Cineworld Group today reported its first-ever annual operating loss with the figure dropping over $2.98B in 2020 as compared to 2019. The previous year had seen profits of $724.7M while the period ended December 31, 2020 was at a negative $2,257.7M. The results were severely impacted by the Covid pandemic which forced the group to shutter its cinemas beginning in March 2020 with intermittent reopenings until all venues were closed again in October and November and remain so today. Revenues for the year were $852.3M versus $4.37B in 2019.
On the positive side 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. 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.“
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 last year’s financials, 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.”