

were closed for a portion of the year.

− We are one of the largest operators of IMAX

in the US and across Europe.

− The Group is the only provider of 4DX in

the UK and an extensive provider in the US

and Europe.

Changes in the year

− Enhanced mobile applications to provide

customers with the ability to book tickets

and pre-order concessions online more

easily and through mobile applications.

− Due to the global pandemic all cinemas

were closed for a portion of the year

resulting in lower revenue from retail

and concession.

For further details see the Chief Executive

Officer’s Review on page 04 and 05 and Chief

Financial Officer’s Review on pages 30 to 35.

Changes in the year

− Due to the global pandemic all cinemas

were closed for a portion of the year.

− Health and safety guidelines were

established to ensure safe operations

during the pandemic.

− Evolved IT systems to provide customers

with the ability to book tickets and pre-

order concessions online more easily and

through mobile applications.

For further details please see Responsible

Business on pages 25 to 29.

Opportunity

− Further expansion of concession offering

in the US.

− Rollout of laser projectors across the estate.

− Continue our investment in providing a

range of premium formats.

Opportunity

− Upon reopening there will be new Lavazza

and B.Fresh locations opening for the

first time.

− Continue to enhance online offerings and

increase tickets and concessions sold

through our mobile platforms.

Opportunity

− New cinemas were ready for business once

reopening occurred.

− Continue to deploy operational best

practices across the Group.

  

Cineworld Group plc

Annual Report and Accounts 2021

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

7 8

REGULATORY BREACH STRATEGY AND

PERFORMANCE

A major statutory, regulatory or

contractual compliance breach.

The approach to setting,

communicating, monitoring and

executing a clear strategy fails to

deliver long-term objectives.

Link to strategy Link to strategy

Risk owner

CFO

Risk owner

Deputy CEO

Impact

The Group’s business and operations are

affected by regulations covering such matters

as planning, the environment, health and

safety (cinemas and construction sites),

licensing, food and drink retailing, data

protection and the minimum wage. Failure to

ensure ongoing compliance with regulation/

legislation could result in fines and/or

suspension of activity.

Impact

Although the overall strategy for the Group

is not a complex one, it is key that this

is executed.

Any diversion from this strategy could result in

loss of market share to competitors, failure to

capitalise on emerging market opportunities,

reduction in potential revenue/profits and

therefore loss in shareholder value.

Mitigation activity

− Management operate an ongoing cinema

compliance programme, supplemented by

independent compliance assurance reviews

by external advisers where appropriate.

− Group support functions use a combination

of ongoing staff development as well as

updates from professional advisers to

ensure management are aware of the latest

regulations in key areas.

− Robust health and safety protocols have

been implemented to ensure compliance

with COVID-19 compliance requirements.

Mitigation activity

− A structure is in place to support

effective strategy development, as well

as ongoing reporting and monitoring

of business performance on a daily,

weekly, monthly, quarterly and annual

basis. Monitoring Senior Management

performance against their agreed personal

objectives is an ongoing exercise.

− There are various communication strategies

(emails, meetings and conferences) used

to ensure the strategic goals of the Group

are clearly understood and executed by

Senior Management.

Changes in the year

− The global pandemic has sparked various

compliance requirements that are fluid and

vary by country, state and municipality.

For further details please see the Risk and

Internal Control section pages 50 to 52.

Changes in the year

− Our performance was significantly

impacted by COVID-19 with the closure of

our cinemas globally during the first half

of the year. During the period of closure,

our focus was on supporting our people,

ensuring that our financial position was

robust and minimising cash burn at a time

of great uncertainty. Once the cinemas

reopened, the focus was to support cinema

management with the resources needed to

ensure Cineworld is the best place to watch

a movie.

Opportunity

− Continue to align the approach to health

and safety audits across the Group.

− Continue data privacy compliance initiatives

across the Group.

− Continue the evolution of our approach to

compliance to ensure it is embedded in our

day-to-day operations.

Opportunity

− The Group’s strategy includes identifying

potential profitable opportunities to grow

and expand the business.

− Continual focus on and review of strategy

ensures the Board is well placed to assess

value adding opportunities as they arise.



Provide the best

cinema experience

Be technological

leaders in the industry

Expand and

enhance our estate

Drive value for

shareholders

Key

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

9 10 11

RETENTION AND

ATTRACTION

GOVERNANCE AND

INTERNAL CONTROL

MAJOR INCIDENT

Failure to attract and retain

SeniorManagement and/or other

keypersonnel.

A critical internal control and/or

governance failing occurs.

Inability to respond to

a major incident.

Link to strategy Link to strategy Link to strategy

Risk owner

Deputy CEO

Risk owner

CFO

Risk owner

CEO

Impact

The Group’s performance and its ability to

mitigate significant risks within its control

depend on its employees and Senior

Management teams. Therefore, reliance

is placed on the Group’s ability to recruit,

develop and retain Senior Management and

other key employees. If the Group loses key

people, this could have an impact on its ability

to deliver business objectives.

Impact

Maintaining Corporate Governance

standards and an effective and efficient risk

management and internal control system,

proportionate to the needs of the Group, is

a key part of short and long-term success.

Any failure and/or weakness in this area

(financial and non-financial) could have

an impact on the efficientand effective

operations of the Group.

Impact

Cinema attendance may be affected by

political events, such as terrorist attacks on,

or wars or threatened wars in territories in

which we operate, health-related epidemics

and random acts of violence, any one of which

could cause people to avoid our cinemas

or other public places where large crowds

are in attendance. In addition, due to our

concentration in certain markets, natural

disasters such as hurricanes, earthquakes

and severe storms in those markets

could adversely affect our overall results

of operations.

Mitigation activity

− To ensure the long-term success of the

Group, it uses a variety of techniques to

attract, retain and motivate its staff, with

particular attention to those in key roles.

− These techniques include the regular review

of remuneration packages, share incentive

schemes, training, regular communication

with staff and an annual performance

review process.

Mitigation activity

The Group uses various mechanisms to

support the implementation and effectiveness

of controls.

These include:

− implementation of the Group Risk

Management Framework;

− ongoing self-assessment process for

monitoring cinema compliance and

financialcontrol standards;

− regular consultation and advice from

external advisers;

− a risk-based cinema compliance and

financial control audit programme;

− the delivery of targeted risk-based internal

audit reviews; and

− the use of technology for live

forensic monitoring.

Mitigation activity

− We receive communications from

relevant government authorities and law

enforcement agencies which keep us

informed and allow us, when needed, to

monitor any potential impact external

events could have on the security and

safety of our cinema estate.

− Various security systems and/or personnel

are in place across the Group.

− Should an incident occur at one of

the Group’s sites, business continuity

and disaster recovery plans are in

place to ensure that management can

react appropriately.

− Appropriate insurance is in place to mitigate

the financial consequences as a result of

property damage.

Changes in the year

− The pandemic continued to impact the

Group during the first half of 2021 with

cinema closures and employee furloughs.

As a result, there has been significant

turnover of key personnel. The Company

is successfully replacing these key roles

with experienced professionals within and

outside of the Group. It is important the

Company remain competitive with the

regional markets to retain and attract key

personnel in the future.

For further details please see Responsible

Business on pages 25 to 29.

Changes in the year

− New Environment Committee established.

For further details please see Risk and Internal

Control on pages 50 to 52.

Changes in the year

− During a portion of the year, the pandemic

resulted in cinema closures, reduced seating

capacity and film content and caused some

reluctance to go into social environments.

− Once the cinemas resumed business, the

availability of quality film content increased

and there is a strong film slate scheduled

for 2022.

− Health and safety procedures have been

implemented in the cinemas to ensure

compliance with jurisdictional COVID-19

compliance requirements.

Opportunity

− The growth of the Group has increased

the opportunities for internal promotion

and transfers.

Opportunity

− Continue to enhance the use of technology

for embedding automated controls and

providing ongoing live assurance.

− Increase internal audit resources focusing

on improving Group compliance activities.

Opportunity

− Enhanced US active shooter training to

provide computer-based learning and

annual certification.

− Continuous review of processes which can

identify areas for operational improvement

and improve overall safety at our sites.

 



Cineworld Group plc

Annual Report and Accounts 2021

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

12 13

TREASURY

MANAGEMENT

CLIMATE CHANGE

(TCFD)

Ineffective treasury management

slows down our ability to service our

debt obligations and deliver against

our planned strategic initiatives

(e.g.refurbishment programmes).

Warming of the planet caused by

greenhouse gas emissions poses

serious risks to the global economy

and will have an impact across many

economic sectors.

Link to strategy Link to strategy

Risk owner

CFO

Risk owner

CFO

Impact

A key future strategy for the Group is ensuring

it has the ability to use the cash generative

nature of the business to reduce the net debt

to Adjusted EBITDA ratio. Balancing this with

the level of planned investment in strategic

initiatives globally will be a continual focus

forthe Board.

Impact

Transitioning to a lower carbon economy

may entail extensive policy, legal, technology,

and market changes to address mitigation

and adaption requirements related to

climate change.

Mitigation activity

− Integration of Regal and Cineworld

treasury functions.

− Ongoing review of financial instruments

being used.

Mitigation activity

− The Company is in the implementation

stages of developing a governance

strategy around climate related risks and

opportunities. Potential impacts of climate-

related risks and opportunities related to

businesses, strategy and financial planning

are being determined and mitigation and

adaption strategies are being established.

Changes in the year

− Secured new debt of $424.9m throughout

the year.

− Obtained a Group covenant waiver until

June 2022 and are currently operating

under a minimum liquidity covenant.

− Accelerated tax year closure brought

forward a tax refund of over $203m to 2021.

− Judgement received in respect to

Cineplex claim.

Changes in the year

− The analysis of climate-related risk has

been integrated into the Group’s existing

risk management framework. As such, the

Company’s Risk Management Committee

has responsibility for monitoring

and managing climate-related risks

and opportunities.

− Following the climate-related analysis

conducted in preparation for reporting

against the recommendations of the

Task Force on Climate-related Financial

Disclosures, the Group has set a target

to reduce its carbon emissions net zero

by 2050.Continue long-term objective

of debtreduction through cash flow

generation and costs optimisation.

Opportunity

− Continue to monitor liquidity.

− Continue long-term objective of debt

reduction through cash flow generation

|and costs optimisation.

Opportunity

− Organisations that shift their energy usage

toward lowemission energy sources could

potentially save on annual energy costs.

− Organisations that innovate and develop

new low emission products and services

may improve their competitive position

and capitalise on shifting consumer and

producer preferences.

 

Provide the best

cinema experience

Be technological

leaders in the industry

Expand and

enhance our estate

Drive value for

shareholders

Key

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Introduction

The Group’s ambitions in respect of decarbonisation are reflected in its

governance framework for climate-related risks and opportunities and the

consideration of climate-related strategy and transition plans at Board and

Committee level.

As required by Listing Rule 9.8.6R(8), the Company confirms that this

Annual Report and Accounts includes climate-related financial disclosures

consistent with the applicable recommendations and recommended

disclosures set out by the Task Force on Climate-related Financial

Disclosures. Following the climate-related analysis conducted in

preparation for reporting against the recommendations of the Task Force

on Climate-related Financial Disclosures, the Group has set a target to

achieve net zero carbon emissions by 2050. This target includes Scope 1

and 2 emissions under the following categories:

Scope 1 – direct emissions, which are GHG emissions from the operation of

directly owned or leased assets.

Scope 2 – indirect emissions from the purchase of energy or heating in

activities controlled by the Group.

The Group does not currently quantify and disclose its Scope 3 emissions as

sufficient information and analysis of its supply chain is not yet in place to

do so. The Group will work to quantify its Scope 3 emissions (being indirect

emissions that indirectly impact on the Group’s activity, but are not caused

by activities or assets under its control) with the intention of considering

whether this category of emissions should also be brought within its target.

To support achieving the target of net zero carbon emissions by 2050,

theCompany has put in place the Cineworld Decarbonisation Strategy,

against which progress will be measured annually. The strategy consists

ofpeople, technology and process change, which together make up an

energy reduction strategy. With Scope 2 emissions representing the most

significant emissions category for the Group, addressing energy usage

isconsidered to be the foundation of the Group’s strategy. The energy

reduction strategy is built on consumption reduction though behavioural

change and analysis of the use of energy across the Group. The most

material energy source used in the Group’s activities is electricity, which

isthe primary focus of the strategy in the short term.

The Cineworld Decarbonisation Strategy is aligned with the strategic

priorities of the business.

Governance

Cineworld’s governance around climate-related risks and opportunities

The analysis of climate-related risks has been integrated into the Group’s

existing risk management framework. As such, the Company’s Risk

Management Committee has primary responsibility for monitoring and

managing climate-related risks and opportunities. Where applicable, the

Risk Management Committee will consider climate-related issues when

reviewing and guiding strategy, major plans of action, risk management

policies, as well as when overseeing major capital expenditures,

acquisitions, and divestitures.

Management and the Risk Management Committee will report to the Board

on their ongoing assessment of climate-related risk on a regular basis and

the advice of the Risk Management Committee will form part of the Group’s

considerations in addressing wider strategy decisions. Climate-related risks

are not currently considered to have a material impact on the financial

performance of the Group.

The Board’s review of emerging risks resulted in an additional risk (relating

to the effects and future impact of climate change to the Group) being

added to the Principal Risks list. Details of this assessment and the Group’s

approach to management of the risk are set out on pages 14-19. The Risk

Management Committee is chaired by the Chief Financial Officer, and

members include the Group’s Head of Risk and Assurance, the Group

Financial Controller and the Company Secretary.

The Risk Management Committee reports to the Company’s newly

established Environment Committee with regard to climate-related risks

and opportunities, which in turn reports to the Audit Committee and the

Board. For more information on the newly established Environment

Committee and reporting structures, please see page 37 of the

Governance section.

This approach ensures that the individuals within the business with

management control over our climate impacts and risk mitigation activities

are involved in decision-making and action, and that key issues are escalated

directly to the Environment Committee, and ultimately the Board.

The Risk Management Committee holds four meetings each year to review

the Group’s risk register and a review and assessment of climate-related

risks and opportunities has been built into these review meetings. More

information on the risk assessment processes in place for the Group may

befound on pages 50 to 52.

The Group has retained external energy experts to advise on the area of

climate risk, strategy and reporting.

The implementation of the Cineworld Decarbonisation Strategy, against

which progress is to be measured on an annual basis, will facilitate the

Board to monitor and oversee progress against the overarching target

ofnet zero carbon emissions by 2050 by:

− Providing a framework of activities within which the Group’s

decarbonisation and risk mitigation steps can be considered; and

− Providing context for the Group’s decarbonisation activities against

developments in technology, regulation and other external factors.

Cineworld Group plc

Annual Report and Accounts 2021

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)

Risk Management

Cineworld’s processes for identifying and assessing climate-related risks

The Group’s risk management framework is designed to identify, evaluate

and mitigate the risks that the business faces at all levels.

Management, together with the Risk Management Committee, will continue

to engage with employees to review current and emerging climate-related

risks. Risk assessments have been undertaken with senior staff in the

Group’s major operating territories to identify all climate-related risks.

Further assessments will be undertaken and the results considered by

management in the context of the climate risk set out on page 21.

The relative significance of climate-related risks in relation to other risks is

determined on the basis of the probability of each given risk materialising

and the severity of the impact on the Group financially. Where considered

necessary, management will engage external advisors to support the risk

assessment process and consider the most appropriate response for the

Group and the potential impact on performance and wider strategy.

The underlying process aims to provide robust management information

toenable conscious risk-based decision-making.

In addition to complying with existing regulatory requirements in relation to

climate change, the Group is conscious of emerging regulatory requirements

in this area, not least the commitment by the UK government to reduce GHG

emissions to net zero by 2050, which directly informs the Group’s headline

target. The Group views such regulatory developments as integral to its

overall Decarbonisation Strategy.

Cineworld’s processes for managing climate-related risks

As part of the processes for managing risks and opportunities presented by

climate change, issues are carefully managed and monitored within our

operational structures.

All risks of the Group are recorded within the risk management system,

which is held by the Group Risk and Assurance team, and the risk register is

employed to manage all significant risks facing the business and ultimately

used to decide how to mitigate, transfer, accept or control such risks.

Risk registers are reviewed regularly by the Risk Management Committee

and relevant teams across the business.

Climate-related risks are assessed and prioritised in terms of consequence

and likelihood and, as described above, the Cineworld Decarbonisation

Strategy has been developed as a result of the climate-related risk review.

Given the nature of the Group’s activities, energy efficiency and energy

sources are considered to be the most pertinent risks to the Group in the

short and medium term. The financial impact of these risks could be

beneficial or detrimental to the Group’s financial performance given the

potential changes in energy use and pricing. The materiality of these risks

(as with all other risks) is considered by reference to the potential impact

onthe Group’s earnings each year.

Cineworld’s integration of processes for identifying, assessing, and

managing climate-related risks into its overall risk management structure

Climate-related risks have a high profile across the Group – they are

fullyintegrated into the risk identification, assessment and management

processes, which are organised and monitored by the Risk Management

Committee, and overseen by the Environment Committee, the Audit

Committee and the Board.

The aim of the risk management process is to enable us to proactively

anticipate, prepare for, respond to and adapt to incremental changes and

sudden disruptions, including those that are climate-related.

The same process for identifying and assessing the climate-related risks

applies across the global business, but the management of the identified

risks varies across the global portfolio.

Strategy

Climate-related risks and opportunities that Cineworld has identified

over the short, medium, and long term

Our primary climate-related risks and opportunities include:

− Short term – greater impact from physical rather than transitional risk

areexpected. Severe storm weather has the potential to cause major

disruption to our sites due to flooding, rainwater ingress, and/or unusual

weather patterns of extreme cold or heat. Increased storm events also

raise the risk of floods at our buildings due to rising external waters, such

as from rivers and the sea. Our cinemas would be particularly affected by

flooding should it occur, as water ingress would damage important and

expensive electrical equipment.

− Short to medium term – providing cinematic screening is a relatively

energy intensive business. Fluctuations in energy prices driven by

risingcarbon costs imposed on power generators, as well as through

increasing taxation at the point of consumption, may impact

the business.

− Long term – decarbonisation requires changing energy sources, such as

moving to more expensive zero-carbon electricity tariffs, and replacing

gas-fired heat sources with more expensive electrically generated heat.

− Short to long term – the Company has identified that its close control

ofenergy consumption is an opportunity to reduce the operational costs

of the cinemas, and to mitigate the rising costs of energy and the costs of

adaption and transition.

The process used by the Group to determine which risks and opportunities

could have a material financial impact is by modelling the marginal cost

andrevenue impact on the Group’s results of achieving its targets and

considering whether the modelled amounts would materially impact the

short term forecasts of the Group.

Management will continue to assess these risks and time horizons. As the

Group’s assessment of climate-related risk develops, more specific time

horizons for specific risks will be established, taking into consideration the

useful life of our cinemas and the fact that climate-related issues often

manifest themselves over the medium and longer terms.

Impact of climate-related risks and opportunities on Cineworld’s

business, strategy, and financial planning

In March 2022 the Board approved Cineworld’s Decarbonisation Strategy

designed to achieve net zero carbon emissions by 2050.

The Cineworld Decarbonisation Strategy consists of people, technology

and process pillars, as set out above. A focus is the reduction in energy,

inparticular electricity usage, through developing behavioural change,

investment in more environmental technologies where commercially

viable,and more energy efficient processes. The Group’s forecast

financialperformance is not considered to be materially impacted by the

implementation of Cineworld’s Decarbonisation Strategy. No impact on

revenue is forecast, nor is the valuation of the Group’s assets forecast to be

affected by potential investment required in the long term. The Executive

Directors, the Environment Committee, and ultimately the Board oversee

the implementation and monitoring of the Cineworld

Decarbonisation Strategy.

Climate-related physical risks, considered with reference to their potential

impact on the financial performance of the Group as a whole, are being

integrated into our business strategy through the mitigation activity flowing

from the risk management processes monitored by the Risk Management

Committee, and through the implementation of the Cineworld

Decarbonisation Strategy.

The Group’s global operational footprint means that there are varying risks

and opportunities across the geographical regions, which reflect the acute

and chronic climate-related risks in those areas. Information is being

collated on the climate-related physical risks, to support an assessment

ofthe value of the risks and the opportunities in the coming years.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Metrics and Targets

The metrics used by Cineworld to assess climate-related risks and

opportunities in line with its strategy and risk management process

In order to assess risks and opportunities in line with Group strategy, the

following metrics are tracked:

− Total Scope 1 and Scope 2 global carbon footprint against carbon targets

globally, tracked by region using the GHG protocols. The Group is in the

process of establishing processes to evaluate potential Scope 3

emissions. Future reporting on such emissions will be considered as the

process develops.

− Carbon intensity against revenue, annually

Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG)

emissions and the related risks

Please see pages 80 to 82 for our latest carbon footprint figures. We have

established 2019 as our baseline year for Scope 1 and Scope 2, and are

working to establish our Scope 3 emissions.

Full details of the Group’s risk assessment can be found on pages 50 to 52.

Targets used by Cineworld to manage climate-related risks and

opportunities and performance against targets

In March 2022, the Board approved a decarbonisation strategy and

associated target to achieve net zero carbon emissions by 2050.

The Environment Committee will continue to monitor electricity and gas

usage, its GHG protocols and overall energy costs in assessing Cineworld’s

Decarbonisation Strategy and its effectiveness in supporting the Group

achieving its target.

It is possible that achieving the headline target of net zero carbon emissions

by 2050 will require Cineworld to set interim targets. The Company is still

considering the most appropriate targets to support its headline target

whilst it is in the process of developing its strategy. The Environment

Committee has overall responsibility for formulating any interim targets,

and will consider their effectiveness in supporting the overall strategy and

success in meeting the net zero target in doing so.

As part of its impact assessment, the Company has conducted a gap

analysis of the information that it needs to acquire in the future to help

further address climate-related risks, such as quantification of its Scope 3

emissions. Financial impacts of the Cineworld Decarbonisation Strategy

arebeing considered, and will be incorporated into financial planning.

Resilience of Cineworld’s strategy, taking into consideration different

climate-related scenarios, including a 2°C or lower scenario

The focus of the Cineworld Decarbonisation Strategy is on ensuring that the

Company plays its part in delivering the carbon reductions that are needed

to mitigate the worst consequences of climate change. The net zero by

2050 target is in line with the IPCC scenario intended to keep global

warming to below 1.5°C.

In terms of the resilience of Cineworld’s Decarbonisation Strategy, the

scenario analysis that has been undertaken so far, taking into account a

2°Cor lower scenario, suggests that the Company’s carbon reduction

programme should serve to mitigate many of the ‘transitional risks’

associated with climate change (for example, increasing legislative, financial

and reputational pressure on businesses to reduce carbon emissions).

The physical risks associated with climate change are focused on our

cinemas, with the incremental changes and sudden disruptions from

extreme weather (from flooding to excessive heating or cooling) being

fullyintegrated into our risk identification, assessment and

management processes.

As the experience and understanding in this area matures, the scenarios

employed to test the resilience of Cineworld’s Decarbonisation Strategy

willshift to take a more systematic and quantitative approach. This will

further enable teams to appraise the risks presented by the physical and

transitional effects of climate change on business operations.

The annual review of performance will further provide the Group with

decision-useful information against which its strategy may be modified.

Cineworld Group plc

Annual Report and Accounts 2021

TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) CONTINUED

In accordance with Provision 31 of the

2018 UK Corporate Governance Code,

the directors are required to assess the

prospects of the Company, explain the

period over which we have done so and

state whether we have a reasonable

expectation that the Company will be

able to continue in operation and meet

liabilities as they fall due over this period

of assessment.

The Directors have determined that

athree-year period from the date of

approving the financial statements

constitutes an appropriate period over

which to provide its viability statement.

Three years was determined based on

the maturity period of the Group’s

financing facilities, the forecast recovery

from COVID-19, the visibility of the

future film slate, the Group’s planned

investment in its estate,investment in

technology and relationships with the

film distributors. Whilst three years is

considered the most appropriate time

horizon for assessing viability, the Board

also has regard for longer term financial

forecasts, key to this are industry level

factors which are set out in the Group’s

business model on pages 08 to 09.

The Directors’ viability assessment has

taken into consideration the potential

impacts of the principal risks in the

business model, future performance,

solvency and liquidity over the period,

including principal mitigating actions

such as reducing capital expenditure

and additional sources of liquidity.

For the purpose of assessing the

Group’s viability, the Directors identified

that of the principal risks detailed on

pages 14 to 19 the following are the

mostimportant to the assessment

ofthe viability of the Group:

− availability and performance of

film content,

− viewer experience and competition,

− major incident,

− treasury management.

Each of the above risks are considered

to have remained consistent during

2021. The impact of COVID-19 continues

to have a significant effect on the

Group’s financial position, with the

availability of film content and the

Group’s liquidity both having been

constrained by the impact of the

interruption caused by amajor external

factor. Availability and performance

offilm content is expected to become

aless significant issue as the impact

ofthe pandemic reduces and the

Group recovers.

The impact of COVID-19 has caused a

significant level of uncertainty in cinema

markets across the world, including all

of those in which the Group operates.

As set out in the Directors’ Going

Concern assessment in note 1 to the

Financial Statements, the Group expects

cinema attendance to return to levels

observed in the year prior to the

pandemic by the end of the viability

assessment period. However, the

directors acknowledge the uncertainty

inthe precise timing of the return to

such levels and therefore have

considered scenarios reflecting varying

rates of recovery. Key factors driving

theoutcomes of such scenarios are

focussed more on short term factors,

due to the current stage of recovery

across the Groups operating territories.

In assessing the viability of the

Group,the Board has considered the

sustainability of the Group’s business

model and the potential impact of

changes to environmental factors which

may potentially affect performance in

the future. New considerations around

risk governance and strategy in the

context of the Group’s compliance

withthe Taskforce on Climate Related

Financial Disclosures (TCFD) are set

outon pages 22 and 23. The Group has

implemented governance structures

toasses and monitor sustainability

issues and carry out risk assessments

identifying threats to operations and

performance. As set out in the TCFD, no

material impact on the Group’s financial

performance is considered to exist in

the short term.

The Group has performed a weighted

scenario analysis, set out in the Going

Concern disclosure on page 99.

The Group’s base case scenario assumes

a gradual increase in admissions, with

cinemas in the US performing at 85% of

comparable levels to 2019 throughout

2022, with the UK and ROW performing

at 90% and 95% respectively.

Admissions across the Group are

thenforecast to return to 95% of

comparable periods in 2019 during 2023.

Admissions are then forecast to reach

2019 levels during 2024. This weighted

base case, forecasts that the Group

willmaintain sufficient liquidity and

headroom against key covenant metrics

through its continued recovery from the

pandemic in 2022 and 21 months beyond

the Going Concern assessment period.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Viability Statement

To assess the Group’s viability,

management performed scenario

analysis considering key factors

expected to drive uncertainty in the

recovery profile. Based on the principal

risks identified above, the scenario

applied was:

− lower cinema attendance for two

months during the first half of 2022,

driven by a lack of content due to

changes to the film slate, achieving

only 50% of admissions levels.

Then gradually recovering to the

weighted base case assumptions

bythe end of December 2022.

Under this scenario assessment, the

Group would still be able to continue to

meet its day to day liabilities as they fall

due over the three-year period. However,

the Group would be in breach of financial

covenants on its debt facilities in June

2022. Further implications of this scenario

are set out in the going concern

disclosure in note 1.

As set out in the Going Concern

disclosure on page 99, a judgement

against the Group awarding damages

ofC$1.23 billion for lost synergies to

Cineplex and C$5.5 million for lost

transaction costs was received in

December 2021. The Group disagrees

with this judgement and has appealed

the decision. The Group does not expect

damages to be payable whilst any

appeal is ongoing. The directors have

not factored any payment of damages

in their assessment of the Group’s

viability. In the event that the Group

loses its appeal and full damages are

required to be paid within the viability

period, the Group would be unable to

meet this obligation.

The maturity of the Group’s various

debtagreements is set out on page 140.

Of the instruments in place eight reach

maturity within the viability period,

representing $4.3bn in liabilities.

The Group will therefore need to agree

refinancing terms for these borrowings

prior to them falling due.

Whilst the reviews performed do

notconsider all of the risks that the

Group may face, the Directors consider

that the scenario based assessment

prepared of the Group’s prospects is

reasonable in the circumstances of the

inherent uncertainty involved.

The Directors believe the risk

management and internal control

systems in place allow them to monitor

the key variables that have the ability

toimpact the liquidity and the solvency

ofthe Group and have a reasonable

expectation that the Group will be able

to continue to meet liabilities as they fall

due over the coming three-year period.

However, as described, there is a risk of

covenant breach should the weighted

base case scenario not be realised.

In addition, if the continued recovery

from COVID-19 is more interrupted or

more prolonged than modelled in the

Group’s weighted base case, there is

apossibility that the Group could be

required to find additional sources

of liquidity.

Cineworld Group plc

Annual Report and Accounts 2021

VIABILITY STATEMENT CONTINUED

See page

See pages

14 and 19

See pages

08 and 09

See pages

27 and 52

Business

model

Anti-

corruption

and anti-

bribery

Human

rights

Principal

risks

See pages

27, 48 and 80

See pages

28 and 49

See pages

29 and 80

Social

Environmental

Employees

Introduction

The Group’s key relationships are

withour customers, our people, our

commercial partners and our wider

communities. How we behave and

interact with each of these parties,

including in these challenging times

ofCOVID-19, reflects on our reputation,

an asset that will underpin the

successful delivery of our strategy.

Our ethics policies seek to guide the

behaviour of our people by specifying

principles which establish common

values through which we do business.

We strive to ensure that we act in

appropriate ways to maintain and

enhance our reputation. The Group

seeks to act with honesty and integrity

in its dealings with customers,

employees, shareholders, regulators,

suppliers and our wider community.

Read more about how we engage

with our key stakeholders on pages

46 to 49.

RESPONSIBLE BUSINESS

Continued focus on our key relationships in these

exceptional times is a crucialpriority for the Group

Non-financial information statement

The Company has complied with the Non-Financial Reporting Directive

contained in sections 414CA and 414CB of the Companies Act 2006.

Where to find related information:

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

RESPONSIBLE BUSINESS CONTINUED

Our customers

Our customers are key to our success.

We believe that by listening and being

responsive to our customer feedback,

we can consistently deliver enhanced

experiences, which help us continue

tobe the best place to watch a movie.

Our customer feedback programme

issupported by the “Rant and Rave”

engagement solution, which has proved

to be an invaluable tool for channelling

customer sentiment, empowering our

teams to address feedback in real time.

We maintain and update health and

safety protocols in all cinemas to ensure

the welfare of our customers and

employees. The “CinemaSafe” protocols,

developed in the US, by leading

epidemiologists and industry experts,

including our own operational teams,

areguidelines developed to ensure the

health and safety of the movie-going

public and our employees.

Our customers can feel confident in our

commitment to their health and safety

as they enjoy their favourite pastime.

Through the implementation of the

health and safety protocols, we also

developed innovations to the movie-

going experience, for example, through

ourmobile apps.

We focus on providing our customers

with a wide variety of on-screen

entertainment, showcasing the best

filmproduct from all the major studio

and independent production houses,

live theatrical, dance and musical events.

We are passionate about providing

ourcustomers with the most innovative

cinematic experiences, with a range

ofimmersive premium large formats

offering the latest theatrical technology

now available in many of our cinemas,

including IMAX, 4DX, ScreenX,

Superscreen, RPX (Regal Premium

Experience) and VIP.

We embrace diversity all across our

business this will be reflected in our

people as well as in the content that

weshow in our cinemas, being created

and including content of diversity.

Since reopening our cinemas in 2021,

wehave been focused on operational

excellence and value propositions

tailored to the attitudes towards

cinema-going of various audiences.

We have also encouraged the use of all

extended subscriptions, vouchers, gift

cards and loyalty credits across the

Group, to drive attendance and

customer satisfaction.

We have initiatives which aim to extend

the relationship with our customers

beyond a single visit. In the UK, US

andPoland, we have the Unlimited

membership service for a fixed monthly

or annual subscription, enabling

customers to watch as many films

asthey wish (with uplifts available for

premium large formats). In addition to

the Unlimited we have loyalty programs

that are free to join and include millions

members across all territories.

Engaging our members with regular

updates and extra benefits helped us

continue the communication with our

core subscriber bases in all three

markets during the COVID-19 related

closures in 2020 and 2021.

In the UK, we have introduced tiered

pricing for Unlimited membership, to

make it more affordable in most regions.

In addition, we recently launched a

partnership with restaurant discount

scheme Tastecard, giving a significant

additional benefit to widen the value of

the scheme.

We have also improved our Unlimited

programme in the US, by adding a

90-day membership option in addition

to the annual option. Additionally, we

have launched several promotional

offers in the US, including “$60 off an

annual subscription” and “First month

free”. All of these enhancements have

be introduced to help grow the

membership base.

In addition to Unlimited, members of

theRegal Crown Club® in the US earn

credits for each dollar spent at the Regal

cinemas, and can then redeem such

credits for movie tickets, concession

items and movie memorabilia at the

cinema, online or via the Regal

mobile app.

We also have a number of other

successful membership schemes

acrossthe Group’s territories, which

offer discounts and added value

benefits, allowing us to interact

frequently with each respective

customer base.

The Group actively encourages our

future cinema-going audience by

specifically tailoring film schedules to

attract families and younger customers.

Where necessary, these performances

are dubbed into the native language to

ensure that all customers can enjoy the

full cinema experience. Concessionary

rates are offered for senior citizens and

students at certain times of the day.

Flexibility around the continuously

changing market environment enables

us to maximise capacity and admissions.

Cineworld Group plc

Annual Report and Accounts 2021

Retail

As many of our customers still consider

going to the cinema as a treat or special

occasion, they expect traditional cinema

snacks as part of their experience.

We offer a range of products to our

customers, and we work closely with

ourpartners to provide healthier, low

sugar or zero sugar alternatives where

possible and in line with customer or

legislative demands.

Access for all

The Group promotes a philosophy of

access for all by offering accessible

cinemas for the disabled, offering a wide

range of movies, film formats and event

cinema. Employees receive disability

awareness training and specific advice

on welcoming disabled customers.

Many of our cinemas offer audio-

descriptive, autism-friendly and

subtitled performances, and in some

territories, the Group allows customers

with disabilities to be accompanied by

acarer, free of charge.

All new cinemas are designed to exceed

current statutory requirements and

provide buildings which are technically

advanced, accessible and safe.

When cinemas undergo major

refurbishment, as part of an ongoing

programme of improvements and

renovations, the opportunity is taken to

enhance access within cinemas where

practicable to do so.

Anti-bribery and corruption

The Group has in place a range of

governance-related policies, including

Whistleblowing, Gifts and Hospitality,

and Health and Safety. The Company

has implemented these policies and

procedures to ensure it is prepared, to

the fullest extent possible, to prevent

corrupt practices across our business

relationships. The Group endeavours to

conduct its business with integrity, aims

to be a responsible employer, and

adopts values and standards designed

to help guide our staff in their conduct

and business relationships.

Our people

Into 2021, the global pandemic

remainedhugely disruptive to our

business, and many of our “usual”

people plans which were postponed

during 2020, remained postponed

into2021, for example the annual

StaffSurvey. However we continued

adapting, leading up to reopening our

venues in order to consistently support

our people in the ever-changing

landscape. Daily conference calls

withthe Executive Teams continued,

and remain in place twice a week,

ineach territory.

Many other teams implemented this and

continue to do so on a weekly basis to

ensure a clear and quick flow of vital

information, and that our teams

remained engaged with what was

happening in all areas of the business.

We continued ensuring our teams felt

supported by providing signposting to

our health and wellbeing support, and

the use of our Employee Assistance

Programme in the UK.

We regularly promote and encourage

the use of Cinelearn, our online learning

platform which can also be accessed

remotely, as this has a wealth of varied

resources such as helping with change,

wellbeing, positive thinking, relaxation

tips and much, much more.

Leading up to re-opening, Cinelearn

wasused to ensure all employees were

correctly briefed and trained on relevant

legislation, health and safety measures

as well as operational refreshers.

This online learning complimented

in-person training done within cinemas.

As our venues re-opened, we continued

to make full use of the flexi-furlough

scheme in the UK which allowed us to

ramp up to a full cohort as business

steadily increased. As of December

2021, we had no staff on a furlough

scheme (or similar) in the UK.

Furlough has been instrumental in

allowing us to retain many of our

people.We are pleased that their

valuable knowledge, skills and talents

have remained in the business to ensure

continuity when cinemas reopened.

As throughout the Group our General

Managers remain the heartbeat of

ourtheatres. The US market was not

aided by government backed furlough

schemes, resulting in the difficult

decision to either reduce General

Managers’ pay in half or furlough our

General Managers entirely. For this

valued group some government

unemployment assistance was

availableto help in various states

andthe company continued to help

ourpeople through our previously

established Regal Foundation

Emergency Relief Fund.

Our General Managers came back to a

different world in 2021 – more than just

COVID-19 protocols. During closure

many markets had dramatically

changed and we found ourselves

competing for a very small talent pool

to build back from massive turnover

across all positions.

Our District Managers reached deep

into our leadership teams to promote

successful talent as new opportunities

for General Manager roles

presented themselves.

We look forward to building on our

people plans in 2022, in our continued

pursuit to create “The Best Place to

Work in the Movies”.

Diversity and human rights

The Group is an equal opportunity

employer and seeks to recruit, retain

and promote staff on the basis of

theirqualifications, skills, aptitude

andattitude. A wide range of applicants

are encouraged to apply for all roles.

In employment-related decisions; the

business complies with all relevant

legislation, including that which is

specifically targeted at preventing

discrimination, and such principles are

embedded through the business by

requisite policies.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

RESPONSIBLE BUSINESS CONTINUED

Our commercial relationships

Having strong commercial relationships

is also key to operating our

business successfully.

With years of experience in the cinema

industry, our teams have worked hard

todevelop strong working relationships

with a range of film studios and

distributors, both major and

independent. We are constantly

engaging with our distribution partners

to ensure that the theatrical experience

remains at the core of their businesses.

The Group is committed to protecting

the intellectual property rights of

filmsand event cinema. Policies and

procedures are constantly reviewed

anddeveloped to ensure cinema

management are able to effectively

monitor and prevent film piracy.

Night-vision technology is utilised and

there is an increased vigilance around

high profile titles which are particularly

vulnerable. The Group will continue to

work closely with relevant industry and

law enforcement organisations in order

to help reduce and prevent film piracy.

Building relationships with developers,

landlords and local planners is vital for

maintaining a robust pipeline of new

sites to expand our estate, as well as

being able to upgrade our existing

facilities as a part of our extensive

refurbishment programme.

These relationships have also helped us

achieve deferrals and discounts on rent

payments, which were much needed in

this economic climate.

We continue to work with suppliers of

innovative technology, demonstrated

bythe introduction of laser projectors

across our cinemas, providing a superior

customer experience while driving down

energy costs. This, coupled with our

continuing rollout of IMAX,4DX and

ScreenX in all our markets, ensures that

we continue to deliver on our customer

promise of being the best place to

watch a movie as well as maximising

boxoffice revenue.

Even during COVID-19, wehave

continued to support the development

and rollout of innovative technology

allowing us to schedule films, trailers

and adverts remotely, maximising

revenue and reducing operating costs.

Since the reopening ofcinemas in 2021,

we have seen a proportionally higher

uptake by our customers of these

innovative experiences, with 4DX and

ScreenXin particular giving a significant

competitive advantage with key movies.

Strong relationships with our principal

retail suppliers enable us to work

together on promotions that help to

drive retail sales. We seek to manage

relationships with our suppliers fairly,

and to work in accordance with our

aspirations as set out in our

ethical policies.

During the ongoing COVID-19

pandemic, our long-standing

relationships with key suppliers have

allowed us to achieve significant costs

savings and support of our cash flow

through payment plans, along with

assisting the formulation ofmitigating

actions to support themanagement of

supply chain challenges. Cost control

and monitoring remain at the core of our

commercial operations, resulting in the

optimisation of processes and services,

and change of some suppliers.

Our communities

Our work with charities, schools and

community groups across all our

territories is of paramount importance

to us. We are proud to be involved with

a wide range of activities, such as

working with distributors on charity

screenings, providing free shows for

organisations and working closely with

local schools.

In the US, the Regal Foundation

supports the communities in which

Regal operates by partnering with

selected charities, including St.

Jude Hospital for Children leaving us

with St. Jude and Variety, dedicated to

the assistance of persons affected by

economic, social, physical or educational

disadvantages. In addition, Cineworld

proudly partners with a number of UK

charities, including BBC Children in

Need and the Film and TV Charity.

The Picturehouse education team

worksclosely with teachers, film

festivals and partner organisations

todeliver a diverse programme at

Picturehouse cinemas across the UK,

where screenings and events are

specially curated for nursery, primary,

secondary and Special Educational

Needs (“SEN”) and Additional Support

Needs (“ASN”) schools and for

adult learners.

Our usual fundraising activities in 2021

have regrettably been impacted again

by the pandemic-related cinema

closures. However, we very much look

forward to resuming our usual work

withcharities and in our communities

in 2022.

Cineworld Group plc

Annual Report and Accounts 2021

Gender breakdown

of the Board

(1)

Gender breakdown

of Senior Managers

(2)

Gender breakdown of

total employees

(3)

Male 7

Female 4

Total Board of Directors 11

Male 36

Female 28

Total Senior Managers 64

Male 14,911

Female 10,775

Total employees 25,686

Environment

We seek to comply with all relevant

environmental legislation and to operate

in an environmentally sensitive manner.

The Board of Directors acknowledges

the impact that the business has on the

environment and seeks to mitigate it.

Often changes which help to mitigate

our environmental impact also reduce

our operating costs.

Being a multisite business, the Group

isconscious of its total energy

consumption and amount of waste

materials generated, and is actively

working on reducing both. The Group’s

mandatory greenhouse gas report can

be found in the Directors’ Report on

pages 80 and 82. In addition, the

Company has reported under the Task

Force on Climate-related Financial

Disclosures framework, and more details

may be found on page 20 to 22.

Our cinema websites enable e-tickets

tobe purchased and used, avoiding

theneed to print tickets. In new and

refurbished cinemas, poster cases are

now digital, reducing the need to deliver,

install and ultimately throw away large

paper posters. All of these efforts help

to reduce our use of resources and, in

turn, our carbon footprint.

Health and safety

Health and safety is of major importance

to us when considering the day-to-day

health, safety and welfare of our

customers, employees and contractors.

Extensive health and safety measures

have been implemented at our cinemas

across the Group, in response to the

challenges of COVID-19. We have been

liaising with national and local

governments to ensurethat our cinemas

provide a safe environment for all, so that

customers, employees and contractors

can feel confident that theirreturn to our

cinemas would be arelaxing and safe

experience. In the US, “CinemaSafe”

health and safety protocols were

implemented, and in the UK we have

liaised closely withthe UK Cinema

Association. For more information on

safety measuresin cinemas, see the

section “Our customers”above.

All employees have received COVID-

related training and all cinemas have

been equipped with sanitising stations,

customer flow signage and protective

safety equipment for employees.

The Group seeks to maintain the highest

standards in the effective management

of our health and safety obligations and

our duty of care to our customers and

staff. Each year, cinemas in the Group are

subject to health and safety assessments

(including aspects of fire,food and

occupational safety). Results are

monitored and any significant issues are

followed up by management teams, with

the assistance of specialist external

consultants where needed.

GENDER REPRESENTATION

(1) Figures in the chart above are as at

31 December 2021.

(2) Figures include the Executive Committee,

theSenior Management Team, and the

Company Secretary, including direct reports.

(3) Data is based on the average headcount

for 2021.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Cineworld Group plc (the “Group”) results are presented for

the year ended 31 December 2021 and reflect the trading and

financial position of the US, UK and Ireland (“UK&I”) and the

Rest of the World (“ROW”) reporting segments. The impact

of COVID-19 continued to affect the Group’s operations and

performance into 2021, however, the Group was successful in

reopening its full estate and saw its most successful months

since the outbreak of the pandemic in the fourth quarter of

the year. The results presented reflect the period of closure

inthe first two quarters of the year, the reopening of cinemas

during the summer and then the return to trading at levels

approaching those seen prior to the pandemic in the fourth

quarter, with the return of major film releases. Whilst the

Group is now looking to continue its recovery with its full

estate operating, the removal of restrictions imposed due

toCOVID-19 and a full film release schedule approaching,

material uncertainty around its ability to continue as a

goingconcern remains (as set out in Note 1 to the

FinancialStatements).

Total admissions increased by 75.2% year on year to 95.3m,

reflecting the length of closures required due to COVID-19 in

2020 and 2021 respectively and film content available in each

year. Total revenue for the year ended 31 December 2021 was

$1,804.9m, an increase of 111.8% ontheprior year.

CHIEF FINANCIAL OFFICER’S REVIEW

Year ended

31 December

2021

Year ended

31 December

2020

Year ended

31 December

2019

Admissions 95.3m 54.4m 275.0m

$m $m $m

Box office 955.7 448.6 2,536.1

Retail 552.3 232.2 1,240.3

Other Income 296.9 171.5 593.3

Total revenue 1,804.9 852.3 4,369.7

Building on a solid reopening

“ The Group is now looking to

continue its recovery with its full

estate operating, the removal

of restrictions imposed due to

COVID-19 and a full film release

schedule approaching.”

Nisan Cohen

Chief Financial Officer

The principal revenue stream for the Group is box office

revenue, which made up 53.0% (2020: 52.6%) of total revenue.

Box office revenue is a function of the number of admissions

and the ticket price per admission, less sales tax. Admissions

(one of the Group’s Key Performance Indicators) depend on

the number, timing and popularity of the movies the Group is

able to show in its cinemas. In addition, the Group operates

membership schemes which provide customers with access

to screenings in exchange for subscriptions fees, and this

revenue is reported within box office.

The Group’s second most significant revenue stream is from

retail sales of food and drink for consumption within cinemas,

which made up 30.6% (2020: 27.2%) of total revenue.

Retail revenue across the Group is driven by admissions

trends within each operating territory.

Other Income represents 16.4% (2020: 20.1%) of total

Grouprevenue. Other Income is made up of all income

otherthanbox office and retail, predominantly revenue from

advertisements shown on screen prior to film screenings and

revenue from booking fees associated with the purchase of

tickets online. The Group also generates distribution revenue

in the UK and ROW, which is included within Other Income.

Cineworld Group plc

Annual Report and Accounts 2021

United States

The results below show the Group’s performance in the

United States.

Year ended

31 December

2021

Year ended

31 December

2020

Year ended

31 December

2019

Admissions 56.2m 30.1m 177.3m

$m $m $m

Box office 627.4 280.3 1,859.6

Retail 391.9 161.1 953.9

Other Income 201.0 134.5 396.1

Total revenue 1,220.3 575.9 3,209.6

Box office

In the US, during 2021, cinemas remained temporarily closed

until 2 April. The Group reopened 77 cinemas during April,

anadditional 423 cinemas during May, and 7 cinemas during

June, representing 98% of the US circuit at the time. As of

31 December 2021, the Group operated 511 theatres in the US.

Box office revenue represented 51.4% (2020: 48.7%) of total

revenue. Box office revenue increased by 123.8% from 2020

to2021, driven by an 86.7% increase in admissions and 19.9%

increase in average ticket price. The increase in admissions

was due to the reopening of the Group’s cinemas after the

temporary closures for significant periods during 2020

and the first half of 2021, as well as the release of several

majorfilms in late 2021.

The total North American industry box office revenue for 2021

was 105.3% higher compared with 2020 (source: Comscore).

The increase in box office revenue for the Group was

inconsistent with the industry due primarily to differing

periods of operation during 2020 and 2021 across the

cinemaoperators. The top performing films during 2021

were“Spider-Man: No Way Home”, “Shang-Chi and the

Legend of the Ten Rings” and “Venom: Let there Be Carnage”

which grossed $988.6m versus “Bad Boys for Life”, “1917”

and“Sonic the Hedgehog” which grossed $507.1m in 2020

(Source: Comscore). During 2021, seven new sites opened,

and 23 sites were closed. These openings and closures did

nothave a significant impact on the results during 2021.

The average ticket price in the US increased by 19.9% to

$11.16(2020: $9.31). The increase in average ticket price was

primarily a result of the increased availability and uptake of

premium format content during 2021 compared with 2020.

During 2021, Regal reinstated its policy of expiring

RegalCrown Club credits not redeemed within 12 months.

The reinstatement of the policy, which had been suspended

during the COVID-19 pandemic, led to the expiration of all

unredeemed credits earned during the period from March

2019 through December 2020. The expiration of those

unredeemed credits resulted in $12.1m in box office

revenuein 2021.

Retail

Retail revenue represented 32.1% of total revenue

(2020: 28.0%). Retail revenue increased as a result of the

cinemas reopening during the year and growth in retail

spendper person once open. Retail spend per person

increased by 30.3% to $6.97 (2020: $5.35), driven by

anincrease in overall purchase frequency and a small

concessions price increase in some US cinemas at the end

ofSeptember 2021. The reinstatement of the Regal Crown

Club credits expiration policy set out above resulted in

$18.1mof retail revenue during the year.

Other Income

Other Income represented 16.5% of total revenue

(2020: 23.4%). Other Income is made up of on-screen

advertising revenue, corporate and theatre income and

revenue from online booking fees charged on the purchase

oftickets for screenings, which is driven by the demand for

tickets and the propensity of customers to book tickets online.

Screen advertising revenue is earned through the Group’s

agreements with National CineMedia (“NCM”) and direct

contracts with concession vendors and distributors.

NCM operates on behalf of a number of United States

exhibitors to sell advertising time prior to screenings.

Advertising revenues are driven primarily by admissions levels

and the value of advertising sold. Other Income also includes

less significant elements related to the sale of gift cards and

bulk ticket programmes and the hire of theatres for events.

Other Income has increased by 49.4% due to the opening

ofcinemas. The impact of the cinemas closures throughout

2020 and 2021 on Other Income has not been as great as

onBox Office and Retail revenue due to certain contractual

advertising revenues being recognised regardless of cinemas

being closed.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

UK & Ireland

The results below for the UK&I include the two cinema brands

in the UK and Ireland: Cineworld and Picturehouse.

Year ended

31 December

2021

Year ended

31 December

2020

Year ended

31 December

2019

Admissions 18.2m 11.4m 48.2m

$m $m $m

Box office 210.0 99.4 405.7

Retail 90.1 37.2 156.7

Other Income 48.0 17.3 86.0

Total revenue 348.1 153.9 648.4

Box office

Box office revenue represented 60.3% of total revenue

(2020: 64.6%). Admissions increased by 59.6% and box office

revenue increased by 111.3%. Admission and box office trends

reflect the respective periods of closure of cinemas due to

lockdown restrictions in 2020 and 2021 and the film content

available in each year. All of the Group’s cinemas were closed

until 19 May, when the estate was reopened. Performance

improved gradually following reopening, until a significant

improvement with the release of the “No Time to Die” in

October and “Spiderman: No Way Home” in December.

In the UK&I, the top three grossing movies were “No Time to

Die”, “Spider-Man: No Way Home” and “Dune”, which grossed

$266.0m (source: Comscore). This compares to the top three

titles in 2020 which were “1917”, “Sonic the Hedgehog” and

“Tenet”, which grossed $96.1m (source: Comscore).

The average ticket price achieved in the UK&I increased by

32.3% to $11.54 (2020: $8.72). This increase was largely driven

by the types of releases during the period that cinemas were

open during 2020.

Retail

Retail revenue represented 25.9% (2020: 24.2%) of total

revenue. Retail revenue increased by 142.2% from the prior

year, driven by longer operating periods, the strength of film

content released compared with 2020 and a higher retail

spend per person. Retail spend per person increased by 51.8%

to $4.95 (2020: $3.26) driven by a greater proportion of

customers purchasing retail goods.

Other Income

Other Income increased by 177.5% from 2020 and represented

13.8% (2020: 11.2%) of total revenue. Other Income includes all

other revenue streams outside of box office and retail, mainly

advertising, online booking fee revenue and some distribution

revenue through Picturehouse. Advertising revenue is

primarily generated by on-screen adverts and is earned

though our joint venture screen advertising business Digital

Cinema Media Limited (“DCM”). DCM sells advertising time

onscreen on behalf of the UK cinema industry and advertising

revenue is impacted by admissions trends and the value of

advertising sold.

CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED

Rest of the World

The results below for the ROW include Poland, Romania,

Hungary, the Czech Republic, Bulgaria, Slovakia and Israel.

Year ended

31 December

2021

Year ended

31 December

2020

Year ended

31 December

2019

Admissions 20.9m 12.9m 49.5m

$m $m $m

Box office 118.3 68.9 270.8

Retail 70.3 33.9 129.7

Other Income 47.9 19.7 111.2

Total revenue 236.5 122.5 511.7

Box office

Box office revenue represented 50.0% (2020: 56.2%) of total

revenue. Admissions in the ROW increased by 62.0% and box

office revenue increased 71.7% compared to the prior year.

Admissions across all ROW territories increased significantly

from the prior year due to the reopening of theatres in 2021

after prolonged closure periods during 2020 due to COVID-19.

The first ROW territory to reopen was Bulgaria in April 2021,

followed by Israel, Romania, Slovakia and Poland in May and

Hungary and Czech Republic in early June 2021. The average

ticket price increased by 6.0% to $5.66 (2020: $5.34).

The increase reflects the number of film releases available

across the Group’s premium offerings.

Retail

Retail revenue represented 29.7% of the total revenue

(2020: 27.7%). Retail spend per person increased by 27.8% to

$3.36 (2020: $2.63). The increase in retail spend per person

resulted from an increase in purchase frequency.

Other Income

Other Income includes distribution, advertising and other

revenues and represented 20.3% (2020: 16.1%) of total

revenue. Forum Film is the Group’s distribution business for

the ROW and distributes movies on behalf of certain major

Hollywood studios as well as owning the distribution rights

to certain independent films. Other Income and distribution

revenue performed in line with admission trends generally

in 2021.

Cineworld Group plc

Annual Report and Accounts 2021

Financial performance

Year ended 31 December 2021

Year ended

31 December

2020

US UK&I ROW Total Group Total Group

Admissions 56.2m 18.2m 20.9m 95.3m 54.4m

$m $m $m $m $m

Box office 627.4 210.0 118.3 955.7 448.6

Retail 391.9 90.1 70.3 552.3 232.2

Other Income 201.0 48.0 47.9 296.9 171.5

Total revenue 1,220.3 348.1 236.5 1,804.9 852.3

Adjusted EBITDA (as defined in Note 2) 454.9 (115.1)

Operating profit/(loss) 15.8 (2,257.7)

Finance income 208.4 69.6

Finance expenses (899.2) (786.8)

Net finance costs (690.8) (717.2)

Share of loss from joint ventures (33.3) (33.0)

Loss on ordinary activities

before tax (708.3) (3,007.9)

Tax on loss on ordinary activities 142.5 356.4

Loss for the year attributable toequity

holders of the Group (565.8) (2,651.5)

Adjusted EBITDA

Adjusted EBITDA has increased to a profit of $454.9m (2020:

loss of $115.1m). This was mainly driven by the longer periods

of operating in 2021 compared with 2020, which were caused

by the impact of COVID-19 and restrictions on opening.

Adjusted EBITDA generated by the US, UK and ROW was

$310.7m, $67.1m and $77.1m respectively for 2021, compared

with negative $(87.2)m, negative $(35.0)m and $7.1m respectively

for 2020. Decreases across all segments were driven by trading

period in each year and the availability of film content.

Operating profit/(loss)

Due to the impact of COVID-19 the Group reported an

operating profit of $15.8m compared withan operating loss of

$2,257.7m in 2020, representing a improvement of $2,273.5m.

Certain material one-off items have been included within

operating loss in 2021, most significantly the net impairment

reversals described below. In addition to impairment reversals,

within operating loss there are a number of non-recurring and

non-trade-related items that have a net negative impact of

$49.3m (2020: net negative impact $127.3m), including

$2.1mrelating to costs arising from the Group’s response

toCOVID-19, $38.1m in transaction and reorganisation costs

and $9.1m in refinancing costs. These items are excluded from

Adjusted EBITDA and havebeen set out in detail in Note 2.

The total depreciation and amortisation charge (included in

administrative expenses) in the year totalled $534.9m (2020:

$643.3m). The charge is lower year on year due to impairment

charges recognised since the outbreak of the pandemic

reducing the value of the Group’s depreciable assets and

amendments to leases during the year reducing a large number

of right-of-use assets, with the reductions caused bya higher

incremental borrowing rate applied to lease cash flows.

Where available, government support for companies to

continue paying employees through the shutdown was

accessed. In some cases, employees were paid directly.

In others, the Group reclaimed amounts once paid to

employees. In such instances, amounts received are shown

reducing staff cost in the period, detail of amounts reclaimed

are set out in note 8. Where available the Group has also

accessed business rates relief.

The impact of COVID-19 on the Group’s forecast cash flows

in2020, in addition to increased uncertainty in the market,

ahigher discount rate reflecting the increased cost of debt and

changes to forecast cash flows, have resulted in the impairment

of property, plant and equipment and right-of-use assets at

cinema cash-generating units (“CGUs”), as well as goodwill

incountry level CGUs and the Group’s investment inNational

Cinemedia Inc (NCM) amounting to a total net charge

of$1,344.4m.

During 2021 uncertainty around the forecast cashflows from

the Group’s investment in NCM and reduction in its share price

have resulted in a further impairment of $55.1m, bringing the

total impairment of NCM since the outbreak of the pandemic

to $92.1m.

Since the beginning of the pandemic the Group has

amendedthe majority of its leases. When leases are amended,

assets and liabilities are recalculated using the incremental

borrowingrate applicable at the date of the amendment.

Incremental borrowing rates are materially higher since the

outbreak of the pandemic and therefore have the effect of

reducing asset balances when amendments take place for the

first time since the pandemic begun. Where asset balances

are reduced in this way at cinema CGUs which have previously

been impaired due to higher discount rate being applied to

forecast cashflows, reversal of impairment charges recognised

earlier in the pandemic can occur. The total reversal of

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED

impairment recognised in the year was $199.6m. In addition,

further impairment charges of $17.4m were recognised in the

year for CGUs at which forecast cashflows no longer support

the carrying value of the assets.

No impairment was recognised in respect of goodwill at country

CGUs during the year. Impairment charges and reversals

recognised during the year are considered to be largely driven

by the impact of the pandemic and are therefore considered to

be exceptional charges in the current period. Full details of

impairment charges are disclosed in Notes 11, 12, 13, 14 and 20.

Leases

The impact of COVID-19 and the associated shutdowns

resulted in the Group renegotiating the majority of its leases

and accessing government relief from payment of leases in

certain countries. The Group has sought to agree the waiver

and deferral of contractual rent under existing leases in order

to manage cash flow during the shutdown and recovery from

the impact of the virus. Payment of lease liabilities has

increased to $400.5m from $198.6m in 2020, reflecting

agreements reached with landlords and relative periods of

opening during 2020 and 2021. Whilst this remains below

pre-pandemic levels, monthly payment of lease liabilities in

the fourth quarter was closer to levels observed prior to

the pandemic.

Amendments to leases, additions in the year, changes to

discount rates applied in the calculation of lease balances,

impairment charges and reversals recognised, andcash

flowsin the year have resulted in total right-of-use assets of

$2,234.1m (2020: $2,306.4m), with a depreciation charge of

$260.9m (2020: $348.7m), with lease liabilities of $4,040.2m

(2020: $3,971.7m) and an interest cost of $444.5m (2020:

$349.0m). For leases amended for the first time since the

outbreak of COVID-19 during the year, higher incremental

borrowing rates reflecting the Group’s higher costs of debt

alower credit rating have been applied to cash flows, resulting

in lower assets and liabilities and higher lease interest cost for

these leases.

Net finance costs

At 31 December 2020 the Group had USD term loans

outstanding totalling $3.9bn, a Euro term loan of $233.8m,

aprivate placement loan of $251.8m and a $462.5m RCF

which was fully drawn.

In April 2021, the Group raised additional funding by issuing

Convertible Bonds which are convertible into equity shares

ofCineworld Group Plc. The bonds have a principal amount

of$213.0m and were issued at a 1% original issuance discount

with a 4 year maturity. The Convertible Bonds are denominated

into units of $200,000 each and the Investors have an option

toconvert each unit into ordinary shares of the Group at a

conversion price of $1.762 (the ‘Conversion Price’) per unit.

The Group recognised a separate derivative liability in respect

ofthe conversion feature with an initial value of $27.8m.

Directly attributable fees of $1.2m were incurred in connection

with raising the facility. The initial carrying value of the

amortisedcost of debt component of the bonds was $181.9m.

At 31 December 2021 the derivative liability was valued at $6.3m.

In July 2021, the Group agreed the terms of a further term

loan facility of $200.0m with a maturity of May 2024 with

existing lenders. Directly attributable fees of $11.6m were

incurred in connection with raising the facility. Upon raising

this additional term loan facility, the Group paid amendment

fees totalling $46.5m in connection with the B1 term loan

facility of $450.0m raised in November 2020, of which fees

of$16.5m were directly apportioned to the initial term loans

increasing their notional position. Amendments to the B1 term

loan enabled the Group to remove certain covenants and cash

flow restrictions that were in place.

In September 2021, the Group announced that it has reached

agreement with dissenting shareholders of Regal Entertainment

Group with respect to the payment of judgment of their claim.

Under this agreement, the Group paid an initial cash settlement

of $170.0m and $92.0m was placed into an escrow account to

be available as additional liquidity under certain circumstances,

with a corresponding term loan entered into for $92.0m.

In 2021 the Group secured a $11.9m loan with Arvest Bank for

the Midwest City cinema in the US with a maturity of 2041.

At 31 December 2021 the Group had USD term loans

outstanding totalling $4.1bn, a Euro term loan of $214.1m,

aprivate placement loan of $251.8m, a convertible bond of

$213.0m and a $462.5m RCF.

Net financing costs totalled $690.8m during the year

(2020:$717.2m). Finance income of $208.4m (2020: $69.6m)

included interest income of $3.1m (2020: $7.4m), $3.0m on the

unwind of the discount on non-current assets (2020: $8.4m)

and $0.8m in respect of the unwind of the discount on

sub-lease assets (2020: $0.7m). Finance income also includes

a gain of $167.7m on the movement of the fair value of financial

derivatives (2020: $9.0m), this gain is driven by movements in

the Group’s share price affecting the valuation of the Group’s

warrants and convertible bond derivative liabilities, as well the

impact of movements in the LIBOR on embedded derivatives

in respect of interest rate floors on the Groups term loans.

A gain of $33.2m relating to the gain on extinguishment

onamending the extended RCF was recognised in 2020.

During the year the Group’s net investment hedge became

ineffective and was de-designated, resulting in a credit

of$11.6m being recycled to the Income Statement.

Foreign exchange gains of $22.2m (2020: $10.9m) were

incurred in respect of monetary assets and non-USD

denominated loans.

The finance expense of $899.2m (2020: $786.8m) has increased

due to higher incremental borrowing rates being applied to lease

liabilities that were amended during 2020 and 2021,driven

upward by changes in the Group’s credit rating. Lease liability

interest for the year was $444.5m (2020: $349.0m).

Interest on bank loans and overdrafts in the period totalled

$276.2m (2020: $166.3m), the increase is the result of

additional lending facilities entered into in 2020 and 2021,

described above. The other finance costs included: $61.3m

(2020: $33.1m) of amortised prepaid finance costs, $47.6m

(2020: $49.4m) in respect of the unwind of discount on

deferred revenue and loss of $5.0m on the movement of the

fair value of financial derivatives (2020: $55.4m). This included

the movements on the fair value of the derivative liability in

respect of the prepayment feature on one of the Group’s term

loans. In addition, $16.8m in respect of foreign exchange

losses (2020:$11.8m) were incurred in the year.

Upon modifications being made to existing debt agreements

during 2020, which implemented a 1% floor in LIBOR-linked

interest rates applied to US dollar-denominated term loans,

embedded derivative liabilities with a total value of $98.0m

were identified.

Cineworld Group plc

Annual Report and Accounts 2021

In 2019 the Group entered a contingent forward contract and

a contingent swap contract in order to hedge certain cash

flows expected to take place on completion of the proposed

Cineplex combination. Due to the termination of the deal,

thecontingent elements of the derivatives were not met.

During 2020 the Group terminated the swap resulting in a

gain of $10.4m and a loss of $4.5m on the deal contingent

forward in line with the fair values reported at 31 December

2019. In addition, the forward contract was modified on

termination, resulting inan additional loss of $10.2m during

2020 and $16.8m which was assessed to be in respect of

debtissuance costs which had been capitalised and were

amortised over the remainder of the year.

During 2020 the Group designated a net investment hedge

relationship between the Group’s Euro term loan and a portion of

the carrying value of the Group investments in Euro denominated

investments in order to mitigate the risk of reported foreign

exchange movements in respect of these items. In 2021, the net

investment hedge became ineffective. This resulted in a $11.6m

credit to the hedge reserve and charge to the income statement.

During the 2020 a hedge relationship between the Group’s

cross currency swaps and certain Euro denominated assets

became ineffective and the hedge relationship ended.

This resulted in $9.8m credit to the hedge reserve and

chargeto the income statement.

Taxation

The overall tax credit during the year was $142.5m, giving an

effective tax rate of 20.1% (2020: 11.8%) on the loss before tax

for the year.

The tax credit for 2020 included a current tax credit of

$224.0m. This primarily relates to a carry back of 2020 US tax

losses against profits of earlier periods under the Coronavirus

Aid, Relief and Economic Security (“CARES”) Act, resulting

ina cash tax refund which was received in 2021.

The effective tax rate for the year is decreased by a partial

de-recognition of the additional deferred tax assets arising

in 2021.

Tax uncertainties and risks are increasing for all multinational

groups which could affect the future tax rate. The Group takes

a responsible attitude to tax, recognising that it affects all our

stakeholders. The Group seeks at all times to comply with

thelaw in each of the jurisdictions in which it operates, and

tobuild open and transparent relationships with those

jurisdictions’ tax authorities. The Group’s tax strategy is

aligned with the commercial activities of the business, and

within its overall governance structure the governance of

taxand tax risk is given a high priority by the Board.

Earnings

The loss on ordinary activities after tax in the period

was$565.8m, compared with a loss in the prior year of

$2,651.5m. The decrease in the loss is the result of the impact

of restrictions and closures due to COVID-19 during 2020

and2021 respectively, as well as the knock-on impact on

filmreleases. There have also been significant non-recurring

charges and expenses in both years, with significant total

non-cash impairment charges set out above, which

significantly increased the loss in 2020.

Basic Deficit Per Share amounted to (41.2)¢ (2020: (193.2)¢).

Eliminating the one-off, non-trade-related items totalling $116.1m,

Adjusted diluted Deficit Per Share were (49.1)¢ (2020: (66.5)¢).

Statement of cash flows and statement of

financial position

Overall, net assets have decreased by $571.3m to a net liability

of $(345.0)m since 31 December 2020. Total assets decreased

by $254.5m. This is driven by the loss for the year. The total

liabilities have increased by $316.8m, primarily due to

additional debt obtained in order to secure liquidity.

With the material loss of revenue driven by the outbreak

ofCOVID-19 continuing throughout 2021, the Group agreed

newsources of liquidity and entered lease negotiations as set

out above. These measures are reflected in the Group statement

of cash flows. Total net cash generated in operating activities in

the year was $555.1m (2020: cash used $227.6m). Net debt of

$8.9bn at the year end is $0.6bn higher than the balance at

31 December 2020 primarily due to losses driven by the impact

of COVID-19 and the additional financing raised during the year.

Cineplex

On 6 July 2020 the Group confirmed that Cineplex had

initiated proceedings against it in relation to its termination

on12 June 2020 of the Arrangement Agreement relating

toitsproposed acquisition of Cineplex (the “Acquisition”).

The proceedings alleged that the Group breached its

obligations under the Arrangement Agreement and/or duty of

good faith and claimed damages of up to C$2.18 billion less the

value of Cineplex shares retained by Cineplex shareholders.

The Group defended these proceedings on the basis that it had

terminated the Arrangement Agreement because Cineplex

breached a number of its covenants and counter-claimed

against Cineplex for damages and losses suffered as a result of

these breaches and the Acquisition not proceeding, including

the Group’s financing costs, advisory fees and other costs.

The Ontario Superior Court of Justice has now handed

downits judgment. It granted Cineplex’s claim, dismissed

theGroup’s counter-claim and awarded Cineplex damages of

C$1.23 billion for lost synergies to Cineplex and C$5.5 million

for lost transaction costs. The Group disagrees with this

judgment and has appealed the decision. The Group does not

expect damages to be payable whilst any appeal is ongoing.

No liability has been recognised in respect of the judgement.

Dividends

The distribution of dividends on our ordinary shares is subject

to validation by the Board of Directors and must be in line

with applicable law. The board of directors validates the

amount of future dividends to be paid, taking into account the

cash balance then available, the anticipated cash requirements,

the overall financial situation, restrictions on loan agreements,

future prospects for profits and cash flows, as well as other

relevant factors. On 7 April 2020 the Board announced the

suspension of the 2019 fourth quarter dividend of 4.25 cents per

share to conserve cash for the Group. No dividend has been

declared in the current period, the Group continues to prioritise

liquidity preservation during its recovery from the pandemic.

Nisan Cohen

Chief Financial Officer

17 March 2022

The strategic report from pages 1 to 35 was approved by the

Board and signed on its behalf by:

Moshe Greidinger

Chief Executive Officer

17 March 2022

Israel Greidinger

Deputy Chief

Executive Officer

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CHAIR’S INTRODUCTION TO GOVERNANCE

Dear shareholders

I am pleased to present the Corporate

Governance Statement for 2021.

As a business, we continued to face

considerable challenges in light of

COVID-19 in 2021, including the

continued closure of our cinema

sitesfora portion of the year.

In light of this, as with 2020, a key

area of focus for the Board was the

Company’s COVID-19 response strategy,

including the reopening of our sites

from April.

Work to support the implementation

of strategy included the development

and oversight of plans to manage and

mitigate the extensive and ever-evolving

impact of the pandemic and, as ever, it

has been of vital importance to ensure

that sound governance principles

underpin all our decisions and

deliberations as a Board.

Regular update meetings have been

held throughout 2021, to consider

various operational and financial

matters, and the Board has received

detailed information from the Executive

Management Team on the developing

situation across all markets throughout

the pandemic.

In addition, the Board has frequently

reviewed information on cash flow and

liquidity. In July 2021, we announced the

securing of $200m of incremental loans,

maturing in May 2024, together with

covenant amendments on certain of the

existing debt facilities. More details may

be found on this significant work in the

CFO’s Review on pages 30 to 35.

Despite the challenging trading

conditions, the business has continued

to deliver strong operational and cash

control, and our teams have given their

utmost during periods where we have

been able to open. I would like to thank

them once again for their commitment

and dedication.

The work of the Board has been

supported through the year by the

Committees. It has been another busy

year for the Audit Committee, in crucial

areas such as going concern, lease

arrangements, impairments, and

accounting for the new financing

arrangements. The Committee also

closely monitored risk, including

emerging riskin the context of

theevolving consequences of the

pandemic. Specific work on climate

change risk hasalso taken place,

involving detailed risk assessment

workshops across the business.

More details of the activities ofthe

Committee can be found in the Audit

Committee Report on pages 56-60

andthe Principal Risks and Uncertainties

section on pages 14 to 19.

The Remuneration Committee

conducted a full review of the

Company’s Remuneration Policy in 2021,

to take account of the changes pursuant

to the 2018 UK Corporate Governance

Code (the “Code”). At the Annual

General Meeting in May, proposals were

made to update the Policy, including

inrespect of pension alignment,

shareholding guidelines, holding

periods, discretion, and malus

and clawback.

The Committee also put in place a new

Long-Term Incentive Plan (“LTIP”) in

early 2021, designed to support the

Group’s recovery by aligning the

interests of the Executive Directors

andother senior executives with the

interests of shareholders.

While we acknowledge that some

shareholders did not support our

proposals, both the LTIP and the new

Policy were approved by shareholders

and, as a Board, we are grateful for this

support. More information on the vital

work of the Remuneration Committee,

including details of the changes that were

made to the Policy and the consultation

processes and voting inconnection with

the LTIP and the newPolicy, can be found

in the Remuneration Report on pages 61

to 75.

Strong and effective governance

tosupport the Group’s strategy

“ The Board provides clear,

entrepreneurial and responsible

leadership in order to promote

the long term success of the

Group.”

Alicja Kornasiewicz

Chair

Cineworld Group plc

Annual Report and Accounts 2021

Led by the Nomination Committee,

there were some changes to the

composition of our Board during the

year. In March 2021, we were pleased to

announce the appointment of Dr Ashley

Steel, who became a Board member on

1 April. Ashley is a former Vice Chair and

member of the UK and European boards

of KPMG, with significant international,

financial and commercial experience.

Given Ashley’s skills and expertise, she

also became a member of the Audit and

Remuneration Committees on joining.

Rick Senat, who had served as a

Non-Executive Director of the Company

since 2010, and Senior Independent

Director, stepped down from the Board

following the Company’s 2021 AGM.

Rick made an exceptional contribution

tothe Company, having been involved

since the time of its inception, and

wewish Rick every future success.

Dean Moore took up the role of Senior

Independent Director on 22 March 2021.

We also announced a new

Environmental Committee of the

Board,established on 13 January 2022.

The Environment Committee is chaired

by independent Non-Executive Director,

Ashley Steel. Renana Teperberg (Chief

Commercial Officer), Camela Galano

(independent Non-Executive Director)

and Scott Brooker (Company Secretary)

are also members of the Committee.

The purpose of the Environment

Committee is to provide oversight, on

behalf of the Board, in relation to the

Group’s environmental strategy and

activities, which will include overseeing

the Company’s environmental reporting

and disclosures. Full details of our

Committee compositions may be

foundon page 43.

During the year, we undertook an

internal evaluation of the composition

and effectiveness of the Board, and I

ampleased to report that it supported

the view that the Board and its

Committees are operating efficiently

and productively. More details of the

work ofthe Nomination Committee and

of theBoard evaluation can be found

onpages 54 to 55. We also considered

ourpurpose, values and strategy, and

undertook a review of our corporate

culture, assessing the extent to which

our values have been embedded

throughout the Group.

The Board was satisfied with the results

of our review, which is described in more

detail on page 55.

As previously reported, Dean Moore

hasbeen appointed as the Non-

Executive Director to represent

employees in theBoardroom, in line

with the requirements of the Code.

During 2021, a detailed schedule of

employee forums and meetings was

prepared by the Human Resources

department, designed to garner

information and insights around

existingengagement methods and

employee points of view on Company

culture, diversity and inclusion,

careeropportunities, strategy and

performance. Feedback regarding

theprogramme has been positive and

information and views expressed as part

of the programme were presented to

the Board by Dean, in order that they

may be borne in mind by the Board in

our ongoing decision-making activities.

In addition to this, HR teams across the

Group continued to support our people

in 2021, in particular leading up to the

reopening of cinemas. Conference calls

with the Executive Teams remain in place

twice a week, in each territory, to ensure a

clear and quick flow of vital information.

More details of the Group’s people-

related initiatives, the Employee Voice

programme and employee engagement

can be found on pages 27, 48 to 49

and 80.

Lastly, and pursuant to the Code

requirements in relation to stakeholder

engagement, together with the

obligations arising under section 172

ofthe Companies Act 2006, we have

taken time as a Board to focus on how

we engage with our key stakeholders

and how we consider their needs,

concerns and expectations in Board

discussions and decision-making.

We have illustrated how the Directors

have had regard to the matters set

outin sections 172(1) (a) - (f) when

discharging their duties by describing

these in the context of our strategy for

reopening the cinemas. Our case study

on this can be found on page 47.

Alicja Kornasiewicz

Chair

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Board Statements

Requirement Board statement

Compliance with

theUKCorporate

GovernanceCode

Read more page 42

The principal governance rules applying to companies with a premium listing for the

yearcovered by this statement are contained in the UK Corporate Governance Code published

by the UK Financial ReportingCouncil (“FRC”) in July 2018 (the “Code”), and a copy is available

on its website www.frc.org.uk. For the year ended 31 December 2021, the Board considers that

the Company was compliant with the Provisions of the Code, save in the following areas:

Changes to Committee compositions announced on 22 March 2021, which took effect on 1 April

2021, strengthened the independence of the Committees, to ensure full Code compliance in this

area, following a transitionary period after the departure of Non-Executive Director Helen Weir

in arch 2020 – please see page 54 and 60 for more details. (Relevant Code Provisions 17 and 32).

The Company takes into account the pay and employment conditions of Cineworld’s

employees when setting executive pay, and there are a number of engagement mechanisms

in place across the Group. The Employee Engagement Director is also the Remuneration

Committee Chair and, during 2021, carried out several cinema site visits in the UK, to engage

with employees, where their own pay and progression were among the subjects discussed.

The Board has not explained to employees how executive pay and wider Company pay policy

are aligned as recommended by the Code on the basis that the Directors’ Remuneration

Report seeks to do so, and our employees wherever they are based are free at any time to

askquestions through the existing channels – please see page 27,48 and 80for more details

on employee engagement. (Relevant Code Provision 41).

The Remuneration Committee has resolved its policy on pension for Executive Directors and

alignment with the pension arrangements to employees and, as set out in the Directors’

Remuneration Policy, pension contributions for the CEO and Deputy CEO will be aligned from

1 January 2023. This alignment represents a reduction in the CEO and Deputy CEO’s pension

entitlement from the current contractual pension allowances – please see page 66 for more

details. For 2021, therefore, the incumbent CEO and Deputy CEO’s pensions were not aligned

as recommended by the Code. Please see page 66 of the Directors’ Remuneration Report for

more details on pension policy. (Relevant Code Provision 38).

Going Concern

pages 57 and 99 inNote 1

The Directors consider that the Group has adequate resources to continue in operational

existence for at least 12 months from the date of signing these accounts. Thus they continue

to adopt the going concern basis in preparing the annual financial statements, but have

highlighted material uncertainties regarding the continued impact on the Group of COVID-19

and its forecast return to performance levels observed prior to the pandemic and the

judgement received in respect of the Cineplex claim. For full details of the going concern

assessment, please see page 99 in Note 1. The Directors have considered the business

activities as set out on pages 30 to 35 and the principal risks and uncertainties on pages 14 to

19. The financial position of the Group, its cash flows, liquidity position and borrowing facilities,

as well as the Group’s objectives, policies and processes for managing capital, are described

in Note 25 on page 155. Financial risk management objectives, details of financial instruments

and hedging activities,and exposure to credit risk and liquidity risk are described in Note 26

to the financial statements.

Viability

pages 23 and 24

The Directors have assessed the viability of the Group over a three-year period, taking into

account the Group’s current position and the potential impact of the principal risks and

uncertainties set out on pages 14 to 19. This assessment considered the established controls

for the risks, and the available mitigating actions, as well as the uncertainty as to the Group’s

continued recovery from the impact of COVID-19. For full details of the Directors’ assessment

on the viability of the Group over the three-year period to 2024, please see pages 23 and 24.

Robust Assessment

ofEmerging and

PrincipalRisks

pages 14 to 19 and 51 to 52

The Directors consider they have undertaken a robust assessment of the emerging and

principal risks facing the Group, including those that would threaten its business model,

futureperformance, solvency and liquidity. Please refer to pages 14 to 19 for further

information on the Company’s principal risks and uncertainties, and their impact on the

prospects of the Group.

Review of Internal Control

and RiskManagement

Read more page 57

The Directors consider the Annual Report and Accounts, taken as a whole, is fair, balanced

and understandable, and provides the information necessary for shareholders to assess the

Group’s position and performance, business model and strategy. Please refer to page 57

CHAIR’S INTRODUCTION TO GOVERNANCE CONTINUED

Cineworld Group plc

Annual Report and Accounts 2021

BOARD OF DIRECTORS

AT 31 DECEMBER 2021

Alicja Kornasiewicz

Non-Executive Chair

Moshe (Mooky)

Greidinger

Chief Executive Officer

Israel Greidinger

Deputy Chief Executive

Officer

Nisan Cohen

Chief Financial Officer

Independent: No

Committee memberships:

None

Tenure on Board:

5 years

Relevant skills, qualifications

and experience:

Nisan Cohen joined the Board

in January 2017 as Chief

Financial Officer, and before

that had been part of the

Cineworld Group for 16 years.

Previously, as Vice President of Finance, he led the integration of

the finance teams in the Cineworld Group across nine countries

after the Cinema City Combination in 2014. In 2018, MrCohen

made a major contribution to the successful acquisition of Regal

Entertainment Group, including leading the integration of the

UK, ROW and US financial teams.

Principal external appointments:

Member of The Institute of Certified Public Accountants

in Israel.

Independent: No

Committee memberships:

None

Tenure on Board:

7 years 10 months

Relevant skills, qualifications

and experience:

Moshe Greidinger joined the

Board in February 2014 as Chief

Executive Officer. Prior to that

he was Chief Executive Officer

of Cinema City International

(“CCI”). He joined Cinema City in 1976.

Since 1984, Mr Greidinger has held executive positions

with Cinema City, has served as a Director and Deputy

Managing Director of Israel Theatres Limited since 1983, and

as Co-Chairman of the Cinema Owners Association in Israel

sinceAugust 1996.

Mr Greidinger achieved the “Exhibitor of the Year Award” at

ShoWest in Las Vegas in 2004, “International Exhibitor of the

Year Award” at CineEurope, in Amsterdam in 2011, with special

recognition for having developed new markets in Central and

Eastern Europe, and the “Global Achievement in Exhibition

Award” at CinemaCon in Las Vegas in April 2016.

Principal external appointments:

Director of Israel Theatres Limited; Co-Chairman of the

CinemaOwners Association, Israel; Head of the Board of

Trustees, the Hebrew Reali School of Haifa. He is a member

of the National Association of Theatre Owners Global Cinema

Federation (“NATO”).

Independent: No

Committee memberships:

None

Tenure on Board:

7 years 10 months

Relevant skills, qualifications

and experience:

Israel Greidinger joined

the Board in February

2014. He isthe Deputy

Chief Executive Officer of

the Company.

From 1994 until 2014, he worked for Cinema City International

(“CCI”) and was appointed Chief Financial Officer of CCI in 1995.

Mr Greidinger has also served as a Director of Israel Theatres

Limited since 1994.

From 1985 to 1992, he was Managing Director of C.A.T.S.

Limited(Computerised Automatic Ticket Sales), and from 1992

to 1994, he was President and Chief Executive Officer of Pacer

C. A.T.S. Inc.

Principal external appointments:

Director of Israel Theatres Limited since 1994; Chairman of the

Israeli Friends of Rambam Health Care Campus.

Independent on appointment

Committee memberships:

Tenure on Board:

6 years 7 months

Relevant skills, qualifications

and experience:

Alicja Kornasiewicz joined

the Board in May 2015 as an

independent Non-Executive

Director, and was appointed

Chair of the Board on 13 May

2020. She is also Chair of the Nomination Committee.

Ms Kornasiewicz brings extensive Central and Eastern Europe

financial, capital markets, business and political experience

to the Board. Over the last 20 years she has held a number

of executive and supervisory board positions. Inter alia, she

was the Chief Executive Officer of Bank Pekao SA, and Head

of Investment Banking for Emerging European countries at

Unicredit Group.

Ms Kornasiewicz served as Secretary of State in the Polish

Ministry of Treasury from 1997 to 2000 and was awarded

the Knight’s Cross of the Order of Polonia Restitua for her

contribution to the country’s economic development.

Ms Kornasiewicz is a long-time advocate for equal opportunities

for women in business, acting as Chair of the Programme Board

of the Women Business Leaders Foundation in Poland.

Ms Kornasiewicz holds a PhD in economics from Poznan

University of Economics and graduated from Harvard

Business School.

Principal external appointments:

Senior Adviser for Investment Banking Division at

Morgan Stanley.

Committee membership key

Nomination

Committee

Audit

Committee

Remuneration

Committee

Committee Chair

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Renana Teperberg

Chief Commercial Officer

Independent: Yes

Committee memberships:

Tenure on Board:

8 months

Relevant skills, qualifications

and experience:

Ashley Steel joined the

Board in April 2021 and

isamember of the Audit

andRemuneration Committees.

Ashley is a former Vice Chair and member of the UK and

European boards of KPMG, with significant international,

financial and commercial experience. Having led the Global

Transport, Leisure and Logistic practice at KPMG for 11 years,

shedeveloped a successful career advising FTSE and Fortune

500 boards on strategy.

Since retiring from KPMG in 2014, Ashley has undertaken

anumber of non-executive roles in the transport, technology

and media sectors.

Ashley has a PhD in Management from Henley Business School.

Principal external appointments:

Non-Executive Director at Vistry Group PLC.

Independent: No

Committee memberships:

None

Tenure on Board:

3 years 6 months

Relevant skills, qualifications

and experience:

Renana Teperberg was

appointed to the Board in

July2018, and has been part

of the Cineworld Group for

over 20 years. Ms Teperberg

first joined Cinema City International as a cashier in 1997, while

studying for a BA in psychology at the Hebrew University

of Jerusalem.

After progressing to General Manager, she moved to the

Cinema City International Head Office where she subsequently

became Head of Programming and Marketing.

Following the combination with Cineworld, she became Senior

Vice President of Commercial and then Chief Commercial

Officer in 2016. In 2018, Renana played a major role in the

acquisition of Regal Entertainment Group.

Renana holds an executive MBA in business management from

IDC Herzliya.

Principal external appointments:

Non-Executive Director of AC JV, LLC (Fathom Events),

National Cinema Media, Inc. and Digital Cinema Media Limited.

Dr Ashley Steel

Non-Executive Director

Scott S. Rosenblum

Non-Executive Director

Independent: No

Committee memberships:

None

Tenure on Board:

7 years 10 months

Relevant skills, qualifications

and experience:

Scott S.Rosenblum

joinedtheBoard in

February2014 as a

non-independent

Non-Executive Director.

Prior to his appointment, he was a member of the Supervisory

Board of Cinema City International (“CCI”), becoming its

Chairman in 2011.

Mr Rosenblum is licensed as a lawyer and is admitted to

theNew York Bar Association. He is Counsel at the law firm

of Kramer Levin Naftalis & Frankel LLP, New York, where he

was Partner for nearly 30 years until 2020. Before that he was

Managing Partner between 1994 and 2000 and a member of

the Executive Committee until 2018. Mr Rosenblum was also

Co-Chairman of the Corporate Department until 2020.

Mr Rosenblum is a graduate of Dartmouth College and the

University of Pennsylvania Law School. He has extensive

experience in areas of general corporate and securities law,

corporate finance, corporate governance, mergers and

acquisitions and joint ventures.

Principal external appointments:

Currently Counsel at Kramer Levin Naftalis & Frankel LLP

(previously Partner from 1991 to 2020 and Co-Chairman of

the Corporate Department from 2000 to 2020); Director and

adviser to the boards of various public and private companies.

Independent: Yes

Committee memberships:

Tenure on Board:

5 years

Relevant skills, qualifications

and experience:

Dean Moore joined the

Board in January 2017 as an

independent Non-Executive

Director. He is Chair of the

Remuneration Committee,

and became Senior Independent Director on 22 March 2021.

Prior to Cineworld, Mr Moore worked as Chief Financial Officer

of N Brown Group plc for 12 years from 2003 to 2015, before

which he was Chief Financial Officer of T&S Stores plc until it

was acquired by Tesco plc in early 2003.

From 1996 to 1999 he was Chief Financial Officer of Graham

Group plc, and he has held a number of other senior finance

positions. Mr Moore is a Chartered Accountant (ICAEW) and

graduate of University of Aston (Business Management BSc).

Principal external appointments:

Non-Executive Director, Audit Committee Chair and Senior

Independent Director of Volex Plc and Non-Executive Director

of Dignity plc (currently acting as interim CFO).

Dean Moore

Non-Executive Director

and Senior Independent

Director

BOARD OF DIRECTORS CONTINUED

Cineworld Group plc

Annual Report and Accounts 2021

Independent: Yes

Committee memberships:

Tenure on Board:

1 year 5 months

Relevant skills, qualifications

and experience:

Damian Sanders joined the

Board in August 2020 as an

independent Non-Executive

Director. He is also a member

ofthe Audit Committee.

Mr Sanders is an FCA qualified member of the Institute of

Chartered Accountants in England & Wales, bringing extensive

financial and commercial experience to the Board, including

over 20 years’ experience as a senior audit partner at Deloitte,

acting as adviser and corporate governance specialist for a

number of FTSE boards.

Principal external appointments:

Non-Executive Director of THG Holdings plc and Senior

Independent Non-Executive Director of Victorian Plumbing

Group plc.

Damian Sanders

Non-Executive Director

Arni Samuelsson

Non-Executive Director

Independent: Yes

Committee memberships:

Tenure on Board:

7 years 10 months

Relevant skills, qualifications

and experience:

Arni Samuelsson joined the

Board in February 2014 as an

independent Non-Executive

Director. He is a member of the

Nomination Committee.

He has over 40 years of cinema exhibition and film distribution

experience, principally through SAMfélagið (Samfilm) – a

cinema exhibitor and film distributor in Iceland, of which he

has been joint owner and Chief Executive Officer since it was

formed in 1975.

Mr Samuelsson has been Chief Executive Officer of Samfilm

EHF (SAMfélagið’s distribution arm) since 1975, and Chief

Executive Officer of SAMcinema (SAMfélagið’s cinema arm)

since the same year. Prior to this, Mr Samuelsson was a Director

and owner of Vikurbaer, a supermarket business in Keflavik,

from 1972 until its sale in 1982.

Principal external appointments:

Chief Executive Officer of Samfilm EHF (SAMfélagið’s

distribution arm) since 1975, and Chief Executive Officer

ofSAMcinema (SAMfélagið’s cinema arm) since 1975.

Camela Galano

Non-Executive Director

Independent: Yes

Committee memberships:

Tenure on Board:

3 years 6 months

Relevant skills, qualifications

and experience:

Camela Galano was appointed

to the Board as an independent

Non-Executive Director in July

2018. She is a member ofthe

Audit, Remuneration and

Nomination Committees.

Camela began her career at New Line Cinema, progressing

to the role of President of International Sales, Marketing &

Distribution, where she oversaw the international distribution of

innumerable titles, including the blockbuster trilogy “The Lord

of the Rings”.

Subsequently, Camela became the President of International

Film Acquisitions for Warner Bros. Following her time at Warner

Bros., she served as President of Relativity International,

overseeing global sales, marketing and distribution

management of Relativity’s own titles, acquisitions and

thirdparty releases.

Ms Galano is a long-time member of the Academy of Motion

Picture Arts and Sciences, and the British Academy of Film

andTelevision Arts.

Principal external appointments:

Head of International at Studio8.

Directors who left in the year

Rick Senat stepped down from the Board on 12 May 2021.

Committee changes since the year-end

A new Environment Committee of the Board was

establishedon 13 January 2022, chaired by Ashley Steel.

Renana Teperberg and Camela Galano are also members.

Camela Galano stepped down as a member of the Company’s

Audit Committee at the same time as joining the

Environment Committee.

Committee membership key

Nomination

Committee

Audit

Committee

Remuneration

Committee

Committee Chair

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE STATE MENT

Application of Code principles

The table below explains where to find further information on how the Company has applied the main principles of the UK

Corporate Governance Code 2018 (“Code”). The information required to be disclosed by Disclosure Guidance and Transparency

Rule 7.2.6 is set out in the Directors’ Report on pages 78 to82 and is incorporated into this statement by reference.

1. Board leadership and Company purpose

A. The Role of the Board

Pages 43 and 45

B. Purpose, Values and Strategy Pages 36 and 37

C. Effective Controls and Risk Management Pages 51 and 52

D. Stakeholder Engagement Pages 48 and 49

E. Workforce Policies

Pages 26 to 29, 55 and 80

2. Division of responsibilities

F. The Role of Chair

Page 44

G. Board Balance and Division of Responsibilities

Pages 43 to 44 and 47

H. The Role of the Non-Executive Directors

Page 44

I. Policies, Processes, Information, Time and Resources Pages 43 to 47

3. Composition, succession andevaluation

J. Succession Planning and Diversity

Page 55

K. Skills, Experience, Knowledge and Tenure on the Board

Pages 54 to 55

L. Board Evaluation

Page 54

4. Audit, risk and internalcontrol

M. Independence of the Internal and External Auditors,

and the Integrity of FinancialStatements

Pages 57 to 60

N. Fair, Balanced and Understandable

Page 57

O. Principal Risks and Internal Control

Pages 14 to 19

5. Remuneration

P. Policies and Practices to Support Strategy and Promote Long-Term Sustainable Success

Pages 61 to 75

Q. Formal and Transparent Procedure for Developing Policy on Executive Remuneration

Pages 61 to 75

R. Independent Judgement and Discretion when Authorising Executive Remuneration

Pages 61 to 75

The role of the Board

The Group is ultimately controlled by

theBoard of Directors of the Company.

The Board is responsible for the

overallleadership of the Group and for

determining its long-term objectives

and commercial strategy to create and

deliver strong and sustainable financial

performance to enhance shareholder

value. In fulfilling its role, the Board

ensures that necessary financial and

other resources are available to enable

the Group’s objectives to be met.

The basis on which the Board seeks to

preserve value over the longer term and

the strategy for delivering the objectives

is set out in the Strategic Report on

pages 1 to 35. The Board meets regularly

in the year for its scheduled meetings

and also for a strategy session. Ad hoc

meetings of the Board take place as

required. The meetings follow a formal

agenda, which includes matters

specifically reserved for decision by

theBoard. The Board also meets, as

andwhen necessary, to discuss and

approve,if appropriate, specific issues.

All Directors receive notice of such

meetings and are given the opportunity

to comment on the issues being

discussed if they are unable to

attendthe meeting.

A schedule of matters specifically

reserved for decision by the Board

has been agreed and adopted.

These matters include: setting Group

strategy; approving an annual budget

and medium-term forecasts; reviewing

operational and financial performance;

approving major acquisitions,

divestments and capital expenditure;

succession planning; approving

appointments to the Board and of the

Company Secretary and approving

policies relating to Directors’

remuneration and contracts.

Cineworld Group plc

Annual Report and Accounts 2021

The Board is supplied on a regular basis

with detailed financial and operational

information. Regular briefings by the

Executive Management Team are given

to the Board, to deepen the collective

understanding of the business, leading

in turn to more effective debate.

Division of responsibilities

The posts of Chair and Chief Executive

Officer are separate. The division of

responsibility between the Chair of

theBoard, Alicja Kornasiewicz, and

theChief Executive Officer, Moshe

Greidinger, is clearly defined in writing.

Further details of the respective

responsibilities are set out on page 44.

Board Committees

In 2021, there were three Board-

appointed Committees: an Audit

Committee, a Nomination Committee

and a Remuneration Committee, to

which certain Board functions have

been have been delegated. Each of

these Committees has formal written

terms of reference which clearly define

its responsibilities.

The terms of reference of each of the

Board’s three Committees are available

on the Company’s website

(www.cineworldplc.com/en/about-us/

corporate-governance).

As described further on page 43,

anewEnvironment Committee

wasestablished by the Board on

13 January 2022.

Governance framework

The Board

Implementation of the Group’s long-term strategy

Audit Committee

The Committee assists the Board in

discharging its responsibility with

regard to financial reporting, the

control environment, the work of

the External and Internal Auditors,

and the Risk and Assurance team.

Nomination Committee

The Committee is responsible for

evaluating the balance of skills,

knowledge and experience on

theBoard, the size, structure

andcomposition of the Board,

retirements, and appointments

ofadditional and replacement

Directors. It is also responsible for

overseeing the development of a

diverse pipeline for succession.

Remuneration Committee

The Committee makes

recommendations to the Board

forapproval of the Group’s broad

policy for the remuneration of the

Chair, the Executive Directors, the

Company Secretary and Senior

Management, and for the design of

performance-related pay schemes

and Long-Term Incentive Plans.

Chair: Damian Sanders

Audit Committee Report

page 56

Chair: Alicja Kornasiewicz

Nomination Committee Report

page 53

Chair: Dean Moore

Remuneration Committee Report

page 61

Membership of the Audit, Nomination and Remuneration Committees

Membership of the Audit, Nomination and Remuneration Committees at the commencement of the financial year was

as follows:

Chair Member Member Member

Audit Committee Dean Moore

(1)

Damian Sanders Camela Galano Rick Senat

(5)

Nomination Committee Alicja Kornasiewicz Scott Rosenblum

(6)

Arni Samuelsson

Remuneration Committee Dean Moore Alicja Kornasiewicz Camela Galano

Following changes that took effect on 1 April 2021, membership of the Audit, Nomination and Remuneration Committees at the

end of the financial year was as follows:

Chair Member Member Member

Audit Committee Damian Sanders

(3)

Dean Moore

(1)

Camela Galano Ashley Steel

(4)

Nomination Committee Alicja Kornasiewicz Arni Samuelsson Damian Sanders

(3)

Camela Galano

(2)

Remuneration Committee Dean Moore

(1)

Camela Galano Ashley Steel

(4)

(1) Dean Moore stepped down as Chair of the Audit Committee on 1 April 2021, and remained as a member.

(2) Camela Galano was appointed as a member of the Nomination Committee on 1 April 2021.

(3) Damian Sanders became Chair of the Audit Committee, and a member of the Nomination Committee, on 1 April 2021.

(4) Ashley Steel joined the Board on 1 April 2021 and became a member of the Audit and Remuneration Committees at that time.

(5) Rick Senat stepped down from the Board on 12 May 2021.

(6) Scott Rosenblum stepped down from the Nomination Committee on 1 April 2021.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE STATEMENT CONTINUED

Changes to Committees following the year-end

A new Environment Committee of the Board was established on 13 January 2022. The Environment Committee is chaired

byindependent Non-Executive Director, Ashley Steel. Renana Teperberg (Chief Commercial Officer), Camela Galano

(independent Non-Executive Director) and Scott Brooker (Company Secretary) are also members of the Committee. The aim

of the Environment Committee is to provide oversight, on behalf of the Board, in relation to the Group’s environmental strategy

and activities, which will include overseeing the Company’s environmental reporting and disclosures. Camela Galano stepped

down as a member of the Company’s Audit Committee at the same time as joining the Environment Committee.

Roles and responsibilities of the Directors

Role Name Responsibility

Chair Alicja Kornasiewicz The Chair, together with the Chief Executive Officer, leads the Board in

determination of its strategy having regard to the Group’s responsibilities to its

shareholders, customers, employees and other stakeholders. She is responsible

for organising the business of the Board, and ensuring that Directors receive

accurate, timely and clear information. The Chair also facilitates constructive

Board relations and the effective contribution of all the Non-Executive Directors

and when appropriate, discusses matters with the Non-Executive Directors

without the Executive Directors being present.

Chief

Executive

Officer

Moshe (Mooky) Greidinger The Chief Executive Officer has direct charge of the Group on a day-to-day basis

and is accountable to the Board for the financial and operational performance of

the Group. He holds regular meetings with his Executive Management Team.

Deputy Chief

Executive

Officer

Israel Greidinger The Deputy CEO supports the CEO with the day-to-day management of the

Group. He is responsible for developing the Group’s business channels and for

growing the Group’s market share.

Chief Finance

Officer

Nisan Cohen The Chief Financial Officer provides strategic and financial guidance to ensure

the Group’s financial commitments are met. He also devises the financial and tax

strategies of the Group in line with the agreed risk appetite and has lead

responsibility for producing the Group’s budget.

Chief

Commercial

Officer

Renana Teperberg The Chief Commercial Officer is responsible for delivery of the Group’s

commercial strategy and has lead responsible for the Group’s marketing activities

and customer engagement initiatives

Non-

Executive

Directors

Camela Galano, Dean Moore,

Scott S. Rosenblum, Arni

Samuelsson, Damian

Sanders, Ashley Steel

The Non-Executive Directors provide constructive challenge, strategic guidance,

offer specialist advice, and hold management to account. They play a key role

in reviewing strategic proposals, including major investments and financing

transactions. The Non-Executive Directors meet during the year in the absence

of the Executive Directors.

Senior

Independent

Director

Dean Moore The Senior Independent Director is available to shareholders if they have

concerns which contact through the normal channels of Chair, Chief Executive

Officer, Deputy Chief Executive Officer or Chief Financial Officer has failed to

resolve or for which contact is inappropriate.

Company

Secretary

Scott Brooker from 1 March

2022, Nigel Kravitz for the

interim period 28 January

2022 to 28 February 2022,

and Fiona Smith until

27 January 2022

The Company Secretary is responsible for advising and supporting the Chair and

the Board on Corporate Governance matters, ensuring Board procedures are

followed and facilitating the good information flow within the Board and the

Board-appointed Committees. He also acts as Secretary for all the Committees.

Cineworld Group plc

Annual Report and Accounts 2021

Attendance at meetings

Attendance at the scheduled Board and Committee meetings for 2021 is described below:

Board

Audit

Committee

Remuneration

Committee

Nomination

Committee

Number of scheduled

meetings in year 6 5 4 2

Independent Attended Attended Attended Attended

Directors

Alicja Kornasiewicz

Independent on

appointment 6/6

(1)

5/5

(2)

4/4

(2)

2/2

(1)

Nisan Cohen No 6/6 N/A N/A N/A

Camela Galano Yes 6/6 3/3 4/4 1/1

(4)

Israel Greidinger No 6/6 N/A N/A N/A

Moshe Greidinger No 6/6 N/A N/A N/A

Dean Moore Yes 6/6 5/5 4/4

(1)

N/A

Scott Rosenblum

(6)

No 6/6 N/A N/A 1/1

(6)

Arni Samuelsson Yes 6/6 N /A N/A 2/2

Damian Sanders Yes 6/6 5/5

(1)

N/A 1/1

(

)

Rick Senat Yes 2/2

(5)

2/2

(5)

N/A N/A

Renana Teperberg No 6/6 N/A N/A N/A

Ashley Steel

(3)

Yes 4/4 3/3 4/4 N/A

(1) Chair of Board/Board Committee.

(2) Committee meetings are attended by the Chair by invitation.

(3) Ashley Steel was appointed to the Board on 1 April 2021, and also became a member of the Audit and Remuneration Committees at that time.

Between the date of Ashley’s appointment and the year end, Ashley attended the maximum number of Board and Committee meetings possible.

(4) Damian Sanders and Camela Galano were appointed as a members of the Nomination Committee on 1 April 2021. Between that time and the year end,

there was only one scheduled Committee meeting, so they attended the maximum number of meetings possible.

(5) Rick Senat stepped down from the Board at the AGM on 12 May 2021. Until that time, there had been two Board meetings and two Remuneration

Committee meetings, so Rick attended the maximum number of meetings possible.

(6) Scott Rosenblum stepped down as a member of the Nomination Committee on 1 April 2021.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE STATEMENT CONTINUED

Directors and Directors’

independence

At the start of the year, the Board was

composed of eleven members, five of

whom were considered independent.

Ashley Steel joined the Board as an

independent Non-Executive Director

on1 April 2021 and, on 12 May 2021,

RickSenat stepped down from the

Board. At the end of the year, the

Boardwas again composed of

elevenmembers, five of whom

areconsidered independent.

The Code recommends that at least

halfthe board of directors (excluding

the chair) should comprise non-

executive directors determined by the

Board to be independent. The Board

considers that Camela Galano, Dean

Moore, Arni Samuelsson, Damian

Sanders, Rick Senat and Ashley Steel

were, for the year (or the portion of the

year for which they served as Non-

Executive Directors), independent

Non-Executive Directors.

The Board is satisfied that Dean Moore

meets the requisite criteria to be

considered independent, notwithstanding

his previous interim employment within

the Group, given the nature of the role

he performed in the ten-month period

from March 2016, where his mandate

was to focus on the Chief Financial

Officer succession planning process.

Prior to his stepping down in May 2021,

Rick Senat had served on the Board

since 2010. In respect of his time on the

Board past his nine years of tenure, a

rigorous review was undertaken as to

whether Rick remained independent,

and the Board was confident that Rick

was able to demonstrate independent

judgement in Board discussions, to

provide effective challenge and exercise

independence of thought, and was

considered to be independent.

Scott Rosenblum is not viewed as

independent because of his previous

business dealings with the Greidinger

family and its interests, and as he is

theGlobal City Theatres B.V. appointee

under the relationship agreement

asdescribed on page 77 of the

Directors’Report.

The names of the Directors at the year

end, together with their biographical

details, are set out on pages 39 to 41.

The terms and conditions of

appointment of the Non-Executive

Directors are set out in letters of

appointment and are made available

forinspection by any person at the

Company’s registered office during

normal business hours, and will be

available at the AGM. Further details

ofthe letters of appointment of the

Non-Executive Directors and the

servicecontracts of the Executive

Directors can be found in the Directors’

Remuneration Policy which is set out in

the Company’s 2020 Annual Report and

Accounts on pages 59 to 69.

The independent Non-Executive

Directors bring an objective viewpoint

and range of experience to the Group

and ensure that no individual or group

of individuals is able to dominate the

Board’s decision-making. They play

akey role in reviewing proposals

andproviding constructive challenge

generally and in particular in respect

ofstrategy. They also ensure that

appropriate standards are maintained.

All the Non-Executive Directors have

access to independent legal advice

subject to consulting with the Board

andfollowing an agreed procedure.

Board evaluation

In accordance with the Code, the

Company conducts an annual

evaluation of Board and Board

Committee performance, which is

facilitated by an independent third

partyat least once every three years.

For 2021, the performance of the Board

and Committees was assessed using

aninternal process. Further details of

the evaluation can be found in the

Nomination Committee Report on

page 54.

Election and re-election

The appointment and replacement of

directors is governed by the Company’s

Articles of Association, the UK

Corporate Governance Code (the

“Code”), the Companies Act 2006

andrelated legislation. All Directors

intending to continue in office seek

election or re-election by shareholders

at each AGM. The Articles of Association

may be amended by a special resolution

of the shareholders.

Biographical details of all the current

Directors are set out on pages 39 to 41.

In view of the performance evaluation,

the Board is satisfied that each Director

standing for election orre-election

continues to show the necessary

commitment and continues to be

aneffective member of the Board

dueto his or her skills, expertise

andbusiness acumen.

External commitments

The Chair and the Non-Executive

Directors all perform a limited number

of external roles, as set out in their

biographies, but the Board is satisfied

that these are not such as to interfere

with the performance of their duties to

the Group.

Stakeholder engagement

The Directors value contact with the

Company’s institutional and private

investors. An Annual Report is sent to

allnew shareholders and is otherwise

made available to shareholders via the

Company’s website unless they have

specifically requested that a copy is

sentto them. Presentations are given to

shareholders and analysts following the

announcement of the interim results and

the preliminary announcement of the

full year results. Trading updates are

typically issued in advance of the full

year results and the interim results.

Separate announcements of all material

events are made as necessary.

In addition to the CEO, Deputy CEO

andCFO, who have regular contact

withshareholders, the Chair and the

Committee Chairs are available to

meetwith shareholders as and when

required. Additionally, the CEO, Deputy

CEO and CFO provide focal points for

shareholders’ enquiries and dialogue

throughout the year. The whole Board is

kept up to date at its regular meetings

with the views of shareholders and

analysts and it receives reports on

changes in the Company’s share register

and market movements. The Board uses

the AGM to communicate with private

and institutional investors and welcomes

their participation. The Chair aims to

ensure that the Chairs of the Audit

Committee, Remuneration Committee

and Nomination Committee are

available at the AGM to answer

questions, and that all Directors

attend.The Company’s website

(www.cineworldplc.com) provides an

overview of the business. Major Group

announcements are available on the

website and new announcements are

published without delay. All major

announcements are approved by the

Chair and Executive Directors and

circulated to the Board prior to issue.

The Group also has internal and external

checks to guard against unauthorised

release of information.

Cineworld Group plc

Annual Report and Accounts 2021

Directors’ duties – compliance

with s.172 of the Companies

Act2006

Section 172 of the Companies Act 2006

(“s.172”) requires directors to promote

the success of the company for the

benefit of the members as a whole

andin doing so have regard to the

interests of stakeholders including

customers, employees, suppliers,

andthe wider community in which

itoperates. The Board is focused on

itsresponsibilities under s.172, and

theimpact of the business on key

stakeholder groups is considered on

aregular basis. During 2021, the Board

spent time examining stakeholder

engagement mechanisms and a

summary of these is set out on pages 46

to 49. These mechanisms will continue

to be reviewed to consider whether

there are ways to enhance their

effectiveness and improve on the

programme of engagement activities

that is already in place.

Board discussions and

decision-making

How the Directors have had regard to

the matters set out in sections 172(1)

(a)-(f) when discharging their duties:

Case study: Cinema

Re-opening Strategy

One key area of focus for the Board in

2021 was developing the Company’s

strategy for reopening the business

following the closures brought about

byCOVID-19.

Key work involved the oversight of

essential operational, people and

financial plans to mitigate the

pandemic’s impact on the Company

andits stakeholders while sites were

closed, and to ensure the smooth

opening of cinemas across the Group

from April 2021.

During the planning stages for

re-opening, the Board considered

detailed updates from Management

onthe evolving situation, including

developments in employee matters and

return-to-work plans. With the health

and safety of employees and customers

at the heart of key decisions, the Board

discussed and provided support in

relation to operational aspects of

reopening, maintaining oversight of the

critical measures needed to provide

a safe environment.

Such activities were supported by the

Audit Committee and the Board, which

received regular risk review reports

andother updates from the Risk and

Assurance team. New safety measures

introduced included an updated

booking system to ensure social

distancing within and throughout

cinemas, adapted daily movie schedules

to manage queues and avoid the

build-up of crowds, and enhanced

hygiene and sanitation procedures

across all sites.

Mindful of the Company’s crucial

relationships with suppliers, customers

and others, the Board also received

comprehensive updates that covered

areas such as discussions with landlords,

film studios and other major suppliers,

as the business prepared to open

its doors.

With the aim of promoting the long-

term success of the Company, the

Boardalso monitored costs and

capitalexpenditure associated with

thereopening of sites, and liquidity.

A key decision in this area includes

thesecuring in July 2021 of $200m

ofincremental loans, maturing in

May2024. Taking into account the

importance of high standards of

governance and business conduct,

extensive advice was sought from

professional advisers in respect of the

Group’s financing obtained in July 2021.

More details may be found in the CFO’s

Review on pages 30 to 35.

The Board continues to preside over

theongoing strategy as the Company

continues to address COVID-19 related

impacts on its global operations.

Culture

The Board considered Company

purpose, values and strategy in 2021,

and undertook a review of corporate

culture, assessing the extent to which

Cineworld values have been embedded

throughout the Group. The Board was

satisfied with the results of the review,

which involved consideration of several

sources of cultural insight, including

feedback from the Employee Voice

programme (described in more detail

inthe Employee Voice section below),

whistleblowing data, and updates from

the CEO and HR teams in respect of

employee matters. It is planned that the

Group’s employee engagement surveys,

which were postponed for 2021, will

resume in 2022, and the detailed results

flowing from these surveys will be

incorporated into future cultural reviews.

The Board is conscious of the culture

review undertaken and discussions with

both executives and employees, the

Board’s decision making process has

regard for consistency with and impact

on the corporate culture.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Employee Voice

As part of Cineworld’s commitment to

compliance with the UK 2018 Corporate

Governance Code, the Board appointed Dean

Moore as the designated Non-Executive

Director with responsibility for workforce

engagement (“Employee Voice”) with effect

from 1 January 2020. Dean’s role is to ensure

that employee interests and feedback are

incorporated into the Board’s discussions as

appropriate and his responsibilities include

ensuring that the Board has effective

methods of receiving feedback

from employees.

During 2021, a detailed schedule of employee

forums and meetings was prepared by the

Human Resources department, designed

togarner information and insights around

existing engagement methods and employee

points of view on Company culture, diversity

and inclusion, career opportunities, strategy

and performance. The schedule included site

visits and tours by Dean and the HR team in

the UK with Regional and General Managers

at a selection of cinemas, followed by

presentations from the General Managers,

then face-to-face Q&A sessions with staff

members, where cinema staff at all levels had

the opportunity to present to Dean on their

day-to-day activities, and to ask questions.

Feedback regarding the programme

waspositive and information and views

expressed as part of the Q&A sessions were

summarised for the Board and presented by

Dean, in order that they may be borne in

mind by the Board in its ongoing decision-

making activities. Another schedule of visits

is planned for 2022, to enable continued

understanding and consideration of

employee views in Board discussions.

In addition to the Employee Voice

programme, the Board received regular

updates from the CEO in relation to live

employee issues. It is also planned for

employee engagement surveys to be

reintroduced across the Group in 2022,

following a postponement in the regular

schedule in light of global cinema closures

due to the impact of COVID-19.

The Board will review the approach to

workforce engagement annually in the light

of any changing governance expectations

and ongoing feedback. More information on

the Group’s people-related initiatives for the

year may be found on page 26.

CORPORATE GOVERNANCE STATE MENT

CONTINUED

Shareholders

The Chief Executive Officer, Deputy Chief Executive

Officer, and Chief Financial Officer provide focal points

for shareholders’ enquiries and dialogue throughout the

year. The Board uses the AGM to communicate with

private and institutional investors.

Engagement

mechanisms

− Investor meetings

− Governance meetings

with the Chair and

Committee Chairs

− AGM

− Investor conference

participation

What do they care

about most?

− Strategy

− Strong leadership

− Strong returns

Customers

Our customers are key to our success. We focus on

ensuring that they have a positive experience every

time to increase the likelihood of repeat visits.

Engagement

mechanisms

− Primarily through the

voice of the customer

programme “Rant

and Rave”

− Customer contact

− Social media

− Unlimited

membership

and feedback

− Site visits

What do they care

about most?

− Quality of

cinema experience

− Customer

service in cinema

− Innovation

− Booking efficiency

and smart technology

− Sustainability

Cineworld Group plc

Annual Report and Accounts 2021

Engaging with our

stakeholders and

responding to

theirneeds

Suppliers

We continue to work hard at developing and

maintaining good relationships with a range of film

studios and distributors. Strong relationships with our

principal retail suppliers enable us to work together

on promotions that help drive retail sales.

Engagement

mechanisms

− Supplier exhibitions

− Regular meetings

− Payment practice

reporting and analysis

− Property relationships

– developers, landlords

and local planners

− Innovation –

commercial

relationships

withsuppliers

of technology

− Retail – commercial

relationships with

suppliers of retail

− Industry body

memberships

What do they care

about most?

− Collaborative

relationships

− Good communication

Wider community

Our usual work with charities, schools and community groups

across all our territories is very important to us where we are

involved with a wide range of activities including working with

distributors on charity screenings, providing free shows for

organisations and working closely with local schools.

Engagement

mechanisms

− Social media

− Numerous local initiatives

− Dialogues with local

businesses, schools, councils

and charities

− Requests from charities

received directly

− Partnership with charities

− Our apprenticeship

programmes

What do they care

about most?

− Jobs and local investment

− Active support for local

charities and organisations

Employees

We are committed to our internal promotion

philosophy and the development of talent through

our“Be More” programmes.

Engagement

mechanisms

− Employee engagement

surveys across Group

− Site visits feedback

− Whistleblowing line

− Turnover data

− Genderand diversity

information

What do they care

aboutmost?

− Being able to develop

careers within

the business

− Feeling involved

− Being listened to

− Being motivated

− Managers motivating

andstanding up

for employees

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE STATEMENT CONTINUED

Audit

The Board is responsible for the

preparation of the Annual Report and

ensuring that the financial statements

present a fair, balanced and

understandable assessment of the

Group’s financial position and prospects.

The detailed work to ensure this, and

tosubstantiate the fair, balanced

andunderstandable statement, is

undertaken by the Audit Committee.

Risk and internal control

The Board has overall responsibility for

establishing, monitoring and maintaining

an effective system of risk management

and internal control. These systems

provide reasonable assurance that the

Group’s assets are safeguarded, and

that material financial errors and

irregularities are prevented or detected

with a minimum delay. The Group

approach is implemented using the

principles of the Three Lines of

Defencemodel, as illustrated in

thediagram below.

During the year, the Board has directly,

and through delegated authority to

theExecutive Management Team and

the Audit Committee, overseen and

reviewed the performance and evolution

of the approach to risk management

and internal control. As part of this

review process, a detailed report is

prepared by the Head of Risk and

Assurance and presented to the Audit

Committee, which considers the details

of the report and has the opportunity

toask questions. The Audit Committee

in turn reports to the Board on the

effectiveness review, and the findings

arising thereunder.

The ongoing review and evaluation of

risk management and internal control is

undertaken by the Risk and Assurance

team whose key responsibilities are:

− risk management;

− internal audit; and

− fraud detection and loss prevention.

Executive Directors

1st Line 2nd Line 3rd Line

Board and Committees

Process and control implementation

and development at cinemas

Operationalise:

− Cinema operating manuals

(policiesand processes)

− Regional/District

Manager oversight

− Training and development

− Regulation and compliance

Group and territory oversight/

monitoring and strategy/

policy setting

Support and review:

− Operational performance reviews

− Executive Directors’ oversight

andchallenge

− Group Board and Committee

oversight and challenge

− Financial oversight and review

− Risk Management Framework design

and implementation

− Assistance in process and control

development

− Management self-assessments

− Customer satisfaction surveys

Independent challenge to the

levelsof assurance provided by

Management on the effectiveness

ofgovernance, risk management

andinternal controls

Challenge and assure:

− Risk-based audits

− Financial controls reviews

− Cinema compliance

assurance programme

− Health and safety

assurance programme

− Insurance inspections

− Fraud and loss

prevention monitoring

− PCI testing

− Data privacy testing

− IT and information security

assurance activity

SUPPORT

FUNCTIONS

OPERATIONS

US UK ROW

The Board confirms that, in

accordance with the Code:

− there is an ongoing and robust

process for identifying, evaluating

and managing the emerging and

principal risks faced by the Group

(for more details please see

Principal Risks and Uncertainties

on pages 14 to 19);

− the Company’s systems of risk

management and internal control

have been in place for the year

under review, and up to the date

ofapproval of this Annual Report,

are regularly reviewed by the

Executive Directors and the Board,

and are deemed to be effective

with no significant weaknesses

identified; and

− the systems comply with the FRC

Guidance on Risk Management,

Internal Control and Related

Financial and Business Reporting.

External Audit (provided by PwC)

Regulators

Cineworld Group plc

Annual Report and Accounts 2021

Risk

The Board, supported by the

AuditCommittee and the Executive

Management Team, has overall

responsibility for implementing an

effective risk management approach.

The Group’s approach is governed by

itsRisk Management Framework that

sets out the policy, oversight structure,

accountability and processes for the

monitoring and reporting of risk within

the Group, and facilitates the following

objectives for risk management:

− to identify, measure, control and

report on business risk that would

potentially undermine the

achievement of the Group strategic

objectives, both strategically and

operationally, through appropriate

analysis and assessment criteria;

− to better allocate effort and resources

for the management of key and

emerging risks;

− to drive business improvements and

improve intelligence for key decision-

making; and

− to support and develop the Group’s

reputation as a well governed and

trusted organisation.

The application of the key components

of the Risk Management Framework

have been as follows:

Oversight structure and accountability

– The risk management oversight and

accountability structure has ensured

that risk consideration is from both

a“top-down” and “bottom-up”

perspective. The Group maintains

aPrincipal Risk Register as well as

operational risk registers for support

functions, cinema operations and

specific projects.

Ongoing process – At each level the

risk assessment process is based on

five key steps:

1. Risk identification (using cause and

effect analysis)

2. Assessment of inherent risk severity

3. Identification of existing controls

and assessment of effectiveness

4. Assessment of residual risk severity

5. Development and implementation of

risk mitigation

Details of the Group’s principal risks

andhow they are being managed

ormitigated are provided on

pages 14 to 19.

As part of this process, risk appetite is

considered by the Board annually for

each of the principal risks, allowing the

Board to clearly set out the nature and

extent of the risk the Group is willing to

accept, and the level of investment in

control in pursuit of the Group’s

strategic objectives.

Escalation, monitoring and reporting –

Aclear escalation policy is in place to

ensure changes to risk exposure are

notified up through the governance

structure as required. Risk owners are

identified for all risks and have the

responsibility for ongoing monitoring of

the effectiveness of current controls and

the progress against the implementation

of further mitigating actions.

There is a cycle of ongoing monitoring

and reporting activities in place with

riskinformation being presented to

theBoard and Audit Committee.

Culture – To support embedding the

application of the Risk Management

Framework into the culture and

behaviours of the Group, ongoing

training has been delivered by the

Riskand Assurance team.

Internal control

While the Board has overall

responsibility for the Group’s system

ofinternal control and for reviewing

itseffectiveness, it has delegated

responsibility for the operation of

thesystem of internal control to

theExecutive Management Team.

The detailed review of internal control

has been delegated to the Audit

Committee. Senior Management

withineach part of the Group are

responsible for internal control and

riskmanagement within their own

areaandfor ensuring compliance with

the Group’s policies and procedures.

The Audit Committee has oversight

ofthe programme of assurance

activities to allow for its ongoing

reviewof the effectiveness of internal

control. The delivery of this assurance

programme is undertaken by the Risk

and Assurance team, which is supported

by specialist advisers as required.

Details of the activities of the Audit

Committee during 2021 are set out on

page 57.

Internal audit – The internal audit

planisa combination of Group-wide

risk-based reviews (providing assurance

over thekey controls relied upon for the

principalrisks), financial and information

technology controls testing and

additional specific reviews requested

byManagement. For 2021, the Company

engaged RSM, under the direction of

the Head of Risk and Assurance, to

undertake the complete Company’s

internal audit plan. Certain aspects of

the internal audit were rescheduled to

alater date due to COVID-19.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CORPORATE GOVERNANCE STATEMENT CONTINUED

Cinema compliance – The Cinema

Compliance programme has operated

across the Group with reviews being

undertaken to understand the

application of the key controls within

theoperational procedures in the

areasof cash, retail, payroll/HR and

operations. This programme was halted

as a result of the cinema closures in

2020 and 2021, although the internal

selfcertification process continued

throughout. Cinema compliance reviews

will resume in 2022, the results of which

will be reviewed and considered by the

Audit Committee.

Each cinema in the Group has been

riskassessed based on operational and

management information to determine

which cinemas would be included in the

audit programme for the year.

Quarterly management reporting

ofkeythemes and trends helps

supporttheGroup to make

continuedimprovements.

In addition to the programme of on-site

reviews conducted by the Risk and

Assurance team, an annual self-

assessment audit is undertaken by

eachcinema in the Group.

Fraud detection and loss prevention

– To support the Group in fraud

detection and loss prevention, ongoing

analysis of our key data sources is

undertaken to identify any irregular

transaction activity that could indicate

instances of fraud, loss or failure of

procedural compliance.

External audit – The External Auditors

provides a supplementary, independent

and autonomous perspective on those

areas of the internal control system

which it assesses in the course of its

work. Its findings are reported to the

Audit Committee.

Operational controls – The Executive

Directors, on a day-to-day basis, are

involved in reviewing the key operations

of the business through their interaction

with their Senior Management teams

across the Group and their discussions

on operational performance

and delivery.

Financial control – The Group has

internal control and risk management

procedures in relation to the Group’s

financial reporting processes and the

preparation of its Consolidated Financial

Statements. Procedures are in place at

the entity, country and Group level,

withfinance teams and management

responsible for the reporting and

controlat each level of the process.

More complex areas of reporting are

addressed at the group level with

seniormanagement input and

oversight.These procedures ensure

themaintenance of records which

accurately and fairly reflect transactions,

to enable the preparation of financial

statements in accordance with

International Financial Reporting

Standards or FRS 101, as appropriate,

with reasonable assurance, and that

require reported data to be reviewed

and reconciled, with appropriate

monitoring internally and by the

Audit Committee.

Ongoing financial performance is

monitored through reporting to the

Executive Directors and the Board.

Capital investment and all revenue

expenditure are regulated by a

budgetary process and authorisation

levels, with post-investment and

periodend reviews as required.

A comprehensive budgeting system

allows managers to submit detailed

budgets which are reviewed and

amended by the Executive Directors

prior to submission to the Board

for approval.

As a result of the General Data

Protection Regulation (“GDPR”),

additional assurance activities have

been undertaken that focused on

reviewing the maturity of the Group

inthe application of the regulation.

In line with requirements under the

Payment Card Industry Data Security

Standard, an independent security

assessor provides reports on

compliance (where applicable).

Policies and procedures – The Group

has in place a range of governance-

related policies which are regularly

reviewed and communicated to

employees. These include Gifts and

Hospitality, Anti-Fraud and Bribery, and

Health and Safety. In addition, the Group

has in place whistleblowing policies so

that the workforce may raise concerns

in confidence. Whistleblowing data is

routinely reviewed by the Board and

follow up actions are considered.

For more details of the Group’s

policiessee page 27.

Cineworld Group plc

Annual Report and Accounts 2021

Chair Alicja Kornasiewicz

Committee

members

Camela Galano

Arni Samuelsson

Damian Sanders

The Company Secretary acts as

Secretary to the Committee

At the same time, we announced

somefurther changes to the Board and

Committee compositions. Rick Senat,

who had been a Non-Executive Director

of the Company since 2010, stepped

down from the Board at the conclusion

of the Company’s 2021 AGM.

Dean Moore took up the role ofSenior

Independent Director in Rick’splace

on22 March 2021. The composition of

the Nomination Committee itself was

refreshed, with independent Non-

Executive Directors Camela Galano

andDamian Sanders joining, and

ScottRosenblum standing down.

We also announced a new Environment

Committee of the Board,established

on13 January 2022. The Environment

Committee is chaired by Ashley Steel.

Renana Teperberg (Chief Commercial

Officer), Camela Galano (independent

Non-Executive Director) and Scott

Brooker (Company Secretary) are also

members of the Committee.

The purpose of the Environment

Committee is to provide oversight, on

behalf of the Board, in relation to the

Group’s environmental strategy and

activities, which will include overseeing

the Company’s environmental reporting

and disclosures. We believe that the

appointment of this new Committee

willserve to enhance the existing

governance framework around

environmental issues and the work

ofthe Board in this area.

Camela Galano stepped down as

amember of the Company’s Audit

Committee at the same time as joining

the Environment Committee.

Full details of our Committee

compositions may be found on page43

and 54.

For the 2021 financial year, we opted for

an internal evaluation of the composition

and effectiveness of the Board and its

Committees. I am pleased to report that

the internal evaluation found the Board

and its Committees to be operating

efficiently and productively. More details

of the work of the Nomination Committee

and the outcomes of our Board

evaluation can be found on page 54.

NOMINATION COMMITTEE REPORT

Other activities of the Committee

included discussions on diversity and

succession planning, and consideration

of how we can best support and

encourage the development of talent

atSenior Manager level.

Details regarding the gender balance

ofour employees and of the Executive

Management Team can be found on

page 29.

Regarding the gender balance on our

Board, I would like to note that there are

currently four female Board members,

out of eleven, representing an increase

in female representation against the

prior year. Following the publication of

the FTSE Women Leaders Review in

February 2022, we were ranked in the

Top Ten in relation to the FTSE 250

Rankings 2021 Women on Boards and

Leadership, and second in the Travel

and Leisure sector.

Lastly, in respect of the ethnic diversity

of our Board, we have met the target

setin the February 2020 update report

from The Parker Review. More details of

our approach in relation to diversity may

be found on page 27.

Alicja Kornasiewicz

Chair of the Nomination Committee

REPORT OF THE

NOMINATION

COMMITTEE FOR 2021

Dear shareholders

I am delighted pleased to present the

report of the Nomination Committee

for 2021.

Work in relation to Board and

Committee composition continued

inthe early part of the year.

In March 2021, after a rigorous

recruitment process supported by

external search agency Russell Reynolds

Associates, we were delighted to also

announce the appointment of Dr Ashley

Steel, as an independent Non-Executive

Director, with effect from 1 April.

Ashley is a former Vice Chair and

member of the UK and European boards

of KPMG, with significant international,

financial and commercial experience.

Given Ashley’s skills and expertise, it

was also recommended that she

become a member of the Audit and

Remuneration Committees.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

NOMINATION COMMITTEE REPORT CONTINUED

Nomination Committee

composition

At the start of the year, the Committee

comprised three Non-Executive

Directors, being Alicja Kornasiewicz

(Chair), Scott Rosenblum and

Arni Samuelsson.

While Arni Samuelsson is considered

tobe independent, Scott Rosenblum is

not. In addition, as Alicja Kornasiewicz

isChair of the Company, she was not

considered independent under the

Provisions of the Code for the purposes

of the Committee composition.

However, due to the importance of

thework of the Nomination Committee

in 2021, particularly in relation to the

recruitment of an additional Non-

Executive Director, it was beneficial for

Alicja to perform the role of Committee

Chair, alongside continuing members

Scott Rosenblum and Arni Samuelsson.

Following the conclusion of the

Committee’s work in respect of Ashley

Steel’s nomination, on 1 April 2021, Scott

Rosenblum stepped down from the

Committee, and Damian Sanders and

Camela Galano (both independent

Non-Executive Directors) joined as

members, ensuring compliance with

thecomposition requirements under the

Code. The period of non-compliance in

the financial year was 1 January 2021 to

31 March 2021.

At the end of the year, the Committee

therefore comprised Alicja Kornasiewicz

(Chair), Camela Galano, Arni

Samuelsson and Damian Sanders.

Gender breakdown

of the Board

(1)

(1) As at 31 December 2021.

Balance of

the Board

(1)

Length of tenure

of Non-Executive

Directors

(1)

Male 7

Female 4

Total Board of Directors 11

Chair 1

Executive Directors 4

Non-Executive Directors 6

0-2 years 2

3-6 years 3

7+ years 2

The role, responsibilities

and activities of the

Nomination Committee

The Committee assists the Board in

discharging its responsibilities relating

tothe composition of the Board. It is

responsible for evaluating the balance

ofskills, knowledge and experience on

the Board, its size and structure, and

retirements and appointments of

additional and replacement Directors.

In addition, the independence of

Directors and the development of the

talent pool of the business are also areas

of responsibility, and the Committee

makes appropriate recommendations to

the Board on all such matters. It is also

responsible for ensuring that Directors

have sufficient time to discharge their

duties on appointment, and thereafter,

with such matters being specifically

addressed in the letters of appointment

of the Non-Executive Directors.

Prior approval is sought before a Director

accepts an external appointment.

The terms of reference ofthe Committee

are available on the Company’s website

(www.cineworldplc.com/en/about-us/

corporate-governance).

The Committee met during the year

todeal with a variety of key tasks,

including the recruitment of an

additional independent Non-Executive

Director – a successful project that led

to the appointment of Ashley Steel.

During the year the Committee also

reviewed its own performance, reviewed

the structure of the Board and the three

Committees, and discussed succession

and diversity issues.

Board evaluation

Towards the end of the year, a

performance evaluation was carried

outin respect of the Board, the

Audit,Remuneration and Nomination

Committees, and each individual Director,

including the Chair. As an external

facilitator had been engaged for the

2019performance evaluation, theBoard

decided to carry out the exercise without

external assistance in2021. The process

adopted involved the completion of

assessment questionnaires by each of

theDirectors and Committee members.

The results were then collated by the

Company Secretary, and a summary

presented to the relevant Committee and

the Board. The process was constructive

and confirmed that overall the Board

and Committee processes were working

appropriately. A few matters were

identified where Directors felt that

moretime should be allocated,

includinga focus on succession

planningand additional training

anddevelopment opportunities.

Follow up actions flowing from the

evaluation were discussed and agreed

upon, so that the recommendations of

the evaluation could be incorporated

into the Board agenda for the coming

year. As part of its work, the Nomination

Committee takes into account the

outcomes of the evaluation process

when considering and assessing the

composition of the Board.

Cineworld Group plc

Annual Report and Accounts 2021

Skills, experience

andknowledge

All Directors have a good understanding

of the markets, territories, regulatory

and risk management frameworks

within which the Group operates,

aswellas the technology it uses.

The biographies of the Directors, as set

out on pages 39 to 41, highlight the skills

and experience each Director brings to

the Board. The Nomination Committee

monitors the length of tenure and

theskills and experience of the

Non-Executive Directors to assist in

succession planning. The Committee

isconfident that the Board has the

necessary mix of skills and experience

tocontribute to the Company’s

strategic objectives.

Tenure

The tenure of each of the Directors is set

out in their biographies on pages 39 to

41, and summarised on page 55.

Succession planning and the

pipeline of talent

To find the most suitable candidates for

the Board, the Nomination Committee

considers the skills, experience and

attributes required to create a diverse

Board which is capable of driving the

Company forward successfully in

fulfilment of its purpose and strategic

goals. The Committee also considers

succession planning on a regular basis,

and the initiatives that are in place to

develop the talent pipeline at a senior

level across the business. Initiatives that

were reviewed by the Committee in

relation to development of talent at a

senior level included advanced coaching

schemes, management conferences,

training on leadership, sessions on

wellbeing, resilience and mental health

awareness, and access to mentoring

schemes. More information on the

development initiatives for Senior

Management can be found on

pages25to 29 of the Responsible

Business section.

Policy on diversity and inclusion

While the Committee considers diversity

to be important when reviewing the

composition of the Board and possible

new appointees, it believes that the

single most important factor is to

identify, recruit and retain the people

itconsiders, on merit, to be the best

candidates for each particular role.

These principles are reflected in the

Diversity Policy that has been

established by the Committee. It is not

currently in favour of setting specific

targets for Board representation to be

achieved by particular dates. As part of

the process of recruiting new Directors,

it has agreed that candidates from a

wide variety of backgrounds, including

different ethnic backgrounds, should

beconsidered and, where reasonably

possible, shortlists should comprise

candidates of different genders.

Diversity extends beyond the

Boardroom and the Committee is

supportive of management’s efforts

tobuild a diverse organisation and

maintain a diverse talent pipeline.

For more information about the Group’s

approach to diversity, please see the

“Employees” section of the Directors’

Report on page 80 and the “Diversity

and human rights” section of

Responsible Business on page 27.

Recruitment process

for BoardDirectors

It was announced on 22 March 2021 that

Ashley Steel had been appointed to the

Board as an independent Non-Executive

Director, with effect from 1 April 2021.

With regard to the appointment of

Ashley, external search consultancy

Russell Reynolds Associates was

appointed to assist with the search

process. A full brief was drawn up for

the role, which included the request for

experience in the field of remuneration.

Following an initial consideration of

potential candidates, a shortlist was

prepared and, following interviews

carried out by members of the

Nomination Committee, the Chief

Executive Officer and the Deputy Chief

Executive Officer, and the Chair of the

Audit and Remuneration Committees,

the Committee recommended to the

Board that Ashley should be appointed

as an independent Non–Executive

Director and a member of the Audit and

Remuneration Committees. The Board

agreed with this recommendation.

Russell Reynolds Associates, the

external search consultancy used for

this search, has no connections with the

Group or any of its Directors and was

chosen on the basis of discussions and

areview process undertaken by the

Nomination Committee.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Chair Damian Sanders

Committee

members

Dean Moore

Ashley Steel

The Company Secretary acts as

Secretary to the Committee

AUDIT COMMITTEE REPORT

REPORT OF THE

AUDITCOMMITTEE

FOR2021

Dear shareholders

I am pleased to present the Audit

Committee Report for the year to

31 December 2021, my first since taking

up the role of Chair of the Committee on

1 April 2021. I would like to thank former

Committee members Rick Senat and

Camela Galano, who stepped down

from the Committee on 1 April 2021 and

13 January 2022 respectively. I would

also like to thank Dean Moore for his

previous work as Committee Chair, and

to welcome Ashley Steel, who joined as

a member of the Committee on 1 April

2021, bringing substantial business, risk

and financial experience.

Details of the activities undertaken by

the Committee during the period are

setout below. Such activities assist us

indischarging our responsibilities in

relation to the Committee’s oversight

and monitoring of the robustness and

integrity of financial reporting, and in

gaining assurance on the effectiveness

of the risk management and internal

control system in place at Cineworld.

As with the prior year, the impact of

COVID-19 has continued to have a

significant bearing on the work of the

Committee, in key areas such as going

concern, viability, lease arrangements,

impairment, and accounting for the new

financing arrangements that were

announced in July 2021.

As part of this work, the Committee has

considered significant judgements and

assumptions in these areas of focus and

monitored the work of Management

andthe ongoing discussions with the

Auditors. More details of our formal

position on these issues is set out on

pages 56 to 60.

In addition, in 2021 we continued our

work on the essential oversight of

internal control and risk management

systems, which included a

comprehensive review of the

effectiveness of our internal audit

systems and controls, in accordance

with the requirements of the Code.

Discussions on emerging risk continued

throughout the period, and a new

climate-related risk has been added

toour principal risk register.

Information onour principal risks and

uncertainties and how we consider

these risks in the context of our wider

strategic objectives, can be found on

pages 14 to 19.

Damian Sanders

Chair of the Audit Committee

Composition

At the start of the year, the Committee

comprised four independent Non-

Executive Directors, being Dean Moore

(Chair), Camela Galano, Damian

Sanders, and Rick Senat. On 22 March

2021, it was announced that Damian

Sanders would become Chair of the

Committee, Ashley Steel would be

appointed as a member, and Rick Senat

would step down from the Committee

with effect from 1 April 2021.

Dean Moore would continue

asa member.

Therefore, at the year end, the

Committee comprised four independent

Non-Executive Directors, being Damian

Sanders (Chair), Camela Galano, Dean

Moore and Ashley Steel.

On 13 January 2022, it was announced

that Camela Galano would step down

from the Committee, and so at the date

of this report, the Committee comprises

three independent Non-

Executive Directors.

Both Dean and Damian are qualified

accountants, and are considered by

theBoard to have recent and relevant

financial experience. The Committee

asa whole is considered to have

competence relevant to the sector

inwhich the Company operates.

The Chair, the Chief Executive Officer,

the Deputy Chief Executive Officer, the

Chief Financial Officer, other Directors

and senior executives, the Head of Risk

and Assurance, the Internal Auditor and

the External Auditors may be invited to

attend meetings, but are not members.

The role, responsibilities

andactivities of the

Audit Committee

The Committee has a clear set of

responsibilities that are set out in its

terms of reference, which are available

on the Company’s website

(www.cineworldplc.com/en/about-us/

corporate-governance). The Committee

assists the Board in discharging its

responsibilities with regard to financial

reporting, the integrity of financial

statements, the control environment,

the work of the External and Internal

Auditors, and the Risk and Assurance

team, including:

− monitoring the financial

reporting process;

− reviewing the integrity of the Annual

and Interim Reports, including

reviewing significant financial

judgements therein;

− reviewing the Group’s risk assessment

process, the output of that

assessment and the associated risk

management systems;

− reviewing the effectiveness of the

Group’s internal controls;

− considering the scope of the Internal

and External Auditors’ activities, and

the work of the Risk and Assurance

team, their reports and

their effectiveness;

− reviewing and monitoring the extent

of the non-audit work undertaken by

the External Auditors; and

− advising on the appointment of the

External Auditors.

The ultimate responsibility for reviewing

and approving the Annual and Interim

Reports remains with the Board.

Cineworld Group plc

Annual Report and Accounts 2021

− reviewed the Committee’s terms

ofreference and carried out a

performance evaluation as required

by the Code. The results of the

evaluation confirmed that the

Committee is performing satisfactorily

and providing strong support to

the Board.

Fair, balanced and

understandable

During the year, the Committee

considered the interim results and the

Annual Report and Accounts in the

context of the requirement that they

arefair, balanced, and understandable

by reviewing papers prepared by

management with regard to this

principle. This included reviewing

thedocuments to ensure that the

description of the business agrees with

the Committee’s own understanding,

therisks reflect the issues that

concernthe Group, the discussion

ofperformance properly reflects the

relevant period, and there is a clear link

between all the areas of disclosure.

Going concern

COVID-19 and the resultant closures

inresponse to it continued to have a

significant impact on the Group’s

financial resources and forecasts

throughout 2021 and will do so going

forward. The cinema industry has been

materially negatively impacted through

2021 with the Group experiencing

closures across all territories.

The Committee challenges the Group’s

application of the going concern basis

and its viability at each reporting date.

During 2021, continuing uncertainty

around the cinema market as well as

economies generally has contributed

tothe continuing elevated detail and

consideration being applied in those

making challenges.

The Group took several steps in securing

additional liquidity in response to the

challenges presented by the pandemic

and to ensure financial stability going

forward. These included the receipt of

the US CARES Act tax rebate, raising

$213m though the issue of a convertible

bond and an additional $200m through

an incremental term loan.

Management prepared scenario analysis

based on the parameters of the liquidity

position at the year end and facilities in

place, covenants in place on new debt

arrangements agreed in the year,

theforecast recovery of cinemas to

pre-pandemic levels of trading as well

as certain key cash flows.

Management also gave consideration

tothe Group’s ability to successfully

appeal the judgement received in

respect of the claim from Cineplex

andits implications for the Groups

financial position.

The Committee considered the scenario

analysis and challenged Management’s

key assumptions and mitigating

actions.Key assumptions recovery

remain uncertain. Details of the

scenarioanalysis and the specific

uncertainties are provided in note 1

tothe Financial Statements.

Having considered both weighted and

severe but plausible scenarios in detail,

the Committee recognised the material

uncertainties that remain around the

Group’s ability to continue as a going

concern, as set out by Management, and

consider details with regard to these

uncertainties disclosed in note 1 to the

financial statements to be appropriate.

On this basis, the Committee

recommended to the Board that the

going concern assumption should

continue to be adopted.

Viability

Part of the Committee’s work in the

yearhas been to discuss and consider

the requirement under the Code for a

longer-term Viability Statement, and

therelated assessment work needed

inorder to enable the Directors to

makesuch a statement. The Directors’

Viability Statement, together with

details of the assessment work,

issetout on pages 23 and 24

(withasummary on page 38,

“Board Statements”).

Significant issues

considered inrelation to

the financial statements

During the year the Committee,

Management and the External Auditor

considered and concluded what the

significant risks and issues were in

relation to the financial statements

andhow these would be addressed.

In relation to the 2021 Group financial

statements, significant risks have been

identified which are outlined as follows:

Valuation of property,

plant andequipment

and right of useassets

As detailed in Note 12 to the financial

statements, there is an inherent risk that

elements of the value of Group’s right of

use and property, plant and equipment

assets may prove to be irrecoverable,

due to fluctuations in the performance

of cinemas or one-off events. Given

thenumber of factors involved in

What the Committee

did in2021

The Committee met for five scheduled

meetings in the year, during which

time it:

− monitored the financial reporting

process and reviewed the interim and

annual financial statements (including

the preliminary announcement) with

particular reference to the impact of

COVID-19 related closures, accounting

policies, principal risks and

uncertainties, together with significant

estimates and financial reporting

judgements and the disclosures

made therein;

− considered and agreed the

reporting timetable;

− considered the interim results and the

Annual Report and Accounts in the

context of the requirement that they

are fair, balanced and understandable;

− received and discussed (in the

absence of management, where

appropriate) reports from the External

Auditors in respect of its review of the

interim results, the internal audit plan

for the year and the results of the

annual audit. These reports included

the scope for the interim review and

annual audit, the approach to be

adopted by the External Auditors to

evaluate and conclude on key areas

ofthe audit, its assessment of

materiality, the terms of engagement

and raising awareness of the likely

impact of future changes to regulation

and accounting standards;

− monitored the performance of the

Risk and Assurance team, and

reviewed the effectiveness of the

Group’s internal financial controls

together with its broader internal

control and Risk Management

Framework, to ensure consistent and

appropriate financial controls across

the Group;

− reviewed the accounting papers

provided by management in relation

to key accounting topics;

− monitored the implementation of the

Group’s internal audit plan for 2021;

− reviewed the results of non-financial

audits and where applicable agreed

enhancements to procedures and

reviewed remedial actions;

− oversaw the Group’s relations with

theExternal Auditors, determined its

independence and monitored the

effectiveness of the audit process;

− discussed the requirements for a

longer-term Viability Statement and

the related assessment work to enable

the Board to make such a statement;

and

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

forecasting the performance of cinema

sites operated by the Group, inmultiple

countries, this results in an element

ofjudgement being applied to the

valuation of an individual cash

generating unit (“CGU”), predominantly

at cinema site level. At each Balance

Sheet date, Management prepares an

assessment which estimates the value

inuse of the CGUs to which the

tangiblefixed assets are allocated.

Where individual sites’ cash flows are

notconsidered independent from one

another, mainly due to strategic or

managerial decisions being made

acrossmore than one site, they may

becombined into a single CGU.

The resulting calculation is sensitive to

the assumptions in respect of future

cash flows and the discount rate applied.

Following impairment charges caused

by the pandemic, affected by the level of

right of use assets held at CGUs where

no lease amendment had been applied

since the outbreak of the pandemic,

there is also a risk that CGUs are valued

below the recoverable amount and

reversal of impairment is required.

The main assumptions over growth rates,

the impact of one-off events, expected

cost increases and discountrates are

updated to reflectManagement’s best

estimate. The impact of COVID-19, its

impact on the Group’s forecast revenue

and the Group’s credit rating resulted in

material one off reductions invalue in

CGUs in each territory. There has been no

material change to forecasts or discount

rates applied for CGU impairment testing

since the 2021 assessment.

When considering the appropriateness

of the discount rate, Management

assess the territory specific discount

rates, and ensure that they are updated

for current market information and

theGroup’s current leverage. The

assessment for the current year

included consideration of the

deterioration in the Group’s credit

ratingand changes to its cost of debt

due to new issuances in the year.

At the year-end Management

preparedtheir valuation models for the

Committee’s consideration, together

with their proposed site impairments,

and drew the Committee’s attention to

any specific judgements taken within

the models. Management confirmed to

the Committee that they have applied a

consistent Group-wide methodology in

the preparation of the valuation models.

This included applying reduction in

forecast cash flows at a CGU level,

implied by the weighted scenario

forecast analysis carried out for the

Group’s Going Concern assessment.

In considering potential reversals of

impairment, Management confirmed

that they had only recognised a reversal

when driven by changes to the right of

use asset held at a CGU, caused by a

lease amendment signed during the

period. All other model parameters for

reversals of impairment were consistent

with those applied in assessing

impairment charges at December 2020.

The committee reviewed the

methodology and assumption

appliedby Management in reaching

their impairment assessments. A key

assumptions addressed were the

forecast return to pre pandemic levels

oftrading, which were assessed for

consistency with the Groups

wider forecast recovery.

The Committee satisfied itself that

theapproach was appropriate, the

assumptions reasonable and the

impairments proposed were complete

and accurate. The Committee also

satisfied itself through enquiry of

Management and review of the Board

papers that all significant events which

may have impacted on the valuation of

PPE and right of use assets had been

appropriately captured in Management’s

assumptions and reflected in the

valuation models and that appropriate

disclosures, including in relation to

sensitivities, had been included in the

financial statements.

Valuation of investments

As detailed in Note 13 to the financial

statements, the continued impact of

COVID-19 resulted in an increased risk to

the valuation of the Groups investment

in National Cinemedia LLC (NCM).

This risk was driven by changes to the

forecast profitability of NCM, reductions

in its forecast distributions and a

material reduction in its share price.

The forecast cash flows arising from the

investment in the form of distributions

require judgement and result in

sensitivity in thevaluation of NCM.

Management’s value in use assessment

was based on forecast cash flows, which

were applied through using NCM own

forecast cash flows and use of

theweighted scenario forecasts

consideredin the Group’s Going

Concern assessment. A WACC was

derived using relevant external market

data and considering the Group’s

creditworthiness at the date ofthe

assessment. Management’s fair value

less cost to sell assessment was

determined by reference to the

tradedshare price in NCM Inc (as set

outin note 13) at 31 December2021.

The Committee has considered

information supplied by Management

and satisfied itself that theapproach

and methodology applied by

Management was appropriate.

Accounting for new financing

arrangements

During the year the Group entered new

financing agreements. The nature and

complexity of certain features of these

arrangements are such that their

treatment and valuation represent

agreater risk than other agreements

theGroup has historically been party

to.These agreements included the

issueof a convertible bond with

certainembedded derivative financial

instruments. Each component of the

new arrangement, their contractual

terms and interaction with other

contracts in place and the appropriate

treatment under IFRS 9: Financial

Instruments were considered by

Management. Detailed disclosures

inrespect of these treatments and

valuations and their impact on the

financial statements are set out in

note 26.

Having considered documentation and

analysis presented to it, the Committee

satisfied itself that Management

obtained appropriate professional

advice in addressing these contractual

arrangements and correctly recognised

them in the financial statements.

IFRS 16: Leases

As detailed in note 20, on adoption of

IFRS 16 “Leases” leases are recognised

as a right-of-use asset and a

corresponding liability at thedate at

which the leased asset is available for

use by the Group in the Consolidated

Statement of Financial Position.

Each lease payment is allocated

between the liability and finance cost.

The finance cost is charged to the

Consolidated Statement of Profit or

Loss over the lease period so as to

produce a constant periodic rate of

interest on the remaining balance of the

liability for each period. Both principal

and finance cost elements of lease

payments are recognised within

financing cash flows within the

Consolidated Statement of Cash Flows.

AUDIT COMMITTEE REPORT CONTINUED

Cineworld Group plc

Annual Report and Accounts 2021

The depreciation charge recognised on

the right-of-use assets is being charged

to administration expenses in the

Group’s Statement of Profit and Loss.

The impact of COVID-19 resulted in

alarge number of lease agreements

intheperiod being renegotiated.

The number and nature ofamendments

made are such that judgements taken

were significant. These judgments

included the lease term, discount rate

applied, the dateamendments took

place and thetreatment of amendment

as modifications under IFRS 16.

Based onthe Committee’s enquiries of

Management and review of accounting

papers, the Committee has satisfied

itself that:

− The details and timing of amendments

to leases during the year, including the

calculation of deferred and waived

rent, have been applied correctly in

accordance with IFRS 16;

− The judgement applied by

Management in assessing whether

alease option period should be

included in the lease liability has been

carefully considered, taking into

account the facts and circumstances

around the lease and the historic

decisions taken over lease options and

the decision making process prior to

executing a lease option; and

− The discount rates used to discount

the lease payments have been

provided by an independent

professional services firm and the

rates have been calculated for

portfolios of leases with similar

characteristics, as permitted under

IFRS 16, with lease term and asset-

specific adjustments and reflecting

the Group’s current cost of borrowing

and credit rating.

Recoverability of deferred

taxassets

The Group recognises deferred tax

assets and liabilities for the future tax

consequences attributable to temporary

differences between the financial

statement carrying amounts of existing

assets and liabilities and their respective

tax bases, unused tax losses and unused

tax credits. Disclosures in respect to of

deferred tax assets and liabilities are set

out in notes 10 and 16. COVID-19 and its

effect on the Group’s taxable profits

over a forecast five-year period have

resulted in greater uncertainty over

therecognition of deferred tax assets.

In particular, judgement exists around

the recognition of deferred tax assets

inrespect of losses incurred and

whether sufficient taxable profits will

begenerated to utilise them in future

periods. Management have applied

theirscenario weighted forecasting

andrelevant tax regulations in assessing

whether assets should be recognised

ineach territory. The Committee have

considered calculation and forecast

prepared by Management and are

satisfied that appropriate judgements

have been made in respect of the

recoverability of deferred tax assets

inthe financial statements.

Cineplex

Management made an assessment

ofthe Group’s ability to successfully

appeal the Judgement received

inrespect of the Cineplex claim.

Management concluded that it is

currently not probable that damages

willbe payable and no liability was

recognised in the Financial Statements.

Given the uncertainty in respect of the

appeal process, Management disclosed

a contingent liability in respect of the

judgement, details of which are set out

on page 162.

The committee challenged the process

undertaken by Management in reaching

its assessment of whether the appeal

would be successful. It further

challenged management on the

implications for the Group should

theappeal not be successful.

Having considered the information

available and the appeal process, the

Committee satisfied itself that the

contingent liability accurately reflects

the risk with regard to the judgement.

External Audit

The Committee reviews the

appointment of the External Auditors

each year before the cycle of audit

commences and in deciding whether

torenew the appointment takes note

ofthe quality of the service received,

the proposed fees and the Auditors’

independence. Management and

allmembers of the Committee

areconsulted during the process.

Further details of these processes

areset out below.

Audit tender

PwC was appointed as External

Auditors to the Company following an

audit tender process carried out in 2019.

The Company will continue to comply

with the relevant tendering and auditors

rotation requirements applicable under

UK regulations, which require the next

external audit tender to occur by 2029.

In addition, the External Auditors will

berequired to rotate the audit partner

responsible for the Group audit every

five years and, as a result, the current

lead audit partner, Christopher

Richmond, will be required to change

in2024. The Committee continues to

review the auditors appointment and

the need to tender the audit.

The Company considers it has complied

with the Competition and Markets

Authority’s Statutory Audit

Services Order.

Independence and Effectiveness

During the year, the Committee evaluated

the performance and objectivity of PwC

and reviewed its independence and

effectiveness as External Auditor in

relation to the prior year accounts.

The effectiveness of the 2020 audit was

assessed by reference to the following:

− the effectiveness of the lead audit

engagement partner, including the

support provided to the Committee;

− the planning and scope of the audit

including identification of areas of

audit risk and communication of any

changes to the plan, and changes in

perceived audit risks;

− the quality of communication with

theCommittee, including the regular

reports on accounting matters,

governance and control;

− the competence with which the

External Auditors handled key

accounting and audit judgements

andcommunication of those to

management and the Committee;

− PwC’s reputation and standing,

including its independence and

objectivity and its internal quality

procedures; and

− the quality of the formal report

to shareholders.

Further, at the conclusion of each

year’saudit, the Committee discusses

the performance of the External

Auditors with the Executive Directors

and relevant senior finance managers

considering areas such as the quality of

the audit team, business understanding,

audit approach and management.

Where appropriate, actions are agreed

against points raised and subsequently

monitored for progress. There were no

significant findings from the evaluation

this year.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

REMUNERATION COMMITTEE

Remuneration Committee

composition

At the start of the year, the Company’s

Remuneration Committee comprised

three Non-Executive Directors,

namelyDean Moore (Chair), Alicja

Kornasiewicz and Camela Galano.

Ashley Steel was appointed to the

Board as an independent Non-

Executive Director on 1 April 2021,

andjoined the Committee at the same

time, in place of Alicja Kornasiewicz.

Therefore, at the end of the year,

theCommittee comprised three

independent Non-Executive Directors,

namely Dean Moore (Chair), Camela

Galano and Ashley Steel.

As Alicja Kornasiewicz is Chair of the

Company, she was not considered

independent under the Provisions

ofthe Code for the purposes of the

Committee composition. However, it

was considered beneficial for continuity

purposes for Alicja to remain as a

Committee member after stepping

down from the role of Committee

Chairin 2020, while the search for

anadditional Non-Executive Director

tojoin the Committee progressed.

As Ashley is an independent Non-

Executive Director, the Committee’s

composition on her appointment on

1 April 2021 was fully compliant with

theCode requirements, following the

period of transition. The period of

non-compliance in the financial years

was 1 January 2021 to 31 March 2021.

The Committee met for four scheduled

meetings in the year. More details on

the work of the Committee are set out

in the Directors’ Remuneration Report

on pages 61 to 75.

The Company Secretary acts as

Secretary to the Remuneration

Committee.

Roles and responsibilities

The activities of the Committee are

covered in the Directors’ Remuneration

Report on pages 61 to 75, and are

incorporated into this Corporate

Governance Statement by reference.

The Committee assists the Board in

determining its responsibilities in

relation to remuneration, including

making recommendations to the

Boardon the Group’s policy on

executive remuneration, determining

the individual remuneration and

benefits package of each of the

Executive Directors, and monitoring

and approving the remuneration of

Senior Management below Board level.

The Committee appointed FIT

Consultants as external adviser in

December 2020 and took advice from

them during the year.

The Committee is comfortable that

theengagement partners and team

ofthe external adviser do not have

connections with the Company or

Directors of the Company that

mayimpair their independence.

On appointment as adviser, the

Committee reviewed the potential

forconflicts of interest and judged

thatthere were no conflicts or potential

conflicts arising. The Company receives

advice in relation to the Remuneration

Policy and its implementation in

respect of the Chair, Executive

Directors, Company Secretary

andSenior Management.

The terms of engagement with FIT

Consultants are available on request

from the Company Secretary.

The Chief Executive Officer is consulted

on the remuneration packages of the

other senior executives and attends

discussions by invitation except when

his own position is being discussed.

The Committee does not deal with

thefees paid to the Non-Executive

Directors. The report of the

Remuneration Committee is

setoutonpages 61 to 75.

The terms of reference of the

Committee are available on

theCompany’s website

(www.cineworldplc.com/en/about-us/

corporate-governance).

After taking into account all of

theabove factors, the Committee

concluded that PwC, as External

Auditors had been effective. In addition,

the Committee is satisfied that it has

sufficient oversight of the External

Auditors and its independence and

objectivity is not compromised due

tothe safeguards in place.

Independence of the Auditors

The External Auditors are required

toperiodically assess whether, in its

professional opinion, it is independent

and confirm this to the Committee.

PwC has provided this confirmation.

Non-Audit services

The Committee considers the

independence of the External Auditors

on an ongoing basis and has established

policies to consider the appropriateness

or otherwise of appointing the External

Auditors to perform non-audit services,

in light of the regulation set out in the

EU Audit Directive and Audit Regulation

2014 (the “Regulations”) and the

Financial Reporting Council (“FRC”)

Revised Ethical Standard 2019.

In particular, all non-audit work

andtheassociated fees need to

beapprovedby the Committee.

The only non-audit services subject to

Audit Committee approval provided by

PwC to the Group during 2021 related

toits review of the Group’s interim

statement and provision of Viewpoint,

PwC’s technical library, resulting in a fee

of $330,000 and $1,600 respectively.

The Committee is satisfiedthat the

above work was bestundertaken by the

External Auditors and that its objectivity

and independence as Auditors have not

been impaired by reason of this further

work. The ratio of audit fees to non-

audit fees is 10 to 1, an analysis of audit

and non-audit fees may be found in

Note 6 to the financial statements.

Insurance

It is not practical or possible to insure

against every risk to the fullest extent.

The Group has in place an insurance

programme to help protect it against

certain insurable risks. The portfolio of

insurance policies is kept under regular

review with the Company’s insurance

broker to ensure that the policies are

appropriate to the Group’s activities

andexposures, taking into account

cost,and the likelihood and magnitude

of the risks involved.

AUDIT COMMITTEE REPORT

CONTINUED

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT

We have continued to focus on the

strategic business priorities in exceptional times

“ It has been another intensive

period for the Committee, with

the COVID-19 global pandemic

continuing to have a significant

impact on Cineworld in 2021…

Decisions by the Committee in

relation to executive remuneration

outcomes have been taken within

the context of this exceptionally

challenging backdrop”

Dean Moore

Chair of the Remuneration Committee

Annual Statement

Dear shareholders

This report describes the key decisions

the Remuneration Committee (the

“Committee”) made in 2021, how the

Directors were paid, and sets out the

Remuneration Committee’s planned

approach to pay in 2022.

It has been another intensive period for

the Committee. In the early part of 2021,

the new one-off Long-Term Incentive

Plan (the “2021 LTIP”) was approved by

shareholders. The Committee decided

that, as the Company was facing such

unusual challenges as a result of

COVID-19, a new and non-standard

approach to remuneration was required.

The Committee engaged extensively

with our largest shareholders as part

ofthe design process and we took

intoaccount the feedback we received.

The stretching share price targets mean

that vesting of the shares will take place

only in circumstances where significant

transformational work in the business

has been achieved, and where

shareholders have also received

substantial returns. The plan is simple,

but reaching the targets will not be easy.

The plan was approved at a General

Meeting (“GM”) in January 2021.

Further details on the targets and

theawards made under the 2021 LTIP

may be found on pages 68.

Following on from the 2021 LTIP,

andahead of the 2021 Annual General

Meeting (“AGM”), the Committee

embarked on a thorough review of

theDirectors’ Remuneration Policy

(the“Policy”), taking into account

shareholders’ views and emerging

governance practice.

Our review led us to make some

governance-related changes to the

Policy, including in relation to pension

alignment, shareholding guidelines,

malus and clawback, and holding

periods for LTIPs, which were included

in the further revised Policy that was

approved by shareholders at the AGM

on 12 May 2021.

Feedback that we have received on

thegovernance-related changes has

been positive.

We acknowledge that some

shareholders were not able to support

the adoption of the 2021 LTIP at the GM,

and this was also reflected in voting for

the Directors’ Remuneration Report and

Policy, despite our positive governance-

related updates. More details on the

voting outcomes at the AGM may be

found on page 71. We have, since the

AGM in May, engaged further with

shareholders to continue our dialogue

on remuneration matters and deepen

ourunderstanding of the views of

shareholders. As a Committee we are

grateful for the feedback and insights

that we have received as part of this

process and for the support we received

from our shareholders.

The impact of COVID-19 on

business performance in 2021

COVID-19 has continued to have an

impact on Cineworld in 2021, with

cinemas remaining closed across

theGroup for a portion of the year,

anda large number of staff on

furlough schemes.

Despite this, we reopened our cinemas

and welcomed back our customers

inthe summer of 2021, and it was

gratifying to see positive trading in the

months of key movie releases, including

the much anticipated James Bond

movie, “No Time to Die” and “Spider-

Man: No Way Home”. Total revenue for

the Group for 2021 was $1,804.9m

(2020: $852.3m on a statutory basis)

and Adjusted EBITDA was $454.9m

(2020: $115.1m).

More details of the impact of COVID-19

on the business are set out in the Chief

Financial Officer’s Review on page 30 to

35. All the decisions taken by the

Committee in relation to executive

remuneration outcomes have been

within the context of this exceptional

and challenging backdrop.

Key decisions during the year

In light of the impact of the pandemic,

and due to the period of cinema

closures during the year, the Committee

decided that salaries and other benefits

for the Executive Directors would not be

increased in 2021.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

As reported last year, the Executive and

Non-Executive Directors volunteered to

defer 100% of their salary and fees, in

each case for a period of time in 2020,

to preserve cash. These amounts are

currently being repaid to Directors in

instalments over asix-month period,

having remained outstanding for over

ayear. More details are set out in the

Salary section on page 66.

Pension contributions remained

unchanged in the year, but, as we said in

2021, the newly adopted Policy makes

clear that Executive Director allowances

are being aligned with the employer

contribution offered to other employees

based in the countries in which they are

resident, from 1 January 2023. The CFO

and CCO’s pension arrangements are

already aligned.

Aligning pension for the CEO and

Deputy CEO from 1 January 2023 will

represent a reduction of 5% of salary

compared with their current

contractually agreed levels.

As stated in the 2020 Directors

Remuneration Report, the Committee

reviewed the budget and associated

bonus targets as cinemas reopened.

In line with the Policy and performance

during the year, the Executive Directors

have earned bonuses at maximum for

their outstanding performance in 2021.

The outcomes were based on a matrix

of Group Adjusted EBITDAaL (as

defined in Note 2 to the Financial

Statements) performance against

budget and the achievement of

stretching individual objectives.

2021 was an extremely challenging year

for the business and for the cinema

industry. Through the early part of the

year cinemas remained closed across all

territories with the continued impact of

COVID-19 and associated restrictions.

The lack of revenue and restrictions in

place around the Group’s debt meant

that the Group was operating under

severely constrained cash flow and

operational conditions, during the early

part of the year. As the business

reopened challenges continued; there

were operational restrictions applied in

a number of countries and regions, there

was discussion in the market around

industry wide issues such as the release

window and there was not a full slate of

content available for a significant period

of time. Towards the end of the year,

content returned and restrictions were

reduced. However, volatility remained

with major film titles being moved

from November.

Despite this volatility and uncertainty,

Management achieved over 110% of

target EBITDAaL in the period from

reopening though to the year end, a

target which reflected the film slate

available for the period was materially

exceeded. The business prepared and

executed a successful reopening, built

onthe back of liquidity raising which

facilitated a return of staff and customers

to fully operational cinemas.

The Committee acknowledges these

achievements and that the bonus has

been earned. The Committee is also

conscious of the stage at which the

Group is at in its recovery from COVID-19

and the continuing challenges it faces.

Accordingly, the Committee has used its

discretion in determining that any bonus

above that payable for the 100% target

EBITDA performance will, for all

employees who participate in the annual

bonus plan, be deferred. This would not

otherwise have been the case for the

Chief Financial Officer and the Chief

Commercial Officer.

Although not required by the Directors’

Remuneration Policy, deferred amounts

will only be paid when the Remuneration

Committee considers that it is

appropriate to do so. The payment of

thedeferred amount will be entirely at

the discretion of the Committee, factors

that the Committee will take into

consideration in applying its discretion

are the performance of the business, its

liquidity position, the continued trajectory

of the business in recovering from the

impact of COVID-19 and the performance

of management. The Committee would

like to see the Group continue to build

onits achievements in 2021. Payment of

the deferred element of 2021 bonuses is

also contingent on employees remaining

in employment until such time as the

Committee decides that payment

shouldbe made.

The deferred bonus will be subject to

malus and clawback provisions and will

only vest when, and to the extent that,

the Remuneration Committee considers

it appropriate (but no sooner than

would otherwise have been required

bythe Directors’ Remuneration Policy).

This approach to annual bonus outturns

has been applied to all participants in

the 2021 annual bonus scheme.

For the CEO and Deputy CEO, deferred

amounts will be into shares in line with

the Directors’ Remuneration Policy.

For the CFO and CCO, the deferred

portion of the annual bonus will be in

cash. In line with the Policy and the

treatment of other employees in the

annual bonus plan, these deferrals

willalso be subject to Remuneration

Committee discretion and will not be

paid (or the shares awarded in the case

of the CEO and Deputy CEO) if the

Committee does not consider it

appropriate to do so as set out above.

Despite the severely impacted business

performance in 2021, the Committee

isof the view that these bonus

payments are the right outcome and

proportionate, in light of the exceptional

achievements and contribution of the

Management team in the face of the

effects of COVID-19.

No bonus was paid in respect of the

financial year 2020 and the LTIP awards

for the Executive Directors made in 2018

and 2019 lapsed in full.

The Committee is mindful that the share

price has underperformed throughout

the year and that employees have been

furloughed. At the same time, it is also

aware that Cineworld has been faced

with the most extraordinary challenges

and, despite this, has delivered

extraordinary financial results which will

in time deliver value for shareholders.

More details on the factors taken into

account are set out in the Bonus section

on page 67.

As was the case with LTIP awards for

Executive Directors due to vest in 2021,

LTIP awards which were due to vest in

May 2022 will also lapse in full, as the

EPS performance target was not met.

No further long-term incentive awards

will be granted to Executive Directors in

2022 or 2023, due to the grant that was

made under the new 2021 LTIP, as

referenced above.

The 2021 policy operated in line with the

Committee’s intentions, however, given

the changeable nature of the current

business environment, both in our

industry and beyond, certain changes

are being made to further develop the

Remuneration policy in line with the

Group’s strategy.

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Implementation of Policy

in2022

Further details of the Committee’s

planned approach to remuneration

in2022 is included in the Policy table

summary that starts on page 74.

In summary, the Remuneration

Committee intends to implement

theDirectors’ Remuneration Policy

forthe financial year 2022 as follows:

The Committee has made some

important and responsible decisions on

base salaries and decided that salaries

for the CFO and CCO will be increased

by 15% effective from 1 January 2022,

reflecting significant progression and

development in the roles over an

extremely challenging period. The

CFOand CCO have been critical to the

business since their appointments,

particularly over the past two years

andthe external pressures facing the

business. They will continue to be critical

to the successful execution of the

strategy and turnaround plans forthe

business. In the view of the Committee,

although the UK market is the

benchmark against which investors and

the Remuneration Committee compare

their pay, they are both vulnerable to

offers from US competitors and the

Remuneration Committee has a duty

toseek to reduce significant flight risk.

The Committee also took into account

the replacement cost of recruiting a

CFO and CCO of the same calibre and

the premium that would be required.

The Committee also decided to increase

the salary for the Deputy CEO by 10%,

to reflect his value to the business and

to maintain an appropriate differential

tothe salaries of the CFO and CCO.

These are the first increases for three

years and on an annualised basis are

theequivalent of 4.77% for the CFO

andCCO and 3.23% respectively for the

Deputy CEO. The average increase for

UK employees from 1 January 2022 is

5.92% and in the US 3.71% – see page 71.

No increase has been applied to the

CEO’s salary, even given his deep

industry knowledge enormous, his

importance to the group and the highly

competitive and international talent

market in which we operate. While

Cineworld’s main competitors are

largeUS companies, the Committee

iscognisant of the shareholder

experienceand appreciates that

UK-listed companies remain the

primaryreference point for

benchmarking CEO pay.

In line with the approach to pension in

the Policy, pension arrangements will

remain unchanged for the CEO and

Deputy CEO in 2022 but will align with

the employer contribution offered to

other employees in Israel from 1 January

2023. This represents a 5% of salary

reduction in their current entitlement.

The CFO and CCO’s pension

arrangements are already aligned

withemployees in Israel.

The maximum annual bonus

opportunity will be 150% of salary

forthe CEO and Deputy CEO and

100%ofsalary for the CFO and CCO.

For 2022, the bonus will be based on

acombination of performance against

the agreed budgeted financial measures

and personal performance levels.

The weighting of these measures is circa

70% financial performance and 30%

personal performance. Bonus targets

are not disclosed on the grounds of

commercial sensitivity but will be

disclosed on a retrospective basis in

thenext Annual Report as in prior years.

Bonus payments will be subject to the

Remuneration Committee’s discretion to

apply “malus” and, following payment,

the Committee will retain the discretion

to “claw back” bonuses in the case of

misconduct or misstatement of

financial results.

Awards were granted under the 2021

LTIP in February 2021. No long-term

incentive awards are expected to be

granted to Executive Directors in 2022.

Consideration of wider

workforce remuneration

During 2021, the Committee reviewed

remuneration practices across the

Group. This informed decision making

on the remuneration of the Executive

Directors and Senior Managers, and

ensures that remuneration practices

across the Group are aligned to the

long-term strategy of the organisation.

Although employees were on furlough

during the year, they also returned to

work when then government restrictions

were lifted. Therefore as part of the

review, the Committee reviewed and

approved base pay increases awarded

to the wider workforce, reviewed

pension contribution levels, reviewed

annual bonus and LTIP awards, and

analysed the Gender Pay Gap results.

Overall the Committee observed a well

balanced and structured approach

to remuneration.

Engagement with the

wider workforce

Engagement with employees is an

ongoing focus with a range of formal

and informal channels available for

employees to share ideas and concerns

with members of the Cineworld Board.

For 2021, the requirements in the

UKCorporate Governance Code in

respect of workforce engagement

wereaddressed using a number of

existing and enhanced tools. I have

beenappointed as the Non-Executive

Director to represent employees in

theBoardroom. As part of my role,

inthe latter part of 2021, I took part in

employee forums and meetings across

anumber of our UK sites, so that I could

gather information and insights around

employee points of view on Company

culture, diversity and inclusion,

careeropportunities, strategy and

performance. I very much appreciate

the contributions of those employees

who attended our Q&A sessions,

andthe support of our HR teams.

More details on our activities in this

areamay be found on page 48.

Employee engagement surveys are

expected to be reintroduced across

theGroup in 2022, following a

postponement in the regular schedule

inlight of global cinema closures due

tothe impact of COVID-19.

This report

This report has been prepared in

accordance with the Large and Medium-

sized Companies and Groups (Accounts

and Reports) (Amendment) Regulations

2008 (as updated), the UKLA Listing

Rules and the 2018 Corporate

Governance Code. It is split into

three parts:

− My Annual Statement as Chair of the

Remuneration Committee, including

asummary of key decisions made by

the Committee in 2021;

− The Annual Report on Remuneration,

which sets out payments made to the

Directors and details the link between

Company performance and

remuneration for the 2021 financial

year. The Annual Report on

Remuneration, together with this

Annual Statement, is subject to an

advisory shareholder vote at the AGM

on 12 May 2022; and

− An “At a Glance” section which

provides a summary of the key

elements of the Policy, and how the

Remuneration Committee intends to

implement the Policy in 2022.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Considerations in the decision-making process

Clarity

The Remuneration Committee considers clarity to be key to maintaining the integrity of incentive

schemes.Targets for both the annual bonus and long-term incentives are set by the Remuneration

Committee and these targets are not amended or overridden in all but the most exceptional circumstances.

The Remuneration Committee did not apply discretion to override performance targets under the annual

bonus or long-term incentive awards granted in 2019, which were due to vest in 2022.

Simplicity

For 2022, the Remuneration Committee has set performance measures and targets for the annual bonus

which have been clearly communicated to the Executive Directors. There will be no further awards under

thelong-term incentive plans for Executive Directors in 2022.

Risk

The Remuneration Committee considers various risks associated with pay, including reputational risk,

behavioural risk and retention risk. These often competing considerations were particularly relevant

inconsidering annual bonus and long-term incentive outturns for 2021 and in the decision not to apply

discretion to override formulaic outturns. The decisions on basis salary increases from 1 January 2022

alsotook account of operational risk to Cineworld if it failed to retain key talent. Annual bonus targets were

met infull in 2021 after two very difficult years for the business and the share price has under-performed.

The Committee has given priority to the talent risk mitigation over the potential for reputational risk by

rewarding performance albeit an element of bonus will be deferred and will vest or be paid contingent

ontheRemuneration Committee’s review and agreement. ’

Predictability

The performance-related elements of remuneration are capped and the financial elements of the annual

bonus are formulaic. There will be no further awards under the long-term incentive plans for Executive

Directors in 2022.

Proportionality

The Remuneration Committee considered the outturns under the annual bonus and the 2019 long-term

incentive awards to be in line with the Company’s performance and gains to shareholders in the challenging

external environment.

Alignment to culture

Pay for performance is key to Cineworld’s remuneration strategy. Our philosophy on pay is to drive long-term

value creation and our Directors’ Remuneration Policy directly aligns our Executive Directors’ pay to this aim.

Activities over the year

The Remuneration Committee met for four scheduled meetings in 2021, and for additional ad hoc meetings as required. At the

scheduled meetings, the activities of the Committees were as follows:

January

2021

March

2021

May

2021

November

2021

Overall remuneration

Considering the remuneration arrangements across the Group ✓ ✓ ✓ ✓

Annual bonus

Deciding the targets for the annual bonus scheme ✓ ✓

Determining bonus payments to be awarded, including for the

widerworkforce ✓

LTIP

Making awards under the 2017 Long-Term Incentive Plan ✓

Approving vesting of awards under the 2017 Long-Term Incentive Plan ✓

Governance

Reviewing the 2020 AGM voting figures and considering the views

ofshareholders ✓

Reviewing and update other Committee terms of reference ✓

Committee evaluation ✓

Review of Directors’ Remuneration Report ✓ ✓

Agreeing Forward-Looking Agenda ✓

Review of Gender Pay reporting outcomes ✓

The Committee has always aimed to be clear and transparent in matters of remuneration, and we hope that this report

continues this approach. Should you have any queries or comments on this report, or more generally in relation to the

Company’s remuneration, then please do not hesitate to contact me via the Company Secretary.

I would like to thank my fellow Committee members for their work in the year, including our new member, Ashley Steel,

who joined the Committee on 1 April 2021, she brings substantial experience in the field of remuneration.

I hope that you find this report informative, and I look forward to your continued support at the Company’s AGM.

Dean Moore

Chair of the Remuneration Committee

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Remuneration for 2021

This section covers the reporting period from 1 January 2021 to 31 December 2021 and provides details of the implementation

ofthe Company’s Remuneration Policy during the period.

Single Total Figure Table (audited information)

The table below gives a single figure for the total remuneration and breakdown for each Executive and Non-Executive Director

in respect of the 2021 financial year. Comparative figures for the 2020 financial year have also been provided.

Financial

year

Base salary

and fees

£000

Benefits

£000

Annual

bonus

(2)

£000

LTIP

(3)

£000

Pension

£000

Total fixed

pay

£000

Total

variable pay

£000

Total

(4)

£000

Executive Directors

Moshe Greidinger

2021 646 55 646 – 129 830 646 1,476

2020

(10)

646

(10)

55 – – 129

(10)

830

(10)

– 830

(10)

Israel Greidinger

2021 518 69 518 – 104 691 518 1,209

2020

(10)

518

(10)

67 – – 104

(10)

689

(10)

– 689

(10)

Nisan Cohen

2021 405 – 296 – 60 465 296 761

2020 405 1 – – 60 466 – 466

(10)

Renana Teperberg

2021 405 – 296 – 60 465

(10)

296 761

2020 400 – – – 60 460 – 460

(10)

Non-Executive Directors

Alicja Kornasiewicz

(5)

2021 225 – – – – 225 – 225

2020 193 – – – – 193 – 193

Arni Samuelsson

2021 58 – – – – 58 – 58

2020 58 – – – – – – –

Ashley Steel

(6)

2021 43 – – – – 43 – 43

2020 – – – – – – – –

Camela Galano

2021 58 – – – – 58 – 58

2020 58 – – – – 58 – 58

Damian Sanders

(7)

2021 72 – – – – 72 – 72

2020 24 – – – – 24 – 24

Dean Moore

(8)

2021 100 – – – – 100 – 100

2020 100 – – – – 100 – 100

Rick Senat

(9)

2021 23 – – – – 23 – 23

2020 71 – – – – 71 – 71

Scott Rosenblum

2021 58 – – – – 58 – 58

2020 58 – – – – 58 – 58

(1) See page 66 for details of the benefits provided to the Executive Directors.

(2) The portion of annual bonus above that payable for target EBITDAaL performance will, for all employees who participate in the annual bonus plan,

bedeferred. In the case of the CEO and Deputy CEO, the deferral will be into shares for at least two years. These shares will be subject to malus and

clawback provisions and will only be delivered when, and to the extent that, the Remuneration Committee considers it appropriate (but no sooner than

would otherwise have been required by the Directors’ Remuneration Policy). For the CFO and CCO, the deferral will be in cash, which will only be

payable when the Remuneration Committee considers it appropriate. These shares will be subject to malus and clawback provisions and will only be

delivered when, and to the extent that, the Remuneration Committee considers it appropriate (but no sooner than would otherwise have been required

by the Directors’ Remuneration Policy). The deferral for the CFO and CCO and the additional restriction on delivery is stricter than the deferral

requirements under the Directors’ Remuneration Policy.

(3) As the performance targets were not met, no options for Executive Directors will vest in 2022.

(4) 2020 figures include amounts in respect of salary, fees, pension and benefits that were deferred for payment at a later date. See page 66 for details.

(5) Alicja Kornasiewicz was appointed Chair of the Board and Chair of the Nomination Committee on 13 May 2020 and stepped down from her position as

Chair of the Remuneration Committee on the same date.

(6) Ashley Steel was appointed to the Board on 1 April 2021. Figures in respect of Ashley’s 2021 remuneration reflect the portion of the year for which

Ashley was a Director.

(7) Damian Sanders was appointed to the Board on 1 August 2020. Figures in respect of Damian’s 2020 remuneration reflect the portion of the year for

which Damian was a Director. Damian was appointed as Audit Committee Chair on 1 April 2021.

(8) Dean Moore was appointed as Remuneration Committee Chair on 13 May 2020 and as the NED designated to lead on employee matters with effect

from 1 January 2020. He was appointed as Senior Independent Director on 22 March 2021 and stepped down as Audit Committee Chair on 1 April 2021.

(9) Rick Senat stepped down as Chair of the Nomination Committee on 13 May 2020 and from the Board on 12 May 2021. Figures in respect of Rick’s 2021

remuneration reflect the portion of the year for which Rick was a Director.

(10) Payments made during 2020 in respect of these items were in line with the amounts reported in the 2020 Annual Report. During the 2021, it was

identified that salary and pension payments to the CEO and Deputy CEO during the period 2016 to 2020 were incorrectly paid below the policy

approved by the Remuneration Committee. Payments of £86,689 and £92,288 respectively were made in order to bring these amount in line with the

Remuneration Committee’s intentions. Amounts presented in the table for salary and pension, for both the CEO and Deputy CEO, for 2020 have been

increased by £3,000 and £36,000 respectively to reflect the correction amounts due in respect of 2020 that were paid during 2021.

Annual Report on Remuneration

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Base salary and pension (audited information)

The base salaries of the Executive Directors are usually reviewed on an annual basis. The Committee compares the Group’s

remuneration packages for its Executive Directors and employees with those for Directors and employees of similar seniority

incompanies whose activities are broadly comparable with those of the Group. It also takes intoaccount the progress made

bythe Group, contractual considerations, and salary increases across the rest of the Group.

In 2021, there were no salary increases for the Executive Directors.

Salary levels as at the end of the financial period were:

Moshe Greidinger £645,750

Israel Greidinger £517,625

Nisan Cohen £404,875

Renana Teperberg £404,875

Part of Moshe Greidinger’s, Israel Greidinger’s, and Nisan Cohen’s salaries are paid in Israel to enable social security and

government healthcare deductions to be made.

As at 31 December 2021, a total of £1,568,092 was owed to the Executive Directors in respect of deferred salary and pension

payments from 2020 and 2021.

Executive Directors are invited to participate in a Group Personal Pension Plan, which is a money purchase plan, or alternatively

may receive a pension allowance in cash. The Executive Directors have elected not to participate in this scheme and instead

receive a cash pension allowance.

For 2021 the cash pension allowance entitlement was up to 20% of salary for the CEO and Deputy CEO, and up to 14.8% of

salary for the CFO and CCO.

As set out in footnote 10 to the single figure table, during the year it was identified that pension payments to the CEO and

Deputy CEO during the period 2016 to 2020 were below the policy approved by the remuneration committee. Payments of

£86,689 and £92,288 respectively were made in order to bring these amount in line with the Remuneration

Committee’s intentions.

Company pension contributions/allowances for the period were:

£000

Moshe Greidinger £129

Israel Greidinger £104

Nisan Cohen £60

Renana Teperberg £60

Other taxable benefits (audited information)

Benefits in kind for Executive Directors comprised the provision of a company car or car allowance, private mileage, life

insurance, permanent health insurance and private medical cover.

Benefit

Moshe

Greidinger

Israel

Greidinger

Nisan

Cohen

Renana

Teperberg

Car/car allowance £14,000 £14,000 – –

Permanent health insurance/private medical cover – £3,116 – –

Life assurance £1,164 £11,965 – –

Disturbance allowance £40,000 £40,000 – –

Israel Greidinger and Moshe Greidinger both received a disturbance allowance of £40,000 for the period as, under the terms of

their employment contracts, they are required to spend a sufficient and proportionate amount of time at different locations

across the Group.

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Annual bonus (audited information)

Annual bonus opportunity for the Executive Directors in the year was a maximum of 150% of base salary for the CEO and

Deputy CEO and 100% of base salary for the CFO and CCO.

As described in the 2021 Directors’ Remuneration Report, the annual bonus for the year was determined by a matrix of

Adjusted EBITDAaL compared to budget, and the achievement of specified individual objectives.

As in previous years, the Committee decided that a bonus would payable only if a minimum of 90% of budgeted Adjusted

EBITDAaL was achieved. All this element would be payable if 110% of budgeted Adjusted EBITDAaL and exceptional personal

performance against objectives is achieved. The final EBITDAaL targets were set once the cinemas reopened in June 2021 in

the second half of the year. The strategic targets were set for the full year.

The choice of these measures reflects the Committee’s belief that incentive compensation should be tied both to the overall

performance of the Group and to those areas that the relevant individual has clear accountability for.

The weighting between the Group’s financial performance and personal performance for this element of the annual bonus was

circa 70%:30%.

The Committee retains the absolute discretion to apply “malus” and “clawback” by reducing or withholding annual bonus

payments from the formulaic outcome based on Adjusted EBITDAaL performance (for example, in the event of misconduct

ormisstatement of financial results).

The EBITDAaL performance target condition of 110% was achieved in full. Recognising the challenging conditions that the

business has faced this year, the Remuneration Committee has determined that any bonus above that payable for the 100%

target EBITDAaL performance will be deferred in shares for all employees who participate in the annual bonus plan. In the case

of the Executive Directors, the Directors’ Remuneration Policy requires that any bonus earned in excess of 100% of salary will be

deferred into shares. One third of the bonus earned by the CEO and Deputy CEO will therefore be deferred as required by the

Policy and, owing to the Committee’s decision, 26.9% of the bonuses earned by the CFO and the CCO will be deferred into

shares in cash. The deferred bonus will be subject to malus and clawback provisions and will be delivered when, and to the

extent that the Remuneration Committee determines that it is appropriate (but no sooner than would otherwise have been

required by the Directors’ Remuneration Policy.

Personal Objectives

The individual performance element for the CEO was tailored to the crisis situation created by the pandemic in a business

with26,000 employees in 7 markets. The goals were (i) ensuring effective communication to all senior teams, across all

territories, while cinemas remain closed due to COVID-19 and (ii) during the phase of re-opening, the CEO was charged

withensuring teams were fully engaged to deliver the necessary operational and business plans. Other objectives included

maintaining strong supplier relationships throughout the period of COVID-related closures, and after reopening.

For the Deputy CEO, the objectives included maintaining good working relations with lenders, including banks, and work in

relation to financing. The Deputy CEO led crucial work in relation to the Group’s IT and cyber security systems and, together

with the CFO, the reduction of Group debt. Other objectives related to communications with major shareholders while cinemas

were closed and once reopened.

The CCO’s objectives included supporting the CEO in the implementation of commercial strategy across the Group, including

inrespect of major suppliers, and ensuring that strong relationships in the face of the challenges of COVID-19. The CCO also

ledCineworld’s communications with film and marketing teams across the Group, and the work of the HR function in an

environment in which many employees were furloughed.

Objectives for the CFO included communications with lenders and the financing for the Group. The CFO also managed the

extensive in 2021 was engagement with investors and lenders. Further objectives related to the leadership of the Group-wide

finance function to ensure that robust, efficient and appropriate financial controls and systems are maintained, and reporting

financial information to key stakeholders.

The Committee took time to reflect on the quality of performance delivered as well as the outcomes taking account of the

shareholder experience and indeed the experience of a range of stakeholders. In the light of the quality of the work and skill

exhibited by each of the Executive Directors the Remuneration Committee decided that the individual objectives had been

achieved in full.

In making this assessment, the Committee considered a number of factors, including the performance of the business, its liquidity

position, the continued trajectory of the business in recovering from the impact of COVID-19 and the performance of management.

As part of the assessment process, the Committee, in conjunction with the Chair, determined the performance ratings for the

CEO and Deputy CEO and the Committee took recommendations from the Board, the CEO and Deputy CEO in respect of the

CCO and CFO respectively.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

2021 annual bonus outcome

The table below shows the 2021 annual bonus targets and performance achieved against them.

Adjusted EBITDAaL

performance

Threshold

bonus

opportunity

(£000)

Maximum

bonus

opportunity

(£000)

Bonus Paid

% of maximum % of salary

Paid in cash

(£000)

Deferred in

(£000)

Deferred in

cash

(£000)

Moshe Greidinger

110% of adjusted

EBITDAaL

achieved

194 969 100% 150% 646 323 –

Israel Greidinger 155 777 100% 150% 518 259 –

Nisan Cohen 81 405 100% 100% 296 – 109

Renana

Teperberg 81 405 100% 100% 296 – 109

The Cineworld Group 2017 Long Term Incentive Plan (“2017 LTIP”) (audited information)

Awards vesting following the end of the performance period ending 31 December 2021

Awards under the 2017 LTIP made in May 2019 were due to vest on 21 May 2022.

As set out in note 7 to the financial statements, the Group reported negative Adjusted Diluted EPS for the year. As a result, the

minimum threshold for vesting was not met, and so none of the awards granted in 2019 to the Executive Directors will vest.

The performance condition that applied to these awards is summarised below:

EPS growth performance Vesting level

Less than 8% p.a. Nil

8% p.a. 25%

15% p.a. 100%

Between 8% and 15% p.a. Straight–line basis

Awards made in the year (audited information)

Awards were made to the Executive Directors under the 2021 LTIP on 8 February 2021 which will vest after three years, subject

to the achievement of applicable performance targets. A further two-year post-vesting holding period will apply on any vesting

shares. Awards were granted over 1.25% of the issued share capital to each of Moshe Greidinger and Israel Greidinger and 0.4%

of the issued share capital to each of Nisan Cohen and Renana Teperberg. Details of the awards are set out below. Awards are

subject to continued employment and the achievement of theperformance conditions as set out below.

Details of awards made on 8 February 2021 are set out below:

Name of Director

Number of shares

awarded

Exercise

price

Vesting

date

Moshe Greidinger 17,163,000 £Nil 8 February 2024

Israel Greidinger 17,163,000 £Nil 8 February 2024

Nisan Cohen 5,492,000 £Nil 8 February 2024

Renana Teperberg 5,492,000 £Nil 8 February 2024

Awards will vest subject to the share price targets set out below:

Target share price

(1)

Vesting

(2)

£1.30 (Threshold) 25%

£1.50 50%

£1.70 75%

£1.90 (Maximum) 100%

(1) Target share price means the average share price over a three-month period ending on the last business day of the performance period.

(2) Where the average share price (calculated over a three-month period ending on the last business day of the performance period) is between one of

the targets above, awards will vest on a straight-line basis between 25% and 100%.

The aggregate value of shares delivered to any one participant under the new plan cannot exceed the GBP figure calculated

bymultiplying the number of shares subject to an award at the date of grant by £3.80. Any award that exceeds this limit will

bereduced accordingly, and the award will lapse as to the balance on the vesting date.

The number and value of share options under the LTIP which were awarded to the Executive Directors during the period are set

out on page 73 of this report.

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

The Chair’s and the Non-Executive Directors’ fees

The table below sets out the fees payable to Non-Executive Directors:

Position held Fees as at 31 December 2021

Chair £215,000 p.a.

Senior Independent Director £10,000 p.a.

Non-Executive Director (base fee) £57,500 p.a.

Audit Committee Chair £20,000 p.a.

Remuneration Committee Chair £20,000 p.a.

Nomination Committee Chair £10,000 p.a.

Environment Committee Chair £10,000 p.a.

Employee Representative £10,000 p.a.

Committee Member £Nil

The Chair and the other Non-Executive Directors do not receive any share options, bonuses or other performance-related

payments, nor do they receive any pension entitlement or other benefits apart from expenses in relation to travel costs to

attend Cineworld Board meetings, including related sustenance and accommodation.

Loss of office payments (audited information)

There were no loss of office payments during the financial year.

Payments to past Directors (audited information)

There were no payments made to past Directors in 2021 required to be disclosed.

External appointments

None of the Executive Directors receive any fees in relation to external non-executive roles (as set out in their biographies on

pages 39 to 41).

Directors’ shareholdings at 31 December 2021 (audited information)

The interests of Directors and their connected persons in ordinary shares as at 31 December 2021, including any interests in

shares and share options provisionally granted under the PSP, 2017 LTIP or 2021 LTIP, are presented below:

Ordinary shares at

31 December 2021

Ordinary shares at

15March 2022

Share options subject to

performance

conditions at

31 December 2021

(1)

Share options subject to

performance

conditions at

15 March 2022

Executive Directors

Moshe Greidinger 277,033,678

(2)

277,033,678

(2)

19,256,747

(1)

19,256,747

(1)

Israel Greidinger 276,620,443

(2)

276,620,443

(2)

18,841,320

(1)

18,841,320

(1)

Nisan Cohen 99,549 99,549 6,476,559

(1)

6,476,559

(1)

Renana Teperberg 143,814 143,814 6,476,559

(1)

6,476,559

(1)

Non-Executive Directors – –

Alicja Kornasiewicz 135,000 135,000 – –

Arni Samuelsson 9,500 9,500 – –

Ashley Steel 31,042 31,042 – –

Camela Galano 10,000 10,000 – –

Damian Sanders 57,942 57,942 – –

Dean Moore 15,000 15,000 – –

Rick Senat 699,862

(3)

699,862

(3)

– –

Scott Rosenblum 100,000 100,000 – –

(1) Relates to unvested awards made in 2019 and 2020 under the 2017 LTIP and awards made under the 2021 LTIP. The vesting date of the 2019 awards

described above is not until 21 May 2022.

(2) At 31 December 2020, Global City Holdings B.V. (“GCH”) held 274,720,505 shares with a further 1,000,000 shares held by Global City Theatres B.V.,

awholly owned subsidiary of GCH. Shares in GCH are held in trust for the benefit of the children of Moshe Greidinger and Israel Greidinger.

(3) Rick stepped down from the Board on 12 May 2021. The levels of shareholding shown are as at this date.

There are currently no vested but unexercised share options in respect of the Executive Directors and there were no other

changes in share interests of any of the Directors after the year end.

As described in the current Policy, each Executive Director is expected to build up, over a period of time, a holding in shares

equal to 200% of their base salary.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Executive Directors

Shareholding

guidelines

(% of 2021

salary)

Shares owned

outright (at

31 December

2020)

Shares owned

outright (at

31 December

2021)

Current

shareholding (% of

salary as at

31 December

2021) Guidelines met

Moshe Greidinger 200% 1,313,173 1,313,173 65% Building

Israel Greidinger 200% 899,938 899,938 56% Building

Nisan Cohen 200% 99,549 99,549 8% Building

Renana Teperberg 200% 143,814 143,814 11% Building

In prior years, the shareholdings of Moshe Greidinger and Israel Greidinger have been sufficient to exceed the shareholding

guidelines (which were previously set at 150% of salary). However, the extreme share price movements of 2020 and 2021 have

meant that the guideline was not met at the end of 2020 or 2021. The share price used for the purposes of this calculation was

the share price at the 2021 year end.

Ten-year Total Shareholder Return performance and CEO pay

The graph below compares the Company’s Total Shareholder Return performance against the FTSE 250 and FTSE All-Share

Travel & Leisure indices over the past ten financial years. The Remuneration Committee believes these to be the most

appropriate comparators as Cineworld is a member of both indices.

Cineworld FTSE 250 FTSE All-Share Travel & Leisure

Total Shareholder Return (rebased to 100)

Dec

2020

Dec

2021

Dec

2019

Dec

2018

Dec

2017

Dec

2016

Dec

2015

Dec

2014

Dec

2013

Dec

2012

Dec

2011

100

200

300

400

500

Financial year

CEO single

figure of total

remuneration

£000

(1)

Bonus as

proportion of

maximum

opportunity

LTIP vesting as

proportion of

maximum

opportunity

2021 £1,476 100% 0%

2020 £830 0% 0%

2019 £2,109 54% 100%

2018 £2,756 91% 100%

2017 £2,346 79% 100%

2016 £2,973

(2)

79% 100%

2015 £1,213 87% –

(3)

2014 £1,440 76% 100%

2013 £1,326 41% 81%

2012 £1,258 60% 99%

(1) Up to 2013 these figures solely relate to Stephen Wiener who was CEO up to and including 27 February 2014. For 2014, it represents a combination of

two months of Stephen Wiener and ten months of Moshe Greidinger who both held the office of CEO during 2014.

(2) The increase in the CEO single figure between 2015 and 2016 primarily relates to the first vesting of a PSP award to the CEO since appointment.

The value of this award vesting increased due to the significant increase in the Company’s share price over the vesting period.

(3) Moshe Greidinger, CEO, did not have an LTIP which vested in this year. For those who did, the proportion was 100%.

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Percentage increase in Directors’ remuneration

The percentage changes in the value of salary, non-pension benefits and bonus between 2019 and 2020 and between 2020

and 2021 for the Directors and employees generally are set out in the table below:

2019 to 2020 2020 to 2021

Base salary

and fees

Non-pension

benefits

Annual

bonus

Base salary

and fees

Non-pension

benefits

Annual

bonus

Employees

(1)

: 0% 0% (100%) 0% 0% 100%

Executive Directors:

Moshe Greidinger 0% (4.21%) (100%) 0% 0% 100%

Israel Greidinger 0% (20.95%) (100%) 0% 3% 100%

Nisan Cohen 0% 100% (100%) 0% (100%) 100%

Renana Teperberg 0% (100%) (100%) 0% 0% 100%

Non-Executive Directors:

Alicja Kornasiewicz 49.6%

(3)

– – 16.6% – –

Arni Samuelsson 0% – – 0% – –

Ashley Steel

(2)

– – – – – –

Camela Galano 0% – – 0% – –

Damian Sanders 0% – – 200%

(4)

– –

Dean Moore 28.2%

(3)

– – 0% – –

Rick Senat (9.0%)

(3)

– – (67.6%) – –

Scott Rosenblum 0% – – 0% – –

(1) The figures reflect increases for UK- and US-based salaried employees excluding the Senior Management group and employees employed on an hourly

rate basis. This group has been selected as being reflective of the jurisdictions in which the CEO spends a significant amount of his time, as there are

too few employees of Cineworld Group Plc to provide and appropriate comparison.

(2) Ashley Steel was appointed to the Board on 1 April 2021.

(3) Alicja Kornasiewicz’s fees increased with effect from 13 May 2020 on her appointment as Chair of the Company. Rick Senat’s fees decreased with effect

from 13 May 2020 when he stepped down as Chair of the Nomination Committee. Dean Moore’s fees increased with effect from 1 January 2020 in

relation to his role as Employee Representative, and again on 13 May 2020 following his appointment as Chair of the Remuneration Committee.

(4) Damian Sanders’ fees increased with effect from 1 April 2021 when he became Audit Committee Chair, taking over from Dean Moore.

Relative importance of spend on pay

The table below shows figures for people costs, shareholder dividends and tax paid, which are a number of other significant

distributions of turnover that the Committee considered to be relevant in order to provide context to the relative importance of

pay spend:

2021 2020 % change

Directors’ remuneration costs

(1)

£4.8m £3.0m 60%

Staff and employee costs $314.3m $244.1m 29%

Corporation tax received $201.8m $6.2m 3,155%

Dividends paid $nil $51.4m (100)%

Accumulated losses $(616.6)m $(57.5)m 972%

Figures in the table above are set out in USD to align with the figures as stated in the financial statements, except for the

Directors’ remuneration figures, which are set out in sterling to align with the figures contained in the Single Total Figure Table

on page 65.

Shareholder voting results from 2021 AGM

The Directors’ Annual Report on Remuneration was subject to a shareholder vote at the AGM on 12 May 2021, the results of

which were as follows:

Remuneration Report Remuneration Policy

Number of votes % of votes cast Number of votes % of votes cast

For 637,282,593 74.30% 637,896,279 73.69%

Against 220,451,920 25.70% 227,749,799 26.31%

Total votes cast 857,734,513 – 865,646,078 –

Votes withheld

(1)

24,960,147 – 17,048,582 –

(1) A vote withheld is not counted as a vote in law.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

The Remuneration Committee engaged extensively with shareholders in 2021 on the 2021 Long-Term Incentive Plan.

The governance-related updates which were included in the current Directors’ Remuneration Policy were positively noted, but

anumber of shareholders did not feel able to support the Remuneration Report or Policy due to the inclusion of the 2021 LTIP

awards which were granted in February 2021. Some Shareholders were unhappy about the change of control provisions as well

as the level of awards. The Committee is grateful that the majority of Shareholders supported the resolutions and will continue

to engage on remuneration.

CEO to UK employee pay ratio

The table below presents the Company’s CEO to UK worker pay ratio. The ratios compare the unadjusted single total figure

ofremuneration of the CEO with the equivalent figures for the lower quartile (P 25), median quartile (P 50) and upper quartile

(P75) of all UK employees of the Group. The reporting will build up over time to show a rolling ten-year period.

As was the case in 2020, a significant number of Cineworld’s UK employees were furloughed at 5 April 2021 (the snapshot date

for our Gender Pay Gap report) and so the Remuneration Committee did not believe Option B would result in a representative

sample of Cineworld’s employees. Instead, the calculation methodology used reflects Option C, adding back furloughed

employees into the Gender Pay Gap reporting sample on a full-time equivalent basis. This option builds upon data analysed

within our Gender Pay Gap report as at 5 April 2021, with employees at the three quartiles identified from this analysis and their

respective singlefigure values calculated. This is the same approach as was adopted last year and was chosen as it represents

the most consistent approach with 2019. To ensure the identified employees were representative, the total remuneration for a

group of individuals above and below the identified employee at each quartile within the Gender Pay Gap analysis was

also reviewed.

Year Method P 25 pay ratio P 50 pay ratio P 75 pay ratio

2021 Option C

(1)

89: 1 84: 1 76: 1

2020 Option C

(1)

47: 1 45: 1 41: 1

2019 Option B 95: 1 91: 1 80: 1

(1) Option C is considered to be the most consistent methodology to that used in 2019.

In order to calculate the base salary component for the representative employees, the hourly rate of pay was used to arrive

atafull-time equivalent rate. Note that the pension rate available to the majority of the UK workforce (4%) was applied to the

full-time equivalent base salary rate for each representative employee. The base salary and total pay and benefits for each of

the representative employees are presented in the table below. No element of pay was omitted from the calculation.

Component P 25 pay ratio P 50 pay ratio P 75 pay ratio

Base salary £15,990 £16,809 £18,720

Total pay and benefits £16,630 £17,481 £19,469

The Committee has reviewed the ratios and pay data for the individuals identified at each of the relevant quartiles and believes

they are a fair reflection of the Company’s wider pay, reward and progression policies of the UK workforce.

The pay ratio results reflect the impact of the vesting of annual and long-term incentives which make up a higher proportion of

the Chief Executive Officer’s total remuneration than is the case for the majority of our employees; the lower ratios in 2020 than

in 2019 are primarily driven by the lack of annual bonus or long-term incentive being paid in the year. The Remuneration

Committee is satisfied that the ratios shown reflect the pay policy for the Executive Directors and the wider Group.

It should be noted that the calculation is based solely on the UK workforce and hence the ratios will not be representative of the

Group as a whole. The UK workforce accounts for approximately 16.5% of the Group’s total headcount and a proportion of the

Senior Management Team are based outside the UK. Employees have been included on a full-time equivalent basis, excluding

the impact of furlough. This was considered by the Remuneration Committee to be the most consistent basis for calculating the

CEO pay ratio in order to allow for year-on-year comparison.

Cineworld has a range of policies and practices to ensure that employees are fairly rewarded for the work they undertake.

These include offering a valued total reward package that includes an all-employee bonus scheme that allows employees to

share in the success of the Group.

We also operate a robust approach to salary management that is underpinned by market benchmarking to ensure we offer

competitive and fair rates of pay across all the different markets in which we operate.

The Company takes into account the pay and employment conditions of Cineworld’s employees when setting executive pay.

Cineworld has a number of engagement mechanisms in place. The Employee Engagement Director is also the Remuneration

Committee Chair and, during 2021, carried out several site visits in the UK as cinemas had started to reopen to engage with

employees where their own pay and progression were among the subjects discussed. More details may be found on page 48.

The Board has not explained to employees how executive pay and wider Company pay policy are aligned as recommended by

the Code on the basis that the Directors’ Remuneration Report seeks to do so and our employees, wherever they are based, are

free at any time to ask questions and to challenge the Board on its decisions through the existing channels.

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Share and Share Option Awards granted and vesting during the year (audited information)

Awards or grants were made under the Company’s Share and Share Option Schemes as follows:

Cineworld Group Performance Share Plan, 2017 Long Term Incentive Plan and 2021 Long Term

Incentive Plan (audited information)

Details of awards made and vesting during the period are set out below. All figures have been adjusted for the February 2018

rights issue where applicable:

Name of Director

At 1

January

2021

Awarded

during

year

(1)

Vested

during

year

Exercised

during

year

Lapsed

during

year

31 December

2021

Exercise

price

Market value

at date of

exercise

Exercise

period

(2)

Result

Moshe Greidinger 2,580,985 17,163,000 – – 487,238 19,256,747 £Nil – 6 months –

Israel Greidinger 2,068,884 17,163,000 – – 390,564 18,841,320 £Nil – 6 months –

Nisan Cohen 1,213,677 5,492,000 – – 229,118 6,476,559 £Nil – 6 months –

Renana Teperberg 1,213,677 5,492,000 – – 229,118 6,476,559 £Nil – 6 months –

(1) Mid-market closing price of a Cineworld Group plc share on 8 February 2021 was £0.7422. The face value of the awards to Moshe Greidinger and Israel

Greidinger were £12,738,379 and to Nisan Cohen and Renana Teperberg were £4,076,162. All awards were granted as nil cost options.

Threshold vesting is 25% of maximum.

(2) Subject to satisfaction of the relevant performance conditions.

Details of the awards for Executive Directors that were due to vest in May 2022 (audited information):

Name of Director Date awarded

Number

awarded Vesting date

Number

vesting

Number

lapsing

Exercise

price Exercise period

Moshe Greidinger 21 May 2019 421,686 21 May 2022 – 421,686 £Nil 6 months from vesting

Israel Greidinger 21 May 2019 338,018 21 May 2022 – 338,018 £Nil 6 months from vesting

Nisan Cohen 21 May 2019 198,293 21 May 2022 – 198,293 £Nil 6 months from vesting

Renana Teperberg 21 May 2019 198,293 21 May 2022 – 198,293 £Nil 6 months from vesting

Cineworld Group Company Share Option Plan (“CSOP”)

No Director was granted an option during the period and no options vested during the period under the CSOP.

No Director, past or present, holds a CSOP option which will vest in the 2022 financial year.

Cineworld Group Sharesave Scheme

No Directors currently participate in any Company Sharesave Scheme.

The Remuneration Committee’s advisers

FIT Remuneration Consultants LLP (“FIT”) continued to advise the Remuneration Committee in 2021, having been appointed in

December 2020. As members of the Remuneration Consultants Group, FIT operates under the voluntary Code of Conduct in

relation to executive remuneration consulting in the UK. The Committee is satisfied that the advice received was objective and

independent. FIT has no other connection with the Company or any of its individual Directors, and does not provide any other

services to the Company. Fees payable to FIT for advice to the Remuneration Committee in 2021 were £58,738 plus VAT, these

were charged on a fixed fee basis.

The Committee also received assistance from the Chair of the Company (Alicja Kornasiewicz), the Chief Executive Officer

(Moshe Greidinger), the Deputy Chief Executive Officer (Israel Greidinger), the Chief Financial Officer (Nisan Cohen), the

Headof Human Resources, US (Jackie McClure), the former Senior Vice President of Human Resources (Tara Rooney) and

theCompany Secretary (Fiona Smith), although they did not participate in discussions relating to the setting of their own

remuneration. The Committee also consulted with the Chief Executive Officer and received recommendations from him in

respect of changes to remuneration packages for Senior Management.

Directors’ service contracts

All Directors’ service contracts and letters of appointment are available for inspection at the Company’s registered office.

All Executive Directors have a notice period of 12 months. The Non-Executive Directors of the Company do not have service

contracts but are appointed by letters of appointment, with each independent Non-Executive Director’s term of office running

for a maximum three-year period.

Incorporation by reference

The sections “The Remuneration Committee and its Role” and “The Remuneration Committee advisers” also form part of the

Corporate Governance Statement, and are incorporated into that statement by reference.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Our Directors’ Remuneration Policy, as approved by shareholders at the AGM on 12 May 2021 is available in the 2020 Directors’

Remuneration Report and is available on the Cineworld Group website: www.cineworldplc.com. The Remuneration Policy has

operated as intended in terms of Company performance and quantum for 2021. The table below provides a summary of the key

elements of the Policy and how the Remuneration Committee intends to implement the Policy in 2022.

Element Summary of Policy Operation in 2022

Base salary Executive Directors’ salary levels are agreed on joining

and thereafter reviewed annually, generally on 1 July

each year.

Salaries may be adjusted and any increase will

ordinarily be (in percentage terms) in line with those

across the Group, in aggregate, allowing for location.

Percentage increases beyond those granted to the

wider workforce may be awarded in

certain circumstances.

No change for the CEO for 2022. The Deputy

CEO’s salary will increase by 10% to £569,388.

The CFO and CCO’s salaries will increase by 15%

to£465,606.

Pension Monthly employer contribution up to 20% of basic

salary or in the form of a cash pension allowance.

Executive Directors will receive a pension contribution

(or cash allowance) in line with the rate offered to the

majority of employees in their country of residence,

with all incumbent Executive Directors aligned from

1 January 2023.

No change for 2022.

Other benefits Benefits in kind for Executive Directors include but are

not limited to the provision of a company car or car

allowance, private mileage, life insurance, permanent

health insurance, private medical cover and a

disturbance allowance.

No change for 2022.

Annual bonus Maximum opportunity for Executive Directors of 150%

of salary. The bonus will be paid in cash save for any

bonus earned above 100% of salary which will be

deferred into shares for a period of two years.

The Remuneration Committee retains the discretion

tooverride formulaic outturns under the annual bonus,

if these are not considered to be appropriate inthe

context of wider Group performance.

Malus and clawback provisions apply.

The maximum annual bonus opportunity will be

150% of salary for the CEO and Deputy CEO and

100% of salary for the CFO and CCO.

For 2022, the bonus will be based on a

combination of performance against the agreed

budgeted financial measures and personal

performance levels. The weighting of these

measures is c.70% financial performance and 30%

personal performance. Bonus targets are not

disclosed on the grounds of commercial sensitivity,

but the 2022 targets will disclosed on a

retrospective basis as in prior years.

2017 LTIP Maximum opportunity for Executive Directors of 200%

of base salary. No awards under the 2017 LTIP will be

made in 2021, 2022 or 2023 to Executive Directors

who participate in the 2021 LTIP.

Annual awards of conditional shares or nil cost options

are made to Executive Directors and members of the

Senior Management Team at the discretion of

the Committee.

Awards may vest after three years, subject to

continuing employment and the achievement of

stretching three-year EPS growth performance

conditions. An additional two-year post-vesting

holding period applies to all grants made under this

plan from 2019 onwards.

The Remuneration Committee retains the discretion

tooverride formulaic outturns under the 2017 LTIP,

ifthese are not considered to be appropriate in the

context of wider Group performance.

Malus and clawback provisions apply.

No awards to be granted in 2022 under the 2017

LTIP to existing Executive Directors.

Summary of Directors’ Remuneration Policy

andImplementation of Policy in 2022

Cineworld Group plc

Annual Report and Accounts 2021

DIRECTORS’ REMUNERATION REPORT CONTINUED

Element Summary of Policy Operation in 2022

2021 LTIP Maximum opportunity for each of Moshe Greidinger

and Israel Greidinger is an award over 1.25% of the

issued share capital, and for each of Nisan Cohen and

Renana Teperberg an award over 0.4% of the issued

share capital.

Awards of nil cost options (or such other form

ofawardas may be granted to participants in

overseasjurisdictions in order to comply with local

requirements) may be made to the Executive Directors

and other senior executives at the discretion of

the Committee.

Awards may vest after three years, subject to

continuing employment and the achievement of

absolute share price targets. If the performance

conditions are achieved, awards will be subject

toatwo-year post-vesting holding period.

The rules of the 2021 LTIP provide that the aggregate

value of shares delivered under the 2021 LTIP to

anyone participant cannot exceed the GBP figure

calculated by multiplying the number of shares subject

to an award at the date of grant by £3.80. Any award

that exceeds this limit will be reduced accordingly,

andthe award will lapse as to the balance on the

vesting date.

Malus and clawback provisions apply.

No awards to be granted in 2022 under the 2021

LTIP to existing Executive Directors.

By order of the Board.

Dean Moore

Chair of the Remuneration Committee

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

DIRECTORS’ REPORT

The Directors present their Annual Report and the audited Consolidated Financial Statements for the year ended 31 December 2021.

The comparative period is the year ended 31 December 2020.

Management Report

This Directors’ Report, together with the Strategic Report on pages 1 to 35, form the Management Report for the purposes of rule

4.1.8R of the Disclosure Guidance and Transparency Rules.

Information contained elsewhere in the Annual Report

Information required to be part of this Directors’ Report and certain other information can be found elsewhere in the Annual

Report as indicated in the table below, and is incorporated into this report by reference.

Information Location in Annual Report

Audit tendering Page 59

Corporate Governance Statement Pages 36 to 60

Diversity, human rights and Our people Pages 25 to 29 (Responsible Business)

Directors’ biographies Pages 39 to 41

Financial instruments: Information on the Group’s financial risk

management objectives and policies, and its exposure to credit

risk, liquidity risk, interest rate risk and foreign currency risk Note 26, Page 156

Going Concern Statement Pages 38, 59 and 99 to 112 – Note 1

Key Performance Indicators Pages 10 to 13

An indication of likely future developments in the business

affecting the Company Pages 1 to 35 (Strategic Report)

Statement of Directors’ responsibilities in respect of the

Annual Report and Financial Statements Page 83

Task Force on Climate-related Financial Disclosures Page 20 to 22

Viability Statement Pages 23 and 24

Forward-looking statements

Certain statements in this Annual Report are forward-looking and so involve risk and uncertainty because they relate to events,

and depend on circumstances, that will occur in the future. 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

Annual Report, and the Group undertakes no obligation to update these forward-looking statements. Nothing in this Annual

Report should be construed as a profit forecast.

Results and dividends

The results for the Group for the year ended 31 December 2021 are presented under International Financial Reporting Standards

(“IFRSs”) and applicable law. However, the Company has elected to prepare its financial statements in accordance with UK

Accounting Standards, including FRS 101 “Reduced Disclosure Framework”. The Group results for the year are set out inthe

Consolidated Statement of Profit or Loss on page 94.

The distribution of dividends on our ordinary shares is subject to validation by the Board of Directors and must be in line

withapplicable law. The Board validates the amount of future dividends to be paid, taking into account the cash balance then

available, the anticipated cash requirements, the overall financial situation, restrictions on loan agreements, future prospects

forprofits and cash flows, as well as other relevant factors. On 7 April 2020 the Board announced the suspension of the 2019

fourth quarter dividend of 4.25 cents per share to conserve cash for the Group. Dividends are currently still suspended.

Events affecting the Company since the year end

None.

Financial risk management

The Board regularly reviews the financial requirements of the Group and the risks associated therewith. Full details are set out

inNote 26 to the financial statements, and are incorporated into this Directors’ Report by reference.

Funding and liquidity

The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Financial

Review on pages 30 to 35. In addition, Note 26 to the financial statements includes the Group’s objectives, policies and

processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging

activities, and its exposures to credit risk and liquidity risk. Such sections are incorporated into this Directors’ Report

by reference.

Cineworld Group plc

Annual Report and Accounts 2021

International operations

At the year end, the Group had operations in the UK, US, Jersey, Ireland, Poland, Israel, Hungary, Czech Republic, Bulgaria,

Romania and Slovakia.

Substantial shareholdings

At 31 December 2021, the Group had been notified, pursuant to the Disclosure Guidance and Transparency Rules, of the

following interests in the voting rights of the Company. Notifications confirming a party’s interest has gone below the threshold

notification level have not been included:

Shareholder Voting rights % of total voting rights

(1)

Nature of holding

Global City Holdings B.V.

(2)

275,720,505 20.08% Direct and Indirect

Jangho Group Company Ltd 189,334,278 13.79% Direct

Polaris Capital Management LLC 107,602,793 7.84% Direct

Aggregate of Standard Life Aberdeen Plc

(affiliated investment management entities) 68,425,390 4.98% Direct and Indirect

Aviva plc and its subsidiaries 67,027,3 69 4.88% Direct and Indirect

(1) Percentages are stated as at the time of notification. The total number of voting rights at 31 December 2021 was 1,372,995,448.

(2) At 31 December 2021, Global City Holdings B.V. (“GCH”) held 274,720,505 shares with a further 1,000,000 shares held by Global City Theatres B.V.,

awholly owned subsidiary of GCH. Shares in GCH are held in trust for the benefit of the children of Moshe Greidinger and Israel Greidinger.

As at 15 March 2022, being the latest practicable date, the Company had been notified of the following updated positions:

Shareholder Voting rights % of total voting rights

(1)

Nature of holding

Polaris Capital Management LLC 116,448,611 8.48% Direct

(1) Percentages are stated as at the time of notification.

Major shareholder voting arrangements

Global City Theatres B.V. (“GCT”) is interested in aggregate in 20.08% of the rights to vote at general meetings of the Company.

The Company and GCT entered into a relationship agreement dated 5 December 2017 to regulate the relationship between

them. This agreement replaced the agreement between Global City Holdings and the Company of 10 January 2014 and is on

the same terms as the previous relationship agreement. Under the relationship agreement, the parties acknowledge that the

Group is capable of carrying on business independently, and that all arrangements between the Company and GCT will be

onarm’s length terms. The relationship agreement contains a requirement (where reasonably practical) to consult with and

consider the reasonable views of the Chair or Senior Independent Director of the Company prior to a disposal of ordinary

shares in the Company.

Share capital and control

The Company has only one class of share capital formed of ordinary shares. All shares forming part of the ordinary share capital

have the same rights and each carries one vote. Details of the share capital, and changes in it over the year, are shown in

Note25 to the financial statements.

The holders of ordinary shares are entitled to receive Company reports and accounts, to attend and speak at general meetings

of the Company, to appoint proxies and to exercise voting rights.

There are no restrictions on transfers of, or limitations on the holding of, ordinary shares and there is also no requirement of any

prior approval of any transfers other than (i) those which may be applicable from time to time under existing laws or regulations

or (ii) if a person with an interest in 0.25% of the issued share capital held in certificated form has been served with a disclosure

notice and fails to respond with the required information concerning interests in that share capital.

No ordinary shares carry any special rights with regard to control of the Company. Except as stated in the paragraph directly

above and the Major Shareholder Voting Arrangements section above, there are no restrictions on voting rights attaching to

theordinary shares and the Company is not aware of any known agreements between shareholders that restrict the transfer

ofvoting rights attached to ordinary shares. No treasury shares are held by the Company and no shares are held by any trustee

in connection with any share scheme operated by the Group.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

DIRECTORS’ REPORT CONTINUED

Articles of Association

The Company’s Articles of Association (“Articles”), together with English law, define the Board’s powers. Changes to the

Articles must be approved by shareholders in accordance with the Articles themselves and legislation in force at the relevant

time. The last changes were approved by shareholders at the AGM held on 16 May 2018.

Change of control

There are no significant agreements which take effect, alter or terminate in the event of a change of control of the Company

except that (i) under its current banking arrangements, a change of control may trigger a right for lenders to require early

repayment of all sums outstanding, and (ii) provisions in the Company’s share schemes may cause options or awards granted

toemployees to vest on a change of control.

No Director or employee is contractually entitled to compensation for loss of office or employment as a result of change

incontrol; however, as described above, options or awards granted to employees may vest on a change of control.

Issue of new shares and authority to purchase shares

At the AGM held on 12 May 2021, shareholders gave authority for the allotment of shares up to an aggregate nominal value

of£4,575,991.63 subject to certain conditions. This authority will expire at the 2022 AGM of the Company or on 11 August 2022,

whichever is earlier.

Between 1 January 2021 and 31 December 2021, a total of 197,959 shares were issued. Further details of the shares issued inthis

period are set out in Note 25 to the financial statements.

At the AGM held on 12 May 2021, shareholders gave authority for the purchase of up to 137,279,748 ordinary shares in the

Company for cancellation or placing into treasury. No shares have been acquired under this authority.

The Board proposes to seek shareholder approval at the AGM to renew both the Company’s authority to issue new shares and

its authority to purchase its own ordinary shares for cancellation or placing in treasury. Details of the proposed resolutions are

set out in the Notice of AGM (the “AGM circular”) dispatched or made available to shareholders with the Annual Report and

Accounts (or on notification of its availability).

Equity warrants

As announced on 23 November 2020, 153,539,786 equity warrants, which are each exercisable into one share of the Company

at an exercise price of 41.49 pence, were issued on a non-pre-emptive basis alongside new debt, with proceeds of such exercise

being retained by the Company. The warrants are exercisable at any time during the next five years and represent 9.99% of the

fully diluted ordinary share capital of the Company assuming full exercise of the warrants. No exercises took place during the

year. More details may be found in the CFO’s Review on pages 30 to 35.

Convertible bond

As announced on 25 March 2021, the Company secured binding commitments from a group of leading institutional investors

fora new$213 millionconvertible bond due 2025 (the “Bond”). The Bond carries a coupon of 7.5%. per annum and is

convertible into ordinary shares of the Group. More details may be found in the CFO’s Review on pages 30 to 35.

Directors’ interests at year end

Director

Ordinary shares held directly

Ordinary shares held by companies in

whichaDirector has a beneficial interest

orisconnected

31 December

2020

31 December

2021

31 December

2020

31 December

2021

Alicja Kornasiewicz 135,000 135,000 – –

Nisan Cohen 99,549 99,549 – –

Camela Galano 10,000 10,000 – –

Israel Greidinger 899,938 899,938 275,720,505

(1)

275,720,505

(1)

Moshe Greidinger 1,313,173 1,313,173 275,720,505

(1)

275,720,505

(1)

Dean Moore 15,000 15,000 – –

Scott Rosenblum 100,000 100,000 – –

Arni Samuelsson 9,500 9,500 – –

Damian Sanders 57,942 57,942 – –

Ashley Steel – 31,042 – –

Renana Teperberg 143,814 143,814 – –

(1) Shares are held by Global City Holdings B.V. (“GCH”) and its wholly owned subsidiary Global City Theatres B.V. Shares in GCH are held in trust for the

benefit of the children of Moshe Greidinger and Israel Greidinger.

Cineworld Group plc

Annual Report and Accounts 2021

Directors’ interests at the latest practicable date being 15 March 2022

Director

Ordinary shares

held directly

Ordinary shares held by

companies in which a

Director has a beneficial

interest or is connected

Alicja Kornasiewicz 135,000 –

Nisan Cohen 99,549 –

Camela Galano 10,000 –

Israel Greidinger 899,938 275,720,505

(1)

Moshe Greidinger 1,313,173 275,720,505

(1)

Dean Moore 15,000 –

Scott Rosenblum 100,000 –

Arni Samuelsson 9,500 –

Damian Sanders 57,942 –

Ashley Steel 31,042 –

Renana Teperberg 143,814 –

(1) Shares are held by Global City Theatres B.V., a wholly owned subsidiary of Global City Holdings B.V. (“GCH”). GCH is owned by trusts for the benefit

ofthe children of Moshe Greidinger and Israel Greidinger.

The Directors who held office at the end of the financial year had interests in the ordinary shares of the Company at the

beginning and end of the year under review, and at the last practicable date, as set out in the tables above.

Details of the interests in the ordinary shares of the Company arising under the Group’s share option schemes are set out in the

Remuneration Report on page 69. No rights to subscribe for shares in or debentures of other Group companies were granted

toany of the Directors or their immediate families, or exercised by them, during the year. None of the Directors had any

disclosable interest in the shares of Group companies other than the Company.

Appointment and replacement of Directors

The appointment and replacement of Directors is governed by the Company’s Articles, the UK Corporate Governance Code

(the “Code”), the Companies Act 2006 and related legislation. All Directors intending to continue in office seek election or

re-election by shareholders at each AGM. The Articles may be amended by a special resolution of the shareholders.

The Directors of the Company who were in office during the year and up to the date of signing the financial statements were:

Director

Alicja Kornasiewicz

Nisan Cohen

Camela Galano

Israel Greidinger

Moshe Greidinger

Dean Moore

Scott Rosenblum

Arni Samuelsson

Damian Sanders

Rick Senat Stepped down from the Board on 12 May 2021

Ashley Steel Appointed to the Board on 1 April 2021

Renana Teperberg

Following the Board evaluation process undertaken in 2021, the Board is satisfied that each Director standing for re-election or

election continues to show the necessary commitment, and to be an effective member of the Board due to their skills, expertise

and business acumen.

Under the terms of the relationship agreement between the Company and GCT (described further in the Major Shareholder

Voting Arrangements section above), GCT has the right to appoint one Non-Executive Director (but only if none of Moshe

Greidinger, Israel Greidinger and Scott Rosenblum are on the Board) for so long as it holds at least 10% of the voting rights

inthe Company.

Details of the Directors’ remuneration are set out in the Directors’ Remuneration Report on pages 61 to 75 and information

ontheir service contracts are set out in the Remuneration Policy contained in the 2021 Annual Report and Accounts.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

DIRECTORS’ REPORT CONTINUED

Conflicts of interest

The Articles permit the Board to consider and, if it sees fit, authorise situations where a Director has an interest that conflicts, or

may possibly conflict, with the interests of the Company. There is in place a formal system for the Board to consider authorising

such conflicts whereby the Directors who have no interest in the matter decide whether to authorise the conflict. In deciding

whether to authorise the conflict, the non-conflicted Directors are required to act in the way which they consider would be

most likely to promote the success of the Company for the benefit of all shareholders and they may, and do, impose conditions

to be attached to such authorisations. The Board believes that the arrangements for reporting and considering such conflicts

operate effectively.

Directors’ interests in contracts

The Group has a number of property lease agreements in place with Global City Holdings B.V. (“GCH”) (and/or its subsidiary

undertakings). Further details of the amounts paid under these agreements can be found in Note 28 to the financial statements.

Shares in GCH are held in trust for the benefit of the children of Moshe Greidinger and Israel Greidinger.

None of the Directors has a material interest in any contract of significance to which the Company or a subsidiary was a

partyduring the financial year, other than as disclosed above, in their service contracts or letters of appointment described

intheDirectors’ Remuneration Report, in Note 28 to the financial statements and in the Remuneration Policy contained on

the2020 Annual Report and Accounts.

Directors’ and Officers’ insurance and indemnity

The Company maintains a qualifying third party indemnity insurance cover for all Directors and Officers of Group companies

against liabilities which may be incurred by them while acting as Directors and Officers.

As at the date of this report, indemnities are in force under which the Company has agreed to indemnify the Directors

aspermitted by law and by the Articles against liabilities they may incur in the execution of their duties as Directors of

the Company.

Political donations

In line with the Group’s policy, no donations to political parties were made during the year.

Employees

The health, welfare and development of the Group’s employees remain a priority. We remain intent on attracting, recruiting,

developing and retaining key employees. Cineworld maintains a number of policies and procedures for the benefit of its

employees, which are available to all employees across the Group. Continuing education, training and development are

important to ensure the future success of the Group.

The policy is to recruit, employ and develop staff on the basis of the suitability of their qualifications and experience, regardless

of sex, marital status, race, nationality, age, sexual orientation or religion. It is Group policy to give full and fair consideration to

applications for employment from disabled people, having regard to their particular abilities and aptitudes. Full consideration

isgiven to continuing the employment of staff who become disabled, including considering them for other reasonable positions

and arranging appropriate training.

The Group supports individuals who wish to obtain appropriate further education qualifications and reimburses tuition fees,

where relevant, up to a specified level. Regular and open communication between management and employees is essential for

motivating the workforce. Briefings, in many various forms, are held regularly to provide updates on the Group’s business and

toprovide opportunity for questions and feedback. The Group encourages the involvement of employees in its performance

through the operation of various bonus schemes throughout the Group.

Employee and stakeholder engagement

The Company is aware of its workforce engagement obligations and details of how the Directors have engaged with

employees, had regard to employee interests, and the impact of such regard on decisions taken by the Company during

theperiod can be found throughout this Annual Report, in particular in the Responsible Business section on pages 25 to 29.

Engagement with stakeholders (including suppliers, customers and others) has continued to be an area of focus and details

ofthe ways in which the Directors have sought to foster the Company’s commercial relationships and relationships with the

communities in which the Group operates its businesses, can be found within the Responsible Business section of the report

onpages 25 to 29 and on pages 48 to 49.

Environmental matters and greenhouse gas emissions

Information on the Group’s environmental policies is summarised in the Responsible Business section on pages 25 to 29.

This section provides the greenhouse gas (“GHG”) emissions data and supporting information required by the Companies

Act2006 (Strategic Report and Directors’ Report) Regulations 2013.

Cineworld Group plc

Annual Report and Accounts 2021

Mandatory disclosure

The information provided below complies with The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations

2013 and The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018;

the latter commonly referred to as Streamlined Energy & Carbon Reporting.

Organisational boundary, methodology and exclusions

The organisational boundary used for the Company’s GHG reporting is operational control.

The below figures capture emissions associated with the operation of the cinemas as well as any administrative buildings.

The report refers to emissions from the UK, US, the portfolio across Europe and Israel.

This information was collected and reported in line with the methodology set out in the UK Government’s Environmental

Reporting Guidelines, 2019.

Emissions have been calculated using the 2021 conversion factors provided by The Department for Business, Energy and

Industrial Strategy (“DBEIS”) for the UK, the 2020 factors provided by the Association of Issuing Bodies (“AIB”) for European

countries and the 2020 factors from the United States Environmental Protection Agency (“EPA”) for the US. The US emissions

have this year been reported by state for the first time; previously the aggregated emissions factor for the US was used.

There are no material omissions from the mandatory scope 1 and 2 emissions. The reporting period is October 2020 to

September 2021. The financial year for Cineworld Group plc is January to December 2020; however the decision was made

tooffset the reporting period by three months to enable the collation of the maximum amount of data.

Reporting scope

The Company is reporting on emissions covered by Scopes 1 and 2 (comprising electricity, gas, and fugitive F-gas emissions)

from global operations.

As well as Scope 1 and 2 emissions figures, Scope 3 transmission and distribution (from electricity) emissions have been

reported voluntarily.

Emissions included

Mandatory emissions sources as specified by the Environmental Reporting Guidelines published by the Department for

Environment, Food and Rural Affairs (“Defra”) have been included in this report (see also “Estimates and exclusions” below).

GHG emissions data

The GHG emissions for the Group for the 12-month period to 30 September 2021 are shown in Table 1 below in tonnes of carbon

dioxide equivalent (tCO

e). 2020 emissions are also included for comparison.

Table 1: 2021 emissions (tonnes tCO

Emissions source 2020 tCO

e 2021 tCO

e % change 2021 share %

Electricity 212,160 152,948 -27.91% 12.01%

Natural gas 42,386 22,147 -47.75% 82.96%

Refrigerant 2,459 8,644 251.54% 4.69%

Transportation 712 618 -13.24% 0.34%

Total emissions (tCO

e) 257,717 184,357 -28.47% 100%

Revenue ($m) 852.29 1,804.9 

Intensity: (tCO

e per $m of revenue) 302.38 102.14 

The 2021 GHG emissions for the Group broken down into their respective scopes are shown below in Table 2.

Table 2: 2021 emissions by Scope (tonnes tCO

Emissions source Scope 1 Scope 2 Scope 3 Total

Electricity 145,024 7, 924 152,948

Natural gas 22,147 22,147

Refrigerant 8,644 8,644

Transportation 618 618

Total 31,409 145,024 7, 924 184,357

As part of the requisite for compliance with the Streamlined Energy and Carbon Reporting scheme, Table 3 shows the

consumption data by source in kWh. As refrigerant use generates no kWh, this has been omitted.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

DIRECTORS’ REPORT CONTINUED

Table 3: 2020/21 consumption (kWh)

Emissions source 2020 kWh 2021 kWh % change Share %

Electricity 485,957,463 434,502,069 -10.59% 77.87%

Natural gas 230,520,317 120,915,841 -47.55% 21.67%

Transportation 2,983,404 2,543,169 -14.76% 0.46%

Total 719,461,184 557,961,079 -22.45% 100%

Table 4: 2021 Scope 1 and 2 emissions (tonnes CO

e) & consumption (kWh) by territory

Territory Scope tCO

e kWh

2,659 9,162,454

Global 28,750 114,296,556

9,264 43,630,907

Global 135,760 390,871,162

Total 176,433 557,961,079

Estimates and exclusions

This report sets out GHG emissions from Cineworld Group plc’s global operations for the reporting period 1October 2020 to

30 September 2021.

No estimates have been included in the reporting data set.

Emissions intensity

The chosen carbon intensity measure is financial turnover. The value for the year 2021 was 102.14 tonnes CO

e per $1m turnover.

For comparison, 2020’s intensity was 302.38 tonnes CO

e per $1m turnover. The change in total emissions in 2021 relative to

2020 reflects the change in calculation methodology for the US states in 2021 as well as the impact that COVID closures

continued to have on Group emissions and turnover.

Energy efficiency measures

After the re-opening of the UK estate in July 2021, Cineworld underwent a rigorous analysis of its overnight consumption to

ensure baseloads were minimised. This work will continue throughout 2022 and expand into analysis of the energy consumption

and optimisation during all times of the day.

The European cinemas are in the process of installing Building Management Systems in several high energy use locations, as

well as focusing on a rollout of LED lighting when refurbishments are being undertaken.

Task Force on Climate-related Financial Disclosures (“TCFD”)

The Company has reported under the TCFD framework for the financial year ending 31 December 2021. Please see the report

and further details on the Group’s work in the area of climate change on pages 20 to 22.

Annual General Meeting

The Notice convening the AGM, to be held at Cineworld Cinema in Wandsworth, Southside Shopping Centre, Wandsworth High

Street, London SW18 4TF at 10.30am on Thursday 12 May 2022, is contained in the AGM circular. Details of all the resolutions to

be proposed are set out in the AGM circular.

Auditors and tender

Following the audit tender process in 2019, PricewaterhouseCoopers LLP was formally appointed as External Auditors at the

AGM in 2020. The Company will continue to comply with the relevant tendering and auditors rotation requirements applicable

under UK and EU regulations.

Disclosure of information to Auditor

The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there

is no relevant audit information of which the Company’s Auditors are unaware; and each Director has taken all steps that he or

she ought to have taken as a Director to make himself or herself aware of any relevant audit information, and to establish that

the Company’s Auditors are aware of that information.

By order of the Board

Scott Brooker

Company Secretary

Cineworld Group plc

17 March 2022

Registered Office:

8th Floor

Vantage London

Great West Road

Brentford

TW8 9AG

Registered: England No: 5212407

Cineworld Group plc

Annual Report and Accounts 2021

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law

and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have

prepared the Group financial statements in accordance with UK-adopted international accounting standards and the parent

Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom

Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and applicable law). Additionally, the Financial

Conduct Authority’s Disclosure Guidance and Transparency Rules require the Directors to prepare the Group financial

statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002

as it applies in the European Union.

Under company law, directors must not approve the financial statements unless they are satisfied that they give a true and fair

view of the state of affairs of the Group and parent Company and of the profit or loss of the Group for that period. In preparing

the financial statements, the Directors are required to:

− select suitable accounting policies and then apply them consistently;

− state whether applicable UK-adopted international accounting standards have been followed for the Group financial

statements and United Kingdom Accounting Standards, comprising FRS 101 have been followed for the parent Company

financial statements, subject to any material departures disclosed and explained in the financial statements;

− make judgements and accounting estimates that are reasonable and prudent; and

− prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent

Company will continue in business.

The directors are responsible for safeguarding the assets of the group and parent company and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s

and parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and

parent Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with

the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the parent Company’s website. Legislation in the United

Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the Annual Finance Report

− Each of the Directors, whose names and functions are listed in Corporate Governance confirm that, to the best of

their knowledge:

− the Group financial statements, which have been prepared in accordance with UK-adopted international accounting

standards and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies

inthe European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Group;

− the parent Company financial statements, which have been prepared in accordance with United Kingdom Accounting

Standards, comprising FRS 101, give a true and fair view of the assets, liabilities and financial position of the parent Company;

and

− the Strategic Report includes a fair review of the development and performance of the business and the position of the

Group and parent Company, together with a description of the principal risks and uncertainties that it faces.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the

information necessary for shareholders to assess the Group’s position and performance, business model and strategy.

Moshe Greidinger

Chief Executive Officer

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Opinion

In our opinion:

− Cineworld Group plc’s group financial statements and company financial statements (the “financial statements”) give a true

and fair view of the state of the group’s and of the company’s affairs as at 31 December 2021 and of the group’s loss and the

group’s cash flows for the year then ended;

− the group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards;

− the company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure Framework”, and

applicable law); and

− the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Annual Accounts 2021 (the “Annual Report”),

which comprise: consolidated statement of financial position and company statement of financial position as at 31 December

2021; consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of

changes in equity, company statement of changes in equity and consolidated statement of cash flows for the year then ended;

and the notes to the financial statements, which include a description of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.

Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial

statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to

provideabasis for our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and

wehave fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were

not provided.

Other than those disclosed in note 6 to the financial statements, we have provided no non-audit services to the company in the

period under audit.

Material uncertainty related to going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure

made in note 1 to the financial statements concerning the group’s and the company’s ability to continue as a going concern.

The global pandemic continued to have a significant impact on the cinema exhibition industry in the 12 months ended

31 December 2021 (‘FY21’), with the group’s cinemas being closed for a significant portion of the first half of the year. During the

year, the group secured additional liquidity, agreeing terms for a convertible bond of $213 million and a new $200 million term

loan which has also released the group from certain reporting covenants. The group’s principal covenants are a minimum

liquidity covenant and group and ROW net leverage covenants. Waivers for covenants were agreed in FY20 with the group

net leverage covenant being tested again from June 2022, and the ROW net leverage covenant from December 2021. No new

covenants were introduced as part of the additional FY21 financing.

In light of the ongoing global pandemic, there remain material uncertainties over the short term in respect of the impact that

this will continue to have on the group and the cinema exhibition industry. Management’s basis of preparation in note 1 to the

financial statements sets out the key assumptions in respect of both the weighted base case and severe but plausible downside

forecasts. In respect of the weighted base case, this currently forecasts sufficient liquidity for the group to pay down enough

of the Revolving Credit Facility (‘RCF’) in June 2022 to avoid the group net leverage covenant test and to repay the RCF upon

maturity in February 2023. The weighted base case is, however, very sensitive to the speed at which admission levels return,

with the US forecast to be 85% of comparable FY19 periods in FY22, with the UK and ROW at 90% and 95% respectively,

increasing to 95% of FY19 in FY23 for all territories. If management is unable to pay down the RCF then a covenant waiver

would be required for the June 2022 test. Management also forecasts sufficient liquidity to repay the RCF in February 2023

however, given the level of working capital that this would leave the group with, it is likely that this would need to be refinanced

in the going concern period.

Under management’s severe but plausible downside scenario, which considers a reduction in admissions and / or further film

delays, there would not be sufficient funds to avoid the June or December 2022 group net leverage covenant which would

breach along with the ROW covenant, the September 2022 minimum liquidity covenant would also breach, although the group

would not run out of liquidity before the repayment of the RCF upon maturity in February 2023.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CINEWORLD GROUP PLC

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Cineworld Group plc

Annual Report and Accounts 2021

In addition, in the event that Cineworld is unable to successfully appeal the Cineplex judgment issued in December 2021, and

the appeals process completes sooner than expected and within the Going concern period, Cineworld would not have sufficient

liquidity to pay the current level of damages awarded.

These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a

material uncertainty which may cast significant doubt about the group’s and the company’s ability to continue as a going

concern. The financial statements do not include the adjustments that would result if the group and the company were unable

to continue as a going concern.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern

basis of accounting included:

− evaluating the directors’ assessment of the impact of reduced admission levels and / or delays to the forecast movie slate,

changes to the average ticket price and spend per person, the ability of the group to manage costs, understanding the likely

outcome and timing of the Cineplex appeal, together with consideration of the covenant calculations.

− In assessing the impact of the above scenarios, referred to in note 1 of the financial statements, we performed the following

procedures on the directors’ assessment that the group and company will continue as a going concern:

− agreed the underlying cash flow projections to management approved forecasts, assessed how these forecasts are

compiled, and the accuracy of management’s forecasts by reviewing third-party industry and analysts’ reports, and

applying appropriate sensitivities to the growth projections where required;

− read all of the loan documents to ensure that all relevant terms and covenants have been appropriately reflected in

management’s assessment;

− evaluated the assumptions in respect of the costs that could be avoided in a period of reduced attendance;

− assessed the likelihood of the group being able to raise additional funding;

− held discussions with external legal advisors in respect of the strength of the Cineworld appeal on the Cineplex judgment

and understanding the likely timing of the appeals process; and

− checked the mathematical accuracy of the spreadsheet used to model future financial performance and determined in

what circumstances there was a risk that the covenants may be breached.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, other than the material

uncertainty identified in note 1 to the financial statements, we have nothing material to add or draw attention to in relation to

the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going

concern basis of accounting, or in respect of the directors’ identification in the financial statements of any other material

uncertainties to the group’s and the company’s ability to continue to do so over a period of at least twelve months from the

date of approval of the financial statements.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections

of this report.

Our audit approach

Overview

Audit scope

− The group operates in 10 countries, across 16 country reporting units.

− The seven country reporting units, where we performed an audit of their complete financial information, and the

consolidation adjustments accounted for 89% of group revenue, 99% of group loss before tax, adjusted for exceptional items.

Key audit matters

− Material uncertainty related to going concern

− Accounting for and disclosure of the Cineplex judgment against Cineworld (group and parent)

− Impairment of property, plant and equipment and right of use assets (group)

− Impairment of goodwill, indefinite lived intangibles and equity accounted investment in National Cinemedia (group)

− Impairment of investments (parent)

− Recoverability of deferred tax assets (group)

− Accounting for additional financing (group)

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CINEWORLD GROUP PLC CONTINUED

Materiality

− Overall group materiality: US$14.1 million (2020: US$14.1 million) based on 5% of average absolute profit/loss before

tax (excluding exceptional items) over a three-year period (2019, 2020, 2021). This would have resulted in an increase in

materiality from 2019 given the size of the losses in 2020 and 2021. Since we consider an increase in materiality would be

inappropriate in the context of the group’s results, we then capped this at the overall materiality level from that of 2019 being

the most recent year of normal trading.

− Overall company materiality: US$18.7 million (2020: US$16.7 million) based on 1% of total assets.

− Performance materiality: US$9.2 million (2020: US$9.2 million) (group) and US$12.2 million (2020: US$10.9 million) (company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the

financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of

thefinancial statements of the current period and include the most significant assessed risks of material misstatement (whether

or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy;

theallocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments

we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a

whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to going concern, described in the material uncertainty related to going concern section above, we determined the

matters described below to be the key audit matters to be communicated in our report. This is not a complete list of all risks

identified by our audit.

Impairment of equity accounted investment in National Cinemedia (group) and, accounting for and disclosure of the Cineplex

judgment against Cineworld (group and parent) are new key audit matters this year. Consideration of the impact of Covid-19

(group and parent), which was a key audit matter last year, is no longer included because there has been a general improvement

in economic conditions and in the market expectation of the Covid-19 recovery period. Any continuing impact of the pandemic

has been dealt with in the impairment sections below. Otherwise, the key audit matters below are consistent with last year.

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Accounting for and disclosure of the Cineplex judgment

against Cineworld (group and parent)

Refer to the Report of the Audit Committee and Note 28

– Contingent Liabilities

Following the termination of the Acquisition Agreement in

June 2020, Cineplex brought a claim against Cineworld for

damages, alleging that there was no basis for terminating

the agreement. Cineplex sought damages of c.C$2.2 billion.

In December 2021 the Ontario Superior Court of Justice

granted Cineplex’s claim whilst awarding damages of

C$1.2 billion for lost synergies and C$5.5 million transaction

costs. Cineworld has appealed this judgment, both in terms

ofliability and damages, Cineplex has counter-appealed in

theevent that Cineworld is successful.

Management believes that Cineworld’s chance of a successful

appeal is more likely than not and as such has not recorded

any provision in the financial statements as at 31 December

2021. There is a risk that the level of provision is inappropriate

and that there is insufficient disclosure of the potential

implications of the judgment within the financial statements.

The significance of the damages awarded and the level of

judgment involved in assessing the strength of and likely

outcome of Cineworld’s appeal has led this to being a key

focus area for our audit.

The procedures performed included the following:

− Reviewed the relevant legal documents, including the

judgment and the Appeal / Cross-appeal submissions.

− Engaging our UK and Canadian legal teams to assist us

with the understanding of the case and rulings and form

anindependent conclusion on the strength of the appeal.

− Receiving legal confirmations and holding calls with external

legal counsel to understand their views on the process,

strength of appeal and likely outcome of the appeal.

− Review of the memorandum prepared and discussion with

the independent law firm engaged by the Board to provide

their views on the appeal and cross appeal.

− Considered the potential impact of the judgment on the

group’s going concern and viability.

− Critically reviewed the associated disclosure within

the financial statements and Accounts to ensure its

appropriateness and sufficiency.

This is a very judgemental area given the nature of the case

and the lack of relevant precedent in Canada. Based on

our procedures we consider management’s position to be

supportable. We also consider the disclosures within the

financial statements to give an accurate view of the current

state of the proceedings and what the implications could be

should the appeal be unsuccessful.

Cineworld Group plc

Annual Report and Accounts 2021

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Impairment of property, plant and equipment and right of use

assets (group)

Refer to the Report of the Audit Committee, Note 11 –

Property, Plant and Equipment and Note 20 – Right-of-

use assets.

The group has Property, Plant and Equipment (“PPE”)

of $1,698 million and Right of Use (“ROU”) assets of

$2,234 million as at 31 December 2021 (2020: $1,788 million

and $2,306 million respectively). During the period there

has been a net impairment reversal of $182 million (2020:

impairment charge of $650 million).

We have identified the risk of impairment, or the

overstatement of a reversal of a prior year impairment, in

PPE and ROU assets as a significant risk for the group due

to the inherent level of management estimation involved in

calculating the value in use of the assets.

As part of its year-end reporting process, management

conducted an impairment trigger assessment of PPE and ROU

assets at the Cash Generating Unit (“CGU”) level as required

by IAS 36. It was assessed that there were no triggers for

further impairments unless carrying values of the CGUs have

increased through lease modifications or refurbishments, or

there has been a deterioration in a specific site’s performance.

Whilst FY21 performance has been below FY20 budgets,

there has not been a deterioration in the overall cash flow

forecast for future periods. Improvements in excess of pre-

pandemic levels have been experienced both in respect of

the Average Ticket Price (ATP) and Spend Per Person (SPP)

however, management has not reversed any impairments

based on improved cash flows as there is not yet sufficient

evidence to support the longer term profile of these increases.

Reversals of prior year impairments were driven by decreases

to the carrying value of assets through lease modifications or

the cash flow benefits associated with a lease extension.

Another significant assumption in the impairment valuation

assumption is the discount rate, which is calculated for each

territory separately. These discount rates are the same or

lower than the discount rates used previously for the majority

of the territories, and therefore there is no impairment trigger

or impairment reversal trigger from the discount rate.

Our procedures included understanding and evaluating

the controls related to the PPE and ROU asset impairment

process, together with performing substantive

audit procedures.

The procedures performed included the following:

− Testing the mathematical accuracy of the impairment

models including assessing that revenue and costs have

been appropriately allocated to each of the CGUs.

− Challenging management on the appropriateness of key

assumptions such as discount rates, admissions, ATP and

SPP growth rates by comparing against industry forecasts

and historical trends.

− Ensured appropriate consistency of assumptions across

management forecasts in both the front and back half.

− Performing look back assessments to consider the historic

growth trends and therefore what growth may be achieved

in a post pandemic environment, also factoring in potential

changes to consumer behaviour.

− We have assessed the appropriateness of the impairment

reversal trigger in respect of lease modifications and the

amount reversed, assessing that it was not in excess of the

original depreciated asset value and did not include the

impact of unwinding the discount.

− Involving our internal experts to assess the appropriateness

of the discount rates used.

− Performing independent sensitivity analysis to identify if we

considered there to be further impairments or reversals.

− As the Group engagement team, we were specifically

involved in assessing the appropriateness of the audit

approach of each component team, where relevant.

This satisfied us that the area was well understood and that

sufficient focus was placed on the risk area with no significant

errors identified. Based on our procedures we consider the

net impairment reversal booked in the year to be appropriate

and we also consider the disclosures around the sites which

are sensitive to impairment to be reasonable.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CINEWORLD GROUP PLC CONTINUED

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Impairment of goodwill, indefinite lived intangibles and equity

accounted investment in National Cinemedia (group)

Refer to the Report of the Audit Committee and Note 12 –

Intangible Assets and Note 13 – Equity-Accounted Investees

The group has goodwill of $4,837 million (2020: $4,868 million)

and indefinite lived intangibles of $365 million (2020:

$365 million) as at 31 December 2021. During the year no

impairment has been booked due to there being sufficient

headroom (2020: $657 million).

The Group also has an equity accounted investment of

$121 million in NCM as at 31 December 2021 (2020: $208 million).

An impairment of $55 million was booked in the year (2020:

$37 million).

The group assesses goodwill for impairment based

upon groups of CGUs at the level goodwill is monitored.

These groups of CGUs are assessed to be the UK, US and

ROW. The recoverable amount of these groups of CGUs

are dependent on certain key assumptions, including the

forecast cash flows, short and long term growth rates and the

discount rate, all of which are dependent upon management

judgement and estimates.

As with PPE and ROU assets, one of the other key judgements

in the period has been the assessment of when the industry

will recover to pre-pandemic levels as cinemas have reopened,

and ensuring that there is consistency in the assumptions

applied across the different models.

The continued impact of Covid-19, together with the

significant fall in the NCM share price was considered a

triggering event for the impairment review. Due to the

magnitude of the balance, and the level of estimation and

judgement inherent within management’s impairment model,

this has been a focus area for our group audit. The valuation

of this investment is dependent on certain key assumptions

including the forecast cash flows provided by NCM, debt

costs and restrictions, short and longer term growth rates

andthe discount rate. There is a risk that significant changes

to assumptions or underperformance of trading could give

rise to an additional impairment.

The procedures performed included the following:

− Understanding the controls and procedures in place in

respect of the goodwill and indefinite lived intangibles and

NCM impairment models.

− Testing the mechanics and mathematical integrity of

management’s impairment models.

− Evaluating the process by which management prepared

its cash flow forecasts and comparing them to the Board

approved forecasts.

− Assessing the appropriateness of the assumptions in the

goodwill and indefinite lived intangibles models around

the recovery profile back to a pre-pandemic level, by

comparing to industry analysis and current trading,

andensuring the consistency of assumptions with other

impairment models, and those used for the purposes

ofthegoing concern and viability assessments.

− Evaluating the appropriateness of key assumptions in the

NCM forecast cash flows, including the speed of recovery

of advertising revenue, covenant restrictions around

distributions, changes in margin driven by the cost base,

increased debt costs, and the forecast dividend profile.

− Performing look back assessments to consider the historic

growth trends and management forecasting reliability.

− Involving our internal experts to assess the appropriateness

of the discount rates used.

− Benchmarking against the industry and peers, external

sources including industry and analysts’ outlook reports

and country inflation rates.

− Assessed the fair value less cost to dispose (FVLCD) based

on the share price of NCM and confirming that FVLCD is

the appropriate recoverable amount, being higher than the

VIU model.

− Performing our own sensitivity analysis to understand the

impact of reasonably possible changes to key assumptions.

Based on these procedures we have assessed that no

impairment is required to be recorded in the year for goodwill

or indefinite lived intangibles and the $55 million impairment

to NCM is appropriate. We also consider the disclosures,

including the sensitivities provided, to be appropriate.

Cineworld Group plc

Annual Report and Accounts 2021

KEY AUDIT MATTER HOW OUR AUDIT ADDRESSED THE KEY AUDIT MATTER

Impairment of investments (parent)

Refer to the Report of the Audit Committee and Note 32 –

Fixed Asset Investments.

The Parent company has investments in subsidiaries of

$1,121 million as at 31 December 2021 (2020: $1,135 million).

During the year no impairment has been booked due to there

being sufficient headroom (2020:$2,510 million impairment

charge), with movements in the carrying value only related to

foreign exchange.

Due to the magnitude of these investments, the market

capitalisation at 31 December 2021, and the level of estimation

and judgement inherent within management’s impairment

model, this has been a key focus area for our company audit.

The valuation of these investments is dependent on certain

key assumptions including the forecast cash flows, short and

longer term growth rates, fair value of the debt held by the

group, and the discount rate. There is a risk that significant

changes to assumptions or underperformance of trading

could give rise to an impairment.

The procedures performed included the following:

− Understanding the controls and procedures in place in

respect of the impairment model.

− Confirming the mathematical integrity of the

impairment model.

− Evaluating the appropriateness of key assumptions, as

noted in the PPE and ROU asset and goodwill and indefinite

lived intangible impairment sections above, ensuring there

is appropriate consistency in the key assumptions applied.

− Assessing the fair value of the external debt at year end

which has been deducted from the net present value of

the forecast cash flows of the group, and comparing the

outcome of the valuation to the market capitalisation.

− Performing sensitivity analysis to evaluate the impact of

reasonably possible changes to key assumptions.

Our sensitivities did not identify any indication of impairment.

We have also considered whether impairment reversal

triggers existed and are comfortable that no reversals have

been booked as at the year end.

Recoverability of deferred tax assets (group)

Refer to the Report of the Audit Committee and Note 16 –

Deferred Tax Assets and Liabilities.

The Group has recognised net deferred tax assets of

$416 million (2020: $278 million) at 31 December 2021.

The recognition of deferred tax assets is based on future

levels of profitability in the relevant tax jurisdiction.

The magnitude of the assets recognised necessitates the

need for significant judgement in assessing the future levels

of profitability. The significant losses reported for 2020 and

2021 present a heightened risk that deferred tax assets are

recognised inappropriately. Further, there is an inherent

increased level of uncertainty in the level of forecast profits

over an extended period.

The procedures performed included the following:

− Understanding the controls and procedures in place in

respect of the impairment model.

− Evaluating management’s assessment as to the availability

of sufficient taxable profits in future periods to support the

recognition of deferred tax assets, taking into account both

business model and the tax jurisdiction.

− Assessing the future profit forecasts and the underpinning

assumptions. The increased asset recognition in the year

reflects that loss making years have now been replaced with

more profitable future years.

− Where applicable, reconciling the forecasts used to justify the

recognition of deferred tax assets to those used elsewhere in

the business including for impairment assessments, or for the

Directors’ viability and going concern statements.

− Assessing the adequacy of disclosures over this area.

Based on these procedures we consider the recognition of

deferred tax assets and the disclosures provided to be appropriate.

Accounting for additional financing (group)

Refer to the Report of the Audit Committee and Note 19

– Loans and Borrowings.

Over the past two years, the Group has entered into new and

modified existing financing arrangements to secure additional

liquidity through the cinema closure period.

The additional financing included various complex clauses

that were recognised as embedded derivatives, including

interest rate floors, prepayment features and default

interest clauses.

In April 2021, the Group raised further liquidity through the

issue of $213m of convertible bonds (maturity April 2025) at an

issue price of $211m, representing a 1% discount to face value.

In July 2021, the group issued further debt in the form of the US

Term Loan Incremental B1 loan of $200m (maturity May 2024).

The additional financing included various clauses that were

recognised as embedded derivatives. Due to the magnitude

and complexity of the new financing entered into in the year,

together with the level of estimation associated with valuing

the embedded derivatives within the prior year financing, this

has continued to be a focus area for our audit.

The procedures performed included the following:

− Understanding the controls and procedures in place in

respect of the accounting for financing.

− Reviewing the financing agreements to understand the terms,

restrictions and covenants, and obligations pertaining to the

new arrangements and assessing the appropriate accounting

treatment, including identifying any embedded derivatives.

− Understanding the nature of the various fees, including

the impact on the effective interest rate, and assessing the

accounting treatment of the fees.

− Engaging our valuation specialists to independently value

the embedded derivatives.

− Assessing the tax implications of the refinancing across the

group involving tax specialists in both the UK and the US.

− Reviewing the disclosures to ensure these were

appropriately presented in the financial statements.

− Ensuring the implications of covenants were appropriately

considered within management’s going concern assessment.

Based on these procedures we consider the new financing in

the year and the valuation of the embedded derivatives to be

accounted for and disclosed appropriately.

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CINEWORLD GROUP PLC CONTINUED

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial

statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,

and the industry in which they operate.

The group operates cinema sites across 10 countries, and there are 16 country reporting components in total. We identified

seven country reporting components across three countries for which we determined that a full scope audit was required and

one country reporting component that required the audit of specified accounts. The full scope country reporting components,

excluding those audited by the group engagement team, were audited by the US and Poland component teams, while our

Israeli team audited distribution revenue and associated costs. The group team also performed the audit of the UK component.

During the year the group engagement team held regular video conference calls to discuss the audit approach and findings

with the component teams, and to attend the full scope component teams clearance meetings with local management.

Our audit scope was determined by considering the significance of each component’s contribution to profit before tax,

excluding exceptionals, and individual financial statement line items, with specific consideration to obtaining sufficient coverage

over significant risks.

The group has set a target to be carbon neutral by 2050. Management considers that the impact of climate change does not

give rise to a material impact on the financial statements however, management’s climate change initiatives and commitments

will be principally focused on changing operating behaviours and installing energy efficient technology into its cinemas.

Disclosure of the impact of climate change risk is incorporated in the Task Force on climate related financial disclosures (‘TCFD’)

section of the Annual Report.

As part of our audit, we made enquiries of management to understand the extent of the potential impact of climate change

on the group’s business and financial statements, including reviewing management’s climate change risk assessment which

was prepared with support from an external expert. We used our knowledge of the group and discussions with management

and its external expert to evaluate the risk assessment. We assessed that the key areas in the financial statements which are

more likely to be materially impacted by climate change are those areas that are based on future cash flows. As a result, we

particularly considered how climate change risks and the impact of climate commitments made by the group would impact

the assumptions in the group goodwill and the company investment cash flow forecasts. Our procedures did not identify

any material impact on our key audit matters for the year ended 31 December 2021. We also checked the consistency of

the disclosures in the TCFD section of the Annual Report with the relevant financial statement disclosures, and with our

understanding of the business.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.

These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and

extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect

ofmisstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

FINANCIAL STATEMENTS – GROUP FINANCIAL STATEMENTS – COMPANY

Overall materiality

US$14.1 million (2020: US$14.1 million). US$18.7 million (2020: US$16.7 million).

How we determined it

5% of average absolute profit/loss before tax

(excluding exceptional items) over a three-year

period (2019, 2020, 2021). This would have

resulted in an increase in materiality from 2019

given the size of the losses in 2020 and 2021.

Since we consider an increase in materiality

would be inappropriate in the context of the

group’s results, we then capped this at the

overall materiality level from that of 2019

beingthe most recent year of normal trading.

1% of total assets

Rationale for

benchmark applied

Profit/loss on ordinary activities before tax

(excluding exceptional items), provides us with

a consistent year-on-year basis for determining

materiality. It is, we believe, a metric commonly

used by the Shareholders as a body in

assessing the group’s performance and is

agenerally accepted auditing benchmark.

We consider that total assets is the primary

measure used by the shareholders in assessing

the performance of a holding company and

is a generally accepted auditing benchmark.

For the purposes of the group audit, we

applied a lower materiality of $13.0 million

to company balances and transactions,

other than those which were eliminated on

consolidation in the group financial statements.

Cineworld Group plc

Annual Report and Accounts 2021

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.

The range of materiality allocated across components was between $2.0 million and $13.3 million. Certain components were

audited to a local statutory audit materiality that was also less than our overall group materiality.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and

undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of

our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in

determining sample sizes. Our performance materiality was 65% (2020: 65%) of overall materiality, amounting to US$9.2 million (2020:

US$9.2 million) for the group financial statements and US$12.2 million (2020: US$10.9 million) for the company financial statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment

and aggregation risk and the effectiveness of controls – and concluded that an amount in the middle of our normal range

was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $0.7 million

(group audit) (2020: $0.7 million) and $0.9 million (company audit) (2020: $0.8 million) as well as misstatements below those

amounts that, in our view, warranted reporting for qualitative reasons.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our

auditors’ report thereon. The directors are responsible for the other information, which includes reporting based on the Task

Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial statements does not

cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly

stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained

in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material

misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial

statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that

there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based

on these responsibilities.

With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK

Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions

and matters as described below.

Strategic report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and

Directors’ Report for the year ended 31 December 2021 is consistent with the financial statements and has been prepared in

accordance with applicable legal requirements.

In light of the knowledge and understanding of the group and company and their environment obtained in the course of the

audit, we did not identify any material misstatements in the Strategic report and Directors’ Report.

Directors’ Remuneration

In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the

Companies Act 2006.

Corporate governance statement

ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the

corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance

Code, which the Listing Rules of the Financial Conduct Authority specify for review by auditors of premium listed companies.

Our additional responsibilities with respect to the corporate governance statement as other information are described in the

Reporting on other information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate

governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and,

except for the matters reported in the section headed ‘Material uncertainty related to going concern’, we have nothing material

to add or draw attention to in relation to:

− The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

− The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging

risks and an explanation of how these are being managed or mitigated;

− The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern

basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and company’s

ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF CINEWORLD GROUP PLC CONTINUED

− The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers

and why the period is appropriate; and

− The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in

operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an

audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that

the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the

statement is consistent with the financial statements and our knowledge and understanding of the group and company and

their environment obtained in the course of the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:

− The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and

provides the information necessary for the members to assess the group’s and company’s position, performance, business

model and strategy;

− The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and

− The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s

compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the

Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities in respect of the Annual Report and the Financial

Statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable

framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control

as they determine is necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic

alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or

in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these

financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which

our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws

and regulations related to employment laws, and we considered the extent to which non-compliance might have a material

effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial

statements such as the Companies Act 2006, UK and US tax legislation, including corporation tax, sales tax and employment

tax. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements

(including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal

entries to increase revenue or reduce expenditure, push profit into future years and management bias in accounting estimates.

The group engagement team shared this risk assessment with the component auditors so that they could include appropriate

audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or

component auditors included:

− Review of the financial statement disclosures to underlying supporting documentation, review of correspondence with

legal advisors.

− Enquiry of management, those charged with governance and the group’s legal counsel around actual and potential fraud and

non-compliance with laws and regulations.

Cineworld Group plc

Annual Report and Accounts 2021

− Auditing the risk of management override of controls, including through testing journal entries and other adjustments

for appropriateness, testing accounting estimates (because of the risk of management bias), and evaluating the business

rationale of significant transactions outside the normal course of business.

− Enquiry of group’s staff in tax and compliance functions to identify any instances of non-compliance with laws

and regulations.

− Obtaining and understanding the results of whistle blowing procedures and assessing any related investigations.

− Enquiry of the group’s Head of Internal Audit and reviewing internal audit reports.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of

non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial

statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one

resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations,

orthrough collusion.

Our audit testing might include testing complete populations of certain transactions and balances, possibly using data

auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete

populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases,

wewill use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:

www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with

Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or

assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may

come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

− we have not obtained all the information and explanations we require for our audit; or

− adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received

from branches not visited by us; or

− certain disclosures of directors’ remuneration specified by law are not made; or

− the company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with

the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit Committee, we were appointed by the directors on 17 June 2019 to audit the

financial statements for the year ended 31 December 2019 and subsequent financial periods. The period of total uninterrupted

engagement is three years, covering the years ended 31 December 2019 to 31 December 2021.

Other matter

As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements

form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct

Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance

over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.

Christopher Richmond (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

17 March 2022

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 DECEMBER 2021

Note

Year ended

31 December

2021

Year ended

31 December

2020

Revenue 4 1,804.9 852.3

Cost of sales (1,263.2) (888. 1)

Gross profit/(loss) 541 .7 (35.8)

Other operating income 5 15.4 2.3

Administrative expenses (668.4) (879.7)

Net reversal of impairment/(impairment) of goodwill, property, plant and

equipment, right-of-use assets and investments

1 2 7.1 (1,344.5)

Operating profit/(loss) 6 15.8 (2,257 .7)

Adjusted EBITDA as defined in Note 2 2 454.9 (115. 1)

Finance income 9 208.4 69. 6

Finance expenses 9 (899.2) (786.8)

Net finance costs (690.8) (717 .2)

Share of loss from jointly controlled entities using equity accounting method

net of tax

(33.3) (33.0)

Loss before tax (708.3) (3,007 .9)

Tax credit on loss 10 142.5 356.4

Loss for the year attributable to equity holders of the Group (565.8) (2,651.5)

Basic Deficit Per Share 7 (41.2) (193.2)

Diluted Deficit Per Share 7 (41.2) (193.2)

The Notes on pages 99 to 163 are an integral part of these Consolidated Financial Statements.

Cineworld Group plc

Annual Report and Accounts 2021

Note

Year ended

31 December

2021

Year ended

31 December

2020

Loss for the year attributable to equity holders of the Group (565.8) (2,651.5)

Items that will not subsequently be reclassified to profit or loss

Change in fair value of financial assets at FVOCI 15 7. 6 –

Deferred tax on change in fair value of financial assets at FVOCI (2. 1) –

Items that will subsequently be reclassified to profit or loss

Retranslation (loss)/gain of foreign currency denominated operations (6. 1) 3.5

De-designation of net investment hedge (11.6) 9.8

Movement on net investment hedge – (19.8)

Income tax charge recognised within other comprehensive income/(loss) (0.2) (0. 1)

Comprehensive loss for the year, net of income tax (12.4) (6.6)

Total comprehensive loss for the year attributable to equity holders oftheGroup (57 8.2) (2,658.1)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Note

31 December

2021

31 December

2020

Non-current assets

Property, plant and equipment 11 1,698. 1 1,788.2

Right-of-use assets 20 2,234. 1 2,306.4

Goodwill 12 4,837 . 1 4,868.3

Other intangible assets 12 464.6 489.5

Investment in equity-accounted investees 13 130.3 215. 1

Financial assets at FVOCI 15 5.8 1 0.0

Deferred tax assets 16 415.9 2 7 8 .1

Fair value of financial derivatives 26 2.8 7. 8

Other receivables 18 48.8 48.7

Total non-current assets 9,837 .5 10 ,012. 1

Current assets

Assets classified as held for sale 11 1.8 2.9

Inventories 17 2 4.3 13.2

Current taxes receivables 10 2.7 206.6

Trade and other receivables 18 142. 1 5 3.7

Restricted cash and cash equivalents 8.0 –

Cash and cash equivalents 354.3 336.7

Total current assets 533.2 613. 1

Total assets 10, 370.7 10,625.2

Current liabilities

Loans and borrowings 19 (169 .5) (54.2)

Fair value of financial derivatives 26 (50.8) (97 .2)

Lease liabilities 20 (547 .9) (596.6)

Trade and other payables 21 (526.2) (596.3)

Deferred revenue 22 (226.9) (27 0.9)

Current taxes payable (35.3) (40 .6)

Provisions 24 (5.0) (8.0)

Total current liabilities (1,56 1.6) (1,663.8)

Non-current liabilities

Loans and borrowings 19 (5,020. 1) (4,608.5)

Fair value of financial derivatives 26 (37 .1) (130. 1)

Lease liabilities 20 (3,492.3) (3,37 5. 1)

Other payables 21 (19.6) (9.2)

Deferred revenue 22 (579.5) (607 .0)

Provisions 24 (1.0) (1. 1)

Employee benefits 23 (4.5) (4. 1)

Total non-current liabilities (9, 154.1) (8,7 35. 1)

Total liabilities (10, 715.7) (10,398.9)

Net (liabilities)/assets (345.0) 226.3

Equity attributable to equity holders of the Group

Share capital 25 2 0.1 2 0 .1

Share premium 513.8 513.8

Foreign currency translation reserve 25 (253.4) (2 4 7 .3)

Hedging reserve 25 – 11.6

Fair value reserve 25 (8.9) (14.4)

Retained earnings (616.6) (57 .5)

Total equity (345.0) 226.3

These Financial Statements on pages 94 to 163 were approved by the Board of Directors on 17 March 2022 and were signed

onits behalf by:

Nisan Cohen

Director

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2021

Cineworld Group plc

Annual Report and Accounts 2021

capital

premium

Foreign currency

translation reserve

Hedging

reserve

Fair value

reserve

Retained

earnings/

(Accumulated

losses)

Total

At 1 January 2020 2 0 .1 516.0 (250 .8) 21.6 (14.4) 2,645.2 2,937 .7

Loss for the year – – – – – (2,651.5) (2,651.5)

Other comprehensive income/

(expense)

Items that will subsequently be

reclassified to profit or loss:

De-designation of net investment hedge – – – 9.8 – – 9.8

Movement on net investment hedge – – – (19.8) – – (19.8)

Tax that will subsequently be reclassified

to profit or loss

– – – – – (0. 1) (0. 1)

Retranslation of foreign currency

denominated operations

– – 3.5 – – – 3.5

Total comprehensive loss – – 3.5 (10. 0) – (2,651.6) (2,658.1)

Contributions by and distributions

toowners

Dividends – – – – – (51.4) (51.4)

Movements due to share-based

compensation

– – – – – (1.9) (1.9)

Transfer of shares – (2.2) – – – 2.2 –

At 31 December 2020 2 0 .1 513.8 (24 7 .3) 11.6 (14.4) (57 .5) 226.3

Loss for the year – – – – – (565.8) (565.8)

Other comprehensive income/

(expense)

Items that will not subsequently be

reclassified to profit or loss:

Change in fair value of financial assets

atFVOCI

– – – – 7. 6 – 7. 6

Deferred tax on change in fair value of

financial assets at FVOCI

– – – – (2. 1) – (2. 1)

Items that will subsequently be

reclassified to profit or loss:

De-designation of net investment hedge – – – (11.6) – – (11.6)

Tax that will subsequently be reclassified

to profit or loss

– – – – – (0 .2) (0.2)

Retranslation of foreign currency

denominated operations

– – (6.1) – – – (6. 1)

Total comprehensive loss – – (6. 1) (11.6) 5.5 (566.0) (57 8.2)

Contributions by and distributions

toowners

Movements due to share-based

compensation

– – – – – 6.9 6.9

At 31 December 2021 2 0 .1 513.8 (253.4) – (8.9) (616.6) (345.0)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

Note

Year ended

31 December

2021

Year ended

31 December

2020

Cash flows from operating activities

Loss for the year (565.8) (2,651.5)

Adjustments for:

Finance income 9 (208.4) (69 .6)

Finance expense 9 899.2 786.8

Taxation 10 (142.5) (356.4)

Share of loss of equity accounted investee 33.3 33.0

Operating profit/(loss) 15.8 (2,257 .7)

Depreciation and amortisation 6 534.9 643.3

Share-based payments charge/(credit) 2 6.9 (2.3)

(Reversal of impairment)/impairment of property, plant and equipment,

right-of-use assets and goodwill

6 (182.2) 1,307 .4

Impairment of investment 6 55. 1 3 7. 1

(Gain)/Loss on sale of assets (32.8) 6.4

(Increase)/decrease in trade and other receivables (87 .6) 214.4

(Increase)/decrease in inventories (11.6) 20.0

Increase/(decrease) in trade, other payables and deferred income 41.5 (204.5)

Increase in provisions and employee benefit obligations 14. 0 2 .1

Cash generated from/(used in) operations 354.0 (233.8)

Tax received 205.5 6.2

Tax paid (4.4) –

Net cash flows from operating activities 555. 1 (227 .6)

Cash flows from investing activities

Interest received 3.0 6.5

Income from net investment in sub-lease 1 .1 1.0

Acquisition of property, plant and equipment (152. 1) (290.0)

Investment in joint ventures (0. 1) (0.3)

Acquisition of distribution rights and other intangibles (4.3) (2.5)

Acquisition of subsidiaries*** 19 (202.7) –

Proceeds from sale of property, plant and equipment 21.3 3.2

Distributions received from equity accounted investees – 17 .8

Distributions received from financial assets at FVOCI 15 11.8 –

Net cash flows from investing activities (322.0) (264.3)

Cash flows from financing activities

Dividends paid to shareholders – (51.4)

Interest paid (227 .3) (158.3)

Repayment of bank loans (55.5) (54.2)

Draw down of bank and other loans 526.2 1,207 .8

Debt issuance costs paid (12.7) (73.2)

Exceptional finance cost (30.5) –

Repayment on termination of financial derivatives – (10.2)

Landlord contributions 5.1 13.5

Payment of lease liabilities* (400.5) (198.6)

Movement in restricted cash** (16.0) –

Net cash flows from financing activities (211.2) 675.4

Cash and cash equivalents at the start of the year 336.7 140.6

Net movements in cash and cash equivalents 21.9 183.5

Exchange (loss)/gain on cash and cash equivalents (4.3) 12.6

Cash and cash equivalents at the end of the year 354.3 336.7

* Payment of lease liabilities includes $2 5 1 . 2m (2020: $1 1 5 .7m) of interest payments and $14 9. 3m (2020: $8 2. 9m) of principal lease payments.

** During the year $1 6 . 0m of cash and cash equivalents was restricted for settlement of interest on the convertible bond described in note 26. $8 . 0m of

this was paid during the year.

*** During the year the Group reached agreement with the Regal Dissenting Shareholders in respect of the Judgement awarded to them. This agreement

settled the outstanding consideration due in respect of the Group’s Acquisition of Regal Entertainment. Further details of amounts still outstanding to

the Regal Dissenting Shareholders are set out in note 19. The total settlement amounted to $2 6 5 .7m, of which $6 3 .0m is included in the trade and other

payables movement as it was previously charged to operating profit.

During the financial year $42 .7m (2020: $47.8m) of government grants was received in cash.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

Cineworld Group plc

Annual Report and Accounts 2021

1. Accounting Policies

Basis of preparation

Cineworld Group plc (the “Company”) is a company limited by shares, incorporated and domiciled in the UK. The Company’s

registered address is 8th Floor, Vantage London, Great West Road, Brentford TW8 9AG.

On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became UK-adopted

International Accounting Standards, with future changes being subject to endorsement by the UK Endorsement Board.

The Group transitioned to UK-adopted International Accounting Standards in its consolidated financial statements on 1 January

2021. This change constitutes a change in accounting framework. However, there is no impact on recognition, measurement or

disclosure in the period reported as a result of the change in framework.

The consolidated financial statements of the Company have been prepared in accordance with UK-adopted International

Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under

those standards, these are presented on pages 164 to 178.

The accounting policies set out below have been applied consistently to all years presented in these Group financial statements.

Information regarding the Group’s business activities, together with the factors likely to affect its future development,

performance and position is set out in the Chief Executive Officer’s Review on pages 4 to 5 and the Principal Risks and

Uncertainties section on pages 14 to 19. The financial position of the Group, its cash flows, liquidity position and borrowing

facilities are described in the Chief Financial Officer’s Review on pages 30 to 35. In addition, Note 25 to the financial statements

includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details

of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.

Presentational currency

The financial results of the Group are presented in US dollars.

Going concern

In assessing the appropriateness of applying the going concern basis in the preparation of the consolidated financial statements

the Directors have considered the Group’s liquidity and forecast cash flows under a range of potential scenarios taking into

account reasonably possible outcomes over a 15-month period from the date of approval of these financial statements.

Given the global economic uncertainty driven by COVID-19 and its specific impact on the exhibition industry, the Directors

consider some volatility in performance and a certain amount of disruption to business likely over the coming 12 months.

The scenarios modelled consider the speed of recovery from the impact of COVID-19 and its effect on the cinema exhibition

industry, consumer behaviour, the availability and timing of film content, impact on contractual cash flows specific to the Group

and its liquidity position as well as future access to liquidity. These scenarios cover a range of potential outcomes primarily

based on the strength and speed of the recovery from the COVID-19 outbreak and the return to pre-pandemic levels of activity,

as well as the potential for further impact in the future. Each of the scenarios are sensitive to forecast admission levels over the

coming 12-month period. In assessing the going concern basis the Directors have assumed the industry will return to levels of

performance similar to those observed prior to the COVID-19 impact by the end of 2023, with continued gradual build up to

those levels over a period of time.

Restrictions required by law across operating territories have reduced significantly since reopening and currently do not impact

the Group’s ability to operate at levels observed prior to the pandemic. The Group has implemented additional safety measures

and operational changes where considered appropriate to ensure the safety of customers and employees.

The minimum liquidity covenant (which will not apply if the Group reaches 80% of admission levels for a 3-month comparable

period in 2019), net leverage covenant on the revolving credit facility (RCF) and the net leverage covenant on the Rest of the

World private placement loan (RoWPP) are the only remaining financial covenants with which the Group is required to comply.

The Group is only required to comply with the RCF net leverage covenant when the facility is drawn down by greater than 35%.

The Directors are confident that the Group can continue to operate and recover fully from the impact of the pandemic whilst

complying with all obligations under its lending agreements.

In addition, the RCF has a maturity of February 2023, at which point the group will either repay or refinance the facility.

The Group’s currently available facilities and indebtedness are set out in note 19.

Dissenting Shareholders

On 10 September 2021, the Group announced that it had reached agreement with the dissenting shareholders of Regal

Entertainment Group (the “Regal Litigation Parties”) with respect to the payment of judgment of their claim. Under this

agreement, the Company paid $170 million of the Judgment to the dissenting shareholders and $92 million was placed into

anescrow account to be available to Cineworld as additional liquidity under certain circumstances.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS)

Cineworld Group plc

Annual Report and Accounts 2021

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

1. Accounting Policies continued

Going concern continued

On 1 February 2022, Cineworld announced that it had initiated discussions with the Regal Litigation Parties in relation to a

potential rescheduling of the Group’s payment obligations under the unsecured facility agreement relating to the settlement

reached with them in September 2021 (the “Unsecured Facility Agreement”). It was agreed that the remaining $79.3 million

(plus interest and fees) owed under the facility would be paid to the Regal Litigation Parties in instalments with a final payment

due on 30 June 2022, rather than the previously agreed date of 31 March 2022.

Cineplex

On 6 July 2020 the Group confirmed that Cineplex had initiated proceedings against it in relation to its termination on 12 June

2020 of the Arrangement Agreement relating to its proposed acquisition of Cineplex (the “Acquisition”). The proceedings

alleged that the Group breached its obligations under the Arrangement Agreement and/or duty of good faith and claimed

damages of up to C$2.18 billion less the value of Cineplex shares retained by Cineplex shareholders.

The Group defended these proceedings on the basis that it had terminated the Arrangement Agreement because Cineplex

breached a number of its covenants and counter-claimed against Cineplex for damages and losses suffered as a result of these

breaches and the Acquisition not proceeding, including the Group’s financing costs, advisory fees and other costs.

The Ontario Superior Court of Justice has now handed down its judgment. It granted Cineplex’s claim, dismissed the Group’s

counter-claim and awarded Cineplex damages of C$1.23 billion for lost synergies to Cineplex and C$5.5 million for lost

transaction costs. The Group disagrees with this judgment and has appealed the decision. The Group does not expect damages

to be payable whilst any appeal is ongoing, which is likely to take longer than the assessment out to 30 June 2023. No liability

has been recognised in respect of the judgement on the basis that payment is not considered probable at this stage, and

the directors have not factored any payment of damages within their assessment of whether it is appropriate to adopt the

going concern basis for the Group as at 31 December 2021. It is the view of the Directors that the appeal process is unlikely to

conclude within the going concern assessment period.

There is a material uncertainty around the Group’s ability to successfully appeal the judgment and avoid the damages payment.

Cineworld believes it has compelling arguments that the trial judge erred when assessing liability and damages and believes

that it has a meritorious appeal. In the event that Cineworld is unsuccessful on appeal the group would not have sufficient

liquidity to pay the existing level of damages awarded. It is also noted that Cineplex is an unsecured creditor.

Base Case Scenario

The Group’s base case scenario assumes a continued recovery to pre-pandemic levels of admissions, with cinemas across all

territories remaining open. In the US, admissions are forecast to return to levels representing 85% of comparable periods in

2019 during 2022, with corresponding levels for the UK and ROW at 90% and 95% respectively. Admissions are then forecast

to remain on average 5% below 2019 levels throughout 2023 and to recover to 2019 levels in 2024. In addition to cinema

performance, the Group’s cash flows and liquidity are sensitive to the timing and level of rent payments. The Group has been

successful in agreeing further waiver and deferral of significant rent payable on a number of lease agreements with the

support of landlords. Rent payments have been modelled in line with actual modifications and the expectations of achievable

deferrals over the coming 15-month period based on on-going discussions with the landlords. The Group has also taken into

consideration mitigating actions available to it, these include stopping all non-essential capital expenditure for the coming six

months which has been modelled under the weighted base case scenario. In addition, the Group has taken steps to reduce

operational and administrative costs, in order to further preserve liquidity. Further steps would be taken to operate at a minimal

costs basis should the Directors consider it necessary. No further lockdowns or operating restrictions in 2022 are considered

within this forecast.

Under the weighted base case scenario, the Group maintains headroom against available cash and debt facilities throughout

the going concern assessment period. Financial covenants on the RCF would not be breached as the Group would have

sufficient funds to pay down the facility such that the covenant is not applicable. It is noted however, that the ability to do this is

sensitive to admission levels not being hit, any further film delays and any a material rent payment that has not been modelled.

As such, there is considered to be a material uncertainty as to whether the Group will be able to pay down the RCF as at the

June 2022 covenant testing date. In the event that it is not able to a covenant waiver for June 2022 would be required.

The minimum liquidity covenant would not be breached and the Group would achieve 80% of 2019 admission levels for a

3-month comparable period in August 2022. Sufficient liquidity would exist to repay the RCF when it matures in February 2023,

however, to support working capital requirements of the Group, it would need to be refinanced.

Considering the liquidity implications of the scenario analysis and the uncertainty, the Board are assessing several options with

regard to additional sources of liquidity including the increase of the RoWPP

Severe but Plausible Downside Scenario

Given the current uncertainty around the speed of recovery from the effects of COVID-19 in the forthcoming period and the

challenges around forecasting the impact on the cinema industry, the Directors have considered the following severe but

plausible downside scenarios to stress test the Group’s financial forecasts.

Cineworld Group plc

Annual Report and Accounts 2021

100

1. Accounting Policies continued

Going concern continued

1. A lack of film content for two months in 2022, driven by changes to the film slate and uncertainty caused by a resurgence

of COVID-19, with a gradual return to admission levels modelled under the weighted base case. Under this scenario the Group

would achieve 50% of the admission levels modelled under the base case for two months, this represents admissions at 43% of

2019 levels during April and May of 2022. Then, averaging 70% of 2019 levels from July through to December 2022, admissions

gradually return to the admissions levels modelled under the base case in January 2023 and beyond. No further lock down or

additional operational restrictions are considered. Under this scenario the Group would breach its net leverage covenant in June

2022, it would also breach its minimum liquidity covenant in September 2022, and would not have sufficient liquidity to repay

the RCF in February 2023. Sufficient liquidity to continue operating would remain up to the point at which the RCF matures.

The above uncertainties in respect of Cineplex, the weighted base case, and the severe but plausible are also applicable

to the company, as it has no ability to repay its borrowings without sufficient distributions being received from the group

subsidiary entities.

Conclusion

The Directors are encouraged by the reopening of the business and the demand for cinema-going shown by customers in

recent months. Recent steps in securing additional liquidity and relaxing restrictions on the business are also believed to

represent significant progress towards a return to previous levels of stability. Having considered all known factors the Directors

are comfortable that the weighted base case supports the going concern assumption. However, the Directors recognise the

challenges facing the business and some uncertainty around the recovery of the cinema industry following the impact of

COVID-19, and the potential risks that remain, which represent material uncertainties that may cast significant doubt upon

the Group’s ability to continue to operate as a going concern. Given the sensitivity to admission levels, and any changes in the

current schedule of film releases, material uncertainties exist in respect of the ability to repay the RCF sufficiently by the end of

June 2022 to avoid the net leverage covenant, and the ability to repay and refinance the RCF in February 2023.

Further there is a material uncertainty as to whether Cineworld is able to successfully appeal the Cineplex judgment against it,

as sufficient liquidity does not exist to be able to pay the damages awarded.

In addition, the potential covenant breaches in the severe but plausible scenario along with the inability to repay the RCF in

February 2023, indicate the existence of a material uncertainty that may cast significant doubt upon the Group’s ability to

continue to operate as a Going Concern. The consolidated financial statements do not include the adjustments that would

result if the Group was unable to continue as a going concern.

Measurement convention

The financial statements are prepared on the historic cost basis except for the following assets and liabilities stated at

their fair value: derivative financial instruments and financial instruments classified as fair value through the Statement of

Comprehensive Income.

Basis of Consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable

returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date on which control

commences until the date on which control ceases.

Joint arrangements

Under IFRS 11 “Joint Arrangements” investments in joint arrangements are classified as either joint operations or joint ventures.

The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint

arrangement. The Group holds both joint operations and joint ventures.

Joint operations

The Group recognises its share of any jointly held or incurred assets, liabilities, revenues and expenses of the joint operation.

These have been incorporated in the Consolidated Financial Statements under the appropriate headings. Details of the joint

operation are set out in Note 14.

Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and

requiring the venturers’ unanimous consent for strategic financial and operating decisions. Joint ventures are accounted for

using the equity method and are initially recognised at cost. The Consolidated Financial Statements include the Group’s share

of the total recognised income and expense and equity movements of equity accounted investees, from the date that joint

control commences until the date that joint control ceases. When the Group’s share of losses exceeds its interest in an equity

accounted investee, the Group’s carrying amount is reduced to $Nil and recognition of further losses is discontinued except

tothe extent that the Group hasincurred legal or constructive obligations or made payments on behalf of an investee.

Cineworld Group plc

Annual Report and Accounts 2021

101

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

1. Accounting Policies continued

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are

eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment

tothe extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but

only to the extent that there is no evidence of impairment.

Equity investments

Equity investments are held in entities which have not been classified as a subsidiary, associate or joint arrangement are

accounted for at fair value. These equity investments are not held for trading purposes and represent strategic investments.

The Group has elected at initial recognition to present value changes through the Statement of Comprehensive Income within

the revaluation reserve. Any dividends received from these equity investments will be recognised within the Consolidated

Statement ofProfit or Loss.

On disposal of these equity investments, any related balance previously recognised within the fair value through other

comprehensive income (“FVOCI”) reserve is reclassified to retained earnings.

Business combinations

For acquisitions on or after 1 January 2010, the Group measures goodwill as the fair value of the consideration transferred

(including the fair value of any previously held equity interest in the acquiree) and the recognised amount of any non-controlling

interests in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities

assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately

in the Consolidated Statement of Profit or Loss. Transactions costs, other than those associated with the issue of debt or equity

securities that the Group incurs in connection with business combinations are expensed as incurred.

Foreign currency

Transactions in foreign currencies are translated at the foreign exchange rate relevant at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the Consolidated Statement of Financial Position date are

translated at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised

inthe Consolidated Statement of Profit or Loss. Non-monetary assets and liabilities that are measured in terms of historical cost

in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities

denominated in foreign currencies that are stated at fair value are translated at foreign exchange rates ruling at the dates the

fair value was determined.

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are

translated at foreign exchange rates ruling at the Consolidated Statement of Financial Position date. The revenues and expenses

of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange

rates ruling at the dates of the transactions. Translation movements are recognised within the Statement of Comprehensive

Income and in the foreign currency translation reserve. As share capital, share premium are denominated in sterling, these are

translated into presentational currency at the historic rate prevailing on the date of each transaction.

Financial instruments

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the

financial instrument. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have

expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial liabilities are de-recognised when the contractual obligations are discharged, cancelled or expire.

Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Statement of Financial

Position, when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net

basis, or realise the financial asset and settle the financial liability simultaneously. IFRS 9 contains three classification categories

for financial assets and liabilities: measured at amortised cost, fair value through profit or loss (“FVPL”) and fair value through

other comprehensive income (“FVOCI”).

At initial recognition, the Group classifies its financial instruments in the following categories depending on the purpose for

which the financial instruments were acquired:

i. Financial assets and financial liabilities at FVPL:

Financial instruments (including derivative financial instruments) in this category are recognised initially and subsequently

at fair value. Transaction costs are expensed in the Consolidated Statement of Profit or Loss. Gains and losses arising from

changes in fair value are presented in the Consolidated Statement of Profit or Loss. Financial assets and financial liabilities

at fairvalue through profit or loss are classified as current, except for the portion expected to be realised or paid beyond

12 months of the Consolidated Statement of Financial Position date, which is classified as non-current.

Embedded derivative features identified within contractual arrangements are separately recognised where it is assessed

that they are not closely related to the terms of the contract, where such features are considered closely related they are not

separately recognised. Embedded derivatives are held at fair value through profit and loss.

Cineworld Group plc

Annual Report and Accounts 2021

102

1. Accounting Policies continued

Financial instruments continued

ii. Financial assets and liabilities at amortised cost:

The Group’s financial assets at amortised cost comprise trade receivables and cash and cash equivalents, and are included in

current assets due to their short-term nature. Financial assets are initially recognised at the amount expected to be received,

less, when material, a discount to reduce the financial assets to fair value. Subsequently, financial assets are measured at

amortised cost using the effective interest method, less an loss allowance.

Financial liabilities at amortised cost include trade payables, bank indebtedness and long-term debt. Trade payables are initially

recognised at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently,

trade payables are measured at amortised cost using the effective interest method. Bank indebtedness and long term debt, are

recognised initially at fair value, net of any transaction costs incurred and, subsequently, at amortised cost using the effective

interest method.

In determining whether debt has been modification to debt instruments have occurred in the period, the Group considers only

quantitative factors impacting the assessment.

Financial liabilities are classified as current liabilities if payment is due within 12 months. Otherwise, they are presented as

non-current liabilities.

iii. Financial instruments at FVOCI:

At initial recognition, the Group can make an irrevocable election to classify equity instruments at FVOCI, with all subsequent

changes in fair value being recognised in OCI. The Group has classified certain equity instruments as FVOCI as outlined in

Note 15.

In addition, the Group uses the following derivatives:

Net investment hedge

The Group uses net investment hedges to mitigate foreign currency translation exposure on certain net investments in

subsidiary companies. Until the investment is disposed of, all gains and losses are recognised in equity, within the hedging

reserve. Any ineffective portion of the hedging relationship is recognised immediately in the Consolidated Statement of Profit

or Loss, within Other Income/(Expenses). In 2021 net investment hedges have been identified as not effective. All the reserve

has been recognised in Profit and Loss Statement. No net investment hedging is in place at 31 December 2021.

Impairment of financial assets

The Group measures expected credit losses using a lifetime expected loss allowance for all current trade and other receivables.

Loss allowances will be measured on either of the following bases:

i. 12-month expected credit losses (“ECLs”) are the ECLs that result from possible default events within 12 months after the

reporting date; and

ii. lifetime ECLs which are ECLs that result from all possible default events over the expected life of a financial instruments.

The expected loss rates are based on current and forward-looking information on macroeconomic factors affecting the ability

of the customers to settle the receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and cash amounts in transit due from credit cards which are

settled within seven days from the date of the reporting period. The Group applies judgement in including credit card amounts

within cash and cash equivalents, on the basis that the risk of recovery of these amounts is consistent with other items in this

classification. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are

included as a component of cash and cash equivalents for the purpose only of the Statement of Cash Flows.

Convertible Bond

During the year the Group entered into a convertible bond, the details of which are set out in the note 26.

Convertible bonds are first assessed to determine classification as a financial liability or equity instrument for the financial

instrument as a whole and components thereof. Consideration is then given as to whether any embedded derivatives require

separate recognition in the consolidated financial statements or whether any conversion options present should be treated as

equity or derivative liability.

The two components are evaluated by decomposing the bonds into debt and derivative components. The initial carrying

amount of a hybrid financial instrument is allocated to its derivative and liability components, with credit spread and volatility

assumptions calibrated such that the two components equal the transaction price, which is considered to represent fair value.

The derivative component is valued by quantifying the value difference between the bond and a bond instrument consistent

terms without a consistent conversion feature. The liability component is measured by determining the residual of the fair value

of the instrument less the estimated fair value of the derivative component.

Cineworld Group plc

Annual Report and Accounts 2021

103

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

1. Accounting Policies continued

The liability component is carried at amortised cost. Interest is calculated by applying the estimated prevailing market interest

rate at the time of issue. The derivative component is carried at fair value through profit and loss.

Leases

The Group’s leases predominantly relate to property leases for each cinema site, however the Group’s lease portfolio also

includes other assets such as motor vehicles. Rental contracts are typically made for fixed periods of on average 15 years but

may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms

and conditions.

Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for

use by the Group in the Consolidated Statement of Financials Position. Each lease payment is allocated between the liability

and finance cost. The finance cost is charged to the Consolidated Statement of Profit or Loss over the lease period so as to

produce a constant periodic rate of interest on the remaining balance of the liability for each period. Both principal and finance

cost elements of lease payments are recognised within financing cash flows within the Consolidated Statement of Cash Flows.

The depreciation charge recognised on the right-of-use assets is being charged to administration expenses in the Group’s

Statement of Profit andLoss.

Liabilities arising from leases are initially measured on a present value basis. Lease liabilities include the net present value of the

following lease payments:

− fixed payments (including in-substance fixed payments), less any lease incentives receivable;

− variable lease payments that are based on an index or a rate;

− the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

− payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the lessee’s incremental borrowing rate being the rate that the lessee would have

to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms

and conditions.

To determine the incremental borrowing rate, the Group:

− uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which

does not have recent third party financing, and

− makes adjustments specific to the lease conditions.

Right-of-use assets are measured at cost comprising the following:

− the amount of the initial measurement of lease liability;

− any lease payments made at or before the commencement date less any lease incentives received; and

− any initial direct costs.

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line

basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying

asset’s useful life.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense

in the Consolidated Statement of Profit or Loss. Short-term leases are leases with a lease term of 12 months or less or leases on

adoption date which has a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office

and cinema equipment.

The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included

in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease

liability is reassessed and adjusted against the right-of-use asset.

Lease modifications

Where lease contracts are amended resulting in extensions to the minimum lease term or increases to the overall consideration

under the lease, they are treated as modifications under IFRS 16.

Landlord contributions

Where the Group receives contributions and incentives from landlords at the start of the lease, these are recorded against the

right-of-use asset.

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1. Accounting Policies continued

Leases continued

Sub-leases

The Group applies IFRS 16 to all leases of right-of-use assets in sub-leases. The Group classifies the sub-lease as a finance lease

or an operating lease with reference to the right-of-use asset arising from the head lease. The Group treats the right-of-use

asset as the underlying asset in the sub-lease, not the item of property, plant and equipment that it leases from the head lessor.

For sub-leases classified as operating leases, rental income will continue to be recognised in the Consolidated Statement of

Profit or Loss in the period to which it relates.

For sub-leases classified as finance leases, the Group will recognise an asset classified as net investment in a sub-lease.

The Group uses the discount rate it uses for the head lease, adjusted for any initial direct costs associated with the sub-lease to

account for the sub-lease.

During the term of the sub-lease, the Group recognises both interest income on the sub-lease and interest expense on the

head lease.

Variable lease payments

Some property leases contain variable payment terms that are linked to sales generated from a particular cinema site.

For individual sites, up to 4% of lease payments are on the basis of variable payment terms with percentages ranging from

4% to 18% of sales. Variable payment terms are used for a variety of reasons, including minimising the fixed costs base for

newly established sites. Variable lease payments that depend on sales are recognised in cost of sales within the Consolidated

Statement of Profit or Loss inthe period in which the condition that triggers those payments occurs.

Extension and termination options

Extension and termination options are included in a number of property and equipment leases across the Group. These areused

to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and

termination options held are exercisable only by the Group and not by the respective lessor. We have identified the inclusion of

extensions and termination options within the lease term as a significant judgement. Refer to significant accounting estimates

and uncertainties section of the accounting policies for further details.

Sale and leaseback

In a sale-and-leaseback transaction the Group transfers an underlying asset to another entity and leases that asset back from

the buyer-lessor. If a sale is deemed to have taken place, the Group de-recognises the underlying asset and applies the lessee

accounting model to the leaseback arrangement. A right-of-use asset is recognised based on the retained portion of the

previous carrying amount of the asset and only the gain or loss is recognised related to the rights which are transferred to the

lessor. If a sale has not been deemed to have taken place, the Group continues to recognise the underlying asset and recognise

a financial liability.

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses.

Depreciation is charged to the Consolidated Statement of Profit or Loss to write assets down to their residual values on a

straight-line basis within operating expenses over the estimated useful lives of each part of an item of property, plant and

equipment. The estimated useful lives are as follows:

− Land and buildings: freehold properties 20 to 50 years

− Land and buildings: long leasehold properties including leasehold improvements Life of lease

− Land and buildings: short leasehold properties including leasehold improvements 30 years or life of lease if shorter

− Plant and machinery 3 to 20 years

− Fixtures and fittings 3 to 20 years

No depreciation is provided on land, assets held for sale or assets in the course of construction.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of

property, plant and equipment. Depreciation methods, residual values and the useful lives of all assets are reassessed annually.

Goodwill and other intangible assets

Identifiable intangibles are those which can be sold separately or which arise from legal rights regardless of whether those

rights are separable.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units (“CGUs”) and

is not amortised but is tested annually for impairment.

Other intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.

Distribution rights that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses.

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Amortisation is charged to the Consolidated Statement of Profit or Loss on a straight-line basis over the estimated useful lives

of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life and goodwill are systematically

tested for impairment at each Statement of Financial Position date.

Other intangible assets are amortised from the date they are available for use. Distribution rights are amortised by film title from

the date of release of the film, at 50% in the first year of release and 25% in each of the two subsequent years. The estimated

useful lives are as follows:

− Brands 10 years to indefinite life

− Distribution rights 3 years

− Other intangibles 4 to 10 years

Assets held for sale

Non-current assets, or disposal groups are classified as held for sale if its carrying amount will be recovered principally through

sale rather than through continuing use, it is available for immediate sale and sale is highly probable within one year.

On initial classification as held for sale, assets and disposal groups are measured at the lower of previous carrying amount and

fair value less costs to sell with any adjustments taken to the Consolidated Statement of Profit or Loss. The same applies to

gains and losses on subsequent remeasurement although gains are not recognised in excess of any cumulative impairment

loss. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on a

pro-rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and

investment property, which continue to be measured in accordance with the Group’s accounting policies. Intangible assets and

property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated.

Inventories

Inventories are stated at the lower of cost and net realisable value. The cost of inventories is based on the First-In, First-Out

(“FIFO”) principle. Cost comprises expenditure incurred in acquiring the inventories and bringing them to their existing location

and condition, and net realisable value is the estimated selling price in the ordinary course of business, less the estimated

selling costs.

Impairment

The carrying amounts of the Group’s assets are reviewed at each Statement of Financial Position date to determine whether

there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. For goodwill

assets that have an indefinite useful economic life, the recoverable amount is estimated at each Statement of Financial

Position date.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (‘CGU’) exceeds its

recoverable amount. Impairment losses are recognised in the Consolidated Statement of Profit or Loss.

Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated

to CGUs and then to reduce the carrying amount of the other intangible assets in the unit on a pro-rata basis. A CGU is the

smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other

assets or groups of assets.

Where individual sites’ cash inflows are determined not to operate independently from one another, mainly due to strategic or

managerial decisions being made across more than one site, they may be combined into a single CGU.

Calculation of recoverable amount

The recoverable amount is the greater of the asset’s fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely

independent cash inflows, the recoverable amount is determined for the CGU to which the asset belongs.

Reversals of impairment

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment is reversed when there

is an indication that the impairment loss may no longer exist as a result of a change in the estimates used to determine the

recoverable amount, including a change in fair value less costs to sell. An impairment loss is reversed only to the extent that

the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or

amortisation, if no impairment loss had been recognised. Where leases have been modified, resulting in a reduction in the

carrying value of the right-of-use asset, the impairment loss reversal will not exceed the modified carrying amount.

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1. Accounting Policies continued

Employee benefits

Defined contribution pension plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated Statement

of Profit or Loss in the periods which services are rendered by employees.

Defined benefit pension plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of

future benefit that employees have earned in the current and prior years, discounting that amount and deducting the fair value

of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit

method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of

economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.

To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurement of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets

(excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in the Statement

of Other Comprehensive Income. The Group determines the net interest expense/(income) on the net defined benefit liability/

(asset) for the year by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual

year to the then-net defined benefit liability/(asset), taking into account any changes in the net defined benefit liability/(asset)

during the year as a result of contributions and benefit payments. Net interest expense and other expenses related to defined

benefit plans are recognised in the Consolidated Statement of Profit or Loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service

or the gain or loss on curtailment is recognised immediately in the Consolidated Statement of Profit or Loss. The Group

recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

Share-based payment transactions

The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted

isrecognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date using

the Black-Scholes model and spread over the period during which the employees become unconditionally entitled to the

options. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except

whereforfeiture is due only to share prices not achieving the threshold for vesting.

Share appreciation rights are also granted by the Group to employees. The fair value of the amount payable to the employee

is recognised as an expense with a corresponding increase in liabilities. The fair value is initially measured at grant date and

spread over the period during which the employees become unconditionally entitled to payment. The fair value of the share

appreciation rights is measured taking into account the terms and conditions upon which the instruments were granted.

The liability is remeasured at each Statement of Financial Position date and at settlement date and any changes in fair value

arerecognised in the Consolidated Statement of Profit or Loss.

Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or

constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to

settle the obligation, and the amount can be reliably estimated. Provisions are measured at the present value of management’s

best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate

used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money.

The increase in the provision due to the passage of time is recognised as an interest expense.

Revenue

Revenue represents the total amount receivable for goods sold and services provided, excluding sales-related taxes and

intra-group transactions. All the Group’s revenue is received from the sale of goods and services. The Group disaggregates

revenue into three material revenue streams which are made up of the following:

Box office revenue

− Box office revenue is recognised on the date of the showing of the film the ticket sold relates to.

− Unlimited card revenue is received annually or monthly in advance. When revenue from the Unlimited card is received

annually in advance it is initially recognised within deferred revenue and subsequently recognised on a straight-line basis

overthe year. Monthly Unlimited card revenue is recognised in the period to which it relates.

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1. Accounting Policies continued

Retail revenue

− Concessions revenue includes the sale of food and drink in the cinemas, in our VIP offerings, Starbucks sites and bars and

restaurants. All concession revenue is recognised at the point of sale. The Group operates a licence arrangement with

Starbucks in the UK&I operating segment. As part of the licence arrangement, the Group is required to pay to the licensor

alicence and royalty fee which is recognised in cost of sales.

− The Group records proceeds from the sale of gift cards and other advanced bulk tickets in deferred revenue and recognises

admissions or retail revenue when redeemed. Dependent on the revenue stream the gift card is redeemed against, revenue

will either be recorded within box office revenue or retail revenue. Additionally, the Group recognises unredeemed gift cards

and bulk tickets as other revenues based on a proportion of redemptions, which is estimated primarily based on the Group’s

historical experience.

− The Group operates loyalty schemes which allow members to earn rewards. The most significant of these is the Regal Crown

Club. Members earn credits for each dollar spent at the Regal theatres and can redeem such credits for tickets, concession

items and other rewards. To determine the amount of revenue to defer upon issuance of credits to customers, an estimate is

made of the value expected to be redeemed by customers for those credits. The estimates are based on rewards that have

historically been offered under the loyalty programme which are considered to be representative of rewards offered in future.

Upon redemption, deferred rewards are recognised as revenues in line with the revenue stream they are redeemed under.

Dependent on the revenue stream the loyalty scheme credits are redeemed against, revenue will either be recorded within

box office or retail.

Other revenue

Other revenue includes the following:

− Fees are charged for advanced bookings of tickets classified as booking fee revenue. This revenue is recognised at the point

when the tickets are purchased.

− Advertising revenue is recognised at the point the advertisement is shown in cinemas or the related impressions are delivered.

− An element of advertising revenue relates to the Exhibitor Services Agreement (“ESA”) with National CineMedia (“NCM”).

This advanced payment was recognised within deferred revenue and is being released over the life of the agreement.

− Distribution revenue is recognised on the date of the showing of the film it relates to for cinema distribution, for other media

the revenue is recognised over the life of the distribution contract.

− Rebates – the Group receives rebates primarily from concession vendors. The rebates are either a fixed amount or a

specified percentage based on the total purchases made from the vendor. The rebates are subject to some estimation

uncertainty but the arrangements are not complex. Rebates are calculated and accrued monthly based on the volume of

purchases. These rebates are either recognised as other revenues, a reduction of cost of goods sold, or a combination of the

two, dependent on the nature of the services provided. For arrangements where the Group is providing various forms of

in-theatre, lobby or website advertising in exchange for the rebate, such rebates are accounted for as a component of other

revenues. For arrangements under which the Group provides no material form of advertising such rebates are accounted for

asa reduction of cost of goods sold. Total rebates recognised in the Consolidated Statement of Profit or Loss during 2021

were $12.8m (2020: $7.3m).

Deferred revenue

Deferred revenue primarily consists of the following:

− NCM Exhibitor Services Agreement (‘ESA’): Revenue generated from the NCM ESA in the United States is recognised over

time as rights to advertising services are provided. The original agreement was due to end in 2037, but was extended until 2041

as part of the amendments made to the ESA in 2019. As part of the business combination accounting for Regal, a fair value

assessment of the ESA assumed contract liability was undertaken, being the Group’s obligation to perform under the acquired

NCM advertising arrangement. This valuation was recognised within deferred revenue and the revenue is recognised on a

straight-line basis over the remaining term of the ESA. The valuation of the ESA includes a significant financing component

due to the significant length of time between receiving the non-cash consideration and fulfilling the performance obligation.

The interest expense is calculated using discount rates implicit within the acquisition of the Regal business. Annually, pursuant

to the Common Unit Adjustment Agreement (the “CUA”) the Group receives the non-cash consideration in the form of newly

issued common units in NCM, in exchange for rights to exclusive access to the Group’s theatre screens and attendees through

to February 2041. Any adjustments to the number of common units held goes to deferred revenue and this is recognised as

advertising revenue on a straight-line basis over the remaining term of the ESA. Refer to revenue accounting policy for details

on how this revenue is recognised.

− Revenue received from the Unlimited scheme. Refer to revenue accounting policy for details on how this revenue is recognised.

− Unredeemed gift cards and bulk tickets: Revenue is initially recognised in deferred revenue and subsequently recognised in

revenue in proportion to the pattern exercised by the customer.

− Revenue received in advance for advertising contracts.

− Unredeemed credits on customer loyalty schemes. The deferred revenue for credits earned through the loyalty scheme is

calculated based on the fair value of the credits earned multiplied by an expected redemption rate. The deferred revenue is

recognised as box office or concession revenue when the credits are redeemed.

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1. Accounting Policies continued

Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will

be received and the Group will comply with the conditions associated with the grant. Government grants relating to costs are

deferred and recognised in the Consolidated Statement of Profit or Loss over the period necessary to match them with the

costs that they are intended to compensate. During the year, the Group received support from governments in connection with

its response to the COVID-19 pandemic. This support included furlough and job retention scheme reliefs, direct tax payment

deferrals, business rate relief and beneficial loans, details are provided in Notes 2, 4, 8 and 19.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred

revenue and they are credited to the Consolidated Statement of Profit or Loss on a straight-line basis over the expected lives

ofthe related assets.

Other operating income

Other income represents rent receivable from sub-leases classified as operating leases (as described in the leases accounting

policy). Rental income is recognised on a straight-line basis over the life of the lease.

Net financing costs

Net financing costs comprise finance income and expenses as detailed in the note 9.

Exceptional items

Exceptional items are charges and credits which are a non-recurring item that is outside the Group’s normal course of business

and material by size or nature. Adjustments have been made for specific costs associated with the impact of COVID-19, as

detailed in Note 2.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Consolidated Statement of

Profit or Loss and Comprehensive Income except to the extent that it relates to items recognised directly in equity, in which

case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted

atthe Statement of Financial Position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the Statement of Financial Position method, providing temporary differences between

the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets

or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to

investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred

tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,

usingtax rates enacted or substantively enacted at the Consolidated Statement of Financial Position date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which

the asset can be utilised.

Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues

and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components.

An operating segment’s operating results are reviewed regularly by the Board of Directors to make decisions about resources

to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Reporting segments

Reportable segments are the Group’s operating segments or aggregations of operating segments.

Significant accounting judgements and estimates

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the

application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ

from these estimates.

Judgements

The key judgements are:

Climate Change Impact

The Group considered the potential impact of climate change, and concluded that, while it remains an emerging risk, the

Group does consider that there could be an impact on its valuation of goodwill. Assumptions used in the impairment testing of

goodwill include the forecast cost of future investment and changes to operational energy costs required in order to meet the

Groups emissions targets, whilst maintaining current operating levels. Sufficient mitigation strategies in respect of future supply

chain costs driven by climate change impact are considered to be in place, such that no material financial impact is currently

considered likely.

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1. Accounting Policies continued

Cinplex Judgement

No liability has been recognised in respect of the award against the Group in respect of the termination of the Groups proposed

acquisition of Cineplex. The Groups assessment of this liability requires certain judgements, the details of which are set out in

note 28.

Lease term

IFRS 16 “Leases” defines the lease term as the non-cancellable period of a lease together with the options to extend or

terminate a lease, if the lessee were reasonably certain to exercise that option. Where a lease includes the option for the Group

to extend the lease term, beyond the non-cancellable period, the Group makes a judgement as to whether it is reasonably

certain that the option will be taken. This will take into account the length of time remaining before the option is exercisable;

current and future trading forecast as to the ongoing profitability of the site; and the level and type of planned future

capital investment.

Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain

tobe extended (or not terminated). Therefore potential future cash outflows have not been included in the lease liability

whereit is not reasonably certain the extension periods will be taken or that the leases will be extended on similar terms

(ornotterminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which

affects this assessment and that is within the control of the lessee. Refer to Note 20 which quantifies the impact on lease liability

should the lease term include extension or termination options.

Lease discount rate

IFRS 16 requires that the discount rate applied in calculating the lease asset and liability represents the incremental borrowing

rate at the date the lease is signed or modified. Leases are signed and amended over the course of each year; the Group elects

to apply an average discount rate over periods for which its cost of borrowing and credit rating are consistent. Given the

judgement required around the date of amendment and the uncertainty affecting incremental borrowing rates, using a rate

covering the three-month period is considered to be appropriate. Refer to Note 20 which sets out the details of the discount

rate applied during the year.

Lease modifications

Judgement is required to determine when the terms of an amendment to an existing lease is formally agreed, which in some

cases is considered to have occurred prior to the date of signing the agreement. The timing of the modification can affect the

discount rate and the period in which it is reported. Management consider a modification to have been completed when it

isreasonably certain to occur without any further changes to agreed terms.

Management have determined that all renegotiated leases are treated as modifications under IFRS 16, and management have

taken the judgement that all renegotiated leases met the criteria for amendment based on the changes to the cash flows, length

and conditions of the original leases.

The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment

and that is within the control of the lessee. Refer to Note 20 which quantifies the impact on the judgements relating to

lease modifications.

Embedded Derivatives

Judgement is required in assessing whether certain elements of debt contracts entered into during the year were closely

related to the terms of the overall contract itself. Management consider that a conversion option in the new convertible bond

entered into during the year (which is disclosed in detail in note 26) was not closely related to the terms of the underlying

contract in which it was identified and was therefore required to be separately recognised.

Estimation is required in assessing the volatility and credit spread assumptions used in determining the value of the derivative

component of the Group’s convertible bond, the valuation and fair value movement recognised in the year are sensitive to these

estimates. The Group uses credit spread data consistent with it observable ranges credit rating. Volatility is determined through

observed historic levels of volatility of the Group’s own share price.

Estimates

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

inthe year in which the estimate is revised and in any future years affected.

In applying the Group’s accounting policies described above the Directors have identified that the following areas are the key

estimates that could have a significant impact on the amounts recognised in the Consolidated Financial Statements in the

nextfinancial year.

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1. Accounting Policies continued

Estimates continued

Impairment of goodwill

The Group determines whether goodwill is impaired on at least an annual basis. This requires an estimate of the value in use

of the cash-generating unit “CGU” to which the goodwill is allocated. To estimate the value in use, the Group estimates the

expected future cash flows from the CGU and discounts them to their present value at a determined discount rate, which

isappropriate for the country where the goodwill is allocated to.

Forecasting expected cash flows and selecting an appropriate discount rate inherently requires estimation. A sensitivity

analysis has been performed over the estimates (see Note 12). The resulting calculation is sensitive to the assumptions in

respect of future cash flows and the discount rate applied. The Directors consider that the assumptions made represent their

best estimate of the future cash flows generated by the CGUs, and that the discount rate used is appropriate given the risks

associated with the specific cash flows.

Impairment of property, plant and equipment and right-of-use assets

The Group determines whether property, plant and equipment and right-of-use assets are impaired or require reversal of

impairment when indicators of impairments or reversal of impairment exist or based on the annual impairment assessment.

The annual assessment requires an estimate of the value in use of the CGUs to which the tangible fixed assets are allocated,

which is predominantly at the individual cinema site level. Where individual site’s cash flows are not determined to be

independent from one another, mainly due to strategic ormanagerial decisions being made across more than one site, they

may be combined into a single CGU.

Estimating the value in use requires the Group to make an estimate of the expected future cash flows from each cinema and

discount these to their net present value at a discount rate which is appropriate for the territory where the assets are held.

The resulting calculation is sensitive to the assumptions in respect of future cash flows and the discount rate applied.

Forecasting expected cash flows and selecting an appropriate discount rate inherently requires estimation. A sensitivity

analysishas been performed over the estimates (see Note 11). The resulting calculation is sensitive to the assumptions in

respectof future cash flows and the discount rate applied. The Directors consider that the key assumptions made within

the cash flow forecasts include admissions levels, average ticket price, concession spend per person,and discount rates.

The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the

CGUs, and that the discount rate used is appropriate given the risks associated with the specific cash flows.

Impairment of investments in joint ventures

The Group determines whether investments in joint ventures are impaired when indicators of impairments exist or based

onthe annual impairment assessment. The annual assessment requires an estimate of the fair value and value in use of each

investment held at amortised cost. Impairment charges recognised are assessed by reference to the higher of fair value less

cost to sell and value in use.

Estimating the fair value of joint ventures with a comparable observable market price involves multiplying the Group’s

shareholding by the current market price. Estimating the value in use requires the Group to make an estimate of the expected

future cash flows from the joint venture and discount these to their net present value at a discount rate which is appropriate for

the asset. The resulting calculation is sensitive to the assumptions in respect of future cash flows and the discount rate applied.

The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the joint

venture and that the discount rates used are appropriate given the risks associated with the specific cash flows. A sensitivity

analysis has been performed over the estimates (see Note 13).

Valuation of warrants

The Group values warrants using the Black-Scholes model, applying a risk-free interest rate, expected term of five years and

anestimated share price and volatility. The Directors consider that the assumptions made represent their best estimate.

Deferred tax asset recognition

The Group recognises deferred tax assets and liabilities for the future tax consequences attributable to temporary differences

between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, unused tax

losses and unused tax credits. Deferred tax assets are recognised only to the extent that it is probable that sufficient taxable

profit will be available against which those unused tax losses, unused tax credits or deductible temporary differences can be

utilised. This assessment requires estimation.

Estimates are required in assessing whether sufficient future taxable profits will be made in order to recognise the benefit

ofdeferred tax assets accumulated at the Balance Sheet date. In assessing recognised and unrecognised deferred tax

assets, theGroup has considered its forecast performance in line with the scenarios set out in its going concern analysis and

impairment models, as set out inNote 1. Details of the deferred tax assets, recognised and unrecognised, are set out in Note 16.

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1. Accounting Policies continued

Forthcoming requirements

LIBOR Reform

The Group has several financial instruments which are linked to LIBOR, primarily US Dollar denominated debt. The Group has

assessed its exposure to LIBOR transition and does not consider that there will be any impact on its financial operations or

reporting before 30 June 2023, at which point US Dollar LIBOR is expected to be replaced. Details of the Group’s interest rate

benchmarks on borrowings are set out in Note 19, the US denominated term loans included here will be assessed for interest

rate reform as required.

There were no new standards adopted by the Group in the year but the following amendments became applicable during

the year:

Amendment to IFRS 16 Leases COVID-19 – Related rent concessions

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2

These amendments did not have a material impact on the Group’s accounting policies and have therefore not resulted

inany changes.

In response to COVID-19, the IASB announced, considered and issued a COVID-19 specific amendment to IFRS 16 on

28 May2020. The amendment exempts lessees from having to consider individual lease contracts to determine whether

rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and allows lessees to

account for such rent concessions as if they were not lease modifications. The exemption applies to COVID-19-related rent

concessions that reduce lease payments due on or before 30 June 2021. The Group elected not to apply the exemption.

The following new accounting standards and interpretations have been published that are not mandatory for 31 December 2021

reporting periods and have not been early adopted by the Group:

Title Effective date

IFRS 17 Insurance Contracts (issued on 18 May 2017); including Amendments to IFRS 17 (issued on

25 June 2020

1 January 2023

Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current

or Noncurrent and Classification of Liabilities as Current or Noncurrent – Deferral of Effective Date

(issuedon 23 January 2020 and 15 July 2020 respectively)

1 January 2023

Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions,

Contingent Liabilities and Contingent Assets Annual Improvements 2018-2020

1 January 2022

Amendments to IAS 12, ‘Taxation’,relating to Deferred tax related to assets and liabilities arising from a

single transaction (issued 7 May 2021)

1 January 2023

Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of

Accounting policies (issued on 12 February 2021)

1 January 2023

Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of

Accounting Estimates (issued on 12 February 2021)

1 January 2023

These standards and others not yet effective are not expected to have a material impact on the Group in the current or future

reporting periods or on foreseeable future transactions.

Cineworld Group plc

Annual Report and Accounts 2021

112

2. Alternative Performance Measures

The Group uses a number of Alternative Performance Measures (“APMs”) in addition to those measures reported in accordance

with IFRS. Such APMs are not defined terms under IFRS and are not intended to be a substitute for any IFRS measure.

The Directors believe that the APMs are important when assessing the underlying financial and operating performance of

the Group. The APMs improve the comparability of information between reporting periods by adjusting for factors such as

fluctuations in foreign exchange rates, one-off items and the timing of acquisitions.

The APMs are used internally in the management of the Group’s business performance, budgeting and forecasting, and for

determining Executive Directors’ remuneration and that of other management throughout the business. The APMs are also

presented externally to meet investors’ requirements for further clarity and transparency of the Group’s financial performance.

Where items of profits or costs are being excluded in an APM, these are included elsewhere in our reported financial

information as they represent actual income or costs of the Group.

Other commentary within the Annual Report and Accounts (such as the Chief Financial Officer’s Review on pages 30 to 35),

should be referred to in order to fully appreciate all the factors that affect the business.

The Group’s Alternative Performance Measures are set out below. Additional adjustments have been made in the current and

prior period to reflect one-off charges incurred due to the impact of the COVID-19 pandemic:

Adjusted EBITDA

Adjusted EBITDA is defined as operating (loss)/profit adjusted for (losses)/profits of jointly controlled entities using the equity

accounting method net of tax and excess cash distributions, depreciation and amortisation, impairments and reversals of

impairment of property, plant and equipment, right-of-use assets, goodwill and investments in the ordinary course of business,

property-related charges and releases, business interruption costs, share-based payment charges and operating exceptional

items. Exceptional items are charges and credits which are a non-recurring item that is outside the Group’s normal course of

business and material by size or nature. Adjustments have been made for specific costs associated with the impact of COVID-19

including stock write offs, additional cleaning costs, lease penalties, redundancy, refinancing and asset impairments and

reversals of impairment driven by COVID-19.

The following items are adjusted for within the Group’s Adjusted EBITDA APM as they are non-cash items: depreciation and

amortisation, impairment of goodwill, property, plant and equipment, right-of-use assets and investments in the ordinary

course of business, property-related charges and releases, and share-based payment charges.

The net impact of share of (loss)/profit of jointly controlled entities and the associated excess cash distributions from joint

controlled entities are included within Adjusted EBITDA as these items are cash items outside of operating profit.

In addition to Adjusted EBITDA, the Group uses Adjusted EBITDAaL to measure performance. Adjusted EBITDAaL is defined as

Adjusted EBITDA less payments of lease liabilities during the period and provides a cash generation measure which adjusted for

rent payments.

Adjusted Loss

Adjusted loss before tax is defined as loss before tax adjusted for amortisation of intangible asset created on acquisition,

excess cash distributions from jointly controlled entities, impairments and reversals of impairment of property, plant and

equipment, right-of-use assets, goodwill and investments in the ordinary course of business, property-related charges and

releases, business interruption costs, share-based payment charges,movements on financial derivatives, exceptional operating

items, foreign exchange translation gains and losses, de-designation of net investment hedge, exceptional financing items and

exceptional tax items. Adjustments have been made for exceptional items associated with the impact of COVID-19 including

stock write offs, additional cleaning costs, lease penalties, redundancy, refinancing and asset impairments and reversals of

impairment driven by COVID-19.

Adjusted loss after tax is arrived by applying an effective tax rate to the taxable adjustments and deducting the total from

Adjusted loss.

Cineworld Group plc

Annual Report and Accounts 2021

113

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

2. Alternative Performance Measures continued

Adjusted Loss continued

The Adjusted EBITDA and Adjusted Loss after tax reconciliation to statutory Operating Profit/Loss are presented as follows:

Year ended

31 December

2021

Year ended

31 December

2020

Operating profit/(loss) 15.8 (2,257.7)

Depreciation and amortisation 534.9 643.3

Share of loss of jointly controlled entity using equity accounting method net of tax (33.3) (33.0)

Adjustment to reverse loss from jointly controlled entities and to reflect cash distributions

received in the period

33.3 56.4

Pre-opening expenses 1.7 –

Property-related charges and releases (26.6) 6.4

Share-based payment charges 6.9 (2.3)

Operating exceptional items:

– Net (reversal of impairment)/impairment of property, plant and equipment, right-of-use

assets, goodwill and investments

(127.1) 1,344.5

– Transaction and reorganisation costs 38.1 60.8

– COVID-19 costs 2.1 19.9

– Cost of refinancing 9.1 46.6

Adjusted EBITDA 454.9 (115.1)

Depreciation and amortisation (534.9) (643.3)

Amortisation of intangibles created on acquisition 23.6 25.7

Net finance costs (690.8) (717.2)

Movement on financial derivatives (162.7) 46.4

Foreign exchange translation gains and losses 29.0 (9.3)

De-designation of net investment hedge 11.6 9.8

Financing exceptional items:

– Amendment fees for refinancing 46.5 –

– Gain on extinguishment of debt – (33.2)

– Remeasurement loss on financial instrument – 98.0

– Remeasurement of financial asset at amortised cost – 11.3

Adjusted Loss before Tax (822.8) (1,326.9)

Tax credit on loss 142.5 356.4

Tax impact of adjustments 24.6 (225.4)

De-recognition of deferred tax assets due to impact of COVID-19 – 319.7

Tax credit for carry back of losses to previous years – (37.0)

Adjusted Loss after Tax (655.7) (913.2)

Cineworld Group plc

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114

2. Alternative Performance Measures continued

Adjusted Loss continued

Excess cash distributions from jointly controlled entities

The Group receives cash distributions over and above the level of profit recognised in equity accounting for its joint ventures.

This is a recurring cash amount. Joint venture earnings recognised and distributions received are disclosed in Note 13.

Net reversal/impairment of goodwill, property, plant and equipment, right-of-use assets and investments

Disclosure in respect of these reversals/ impairment charges can be found in Notes 11, 12, 13 and 20.

Property-related charges and releases

The net decrease to operating loss of $26.6m (2020: increase of $6.4m) is a result of the following:

− $21.3m gain as a result of remeasurement of right-of-use assets (2020: $12.3m) which were modified and due to the

modification the asset was decreased by an amount in excess of its carrying value. The excess above carrying value was

therefore recognised in the income statement.

− Disposal of 10 sites in US and one site in the UK has resulted in $3.3m gain due to the de-recognition of the lease liabilities and

right-of-use assets.

− Gain of $8.2m recognised on property, plant and equipment disposed of in the US and UK.

− Loss of $6.2m recognised on lease penalties in the US and in the UK.

− In 2020, disposal of 18 sites in US has resulted in $1.0m gain due to the de-recognition of the lease liabilities and right-of-use

assets. Losses of $13.6m were recognised on property, plant and equipment disposed of at these sites.

− During 2020, 6,416 digital projectors were transferred to the Group from its joint operation DCIP. At the date of transfer the

assets had a net with a net book value of $117.6m. Following the transfer, the Group disposed of projector assets with a net

book value of $5.8m. In addition, a $4.7m gain was recognised connected to the termination of the master lease with DCIP.

− In 2020, $5.0m in losses on assets which had been held at sites classified as under construction in the UK, but were disposed

of during the year as the projects were no longer expected to go ahead, were also incurred.

Operating exceptional items

The following operating exceptional items were recognised during the year:

− During 2021 the impact of the pandemic has continued to affect the Group’s forecast cash flows. A net reversal resulting from

changes to right of use assets caused by amendments made during the year of $182.2m has been recognised. This is made

up of impairment reversals of $199.6m caused by amendments to leases at a lower discount rate in the current period have

resulted in reductions to right of use assets and property, plant and equipment within CGUs previously impaired due to the

impact of COVID-19. In addition, changes to asset carrying values have resulted in additional impairment charges of $17.4m

during the year.

− During the year forecast future dividend cash flows from the Group’s investment in National Cinemedia Inc (NCM) were

reduced significantly. The Group determined that the fair value indicated by the NCM share price, in excess of the value in use,

represented the recoverable amount of the NCM asset. The Group therefore determined that the carrying amount exceeded

the recoverable amount and, as such, recorded an impairment charge of $55.1m.

− During 2020 the impact of the COVID-19 pandemic on the Group’s forecasts cash flows. In addition to increased uncertainty

in the market, a higher discount rate driven by the higher cost of debt, and changes to forecast cash flows have resulted in

the impairment of property, plant and equipment, right-of-use assets and investments at cinema CGUs, as well as goodwill

in country level CGUs amounting to a net total charge of $1,344.5m in the year ended 31 December 2020. These impairment

charges and reversals are considered to be driven by the impact of the pandemic and are therefore considered to be

exceptional charges.

− One off costs of $2.1m associated with the impact of COVID-19 including stock write-offs of $1.6m and $0.5m legal fees.

During the prior year one-off costs of $19.9m associated with the impact of COVID-19 included stock write offs of $16.0m,

additional cleaning expenses, redundancy and write offs of $3.9m.

− Transaction and reorganisation costs of $38.1m were incurred in 2021 of which $20.5m relates to dissenting shareholders legal

case, $9.1m incurred with the Cineplex transaction, $7.7m relates to the settlement of a license claim in the US, $0.9m receipt

of VAT refund and $1.7m redundancy costs relate to reorganisation costs. Transaction and reorganisation costs of $60.8m

were incurred in 2020 of which $2.2m relates to reorganisation costs, $12.8m to costs incurred with the Cineplex transaction

and receipt of a VAT refund of ($1.6m). Costs in connection with the dissenting shareholder liability which arose on the

acquisition of Regal of $47.4m were incurred, which includes $41.6m in respect of interest on the outstanding liability.

− Legal and adviser costs, in addition to those capitalised as directly attributable to new debt instruments, $9.1m was incurred

in connection with new debt facilities entered into and amendments to existing debt facilities during the period. In 2020, legal

and adviser costs, in addition to those capitalised as directly attributable to new debt instruments, $46.6m were incurred in

connection with the new debt facilities entered into during the year 2020.

Amendment fees for refinancing

These costs represent the amendment fees paid in relation to the new B1 term loan secured in July 2021 of which $30.5m was

paid in cash and $16.0m recognised as PIK, please refer to note 19 for further information.

Cineworld Group plc

Annual Report and Accounts 2021

115

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

2. Alternative Performance Measures continued

Adjusted Loss continued

Gain on extinguishment of debt

In 2020, the Group amended a previously agreed incremental revolving credit facility of $110.8m to a term loan.

The amendment to this facility was considered to represent a discount to the face value of the debt at the time of the

agreement and therefore resulted in a gain on extinguishment of $33.2m, please refer to note 19 for further information.

Remeasurement loss on financial asset

During 2020 the Group reassessed the time frame over which its tax receivable asset from National Cinemedia LLC would be

received, which resulted in a longer timeframe and the asset was remeasured. As such the Group wrote off $11.3m of the tax

receivable asset during the year 2020.

Movement on financial derivatives

In 2020 the Group recognised three derivative financial instruments in respect to its new financing arrangements. On term

loan B1, the Group recognised detachable equity warrants, and the fair value movement for the year was a loss of $15.2m.

Additionally, linked to term loan B1 is a call option, and the fair value movement during the year amounts to a gain of $4.5m.

Term loan B2 includes an embedded derivative linked to the USD-LIBOR and the fair value movement for the year 2020

amounts to a loss of $0.1m.

In addition to the charge arising due to the termination of a hedge relationship set out below, there was a further movement

on the fair value of the Group’s cross currency swaps during the year. This movement totalled $13.9m and was recognised in

the movement on financial derivatives. The movement was driven by interest rate and currency fluctuations, as well as being

significantly affected by reductions in the Group’s credit rating. Upon modifications being made to existing debt agreements

during the year, which implemented a 1% floor in LIBOR-linked interest rates applied to US dollar-denominated term loans,

embedded derivative liabilities with a total value of $103.6m were identified, of which $98.0m is recognised as a remeasurement

loss on financial instrument and $5.6m as a fair value movement on derivative. These derivatives were recognised as a cost

within movement on financial derivatives in 2020.

In 2020 a gain of $10.4m and a loss of $4.5m have been recognised respectively on a contingent forward contract

and contingent cross currency swap entered into to hedge certain expected transaction flows linked to the proposed

acquisition of Cineplex. A further loss $3.7m was incurred on a short term forward contract entered into as part of the minor

financing restructure.

During the year 2021, the movements on the instruments described above included a gain on the fair value movement of

the detachable equity warrants of $58.2m, a gain on the fair value movement of the B2 LIBOR floor embedded derivative of

$1.8m, a gain on the fair value movement of the US dollar denominated term loans LIBOR floor of $68.0m, a loss on the fair

value movement of the B1 prepayment option of $5.0m and a gain in the revaluation of the cross currency swaps of $18.2m.

These movements were recognised within net finance costs.

On 16 April 2021, the Group raised additional funding by issuing convertible bonds. The Group separately recognised a

derivative liability in respect of the holder’s option to convert the bonds into ordinary shares. The fair value movement on the

derivative was $21.5m during the year.

De-designation of net investment hedge

In 2020, the Group had previously designated the Euro leg of three cross currency swaps held as a net investment hedge

against the assets of certain Euro denominated subsidiaries. During the period the hedge relationship became ineffective and

the hedge relationship ended. This resulted in a $9.8m credit to the hedge reserve and charge to the income statement.

On 30 June 2020 the Group designated the Euro denominated term loan and the assets of a Euro trading subsidiary as a net

investment hedge. In 2021 net investment hedges have been identified as not effective. This resulted in a $11.6m credit to the

hedge reserve and charge to the income statement.

Foreign exchange translation gains and losses

Gains and losses arise due to movements on foreign exchange in respect of the Group’s unhedged Euro denominated term

loan. These gains and losses are excluded from Adjusted Profit Before Tax.

Tax exceptional items

In 2020 the Group recognised a one-off tax credit under the CARES Act in the United States of $37.0m due to the carry back

of losses against profits of earlier years with higher tax rates. In addition, the Group has de-recognised $319.7m in deferred tax

assets due to reduction in the Group’s forecast cash flows. In 2021 the Group did not recognised tax exceptional items.

Net debt

Net Debt is defined as total liabilities from financing, excluding embedded derivatives, net of cash at bank and in hand.

A reconciliation of movements in Net Debt is provided in Note 19.

Cineworld Group plc

Annual Report and Accounts 2021

116

3. Operating Segments

The Group has determined that it has three reporting operating segments: the US; the UK&I and the ROW. The ROW operating

segment includes the cinema chain brands Cinema City in Central and Eastern Europe territories and Yes Planet and Rav-Chen

in Israel. The ROW reporting segment includes Poland, Romania, Hungary, the Czech Republic, Bulgaria, Slovakia and Israel.

The results for the United States include the three cinema chain brands Regal, United Artists and Edwards Theatres. UK&I

includes two cinema chain brands, Cineworld and Picturehouse, which operate in the same territory with the same external

regulatory environment and ultimately provide the same services and products. On this basis it is deemed appropriate that

these two segments can be aggregated and reported as one reporting segment for the UK&I.

UK&I

ROW

Total

Year ended 31 December 2021

Total revenues 1,220.3 348.1 236.5 1,804.9

Adjusted EBITDA as defined in Note 2 310.7 67.1 77.1 454.9

Operating loss (27.8) 20.6 23.0 15.8

Finance income (33.9) (170.0) (4.5) (208.4)

Finance expense 684.1 136.2 78.9 899.2

Depreciation and amortisation 391.9 75.5 67.5 534.9

Net reversal of impairment of property, plant and equipment and right-of-use

assets, and investments

(81.2) (35.3) (10.6) (127.1)

Share of loss from jointly controlled entities using equity accounting

method net of tax

(33.2) – (0.1) (33.3)

(Loss)/profit before tax (711.2) 54.4 (51.5) (708.3)

Non-current asset additions – property, plant and equipment (Note 11) 95.6 32.5 7.6 135.7

Non-current asset additions – intangible assets (Note 12) – 0.9 3.7 4.6

Investment in equity accounted investee (Note 13) 128.4 1.0 0.9 130.3

Total assets 8,300.7 1,171.9 898.1 10,370.7

Total liabilities 8,543.6 1,529.2 642.9 10,715.7

Year ended 31 December 2020

Total revenues 575.9 153.9 122.5 852.3

Adjusted EBITDA as defined in Note 2 (87.2) (35.0) 7.1 (115.1)

Operating profit (1,500.3) (585.9) (171.5) (2,257.7)

Finance income 8.4 49.7 11.5 69.6

Finance expense (462.1) (269.4) (55.3) (786.8)

Depreciation and amortisation 481.6 90.7 71.0 643.3

Impairment of goodwill, property, plant and equipment and right-of-use assets

and investments

761.5 493.8 89.2 1,344.5

Share of loss from jointly controlled entities using equity accounting

method net of tax

(32.7) – (0.3) (33.0)

Loss before tax (1,986.7) (805.6) (215.6) (3,007.9)

Non-current asset additions – property, plant and equipment (Note 11) 231.8 41.1 9.8 282.7

Non-current asset additions – intangible assets (Note 12) – 0.3 2.2 2.5

Investment in equity accounted investee (Note 13) 213.3 1.0 0.8 215.1

Total assets 8,552.8 1,163.9 908.5 10,625.2

Total liabilities 8,403.9 1,377.2 617.8 10,398.9

There were no (2020: none) revenues from transactions with other operating segments. All revenue is generated from

external customers.

Cineworld Group plc

Annual Report and Accounts 2021

117

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

4. Revenue

The Group derives revenue from the transfer of goods at a point in time and services over time in the following territories:

Revenue by country

Year ended

31 December

2021

Year ended

31 December

2020

United States 1,220.3 575.9

United Kingdom & Ireland 348.1 153.9

Poland 69.7 42.7

Israel 60.9 15.9

Hungary 36.5 22.0

Romania 26.8 16.0

Czech Republic 28.0 17.1

Bulgaria 10.0 4.8

Slovakia 4.6 4.0

Total revenue 1,804.9 852.3

Revenue per operating segment can be broken down by product and service provided as follows:

United States

Revenue by product and service provided

Year ended

31 December

2021

Year ended

31 December

2020

Box office 627.4 280.3

Retail 391.9 161.1

Other 201.0 134.5

Total revenue 1,220.3 575.9

Timing of revenue recognition

At a point in time 1,092.3 474.0

Over time 128.0 101.9

UK and Ireland

Revenue by product and service provided

Year ended

31 December

2021

Year ended

31 December

2020

Box office 210.0 99.4

Retail 90.1 37.2

Other 48.0 17.3

Total revenue 348.1 153.9

Timing of revenue recognition

At a point in time 348.1 152.6

Over time – 1.3

ROW

Revenue by product and service provided

Year ended

31 December

2021

Year ended

31 December

2020

Box office 118.3 68.9

Retail 70.3 33.9

Other 47.9 19.7

Total revenue 236.5 122.5

Timing of revenue recognition

At a point in time 217.8 116.5

Over time 18.7 6.0

All revenue is generated from external customers except for the funding received from government support schemes in ROW

during 2020 only, for an amount of $1.0m.

Refer to Note 22 for a breakdown of contract liabilities recognised during the year.

Cineworld Group plc

Annual Report and Accounts 2021

118

5. Other Operating Income

Year ended

31 December

2021

Year ended

31 December

2020

Rental income 3.6 2.3

Other non-cinema income 11.8 –

Total other operating income 15.4 2.3

The Group received financial support from various government bodies at the individual territory level. Other non-cinema

income includes all grants and other governmental financial support received not directly related to payroll costs.

6. Operating Profit/(Loss)

Included in operating profit/(loss) for the year are the following:

Year ended

31 December

2021

Year ended

31 December

2020

Depreciation 506.6 613.5

Amortisation of intangibles 28.3 29.8

Property–related charges and releases (26.6) 6.4

Net exceptional (reversal of impairment)/impairment of goodwill, property, plant and

equipment, right-of-use assets and investments

(127.1) 1,344.5

Other operating exceptional items 49.3 127.3

Short-term and turnover rent leases 14.4 4.8

Details of these items are presented in Note 2.

The total remuneration of the Group Auditors, PricewaterhouseCoopers LLP, and their affiliates for the services to the Group in

2020 and 2021 is analysed below:

Auditors’ remuneration:

Year ended

31 December

2021

Year ended

31 December

2020

Group – audit 2.5 2.3

Amounts received by Auditors and their associates in respect of:

– Audit of financial statements pursuant to legislation 0.6 0.5

– Audit-related assurance services 0.3 0.3

– All other services – 0.6

Cineworld Group plc

Annual Report and Accounts 2021

119

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

7. Earnings Per Share

Basic Earnings Per Share is calculated by dividing the profit for the year attributable to ordinary shareholders by the weighted

average number of ordinary shares outstanding during the year, after excluding the weighted average number of non-vested

ordinary shares. Diluted Earnings Per Share is calculated by dividing the profit for the year attributable to ordinary shareholders

by the weighted average number of ordinary shares plus any dilutive non-vested/non-exercised ordinary shares. Where dilutive

options are not considered likely to vest, no dilution is applied. Equity Warrants and the convertible bond are potential dilutive

instruments for the dilute basic earnings per share in the future. These were not included in the calculation of diluted earnings

per share because they are antidilutive for the periods presented. Adjusted Earnings Per Share is calculated dividing the

adjusted profit after tax for the year attributable to ordinary shareholders by the weighted average number of ordinary shares

outstanding during the year, after excluding the weighted average number of non-vested ordinary shares.

Year ended

31 December

2021

Year ended

31 December

2020

Loss attributable to ordinary shareholders (565.8) (2,651.5)

Adjustments:

Amortisation of intangible assets

(1)

23.6 25.7

Adjustment to reverse loss from jointly controlled entities and to reflect cash distributions

received in the year

33.3 56.4

Pre-opening costs 1.7 –

Property-related charges and releases (26.6) 6.4

Share-based payment charges 6.9 (2.3)

Operating exceptional items:

– Net (reversal of impairment)/impairment of goodwill, property, plant and equipment,

right-of-use assets and investments

(127.1) 1,344.5

– Transaction and reorganisation costs 38.1 60.8

– COVID-19 costs 2.1 19.9

– Refinancing costs 9.1 46.6

Financing exceptional items:

– Amendment fees for refinancing costs 46.5 –

– Gain on extinguishment of debt – (33.2)

– Remeasurement of financial asset amortised cost – 11.3

– Remeasurement loss on financial instrument – 98.0

Movement on financial derivatives (162.7) 46.4

Foreign exchange translation gains and losses

(2)

29.0 (9.3)

De-designation of net investment hedge 11.6 9.8

Adjusted loss (680.3) (970.5)

Tax effect of above items 24.6 (225.4)

Tax exceptional items

De-recognition of deferred tax assets due to impact of COVID-19 – 319.7

Tax credit arising on capitalised foreign exchange loss – (37.0)

Adjusted loss after tax (655.7) (913.2)

Cineworld Group plc

Annual Report and Accounts 2021

120

7. Earnings Per Share continued

Year ended

31 December

2021

Year ended

31 December

2020

Weighted average number of shares in issue 1,373.0 1,372.4

Basic Earnings Per Share denominator 1,373.0 1,372.4

Dilutive options – –

Diluted Earnings Per Share denominator 1,373.0 1,372.4

Shares in issue at year end 1,373.0 1,372.8

Cents

Basic Deficit Per Share (41.2) (193.2)

Diluted Deficit Per Share (41.2) (193.2)

Adjusted Basic Deficit Per Share (47.8) (66.5)

Adjusted Diluted Deficit Per Share (47.8) (66.5)

(1) Amortisation of intangible assets includes amortisation of the fair value placed on brands, customer lists, distribution relationships, and advertising

relationships as a result of the Cinema City and Regal business combination which totalled $23.6m (2020: $25.7m). It does not include amortisation of

purchased distribution rights.

(2) Net foreign exchange gains and losses in 2021 included within earnings comprises $29.0m (2020: loss of $9.3m) foreign exchange gain recognised on

translation loans Euro denominated loans held in US Dollar functional currency entities.

Cineworld Group plc

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121

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

8. Staff Numbers and Costs

The monthly average number of persons employed by the Group (including Directors) during the year, analysed by category,

was as follows:

Number of staff

2021

2020

Head office 1,077 1,161

Cinemas 26,905 29,270

Total headcount 27,982 30,431

Included in the monthly average number of persons employed by the Group are part-time employees. No distinction is made

between full-time and part-time employees in the analysis above (2020: none).

The aggregate payroll costs of these persons were as follows:

Year ended

31 December

2021

Year ended

31 December

2020

Wages and salaries 306.7 206.7

Social security costs 14.5 38.1

Other pension costs – defined contribution – 1.6

Share-based payments 6.9 (2.3)

Total payroll costs 328.1 244.1

Payroll costs are net of funding received during the year from government support schemes which amounted to $27.6m (2020:

$44.5m) and $3.5m (2020: $2.3m) in the UK and ROW respectively.

See page 66 for details of Directors’ remuneration.

9. Finance Income and Expense

Year ended

31 December

2021

Year ended

31 December

2020

Interest income 3.1 7. 4

Foreign exchange gain 22.2 10.9

Unwind of discount on sub-lease assets 0.8 0.7

Gain on movement in the fair value of financial derivatives 167.7 9.0

Gain on extinguishment of debt – 33.2

Unwind of discount on non-current receivables 3.0 8.4

De-designation of net investment hedge 11.6 –

Finance income 208.4 69.6

Interest expense on bank loans and overdrafts 276.2 166.3

Amortisation of financing costs 61.3 33.1

Lease liability interest 444.5 349.0

Unwind of discount of deferred revenue 47.6 49.4

Remeasurement of financial asset amortised cost 1.3 11.3

Remeasurement of net investment in sub-lease assets – 2.7

Loss on movement in the fair value of financial derivatives 5.0 55.4

Remeasurement loss on financial instrument – 98.0

Foreign exchange loss 16.8 11.8

De-designation of net investment hedge – 9.8

Refinancing costs 46.5 –

Finance expense 899.2 786.8

Net finance costs (690.8) (717.2)

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122

9. Finance Income and Expense continued

Recognised within other comprehensive income

Year ended

31 December

2021

Year ended

31 December

2020

Movement on net investment hedge – (19.8)

Change in fair value of financial assets at FVOCI 7.6 –

De-designation of net investment hedge (11.6) 9.8

Retranslation (loss)/gain of foreign currency denominated operations (6.1) 3.5

10. Taxation

Recognised in the Consolidated Statement of Profit or Loss

Year ended

31 December

2021

Year ended

31 December

2020

Current tax credit

Current year (1.5) (220.9)

Adjustments in respect of prior years – (3.1)

Total current tax credit (1.5) (224.0)

Deferred tax (credit)/expense

Current year (103.1) (138.0)

Adjustments in respect of prior years (15.3) 8.9

Adjustments from change in tax rates (22.6) (3.3)

Total tax credit in the Statement of Profit or Loss (142.5) (356.4)

Reconciliation of effective tax rate

Year ended

31 December

2021

Year ended

31 December

2020

Loss before tax (708.3) (3,007.9)

Tax using the UK corporation tax rate of 19.0% (2020: 19.0%) (134.6) (571.5)

Differences in overseas tax rates (52.0) (100.3)

Permanently disallowed depreciation 1.6 9.2

Permanently disallowed exceptional costs 1.3 2.4

Impact of higher prior year US tax rate applied to loss carry backs – (37.0)

Impairment of goodwill on which no deferred tax asset is recognised – 124.7

De-recognition of deferred tax assets 84.6 319.7

Tax effect of Fair Value adjustments – (85.5)

Other permanent differences (5.5) (20.7)

Adjustment in respect of prior years (15.3) 5.8

Effect of change in statutory rate of deferred tax (22.6) (3.2)

Total tax credit in the Statement of Profit or Loss (142.5) (356.4)

During the year there was a tax charge of $0.2m, recognised directly in the Statement of Comprehensive Income (2020: $0.1m).

This related to share remuneration schemes. A $203.0m US CARES Act tax refund was received in May 2021.

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123

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

10. Taxation continued

Factors that may affect future tax charges

The Group expects that the tax rate in the future will be affected by the geographical split of profits and the different tax rates

that will apply to those profits.

An increase in the UK corporation tax rate from 19% to 25% was substantively enacted on 24 May 2021. The increased rate will

apply from 1 April 2023. UK deferred tax asset and liabilities have been revalued at the increased rate to the extent they are

expected to reverse after 1 April 2023.

At 31 December 2021 the Group had unrecognised deferred tax assets relating to the following temporary differences:

− US tax interest of $1,049.2m with no expiry date (2020: $797.7m);

− US deferred revenue of $383.1m (2020: $239.4m);

− UK tax losses of $122.4m with no expiry date (2020: $137.6m);

− UK deferred rent deductions of $45.9m (2020: $67.2m);

− Israeli tax losses of $nil with no expiry date (2020: $20.0m);

− Israeli deferred rent deductions of $nil (2020: $16.4m);

− Bulgarian tax losses of $nil with no expiry date (2020: $3.1m);

− Bulgarian deferred rent deductions of $nil (2020: $2.8m);

− Slovakian deferred rent deductions of $nil (2020: $5.1m);

− Hungarian tax losses of $136.2m with no expiry date (2020: $143.9m); and

− UK capital losses of $10.2m with no expiry date (2020: $9.8m).

On 25 April 2019 the European Commission released its decision which concluded that for years to 31 December 2018 the UK

Controlled Foreign Company legislation represents recoverable State Aid in some circumstances. There remains uncertainty

surrounding the quantum of any additional tax exposure which is subject to ongoing discussion with HM Revenue & Customs.

Following a review of the potential application of the decision to Controlled Foreign Company claims to 31 December 2018 the

Group has recognised a provision of $0.9m against potential exposures. The maximum potential exposure is $11.1m.

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124

11. Property, Plant and Equipment

Land and

buildings

Plant and

machinery

Fixtures and

fittings

Assets in the

course of

construction

Total

Cost

Balance at 1 January 2020 643.7 1,365.8 718.5 120.4 2,848.4

Additions 41.9 47.8 24.3 168.7 282.7

Disposals (58.8) (19.5) (20.8) (6.1) (105.2)

Transfers 38.9 4.9 10.9 (54.7) –

Effects of movement in foreign exchange 18.0 14.6 23.3 0.1 56.0

Balance at 31 December 2020 683.7 1,413.6 756.2 228.4 3,081.9

Additions 22.0 39.9 2.4 71.4 135.7

Disposals (14.1) (34.9) (9.5) (1.6) (60.1)

Transfers 72.4 96.5 26.5 (195.4) –

Effects of movement in foreign exchange (6.9) (14.3) (11.7) (2.8) (35.7)

Balance at 31 December 2021 757.1 1,500.8 763.9 100.0 3,121.8

Accumulated depreciation and impairment

Balance at 1 January 2020 119.1 430.8 259.0 – 808.9

Charge for the year 130.9 64.0 69.9 – 264.8

Disposals (48.1) (18.4) (16.5) – (83.0)

Effects of movement in foreign exchange 8.3 12.7 15.7 – 36.7

Impairments 148.1 71.1 55.8 23.7 298.7

Impairment reversals (17.2) (6.0) (7.4) (1.8) (32.4)

Balance at 31 December 2020 (341.1) (554.2) (376.5) (21.9) (1,293.7)

Charge for the year (108.2) (69.6) (67.9) – (245.7)

Disposals 2.3 32.2 8.3 – 42.8

Effects of movement in foreign exchange 2.7 11.3 4.4 – 18.4

Impairments (1.8) (1.7) (0.2) – (3.7)

Impairment reversals 11.6 19.6 25.6 1.4 58.2

Balance at 31 December 2021 (434.5) (562.4) (406.3) (20.5) (1,423.7)

Net book value

At 31 December 2020 342.6 859.4 379.7 206.5 1,788.2

At 31 December 2021 322.6 938.4 357.6 79.5 1,698.1

Interest of $4.8m (2020: $5.2m) and payroll costs of $4.6m (2020: $9.0m) has been capitalised during the year which relates to

the construction of new sites.

Contractual commitments in relation to future capital expenditure is outlined within Note 27.

Property, plant and equipment at specific sites has been pledged as security against the borrowing facilities as outlined in

Note 19.

Impairment

The Group determines whether these assets are impaired when indicators of impairment exist or based on the annual

impairment assessment. The annual assessment requires an estimate of the value in use of the CGUs to which the property,

plant and equipment and right-of-use-assets are allocated, which is predominantly at the individual cinema site level.

Where individual sites’ cash inflows are determined to not operate independently from one another, mainly due to strategic or

managerial decisions being made across more than one site, they may be combined into a single CGU. Where the recoverable

amount is less than the carrying amount, an impairment charge to reduce the assets down to recoverable amount is recognised.

The recoverable amount of a CGU is the higher of value in use or fair value less cost of disposal. The Group determines the

recoverable amount with reference to its value in use.

As disclosed within the Group’s interim financial statements, the impact of the COVID-19 pandemic on the Group during the

period was considered a triggering event and an impairment assessment was performed at 30 June 2021.

Total net reversal of impairments, across property, plant and equipment and right-of-use-assets during the period to 30 June

2021 of $95.6m, comprised of gross reversals of $140.8m and gross impairments of $45.2m. This was in relation to 80 total sites

comprised of 50 sites in the US, 13 sites in the UK and 17 sites in the ROW. Impairments recognised during the period to 30 June

2021 were in relation to 28 sites in the US and one site in the ROW whose recoverable amount was less than the carrying

amount. The recoverable amount of these 29 sites subsequent to impairment was $87.8m.

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125

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

11. Property, Plant and Equipment continued

Impairment continued

In performing the impairment review at 31 December 2021 management compared the carrying value of each CGU which

included the impairment (or reversals) recognised at 30 June 2021 and during the period ended 31, December 2020.

Subsequent to 30 June 2021 a number of leases held by CGUs were amended, which resulted in a revised right-of-use asset

being calculated, in turn reducing the carrying value of the right-of-use asset. As a result management identified a number

of CGUs which were previously impaired whose recoverable amount was now greater than that of its carrying amount.

Where this was the case, management have recognised a reversal of the impairment charge previously recorded for these

CGUs. The impairment reversal is the lower of the estimated recoverable amount at 31 December 2021 or impairment previously

recorded, less depreciation since the date of the original impairment.

Total net reversal of impairment recognised, across property, plant and equipment and right-of-use assets during the six month

period to 31 December 2021 was $86.6m. The total net reversal for the year ended 31 December 2021 was $182.2 (2020: net

impairment charge $649.2m). The table below summarizes the net (impairment) and reversal of impairment recognised across

property, plant and equipment and right-of-use assets by segment for the periods throughout 2020 and 2021:

Reversal of Impairment/(Impairment) recognised across each

reporting segment

Period ended

30 June

2021

Period ended

31 December

2021

Year ended

31 December

2021

Year ended

31 December

2020

United States 57.5 78.8 136.3 (482.0)

United Kingdom and Ireland 34.1 1.2 35.3 (123.0)

Rest of world 4.0 6.6 10.6 (44.2)

Total 95.6 86.6 182.2 (649.2)

Impairment reversals recognised during 2021 were in relation to 133 sites in the US, 16 sites in the UK and 19 sites in the ROW.

The most significant factor causing impairment reversals were lease amendments. The recoverable amount of these CGUs

subsequent to reversal was $744.9m. Impairment recognised during 2020 were in relation to 239 sites in the US, 53 sites

in the UK and 28 sites in the ROW, whose recoverable amount (calculated by reference to its value in use) was less than

carrying amount. The most significant factors causing impairment in 2020 were the forecast continued impact of COVID-19

on operations and a higher discount rate, driven by the Group’s higher cost of debt. The recoverable amount of these CGUs

subsequent to impairment in 2020 was $1,362.4m.

Estimating the value in use requires the Group to make an estimate of the expected future cash flows from each CGU and

discount these to their net present value at a pre-tax discount rate which is appropriate for the territory where the assets are

held. A table summarising the rates used, which are derived from externally benchmarked data, is set out below:

Year ended

31 December

2021

Period ended

30 June

2021

Year ended

31 December

2020

United States 14.2 14.2 14.2

United Kingdom 14.5 14.5 14.5

Poland 14.4 14.9 14.9

Israel

(1)

13.8 14.2 14.2

Hungary 14.3 14.9 14.9

Romania 15.8 15.6 15.6

Czech Republic 13.7 14.4 14.4

Bulgaria 13.8 14.5 14.5

Slovakia 13.8 14.9 14.9

(1) For sites which generate significant rental cash flows in addition to cinema cash flows a separate discount rate of 12.8% (30 June 2021: 12.8%;

2020: 12.8%) was applied to rental cash flows to reflect the specific risks related to them.

The outbreak of the pandemic in March 2020 has caused a materially higher cost of debt component of the weighted average

cost of capital (“WACC”). However, the WACC has remained consistent since the outbreak of the pandemic.

The value in use is calculated using forecast cash flows (defined as the Adjusted EBITDA generated by each CGU), which are

based on management’s anticipated performance of the CGU’s over the term remaining on its respective lease.

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Annual Report and Accounts 2021

126

11. Property, Plant and Equipment continued

Impairment continued

Management have prepared individual cash flow forecasts for each CGU. These cash flow forecasts apply specific growth

assumptions to the key drivers within the cash flow such as attendance, average ticket price (“ATP”), spend per patron (“SPP”)

and long-term growth rates of other revenue and cost streams. COVID-19 has had a significant impact on the operations of the

business and the territories in which it operates. The impact of COVID-19 has impacted each CGU’s ability to generate future

cash flows in the short term and management have factored this into each CGU’s cash flow forecast.

During these uncertain times, there are significant challenges in preparing forecasts necessary to estimate the recoverable

amount of a CGU. Management determined that using an expected cash flow approach is the most effective means of

reflecting the uncertainties of the COVID-19 pandemic in its estimates of recoverable amount. This approach reflects all

expectations about possible cash flows instead of the single expected outcome.

The key assumptions applied within these models are as follows:

− Budgeted Adjusted EBITDA for 2022 represents management’s best estimate of future cashflows and have therefore been

used as the base assumption within the cash flow forecast. The budget assumptions reflect management’s assessment of the

short-term impact of COVID-19.

− Adjusted EBITDA for the year ended 31 December 2019 is deemed to represent a standard year of cash flows generated

under normal operating conditions. Management have therefore used 31 December 2019 actuals as the standard operating

conditions for a fully recovered year within the cash flow forecast.

− As part of the Group’s assessment of going concern and longer-term viability a five-year forecast reflecting the impact of

COVID-19 has been prepared. Management have compared the assumptions used within this model to that of the actuals

at 31 December 2019. The differential between 31 December 2019 and the COVID-19 five-year forecast has been deemed to

represent a reduction as a result of the virus.

− Within this five-year forecast management believe monthly cash flows will return to pre-COVID-19 levels (31 December 2019

actual Adjusted EBITDA) by the year ended 31 December 2024.

− For the 2022 forecast period, management used theatre level budget information which includes expected impact to a

standard year of cash flow for COVID-19. For the 2023 forecast period, management have applied the respective financial

year’s hair-cut to the 31 December 2022 budget to generate the forecast Adjusted EBITDA for each financial year on a like for

like basis. In turn, this will result in the Adjusted EBITDA for the year ended 31 December 2024 to represent the 31 December

2019 actuals.

− From 31 December 2024 onwards management have forecast attendance will remain at 31 December 2019 levels. However,

all other assumptions will grow at a long-term growth rate of 1%, with the exception of specific sites within the US CGU which

have had specific upside assumptions applied to them.

Similar assumptions were applied as part of the impairment assessment performed at 30 June 2021. The discount rates applied

at the date of 30 June 2021 testing differ from those used at 31 December 2021 as outlined in the above table. The hair-cuts

applied as part of the 30 June 2021 testing reflected the 2022–2023 forecast used as part of the 30 June 2021 going concern

assessment, as disclosed in the 30 June 2021 interim report. This forecast differed to that used as part of the 31 December 2021

testing and therefore different assumptions were applied between the two models.

For CGU’s which have either opened within the 31 December 2018 to 2021 financial years, or refurbishments occurring during

the 2019 to 2021 financial year management acknowledge that 31 December 2019 actuals, if available, do not represent a full

year of standard trading. Therefore, specific assumptions have been applied to the key drivers over the 2023–2024 forecast

period, in order for the forecast 2024 adjusted EBITDA to represent management’s expectations of a standard year of

operations (pre COVID-19) for that CGU.

For specific CGUs which have had negative decline in EBITDA over the 2017–2019 financial years, management have assumed

this historical decline will continue to at least 31 December 2024. Further declines have been applied for those CGUs for which

forecast admissions per screen at 31 December 2024 were above the territories average admissions per screen, until the

financial year the admissions per screen is below the territory’s average.

The recoverable amount of any CGU is determined as the greater of value-in-use or fair value less cost to sell. Consideration was

given to whether the fair value less cost to sell of each CGU is higher than the calculated value in use. In all cases the fair value

less cost to sell was found to be lower than the value in use.

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127

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

11. Property, Plant and Equipment continued

Sensitivity to changes in assumptions

Impairment reviews are sensitive to changes in key assumptions, especially given that the full extent of COVID-19 on the

operations and future cash flows of the Group is not fully known at this stage. Management have determined that the

following assumptions used within the cash flow forecast are most sensitive to further changes as a result of COVID-19.

Sensitivity analysis has been performed on all CGU’s calculated recoverable amounts giving consideration to incremental

changes in the key assumptions of the following:

Discount rates are largely derived from market data, and these rates are intended to be long term in nature. However, the

models are sensitive to changes in these rates. Therefore:

(1) an increase by a factor of 1% and

(2) a decrease by a factor of 1% have been applied in the sensitised scenarios.

(3) The Group has observed increased ATP and SPP levels since reopening. These increased to ATP and SPP have not been

assumed in the impairment testing. A scenario has been prepared to present the upside from a sustained increase in the current

ATP and SPP levels.

(4) The implied hair-cuts applied to the model over the 2022–2023 forecast period is sensitive to the outcomes of various

scenarios used within the Group’s assessment of going concern and long-term viability as set out in Note 1. We have

recalculated the implied hair-cuts based on a severe but plausible scenario over a 2022–2026 forecast period and applied this

as a sensitised scenario.

The sensitivities applied reflect realistic scenarios which management believe would have the most significant impact on the

cash flows described above.

The sensitivity analysis has been prepared on the basis that the reasonably possible change in each key assumption would

not have a consequential impact on other assumptions used in the impairment review. The sensitivity analysis has not been

performed on the Rest of World segment due to the sensitivities on the segment not being material.

The impact on the total impairment charge allocated between both property, plant and equipment and right-of-use asset of

applying different assumptions to the growth rates used over the forecast period and the discount rates would be as follows:

Reduction (Increase)

of Impairment

Reversal

(1) 1 percentage point increase to the discount rates (41.4)

(2) 1 percentage point decrease to the discount rates 133.4

(3) Upside from sustained increase in ATP and SPP 90.8

(4) Severe but plausible scenario (115.0)

Assets held for sale

The values in the table below represent the net book value of the property, plant and equipment held for sale. As the fair value

less costs to sell is expected to be in excess of the net book value no impairment is considered necessary.

31 December

2021

31 December

2020

Property, plant and equipment 1.8 2.9

Assets held for sale of $1.8m at 31 December 2021 related to one theatre. Assets held for sale at 31 December 2020 of $2.9m

related to one theatre in the US, and two remaining buildings of the old US head office facilities.

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128

12. Intangible Assets

Goodwill

Brand

Distribution

rights

Other

intangibles

Total

Cost

Balance at 1 January 2020 5,503.2 421.2 53.1 166.9 6,144.4

Additions – – 1.0 1.5 2.5

Disposals – – – (3.4) (3.4)

Effects of movement in foreign exchange 33.6 3.8 3.0 1.1 41.5

Balance at 31 December 2020 5,536.8 425.0 57.1 166.1 6,185.0

Additions – – 3.8 0.8 4.6

Disposals – – – (0.1) (0.1)

Effects of movement in foreign exchange (30.9) (1.5) (1.8) (0.7) (34.9)

Balance at 31 December 2021 5,505.9 423.5 59.1 166.1 6,154.6

Accumulated amortisation and impairment

Balance at 1 January 2020 11.1 25.8 45.7 54.1 136.7

Amortisation – 3.7 4.4 21.7 29.8

Impairments 657.4 – – – 657.4

Effects of movement in foreign exchange – 2.8 2.8 (2.3) 3.3

Balance at 31 December 2020 668.5 32.3 52.9 73.5 827.2

Amortisation – 4.0 3.2 21.1 28.3

Effects of movement in foreign exchange 0.3 (0.5) (1.8) (0.6) (2.6)

Balance at 31 December 2021 668.8 35.8 54.3 94.0 852.9

Net book value

At 31 December 2020 4,868.3 392.7 4.2 92.6 5,357.8

At 31 December 2021 4,837.1 387.7 4.8 72.1 5,301.7

Included within the brand intangible asset is $365.0m in relation to Regal, $21.2m in relation to Cinema City B.V and $1.5m in

relation to Picturehouse. The Regal brand has been determined as having an indefinite useful life. The remaining amortisation

period of the Cinema City B.V and Picturehouse brands is 12 years and one year, respectively.

Included within other intangible assets is customer and studio relationships. The remaining amortisation period ofthese

intangibles are between two and eight years.

Additions during the current year of $4.6m (2020: $2.5m) were all acquired separately.

No amounts included within capital commitments as outlined in Note 27 are in relation to intangible assets (2020: $Nil).

Impairment testing

Each individual cinema, or collection of cinemas which are strategically or operationally co-dependent, is considered to be

oneCGU. However, for the purpose of testing goodwill for impairment, it is acceptable under IAS 36 to group CGUs, in order

toreflect the level at which goodwill is monitored by management.

The Group has the following CGUs for the purpose of testing goodwill for impairment:

− Goodwill for the US operating segment was acquired as a part of the acquisition of Regal in 2018 and is assessed as one CGU.

− The ex-Cine-UK, ex-UGC (including Dublin) businesses are now fully integrated, meaning that goodwill is now monitored on a

Cineworld level.

− The Picturehouse business is monitored as a separate UK CGU.

− Cinema City CGUs are considered as separate groups in each territory and have been tested for goodwill impairment on this

basis, the territories being Poland, Israel,Hungary, Romania, Bulgaria, Czech and Slovakia.

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129

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

12. Intangible Assets continued

The value of goodwill allocated to each CGU is as follows:

Year ended

31 December

2021

Year ended

31 December

2020

United States 4,060.5 4,060.5

United Kingdom – Cineworld 350.5 354.8

United Kingdom – Picturehouse 9.8 9.9

Poland 122.1 133.3

Israel 80.6 77.8

Hungary 53.2 58.5

Romania 97.3 107.2

Czech Republic 38.3 39.3

Bulgaria 19.9 21.6

Slovakia 4.9 5.4

Total 4,837.1 4,868.3

In testing goodwill for impairment, the value of each CGU’s other intangible assets, investments and other long-term assets,

right-of-use assets and property, plant and equipment is included within the carrying value of the CGU. Included within the

United States CGU is the Regal brand which has an indefinite useful life.

The recoverable amounts of US, Cineworld, Picturehouse and Cinema City CGU Groups have been determined based on a

value-in-use calculation. That calculation uses cash flow projections based on financial forecasts approved by management

covering a five-year period. The five-year forecast annual Adjusted EBITDA, as defined in Note 2, was used as the basis of the

future cash flow calculation. Cash flows beyond the first five year period have been extrapolated using the below assumptions,

with cash flows adjusted for rent at a CGU level applied beyond the period covered by each current lease. This growth rate does

not exceed the long-term average growth rate for the market in which the CGU Groups operate.

The pre-tax discount rates applied are detailed in Note 11. This is considered to reflect the risks associated with the relevant cash

flows for each CGU Group.

At 30 June 2021, the Group determined there was no indicator of impairment as the forecast cash flows were broadly in line

with the forecasts of 31, December 2020.

An impairment test was performed at 31 December 2021, which resulted in no impairment charge.

Previously, an impairment charge of $315.3m was incurred at 31 December 2020, comprised of the United States goodwill

($242.3m), United Kingdom goodwill ($29.9m), Israel goodwill ($16.8m), Romania goodwill ($25.9m) and Bulgaria goodwill

($0.4m). The most significant factors causing impairment were the forecast of the continuous impact of COVID-19 on

operations and a higher discount rate, driven by the Group’s higher cost of debt.

Management have sensitised the key assumptions in the goodwill impairment tests and under both the base case and severe

but plausible case. The key assumptions used and sensitised were the drivers for the cash flows forecast (as set out in Note 1)

and the relevant discount rate, as they are the key variable elements of the value in use.

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130

12. Intangible Assets continued

Sensitivities have been applied to the forecast cash flows to assess the potential impairment under different scenarios.

The scenarios applied are the severe but plausible scenario (as set out in Note 11), a 1% reduction in long-term growth rates

and a 1% increase in discount rate. The additional impairment as a result of these scenarios by CGU would be as follows.

These values are after considering the property, plant andequipment sensitivities:

CGU

Severe but

plausible case

Long-term

growth rates

reduced by 1%

1 percentage point

increase in the

discount rates

UK – Cineworld 209.4 – –

UK – Picturehouse 23.1 1.1 2.5

Israel 15.0 – –

Slovakia 0.4 – –

Bulgaria 2.7 – –

Romania 27.2 – –

No additional impairment under the above sensitivity scenarios would be recognised for the US, Poland, Hungary and Czech

RepublicCGU’s.

Indefinite life intangible assets

The Regal brand is instrumental in driving revenues and therefore we valued this at $365.0m. We have determined that this

brand has an indefinite useful life. The factors that played a significant role in determining that this asset has an indefinite useful

life are the historical term over which it has been used and management’s intention to continue to invest in its value.

Amortisation charge

The amortisation of intangible assets is recognised in the following line items in the Consolidated Statement of Profit or Loss:

Year ended

31 December

2021

Year ended

31 December

2020

Administrative expenses 28.3 29.8

Cineworld Group plc

Annual Report and Accounts 2021

131

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

13. Equity-Accounted Investees

The Group has the following investment in jointly controlled entities:

Country of

incorporation

Class of

shares held Ownership

Carrying value

31 December

2021

Carrying value

31 December

2020

National CineMedia, LLC United States Ordinary 26.0% 121.4 208.0

AC JV, LLC United States Ordinary 32.0% 5.2 4.1

Digital Cinema Distribution Coalition United States Ordinary 14.6% 1.8 1.4

Digital Cinema Media Limited England and Wales Ordinary 50.0% 1.0 0.9

Black Shrauber Limited Israel Ordinary 50.0% 0.9 0.7

National CineMedia, LLC

In March 2005, Regal and AMC announced the combination of the operations of RCM Regal and AMC’s subsidiary, National

Cinema Network, into a joint venture company known as National CineMedia (‘NCM’). In July 2005, Cinemark joined the NCM

joint venture. NCM operates the largest digital in-theatre advertising network in North America.

Regal entered into an Exhibitor Services Agreement (‘ESA’) with NCM, pursuant to which NCM primarily provides advertising

to our cinemas. National CineMedia, Inc. (‘NCMI’) is an entity that serves as the sole manager of NCM, and has no business

operations or material assets other than its cash and ownership interest in NCM. NCMI completed an IPO of its common stock

and as a result Regal amended its operating agreement and the ESA. At the time of the NCM IPO and as a result of amending

the ESA, Regal received approximately $281.0m in cash consideration from NCM. The proceeds were recorded as deferred

revenue and were being amortised over the term of the ESA, until February 2037. During 2019, the Group amended the ESA

under which the Group will provide incremental advertising time to NCM and has extended the term of the ESA through

February 2041.

Also in connection with the IPO, the joint venture partners entered into a Common Unit Adjustment Agreement with NCM.

Pursuant to the Common Unit Adjustment Agreement, from time to time, shares of NCM held by the joint venture partners

will be adjusted up or down through a formula primarily based on increases or decreases in the number of theatre screens

operated and theatre attendance generated by each joint venture partner. The common unit adjustment is computed annually,

except that an earlier common unit adjustment will occur for a joint venture partner if its acquisition or disposition of theatres,

in a single transaction or cumulatively since the most recent common unit adjustment, will cause a change of 2% or more in

thetotalannual attendance of all of the joint venture partners.

On 31 March 2021 as a result of the annual adjustment provisions of the Common Unit Adjustment Agreement, the Group

received 736,100 newly issued common units in NCM, each of which is convertible into one share of NCMI. The Group records

additional common units received at estimated fair value using the available closing stock prices of NCMI as of the date on

which the units were issued. During 2021, the Group recorded an increase to its investment in NCM (along with a corresponding

increase to deferred revenue) of approximately $3.4m related to the common unit adjustment. The deferred revenue will be

recognised as advertising revenue on a straight-line basis over the remaining term of the ESA.

The Group receives a monthly theatre access fee for participation in the NCM network and also earn screen advertising revenue

on a per patron basis. The theatre access fee revenues are based on a combination of both fixed and variable factors which

include the total number of theatre screens, attendance and actual revenues generated by NCM. The ESA does not require the

Group to maintain a minimum number of screens and does not provide a fixed amount of access fee revenue to be earned by

the Group in any period. In addition, we receive mandatory quarterly distributions of any excess cash from NCM.

The NCMI IPO and related transactions have the effect of reducing the amounts NCMI would otherwise pay in the future to

various tax authorities. On the IPO date, NCMI, the Company, AMC and Cinemark entered into a tax receivable agreement.

Under the terms of this agreement, NCMI will make cash payments to us, AMC and Cinemark in amounts equal to 90% of

NCMI’s actual tax benefit realised from the tax amortisation of certain intangible assets.

As of 31 December 2021, the Group owned a total of 43,026,794 common units of NCM, representing an ownership interest

of 25.6%. Each of the Group’s common units in NCM is convertible into one share of NCMI common stock. As of 31 December

2021, the estimated fair value of the Group’s investment in NCM was approximately $120.9m (2020:$157.3m) based on NCMI’s

stock price as of 31 December 2021 of $2.81 (2020:$3.72) per share. The market value of NCMI’s stock price may vary due to

the performance of the business, industry trends, general and economic conditions and other factors, including those resulting

from the impact of COVID-19.

Management, however, recognise the carrying value of investment in NCM at its recoverable amount. The recoverable amount

isthe higher of fair value or value in use. As outlined within the impairment testing section, the recoverable amount of NCM is

materially consistent with the fair value implied by the share price.

Cineworld Group plc

Annual Report and Accounts 2021

132

13. Equity-Accounted Investees continued

National CineMedia, LLC continued

As of and for the year ended

31 December 2021

For the year ended

31 December 2021

Investment in

NCM

Tax receivable

agreement

Deferred

revenue

Share of loss

Other

revenue

Cash

distributions

Balance as of 1 January 2021 208.0 37.1 (627.4) – – –

Receipt of additional common units

(1)

3.4 – (3.4) – – –

Receipt under tax receivable agreement

(2)

– (0.4) – – – (0.4)

Discount unwind on tax receivable agreement

(2)

– 3.0 – – – –

Remeasurement of tax receivable agreement

(2)

– (1.3) – – – –

Revenues earned under ESA

(3)

– – – – 13.9 –

Amortisation of deferred revenue

(4)

– – 7 7.1 – 77.1 –

Discount unwind on deferred revenue

(4)

– – (47.6) – – –

Share of loss

(5)

(34.9) – – (34.9) – –

Impairment of investments (55.1) – – – – –

Balance as of 31 December 2021 121.4 38.4 (601.3) (35.0) 91.0 (0.4)

(1) During the year the Group received from NCM approximately 0.7 million newly issued common units in NCM in accordance with the annual adjustment

provisions of the Common Unit Adjustment Agreement.

(2) During the year the Group received cash distributions from NCM of $0.4m related to a payment received under the tax receivable agreement.

During the year the Group reassessed the time frame over which the asset would be received which resulted in a longer timeframe and the asset was

remeasured. As such the Group wrote off $1.3m of the tax receivable agreement asset during the year ended 31 December 2021.

(3) Amounts include the per patron and per digital screen theatre access fees, net of amounts due to NCM for on-screen advertising time provided to the

Group’s concession supplier.

(4) Amounts represent the amortisation of the ESA to advertising revenue and the associated unwind of discount. The revenue is recognised on a straight-

line basis over the remaining term of the ESA, the unwind of discount is recognised as finance cost.

(5) Amounts represent the Group’s share in the net profit/(losses) of NCM.

Impairment testing

Each investment is tested for impairment individually. The impact of COVID-19 was considered a triggering event for the

investment in NCM, with the share price of NCMI, whose shares represent a comparable for shares in NCM, falling significantly

below the level at which NCM is valued in the Group’s statement of financial position.

The recoverable amount of each investment is considered by assessing the higher of the value in use and fair value less cost to

sell. Fair value less cost to sell is determined with reference to the value of shares in NCMI. As outlined above the fair value of

these shares at 31 December 2021 was $120.9m, however, NCMI’s stock price may vary due to the performance of the business,

industry trends, general and economic conditions and other factors, including those resulting from the impact of COVID-19.

Value in use is determined by applying the Group’s WACC (see Note 11) to forecast dividend cash flows to discount them to

present value generated by the joint venture over the term of the ESA. A reduction in forecast dividends has been applied for

the years 2022 to 2023, while NCM recovers from the impact of the COVID-19 pandemic.

Based on forecast cashflows, consistent with the Group’s own weighted scenario analysis set out in Note 1 and underpinned by

contractual arrangements, the Group determined that the fair value indicated by the NCMI share price, in excess of the value in

use, represents the recoverable amount of the NCM asset.

The Group therefore determined that the carrying amount exceeded the recoverable amount and, as such, recorded an

impairment charge of $55.1m to the investment in NCM for the year ended 31 December 2021.

Management performed additional analysis as to how sensitive the impairment charge was to changes in the share price used

to determine the recoverable amount. If the share price was to decrease by 10% an additional impairment of $12.2m would be

recognised. If the share price was to increase by 10% the impairment would be decreased by $12.2m.

Under the terms of the shareholder agreement between the Group and other NCM shareholders, key business decisions in

respect of NCM require the unanimous approval of the shareholders. As a consequence, the Directors of the Group do not have

total management control of NCM, therefore the Group’s investment is accounted for as a joint venture.

Cineworld Group plc

Annual Report and Accounts 2021

133

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

13. Equity-Accounted Investees continued

National CineMedia, LLC continued

Summary aggregated financial information of NCM:

31 December

2021

31 December

2020

Cash and cash equivalents 58.6 66.5

Current assets 114.6 142.6

Non-current assets 658.4 685.6

Current liabilities (66.3) (46.9)

Current liabilities (excluding trade and other payables and provisions) (40.2) (47.2)

Non-current liabilities (excluding trade and other payables and provisions) (1,114.2) (1,072.2)

Net liabilities (407.5) (290.9)

Income 114.6 89.9

Expenses (249.5) (205.7)

Depreciation and amortisation (2.8) (3.5)

Interest income – 0.0

Interest expense (5.2) (5.3)

Income tax expense – (0.2)

Net loss (134.9) (115.8)

Reconciliation to carrying amounts:

31 December

2021

31 December

2020

Opening net liabilities 1 January (290.9) (181.3)

Loss for the period (134.9) (115.8)

Dividends paid – (8.5)

Common unit adjustment 14.1 10.5

Other comprehensive income 4.2 1.1

Retained earnings adjustment due to change in accounting policy – 3.1

Closing net liabilities (407.5) (290.9)

Group’s share of closing liabilities 25.8% 26.1%

Value of share of liabilities prior to adjustments – –

Fair value adjustment on acquisition 200.0 200.0

Purchase of additional shares at fair value 78.4 78.4

Receipt of additional common units since acquisition 25.6 22.2

Group share of earnings since acquisition (90.5) (55.5)

Impairment of investments (92.1) (37.1)

Carrying amount 121.4 208.0

The opening fair value adjustment on acquisition related to fair value uplift to the NCM investment as part of the Regal purchase

price acquisition accounting.

The current year fair value adjustments at 31 December 2021 and 31 December 2020 represent additional units issued to the

Group as part of the Common Unit Adjustment Agreement. These are recognised at prevailing share price on date of issuance.

AC JV LLC

The Group maintains an investment in AC JV LLC (“AC JV”), a Delaware limited liability company owned 32.0%, by each of the

Group, AMC and Cinemark and 4.0% by NCM. AC JV acquired the Fathom Events business from NCM on 26 December 2013.

AC JV owns and manages the Fathom Events business, which markets and distributes live and pre-recorded entertainment

programming to various theatre operators (including Regal, AMC and Cinemark) to provide additional programme to augment

their feature film schedule and includes events such as live and pre-recorded concerts, opera and symphony, marketing events,

theatrical premiers, Broadway plays, live sporting events and other special events.

Cineworld Group plc

Annual Report and Accounts 2021

134

13. Equity-Accounted Investees continued

AC JV LLC continued

In consideration for the sale, NCM received a total of $25.0m in promissory notes from the Group, Cinemark and AMC (one

third or approximately $8.3m from each). The notes bear interest at 5.0% per annum. Interest and principal payments are due

annually in six equal instalments commencing on the first anniversary of the closing. NCM recorded a gain of approximately

$25.4m in connection with the sale. The Group’s proportionate share of such gain (approximately $1.9m) was excluded

from equity earnings in NCM and recorded as a reduction in the Group’s investment in AC JV. The $3.0m loan note payable

outstanding at 31 December 2018 was repaid in full during 2019. Since the Group does not have a controlling financial interest

inAC JV, itsinvestment in AC JV is accounted for as a joint venture.

Summary aggregated financial information of AC JV LLC:

31 December

2021

31 December

2020

Current assets 19.1 7.7

Non-current assets 12.4 14.2

Current liabilities (11.2) (5.0)

Net assets 20.3 16.9

Income 35.4 16.0

Expenses (32.0) (21.0)

Net profit/(loss) 3.4 (5.0)

Reconciliation to carrying amounts:

31 December

2021

31 December

2020

Opening net liabilities 1 January 16.9 22.0

Profit/(loss) for period 3.4 (5.0)

Dividends paid – (0.1)

Closing net assets 20.3 16.9

Group share in % 32.0% 32.0%

Group share 6.5 5.4

Fair value adjustment (1.3) (1.3)

Carrying amount 5.2 4.1

Digital Cinema Distribution Coalition

The Group is a party to a joint venture with certain exhibitors and distributors called Digital Cinema Distribution Coalition

(“DCDC”). DCDC has established a satellite distribution network that distributes digital content to theatres via satellite.

Under the terms of the shareholder agreement between the Group and other DCDC shareholders, key business decisions in

respect of DCDC require the unanimous approval of the shareholders. As a consequence, the Directors of the Group do not

have total management control of DCDC, therefore the Group’s investment is accounted for as a joint venture.

Summary aggregated financial information of DCDC:

31 December

2021

31 December

2020

Current assets 11.2 6.7

Non-current assets 6.1 8.0

Current liabilities (4.4) (4.8)

Net assets 12.9 9.9

Income 19.0 6.6

Expenses (15.9) (13.7)

Net profit/(loss) 3.1 (7.1)

Cineworld Group plc

Annual Report and Accounts 2021

135

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

13. Equity-Accounted Investees continued

Digital Cinema Media Limited

Reconciliation to carrying amounts:

31 December

2021

31 December

2020

Opening net assets 1 January 9.9 22.1

Profit/(loss) for period 3.1 (7.1)

Dividends paid (0.1) (5.1)

Closing net assets 12.9 9.9

Group share in % 14.6% 14.6%

Group share 1.8 1.4

Carrying amount 1.8 1.4

On 8 February 2008 the Group jointly formed Digital Cinema Media Limited (“DCM”) with Odeon Cinemas Holdings Limited

(“Odeon”). On 10 July 2008 DCM acquired certain trade and assets (substantially employees, computer systems, leasehold

office and existing contracts) from Carlton Screen Advertising Limited, the Group’s former advertising supplier.

Under the terms of the shareholder agreement between the Group and Odeon, key business decisions in respect of DCM

require the unanimous approval of the shareholders. As a consequence, the Directors of the Group do not have total

management control of DCM, therefore the Group’s investment is accounted for as a joint venture.

As at 31 December 2021 and 31 December 2020 the assets, liabilities and net profit of DCM were not material to the Group.

Black Shrauber Limited

On 24 June 2015 the Group jointly formed a partnership for running a restaurant in the new complex in Jerusalem.

Under the terms of the partnership agreement, key business decisions in respect of Black Shrauber Limited require the

unanimous approval of the partners. As a consequence, the Directors of the Group do not have total management control

ofBlack Shrauber Limited, therefore the Group’s investment is accounted for as a joint venture.

As at 31 December 2021 and 31 December 2020 the assets, liabilities and net profit of Black Shrauber Limited were not material

to the Group.

14. Jointly Controlled Operation

Digital Cinema Implementation Partners (“DCIP”) is a joint arrangement with other United States exhibitors set up to collect

and administrate Virtual Print Fee (“VPF”) income received from studios to compensate exhibitors for their investment in digital

projection equipment. Through long term leasing arrangements with DCIP, the exhibitors retain control over the projection

equipment it has acquired. In addition, it was determined that under the terms of the leasing arrangements and the associated

minimum rental charges expected to be made, it has a joint obligation for the debt taken out by DCIP to finance the acquisition

of the projection equipment. It was concluded that, with joint control over these, the material assets and liabilities of DCIP, it

should classified as a joint operation.

The Group holds a 46.7% interest in a joint arrangement DCIP and recognises its direct right to the assets, liabilities, revenues

and expenses of DCIP under the appropriate headings. The impact on the Group’s financial statements is as follows:

31 December

2021

31 December

2020

Consolidated Statement of Profit or Loss

Gross profit 17.2 6.3

Operating profit/(loss) 12.5 (9.7)

(Loss)/profit before tax (8.7) 40.8

Net (loss)/profit (8.7) 40.4

Consolidated Statement of Financial Position

Property, plant and equipment – –

Total assets 10.7 14.1

Total liabilities 5.4 10.5

On 1 November 2020, DCIP terminated the master lease agreement it held with the Group and distributed and transferred

all of its right, title and interest in the digital projectors the Group leased to the Group. The Group, however, is required to

continue to make lease payments as if this agreement had remained in place until DCIP recoups its cost of the property, plant

and equipment.

Cineworld Group plc

Annual Report and Accounts 2021

136

14. Jointly Controlled Operation continued

On 1 November 2020, 6,416 digital projectors were transferred to the Group with a carrying value of $116.1m. In total projectors

with a carrying value of $5.8m were disposed of following the transfer, having been taken out of active use. In addition, the

Group recognised an impairment charge of $35.2m in respect of assets transferred. The assets impaired are held as property,

plant and equipment at cinema CGUs. Details of the impairment analysis is set out in Note 11.

During the year ended 31 December 2020 the Group recognised a termination of the master lease fee of $6.6m. This represents

the monthly lease obligation from the date of transfer to the cost recoupment date.

15. Financial Assets at FVOCI

Financial assets at FVOCI comprise equity securities which are not held for trading. The Group has irrevocably elected at

initial recognition to recognise the investments in this category. These are strategic investments and the Group considers this

classification to be more relevant, than financial assets at fair value through profit or loss.

Equity investments at FVOCI comprise the following individual investments:

31 December

2021

31 December

2020

Non-current assets

Unlisted securities

Spyglass Media Group, LLC 5.8 10.0

Total 5.8 10.0

During the year ended 31 December 2019, the Group made an investment in Spyglass Media Group, LLC for $10.0m.

Management believe that the cost of this investment was approximate to its fair value at 31 December 2020. On 15 July 2021,

Spyglass Media Group, LLC sold approximately 200 feature film titles to Lionsgate. Spyglass Media Group, LLC also formed

astrategic content partnership with Lionsgate through the sale of preferred equity interests in the Company’s parent company,

and entered into a multiyear first-look television arrangement with Lionsgate. The agreement to sell the library and distribute the

proceeds implied an increase in the fair value of our investment of $7.6m at 30 June 2021. Upon execution of the library sale and

distribution of proceeds of $11.8m in July 2021, the fair value of our investment was decreased to $5.8m at 31 December 2021.

Given the proximity of the library sale to year end and no significant events impacting the operations and valuation of Spyglass

Media Group, LLC subsequent to the library sale, management deem that the remaining value of our investment is approximate

toits fair value.

Amounts recognised in the Statement of Comprehensive Income during the financial year in relation to equity investments were

as follows:

31 December

2021

31 December

2020

Gains recognised in comprehensive income as a result of the revaluation of

equityinvestments

7.6 –

Refer to Note 26 as to how the fair value of these equity instruments has been determined.

16. Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

31 December

2021

31 December

2020

31 December

2021

31 December

2020

31 December

2021

31 December

2020

Property, plant and equipment 224.5 200.5 (1.4) (6.3) 223.1 194.2

Deferred rent 37.0 26.6 – – 37.0 26.6

Deferred revenue 93.1 143.5 – – 93.1 143.5

Intangible assets – – (109.0) (121.7) (109.0) (121.7)

Investments – – (50.8) (53.5) (50.8) (53.5)

Employee benefits 1.9 2.4 – – 1.9 2.4

Tax losses 194.7 65.1 – – 194.7 65.0

Tax interest 44.9 26.1 – – 44.9 26.1

Other 2.3 2.7 (21.3) (7.2) (19.0) (4.5)

Tax assets/(liabilities) 598.4 466.8 (182.5) (188.7) 415.9 278.1

Set off tax (182.5) (188.7) 182.5 188.7 – –

Net tax assets/(liabilities) 415.9 278.1 – – 415.9 278.1

Cineworld Group plc

Annual Report and Accounts 2021

137

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

16. Deferred Tax Assets and Liabilities continued

See Note 10 for details of unrecognised tax assets.

Deferred taxation provided for in the Consolidated Financial Statements at the year end represents provision at the local tax

rates on the above items.

A review of the deferred tax is performed at each Balance Sheet date and adjustments made in the event of a change in any

key assumptions.

Deferred tax assets and liabilities are attributable to the following:

1 January

2021

Recognised

in income

Recognised

in equity

Foreign

exchange

31 December

2021

Property, plant and equipment 194.2 28.9 – – 223.1

Deferred rent 26.6 11.2 – (0.8) 37.0

Deferred revenue 143.5 (49.9) – (0.5) 93.1

Intangible assets (121.7) 12.6 – 0.1 (109.0)

Investment (53.5) 2.7 – – (50.8)

Employee benefits 2.4 (0.2) (0.2) (0.1) 1.9

Tax losses 65.0 130.0 – (0.3) 194.7

Tax interest 26.1 20.1 – (1.3) 44.9

Other (4.5) (14.4) – (0.1) (19.0)

Tax assets/(liabilities) 278.1 141.0 (0.2) (3.0) 415.9

Deferred tax assets have been recognised to the extent that it is probable that future taxable profits will be available against

which deductible temporary differences can be utilised. In estimating future taxable profits the Group has considered its

forecast performance in line with its going concern analysis. More details on the forecast assumptions made in arriving at this

judgement are set out in Note 1.

17. Inventories

31 December

2021

31 December

2020

Goods for resale 22.0 10.5

Equipment and spare parts 2.3 2.7

Total inventories 24.3 13.2

Inventory recognised in cost of sales in the year amounted to $84.0m (2020: $43.1m).

In total $1.6m (2020: $16.0m) of stock was written off during the current financial year.

While goods for resale are perishable they typically have a long shelf-life of up to 12 months. Closure of cinemas would imply

stock written off for those inventory that has its life over 12 months. While most of the cinemas are reopened in current year,

management performed an assessment at 31 December 2021 to write off any perishable stock associated with the closed

periods which could not be resold, whichwas recognised in COVID-19 exceptional costs.

No stock written off during the current and prior financial year has been reversed.

Cineworld Group plc

Annual Report and Accounts 2021

138

18. Trade and Other Receivables

Current

31 December

2021

Represented

31 December

2020

Trade receivables 97. 6 12.6

Loss allowance (2.8) (2.2)

Other receivables 18.5 21.7

Prepayments 26.6 20.9

Accrued income 1.7 0.2

Net investment in sub-lease 0.5 0.5

Trade and other receivables 142.1 53.7

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.

They are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised

initially at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect

the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

Other receivables represents any other amount due to the Group at Balance Sheet date which has not been classified as a

trade receivable.

Due to the short-term nature of the current receivables, their carrying amount is not considered to be materially different to

their fair value.

Net investment in sub-lease represents the future cash flows expected to be received from the sub-leasing of specific sites,

discounted at the rate used for the head lease, adjusted for any initial direct costs associated with the sub-lease.

Non-current

31 December

2021

31 December

2020

Other long-term receivables 42.0 41.6

Loan to jointly controlled entity 0.7 0.7

Net investment in sub-lease 6.1 6.4

Other receivables 48.8 48.7

Included within other long-term receivables is the NCM tax receivable as detailed in Note 13.

Further information relating to loans to jointly controlled entities is set out in Note 14.

19. Loans and Borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.

31 December

2021

31 December

2020

Non-current liabilities

Secured bank and private placement loans, less issue costs of debt to be amortised 4,833.8 4,608.5

Unsecured bank and private placement loans, less issue costs of debt to be amortised 186.3 –

Total non-current liabilities 5,020.1 4,608.5

Current liabilities

Secured bank and private placement loans, less issue costs of debt to be amortised 50.5 32.4

Unsecured bank and private placement loans, less issue costs of debt to be amortised 98.7 –

Overdraft 20.3 21.8

Total current liabilities 169.5 54.2

Cineworld Group plc

Annual Report and Accounts 2021

139

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

19. Loans and Borrowings continued

The terms and conditions of outstanding loans were as follows:

31 December 2021 31 December 2020

Currency Nominal interest rate

Year of

maturity

Face value

Carrying

amount

Face value

Carrying

amount

Initial US Dollar term loan USD Eurocurrency Base Rate

plus applicable margin

(1)

(2)

2025 2,672.6 2,649.5 2,692.7 2,658.2

Initial Euro term loan EUR Eurocurrency Base Rate

plus applicable margin

(1)

(2)

2025 214.1 212.2 233.8 230.9

Incremental US Dollar term loan USD Eurocurrency Base Rate

plus applicable margin

(1)

(2)

2026 636.9 631.5 643.5 635.2

Incremental B1 term loan USD Eurocurrency Base Rate

plus 8.25% margin

(1)

2024 200.0 193.0 – –

B1 term loan USD 7.0% plus 8.25% PIK 2024 523.0 407.8 480.8 342.4

B2 term loan USD Eurocurrency Base Rate

plus 5.0% margin

(1)

2024 110.8 79.5 110.8 69.4

Private placement loan USD and EUR 11.0% 2023 251.8 240.6 263.3 246.2

Convertible Bonds USD 7.5% 2025 213.0 189.8

Revolving credit facility USD Eurocurrency Base Rate

plus applicable margin

(1)

(2)

2023 456.7 451.9 456.8 451.6

Regal Dissenting Shareholders USD 4.0% to 11% 2022 95.8 95.2 – –

Midwest City USD Base rate plus 3.0% 2041 11.9 11.9 – –

Secured bank loan – DCIP USD 4.17% 2021 – – 0.4 0.4

Israeli government loan NIS Base rate plus 2.0% 2025 6.5 6.4 6.6 6.6

Total interest-bearing liabilities 5,393.1 5,169.3 4,888.7 4,640.9

(1) The rate of interest in the case of any Eurocurrency Rate Loan denominated in Dollars is the rate per annum equal to the London interbank offered

rate administered by ICE Benchmark Administration Limited, subject to a 1.00% floor (2020: 1.00% floor). The rate of interest in the case of any

Eurocurrency Rate Loan denominated in Euro is the rate per annum equal to the Euro interbank offered rate administered by the European Money

Markets Institute, subject to a zero floor. RCF and Term loans are subject to a LIBOR floor of 1.00%.

(2) The margin applicable to each tranche of term loans and to drawings under the revolving credit facility is calculated according to the first lien net

leverage ratio of Crown UK Holdco Limited and its subsidiaries. The applicable margin on Eurocurrency Rate Loans is as follows:

Initial US Dollar term loan – 2.50% per annum where the first lien net leverage ratio is greater than or equal to 3.50:1.00 and otherwise 2.25%.

per annum;

Initial Euro term loan – 2.625% per annum where the first lien net leverage ratio is greater than or equal to 3.50:1.00 and otherwise 2.375%. per annum;

Incremental US Dollar term loan – 2.75% per annum where the first lien net leverage ratio is greater than or equal to 3.50:1.00, 2.25% per annum where

the first lien net leverage ratio is less than or equal to 3.00:1.00 and otherwise 2.50% per annum; and

Revolving credit facility drawings – 3.00% per annum where the first lien net leverage ratio is greater than or equal to 3.50:1.00, 2.50%. per annum

where the first lien net leverage ratio is less than 3.00:1.00 and otherwise 2.75%. per annum.

Private Placement loan

On 30 June 2020 the Group secured a $250.0m private placement debt facility with a maturity of 31 December 2023. The

$250.0m debt facility consisted of a €122.9m and $112.5m loan. An original issue discount of €4.9m and $4.5m was incurred on

draw down respectively alongside borrowing costs of $9.3m which were capitalised against this facility.

B2 Term Loan

On 28 May 2020 the Group further increased its RCF limit by $110.8m to $573.3m. On 23 November 2020, the Group converted

the incremental RCF of $110.8m into a term loan facility (B2 term loan) with a maturity of May 2024. The amendment to this

facility was considered to represent a discount to the face value of the debt at the time of the agreement and therefore resulted

in a gain on extinguishment of debt of $33.2m, which has been recognised within finance income. The new amended facility has

been secured with the same collateral as the new debt facility, bringing lenders in second line on these assets. The remaining

RCF of $462.5m was fully utilised as of December 2020 and 2021.

B1 Term Loan

On 23 November 2020, the Group secured a new debt facility of $450.0m (B1 term loan) with majority group of existing term

loan lenders with a maturity of 24 May 2024. Alongside the new debt facility, the Group issued to participating TLB lenders

153,477,195 equity warrants representing in aggregate 9.99% of the fully diluted ordinary share capital of the Company

assuming full exercise of the warrants. Each of the equity warrants that were issued alongside the new debt facility are

exercisable into one ordinary share of the Company at an exercise price of 41.49 pence per share with the proceeds of such

exercise being retained by the Company. The warrants are exercisable at any time over the next five years from inception date.

The exercise price represents a 10% discount to the closing share price on 20 November 2020. The detachable equity warrants

include an antidilution provision, meaning that the number of shares to be issued on exercise of the warrants is not fixed.

Cineworld Group plc

Annual Report and Accounts 2021

140

19. Loans and Borrowings continued

On 23 November 2020, the Group recognised in connection to equity warrants a $80.2m derivative liability, a $3.3m derivative

asset in respect of a prepayment option and fees of $36.0m incurred in connection with obtaining the facility. The initial

carrying value of the B1 term loan on issuance date was $337.1m. The Group also incurred upfront fees of $27.0m on issuance,

which were capitalised against this facility.

At 31 December 2021, the equity warrants are valued at $39.0m (2020: $97.2m) and the embedded derivative asset in respect

of a prepayment option within the new agreement valued at $2.8m (2020: $7.8m).

The B1 and B2 term loans are secured against specific assets in the US and is senior to the other facilities.

Convertible Bond

On 16 April 2021, the Group raised additional funding by issuing Convertible Bonds which are convertible into equity shares

of Cineworld Group Plc. The bonds have principal amount of $213.0m and were issued at a 1% original issuance discount with

a 4-year maturity. The Convertible Bonds are denominated into units of $200,000 each and the Investors have an option to

convert each unit into ordinary shares of the Group at a conversion price of $1.762 (the ‘Conversion Price’) per unit. The Group

recognised a separate derivative liability in respect to the conversion feature with an initial value of $27.8m. Directly attributable

fees of $1.2m were incurred in connection with raising the facility. The initial carrying value of the amortised cost debt

component of the bonds was $181.9m. At 31 December 2021, the derivative liability was valued at $6.3m.

Incremental B1 Term loan

On 29 July 2021, the Group secured $200m of incremental loans from a group of existing lenders with a maturity of 23 May

2024. Directly attributable fees of $11.6m were incurred in connection with raising the facility. Upon raising this additional term

loan facility, the Group paid amendment fees totalling $46.5m in connection with the B1 term loan facility of $450.0m raised in

November 2020, of which fees of $16.5m were directly apportioned to the initial term loans increasing their notional position.

The initial carrying value of the amortised cost B1 Term loan debt was $188.4m.

Regal Dissenting Shareholders

On 10 September 2021, the Group announced that it has reached agreement with dissenting shareholders of Regal

Entertainment Group with respect to the payment of judgment of their claim. Under this agreement, the Group paid an initial

cash settlement of $170.0m and $92.0m was placed into an escrow account to be available as additional liquidity under certain

circumstances, with a corresponding term loan entered into for $92.0m. The Group paid an upfront fee of $1.0m and a base

cash fee of $2.7m to Shareholders. On 8 October 2021 and 14 December 2021 the Group drew down $45.0m and $47.0m

respectively from the escrow account. At year end, cash balance remaining on the escrow account is nil.

Other loans

In 2021 the Group secured a $11.9m loan with Arvest Bank for the Midwest City cinema in the US with a maturity of 1 July 2041.

In 2020 the Israeli government granted a loan of NIS 24.0m ($6.9m) with a maturity of 2025. There are no conditions attached

to the loan.

In 2020 the Group drew $0.4m on the DCIP secured bank loan. In 2021 the entire DCIP secured bank loan was forgiven.

Loans and Borrowings covenants

Revolving credit facility

The RCF is subject to a springing covenant when utilisation is above 35.0%. The covenant requires the Company to maintain a

net leverage of 5.0x, tested semi-annually on a 12 months rolling basis. In 2020, the Company secured a covenant waiver on the

RCF until June 2022 testing date.

Private placement loan

The following financial covenants are attached to the private placement debt facility raised in June 2020. These financial

covenants are calculated only on those entities within the ROW operating segment:

− Springing liquidity covenant: Minimum liquidity of $30.0m, tested monthly from closing provided that if on a test date falling

after 30 June 2021, net leverage is less than 2.0x, the minimum liquidity covenant shall not be required to be tested on that

test date.

− Net leverage: 5.0x, tested semi-annually from 31 December 2021, on a 12 month rolling basis.

B1/B2 term loan

The B1 and B2 term loan facilities are subject to financial and liquidity covenants.

Until the group reaches 80% of admission levels for a 3-month comparable period in 2019, it is subject to a minimum liquidity

covenant. The agreement also entitles the lenders to appoint a board observer.

Cineworld Group plc

Annual Report and Accounts 2021

141

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

19. Loans and Borrowings continued

On 30 July 2021, the Group agreed amendments on certain covenants and restrictions under its B1 and B2 term loan

agreements, including the removal of the operating and capital cash disbursements covenants described above. The minimum

liquidity covenant has been amended to $100m until the group reaches 80% of comparable 2019 admissions levels for a period

of 3 consecutive months.

Analysis of Net Debt

Bank and

other loans

Convertible

bond

Lease

liabilities

Derivatives

Bank

overdraft

Total

financing

activity

liabilities

Restricted

cash

Cash at

bank and

in hand

Net Debt

1 January 2020 (3,616.8) – (4,197.5) (3.8) (2.5) (7,820.6) – 140.6 (7,680.0)

Cash flows (1,062.1) – 198.6 10.2 (18.3) (871.6) – 183.5 (688.1)

Non-cash movement 71.3 – 67.4 (24.9) – 113.8 – – 113.8

Effect of movement in

foreign exchange rates

(33.3) – (40.2) – (1.0) (74.5) – 12.6 (61.9)

At 31 December 2020 (4,640.9) – (3,971.7) (18.5) (21.8) (8,652.9) – 336.7 (8,316.2)

Cash flows (248.8) (209.7) 400.5 3.0 0.5 (54.5) 8.0 21.9 (24.6)

Non-cash movement (118.9) 19.9 (493.0) 5.6 – (586.4) – – (586.4)

Effect of movement in

foreign exchange rates

29.1 – 24.0 – 1.0 54.1 – (4.3) 49.8

At 31 December 2021 (4,979.5) (189.8) (4,040.2) (9.9) (20.3) (9,239.7) 8.0 354.3 (8,877.4)

Net debt as defined in note 2, which included dissenting shareholders’ term loan, excludes an embedded derivative of $36.1m

(2020: $103.6m) which was a non cash movement in the year and equity warrants of $39.0m (2020: $97.2m) explained

further below.

Cash flows from bank loans, loan notes and bank overdraft in the current year of $458.0m (2020: $1,080.4m) are made up of

the following:

31 December

2021

31 December

2020

Repayment of bank loans and overdrafts 55.5 54.2

Draw down of bank loans (526.2) (1,207.8)

Debt issuance costs paid 12.7 73.2

Total cash flows (458.0) (1,080.4)

In the Analysis of Net Debt table above, cash flows from convertible bond includes the full cash proceeds issued on 16 April

2021. In accordance with IFRS 9, a non-cash movement of $27.8m of the conversion feature was allocated to derivative

liability in the year. In addition, a non-cash movement of ($7.9m) within convertible bond includes the amortisation and

accrued interest.

In 2020, cash flows from bank loans includes the full cash proceeds of the new financing arranged in the prior year.

In accordance with IFRS 9, $80.2m of the transaction price was allocated to the equity warrants in prior year, which has been

recognised within non cash movements in bank loans above. A non-cash fair value movement of $17.0m was recognised on the

equity warrants between initial recognition and year end of 2020.

In 2020, non-cash movements on bank loans also includes $0.6m attributed to the initial fair value of embedded derivatives

with an equal and opposite non-cash movement in the derivatives column.

In addition, the non-cash movements of $118.9m (2020: $71.3m) within bank loans includes PIK, the amortisation of

debt issuance costs, accrued interest, accrued debt issuance costs and discounting on draw down of term and Israeli

government loan.

The non-cash movement of $493.0m (2020: $67.4m) within lease liabilities relates to the following: the interest expense related

to lease liabilities of $444.5m (2020: $349.0m), the impact of entering into new leases $91.9m (2020: $52.8m), modifications of

existing leases of ($34.9m) (2020: ($447.5m)), and disposal of leases during the year of ($8.5m) (2020: ($21.7m)).

Cineworld Group plc

Annual Report and Accounts 2021

142

20. Leases

The Consolidated Statement of Financial Position shows the following amounts relating to leases:

Land and

buildings

Plant and

machinery

Other

Total

Right-of-use assets

Balance at 1 January 2020 3,439.1 1.0 1.1 3,441.2

Additions 44.6 – – 44.6

Modifications (435.3) – – (435.3)

Depreciation of right-of-use assets (347.2) (0.5) (1.0) (348.7)

Disposals (20.7) – – (20.7)

Impairments (519.1) – – (519.1)

Reversal of Impairments 136.2 – – 136.2

Effects of movement in foreign exchange 8.2 (0.1) 0.1 8.2

31 December 2020 2,305.8 0.4 0.2 2,306.4

Additions 86.7 – – 86.7

Modifications (9.0) – – (9.0)

Depreciation of right-of-use assets (260.4) (0.3) (0.2) (260.9)

Disposals (5.1) – – (5.1)

Impairments (13.7) – – (13.7)

Reversal of Impairments 141.4 – – 141.4

Effects of movement in foreign exchange (11.7) – – (11.7)

31 December 2021 2,234.0 0.1 – 2,234.1

Lease liabilities

Balance at 1 January 2020 4,195.9 0.4 1.2 4,197.5

Additions 52.8 – – 52.8

Modifications (447.5) – – (447.5)

Interest expense related to lease liabilities 348.9 0.1 – 349.0

Disposals (21.7) – – (21.7)

Effects of movements in foreign exchange 40.2 – – 40.2

Repayment of lease liabilities (including interest) (197.3) (0.2) (1.1) (198.6)

31 December 2020 3,971.3 0.3 0.1 3,971.7

Additions 91.9 – – 91.9

Modifications (34.9) – – (34.9)

Interest expense related to lease liabilities 444.5 – – 444.5

Disposals (8.5) – – (8.5)

Effects of movements in foreign exchange (24.0) – – (24.0)

Repayment of lease liabilities (including interest) (400.2) (0.2) (0.1) (400.5)

31 December 2021 4,040.1 0.1 – 4,040.2

Current 547.8 0.1 – 547.9

Non-current 3,492.3 – – 3,492.3

In response to COVID-19, the IASB announced, considered and issued a COVID-19 specific amendment to IFRS 16 on

28 May2020. The amendment exempts lessees from having to consider individual lease contracts to determine whether

rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications and allows lessees

toaccount for such rent concessions as if they were not lease modifications. The exemption applies to COVID-19-related rent

concessions that reduce lease payments due on or before 30 June 2021. The Group elected not to apply the exemption.

Despite the scale and impact of the changes to leases during the period and the volatility in key inputs to their calculation and

their potential materiality of the impact on the financial statements as whole, the Group’s significant judgments in respect of the

matters set out below are unchanged. The Group’s accounting policy with respect to leases is also unchanged.

Cineworld Group plc

Annual Report and Accounts 2021

143

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

20. Leases continued

Modification and discount rates

Due to the negotiations held with landlords, the amended leases have changed in substance either from a consideration or term

perspective. Thus, the modification treatment per IFRS 16 has been followed.

In line with the approach on transition to IFRS 16, the Group has used an incremental borrowing rate (“IBR”) and made a

corresponding adjustment to the right-of-use asset. The amendments did not result in the identification of a separate lease.

On transition, the incremental borrowing rates applied to property leases ranged between 2.6% and 11.7%. The asset specific

IBR applied to each lease was determined by taking into account the risk-free rate, adjusted for factors such as the credit

rating linked to the life of the underlying lease agreement. These rates are intended to be long term in nature and calculated

on inception of each lease. In 2020, the IBRs applied to property leases for the COVID-19 amendments ranged between 5.9%

and 16.8% for modifications between March and September and ranged between 17.9% and26.4% for modifications between

October and December. In 2021, the IBRs varied primarily due to changes in the credit risk and market debt pricing.

The IBR applied to amended leases during the period, depending on the territory and remaining lease term, ranged between:

January 2021 19.8% – 26.5%

February 2021 19.8% – 26.2%

March 2021 19.8% – 26.9%

1-15 April 2021 (1) 19.7 % – 28.1%

16-30 April 2021 (1) 8.9% – 17.3%

May 2021 8.9% – 14.0%

June 2021 8.4% – 18.3%

July 2021 7.5% – 14.4%

August 2021 8.6% – 15.1%

September 2021 9.3% – 15.2%

October 2021 9.1% – 18.0%

November 2021 9.0% – 17.9%

December 2021 10.8% – 18.1%

(1) The Group issued convertible bond issued on 16 April. As a result, the credit risk applied in calculating IBRs has reduced, resulting in lower overall

IBR results.

During the first three months of the year, the IBRs were similar to the period in Q4 2020. The relatively high IBRs are the most

significant factor behind the decrease in right of use assets and lease liabilities during the first 3 months of the year. However,

subsequent to 16 April 2021, leases that were amended could have had an increase in the right of use asset and lease liability

due to the lower IBRs in Q2 2021.

Due to the number of renegotiated lease agreements in the period, the Group has recognised a large number of lease

modifications and expects further modifications in 2022.

During the year, there were lease modifications that would have required a reduction to the right of use asset in excess of the

carrying amount at the date of modification. For these leases, the asset carrying values were reduced to $nil with the excess

gain credited to the consolidated statement of profit or loss. Where these leases were previously impaired, this is first presented

as an impairment reversal (up to the amount of impairment reversal permitted by IFRSs) with any remaining gain presented as

alease modification gain within property related releases and charges as part of administrative expenses.

The consolidated statement of profit or loss includes within administrative expenses a lease modification gain of $21.3m

(2020:$12.3m).

The impairment reversal is part of net impairments of goodwill, property, plant and equipment, right-of-use assets and

investments in the consolidated statement of profit or loss.

Cineworld Group plc

Annual Report and Accounts 2021

144

20. Leases continued

Modification and discount rates continued

The number and size of amendments made are such that judgements taken were significant. These judgements included

the following:

− Where a lease includes the option for the Group to extend the lease term, beyond the non-cancellable period, the Group

makes a judgement as to whether it is reasonably certain that the option will be taken. This will take into account the length

of time remaining before the option is exercisable; the current and future trading forecast as to the ongoing profitability of

the site; and the level and type of planned future capital investment. Extension options (or periods after termination options)

are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Therefore, potential

future cash outflows have not been included in the lease liability where it is not reasonably certain the extension periods will

be taken or that the leases will be extended on similar terms (or not terminated).

− The discount rate applied. The Group elected to apply an average discount rate over periods with consistent relevant

characteristics rather than applying the rate at the specific date of the amendment. Given the judgement required around

thedate of amendment and the uncertainty affecting IBRs, using such a rate is considered to be appropriate.

− The date of the amendment. Judgement was required to determine when the terms of each amendment were formally

agreed, which in some cases was considered to have occurred prior to the date of signing the agreement.

− All renegotiated leases were treated as modification under IFRS 16. Management has taken the judgement that all

renegotiated leases met the criteria for amendment based on the changes to the cash flows, and length and conditions

oftheoriginal leases.

Impairments and disposals

During the year ended 31 December 2021, the Group recognised impairment charges of $13.7m on right-of-use assets and

$141.4m reversal of impairments. The reversal relates to 168 cinema CGUs.

During the year ended 31 December 2020, the Group recognised impairment charges of $519.1m on right-of-use assets and

$136.2m reversal of impairments. The reversal related to 102 cinema CGUs. Note 11 summarises the assumptions applied

inassessing impairments, including theaccounting for reversals of impairments.

During the year ended 31 December 2021, the disposals relate to 10 sites in the US Segment that were closed and 1 site in the

UK&I segment, resulting in a $3.3m gain.

During the year ended 31 December 2020, the disposals relate to 18 sites in the US segment that were closed, resulting in a

$1.0m gain.

Consolidated Statement of Profit or Loss

The Consolidated Statement of Profit or Loss shows the following amounts relating to leases:

Year ended

31 December

2021

Year ended

31 December

2020

Depreciation charge of right-of-use assets 260.9 348.7

– Land and buildings 260.4 347.2

– Other 0.5 1.5

Sub-lease income (3.6) (2.3)

Impairment of right-of-use assets 13.7 519.1

Reversal of Impairment of right-of-use assets (141.4) (136.2)

Expenses relating to short-term leases

(included in cost of goods sold and administrativeexpenses)

– 1.3

Expenses relating to variable lease payments not included in lease liabilities

(included in cost of sales)

14.4 3.5

Charge to operating profit 144.0 734.1

Interest expense (included in finance costs) 444.5 349.0

Charge to profit before taxation for leases 588.5 1,083.1

The total cash outflow for leases in 2021 was $400.5m (2020: $198.6m).

Commitments for short-term leases at 31 December 2021 was $Nil (2020: $Nil).

Cineworld Group plc

Annual Report and Accounts 2021

145

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

20. Leases continued

Sensitivity

In 2021, for sites which are subject to variable lease payments, a 10% increase in sales across all sites in the Group with such

variable lease contracts would increase total lease payments by approximately $1.4m (2020: $0.4m).

As outlined in Note 1 extension options (or periods after termination options) are only included in the lease term if the lease

is reasonably certain to be extended (or not terminated). Should the next available option for all leases be taken the impact

on thelease liability and right-of-use asset would be an increase of $612.2m (2020: 249.6m) increasing future cash flows by

$2,279.6m (2020: $1,703.9m).

No leases contain a residual value guarantee clause.

Some cinema sites are sub-leased to tenants under operating leases with rentals payable monthly. Lease payments for

some contracts include CPI increases, but there are no other variable lease payments that depend on an index or rate.

Where considered necessary to reduce credit risk, the Group may obtain bank guarantees for the term of the lease.

Sub-lease income of $3.6m was recognised during the current financial year (2020: $2.3m).

Minimum lease payments receivable on sub-leases are as follows:

31 December

2021

31 December

2020

Within 1 year 5.4 5.5

Between 1 and 2 years 3.0 4.1

Between 2 and 3 years 2.9 2.9

Between 3 and 4 years 2.6 2.4

Between 4 and 5 years 2.0 1.8

Later than 5 years 11.9 11.9

21. Trade and Other Payables

31 December

2021

31 December

2020

Current

Trade payables 108.7 169.0

Other payables 66.6 290.2

Accruals 350.9 137.1

Trade and other payables 526.2 596.3

31 December

2021

31 December

2020

Non–current

Other payables 19.6 9.2

Current other payables declined $223.6m from 31 December 2020 to 31 December 2021, as $244.2m of the 31 December 2020

balance represented consideration payable to a group of Regal’s previous shareholders who challenged whether they received

a fair market price for their shares. Of the total, $202.6m was part of the total consideration due for the acquisition of Regal

and the value represented the number of shares held by these shareholders multiplied by the $23.0 per share due to be paid to

them under the terms of the acquisition. The additional $41.6m represents further costs including interest due on outstanding

payment. The existence of the legal dispute meant that the cash consideration in respect of these shareholdings was retained

by the Group until such time as the dispute is settled. On 14 May 2021, the Group reached an agreement with the dissenting

shareholders of Regal with respect to the payment of judgement of their claim. On 10 September 2021, the Group paid $170m

of the judgement to dissenting shareholders and the remaining $92m was placed into an escrow account to be available to the

Group as additional liquidity under certain circumstances. These funds are presented as short-term debt in the consolidated

financial statements. See Note 19 for further detail.

Accruals increased $213.8m from 1 January 2021 to 31 December 2021, driven by the reopening of theatres and operations

in 2021.

Included within other payables is $6.6m (2020: 3.7m) accrued interest in relation to the Libor floor.

Cineworld Group plc

Annual Report and Accounts 2021

146

22. Deferred Revenue

31 December

2021

31 December

2020

Government grants 8.0 8.9

Customer advances 173.3 192.5

Customer loyalty schemes 16.1 34.2

Advertising contracts 609.0 642.3

Deferred revenue 806.4 877.9

Current 226.9 270.9

Non–current 579.5 607.0

Total 806.4 877.9

Refer to Note 1 for further details of the items classified within deferred revenue and the timing of recognition of these items.

The following table shows how much revenue has been recognised in relation to carried-forward contract liabilities:

Year ended

31 December

2021

Year ended

31 December

2020

Revenue recognised which was included within the opening contract liability balance:

Contract liabilities – customer loyalty programme 31.9 9.9

Contract liabilities – advertising income 91.6 83.1

Contract liabilities – other deferred income 57.9 73.3

Movements on customer advances and customer loyalty schemes is due to the timing of receipt of cash and recognition

ofrevenue in relation to the redemption of advanced tickets and vouchers sold and loyalty points redeemed. Management

changed the loyalty scheme to restrict the redemption period to one year. This change resulted in a release of $30.2m from

deferred revenue during the year. The sale of advanced tickets and vouchers is returning to normal as the recovery from

COVID-19 continues.

Movements on contract liabilities in connection with advertising contracts is predominantly due to the exhibitor service

agreement with NCM, details of which are disclosed further within Note 13.

Cineworld Group plc

Annual Report and Accounts 2021

147

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

23. Employee Benefits

Defined benefit pension plans

The Group operates one externally funded defined benefit pension scheme in Ireland, the Adelphi-Carlton Limited Contributory

Pension Plan.

The Adelphi-Carlton Limited Contributory Pension Plan is closed to new entrants and therefore the current service cost is $Nil.

The trustees of the Adelphi-Carlton Contributory Pension Plan have not agreed that any surplus on the plan can be refunded

tothe Group. Accordingly the surplus has not been recognised. The scheme has a surplus of $1.7m as at 31 December 2021

(2020: $1.1m).

Actuaries for Adelphi-Carlton Limited carried out the last actuarial valuation of the Scheme as at 1 April 2019. Based on this

assessment, the actuarial value of the assets is $3.0m which is more than sufficient to cover 100% of the benefits that had

accrued to members. In view of this, a suspension of Group contributions was in force from 1 April 2001 to 31 December 2021.

Total contributions for the years ended 31 December 2021 were $Nil (2020: $Nil). No contributions are expected for the year

ending 31 December 2022.

Accrued employee retirement rights

Local applicable labour laws and agreements in the ROW require certain Group companies to pay severance pay to dismissed

or retiring employees (including those leaving their employment under certain other circumstances). The calculation of the

severance pay liability has been made in accordance with labour agreements in force and based on salary components that,

inmanagement’s opinion, create entitlement to severance pay.

Group companies’ severance pay liabilities to their employees are funded partially by regular deposits with recognised pension

and severance pay funds in the employees’ names and by purchase of insurance policies. They are accounted for as if they

were a defined benefit plan. The amounts funded as above are netted against the related liabilities and are not reflected in

theConsolidated Statement of Financial Position since they are not under the control and management of the companies.

The amounts of the liability for severance pay presented in the Consolidated Statement of Financial Position reflect that part

of the liability not covered by the funds and the insurance policies mentioned above, as well as the liability that is funded by

deposits with recognised central severance pay funds held under the name of the Company’s subsidiaries.

The cost of severance provision is determined according to the projected unit credit method. It has been calculated using

adiscounted cash flow approach. The calculations are based on the following assumptions:

− Average discount rate at 31 December 2021 0.81% (2020: 0.79%)

− Expected returns on plan assets at 31 December 2021 0.81% (2020: 0.81%)

The net provision for accrued employee rights upon retirement comprises:

31 December

2021

31 December

2020

Present value of unfunded obligation 7.8 7.1

Less: Fair value of plan assets (3.3) (3.0)

Total obligation 4.5 4.1

Movements in the provision for accrued employee rights upon retirement:

Gross

amount

Amount

deposited

Net

amount

At start of period 7.1 (3.0) 4.1

Payments made upon retirement (0.4) (0.6) (1.0)

Net movement in provision – charged to net profit 0.8 0.4 1.2

Foreign exchange movements 0.3 (0.1) 0.2

Total obligation 7.8 (3.3) 4.5

Defined contribution pension plans

The Group operates a number of defined contribution pension plans.

The total expense relating to these plans in the current year was $1.8m (2020: $1.6m). There was $Nil accruing to these pension

schemes as at 31 December 2021 (2020: $Nil).

Cineworld Group plc

Annual Report and Accounts 2021

148

23. Employee Benefits continued

Share-based payments

As at 31 December 2021 there were four types of share options and share schemes: the Cineworld Group 2007 Performance

Share Plan, the Cineworld Group plc Company Share Option Plan, the Cineworld Group 2017 Long-Term Incentive Plan and

the Cineworld Group 2021 Long-Term Incentive Plan. Details of each of the schemes are set out in the Directors’ Remuneration

Report on pages 68 and 73.

The Cineworld Group Performance Share Plan (“PSP”)

Assumptions relating to grants of share options outstanding are as follows:

Date of grant Exercise period

2021

Number of

options

’000

2020

Number of

options

’000

12 April 2017 6 months from 12 April 2020 – –

Under the PSP, awards of conditional shares or nil cost options could be made that vest or become exercisable after three years

subject to continued employment and generally the achievement of specified performance conditions as follows:

12 April 2017

Under these grants, awards of 854,332 options were made in total. Awards of 670,343 options were made with the

performance conditions set out below:

− 25% of the options under the Award would vest if the average annual growth in EPS (calculated by comparing the EPS for

thefinancial year ended 31 December 2017 and the EPS for the financial year ended 31 December 2019) is not less than 5.0%.

− 100% of the options under the Award would vest if the average annual growth in EPS (calculated by comparing the EPS for

the financial year ended 31 December 2017 and the EPS for the financial year ended 31 December 2019) is at least 11.0%.

− Where the average annual growth in EPS (calculated by comparing the EPS for the financial year ended 31 December 2017

and the EPS for the financial year ended 31 December 2019) is between the two limits above, the Award would vest on a

straight-line basis between 25% and 100%.

EPS means adjusted Earnings Per Share calculated by dividing the profits for the period attributable to ordinary shareholders

(adjusted by adding back the amortisation of intangible assets and other one-off income or expenses and applying a tax effect

on all adjustments) by the number of ordinary shares outstanding at the end of the period.

Awards over 183,989 options were made which would vest after three years subject to continued employment only, with no

specified performance conditions attached.

Assumptions relating to grants of share options outstanding are as follows:

Date of grant

Share price

atgrant

Exercise

price

Expected

volatility

Expected

life years

Dividend

yield

Risk-free

rate

Fair value

12 April 2017 8.39 – 37 3 3.6 0.30 7.52

Expected volatility has been calculated as the annualised volatility of the natural logarithm of the daily stock price observation.

On 2 February 2018, the Group performed a rights issue, resulting in four additional shares being granted for one share.

An indicative bonus factor was applied to the fair value of the PSP options. This resulted in a revised fair value of the 2017 PSP

options to $3.34.

A reconciliation of option movements over the year to 31 December is shown below:

Number of

options 2021

Equity-settled

’000

Number of

options 2020

Equity-settled

’000

Outstanding at the beginning of the year – 854

Exercised in shares during the year – (847)

Lapsed during the year – (7)

Outstanding at the end of the year – –

A charge of $Nil was recorded in the Consolidated Statement of Profit or Loss for the four PSP schemes (2020: $0.3m).

Cineworld Group plc

Annual Report and Accounts 2021

149

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

23. Employee Benefits continued

The Company Long-Term Incentive Plan (“LTIP”)

The following share options have been granted under the LTIP and were outstanding at 31 December 2021:

Date of grant Exercise period

2021

Number of

options

’000

2020

Number of

options

’000

23 April 2018 6 months from 23 April 2021 – 1,560

21 May 2019 6 months from 21 May 2022 1,681 1,752

18 September 2019 6 months from 21 May 2022 5 6

14 April 2020 6 months from 14 April 2023 6,666 7,015

1 June 2020 6 months from 1 June 2023 15 16

8 February 2021 From 8 February 2024 to 8 February 2026 49,385 –

4 May 2021 6 months from 4 May 2024 1,395 –

23 April 2018

Under these grants, awards of 1,617,997 options were made in total. Awards of 1,399,843 options were made with the

performance conditions set out below:

− 25% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2018 and the EPS for the financial year ended 31 December 2020) is not less than 8%;

− 100% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2018 and the EPS for the financial year ended 31 December 2020) is at least 15%; and

− Where the average annual growth in EPS (calculated by comparing the EPS for the financial year ended 31 December 2018

and the EPS for the financial year ended 31 December 2020) is between the two limits above, the Award shall vest on a

straight-line basis between 25% and 100%.

Awards of 218,154 options were made which will vest after three years subject to continued employment only, with no specified

performance conditions attached.

21 May 2019 and 18 September 2019

Under these grants, awards of 1,805,489 options were made in total. Awards of 1,242,908 options were made with the

performance conditions set out below:

− 25% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2019 and the EPS for the financial year ended 31 December 2021) is not less than 8%;

− 100% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2019 and the EPS for the financial year ended 31 December 2021) is at least 15%; and

− Where the average annual growth in EPS (calculated by comparing the EPS for the financial year ended 31 December 2019

and the EPS for the financial year ended 31 December 2021) is between the two limits above, the Award shall vest on a

straight-line basis between 25% and 100%.

EPS means adjusted Earnings Per Share calculated by dividing the profits for the period attributable to ordinary shareholders

(adjusted by adding back the amortisation of intangible assets and other one-off income or expenses and applying a tax effect

on all adjustments) by the number of ordinary shares outstanding at the end of the period.

Further awards over 562,581 options were made which will vest after three years subject to continued employment only, with

no specified performance conditions attached.

Cineworld Group plc

Annual Report and Accounts 2021

150

23. Employee Benefits continued

The Company Long-Term Incentive Plan (“LTIP”) continued

14 April 2020 and 1 June 2020

Under these grants, awards of 7,129,676 options were made in total. Awards of 4,942,540 options were made with the

performance conditions set out below:

− 25% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2020 and the EPS for the financial year ended 31 December 2022) is not less than 8%;

− 100% of the options under the Award will vest if the average annual growth in EPS (calculated by comparing the EPS for the

financial year ended 31 December 2020 and the EPS for the financial year ended 31 December 2022) is at least 15%; and

− Where the average annual growth in EPS (calculated by comparing the EPS for the financial year ended 31 December 2020

and the EPS for the financial year ended 31 December 2022) is between the two limits above, the Award shall vest on a

straight-line basis between 25% and 100%.

EPS means Adjusted Earnings Per Share calculated by dividing the profits for the period attributable to ordinary shareholders

(adjusted by adding back the amortisation of intangible assets and other one-off income or expenses and applying a tax effect

on all adjustments) by the number of ordinary shares outstanding at the end of the period.

Further awards over 2,187,136 options were made which will vest after three years subject to continued employment only, with

no specified performance conditions attached.

The 2021 Company Long-Term Incentive Plan (“2021 LTIP”)

8 February 2021 and 4 May 2021

Under these grants, awards of 51,335,019 options were made in total. Awards of 49,785,000 options were made with the

performance conditions set out below:

− 25% of the options under the Award will vest if the target share price of £1.3 is achieved;

− 50% of the options under the Award will vest if the target share price of £1.5 is achieved;

− 75% of the options under the Award will vest if the target share price of £1.7 is achieved; and

− 100% of the options under the Award will vest if the target share price of £1.9 is achieved.

Target share price means the average share price over a three-month period ending on the last business day of the

performance period. When the average share price is between one of the targets above, awards will vest on a straight-line

basis between 25% and 100%. The aggregate value of shares delivered to any one participant cannot exceed the GBP figure

calculated by multiplying the number of shares subject to an award at the date of grant by £3.8. After the vesting date, the

vested shares are subject to a holding period of two years.

Further awards over 1,550,019 options were made which will vest after three years subject to continued employment only, with

no specified performance conditions attached.

Assumptions relating to grants of share options outstanding are as follows:

Date of grant

Share price

atgrant

Exercise

price

Expected

volatility

Expected

life years

Dividend

yield

Risk-free

rate

Fair value

21 May 2019 4.0 – 38.0 3 7.9 0.83 3.0

18 September 2019 3.9 – 38.0 2.8 8.4 0.78 2.9

14 April 2020 0.63 – 60.8 3 24.0 0.70 0.31

1 June 2020 0.80 – 63.4 3 28.9 0.20 0.34

8 February 2021 0.74 – 109.0 3 0 0.01 0.29

4 May 2021 0.94 – 69.9 3 0 0.08 0.94

Expected volatility has been calculated as the annualised volatility of the natural logarithm of the historical daily stock price

observation from the date of initial listing through to the date of grant.

Cineworld Group plc

Annual Report and Accounts 2021

151

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

23. Employee Benefits continued

The 2021 Company Long-Term Incentive Plan (“2021 LTIP”) continued

A reconciliation of option movements over the year to 31 December is shown below:

Number of

options 2021

Equity-settled

’000

Number of

options 2020

Equity-settled

’000

Outstanding at the beginning of the year 10,388 3,380

Exercised during the year (198) –

Granted during the year 51,335 7,129

Lapsed during the year (2,377) (121)

Outstanding at the end of the year 59,148 10,388

A charge of $6.9m was recorded in the Consolidated Statement of Profit or Loss for the LTIP scheme (2020: credit $2.3m).

The Company Share Option Plan (“CSOP”)

The following share options have been granted under the CSOP and were outstanding at 31 December 2021:

Date of grant Exercise period

2021

Number of

options

’000

2020

Number of

options

’000 Performance conditions

6 June 2014 6 June 2017 – 5 June 2024 7 7 Awards of 2,891 options were made with

the same conditions as the 2014 PSP grant.

Awards of 14,455 were made with no

performance conditions attached.

23 April 2015 23 April 2018 – 22 April 2025 54 54 All awards were made with no

performanceconditions attached.

18 April 2016 18 April 2019 – 17 April 2026 34 34 All awards were made with no

performanceconditions attached.

Assumptions relating to grants of share options outstanding are as follows:

Date of grant

Share price

at grant

Exercise

price

Expected

volatility

Expected life

years

Dividend

yield

Risk-free rate

Fair value

6 June 2014 5.82 5.82 41 3–10 years 4.3 0.56 1.23

23 April 2015 7.23 7.23 39 3–10 years 4.3 0.59 1.41

18 April 2016 7.79 7.78 38 3–10 years 2.9 0.37 1.65

Expected volatility has been calculated as the annualised volatility of the natural logarithm of the historical daily stock price

observation from the date of initial listing through to the date of grant.

A reconciliation of option movements over the year to 31 December is shown below:

Number of

options 2021

Equity-settled

Number of

options 2020

Equity-settled

Outstanding at the beginning of the year 95 95

Outstanding at the end of the year 95 95

A charge of $Nil was recorded in the Consolidated Statement of Profit or Loss for the three CSOP schemes (2020: $Nil).

The fair value is measured at the grant date and spread over the period during which the employees become unconditionally

entitled to the options.

Cineworld Group plc

Annual Report and Accounts 2021

152

23. Employee Benefits continued

Total share-based payments

A total charge recognised for the year arising from share-based payments is $6.9m (2020: credit $2.3m). At 31 December

2020, management have assumed based on latest forecast that the performance conditions attached to the 2018 and 2019

LTIP would not be met and these options would not vest. As a result management have updated their share-based payment

calculations to take into account the revised shares expected to vest. This resulted in a reversal of prior years share-based

payment charges attached to the 2018 and 2019 LTIP with performance conditions to the prior year profit and loss.

The share-based payment expense recognised in creditors relates to dividends accrued by the option holders over the

vesting period.

The number and weighted average exercise prices of share options in equity-settled schemes are as follows:

Weighted average

exercise price

2021

Equity-settled

Number of

options

2021

Equity-settled

’000

Weighted average

exercise price

2020

Equity-settled

Number of

options

2020

Equity-settled

’000

Outstanding at the beginning of the year – 10,483 0.1 4,328

Adjustments due to rights issue – – – –

Exercised during the year – (198) (0.1) (847)

Granted during the year – 51,335 – 7,130

Lapsed during the year – (2,377) – (128)

Outstanding at the end of the year – 59,243 – 10,483

Exercisable at the end of the year – 95 – 95

The weighted average remaining contractual life of the share options is 2.1 years (2020: 1.8 years).

Single Total Figure Table

The table below gives a single figure for the total remuneration and breakdown for each Executive and Non-Executive Director

in respect of the 2021 financial year. Comparative figures for the 2020 financial year have also been provided.

Salary and fees

including bonus

$000

Pension

contributions

$000

Total

$000

Year ended 31 December 2021

Total compensation for Directors 4,491.0 353.0 4,844.0

Salary and fees

including bonus

$000

Pension

contributions

$000

Total

$000

Year ended 31 December 2020

Total compensation for Directors 2,747.0 281.1 3,028.1

Full details of Directors’ Remuneration including aggregate emoluments, contributions made in respect of money purchase

schemes and details on the highest paid Director, including if they exercised any share options and participated in a defined

benefit pension scheme can be found in the Directors’ Remuneration Report. Refer to pages 68 and 73 for this information.

Cineworld Group plc

Annual Report and Accounts 2021

153

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

24. Provisions

Provisions for

contracts with

suppliers $m

Other

provisions

Total

provisions

Balance at 31 December 2020 2.4 6.7 9.1

Provisions made 2.6 – 2.6

Provisions utilised – (5.7) (5.7)

Balance at 31 December 2021 5.0 1.0 6.0

Current 5.0 – 5.0

Non-current – 1.0 1.0

Total 5.0 1.0 6.0

Provisions for contracts with suppliers relate to claims from suppliers against contractual obligations. These provisions were

assessed by applying the expected payments based on settlement of historic claims, and legal claims which have been assessed

based on legal advice received. During the year, a further provision was made based on the management assessment on contracts

in place during the year and expected claims against those contracts.

Other provisions relate to legal, sales tax and unclaimed property amounts. A provision of $3.8m, recognised on acquisition

ofRegal, was utilised on settlement of the dissenting shareholder claim during the year. A provision in respect of royalty claims

in the ROW segment was made in prior year, of which $1.9m was utilised during the year. Based on legal advice, the remaining

provision is not expected to be used within the next year.

Cineworld Group plc

Annual Report and Accounts 2021

154

25. Capital and Reserves

Share capital

31 December

2021

31 December

2020

Allotted, called up and fully paid 20.1 20.1

1,372,995,448 (2020: 1,372,797,489) ordinary shares of £0.01 each.

The Company has no limits to the number of shares which can be issued, however does seek authority at each AGM to

allot shares.

Foreign currency translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of

foreign operations, as well as from the translation of liabilities that hedge the Company’s net investment in a foreign subsidiary.

Fair value reserve

The fair value reserve comprises the net change in the fair value of equity securities designated as held at fair value.

Hedging reserve

During the year 2020 the hedge relationship became ineffective and the hedge relationship ended. This resulted in $9.8m credit

to the hedge reserve and charge to the income statement.

On 30 June 2020 the Group designated the Euro denominated term loan and the assets of a Euro trading subsidiary as a net

investment hedge. In 2021 net investment hedges have been identified as not effective. All the reserve has been recognised in

Profit and Loss Statement.

Dividends

The following dividends were recognised during the year:

2021

2020

Special – –

Q1 Interim – –

Q2 Interim – –

Q3 Interim – –

Interim – –

Final (for the preceding year) – 51.4

Total dividends – 51.4

On 7 April 2020 the Board announced the suspension of the 2019 fourth quarter dividend of 4.25 cents per share to conserve

cash for the Group.

Prior to the impact of the COVID-19 pandemic, the Board paid four interim dividends for each financial year. Payments in

relation to the first three quarters of the year are equal to 25% of the full year dividend of the prior year, with the final payment

reflective of the Group’s full year earnings performance and resulting in a full year dividend payment aligned with the Group’s

pay-out ratio.

In 2020, only the interim dividend of 3.75 US cents per ordinary share in respect of the third quarter of 2019 was paid to

shareholders on 10 January 2020. The total cash consideration was $51.4m.

The distribution of dividends on our ordinary shares is subject to validation by the Board of Directors and must be in line

with applicable law. The board of directors validates the amount of future dividends to be paid, taking into account the cash

balance then available, the anticipated cash requirements, the overall financial situation, restrictions on loan agreements, future

prospects for profits and cash flows, as well as other relevant factors. On 7 April 2020 the Board announced the suspension of

the 2019 fourth quarter dividend of 4.25 cents per share to conserve cash for the Group. No dividend has been declared in the

current period, the Group continues to prioritise liquidity preservation during its recovery from the pandemic.

Cineworld Group plc

Annual Report and Accounts 2021

155

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

26. Financial Instruments

Overview

The Group has exposure to the following risks from its use of financial instruments:

− Credit risk

− Liquidity risk

− Market risk

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and

processes for measuring and managing risk, and the Group’s management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s Risk Management

Framework. The Group has in place a risk management programme and regular reports are made to the Audit Committee,

which is tasked with general oversight. The Group’s risk management policies are established to identify and analyse the risks

faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management

policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group,

through its training and management standards and procedures, aims to develop a disciplined and constructive control

environment in which all employees understand their roles and obligations.

The Group’s Audit Committee oversees how management monitors compliance with the Group’s risk management policies and

procedures and reviews the adequacy of the Risk Management Framework in relation to the risks by the Group. The Group’s Audit

Committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews ofcertain

risk management controls and procedures, the results of which are reported to the Audit Committee.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its

contractual obligation. Management believe the credit risk on cash and cash equivalents is low because the counterparties

arebanks with high credit ratings.

Accounts receivable include trade and other receivables. Trade receivables are amounts billed to customers for the sale

of services, and represent the maximum exposure to credit risk of those financial assets, exclusive of the allowance for

doubtful accounts. Normal credit terms for amounts due from customers call for payment within 30 days. Other receivables

include amounts due from suppliers and landlords and other miscellaneous amounts. The Group’s credit risk is primarily

related to its trade receivables, as other receivables generally are recoverable through ongoing business relationships with

the counterparties. Due to the nature of its receivables, the Group defines default with regard to the specific nature of each

contractual arrangement, given the nature and number of transactions involving credit risk, events of default are not considered

tobe high risk and are assessed on specific basis for each asset held at the reporting date.

The Group grants credit to customers in the normal course of business. The Group typically does not require collateral or other

security from customers; however, credit evaluations are performed prior to the initial granting of credit when warranted and

periodically thereafter. The Group records a reserve for estimated uncollectable amounts, which management believes reduces

credit risk. See Note 1, for policy on Impairment of financial assets.

The ageing profile of the Group’s trade receivables is as follows:

31 December

2021

31 December

2020

Within 30 days 40.4 5.1

Between 30 and 60 days 14.8 0.4

Between 60 and 90 days 14.4 0.7

Over 90 days 28.0 6.4

Total trade receivables 97.6 12.6

Standard credit terms granted to customers is between 30 to 60 days. The percentage of trade receivables past due date is

31.8% (2020: 51.0%). The percentage of trade receivables outstanding more than 90 days is 28.7% (2020: 40.4%).

Cineworld Group plc

Annual Report and Accounts 2021

156

26. Financial Instruments continued

Liquidity risk

The following schedule reflects the changes in the allowance for trade receivables during the year:

31 December

2021

31 December

2020

Opening loss allowance 2.2 1.1

Additional allowance 1.3 2.1

Amounts written off (0.7) (1.0)

Closing loss allowance 2.8 2.2

To measure the expected credit losses, trade receivables and other receivables have been grouped based on shared credit

riskcharacteristics and the days past due. The expected credit loss rate has been calculated by the average proportion of sales

which were subsequently written off of total sales for the respective category over the past 30 months. Management believe

that 30 months is a reasonable time-line to understand the historical default rate. The historical loss rates are adjusted to

reflect current and forwardlooking information on macroeconomic factors affecting the ability of the customers to settle the

receivables. The group has identified the Corporate Default Rate of the territories in which it operates to be the most relevant

factors, and accordingly adjusts the historical loss rates based on expected changes in this factor.

There are no material expected credit losses against contract assets, cash or other receivables. Due to the Group’s diversified

client base, management believes the Group does not have a significant concentration of credit risk.

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach

to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due,

under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of

netting agreements. The amounts disclosed in the table are contractual undiscounted cash flows, including interest payments

calculated using interest rates in force at each reporting date, so will not always reconcile with the amounts disclosed on the

Consolidated Statement of Financial Position.

31 December 2021

Carrying

amount

Contractual

cash flows

6 months

or less

6–12 months

1–2 years

2–5 years

More than

5 years

Non-derivative financial

liabilities

Secured bank and private

placement loans

(1) (2)

4,884.3 (5,767.3) (125.0) (124.7) (943.7) (4,562.4) (11.5)

Unsecured bank and private

placement loans

285.0 (364.7) (103.6) (8.2) (16.2) (236.7) –

Bank overdraft 20.3 (20.3) (20.3) – – – –

Lease liabilities 4,040.2 (7,160.5) (483.6) (483.6) (730.3) (1,915.0) (3,548.0)

Trade payables 526.2 (526.2) (526.2) – – – –

Total non-derivative financial

liabilities

9,756.0 (13,839.0) (1,258.7) (616.5) (1,690.2) (6,714.1) (3,559.5)

Derivative financial liabilities

Cross currency swaps 5.4 (5.4) 1.6 (7.0) – – –

Embedded derivative 43.5 (89.8) (13.2) (13.2) (26.2) (37.2) –

Total derivative financial

liabilities

48.9 (95.2) (11.6) (20.2) (26.2) (37.2) –

Cineworld Group plc

Annual Report and Accounts 2021

157

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

26. Financial Instruments continued

31 December 2020

Carrying

amount

Contractual

cash flows

6 months

or less

6–12 months

1–2 years

2–5 years

More than

5 years

Non-derivative financial

liabilities

Secured bank and private

placement loans

(1) (2)

4,640.9 (5,806.7) (114.1) (113.5) (229.0) (4,725.6) (624.6)

Bank overdraft 21.8 (21.8) (21.8) – – – –

Lease liabilities 3,971.7 (6,824.9) (644.0) (332.6) (688.3) (1,815.2) (3,344.8)

Trade payables 169.0 (169.0) (169.0) – – – –

Total non-derivative financial

liabilities

8,803.4 (12,822.4) (948.9) (446.1) (917.3) (6,540.8) (3,969.4)

Derivative financial liabilities

Cross currency swaps 23.6 (18.2) 1.4 1.4 2.7 8.1 (31.8)

Embedded derivative 106.5 (136.7) (13.2) (13.2) (26.5) (79.5) (4.3)

Total derivative financial

liabilities

130.1 (154.9) (11.8) (11.8) (23.8) (71.4) (36.1)

Refer to Note 19 for details on the Group’s borrowing facilities, including covenants attached to these.

(1) The B1 term loan contains a prepayment option allowing the company to repay up to 30% of the principal in certain circumstances at a premium

anytime up to maturity. The cashflows presented above do not factor in early repayments. The prepayment option is separated as an embedded

derivative as disclosed in note 19.

(2) The warrant instruments will be settled by issue of equity and therefore there are no fixed contractual cash flows.

Net Investment Hedging

The Group had previously designated the Euro leg of three cross currency swaps held as a net investment hedge against

the assets of certain Euro denominated subsidiaries. During 2020 the hedge relationship became ineffective and the hedge

relationship ended. This resulted in $9.8m credit to the hedge reserve and charge to the income statement.

On 30 June 2020 the Group designated the Euro denominated term loan and the assets of a Euro trading subsidiary as a net

investment hedge. In 2021 net investment hedges have been identified as not effective. All the reserve has been recognised in

Profit and Loss Statement.

Items held in net investment hedge:

31 December 2021 31 December 2020

Year of

maturity

Change in value of

hedging instrument

Change in value of

hedged item

Change in value of

hedging instrument

Change in value of

hedged item

Initial Euro term loan 2025 – – (19.8) 19.8

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect

the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage

and control market risk exposures within acceptable parameters, while optimising the return on risk.

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158

26. Financial Instruments continued

Foreign currency risk

Operating across ten territories increase the Group’s exposure to currency risk. Wherever possible, overseas operations will

fund their day-to-day working capital requirements in local currency with cash generated from operations, naturally hedging

the currency risk exposure to the Group. Management will continually monitor the level of currency risk exposure, and consider

hedging where appropriate. Currently the Group considers the currency risk on consolidation of the assets and liabilities of its

foreign entities to be of low materiality.

Interest rate risk

Interest rate risk arises from the Group’s borrowing facilities in which a variable rate of interest is charged. The Group has

historically managed this risk by securing fixed interest rates on a portion of its term loans.

While fixed-rate interest-bearing debt is not exposed to cash flow interest rate risk, there is no opportunity for the Group to

enjoy a reduction in borrowing costs in markets where rates are falling.

In addition, the fair value risk inherent in fixed-rate borrowing means that the Group is exposed to unplanned costs should debt

be restructured or repaid early as part of the liquidity management process.

Exposure to interest rate risk is monitored through several measures including sensitivity and scenario testing and a cost benefit

analysis of entering into interest rate swaps to mitigate this risk.

The Group believes it is more cost effective for the US term loan to remain unhedged. The Group however uses interest rate

swaps agreed with other parties to hedge a portion of the interest charged on the Euro term loan. Interest rate swaps are

measured at fair value, which have been calculated by discounting the expected future cash flows at prevailing interest rates.

At 31 December 2021 the Group had two (2020: two) cross currency interest rate swaps. On maturity of the swaps and the

incremental USD term loan, the Group will receive $300.0m on the US dollar legs of the swaps and pay €272.5m on the

Euro leg.

Cash flow sensitivity analysis

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

Carrying amount

31 December

2021

31 December

2020

Fixed rate instruments

Financial liabilities (loans and borrowings – unhedged portion) 933.4 617.3

Lease liabilities 4,040.2 3,971.7

Total Fixed rate instruments 4,973.6 4,589.0

Variable rate instruments

Financial liabilities (interest rate swap) 5.4 23.6

Financial liabilities (loans and borrowings – unhedged portion) 4,235.9 4,045.4

Total Variable rate instruments 4,241.3 4,069.0

The Group accounts for derivative financial instruments (including interest rate swaps) at fair value through profit and loss.

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159

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

26. Financial Instruments continued

Cash flow sensitivity analysis

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or

loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain

constant. The analysis is performed on the same basis for 2020.

Profit or loss Equity

Effect in dollars thousands

100 bp

increase

100 bp

decrease

100 bp

increase

100 bp

decrease

31 December 2021

Variable rate instruments (43.0) 43.0 (43.0) 43.0

Interest rate swap 0.1 (0.1) 0.1 (0.1)

Cash flow sensitivity (net) (42.9) 42.9 (42.9) 42.9

31 December 2020

Variable rate instruments (33.6) 33.6 (33.6) 33.6

Interest rate swap 6.5 (6.5) 6.5 (6.5)

Cash flow sensitivity (net) (27.1) 27.1 (27.1) 27.1

*The impact of interest rate floors disclosed in note 19 are not presented in the table above.

Fair values

Set out below is a comparison by category of carrying amounts and fair values of the Group’s financial instruments that are

carried in the financial statements.

Carrying amount

31 December

2021

Fair value

31 December

2021

Carrying amount

31 December

2020

Fair value

31 December

2020

Secured bank and private placement loans

(1)

4,884.3 4,408.8 4,640.9 3,734.9

Unsecured bank and private placement loans 285.0 281.9 – –

Bank overdraft 20.3 20.3 21.8 21.8

Equity investments (5.8) (5.8) (10.0) (10.0)

Unhedged interest rate swap 5.4 5.4 23.6 23.6

Warrant 39.0 39.0 97.2 97.2

Embedded derivatives liability 43.5 43.5 106.5 106.5

Embedded derivatives asset (2.8) (2.8) (7.8) (7.8)

Total 5,268.9 4,790.3 4,872.2 3,966.2

(1) The fair value of the secured bank and private placement loans stated include the Fair value of embedded derivatives.

Cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities are reflected in the Consolidated

Financial Statements at carrying values that approximate fair values because of the short-term maturities of these financial

instruments. Short-term debtors, creditors and cash and cash equivalents have been excluded from the above table on the

basisthat their carrying amount is a reasonable approximation to fair value.

Finance lease liabilities are recorded at amortised cost, as derived from expected cash outflows and the estimated incremental

borrowing rate attached to the lease. Finance lease liabilities are separately disclosed within the Consolidated Statement of

Financial Position.

Fair value hierarchy

Under the provisions of IFRS 9, the interest rate swap agreements are recorded on the Consolidated Statement of Financial

Position at their fair values, with subsequent changes in fair value recorded in the Consolidated Statement of Profit and Loss.

See Note 19 Long-term debt for the Group’s current swap agreements.

Equity investments relate to investments designated as fair value through OCI. Any movement in fair value has been recognised

within fair value reserve. The Group holds unquoted equity investments and concluded that these cost of investments represent

their fair value at 31 December 2021.

The difference between net carrying amount and estimated fair value reflects unrealised gains or losses inherent in the

instruments based on valuations at 31 December 2021 and 31 December 2020. The volatile nature of the markets means

thatvalues at any subsequent date could be significantly different from the values reported above.

Cineworld Group plc

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160

26. Financial Instruments continued

Fair value hierarchy continued

The fair value of derivatives and borrowings has been calculated by discounting the expected future cash flows at prevailing

interest rates, except where the borrowings are traded in secondary markets and traded prices are available. The carrying

amount of unsecured bank loans is stated net of debt issuance costs and the fair value is stated gross of debt issuance costs

and is calculated using the market interest rates.

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined

as follows:

− In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical financial assets or

financial liabilities that the Group has the ability to access.

− Fair values determined by Level 2 inputs use inputs other than the quoted prices included in Level 1 that are observable for

the financial asset or financial liability, either directly or indirectly. Level 2 inputs include quoted prices for similar financial

assets and financial liabilities in active markets, and inputs other than quoted prices that are observable for the financial

assets or financial liabilities. The Group uses market interest rates and yield curves that are observable at commonly quoted

intervals in the valuation of its interest rate swap and option agreements. The derivative positions are valued using models

developed internally by the respective counterparty that uses as its basis readily observable market parameters (such as

forward yield curves, share prices and share price volatility) and are classified within Level 2 of the valuation hierarchy.

The Group considers its own credit risk as well as the credit risk of its counterparties when evaluating the fair value of its

derivatives. Any adjustments resulting from credit risk arerecorded as a change in fair value of the derivatives and reflected

in the Statement of Comprehensive Income.

− Level 3 inputs are unobservable inputs for the financial asset or financial liability, and include situations where there is little,

if any, market activity for the financial asset or financial liability. The Group’s assessment of the significance of a particular

input to the fair value measurement in its entirety requires judgement, and considers factors specific to the financial asset

orfinancial liability.

Level 1

Level 2

Level 3

Total

31 December 2021

Derivative financial instruments – 85.1 – 85.1

Secured and unsecured bank and private placement

loans

– 4,690.7 – 4,690.7

Equity investments – – (5.8) (5.8)

31 December 2020

Derivative financial instruments – 219.5 – 219.5

Secured bank and private placement loans 4,640.9 – 4,640.9

Equity investments – – (10.0) (10.0)

There have been no transfers between levels in 2021.

Valuation techniques used to determine fair values

Specific valuation techniques used to value financial instruments include:

− The fair value of derivatives and borrowings has been calculated by discounting the expected future cash flows at prevailing

interest rates.

− The carrying amount of bank loans is stated net of debt issuance costs and the fair value is stated gross of debt issuance

costs and is calculated using the market interest rates.

− The fair value of investments has been calculated by reference to quoted market values. The Group holds one unquoted

equity investment and have concluded that the cost of this investment represents its fair value at 31 December 2021.

Please refer to Note 15.

All of the resulting fair value estimates are included in Level 2 except for unlisted equity investments (Level 3).

The difference between net carrying amount and estimated fair value reflects unrealised gains or losses inherent in the

instruments based on valuations at 31 December 2021 and 31 December 2020. The volatile nature of the markets means

thatvalues at any subsequent date could be significantly different from the values reported above.

Cineworld Group plc

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161

Strategic Report Corporate Governance Financial Statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(FORMING PART OF THE FINANCIAL STATEMENTS) CONTINUED

26. Financial Instruments continued

Capital Management

The capital structure of the Group consists of the following items:

2021

2020

Cash and cash equivalents 354.3 336.7

Restricted cash and cash equivalents 8.0 –

Bank and private placement loans and overdrafts (5,189.6) (4,662.7)

Lease liabilities (4,040.2) (3,971.7)

Equity attributable to equity holders of the parent 1,339.1 1,328.9

The year 2020 were significantly impacted by the COVID-19 pandemic with all our cinemas being temporarily closed for

extensive periods from mid-March. In response to this extraordinary situation, the Board of Director adapted their monitoring

asdescribed in the chair’s section on page 36.

Alongside the above crisis monitoring, the Board of Directors constantly monitors the ongoing capital requirements of the

business and has reviewed the current gearing ratio, being the ratio of bank debt to equity and considers it appropriate for the

Group’s current circumstances. Ratios used in the monitoring of debt capital include the ratio of Adjusted EBITDA to net debt.

The Group’s objective when managing capital is to maintain a strong capital base so as to maintain investor, creditor and market

confidence and to sustain future development of the business, to provide returns for shareholders and to optimise the capital

structure to reduce the cost of capital. The Board of Directors monitors both the demographic spread of shareholders, as well as

the return on capital, which the Group defines as total shareholders’ equity and the level of dividends toordinary shareholders.

27. Capital Commitments

Capital commitments at the end of the financial year for which no provision has been made:

31 December

2021

31 December

2020

Contracted 153.0 47.8

Capital commitments at the end of the current and preceding financial year relate to new sites and refurbishment projects

which have commenced or have been committed to through an executed lease agreement or lease amendment.

28. Contingent Liabilities

On 6 July 2020 the Group confirmed that Cineplex had initiated proceedings against it in relation to its termination on 12 June

2020 of the Arrangement Agreement relating to its proposed acquisition of Cineplex (the “Acquisition”). The proceedings

alleged that the Group breached its obligations under the Arrangement Agreement and/or duty of good faith and claimed

damages of up to C$2.18 billion less the value of Cineplex shares retained by Cineplex shareholders.

The Group defended these proceedings on the basis that it had terminated the Arrangement Agreement because Cineplex

breached a number of its covenants and counter-claimed against Cineplex for damages and losses suffered as a result of these

breaches and the Acquisition not proceeding, including the Group’s financing costs, advisory fees and other costs.

The Ontario Superior Court of Justice has now handed down its judgement. It granted Cineplex’s claim, dismissed the Group’s

counter-claim and awarded Cineplex damages of C$1.23 billion for lost synergies to Cineplex and C$5.5 million for lost

transaction costs. The Group disagrees with this judgement and has appealed the decision on the basis of both liability and

damages. There is no requirement to settle the existing judgement on damages whilst any appeal is ongoing. No liability has

been recognised in respect of the judgement as based on external advice, management has concluded that it is currently not

probable that damages will be payable.

In the event that the appeals process is not successful, it would not be possible to determine an appropriate settlement range

as Cineplex is an unsecured creditor, and sufficient liquidity would not be available.

The Group is also exposed to certain other claims in its ROW operating segment, including in respect of royalty and exclusivity

agreements. The Group does not believe that there is any merit in these claims and does not expect any outflow will occur as a

result of them.

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162

29. Related Parties

Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are

not disclosed in this note. The transactions between the Group and its joint ventures and associates are disclosed below.

For the purposes of IAS 24 “Related Party Disclosures”, executives below the level of the Company’s Board are not regarded as

related parties.

The remuneration of the Directors at the year end, who are the key management personnel of the Group, is set out in aggregate

in the audited part of the Directors’ Remuneration report on pages 65 to 69 and 73.

The compensation of the Directors is as follows:

Salary and fees

including bonus

$’000

Pension

contributions

$’000

Total

$’000

Year ended 31 December 2021

Total compensation for Directors 4,491.0 353.0 4,844.0

Salary and fees

including bonus

$’000

Pension

contributions

$’000

Total

$’000

Year ended 31 December 2020

Total compensation for Directors* 2,747.0 281.1 3,028.1

* Amounts disclosed above have been presented on a consistent basis with those paid in 2020. For details of corrections subsequently made are presented

in the Directors Remuneration Report on pages 65 and 66.

Other related party transactions

Digital Cinema Media Limited (“DCM”) is a joint venture between the Group and Odeon Cinemas Holdings Limited set up on

10 July 2008. Revenues from DCM in the year ended 31 December 2021 totalled $8.4m (2020: $5.3m) and as at 31 December

2021, $3.0m were due from DCM in respect of receivables (2020: nil). In addition, theGroup has a working capital loan

outstanding from DCM of $0.7m (2020: $0.7m).

NCM is a joint venture between AMC Entertainment Holdings Inc, Cinemark Holdings Inc and the Group. As at 31 December

2021 $10.1m (2020: $0.2m) was due to NCM in respect of trade payables and $3.8m (2020: $1.0m) was due from NCM in

respect of trade receivables. Refer to Note 13 for details of transactions with NCM.

Revenue received from NCM in the year ended 31 December 2021 totalled $91.1m (2020: $83.7m).

AC JV is a joint venture between AMC Entertainment Holdings Inc, Cinemark Holdings Inc and NCM. As at 31 December 2021

$2.6m (2020: $0.2m) was due to Fathom AC in respect of trade payables.

Revenue received from Black Shrauber Limited in the year ended 31 December 2021 was nil (2020: $0.1m).

Global City Holdings N.V. (“GCH”), is a company in which Moshe Greidinger and Israel Greidinger, Directors of the Group, have

a controlling interest. During the year, the Group made lease payments of $9.1m (2020: $6.1m) to companies under the control

of GCH. At 31 December 2021 $57.1m (2020: $59.6m) in lease liabilities were included within the Group’s Statement of Financial

Position. The Group had amounts payable of $13.6m (2020: $0.2m) by companies under the control of GCH.

No related party transactions other than compensation have occurred during both the current or prior financial years with key

management personnel.

All related party transactions were made on terms equivalent to those that prevail in an arm’s length transaction.

Details of subsidiaries held by the Group can be found in Note 32.

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163

Strategic Report Corporate Governance Financial Statements

Company Statement of Financial Position

AT 31 DECEMBER 2021

Note

31 December

2021

31 December

2020

Fixed assets

Investments 32 1,121.4 1,135.4

Current assets

Trade and other receivables 33 752.0 531.8

Cash at bank and in hand – 0.3

Total assets 1,873.4 1,667.5

Creditors: amounts falling due within one year

Trade and other payables 34 (299.2) (241.4)

Derivative financial liabilities 35 (45.3) (97.2)

Creditors: amounts falling due after more than one year

Loans and borrowings 36 (189.8) –

Total liabilities (534.3) (338.6)

Net assets 1,339.1 1,328.9

Capital and reserves

Called up share capital 38 20.1 20.1

Share premium account 513.8 513.8

Translation reserve (240.8) (218.8)

Profit and loss account 1,046.0 1,013.8

Total shareholders’ funds 1,339.1 1,328.9

The Company generated a profit of $25.3m (2020: $2,519.5m loss) during the current financial year.

These Financial Statements on pages 164 to 178 were approved by the Board of Directors on 17 March 2022 and were signed

onits behalf by:

Nisan Cohen

Director

Cineworld Group plc

Annual Report and Accounts 2021

164

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

Note

Issued

capital

premium

Translation

reserve

Retained

earnings

Total

Balance at 1 January 2020 20.1 516.0 (345.3) 3,584.4 3,775.2

Loss for the financial year – – – (2,519.5) (2,519.5)

Other comprehensive income

Items that will subsequently be reclassified toprofit or loss

Movement on translation reserve – – 126.5 – 126.5

Total comprehensive expense – – 126.5 (2,519.5) (2,393.0)

Contributions by and distributions toowners

Dividends 38 – – – (51.4) (51.4)

Movements due to share-based compensation 37 – – – (1.9) (1.9)

Issue of shares – (2.2) – 2.2 –

Balance at 31 December 2020 20.1 513.8 (218.8) 1,013.8 1,328.9

Profit for the financial year – – – 25.3 25.3

Other comprehensive expense

Items that will subsequently be reclassified toprofit or loss

Movement on translation reserve – – (22.0) – (22.0)

Total comprehensive income – – (22.0) 25.3 3.3

Contributions by and distributions toowners

Dividends 38 – – – – –

Movements due to share-based compensation 37 – – – 6.9 6.9

Balance at 31 December 2021 20.1 513.8 (240.8) 1,046.0 1,339.1

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165

Strategic Report Corporate Governance Financial Statements

30. Accounting Policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation

to the Company’s financial statements.

General information

Cineworld Group PLC is a public company, limited by shares, incorporated and domiciled in England. Its registered address is

8th Floor, Vantage London, Great West Road, Brentford, TW8 9AG.

Basis of Preparation

These financial statements present information about the Company as an individual undertaking and not about its Group.

The Directors of the Company have prepared the financial statements on a going concern basis. Details of the Directors

assessment of going concern, including material uncertainties that exist, is set out on pages 99 to 101 of the consolidated

financial statements.

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements

of International Financial Reporting Standards as adopted by the UK (UK-adopted international accounting standards), but

makes amendments where necessary in order to comply with the Companies Act 2006 and to take advantage of FRS 101

disclosure exemptions.

On 31 December 2020, EU-adopted IFRS was brought into UK law and became UK-adopted international accounting

standards, with future changes to IFRS being subject to endorsement by the UK Endorsement Board. In preparing these

financial statements in accordance with FRS 101, the Company Financial Statements transitioned to UK-adopted international

accounting standards (as described above) on 1 January 2021. There is no impact on recognition, measurement or disclosure in

the period reported as a result of this change.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the

following disclosures:

− a Cash Flow Statement and related notes;

− disclosures in respect of transactions with wholly owned subsidiaries;

− IFRS 7, ‘Financial instruments: Disclosures’;

− disclosures in respect of capital management;

− the effects of new but not yet effective IFRSs;

− the requirements of paragraphs 17 and 18A of IAS 24 “Related Party Disclosures”, including disclosures in respect of the

compensation of key management personnel; and

− a separate Statement of Profit or Loss in line with the section 408 exemption.

Presentational currency

The functional currency of the Company is sterling. To aid the users of the Company accounts with consistency of the

consolidated Group accounts, the Company’s presentational currency is in US dollars.

Investments

In the Company’s financial statements, investments in subsidiary undertakings are stated at cost less provision for any

impairment in value.

Impairment

The Company evaluates its investments for financial impairment where events or circumstances indicate that the carrying

amount of such assets may not be fully recoverable. When such evaluations indicate that the carrying value of an asset exceeds

its recoverable value, an impairment in value is recorded.

Deferred taxation

Deferred tax is recognised using the Statement of Financial Position method, providing temporary differences between the

carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

Deferred tax is recognised, without discounting, in respect of all temporary differences except as otherwise required by IAS 12.

Share-based payment transactions

The share options programme allows Group employees to acquire shares of the Company. The fair value of options are

measured at grant date and spread over the period during which the employees become unconditionally entitled to the options.

The fair value of the options granted is measured using an evaluation model, taking into account the terms and conditions upon

which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options

that vest except where forfeiture is due only to share prices not achieving the threshold for vesting.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

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166

30. Accounting Policies continued

Where the Company grants options over its own shares to the employees of its subsidiaries it recognises an increase in the

cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its subsidiary’s

financial statements with the corresponding credit being recognised directly in equity. Amounts recharged to or reimbursed by

the subsidiary are recognised as a reduction in the cost of investment in the subsidiary.

Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions

ofthefinancial instrument. Financial assets are de-recognised when the rights to receive cash flows from the financial assets

have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.

Financial liabilities are de-recognised when the contractual obligations are discharged, cancelled or expire.

Financial assets and financial liabilities are offset and the net amount is reported in the Statement of Financial Position, when

there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise

the financial asset and settle the financial liability simultaneously.

IFRS 9 contains three classification categories for financial assets and liabilities: measured at amortised cost, fair value through

profit or loss (“FVPL”) and fair value through other comprehensive income (“FVOCI”).

At initial recognition, the Company classifies its financial instruments in the following categories depending on the purpose for

which the financial instruments were acquired:

Financial assets at amortised cost:

The Company’s financial assets at amortised cost comprise cash and cash equivalents and loans receivable from other legal

entities within the Cineworld Group. Loans and receivables are initially recognised at the amount expected to be received, less,

when material, a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured

atamortised cost using the effective interest method, less a loss allowance.

The Company fixed asset investment is held at amortised cost.

Financial assets and financial liabilities at FVPL:

Financial instruments in this category are recognised initially and subsequently at fair value. Transaction costs are expensed in

the Company’s Statement of Profit or Loss. Gains and losses arising from changes in fair value are presented in the Company’s

Statement of Profit or Loss. Financial assets and financial liabilities at fair value through profit or loss are classified as current,

except for the portion expected to be realised or paid beyond 12 months of the Consolidated Statement of Financial Position

date, which is classified as non-current.

Impairment of financial assets

The company applies the IFRS 9 expected credit losses approach, assessing lifetime expected loss allowances for all trade

receivables and contract asset.

Loss allowances will be measured on either of the following bases:

i. 12-month ECLs which are ECLs that result from possible default events within 12 months after the reporting date; and

ii. lifetime ECLs which are ECLs that result from all possible default events over the expected life of a financial instruments.

The Company measures expected credit losses using a lifetime expected loss allowance for all intercompany receivables.

Impairment losses on financial assets carried at amortised cost or FVOCI are reversed in subsequent years if the amount of

theloss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised.

The carrying amount of the Company’s fixed asset investment is reviewed at each Statement of Financial Position date

to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount

is estimated.

An impairment loss is recognised whenever the carrying amount of these fixed asset investments exceeds their recoverable

amount. Impairment losses are recognised in the Company’s Statement of Profit or Loss.

The recoverable amount is the greater of the asset’s fair value less costs to sell and value in use. In assessing value in use, the

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset.

Significant accounting judgements and estimates

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the

application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ

from these estimates.

Cineworld Group plc

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167

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

30. Accounting Policies continued

Judgements and estimates made by the Directors in the application of these accounting policies that have significant effect

on these financial statements and estimates with a significant risk of material adjustment in the next financial year are set

out below.

Judgements

There are no significant accounting judgements that impact the Company financial statements, other than those related to

estimates shown below.

Estimates

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in

the year in which the estimate is revised and in any future years affected.

In applying the Company’s accounting policies described above the Directors have identified that the following area as key

estimates that have a significant impact on the amounts recognised in the financial statements.

Recoverable amount of fixed asset investments

The Company determines whether its investment in subsidiary Crown UK Holdco Limited is impaired when indicators of

impairment exist or based on the annual impairment assessment. The annual assessment requires an estimate of the value

inuse of the underlying investment. This investment holds subsequent investments in all Group companies.

Estimating the value in use requires the Company to make an estimate of the expected future cash flows from the investment

and discount this to net present value at the Group’s weighted average discount rate. The resulting calculation is sensitive to the

assumptions in respect of future cash flows and the discount rate applied.

The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the

investment and that the discount rate used is appropriate given the risks associated with the specific cash flows.

Forecasting expected cash flows and selecting an appropriate discount rate inherently requires estimation. A sensitivity analysis

has been performed over the estimates (see Note 32). The resulting calculation is sensitive to the assumptions in respect of

future cash flows and the discount rate applied. The Directors consider that the key assumptions made within the cash flow

forecasts include long-term growth, the impact of the Company’s recovery from COVID-19 as outlined in Note 1, and discount

rates. The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the

investment, and that the discount rate used is appropriate given the risks associated with the specific cash flows. Based on the

sensitivity analysis performed, there would be additional impairment. Refer to Note 32 for full details. Therefore it is considered

appropriate to disclose this as an area of significant estimation due to the size of the balance and the fact that it could change

as a result of future events.

Expected credit losses

The company applies the IFRS 9 expected credit losses approach, assessing lifetime expected loss allowances for all amounts

receivable from group undertakings.

All amounts due from group undertakings are repayable on demand and the nature of these receivables is considered within

the expected credit loss calculation.

The expected credit losses are calculated using the 3-step general impairment model as follows;

− Probability of default – the likelihood that the borrower would not be able to repay in the very short payment period;

− loss given default – the loss that occurs if the borrower is unable to repay in that very short payment period; and

− exposure at default – the outstanding balance at the reporting date

The probability of default is based on an external assessment of the Group’s weighted corporate default rate which is a function

of the Group’s external credit rating.

31. Staff numbers and cost

The Company pays no employees (2020: none). Salaries of the Directors of the Company, including Non-Executive Directors,

as well as theCompany Secretary are recharged to the Company from its subsidiary Cineworld Cinemas Ltd. See page 65 for

details of Directors’ remuneration.

Cineworld Group plc

Annual Report and Accounts 2021

168

32. Investments

Company

Shares in

Group

undertakings

Balance at 1 January 2020 3,446.0

Additions 80.5

Disposal –

Impairment (2,509.9)

Effects of movement in foreign exchange 118.8

Balance at 31 December 2020 1,135.4

Additions –

Disposal –

Impairment –

Effects of movement in foreign exchange (14.0)

Balance at 31 December 2021 1,121.4

Net book value

At 31 December 2020 1,135.4

At 31 December 2021 1,121.4

Additions of $80.5m during the prior financial year relate to a capital contribution in Crown UK Holdco Limited as a result of the

issue of equity warrants as outlined in note 35. The $80.5m represents the fair value of these warrants on date of issuance.

Fixed asset investments

Registered office Principal activity Class

% of shares

held

Subsidiary undertakings

Directly held

Crown UK Holdco Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company Ordinary 100

Cineworld Funding (Jersey)

Limited

22 Grenville Street, St. Helier, JE4 8PX,

Jersey

Holding company Ordinary 100

Indirectly held

Cinema City Holding B.V. PO Box 1370 NL-3000 BJ Rotterdam

The Netherlands

Holding company Ordinary 100

Augustus 1 Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company Ordinary 100

Cinema Finco 1 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema Finco 2 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema Finco 3 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema Finco 4 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema Finco 5 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema Finco 6 Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Financing company Ordinary 100

Cinema City Holdco

(Hungary) K.F.T

1132 Budapest, Váci út 22-44 Financing company Ordinary 100

Crown Intermediate

Holdco. Inc

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Cineworld Hunco. Kft 1132 Budapest, Váci út 22-44 Holding company Ordinary 100

Crown Finance US. Inc 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Cineworld Group plc

Annual Report and Accounts 2021

169

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

Registered office Principal activity Class

% of shares

held

Augustus 2 Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company Ordinary 100

Cineworld Holdings Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company Ordinary 100

Cine-UK Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

Cineworld Cinemas

Holdings Limited

8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company Ordinary 100

Picturehouse Cinemas Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

Cineworld Cinemas Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Holding company and

Cinema operations

Ordinary 100

Classic Cinemas Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Retail services

company

Ordinary 100

Gallery Holdings Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant holding

company

Ordinary 100

Cineworld Estates Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema property

leasing

Ordinary 100

Adelphi-Carlton Limited 8th Floor, Block E, Iveagh Court,

Harcourt Road, Dublin 2, Ireland

Cinema operations Ordinary 100

Basildon Cinema 2 Limited 2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema property

leasing

Ordinary 100

Basildon Cinema

Number Two 2 Limited

2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary and

preference

100

Bromley Cinema 2 Limited 2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary and

preference

100

Empire Cinema 2 Limited 2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary and

preference

100

Hemel Hempstead

Two Cinema 2 Limited

2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary 100

Poole Cinema 2 Limited 2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary and

preference

100

Newcastle Cinema 2 Limited 2nd Floor, The Le Gallais Building, 54 Bath

Street, St Helier, Channel Islands, JE2 1FW

Cinema operations Ordinary 100

Cineworld South East

CinemasLimited

8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant holding

company

Ordinary 100

Cineworld Elite Picture Theatre

(Nottingham) Limited

8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant Ordinary 100

Gallery Cinemas Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant Ordinary 100

Cineworld Cinema

Properties Limited

8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant property

company

Ordinary 100

Newman Online Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Dormant software

development and

provider

Ordinary 100

Picturehouse Bookings Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Ticket booking

operations

Ordinary 100

Picturehouse Entertainment

Limited

8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Film distribution Ordinary 100

City Screen (SOA) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

CS (Exeter) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

170

Registered office Principal activity Class

% of shares

held

City Screen (Stratford) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

City Screen (York) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

City Screen (Liverpool) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

CS (Brixton) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

CS (Norwich) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

City Screen (Brighton) Limited 8th Floor, Vantage London,

Great West Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

Cinema City Finance (2017) B.V PO Box 1370 NL-3000 BJ Rotterdam

The Netherlands

Financing company Ordinary 100

Seracus Limited 75 Prodromou Avenue, 1st Floor, Office

101 Strovolos, Nicosia 2063 Cyprus

Holding company Ordinary 100

I.T. Planet Advertising Ltd 91 Medinat Hayehudim, Herzelia, Israel Dormant Ordinary 100

Norma Film Limited 91 Medinat Hayehudim, Herzelia, Israel Cinema operations Ordinary 100

Cinema Theatres Limited 91 Medinat Hayehudim, Herzelia, Israel Cinema operations Ordinary 100

Cinema-Phone Limited 18 Haneviim, Haifa, Israel Cinema operations Ordinary 100

Forum Film Limited 91 Medinat Hayehudim, Herzelia, Israel Cinema operations Ordinary 100

IT Magyar Cinema Moziüzemeltető

és Filmforgalmazó K.F.T.

1132 Budapest, Váci út 22-24 Cinema operations Ordinary 100

Palace Cinemas Hungary K.F.T. 1132 Budapest, Váci út 22-24 Cinema operations Ordinary 100

Forum Hungary K.F.T. 1132 Budapest, Váci út 22-24 Cinema operations Ordinary 100

New Age Cinema K.F.T. 1132 Budapest, Váci út 22-24 Advertising Ordinary 100

Cinema City Romania SRL 13 Ana Davila street, Sector 5,

Bucharest 050491, Romania

Cinema operations Ordinary 100

Forum Film Romania SRL 13 Ana Davila street, Sector 5,

Bucharest 050491, Romania

Film distribution Ordinary 100

New Age Media Romania SRL 13 Ana Davila street, sector 5,

Bucharest 050491, Romania

Cinema operations Ordinary 100

Cinema City Bulgaria EOOD 45 Bregalnitza Str, 5 floor

Vazrajdane Region Sofia 1303, Bulgaria

Cinema operations Ordinary 100

Forum Film Bulgaria EOOD 45 Bregalnitza Str, 4 floor

Vazrajdane Region Sofia 1303, Bulgaria

Film distribution Ordinary 100

Cinema City Czech s.r.o. Arkalycká 951/3, 149 00 Praha 4,

Czech Republic

Cinema operations Ordinary 100

Forum Film Czech s.r.o. Arkalycká 951/3, 149 00 Praha 4,

Czech Republic

Film distribution Ordinary 100

Cinema City Cinemas sp.Zoo UL. Fosa 37 02-768 Warszawa Poland Group services Ordinary 100

All Job Poland sp.Zoo Woloska 12 02-675 Warszawa, Poland Cinema operations Ordinary 100

I.T. Poland Development

2003 sp. Zoo

UL.Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

New Age Media sp. Zoo UL. Powsińska 31 02-903

Warszawa Poland

Advertising Ordinary 100

Cinema City Poland sp. Zoo

CC spolka komandytowa.

UL. Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

Cinema City Poland CC sp. Zoo UL. Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

Forum Film Poland CC Sp. Zoo Woloska 12 02-675 Warszawa, Poland Film distribution Ordinary 100

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

171

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

Registered office Principal activity Class

% of shares

held

Job & Services sp. Zoo UL. Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

New Cinemas Sp. Zoo UL. Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

JOB4YOU Sp z o.o UL. Fosa 37 02-768 Warszawa Poland Cinema operations Ordinary 100

Cinema City Slovakia s.r.o. Einsteinova 20, 851 01 Bratislava, Slovakia Cinema operations Ordinary 100

Forum Film Slovakia s.r.o. Einsteinova 20, 851 01 Bratislava, Slovakia Film distribution Ordinary 100

A 3 Theatres of San Antonio, Ltd 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

A 3 Theatres of Texas, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Cinebarre, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Consolidated Theatres

Management, L.L.C.

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 100

Crown Theatre Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Eastgate Theatre, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Edwards Theatres, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Frederick Plaza Cinemas, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape of Nitro, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape of O’Fallon, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape Theatres, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape Theatres of

Bowling Green, LLC

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape Theatres of

Harrisburg, LLC

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape LaGrange LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 100

Great Escape Theatres of

Lebanon, LLC

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Great Escape Theatres of

New Albany, LLC

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Hollywood Theatres, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Hollywood Theatres III, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Hoyts Cinemas Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Interstate Theatres Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Lois Business Development

Corporation

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

McIntosh Properties LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

172

Registered office Principal activity Class

% of shares

held

Next Generation Network, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 100

Pacific Rim Business

Development Corporation

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Palace Suite, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 100

Ragains Enterprises LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

RAM/UA-KOP, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 50

R.C.Cobb, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

R.C.Cobb II, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

RCI/FSSC, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

RCI/RMS, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal/Cinebarre Holdings, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Cinemas Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Cinemas Holdings, Inc 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal Cinemas, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal Cinemas II, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal CineMedia Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Gift promotions Ordinary 100

Regal CineMedia Holdings, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal/DCIP Holdings, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Distribution, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Film Distribution Ordinary 100

Regal Distribution Holdings, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Entertainment Group 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Entertainment Holdings, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Entertainment

Holdings II, LLC

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Gallery Place, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal Investment Company 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Regal Licensing, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal Paramus Park, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 99

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

173

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

Registered office Principal activity Class

% of shares

held

Regal Stratford, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Richmond I Cinema, L.L.C. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

San Francisco Theatres, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

United Artists Theatre Company 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

United Artists Theatre Circuit, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

United Artists Theatre

Circuit II, Inc.

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

United Artists Realty Company 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema property

leasing

Ordinary 100

United Artists Properties I Corp. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema property

leasing

Ordinary 100

Vogue Realty Company 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema property

leasing

Ordinary 100

United Stonestown Corporation 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

UA Shore LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

UA Swansea. LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Valeene Cinemas LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Wallace Theatre Holdings, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

Wallace Theatres – Guam. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Wallace Theatres – Saipan, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

13th Avenue Partners, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Cinemas Associates, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Oklahoma Warren Theatres II, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Oklahoma Warren Theatres, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal/Atom Holdings, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Holding company Ordinary 100

The Movie Machine, LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Warren Oklahoma Theatres, Inc. 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Restaurant Row Business

Development Corp

101 E. Blount Avenue, Knoxville,

TN 37920, United States

Dormant Ordinary 100

Regal – 18 LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

Regal Realty 17 LLC 101 E. Blount Avenue, Knoxville,

TN 37920, United States

Cinema operations Ordinary 100

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

174

Registered office Principal activity Class

% of shares

held

1232743 B .C .LTD. Suite 2400, 745 Thurlow Street,

Vancouver BC V6E 0C5, Canada

Holding company Ordinary 100

CDD Borrower, LLC 1206 Orange Street, The Corporation

Trust Centre, City of Wilmington, County

of New Castle DE 19801, United States

Cinema operations Ordinary 100

CDD Parent, LLC 1206 Orange Street, The Corporation

Trust Centre, City of Wilmington, County

of New Castle DE 19801, United States

Holding company Ordinary 100

CDD UK Borrower Limited 8th Floor, Vantage London, Great West

Road, Brentford, TW8 9AG

Cinema operations Ordinary 100

CDD UK Parent Limited 8th Floor, Vantage London, Great West

Road, Brentford, TW8 9AG

Holding company Ordinary 100

Crown NL Holdco B.V. Coolsingel 63, 7th floor, 3012 AB

Rotterdam, Netherlands

Cinema operations Ordinary 100

Jointly controlled entities

Digital Cinema Distribution

Coalition, LLC

840 Century Park East Suite 550 Los

Angeles, CA 90067, United States

Film distribution Ordinary 14.6

Digital Cinema Implementation

Partners, LLC

100 Enterprise Drive, Suite 505

Rockaway, New Jersey 07866

Leasing company Ordinary 33.3

Digital Cinema Media Limited 350 Euston Road, London, NW1 3AX Screen Advertising Ordinary 50

Siam UATC Company Limited 101 E. Blount Avenue, Knoxville, TN 37920,

United States

Cinema operations Ordinary 10

United Artist Singapore

Theaters Pte. Ltd

101 E. Blount Avenue, Knoxville, TN 37920,

United States

Cinema operations Ordinary 10

AC JV, LLC 5990 Greenwood Plaza Blvd, Greenwood

Village, CO, United States

Events organisation Ordinary 32

National CineMedia, LLC 6300 South Syracuse Way, Suite 300,

Centennial, CO 80111, United States

Screen Advertising Ordinary 26.1

Black Shrauber Limited Cinema complex, Neomi 4, Jerusalem,

Israel

Restaurant company Ordinary 50

Cinema City Poland Sp. z.o.o, I.T. Poland Development 2003 Sp. z.o.o, Forum Film Poland Sp. z.o.o, New Age Media Sp. z.o.o

and All Job Poland Sp. z.o.o have a statutory year end that is different to that of the Group, being 30 November 2021.

For all group fixed asset investments listed above the % of shares held is also equal to the group’s % of voting rights.

No subsidiary company is exempt from audit by virtue of s479A of Companies Act 2006.

No dormant subsidiary company is exempt from preparing individual accounts by virtue of s394A of Companies Act 2006.

No dormant subsidiary company is exempt from filing with the registrar individual accounts by virtue of s448A of Companies

Act 2006.

32. Investments continued

Fixed asset investments continued

Cineworld Group plc

Annual Report and Accounts 2021

175

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

32. Investments continued

Impairment

The Company holds a direct investment in Crown UK Holdco Limited. The Company determines whether these assets are

impaired when indicators of impairment exist or based on the annual impairment assessment. The annual assessment requires

an estimate of the recoverable amount by reference to the value in use of the Crown UK Holdco Limited.

Where the recoverable amount is less than the carrying value, an impairment charge to reduce the investment to recoverable

amount is recognised.

Estimating the value in use requires the Company to make an estimate of the expected future cash flows from its investment

and discount these to net present value at a pre-tax discount rate.

Crown UK Holdco Limited holds investments within all Group companies either directly or indirectly and therefore the value

in use is based on forecast future cash flows generated by the Group. These forecast cash flows are defined as the Adjusted

EBITDA (see Note 2) and are based on the five-year cash flow forecast of the Group per the Group’s going concern assessment

outlined in Note 1. These cash flows have been extrapolated into perpetuity from 2026 applying a long-term growth rate

of 1%. This growth rate does not exceed the long-term average growth rate for the markets in which Crown UK Holdco

investments operate.

These cash flows are adjusted to take into account the repayment of the Group’s borrowings at 31 December 2021 and future

rental payments beyond the period covered by each current lease.

These cash flows have been discounted at the Group’s weighted average cost of capital of 14.3%.

Based on management’s assessment, the recoverable amount of the Company’s investment was higher than its carrying value

and an therefore no impairment was recognised (2020: $2,509.9m).

In calculating the recoverable amount of the Company’s investment, reference was also made to the fair value less cost of

disposal. It was concluded that the calculated value in use was greater than fair value less cost of disposal and therefore the

recoverable amount was deemed to represent the value in use.

Sensitivity to changes in assumptions

Sensitivities have been applied to the forecast cash flows to assess the potential impact under different scenarios. The scenarios

applied are the severe but plausible scenario set out in Note 1, the upside from sustained increase in ATP and SPP as set out in

note 11, a 1% reduction in long-term growth rates and a 1% increase in discount rate. The results would be as follows:

Additional

impairment/

(reversal)

Long-term growth rates reduced by 1% 522.4

1 percentage point decrease to the discount rate (402.7)

1 percentage point increase to the discount rates 710.9

Upside from sustained increase in ATP and SPP (111.5)

Severe but plausible scenario 1,121.4

33. Trade and other receivables

31 December

2021

31 December

2020

Amounts owed by Group undertakings 781.5 552.3

Expected credit loss (29.5) (20.5)

Total financial assets at amortised cost 752.0 531.8

The amounts owed by Group undertakings are interest free and repayable on demand. The Company has considered if these

loan receivables are impaired and has recognised an expected credit loss of $29.5m (2020: $20.5m) against amounts due from

subsidiary undertakings during the current financial year. The movement in this provision for the year is an expense of $9.0m

(2020: $19.3m expense).

Cineworld Group plc

Annual Report and Accounts 2021

176

34. Trade and other payables

31 December

2021

31 December

2020

Amounts owed to Group undertakings 297.5 240.9

Accruals 1.7 0.5

Total creditors falling due within one year 299.2 241.4

The amounts owed to group undertakings are non-interest bearing and repayable on demand.

Fair values

Fair value disclosures for debtors and creditors have not been prepared on the basis that their carrying amount is a reasonable

approximation to fair value.

35. Derivative financial liabilities

31 December

2021

31 December

2020

Fair value of equity warrants 39.0 97.2

Fair value of convertible bonds option 6.3 –

Total fair value of financial derivatives 45.3 97.2

Derivative financial liabilities held by the Company at 31 December 2021 relate to convertible bonds issued in the year and

equity warrants issued in the prior year, as set out in Note 19 of the Group Consolidated Financial Statements.

Fair value disclosures in relation to both the convertible bonds and equity warrants have been prepared in Note 26 of the Group

Consolidated Financial Statements.

36. Loans and Borrowings

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings.

31 December

2021

31 December

2020

Non-current liabilities

Convertible Bonds 189.8 –

Total non-current liabilities 189.8 –

The terms and conditions of outstanding loans were as follows:

31 December 2021 31 December 2020

Currency Nominal interest rate

Year of

maturity

Face value

Carrying

amount

Face value

Carrying

amount

Convertible Bonds USD 7.50% 2025 213.0 189.8 – –

Total interest-bearing liabilities 213.0 189.8 – –

Convertible Bond

On 16 April 2021, the Group raised additional funding by issuing Convertible Bonds which are convertible into equity shares

of Cineworld Group Plc. The bonds have principal amount of $213.0m and were issued at a 1% original issuance discount with

a 4-year maturity. The Convertible Bonds are denominated into units of $200,000 each and the Investors have an option to

convert each unit into ordinary shares of the Group at a conversion price of $1.762 (the ‘Conversion Price’) per unit. The Group

recognised a separate derivative liability in respect to the conversion feature with an initial value of $27.8m. Directly attributable

fees of $1.2m were incurred in connection with raising the facility. The initial carrying value of the amortised cost debt

component of the bonds was $181.9m. At 31 December 2021, the derivative liability was valued at $6.3m.

The mechanism for issuing this convertible bond has resulted in this loan being recognised as an amount owed to group

undertakings and is considered a ‘back to back’ loan i.e. the lender has recognised external borrowings on the same terms.

Cineworld Group plc

Annual Report and Accounts 2021

177

Strategic Report Corporate Governance Financial Statements

NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED

37. Share-Based Payments

A share-based payment charge of $5.9m (2020: credit of $2.3m) was recognised within profit and loss of the Company during

the year in relation to the Company’s Directors portion of the Group share options and share plans. Further details of these

share options and plans are outlined in Note 23 of the Consolidated Financial Statements.

38. Capital and Reserves

Called up share capital

31 December

2021

31 December

2020

Allotted, called up and fully paid 20.1 20.1

1,372,995,448 (2020: 1,372,797,489) ordinary shares of £0.01 each.

197,959 shares were issued during the year on vesting of the 2018 PSP plan as outlined within Note 23.

Foreign currency translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of the

Company from its functional currency of GBP to its presentational currency of USD.

Dividends

The Directors have not (2020: same) approved or proposed a dividend for the year ended 31 December 2021.

Further information on dividends paid for the current financial year are outlined within Note 25 of the Group Consolidated

Financial Statements.

39. Capital management

Details of the Company’s and Group’s capital management is outlined within Note 26 of the Group Consolidated

Financial Statements.

40. Commitments, Pension Commitments, Guarantees And Contingencies

The Company had no contractual commitments, pension commitments, guarantees or contingencies at 31 December 2021

(2020: $Nil).

Cineworld Group plc

Annual Report and Accounts 2021

178

SHAREHOLDER INFORMATION

AS AT 31 DECEMBER 2021

Directors

Alicja Kornasiewicz (Non-Executive Chair)

Moshe Greidinger (Chief Executive Officer)

Israel Greidinger (Deputy Chief Executive Officer)

Nisan Cohen (Chief Financial Officer)

Renana Teperberg (Chief Commercial Officer)

Dean Moore (Non-Executive Director and Senior Independent Director)

Camela Galano (Non-Executive Director)

Scott Rosenblum (Non-Executive Director)

Arni Samuelsson (Non-Executive Director)

Damian Sanders (Non-Executive Director)

Ashley Steel (Non-Executive Director)

Registered & Head Office

8th Floor

Vantage London

Great West Road

Brentford

TW8 9AG

Telephone Number

020 8987 5000

Website

www.cineworldplc.com

Place of Incorporation

England and Wales

Company Number

Registered Number: 5212407

Independent Auditors

PricewaterhouseCoopers LLP

1 Embankment Place

Charing Cross

London

WC2N 6RH

Joint Brokers

Investec Bank plc Goldman Sachs International

2 Gresham Street Plumtree Court, 25 Shoe Lane

London London

EC2V 7QP EC4A 4AU

Legal Advisers to the Company

Slaughter and May

1 Bunhill Row

London

EC1Y 8YY

Cineworld Group plc

Annual Report and Accounts 2021

179

Strategic Report Corporate Governance Financial Statements

NOTES

Cineworld Group plc

Annual Report and Accounts 2021

180

Cineworld Group plc

8th Floor

Vantage London

Great West Road

Brentford TW8 9AG

020 8987 5000

www.cineworldplc.com

Cineworld Group plc Annual Report and Accounts 2021