CinemaONE incurs $3.5m loss, hopeful of reopening for new movies

The patronage of moviegoers to see action thrillers Godzilla vs King Kong and Mortal Kombat early in April could not save CinemaONE theatres from a $3.5 million loss.

Chairman Brian Jahra, in CinemaONE's financial results for the nine-month period ending June 30, 2021, said the continuing lockdown on cinemas setback operations which were even hampered during openings by restrictions of a 50 per cent seating capacity, and on alcohol consumption, and at the time, a 10 pm closure. These conditions preceded the state of emergency implemented in May.

"In this context of a materially distorted operating environment, for the period ended June 30, 2021, net revenue was $2.2 million (2020: $5.8 million), gross profit was $1.5 million (2020: $3.9 million) and net (loss) was $3.5 million) (2020: ($1.9 million)," Jahra reported.

He said CinemaONE was encouraged by the performance for Godzilla vs King Kong for the first two weeks of the third quarter and persistent audience demand for Mortal Kombat, when restrictions on food and beverage consumption on cinema premises were implemented.

"CinemaONE initiated the the third quarter period in April with the the following results:

• monthly attendance for the second consecutive month exceeded 3,000 with 3,777

(3,000 is a historical company benchmark for a low attendance month)

• YTD attendance was just below 12,000 patrons

• YTD per capita total spend (ticket spend + food and beverage spend) was on par with historical average despite the mid-April constraint on consumption on premises."

At the onset of the recent third lockdown, CinemaONE refocused on cash preservation and liquidity actions," Jahra stated.

"By reducing cash outlays and limiting the erosion of net working capital to -15 per cent with a period closing net working capital balance of $4.1 million (2020 $4.8 million), the company is positioned to sustain a protracted theatre closure period."

However, Jahra was hopeful of a reopening of the entertainment sector as the government's vaccination drive continues and more movie releases in the coming months.

"CinemaONE notes the promising local acceleration of the covid19 vaccine programme and the strong pipeline of compelling Hollywood international releases which are currently being distributed worldwide as approximately 80 per cent of global cinemas have reopened. The company is managing for readiness to immediately capitalise on upcoming September and October releases such as Disney’s Shang Chi, Sony’s Venom, and MGM/Amazon’s James Bond action thriller No Time to Die, along with the best selection of current summer blockbusters which are propelling the global cinema rebound."