24th Sep 2020 08:47
(Alliance News) - Shares plunged in Cineworld Group PLC on Thursday after it reported a sharp swing to loss for the first half of 2020, as revenue was severely hit by the Covid-19 pandemic.
Shares in the cinema chain were 15% lower at 41.11 pence on Thursday in London, the worst performer in the FTSE 250 index. Cineworld's shares have fallen by 81% in value in 2020 to date.
For the six months to the end of June, Cineworld reported a pretax loss of USD1.64 billion, compared to a profit of USD139.7 million the year before. Adjusted earnings before interest, taxes, depreciation and amortisation fell by 93% year-on-year to USD53.0 million from USD758.6 million.
This was on revenue that declined by 67% to USD712.4 million from USD2.15 billion, as admissions dropped by 65% to 47.5 million from 136.0 million. From late March to late June, all of Cineworld's sites were closed.
To date, 561 out of 778 sites have been reopened, but 200 in the US, six in the UK and 11 in Israel remain closed. In the US, the majority of sites closed are in California and New York.
During the period, Cineworld raised USD360.8 million in additional liquidity, and looking ahead said it can continue operating in the level of its current facilities for at least 12 months.
Currently, the group has had a steady performance from reopened sites in Rest of World territories, as well as an admission build up in the UK and US from new releases such as Tenet and smaller, more local films.
However, Cineworld added: "There can be no certainty as to the future impact of Covid-19 on the group. If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity."
Cineworld said negotiations with banks remain ongoing in order to secure covenant waivers in respect of December 2020 and June 2021.
Under a 'going concern' section of the results report, it was noted: "The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level of its current facilities for at least 12 months from the approval date of these interim consolidated financial statements, however the covenants are forecast to be breached at 30 December 2020, 30 June 2021 and 31 December 2021."
The directors expect waivers will be obtained.
"Despite the difficult events of the last few months, we have been delighted by the return of global audiences to our cinemas toward the end of the first half, as well as by the positive customer feedback we have received from those that have waited patiently to see a movie on the big screen again," said Chief Executive Officer Mooky Greidinger.
"Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema - with high quality screens and best-in-class sounds - to watching it at home. As part of this, our policy regarding the theatrical window remains unchanged as an important part of our business model, and we will continue to only show movies that respect it," Greidinger added.
By Dayo Laniyan; [email protected]
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