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].
IMAX CHINA(01970) - 2020 - 中期财报