Financial Performance - Total box office revenue for IMAX films reached $76.3 million in the first half of 2022, a decrease of 43% compared to the same period in 2021 due to COVID-19 related cinema closures in China[9]. - For the first half of the 2022 fiscal year, total revenue was $32,713 thousand, a decrease of 38.8% compared to $53,431 thousand in the same period of 2021[10]. - IMAX DMR film revenue was $6,519 thousand, representing 19.9% of total revenue, down from $11,493 thousand or 21.5% in the previous year[10]. - Revenue from IMAX system sales and maintenance was $20,945 thousand, accounting for 64.0% of total revenue, compared to $31,686 thousand or 59.3% in the prior year[10]. - The company reported a net loss of $0.6 million due to expected credit loss provisions primarily related to trade receivables impacted by cinema closures in China[15]. - The company reported a net loss attributable to shareholders of $11.75 million in the first half of fiscal 2022, compared to a profit of $25.44 million in the same period of fiscal 2021[20]. - Adjusted profit for the first half of fiscal 2022 was $2.1 million, down from $21.3 million in the same period of fiscal 2021[22]. - Gross profit for IMAX DMR films was $5,180 thousand with a gross margin of 79.5%, compared to $9,284 thousand and 80.8% in the previous year[13]. - Gross profit decreased from $33.1 million in the first half of fiscal 2021 to $18.6 million in the first half of fiscal 2022, with a gross margin decline from 62.0% to 56.9%[42]. - The company recorded a total comprehensive loss of $(11,753,000) for the period, primarily due to foreign exchange losses[186]. Revenue Sources - The company’s revenue is primarily derived from three main categories: IMAX technology network, IMAX technology sales and maintenance, and new business plans and others[6]. - IMAX technology sales and maintenance revenue includes fixed income from sales and leasing arrangements, maintenance services, and aftermarket sales, which are not directly tied to box office results[8]. - The company’s new business plans and other revenues encompass all income related to developing and/or startup non-core business activities[9]. - The company has implemented a mixed revenue sharing arrangement with cinema partners, which includes both fixed and variable rental income based on box office performance[7]. Expenses and Losses - Total sales, general, and administrative expenses were $9,545 thousand, which is 29.2% of total revenue, up from $7,723 thousand or 14.5% in the same period last year[14]. - Other operating expenses amounted to $1.9 million, representing 5% of total revenue, compared to $3.0 million in the previous year[16]. - Selling, general, and administrative expenses rose from $7.7 million in the first half of fiscal 2021 to $9.5 million in the first half of fiscal 2022, an increase of 23.4%[50]. - The net loss from expected credit loss provisions was $0.6 million in the first half of fiscal 2022, compared to a reversal of $2.6 million in the first half of fiscal 2021[51]. Cash Flow and Assets - Cash and cash equivalents decreased from $97.7 million as of December 31, 2021, to $76.9 million as of June 30, 2022, a decline of $20.8 million[56]. - Current assets decreased from $178.7 million as of December 31, 2021, to $171.6 million as of June 30, 2022[56]. - The company experienced a net cash outflow from operating activities of approximately $4.2 million, compared to a net cash inflow of $16.1 million in the same period of 2021, representing a decrease of 126%[60][61]. - The company incurred a net cash outflow from investing activities of approximately $7.5 million in the first half of 2022, primarily related to film investments of $4.7 million and $2.7 million for installing IMAX cinema equipment[62]. - The net cash outflow from financing activities for the first half of 2022 was approximately $6.3 million, mainly due to repayment of loans of $3.6 million and share repurchases of $1.8 million[64]. Market Conditions and Risks - The ongoing impact of the COVID-19 pandemic on the company’s business and financial performance will depend on various unpredictable factors, including the duration and extent of the pandemic and government responses[9]. - The company faces interest rate risk on floating-rate borrowings, with a potential impact of less than $1,000 on after-tax profit for a 10 basis point change in interest rates[198]. - The financial performance of the company is subject to various unpredictable factors related to the ongoing COVID-19 pandemic, including the duration and extent of the pandemic and government responses[196]. - The company’s operations are primarily exposed to foreign exchange risks involving USD and RMB, with most assets and liabilities denominated in these currencies[198]. Shareholder and Management Information - The board proposed an interim dividend of $0.001 per share (equivalent to HK$0.008) for the first half of the fiscal year 2022[78]. - As of June 30, 2022, the total equity of the company was a deficit of $8.1 million, affecting the ability to distribute dividends[79]. - The company has established a board committee to manage and oversee specific affairs of the group[91]. - The company has a structured reward mechanism that ties compensation to the group's annual performance[158]. Agreements and Licensing - The company entered into an agreement with IMAX Corporation to develop and expand the Enhanced business in Greater China, which includes licensing fees of 5% on certain revenues[72]. - The trademark licensing agreement can be renewed for an additional 25 years based on fair market value licensing fees not exceeding 6% of total applicable revenue[103]. - IMAX Corporation has entered into a trademark licensing agreement with a duration of 25 years, which is renewable, to utilize the "IMAX" brand in Greater China[104]. - The DMR service agreements provide a long-term revenue source and cost certainty for the company by ensuring access to DMR conversion services[119]. Employee and Compensation Plans - The long-term incentive plan allows for a total of 35,532,500 shares to be issued as rewards under the plan[159]. - The company has a plan for restricted stock units that vests 100% on March 12, 2022[173]. - The total number of restricted stock units granted to employees in 2020 was 239,470, with 119,736 units exercised by June 30, 2022[172]. - The performance conditions for the units granted from January 1, 2020, to December 31, 2022, must be met for full or partial vesting following the announcement of the company's 2022 financial results[177].
IMAX CHINA(01970) - 2022 - 中期财报