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]
IMAX CHINA(01970) - 2019 - 年度财报