Palace Amusement revenue begins climb to recovery
Published:Friday | December 10, 2021 | 12:14 AM
Cinema operator Palace Amusement Company has tripled revenue for the three-month period ending September 2021, a performance that saw its losses dwindling in the period by 16 per cent.
The cinema company has been pushing through disappointing results since the COVID-19 outbreak in March 2020.
Due to curfew restrictions, Palace has been locked out of time slots when it would normally make money – evenings – as well as periods when it would normally see its largest crowds, that is, weekends and public holidays. The cinema operator responded to the challenges with the launch of a drive-in cinema, but that has so far been insufficient to get the company back to levels where its cost of doing business no longer outpaces revenue.
Losses for the September first quarter stood at $79 million, a 16 per cent improvement on the $95 million of losses the company posted for the comparative period in 2020, but lagging well behind the $18 million of profit in the pre-pandemic 2019 period.
Palace’s revenue, too, while showing signs that the business was starting to get back some of its mojo, still has a steep hill to climb towards recovery. Sales of $80.5 million in the September quarter was more than three times the $29 million generated in the 2020 period, but it’s a far cry from the $370 million of revenues earned in the 2019 period.
Comparatively, the revenue generated in the July-September quarter was only just $25 million below the sales income for the entire 12 months of the preceding financial year ending June 2021.
Palace’s revenue is derived from movie ticket and confectionery sales as its breadwinners; as well as screen advertising and film rentals.
The company, controlled and operated by Douglas Graham and family, however, emerged from its constraining cash deficit, with net flows of $40 million — helped in part by additional borrowings of $35 million. Its cash position marks a turnaround from a $7.5-million deficit a year ago.
Marketing Manager Melanie Graham is optimistic about sustaining the performance for the second quarter, on the release of more attractive films over the festive season and persons looking for entertainment outside of their homes. But there are still concerns.
“The curfew hours have been extended, but it still doesn’t give us enough time for viewings. People usually prefer to come to the theatre at nights, [but] with a 9 p.m. curfew that only give us time for one evening movie,” Graham said.
Palace Amusement has, in part, been manoeuvring the fallout from the pandemic from injections of debt capital.
The $35 million of financing acquired through Victoria Mutual Investments was used for working capital. The loan is repayable over five years, with a two-year moratorium on the principal debt.
Before that, Palace obtained a loan of $170 million to shore up its pandemic-hit operations that suffered multiple movie theatre closures; and the company restructured two loan facilities totalling $55.3 million, both of which are guaranteed by a mortgage over its largest movie house, Carib Cinema. The loans are repayable by February 2027.
For its financial year ending June 2021, Palace posted losses of $383 million, three to four times the $99.6 million of losses made in 2020. Revenue was decimated in the year, falling to $105 million from $919 million in 2020.