Ster-Kinekor Theatres says that it expects customers to begin returning to cinemas in higher numbers towards the end of the year.
In a letter to creditors on Wednesday (26 May), the group said that despite no new major content releases in recent weeks, the business is showing steady growth in attendance numbers.
“Early predictions are that May and June forecasts are likely to be exceeded. This is in part due to the longer showing of existing content, such as Godzilla vs. Kong, which is continuing to attract attendance levels usually reflective of opening weeks only.
“Whilst the business continues to trade significantly below pre-Covid attendance numbers, attendance levels are projected to recover towards the end of this financial year.
“(This will be) fuelled by major new content/blockbusters scheduled for release, accumulated during the Covid period, along with the ongoing assumption of no further or major lockdowns and a concurrent vaccine rollout.”
Ster Kinekor said that a recovery is predicated mainly on the release of new content which is forecast from July 2021 onwards.
It added that early global indications reflect a strong opening weekend for incoming movies in July, such as Fast and Furious 9, which is expected to aid the recovery in attendance levels.
“Content release remains a clear driver of increased attendance levels in our local market and the Ster Kinekor business position as market leader leaves us best placed to capitalise on this,” it said.
Ster Kinekor entered into business rescue at the end of January 2021 – citing the Covid-19 pandemic and intense lockdown restrictions.
The group said that up until February 2020, the business was profitable and highly cash generative, with good prospects of future and ongoing profitability from the pipeline of blockbuster film content that had been scheduled.
However, as a result of the Covid-19 pandemic and the consequent economic lockdown instituted by the South African government at the end of March 2020, all cinemas were required to shut down, and only permitted to reopen under strict conditions as from the end of August 2020.
Since then the company has been operating under various forms of restriction, including curfews and mandatory limits to the number of guests per auditorium.
In addition, there has been an impact of the rescheduling of blockbuster film contents from the original date. The second Covid-19 wave hit South Africa and other countries in December 2020, with further lockdown measures and curfews reintroduced across the cinemas.
The assigned business rescue practitioners now hope to publish a business rescue plan by the end of July.