Brief Commercial Analysis
Cine World is one of the largest movie theater and cinema operators not only in its home country, the United Kingdom, but also in Europe. Specifically, it is the second largest in its industry, in terms of sales volume, net income, and number of branches. It owns several chains and brands of cinemas, the biggest of which would be Picture House Cinemas with 24 branches and Cine World Cinemas with 82 branches. All in all, however, the company has more than 800 branches, with some of its newest screens being opened in foreign European countries like Jersey and Ireland.
The first Cine World branch was established in Hertfordshire in July of 1996, mainly as a result of the increasing appetite of the consumer market for public film screenings. The establishment of the first branch was a huge success both financially and operationally. This encouraged the management team of the company to open up its second branch in Wakefield, Yorkshire a year later. The company experienced tremendous success and later on started a nationwide expansion program. Fast forward to today, the company now owns and operates more than 800 branches across Europe.
Cine World’s success is mainly a result of the success of the movie industry. With the hobby of watching movies, either with friends and family members, or alone, becoming more popular than ever (i.e. leading to an exponential increase in market size) and the rapid and continuous release of mainstream movies, Cine World’s growth was only natural. This perfectly describes the company’s business model and corporate strategy.
Description and Critical Evaluation
Communication Strategies and Incremental Impression Management
The company, Cine World, employs a comprehensive strategy when it comes to the task of communicating with its stakeholders—i.e. management team members, employees, customers, business partners, investors, and members of the community.
It has to be noted that Cine World is a publicly listed company under the FTSE, which is basically an index or a collection of companies that are listed on the London (i.e. United Kingdom) Stock Exchange. In the case of Cine World, being listed as one of the components of FTSE only means that it is one of the companies listed in the exchange that have the highest market capitalization (an indicator of market value obtained by multiplying the company’s outstanding number of shares to its current share price).
Being a publicly listed company requires the company to follow a strict set of rules when it comes to communicating both material and immaterial information to the public, especially those that can potentially affect the investment outcomes of investors or those that can have a direct effect on the movement of its stock price. In general, the same is true for all publicly listed company not only in the UK but also in foreign bourses.
The company communicates with its stakeholders in a variety of ways. They do it via their website which can be found in cineworldplc.com. Their site contains all forms of information about the company and is by far the most comprehensive source of information for anyone who wants to know the basic up to the most advanced information about the company. From information such as the history and early beginnings of the company down to the more technical ones such as the company’s financial performance within a certain period, all of these can be found in their website.
In this case, the author of this paper shall focus more on analyzing a specific communication document published by Cine World, its Annual Financial Report for the year 2014 (i.e. the latest since annual reports for the entire year 2015 often gets published by the end of the first quarter of 2016). The company’s annual report is a public document that is addressed to the company’s stakeholders. Arguably though, the contents of the said document would make it seem that the company’s investors are the real target audience. The report would prove to be more lay people and customer-friendly after removing the investment and accounting jargons (e.g. statement of income, statement of assets, and so on), a move which is not entirely impossible but highly unlikely.
Other means of communication that the company uses include press releases in news televisions, sites, and print mediums (e.g. newspapers). All in all, the company, considering its business model, is on par with what other companies of its size and stature are doing as far as business and accounting communication and impression management strategies are concerned.
Rationale for Managerial Choices
The management’s choice in the past fiscal years, as far as financial communication is concerned, can be deducted into two words: public relations. It can be argued that the company is trying to prop up its public relations standing in order to attract more investors. Being able to attract more investors would allow the company to gather a bigger volume of funds that it could then use to finance further expansion plans and programs.
This is a typical move for a company that is struggling to grow its portfolio of revenue-generating assets—a perfect example of which would be Cine World, whose net income, based on their annual financial reports, has been growing flatly or in a not so attractive pace. One of the manifestations and evidences of this assumption would be the time, effort, and idea that they put into their financial communication channels, i.e. their annual financial report. This can be seen as a perfectly fitting rationale for managerial choices as far as their grand financial communication strategy is concerned.
Likely Impact on Recipient
For this part, the author will focus more on the impact of such acts and rationales on the investors since most, if not all, annual reports are drafted with them in the corporations’ minds. The likely impact of Cine World’s moves on the investors would most likely be positive. Investors are humans too.
Although they would be fine if all that they can see in the ARs would be plain texts, graphs, and numbers, with no traces of multimedia elements and components, they would certainly notice and appreciate the effort that the company puts in making their annual financial reports more aesthetically pleasing and fun and easier to read.
A perfect example of that would be Cine World because so far, their AR2014 document is pleasing to the eyes. It is one that fits the class definition of what an AR should look like—an evolution of an accounting tool. In Cine World’s case, its AR tells the entire story about the company, from its inception to how it is currently performing now.
With the addition of sections like message to the company’s stakeholders, recipients of this document may even be able to predict or have a glimpse of what the company would look like a few years from now .
In-depth Analysis of a Financial Communication Issue of your Choice (section chosen: financial statement section, on the aspect of presentation of graphs, tables, and etc.)
The analysis in this section is hinged on the assumption (based on class discussions) that the annual financial report of a company is an evolved form of financial community strategy that started with just a mere presentation of financial information to a more multimedia-centered experience for an organization’s stakeholders. In this case, the management team’s choice, based on the company’s AR2014, was a good one, overall.
Firstly, it contains all the vital information that all stakeholder groups expect from an annual report. For the company investors (both current and prospective) for example, the consolidated statement of profit or loss, of comprehensive income, financial position, changes in equity, and cash flows, among other most commonly viewed financial records are all there.
For the company’s employees, business partners, and other stakeholder groups, the company’s strategic business and corporate governance reports are all there for them to read. In terms of the multimedia aspect, the author of this paper would like to highlight the fact that Cine World is a company that since the day of its inception has hinged its success on the growth of a multimedia-related industry (i.e. the movie industry) and so it would only be reasonable to expect a creative annual report from them as far as the objective of being able to present both qualitative and quantitative data to their stakeholders is concerned. In that aspect, the people in charge of the presentation and release of the company’s annual financial report for the year 2014 did a superb job. Sure, the report was not futuristic but it directly communicated to the potential readers what type of company Cine World ought to be, both qualitatively and quantitatively.
Since it is a generally accepted truth that annual financial reports are released for investors to read, it makes sense to focus more on analyzing sections that are pertinent to them—in this case, the statement of income . In the beginning of the section where all financial statements were presented, there were both tables and graphs. Now, traditionally, such sections only contain tables and no graphs.
Then again, as mentioned in class discussions and other sources used in the module, an annual report or any financial communication method or tool for that matter should be more than just a collection of quantitative and qualitative information about the company—mainly because it has already evolved.
In Cine World’s case, they were able to include a lot of creative aspects and ideas in their report. It is important to note that these are not just senseless additions to their annual report because those added multimedia components actually make it easy for the readers to understand what the numbers in the tables and graphs mean. Ultimately, it makes the act of reading the company’s reports and other financial communication mediums easier and fun at the same time.
Bibliography
CineWorld. 2015. CineWorld Group PLC Annual Financial Report 2014. CineWorld Group PLC, 01-128.
