IMAX CHINA(01970) - 2019 - 中期财报

Financial and Operational Summary Financial Summary H1 2019 revenue grew 15.1% to USD 59.3M, profit rose 17.1% to USD 24M, driven by strong box office Key Financial and Operational Indicators for H1 2019 | Indicator | H1 2019 (Unaudited) | H1 2018 (Unaudited) | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Financial Data (USD Thousands) | | | | | Total Revenue | 59,256 | 51,487 | +15.1% | | Gross Profit | 41,047 | 37,006 | +10.9% | | Profit for the Period | 23,965 | 20,465 | +17.1% | | Adjusted Profit | 24,894 | 21,251 | +17.1% | | Earnings Per Share (USD) | 0.07 | 0.06 | +16.7% | | Operational Data | | | | | Total Box Office Revenue (USD Thousands) | 235,959 | 189,579 | +24.5% | | Box Office Per Screen (USD Thousands) | 379 | 361 | +5.0% | | Total Cinema System Installations | 30 | 25 | +20.0% | | Total Network (Cinemas) | 662 | 569 | +16.3% | 2019 Outlook Expected 90-95 new cinema installations in 2019; SG&A (ex-share compensation) projected flat - Expected new cinema installations for the full year 2019 are 90 to 95[7] - Sales, general, and administrative expenses, excluding share-based compensation, are projected to remain largely consistent with 2018 levels[7] Management Discussion and Analysis Overview and Business Model Revenue from network (56.9%), cinema (42.8%), and new businesses in H1 2019 - Company revenue sources are categorized into network business (box office-related), cinema business (fixed income), and new business and others[8][9][10] H1 2019 Revenue Composition | Business Segment | H1 2019 Revenue (USD Thousands) | Percentage of Total Revenue | | :--- | :--- | :--- | | Network Business | 33,745 | 56.9% | | - Film | 17,921 | 30.2% | | - Revenue Sharing Arrangement - Contingent Rent | 15,824 | 26.7% | | Cinema Business | 25,366 | 42.8% | | - Sales and Sales-Type Leases | 10,364 | 17.5% | | - Revenue Sharing Arrangement - Upfront Fees | 3,537 | 6.0% | | - Cinema System Maintenance | 10,859 | 18.3% | | - Other Cinema | 606 | 1.0% | | New Business and Others | 145 | 0.2% | | Total | 59,256 | 100.0% | Year-over-Year Comparison of Operating Results H1 2019 revenue increased 15.1% to USD 59.3M, gross profit rose 10.9% to USD 41M, with gross margin at 69.3% H1 2019 vs H1 2018 Performance Comparison | Indicator (USD Thousands) | H1 2019 | H1 2018 | Year-over-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 59,256 | 51,487 | +15.1% | | Gross Profit | 41,047 | 37,006 | +10.9% | | Operating Profit | 29,805 | 26,007 | +14.6% | | Profit for the Period Attributable to Owners of the Company | 23,965 | 20,465 | +17.1% | | Adjusted Profit | 24,880 | 21,251 | +17.1% | - Gross margin decreased from 71.9% to 69.3% year-over-year, primarily due to increased system cost mix from IMAX laser system installations[43] Revenue Analysis Total revenue grew 15.1%, primarily from 24.2% network business revenue increase to USD 33.7M - Network business revenue increased by 24.2% year-over-year, primarily due to a 24.5% rise in box office revenue to USD 236 million[24][25] - Cinema business revenue grew 4.7% year-over-year, with upfront fees from hybrid revenue sharing arrangements significantly increasing by 246.1% due to higher installations[28][32] - Revenue from sales and sales-type lease arrangements decreased by 21.6% year-over-year, attributed to a reduction of two system installations in the first half[31] Cost of Sales and Gross Profit Analysis Cost of sales rose 25.7% to USD 18.2M; network gross margin improved to 75.1%, cinema declined to 61.5% - Total cost of sales increased by 25.7% year-over-year, mainly driven by a USD 3.1 million increase in cinema business costs[35] - Network business gross margin improved from 71.5% to 75.1%, primarily due to increased box office revenue and reduced one-time upfront costs[44] - Cinema business gross margin decreased from 72.5% to 61.5%, mainly due to higher maintenance and system sales costs from IMAX laser upgrades[47] Operating Expenses and Profit Analysis Profit for the period grew 17.1% to USD 24M, as SG&A decreased 3.4% to USD 7.8M and other operating expenses rose 17.9% to USD 3.4M - Sales, general, and administrative expenses decreased by 3.4% year-over-year, mainly due to lower legal and litigation fees and foreign exchange expenses[51] - Other operating expenses increased by 17.9% year-over-year, primarily due to higher annual license fees payable to IMAX Corporation[52] - Total comprehensive income for the period was USD 19 million, a 5.6% year-over-year increase, with a USD 3.5 million profit growth partially offset by a USD 4.4 million loss from fair value changes in financial assets[54] Liquidity and Capital Resources Net current assets decreased to USD 110M (from USD 127M end-2018), cash at USD 97M, funded by operating cash and RMB 200M credit facility Liquidity Position | Item (USD Thousands) | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 96,980 | 120,224 | | Total Current Assets | 176,115 | 179,185 | | Total Current Liabilities | 66,091 | 52,020 | | Net Current Assets | 110,024 | 127,165 | - The company has an unsecured revolving credit facility of up to RMB 200 million to meet ongoing working capital requirements[70][71] - Capital expenditures for fiscal year 2019 are estimated at approximately USD 26.6 million, primarily for expanding the IMAX cinema network under full revenue sharing arrangements[66] Cash Flow Analysis H1 2019 net operating cash was USD 17.1M, investing used USD 20.8M (equity investment), financing used USD 19.2M (repurchases/dividends) Cash Flow Summary (USD Thousands) | Activity | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 17,125 | 17,801 | | Net Cash Used in Investing Activities | (20,803) | (4,295) | | Net Cash Used in Financing Activities | (19,247) | (13,860) | | Decrease in Cash and Cash Equivalents for the Period | (23,244) | (76) | - Cash outflow from investing activities significantly increased, primarily due to a USD 15.2 million equity securities investment in Maoyan Entertainment[62][79] - Cash outflow from financing activities primarily included USD 16.8 million for share repurchases and USD 2.3 million for dividend payments[64] Key Financial Ratios and Dividend Policy Debt-to-capital ratio rose to 36.6% (from 29.9% end-2018), adjusted profit margin increased to 42.0%, USD 0.02/share interim dividend recommended Key Financial Ratios | Ratio | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Debt-to-Capital Ratio | 36.6% | 29.9% | | Ratio | H1 2019 | H1 2018 | | Adjusted Profit Margin | 42.0% | 41.3% | - The Board recommended an interim dividend of USD 0.02 per share for the first half of the 2019 fiscal year[76][78] Significant Investments In Feb 2019, company invested USD 15.2M for 0.706% stake in Maoyan Entertainment, and holds preferred shares in IMAX Hong Kong Holding for profit sharing - In February 2019, the company invested USD 15.2 million in Maoyan Entertainment, subscribing for 7,949,000 shares (approximately 0.706% equity interest)[79] Corporate Governance Summary and Other Information Purchase, Sale or Redemption of the Company's Listed Securities H1 2019, company repurchased 7,025,700 listed shares for HKD 132M, plus 122,901 shares for share option scheme H1 2019 Share Repurchase Details | Month | Number of Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | March 2019 | 709,800 | 19.84 | 19.04 | 13,863,730.52 | | May 2019 | 4,377,100 | 20.70 | 16.96 | 80,898,142.44 | | June 2019 | 1,938,800 | 19.56 | 18.30 | 36,870,693.79 | | Total | 7,025,700 | | | 131,632,566.75 | Connected Transactions Ongoing connected transactions with IMAX Corporation include equipment supply, technology/trademark licensing, DMR services, and personnel secondment - The company has multiple ongoing connected transactions with its controlling shareholder, IMAX Corporation, including personnel secondment, trademark licensing, technology licensing, DMR services, equipment supply, and master distribution agreements[91] H1 2019 Key Connected Transaction Amounts (USD Thousands) | Transaction Agreement | Counterparty | Transaction Amount | | :--- | :--- | :--- | | Equipment Supply Agreement | IMAX Corporation | 14,828 | | Master Distribution Agreement (DMR Fees Payable) | IMAX Corporation | 3,541 | | Master Distribution Agreement (Revenue Receivable) | IMAX Corporation | 16,291 | | Technology License Agreement | IMAX Corporation | 2,017 | | Trademark License Agreement | IMAX Corporation | 1,345 | | Personnel Secondment Agreement | IMAX Corporation | 596 | Long-Term Incentive Plans Company operates share option and RSU schemes; as of June 30, 2019, 5.16M pre-IPO options, 1.36M post-IPO options, and 1.17M RSUs unexercised/unvested - As of June 30, 2019, 5,163,800 share options under the pre-IPO plan remained unexercised[155][156] - As of June 30, 2019, 1,359,544 share options under the post-IPO plan remained unexercised, with 417,764 new options granted during the period[162][163] - As of June 30, 2019, 1,174,615 RSUs under the restricted share unit plan remained unvested, with 503,680 new RSUs granted during the period[168][169] Interim Financial Information Condensed Consolidated Interim Statement of Comprehensive Income H1 2019 total revenue was USD 59.26M (up 15.1%), gross profit USD 41.05M, operating profit USD 29.81M (up 14.6%), profit attributable to owners USD 23.97M (up 17.1%) H1 2019 Statement of Comprehensive Income Summary (USD Thousands) | Item | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Revenue | 59,256 | 51,487 | | Gross Profit | 41,047 | 37,006 | | Operating Profit | 29,805 | 26,007 | | Profit Before Income Tax | 30,745 | 26,418 | | Profit for the Period Attributable to Owners of the Company | 23,965 | 20,465 | | Total Comprehensive Income for the Period Attributable to Owners of the Company | 18,979 | 18,037 | Condensed Consolidated Interim Statement of Financial Position As of June 30, 2019, total assets were USD 342M, total liabilities USD 91.6M, total equity USD 250M, with non-current assets including PPE (USD 105M) and finance receivables (USD 40.14M) Statement of Financial Position Summary (USD Thousands) | Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Non-Current Assets | 165,721 | 150,158 | | Current Assets | 176,115 | 179,185 | | Total Assets | 341,836 | 329,343 | | Liabilities and Equity | | | | Total Liabilities | 91,600 | 75,666 | | Total Equity | 250,236 | 253,677 | | Total Equity and Liabilities | 341,836 | 329,343 | Condensed Consolidated Interim Statement of Cash Flows H1 2019 net operating cash was USD 17.13M, investing used USD 20.80M, financing used USD 19.25M, resulting in a USD 23.24M net cash decrease Cash Flow Statement Summary (USD Thousands) | Item | H1 2019 | H1 2018 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 17,125 | 17,801 | | Net Cash Used in Investing Activities | (20,803) | (4,295) | | Net Cash Used in Financing Activities | (19,247) | (13,860) | | Decrease in Cash and Cash Equivalents for the Period | (23,244) | (76) | | Cash and Cash Equivalents at End of Period | 96,980 | 116,602 |