Kinepolis limits cash burn in 2020 and maintains a solid financial basis throughout the Covid-19 crisis

Kinepolis Group
·4 min read

Kinepolis limits cash burn in 2020 and maintains a solid financial basis throughout the Covid-19 crisis

Regulatory release

25 February 2021, 7 a.m.

After a promising start of the year 2020 for Kinepolis, with a 12.0% increase in visitor numbers up to 12 March, the cinema industry was badly hit by the Covid-19 pandemic, with long periods of cinema closures and restrictive measures as well as repeated postponements of blockbuster movie releases.

As such, Kinepolis welcomed 12.1 million visitors in 2020, compared to initial expectations of more than 45 million visitors. Thanks to strong cost control and various measures that were taken, the EBITDA loss, adjusted for leases (EBITDAL), has been limited to € -14.0 million.

Kinepolis entered the crisis with a conservative debt ratio and a significant liquidity reserve, reinforced by the additional loan of € 80.0 million concluded at the beginning of 2021. Strong cost management, supported by the Group's significant real estate position, ensures that Kinepolis can confidently navigate through the crisis and can continue to cope with the negative effects of the Covid-19 pandemic for a considerable period of time. The Group had € 171.0 million of financial headroom at the start of 2021.

In recent months, management has focused on further consolidating its business strategy, resulting in a plan - called ‘Entrepreneurship 2022’ - which, based on further optimisation measures and innovation, should provide maximum support for the restart and performance of the Group from 2022 on. The construction of various new-build projects was also continued in the past year, and these new cinemas will also help support the restart.

Important achievements in 2020

  • Mainly thanks to strong cost management, the cash burn as a result of the Covid crisis was limited to € 32.1 million in 2020 (excluding working capital impact).

  • An additional bullet loan of € 80.0 million, with a term of 3 years, combined with an extension of the covenant holiday until 30 June 2022.

  • Development of the ‘Entrepreneurship 2022’ plans, in further execution of the Kinepolis business strategy.

  • Continuation and completion of various new construction projects: Kinepolis Haarlem (NL), Leidschendam (NL), Metz Waves (FR) and Edmonton Tamarack (CA)

  • Various new initiatives in the context of Covid-19, including ‘Kinepolis on Tour’, a home delivery service and a ‘private cinema’ concept.

Key figures for 2020 as compared to 2019

  • Kinepolis welcomed 12.1 million visitors in 2020 due to the repeated closures of the cinemas from mid-March, the safety measures that were imposed and the postponement of blockbusters.

  • The total revenue per visitor also increased during 2020.

  • Thanks to the cost measures taken, the EBITDAL, i.e. EBITDA adjusted for leases, was only € -14.0 million.

  • The net result amounted to € -69.1 million, mainly due to the high depreciations related to the significant real estate position of the Group.

  • Free cash flow amounted to € -56.5 million for the full year. Without taking the working capital loss into account, the free cash flow was limited to just € -3.6 million per month in the second half of the year.

  • The net financial debt, excluding lease liabilities, compared to 31 December 2019, increased from € 417.0 million to € 513.3 million, mainly due to the negative free cash flow combined with investments in the construction of new complexes.

  • In view of the result and the current circumstances, a proposal will be made to the General Meeting not to distribute a dividend for the 2020 financial year.

Eddy Duquenne, CEO of Kinepolis Group, about the results for 2020:

“Financially, Kinepolis is still in a very strong position. Our net financial debt has only increased by € 96.3 million. This includes nearly € 40 million in investments in expansion. This debt also includes a working capital loss of € 24.3 million due to the discontinuation of our activities, which we will recover when we restart our cinemas. This means that our actual cash burn in 2020 was only € 32.1 million, something we can be proud of in the circumstances. With a liquidity reserve of € 171.0 million at the start of this year, Kinepolis can stand firm for quite some time and we can say with certainty that our company will survive this crisis.

Everyone is waiting for the reopening of the cinemas. Both the US studios, who continue to postpone their blockbusters because of the importance of cinemas in the life cycle of a film, and our customers, who need to be able to relax away from home. And our employees, who have been unemployed for a long time, are also eager to get back into action. We are convinced that we can reopen safely and thereby contribute to everyone's well-being. In the meantime, we are continuing to prepare for the future with our ‘Entrepreneurship 2022’ plans."

Full report annual results 2020 attached.

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