UPDATE, writethru with more detail: Cineworld Group today reported a $2.258B operating loss for the year ended December 31, 2020. This is the company’s first-ever annual profit loss and includes asset impairments of $1.34B as the exhibition industry has been severely impacted by the Covid pandemic. The figure compares to profits of $724.7M in 2019.
The world’s second largest exhibitor shuttered its cinemas beginning in March 2020 with intermittent reopenings until all 767 venues were closed again in October/November and remain so today. Total admissions for the Regal parent were down 80% to 54M in 2020.
Revenues for the year were $852.3M versus $4.37B in 2019 and net loss after tax was $2.65B. Cineworld shares were hovering around a drop of 8% in early morning London trading.
In its earnings report today, Cineworld said it had a binding commitment from a group of institutional investors for a new $213M convertible bond due 2025. Across 2020, the group raised $810.8M of additional liquidity, including issuance of equity warrants, and today said it will seek shareholder approval to temporarily suspend its borrowing limit.
As we reported earlier this week, Cineworld plans to reopen its Regal sites in the U.S. beginning on April 2, and on May 17 in the UK. The company’s so-called base case scenario expects admissions to reach 60% of 2019 levels in May this year, with a return to 90% of comparable periods in 2019 by the end of the year. Admissions are then forecast to remain on average 10% below 2019 levels throughout 2022 and 5% below through 2023.
CEO Mooky Greidinger noted today, “While short-term uncertainty remains, we have taken decisive actions to enable the Group to withstand the challenges presented… We are well positioned to recover and reopen our cinemas when restrictions are eased and a pipeline of incredible content is in place… There is clear evidence that consumer demand for cinemas remains strong, and due to the long-term investment in our estate, which boasts high quality cinemas with the latest technology, we are well placed to leverage the market opportunities available to us over the medium to long term.“
In other financials, Cineworld said it had reduced its monthly cash burn to $60M per month when cinemas were closed and that its capital expenditure during 2020 was $277M as some ongoing refurbishments and new builds continued through the crisis. It expects that figure to be $150M in 2021.
Greidinger added, “Our financial strategy continues to be focused on minimizing cash burn and ensuring the business has sufficient liquidity throughout the closure period. However, we also remain focused on our long-term objective of debt reduction through cash flow generation and cost optimization. In 2020, we raised over $800M of liquidity and accelerated our tax year closure to bring forward an expected tax refund of over $200M under the United States CARES Act, which we expect to receive by April 2021.”
Under the current reopening scenario, the group has sufficient headroom for 2021 and beyond, it said. However, as it similarly noted when reporting financials last year, the company said factors “indicate the existence of material uncertainties that may cast significant doubt upon the group’s and company’s ability to continue to operate as a going concern.”