Kinepolis Remains Financially Solid Despite Prolonged Closures and Looks Forward to Reopening Cinemas

(April 29, 2021) – In the first quarter of 2021, only the American MJR cinemas and a number of Spanish cinemas were open for all three months. The Kinepolis cinemas in Luxembourg were able to welcome visitors again from 13 January and all Spanish Kinepolis cinemas were open again on 26 March. Of the 46 Landmark complexes in Canada, only 2 to 5 cinemas were open during the first quarter. All cinemas in Belgium, the Netherlands, France and Switzerland remained closed throughout the first quarter. Kinepolis Schaffhausen, the Kinepolis complex in Switzerland, reopened its doors on 19 April.

In the countries where the cinemas are open to the public, the operation is subject to capacity restrictions and other health protection measures. These obviously have a direct impact on cinema attendance, which is further impacted by the worldwide market situation that is causing constant postponement of major film releases.

In this context, which resulted in only 0.4 million visitors in the first quarter, Kinepolis is continuing to optimally manage its cash burn. These efforts, combined with an additional loan of € 80.0 million, ensure that Kinepolis retains sufficient financial resources to bridge the gap for a considerable period to come, even in a full closure scenario.

Over the coming months, Kinepolis will maintain its focus on cash management, on reopening its cinemas and on the future performance of the Group. With these goals in mind, Kinepolis will continue working on the development and implementation of new ideas and optimisations. In the first quarter, Kinepolis also finalised three new construction projects, namely in the Netherlands, France and Canada. These cinemas are ready to open their doors as soon as the Covid-19 measures in the countries concerned allow it.

Key figures first quarter 2021
– Due to most cinemas having to keep their doors closed, Kinepolis received only 0.4 million visitors in the first quarter, or 5.0% of visitors compared to the same period last year.
– Total revenue decreased less sharply than the number of visitors in all countries.
– EBITDA was negative, although the impact has been limited thanks to the cost control measures taken.
– The net result was negative due to the negative operating result, depreciations and financial costs, somewhat offset by the tax impact.
– Normalised free cash flow, excluding working capital impact, amounted to € -4.7 million per month in the first quarter.
– The net financial debt compared to 31 December 2020, excluding lease liabilities, increased from € 513.3 million to € 539.6 million.
– At the end of March 2021, available financial resources amounted to € 144.5 million.

Important achievements
– The normalised free cash flow (excluding working capital impact) during the first quarter was limited to € -4.7 million per month thanks to strong cost management.
– An additional 3-year bullet loan of € 80.0 million was concluded, in combination with an extension of the covenant holiday until 30 June 2022.
– Completion of new construction projects Kinepolis Leidschendam (NL), Landmark Edmonton Tamarack (CA) and Kinepolis Metz Waves (FR).
– Start-up and/or continuation of new initiatives such as the home delivery service of cinema snacks, ‘Kinepolis Privé’, ‘Kinepolis on Tour’ and a streaming studio for hybrid corporate events.

Eddy Duquenne, CEO Kinepolis Group: “Kinepolis is today still in a strong financial position. The first quarter is characterised by more closures than in the last months of 2020, and in that context we are managing to limit the cash loss to € -4.7 million per month. Moreover, by taking out a new € 80 million loan earlier this year, we have created additional relief, resulting in € 144.5 million in available financial resources at the end of March.

We are looking forward impatiently to the reopening of our cinemas and to a cinema visit without any restrictions. The hunger of movie lovers is illustrated by the current success of ‘Godzilla vs. Kong’, a film that people really want to see on the big screen, and the American film studios are continuing to delay their major blockbusters in anticipation of a wide-scale cinema release. Our teams are more than ready to provide customers with the ultimate movie experience as before.”

Notes
In the first quarter, Kinepolis welcomed 0.4 million visitors, barely 5.0% of visitor numbers during the same period last year, due to most cinemas remaining closed for the entire quarter as a consequence of Covid-19 measures imposed by local and national governments. In cinemas that were open, we recorded 25 to 30% of the normal (pre-Covid) attendance, which is actually encouraging considering the lack of content and the far-reaching safety measures.

The top 5 films in the first quarter of 2021 were ‘The Croods: A New Age’, ‘Tom and Jerry’, ‘Wonder Woman 1984’, ‘Raya and the Last Dragon’ and ‘Godzilla vs. Kong’. The most successful local films were ‘Hasta el cielo’ in Spain and ‘Gott, du kannst ein Arsch sein’ in Luxembourg.

Total revenue decreased less sharply than the number of visitors, mainly due to a smaller decline in revenue from concessions (rental of commercial space) and film distribution.

Revenue per visitor from ticket sales (Box Office) showed a slight drop, mainly because of the country mix and lower sales of 3D and premium experiences due to the lack of blockbusters. Revenue per visitor from beverage and snack sales (In-theatre Sales) increased because of the country mix dominated by the US, with above-average ITS consumption.

Revenue from B2B activities and screen advertising continued to be strongly impacted by the Covid-19 pandemic, as most complexes were closed.

Revenue from real estate activities was also under pressure due to the severe impact of the Covid-19 crisis on the hospitality industry.

EBITDA was negative, but the impact was partly offset by the cost control measures taken. Costs fell by nearly half in the first quarter of 2021, compared to the same period the year before.

Free cash flow excluding working capital was € -19.5 million in the first quarter. Not taking into consideration a number of one-off annual payments in January and February, the cash burn, again excluding working capital impact, amounted to € -4.7 million per month. This is substantially lower than the calculated cash loss in a fully closed situation (€ -5.8 million per month).

Kinepolis invested a total of € 4.4 million in the first quarter, of which € 4.0 million in new construction projects and internal expansion and € 0.4 million in maintenance.

The net financial debt compared to 31 December 2020, excluding lease liabilities, increased from € 513.3 million to € 539.6 million. This is due to the negative free cash flow combined with the investments in the construction of new complexes.

Covid-19 impact and measures
The strategy and nature of the company, characterised by maximum variability of costs, a solid real estate position, with a large proportion of cinema real estate being owned, a decentralised organisation and a corporate culture driven by facts and figures, have all helped Kinepolis Group to manage this crisis optimally and mitigate its impact.

Kinepolis continues to take measures to further reduce the impact on all cost levels, including fixed costs and cash outflows. All investments that were not urgent or for which no commitments had been made were stopped. Ongoing investments in new construction projects, for which a commitment was already made, continue as planned.

Kinepolis still had € 144.5 million in cash and unused available credit lines as at the end of March 2021, partly attributable to an additional € 80.0 million loan taken out at the start of this year. This means that Kinepolis has ample liquidity to cope with this crisis for a considerable period of time. In recent years, Kinepolis has pursued a prudent financial policy. This has resulted in the average term of more than four years of its outstanding financial liabilities. The next significant repayment of its bonds will not take place until January 2022. Kinepolis also has a strong and healthy balance sheet with an important real estate portfolio.

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About Kinepolis
Kinepolis Group NV was formed in 1997 as a result of the merger of two family-run cinema groups and was listed on the stock exchange in 1998. Kinepolis offers an innovative cinema concept which serves as a pioneering model within the industry. In addition to its cinema business, the Group is also active in film distribution, event organization, screen publicity and property management. In Europe, Kinepolis Group NV has 58 cinemas spread across Belgium, the Netherlands, France, Spain, Luxembourg, Switzerland and Poland. Since the acquisition of Canadian movie theatre group Landmark Cinemas and American movie theatre group MJR Digital Cinemas, Kinepolis also operates 46 cinemas in Canada and 10 in the US.

In total, Kinepolis Group currently operates 114 cinemas worldwide, with a total of 1,106 screens and almost 200,000 seats. Kinepolis’ employees are all committed to giving millions of visitors an unforgettable movie experience. More information on www.kinepolis.com/corporate.

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