Financial Performance - Total revenue for the six months ended June 30, 2020, was $6.662 million, a decrease of 88.8% compared to $59.256 million for the same period in 2019[6]. - Gross loss for the same period was $(4.042) million, resulting in a gross loss margin of (60.7%), down from a gross profit margin of 69.3% in 2019[6]. - Net loss for the period was $(35.248) million, representing a net loss margin of (529.1%), compared to a net loss margin of 40.4% in 2019[6]. - Adjusted EBITDA for the six months was $(13.424) million, with an adjusted EBITDA margin of (201.5%), down from 64.2% in the previous year[6]. - Total box office revenue for the period was $7.393 million, a significant decline from $235.959 million in the same period of 2019[6]. - The adjusted loss per share for the period was $(0.10), compared to a profit of $0.07 per share in the same period of 2019[6]. - The company reported a significant increase in costs related to revenue-sharing arrangements, with a cost of $6,586 thousand for revenue-sharing arrangements, reflecting a 1,571.8% increase from the previous year[15]. - The company reported a net cash outflow from operating activities of approximately $3.8 million for the first half of the 2020 fiscal year, compared to a net inflow of $17.1 million in the same period of 2019[63][64]. - The company experienced a pre-tax loss of $21.7 million for the first half of 2020, highlighting the financial impact of operational challenges during this period[64]. - The total comprehensive loss for the period was $40,460 thousand, reflecting a significant increase from the previous year's loss[182]. Revenue Sources - IMAX technology sales and maintenance revenue is not directly linked to box office results, indicating a shift in revenue generation strategy[10]. - IMAX DMR film revenue dropped to $701 thousand, accounting for 10.5% of total revenue, down from $17,921 thousand and 30.2% in the prior year[13]. - IMAX technology network revenue fell by 96.7% from $33.7 million in the first half of the 2019 fiscal year to $1.1 million in the first half of the 2020 fiscal year[26]. - Revenue share arrangements and contingent rents fell by 97.3% from $15.8 million in the first half of the 2019 fiscal year to $0.4 million in the first half of the 2020 fiscal year[29]. - IMAX DMR film gross profit decreased from $15.3 million in the first half of fiscal 2019 to $0.7 million in the first half of fiscal 2020, a decline of 95.6%[47]. - The gross profit from revenue-sharing arrangements turned from a profit of $10.1 million in the first half of fiscal 2019 to a loss of $6.2 million in the first half of fiscal 2020, a decrease of 161.3%[48]. Operational Challenges - The company anticipates ongoing challenges even after theaters reopen, as consumer habits and spending may take time to return to normal[11]. - The impact of COVID-19 led to the closure of approximately 700 IMAX theaters in mainland China, resulting in a significant drop in revenue and operating cash flow[187]. - The company continues to face uncertainties related to the pandemic, which may affect its operational and financial performance in the near future[187]. - The company has implemented significant cash preservation measures, including reducing employee hours and minimizing non-essential capital expenditures, to manage the financial impact of the pandemic[11]. - The company anticipates that the recovery of consumer spending on movies may be delayed, impacting its ability to generate significant box office revenue[187]. Cash Flow and Liquidity - The cash and cash equivalents balance as of June 30, 2020, was $74.1 million, a decrease of $15.3 million from $89.3 million on December 31, 2019, with significant reductions in USD and RMB holdings[61]. - Operating cash flow for the six months ended June 30, 2020, was $(3,819) thousand, a significant decrease from $17,125 thousand in the same period of 2019, reflecting a decline due to the pandemic[183]. - The total cash flow from financing activities was $(8,983) thousand for the six months ended June 30, 2020, compared to $(19,247) thousand in the same period of 2019, showing a reduction in financing outflows[183]. - The company has drawn RMB 1.7 million from its unsecured revolving financing of up to RMB 200 million as of June 30, 2020, with no other bank borrowings or commitments[73]. - The total current liabilities decreased to $40.5 million as of June 30, 2020, from $43.5 million on December 31, 2019, indicating improved liquidity management[60]. Shareholder and Equity Information - The company declared an interim dividend of $0.02 per share for the first half of the 2020 fiscal year, equivalent to approximately HKD 0.155 per share[79]. - The company repurchased a total of 906,400 shares during the six months ended June 30, 2020, with a total expenditure of HKD 11,885,233.59[84]. - As of June 30, 2020, the company's total equity was $211,277 thousand, down from $259,031 thousand as of December 31, 2019, indicating a decrease of approximately 18.4%[182]. - The total number of shares that may be issued under the long-term incentive plan is capped at 35,532,500 shares[156]. - The company has approximately 108 employees, all located in Greater China, and aims to attract and retain talent through its compensation policy[155]. Related Party Transactions - The company engaged in related party transactions with IMAX Corporation, which is considered a related party under the listing rules[93]. - IMAX Shanghai Multimedia and IMAX Corporation entered into a personnel secondment agreement effective from August 11, 2011, lasting 25 years until October 28, 2036[94]. - The maximum annual fee for the personnel secondment agreement is set at $5,800,000 for the fiscal years 2018, 2019, and 2020[96]. - IMAX Corporation received approximately $210,000 under the trademark licensing agreement for the six months ended June 30, 2020[103]. - The company has received exemptions from compliance with certain listing rules regarding related party transactions, including DMR software licensing agreements and equipment supply contracts[146]. Risk Management - The group faces foreign exchange risk primarily related to transactions denominated in currencies other than its functional currency, mainly involving USD and RMB[188]. - The group has not changed its risk management policies since the end of the previous year[188]. - Management believes that the credit risk associated with trade receivables from product sales is not significant[191]. - The group expects limited credit risk from bank deposits and receivables from related companies due to their placement in banks with good credit ratings[192]. - The group monitors short-term and long-term liquidity needs through rolling forecasts to ensure sufficient cash and easily convertible securities for operational needs[193].

Financial Performance - IMAX China recorded revenue of $124.3 million in 2019, representing a year-over-year growth of 5.8%[4] - Adjusted EBITDA for IMAX China was $68.8 million, with adjusted net income of $44.6 million[4] - IMAX China achieved a total box office revenue of $365.8 million in 2019, representing an 8.7% year-over-year growth, significantly outpacing the industry growth of 5%[8] - Total revenue for 2019 was $124.294 million, representing a 5.8% increase from $117.520 million in 2018[40] - Adjusted profit for 2019 was $44.570 million, a 0.6% increase from $44.283 million in 2018[40] - The company recorded a total sales cost of $47.647 million in 2019, which is 38.3% of total revenue, up from 36.0% in 2018[73] - Gross profit for the fiscal year 2019 was $76.647 million, with a gross margin of 61.7%, down from $75.251 million and 64.0% in 2018[74] - The total comprehensive income attributable to the company was $36.6 million in FY 2019, compared to $32.5 million in FY 2018, an increase of 12.9%[80] Box Office Performance - The box office for IMAX China reached $365.8 million, an increase of 8.7% compared to 2018, significantly outperforming the industry growth of 5%[4] - The film "Avengers: Endgame" set a record for IMAX China with a box office of $83.5 million, accounting for 13% of the film's total box office[4] - "The Wandering Earth" achieved a box office of $47.9 million, becoming the highest-grossing local language film for IMAX China[4] - The local language films accounted for 31% of IMAX China's total box office, with a year-over-year growth of 15%[4] - The Lunar New Year period in 2019 saw a 40% increase in box office revenue, largely due to the success of the film "The Wandering Earth," which grossed $47.9 million[8] - The average box office per screen in China was RMB 3,798, a slight decrease of 2.1% from RMB 3,881 in 2018[40] - In the fiscal year 2019, the average box office per screen for IMAX theaters in Greater China was $0.57 million, significantly higher than the average of $0.14 million for all screens in China[57] Theater Expansion and Technology - The number of theaters in operation increased to 717 by the end of 2019, with a same-store sales growth of 12%[4] - IMAX China signed contracts with 64 new theaters during the year, including a major expansion agreement for 40 theaters with a partner[3] - As of the end of 2019, 40 IMAX laser systems utilizing new technology had been adopted[3] - The company installed 95 new systems in 2019, including 56 revenue-sharing theaters and 12 IMAX laser upgrade systems, expanding its network to 717 theaters across 191 cities[9] - The number of IMAX theaters under revenue-sharing agreements increased from 410 as of December 31, 2018, to 463 as of December 31, 2019, indicating a growth in the network[57] - IMAX's cinema network in Greater China increased from 639 theaters on December 31, 2018, to 717 theaters on December 31, 2019[54] Revenue Segments - Network business revenue grew by 11.0% to $52.9 million, driven by the 8.7% increase in box office and a 30 basis point improvement in net sharing[12] - Cinema business revenue increased by 2.1% year-on-year to $71.0 million, driven by network expansion and two new hybrid installations[16] - The network business segment contributed $52.919 million (42.5% of total revenue) in 2019, up from $47.678 million (40.6%) in 2018[71] - The cinema business segment generated $71.033 million (57.2% of total revenue) in 2019, compared to $69.599 million (59.2%) in 2018, indicating a slight decline in percentage contribution[71] Market Share and Future Growth - The market share of IMAX China increased from 3.7% to 4.0%, with local language films contributing 31.4% to the total box office[8] - The company has a backlog of 253 theater contracts, including 58 full revenue-sharing theaters, indicating potential future growth[9] - IMAX China plans to continue expanding its market share in Hollywood films as its geographic coverage increases[8] - The company aims to enhance the number of Chinese films screened and increase annual revenue from these films[51] - IMAX has identified approximately 1,400 potential IMAX regions in Greater China for future expansion[55] Management and Governance - The company’s management team includes experienced professionals with extensive backgrounds in the entertainment and cinema industry[156] - The group focuses on expanding its market presence and enhancing its operational strategies through experienced board members[148][149][150][151][152][153] - The management team is committed to enhancing shareholder value through effective governance and strategic initiatives[148][149][150][151][152][153] Risks and Challenges - The company anticipates that the impact of the COVID-19 pandemic will significantly affect the first quarter of 2020, with uncertainty regarding the duration of theater closures[4] - The company faces risks from the Chinese real estate market, which may impact the demand for new IMAX theaters if growth slows[63] - The Chinese market is subject to various risks, including regulatory changes and economic downturns, which could significantly affect revenue and cash flow[65] Cash Flow and Capital Management - The net cash generated from operating activities for the fiscal year 2019 was approximately $39.3 million, a decrease of 30.2% from $56.4 million in 2018[119][120] - The company experienced a cash decrease of $30.9 million during the fiscal year 2019, contrasting with an increase of $3.5 million in 2018[119] - The company’s capital expenditures for fiscal year 2019 were $34.4 million, compared to $25.1 million in 2018, reflecting an increase in investment activities[128] Dividend and Shareholder Returns - The company proposed a final dividend of $0.02 per share, maintaining a payout ratio of 33%[14] - The company declared a final dividend of USD 0.02 per share, equivalent to approximately HKD 0.156 per share, for the fiscal year 2019[163] Strategic Agreements - IMAX Corporation agreed to a personnel secondment agreement with IMAX Shanghai Multimedia for a term of 25 years, ending on October 28, 2036[174] - The trademark licensing agreement grants IMAX Shanghai Multimedia exclusive rights to use the "IMAX" brand in China for a term of 25 years, which can be renewed[179] - The technology licensing agreement has a 25-year term, renewable based on fair market value licensing fees not exceeding 9% of total revenue[188]

Box Office Performance - Total box office revenue for IMAX China increased by 16% to $336.6 million in 2018, setting a new record[7]. - The company screened 45 films in mainland China, including 19 Chinese films, with Chinese films accounting for 30% of total box office revenue, up from 24% in 2017[4]. - IMAX China achieved a 40% increase in box office during the 2019 Chinese New Year compared to the same period in 2018, while the industry remained flat[3]. - The film "The Wandering Earth" generated $45 million in IMAX box office, becoming the highest-grossing IMAX film in China[3]. - IMAX's box office share during the Chinese New Year for "The Wandering Earth" was 11% on the first day, and 8% of the total box office for the film as of February 26, 2019[3]. - Total box office revenue reached $336.63 million, up from $290.82 million in 2017, with box office per screen at $616[38]. - In fiscal year 2018, IMAX format Chinese films accounted for 30.0% of the company's box office in China, up from 24.1% in fiscal year 2017[56]. - The share of Chinese films in China's total box office was 62.0% in fiscal year 2018, compared to 54.0% in fiscal year 2017[56]. - The average box office per screen for IMAX theaters in Greater China was $0.62 million, significantly higher than the average of $0.15 million for all screens in China[55]. Revenue and Financial Performance - Total revenue for 2018 was $117.52 million, down from $126.47 million in 2017, with a gross profit of $75.25 million and a gross margin of 64%[38]. - Adjusted profit for 2018 was $44.28 million, with an adjusted profit margin of 37.7%, reflecting a 140 basis point increase[38]. - Network business revenue increased to $47.7 million, benefiting from a 16% growth in box office revenue, with a gross margin improvement of 920 basis points[12]. - The average revenue per cinema system rose to $1.4 million, although overall cinema business revenue decreased due to 14 new installations in 2017[15]. - The company returned $27 million to shareholders through dividends and share buybacks in 2018[5]. - The company reported a pre-tax profit of $54.0 million for the fiscal year 2018, compared to $55.8 million in 2017[121]. - Total comprehensive income attributable to the company’s owners decreased from $52.0 million in FY2017 to $32.5 million in FY2018[77]. - Adjusted profit decreased from $45.9 million in FY2017 to $44.3 million in FY2018, a reduction of 3.6%[116]. - The company’s cash and cash equivalents balance as of December 31, 2018, was $120.2 million, compared to $116.7 million at the end of 2017, reflecting an increase of $3.5 million[120]. Expansion and Network Development - IMAX installed 101 systems in 2018, including 70 revenue-sharing theaters and 11 IMAX laser systems, expanding its network to 639 theaters across 185 cities[11]. - The company plans to install approximately 90 to 95 new cinemas in 2019, maintaining a similar installation pace as the previous year[39]. - IMAX has 639 theaters in Greater China as of December 31, 2018, with 624 located in commercial areas and an additional 272 theaters under contract[43]. - The number of IMAX theaters increased from 544 in FY2017 to 639 in FY2018, representing a growth of 17.5%[83]. - The company aims to increase the number of Chinese films screened and the annual revenue generated from these films[49]. - IMAX plans to continue expanding its network in first, second, third, and fourth tier cities, with a focus on identifying new IMAX theater locations[54]. - The company has established approximately 1,260 identified IMAX regions in Greater China, allowing for potential new theater openings without negatively impacting existing theaters[53]. Strategic Partnerships and Investments - IMAX's marketing efforts included a $15 million investment in Maoyan, China's largest ticketing platform, which accounts for approximately 60% of all movie ticket sales in China[5]. - The company is investing in a film fund focused on Chinese-language blockbusters to strengthen ties with local filmmakers[45]. - IMAX has a long-term partnership with local production houses to enhance its film offerings and adapt to market changes[45]. - The company continues to leverage its unique relationships with Hollywood studios to secure a diverse range of film content[48]. - IMAX's revenue-sharing arrangements include comprehensive and hybrid models, allowing partners to expand their IMAX networks with reduced upfront costs[44]. Cost Management and Profitability - The company maintained a strong cost control strategy, as evidenced by a 280 basis point increase in gross profit margin[17]. - Selling, general, and administrative expenses totaled $16.11 million, representing 13.7% of total revenue, up from 11.5% in 2017[72]. - The company incurred restructuring expenses of $0.1 million in 2018, a decrease from $0.6 million in 2017, as part of its cost reduction plan[73]. - The cost of sales for the fiscal year 2018 was $42.27 million, which is 36.0% of total revenue, compared to $49.12 million or 38.8% in 2017[70]. - The company emphasizes the importance of a balanced mix of Hollywood and Chinese films to ensure box office success[55]. Management and Governance - The senior management team includes CEO Chen Jiande, CFO and COO Jim Athanasopoulos, and CMO Zhou Meihui, among others[153]. - Megan Colligan has been appointed as a non-executive director since February 2019, bringing extensive experience from Paramount Pictures and IMAX Corporation[148]. - The company is focused on providing strategic advice and guidance through its board members with diverse backgrounds in media and finance[153]. - The management team is committed to expanding the company's market presence and enhancing operational efficiency[153]. - The board includes members with significant experience in the entertainment and investment sectors, which supports the company's strategic initiatives[153]. Risks and Challenges - The company faces risks from fluctuations in the real estate market, which could negatively impact the demand for new IMAX theaters[61]. - The ability to maintain pricing and profit margins is crucial, as a significant portion of operating costs are fixed, particularly related to network business[62]. - The company does not currently hedge against currency fluctuations, which could adversely affect profitability if the USD/CNY exchange rate rises significantly[63]. - The company's operations are seasonal, with higher profitability typically seen in the second half of the year due to installations before the Chinese New Year[63]. Agreements and Licensing - IMAX Corporation agreed to a personnel secondment agreement with IMAX Shanghai Multimedia for a term of 25 years, effective from August 11, 2011, to October 28, 2036[173]. - The trademark licensing agreement grants IMAX Shanghai Multimedia exclusive rights to use the "IMAX" brand in China for a term of 25 years, effective from October 28, 2011, with an option to renew[178]. - The technical licensing agreement requires IMAX Shanghai Multimedia and IMAX Hong Kong to pay a quarterly fee of 3% of total revenue from cinema and film operations during the initial 25-year term[190]. - The DMR service agreement has a term of 25 years, effective from October 28, 2011, with an option for renewal for an additional 25 years[196]. - The agreements are critical to the business, and shorter terms are deemed not in the shareholders' best interests[183].