The UK’s largest cinema chain has announced a record £2.2billion pre-tax loss but is predicting a strong recovery when it reopens venues saying there is huge pent-up demand.
Cineworld Group Plc said the global pandemic has significantly impacted its industry with all its 767 sites worldwide temporarily closed from mid-March 2020.
This meant group revenue fell to US$852.3million, about £622.5million, from 2019’s US$4.369billion. And this led to a pre-tax loss of US$3billion, about £2.2billion, down from a profit of US$212million pre-pandemic.
The firm’s preliminary results for the year ended December 31, 2020, presented in US dollars, revealed the period was “severely impacted by closures”.
But the company is aiming to re-open in the US from April 2, 2021, and in the UK from May 17, followed by its outlets worldwide, including Ireland, Israel and Poland.
It said the appetite for movies shown in countries such as Australia, China and Japan, where cinemas are already open, shows the future looks bright.
Cineworld has 127 UK venues in lacations such as London, Glasgow, Middlesbrough, Bolton, St Helens, Newcastle, Bristol, Newport, Birmingham, Hull and Plymouth, where it only opened in the city centre’s £53million Barcode development in late 2019.
But Cineworld forecasts a powerful comeback and said it is supported by “a strong pipeline of movies and current indication that Government restrictions will be lifted.”
A statement to investors said there is “strong pent-up demand for affordable out-of-home entertainment anticipated post re-opening due to the Covid-19 pandemic as indicated by the theatrical industry performing well in re-opened markets such as China, Japan and Australia.”
But it warned: “here can be no certainty as to the future impact of Covid-19 on the Group. Governments strengthening of restrictions on social gathering may lead to closure of cinemas or studios delaying movie releases.
“This would have a negative impact on the group’s financial performance and likely require the need to raise additional liquidity.”
Cineworld has already raised US $810.8million (£592,5million) in additional liquidity and has now announced binding commitments from institutional investors for a new US$213million (£155.7million) convertible bond due in 2025.
It is also asking shareholders for permission to waive borrowing limits, allowing it to build more debt to see it through the pandemic.
The company said its main priorities have been the safety of customers and employees, liquidity, cash preservation and costs reduction.
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Alicja Kornasiewicz, chair of Cineworld, said: “The group has demonstrated resilience through what has been a very difficult year and I am extremely proud of the commitment our colleagues have shown during these exceptional times.
“Despite the significant challenges that Covid-19 continues to present, we look forward to reopening cinemas worldwide and welcoming our guests.”
Mooky Greidinger, chief executive of Cineworld, said: “For all of us across the world, this has been an incredibly challenging year. Covid-19 has created a huge amount of stress and uncertainty, both in business and in our personal lives.
“At Cineworld, I never imagined a time that we would see the closure of our entire cinema estate, nor that varying restrictions would remain in place for so long as we continue to navigate our way through this crisis. I am immensely proud and inspired by the response of our people to these very difficult circumstances.
“We have worked hard to strengthen the long-term prospects of the business and, looking forward, Cineworld enters 2021 confident about the next chapter in our development; not least the intention to reopen our cinemas starting April 2.”