One of South Africa’s most recognisable businesses risks going under because of lockdown

Cinema group Ster Kinekor has appealed to government to relax its adjusted level 4 lockdown restrictions and allow for the reopening of movie theatres.

The group said that it was forced to close its cinemas for nearly five months in 2020 due to restrictions, with no guests admitted between 27 March and 28 August.

Ster Kinekor said it is now being forced to close its doors again in line with the new lockdown regulations from 28 June.

“Over 1.3 million customers in South Africa have visited the cinema since reopening at the end of August, and this new closure will have a devasting blow especially at a time when cinemas are starting to experience an encouraging increase in attendances,” it said.

Ster-Kinekor is currently in business rescue and the group warned that the impact of the current lockdown will have a devastating impact on the business.

“As an industry we employ thousands of people and create employment for thousands of others in related industries.

“Ster-Kinekor is compliant with all Covid-19 protocols, and the cinema remains one of the safest forms of entertainment due to access control, the ability to distance patrons accordingly, strict management of cleaning, and no-touch points for purchase  – tickets and confectionery can be purchased online.

“The health and safety of our staff and customers is our highest priority and we have been operating been under strict Covid-19 protocols and even exceeding governmental requirements.  Cinemas remain a safe indoor venue with no infections traced back to cinema globally.”

Business rescue

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.

Read: Government clears path for TV licence changes in South Africa

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One of South Africa’s most recognisable businesses risks going under because of lockdown