Cineworld Group plc. (OTCPK:CNNWF) Q4 2021 Earnings Conference Call March 17, 2022 5:30 AM ET

Company Participants

Moshe Greidinger – Chief Executive Officer

Nisan Cohen – Chief Financial Officer

Conference Call Participants

Alastair Reid – Investec

Imogen Barker – Morgan Stanley

Richard Taylor with – Barclays

Kiranjot Grewal – Bank of America

Ali Naqvi – HSBC

Operator

Ladies and gentlemen, welcome to the Cineworld Group 2021 Preliminary Results Call. My name is Emma and I will be your operator for your call this morning. If you’d like to ask a question during the question-and-answer session on today’s call, [Operator Instructions]. And I will now hand you over to Mooky. Please go ahead.

Moshe Greidinger

Hi everyone, good morning. Welcome. Thank you for joining us. Really a very important day for us. Announcing goal with us 2021, where we finally see, the business turning around. Started, as we all know, after 2020 with a few months to do, we’re still closed all over. Started reopening somewhere in April and moved forward until somewhere in the summer, we were fully operational, but still under all kinds of restrictions, differing between all the ten territories where we operate. But then after a relatively slow quarter, the last quarter of the year really started kicking off the business. Early October, we had The Bond. And the end of December, we finished with Spider Man, which is currently the fourth biggest movie ever. And in the U.S., I think it is the sales biggest movie ever of all time. And really the strong impact of these big movies coming back.

And really, the way we saw how eager, our customers to come back to the cinema were, and gave us a very strong push, and a good reason to believe that we are on the right track. Omicron slowed it a bit in January and February 2022, there was no big movies and we never know a little bit the case of the chicken and egg. But Omicron really went wild. But fortunately enough, the cases were not so difficult, number of hospitalization as a result of Omicron were much, much lower. And today in early March where we started investments, we have almost no restriction at all, in any of our territories. There is no need for vaccination proof anymore. Almost no need for masks in most of the cinemas around our territory. And we really see, people are coming back to all kinds of movies. You know, of course, the Batman of this world’s which are the big, big blockbusters.

But we see great results for family movies, if you look at Sing 2, that was delayed a bit in the UK, and open just now, and performed amazingly well. A lot of talking about the more mature audiences, I will refer you to the results of movies like Belfast in the United Kingdom. And I think that we’re on the right track and looking forward into a very strong lineup, which is coming as of April until the end of the year. We had a lot of key issues that we need to deal — we needed to deal with in 2021 on the side of the commercial side, mainly the soldiers and our landlords. I think we’re in a good position there. We have — we can say that we — the new normal window is around 45 days. The big movies we know already from the studios will have even a longer window. Some of the movies will have a shorter window. But in general, I think the whole COVID experience taught us and taught the studios because at the end of the day it’s partnership, that the best way to see income from the big movies and from the movies that they have, is fair starting with the theatrical.

The second Key management action was around the Operational measures. We had to be very careful with cash. This is the name of the game. And we really had very strong cost reductions on the time that we were closed. But many of most — most of the cost reductions are there to stay with us also for the future and this is a very strong message from our point of view. Financial initiatives were a key thing and really securing additional financing covenant valuables and everything that was around this. Now, as I said, we are well-positioned to really welcome the great lineup, which is coming ahead of us and we will talk about it at a later stage. And I will move it now to you, Nisan.

Nisan Cohen

Thank you Mooky and good morning to everyone. We start with the headline of the financials, consider that we split the year into two. First half, where most of the time, the cinemas were closed. We just opened somewhere in May slowly and it’s reflected in the number. Always $40 million in admission and the Adjusted EBITDAaL -$103m. But we can see clearly that when cinemas reopen in May and starting slowly to receive the supply of the movies, it’s definitely reflected in the number, which revenue of $1.5 billion and positive Adjusted EBITDA and also positive Adjusted EBITDAaL, after the leases of $158 million. The full year also, I will say, number [Indiscernible] positive. And you can see that we managed to achieve $1.8 billion of revenue. And the $54 million of Adjusted EBITDAaL after a a cash basis. When we move to the next slide.

The full income statement on adjusted basis – IFRS 16, I will point here maybe to fuel away land, which is a depreciation and amortization that went down from 2020 to 2021, mainly because of some impairment that we took in 2020. Interest cost went up, one because the debt increased and it’s allocated some more interest to be paid. But also there is the element of the interest on the leases and almost connects to the work, that there were also some impact on the net finance. There is a credit tax charge of under $167 million due to the losses that we carry in this year. And our belief that we manage to use these losses. In the next coming years. The [Indiscernible], with the adjusted loss is lower than 2020, 656 compared to 970. Next slide. If you look on some KPI results, [Indiscernible] speaker price on the Group level went up by 8.8% to $10 in the U.S., which has allowed just [Indiscernible] for us.

We see also an increase of 6.4%. It’s a combination of few thing. One is the premium format 4DX, IMAX, the ScreenX, Mooky will talk about it later on, I mean, the section. There is also the element of the type of the movies. The big blockbuster, and some blockbuster tax. By the end of the day, this increase is material, I would say for our going forward results. If we move to the next slide, the Spend Per Person, what we call their results in the written and the concession. And we can definitely see here very encouraging numbers on the Group level and also in the biggest territory the U.S., almost 30% percent increase. And this is a really encouraging coming. Not just impacting the revenue lines, it’s also impacting positively the EBITDA. This revenue come with high-margin. In the beginning we thought it was really a surprise and a good surprise, I would say.

And it’s took us a big time to for let’s say, come to conclusion, if this is something which is a sustainable, and I’m happy to say now, only eight months after the cinemas are reopened, that we see the numbers strong and this is again, people are buying more, people are buying big. This is, I will say, very promising the API for the future remodel of the business. Next slide. Key Liquidity Actions. In 2021, similar to 2020, we worked a lot on the liquidity side of the business. We raised the $400 million of liquidity part as convertible bond, part of Term loan. We received a $203 million of US CARES act tax refund. We managed to defer $92 million of dissenting shareholder out of $265 million, and we also worked a lot on the cost side for operating expenses, CapEx negotiating almost l would like to say all, but over 80% deals, with the landlords already done, and we secured rent relief and deferral, and we worked, again, the last two years, we have worked a lot on the permanent cost-reduction.

And it will be impacting the going forward results of the business. We’ll talk about it in a second. We move to the next slide. The second half of fiscal of the year. Last year in the second half, because this is really the target cinemas, were open. It’s interesting to see that if we look on the cash that generated from operation after then, after we pay early the cash leases, the company generate positive cash flow of a $171 million. If we take into account also, the other elements of the cash, which is CapEx, an interest, the company bill in six months, $89 million. Again, it was not a 6 months that cinemas where fully operated. The beginning was — there was some lack of movies. So I think that the bottom line — I think it’s — the slide is showing a strong flow generation position. And we are also mentioning here what we said, by the way, in one of our R&S in the past that it looks specifically in Q4 where we had [Indiscernible] and in September — where in the December, the Spider-Man, the business generates a positive cash flow after CapEx and after interest.

The next slide, please. Looking on the net debt, Net debt increased by only 5%, which is $220 million. It’s not a small amount, but to compare it to 2020, the net debt increased by almost $1billion. So I think this is really a material improvement and showing that in a challenging year, we managed to keep the debt, more or less, on a similar level of last deal. This was of course, supported by the tax refund that we got. But I think the bottom line is, encouraging to see with only with six months of operation. And again, numbers of Admission, move up gradually. The business managed to maintain, more or less similar net debt, as we started the year. Next slide. Cost saving and initiatives are very important. We invested a lot of management time in the last two years, in order to renegotiate the deals and I’m happy to say, that now, after only eight months of fully operations of the business, we can mall estimated what it was difficult to estimate, maybe six months ago where we are seeing now between $50 million to $75 million of net annual cost savings.

And this is partially offset by some cost inflation, mainly on payroll and energy costs. You can look on the slide and see that the savings is coming from almost every line of cost, either G&A, either repair and maintenance, payroll within the cinema, out of the cinema. I think this is very encouraging. It’s not the last, I’ll say, level of cost savings; we’ll analyze it, I think every quarter, probably, and I hope this number will be able to grow. But this is encouraging to see that despite some cost inflation and some energy pressure that we are facing, mainly in the last few months, the business is in a good spend to save almost $75 million on an annual basis. Next, please. Financial outlook. I think that we are now well-positioned really to benefit from the Star movie bookings. We’ll talk about slate of its look like that’s starting former April. There is a very promising line of movies in front of us. We continue to improve the revenue credit customers in all aspects, either in ADP, either in [Indiscernible], working hard also to improve the advertising segment of the business.

Tight cost control, the litigation spot shell cost. Again, we are not resting in this and they’re investing a lot of management time, to find all the type of ways to keep the cost down as much as we can. Of course, not impacting badly the services that we ought to give to our customers. We are targeting to generate positive cash flow within it already in Q4 last year. It was very encouraging to see the business generating cash and our goal is to deleverage in 2022. And also, to look into some debt refinancing. And again, it should come also with the industry [Indiscernible]. The capital expenditure that you are expecting to have this year, is approximately $150 million. The combination of maintenance CapEx, but also some sites that are under renovation. It’s important to keep investing. We are very happy with the results, that we see in the cinemas that we renovated them now.

We’re enjoying from it, from all aspects. These CapEx have really promising return. The dissenting shareholder, we managed to defer the payments through the — all first half of the year, talking about $92 million. Up to-date we paid $33 million, and I think in the second half of the year, this issue will be behind us. The last point, and I think also the next section, the business updates, Mooky will take the meeting. So thank you, and I’m waiting for your Q&A.

Moshe Greidinger

Okay. Thank you very much, Nisan. The last point I would say in Nisan’s slides is really something that all of you are very interested around and needless to say, it’s a very important issue for the company and this is the court decision in Canada that granted Cineplex CAD 1.23 billion as damages. We pursue, with all the respect to the Canadian court system and the judge that was sitting in our case strongly disagree with this judgment. And we are really backed with strong opinions from our legal advisors. We have added to the case another law firm to join our expert lawyers because their expertise is appeals. I think that we can say quite confident that we strongly believe that the Supreme Court or the High Court there in front of three judges will reverse the decision. And we say very openly in our report, if it’s not going this way, we don’t have the money space, so it’s not an issue that can go this will become an unsecured debt. But I would say again, we’re very positive about the results.

We have left the judgment very deeply as we’re working with our lawyers, we have already submitted the basis for the appeal to the court. This is according to the way it is being treated in Canada. And we will need to submit probably by the end of April the full appeal, detailed appeal. Of course the other side we’ll have some time to answer. They also decided to [Indiscernible] the decision. I think it’s rare on [Indiscernible], to a case that someone who will in the close to $1.2 billion and costs appealing [Indiscernible]. And I think it says a lot in the subject. In any case, we will need to wait for the call. We wanted to come as early as possible because we are positive and optimistic think about the results, but we will need to wait patiently and see what’s the three judges, that will be coming from the high quarter will decide.

Next slide. So really the operational highlights, if we go back, is the reopening and the recovery was a huge challenge and going back, recruiting thousands of employees. A lot of issues in the label side of the business. At the beginning, it was very difficult to recruit and now we are in a good position already. We had people that left us, we were closed for about a year-and-a-half and we need to recruit new team. But we are in a very good shape now and we are really ready, as we said, to greet more and more customers, like we did in December for Spider-Man in the coming months that are ahead of us.

Customer experience, we are continuing to expand a lot of our food and beverage offerings. We see really in the SPP growth that few reasons for the SPP growth as Sam mentioned, but really people missed — in a big way we can say people missed the popcorn and the Pepsi and our really continuous ship partnership with Pepsi in U.S., U.K., and Central Europe is important for us and we are coming with our new offerings. First our very successful cooperation with Starbucks in the United Kingdom and we are now starting opening Lavazza coffee shops in all cinemas in the U.S. And we have great success with the alcohol bars also in the United States. So, this section of the business of the food and beverages is going very nicely as we saw, and encourage us with those results for the future.

Third point is technology and innovation. Cineworld was always having as part of our strategy is to lead with technology, with the quality of the picture, with the quality of the [Indiscernible]. We believe very much that we should bring great experience to people that are going out of the home and want to have some good time in the cinemas. We currently have, as you can see, very impressive numbers of IMAX cinemas, 4DX, which is a phenomenal success. ScreenX, just starting to grow, because all these four months need also the support from the movie makers. I think all these formats are being embraced by the studios now and by the movie makers, and it is doing well for us, very well for us. And we have invested already until today in this book done, the decision was done before COVID. So, we — maybe the timing was not the best, but we are already enjoying 2,000 next-generation laser projectors.

And not only that these projectors are giving great result on the screen and a very strong live possibilities on the screen, but it has also, very considerable operating savings. And there’s no need anymore to change ramps, which is a big cost. It saves big amount of electricity. It needs much less air conditioning in the booth, so it’s again energy. It’s really a very good move. And we really see dramatic savings, I would say, around this investment. And we have also very good increase in the online ticket sales across all our territories. Expansion and refurbishment. We had seven sites refurbished in 2021. Altogether, we have already 14 sites in the U.S. as we sunset the reaction from the audience, and the results of this cinema is only improving. It takes some time for every refurbishment to mature, same as a new cinema, but we’re very happy with the results that we see.

I would say it was one of our difficult decisions, whether to continue the refurbishment through the time of the closer and through the COVID time. We took a very hard decision here to continue with the projects we were doing. Of course, we didn’t start new projects until the things started to be clear. Currently we are again furbishing, a bit slower than what we’ve planned. We needs to be very careful with the cash. But on the other hand, when we see the results and when we see the return on investment, we are continuing and we hope to accelerate once the cash flow situation and the debt will be starting to go down, we will even do it faster. We have closed 25 under performing sites through the COVID time. Some simply contract had ended and some, we reached agreements with the landlords to close. And we have opened ten new cinemas, which will of course, plenty [Indiscernible] of COVID.

And the timetable, as you know, in the new projects is something in our hands, but they hand of the developers. And we have worked very close with the landlords. As you can see here, we have more than 85% of the Landlords of cinemas already under agreements. Landlords that worked with us, the partnership with the Landlords is a very long. We have some Landlords, that we have relations for 30 years now. The deals in this industry are going anywhere from 10 to 25 years. So it’s really a long partnership and I think that most of the Landlords really helped us and supported us. We have some cases of litigation, unfortunately, but I hope they will be settled soon and some are still under negotiations for seasons but I think the main issue with the landlord has already been handled,

Next slide so if we look at the recovery this is an interesting slide because it takes us really, we see the 90%. This is income of box office and concession revenue in vessels 2019 so October, thanks to bond and thanks to other movies that were there like June for example, for not only bond we reached 90% November slowed down unfortunately, Top Gun was postponed, always in lives as you know, pluses and minuses. So we lost, Top Gun in November, it costs us as you can see. But we are getting Top Gun in May. So we didn’t lose it completely and we are now looking forward to have it in two month’s time. December with Spider Man. with 88%. Omnicom has changed our plans a little bit, and our forecast in January and February. But we see and here we see the first two weeks of March. 86%, thanks to Batman, thanks to good increase in the SPPs.

And from there on, we believe that we’re going for a very strong lineup as of April and this will be seen in the results. I think we are really looking forward now to the lineup which is going to come. Next slide. Now in Cineworld, we are running every few years, a survey which we decided to share with you guys, and the last survey was done in January 2022, immediately after the Spider-Man and the great December that we had. And I think we can learn a lot of it if we look at the number people that were saying back in September 14, we will take it, and said like, “I go to the cinema for the quality of the viewing experience. “73% were saying it in 14, now it is 82%. “I love the shared experience. “We always say that going to the cinema is not only the big screen and the big sound and the outing, it’s also a big social event to see Spider-Man. Surrounded by 400 people is a different experience than to see it at home with 3, 4, 5 family members.

And if in September 14, the view that I loved to share experiences, 54% look what COVID have done, we’re now 67% and we hear it a lot from our customers that they want to be together. People want to see one another together. [Indiscernible] restaurants and for other activities, but in the cinemas it really very, very impressive, same as the next call, if I go to get away from it all. Good way to run away from COVID is to sit down with a friend or with a partner, or with the kids in the cinemas watch the big screen, it’s safe and if it was 43% in 2014. Or it was 45% in 2019, after the huge year in the business. It is 64% in January 2022. Next slide. We have her another two examples. And they are really speaking for themselves. And one thing that we love very much is that, I would like to go more than I do. The numbers really are self explanatory and the really giving a very good impression of where the people are in their view.

And affected, they love going to the movies and they want to continue going through the movies. Next slide. For the continued refurbishments, I mentioned already, we have already 14 refurbishments completed in the U.S. Among them, some of our flagship cinemas, Union Square in Manhattan, Urban Spectrum in California, but many, many more, was Hacienda coast in San – Francisco; they are big cinemas that were taken care off. As we were saying, all the time about Cineworld and we said the gain about Regal, these two circuits have some of the best location in the world for cinemas, but many of the cinemas after just 25 years or 30 years will be tired, needed the freshening up. And you can see here just with the small sample of the photos to know how it looks now, what kind of experience people are getting now in the cinemas. We have now ten additional projects that are on the line.

And all these projects, or most of them are including some of the formats or all the formats, which are the IMAX, the ScreenX, the 4DX, the Premium Large Format that we have, and many more. Same goes for the new offerings of food that we are now starting in the U.S.. knowing that our cooperation with startups in the U.K. is so successful. And really the customers are embracing the cinemas in a big way. Next slide. The roll out, as we mentioned before continue, we do not control the timetable, but we opened seven new sites in the U.S., two new sites in the UK, and one in the Rest of the World. And I think that in general, we’re going to enjoy all these new cinemas in 2022, and eight new sites are about to be opened in 2022. Here we have two sites in the U.S. that we’re very close to completion. One, I think is opening next month and the other one in June. Five new sites in the UK, and one new site in the Rest of the World, which is already opened, but it belongs 2022.

So, I think we have a lot of more attractive cinemas here that will serve our main goal and this is really generating vector cash that we need into the business. Next slide. So the strategy that we so much believe in, we are, just as a summary, continuing to be an innovative operator. We really go to the new formats, we’re changing a lot of things in the cinema and also in customer services. And we think, we’re on the right track there, best cinema experience that we are further expanding, diversity of the revenue base. We have all kinds of initiatives that are going well with for example developing now more and more the in-video gaming in the cinema, in the entrances. We have very big lobbies in the United States.

In the cinemas, we have now new video games and attractions for the youngsters and for the kids to play in. And we see great results from there. So really we’re trying to get more of what we can from the cinemas that we have. And we are continuing our expansion slowly, but surely with new sites, and the refurbishments. Next slide. So just summarizing here, what we see at this status, future of the cinemas, So is improved retail offering all the way from coffee to bows B.Fresh, which is kind of the mall health drinks, which is very popular now. We are going to the new premium formats and the great premium formats that we have, IMAX, Super Screen, RPX, which are our own Large Format and of course ScreenX and 4DX are so successful.

We are looking at the new technologies and investing in new technologies like the laser and all kinds of apps activities that we are developing on both sides of the ocean. And of course the famous and strong unlimited offering that we have, including our members club Regal Crown Club in My Cineworld. All these are very important tools in our marketing, and in our accessibility to our customers. And numbers of unlimited, which naturally went down dramatically for COVID are going now again. And really Movie lovers, we always say unlimited is not a bargain unlimited is the solution for movie lovers if you want to see more than two movies a month. And we start seeing in going and see very important base of customers for us. In the next slide, last but also, not the least, 2022 feelings play. started first quarter, as we mentioned, was not a strong because of Omicron.

But still, mesh to box office with an amazing result. We still have Lost City in the end of March, the new Sandra Bullock. But look, what’s going to happen in Q2 2022, as of April, there are coming big movies, one after the other, and without really lowering expectation from all the movies there. We must say, that it is very rare to have in one quarter, three mega blockbusters, which are here: Doctor Strange, early May, Top Gun, end of May and Jurassic World, in the middle of June. So really a great quarter is coming ahead of us. But look at the second half of 2022 in the next slide. And it is — we cannot say we’ve been getting better, but maybe it’s even getting better. We have two huge Marvel titles here, Soul, and the Black Panther — the second Black Panther, which is coming.

We have the animated Spider-Man. The first one was very, very successful. And as you look at it, give you a few minutes to just to get your own impressions. And ending the year was what can we expect more than Avatar? The second chapter is coming. There are additional three Avatars under production. I can say that we saw already some pieces of the new Avatar in the special presentation that we were invited to. It’s looking really outstanding and really have very, very high hopes for Avatar, which is going to be the last big release of the year. And we need to look also forward, as we know, this industry is easier as now to predict in the era of pace [Indiscernible] So they are probably many, many great movies that are original, not sequels, that will be coming in 2022 and in 2023 and beyond. All kinds of movies that I’m just remind, one, like Bohemian Rhapsody. We had the [Indiscernible].

Nobody expected this movie will do the amazing numbers it did. But when we look into the future, the sequels are really giving us the main base. I would say, for the future and the least here is, really self explanatory. I already mentioned that there are another three out of the way. There are new styles in the way. Indiana Jones is coming back. Mission Impossible have next movie in May 2023 and another one is now under production. Many more Marvel titles, DC titles and really, I don’t know, the list is almost endless. But you have here in front of you, some good choices of the movies to come. And at this stage, I will thank you for listening to me and to Nisan. And we will be very happy to answer any questions.

Question-and-Answer Session

Operator

[Operator Instructions] When preparing to ask your question, please ensure that your phone is unmuted locally. [Operator Instructions] The first question is from the line of Alistair Reid with Investec, pleas go ahead.

Alastair Reid

Morning. Thanks. Three for me, please. Firstly, can you touch on how you think you’ve been performing market share-wise in U.S. over the past few months? And then secondly, could you expand a little bit on your plans on ticket price inflation from here? And what is the scale of that blockbuster tags you’re applying. What proportion of admissions could potentially see that tags. And then lastly, can you just remind us what cash payments for deferred rent you expect this year or next? Thank you so much.

Moshe Greidinger

Okay. So we’ll start talking about the market shares. So we are already back to the market share that we had in 2019. We had relatively slow start with regards to market share because we need to remember that our competition, took the decision not to reclose the cinemas back in October 2020, when Bond was postponed. We took the decision to close down the cinemas again in view of the lack of products. We saved a lot of money. I think it was a great decision and was important. But as we went close the now quick two competitors were still open. Not too early people that still was going through the cinema some of them changed their habit, got used to another cinema. So the early opening, we felt a lower market share. But we are back now. We had an amazing market share on Spider-Man. And now again, in Batman. And I think our market share in general, in the U.S.. is going to the positive direction. And we will be doing higher market sales than we did in 2019 in 2022 and also in 2023.

And this will come as a result of the new cinemas, of the refurbishments, and also the special formats, which are also giving us a higher ATP. As for the inflation and ticket price, look, we cannot ignore the fact that although we make amazing savings in the cost, we have a lot of costs that went up, much over the inflation. One of them, is very significant for us is the hourly rate that we need to pay now to employees, there are some states that we had to increase the hourly rate by 25%, 30%, even 40%. And this is part of the market. And in order to get the employees, we had to do it. And this is going to stay with us. We know salaries are not going down usually. We had a lot of relatively big increase in energy costs. We need also to think about the losses that we suffered in the last two years, and the higher cost of interest that we need to bear. All these coming together and not only for Cineworld, not only for the cinema business, but all over the world, is creating some of the inflation that we are experiencing.

In general, we’re still the most affordable Entertainment outside of home and these Teresa change here and there, which is meaningful for the results if we increase the ticket price likes $1 in this stage. It’s something like 10% increase. But we’re not rushing with it, we are very, very careful with it. This is one of the reasons we decided that this stage, when we’re still gaining breakout customers and really reintroducing the cinema going heavy. We decided in some of the cases to increase the ticket price only on the big movies and only for limited time like the first two or three weekends. And this was well received by the customers. We didn’t hear any criticism or any there was no complaints around it’s or something that this this is part of the business and prices are going up all around. We are very, very conservative with it, but we need to take care of course, of the results and being realistic with the high cost coming up. We need here and there to increase process.

Here and there to increase prices only for short periods and fall very special movies. And the last question, I don’t have the exact number of the deferrals, but the deferrals with the landlords are running anywhere between 12, 18 months, up to even six or seven years. It depends also on the level of abatements. The client loss gave us — some gave us a bigger abatements, but a shorter period to pay. Some gave us smaller abatement, but they allowed us to pay even up to 10 years. So it was also the strategy of the landlords on where to go. But I think in general these agreements, of course, will be a cash flow cost in the coming years, but not that significant for the cash flow situation.

Operator

Thank you. The next question is from the line of Imogen Barker with Morgan Stanley, please go ahead.

Imogen Barker

Hello, thanks for taking my questions. Three from me, please. The first one is just on the current available liquidity. And if you can’t provide that, then perhaps if you could just help us understand what the cash flow per month in Q4 was on an underlying basis, and how that changes as admissions change. The second question is on the structural change in the industry. The statement references that the theatrical release window that you’re anticipating for this year is 20 to 60 days. Perhaps you could talk a little bit about the agreements that you’ve currently signed with the studios, and what the terms are regarding the theatrical release windows? The final question, is just in the base case scenario of your going concern, is that you get to 85% admissions recovery for 2022 in the US. I just want to understand how the company’s arrived at this forecast, when January and February admissions were more than 50% below 2019. Thank you.

Nisan Cohen

Maybe I will start with the first question and the last question. And, Nick, you will answer on the spectrum. So far liquidity point of view, we’re not disclosing the current liquidity. But you can see the over the results that they in the fluff yield. We have approximately $350 million of available cash, and specifically for Q4. If you remember that October was a very strong month with bond. November was a bit weaker due to the postponed of Top Gun. And in December, was again even strong months with Spider-Man. Saying least, altogether, it’s not we reached 100% of the pre -pandemic level. Of course, they’re increasing the KPI and the ADP, and mainly the [Indiscernible] help us to mitigate some [Indiscernible] in the admission. And we managed to generate a positive cash flow in these three months, after the, I would say paying for CapEx and approximately $65 million of interest.

That’s about the liquidity. We’re not specifically disclosing the liquidity per month or per quarter, but I think the general picture, I think it’s clear and during the presentation and for the full — the full six — the second-half of the year cash flow. Above the base case, we are reselling to 85%, this is after we took into account the extra results of January and February because we believe, and again, everything is in our control, but we believe, and we look also on — and there’s some other forecast that the industry is forecasting that in a month that you will have Avatar, or the Marvel will release Black Panther, or Jurassic World. We can do or — over 85% or so. This number is really an average of some month that we can maybe reach even more than 100% compared to 2019. So that’s the reason we think that, and again, not everything is in our control. We think that 85% level is correct for the base case phenomenon.

Moshe Greidinger

And I will take the piece of the window. I think we said it already, that the movies that probably are going to generate 80% of the box-office, will have a minimum 45 days windows, some of the studios are even talking on the longer window. There will be movies that will have shorter windows. Some of them might even go day in date, I’m not sure. But we would show them, we’ll see. We’re analyzing case-by-case we have deals with all these studios. And some things are more flexible and some are less. But of course, we cannot go into the details of these agreements. I would say, that we are in a good place and all the main movies are going to have at least 45 days of the window.

Imogen Barker

Thank you.

Operator

The next question is from the line of Richard Taylor with Barclays

Richard Taylor

Morning Thanks. A couple please. Firstly, following your comments on retail spend per has cost savings and cost inflation. If we use your base case from the going concern segments. What are the implications to EBITDA margins vs. 2019, would that be consistent with — in line above or below. Secondly, on the Cineplex situation, can you talk us through what will happen in that hypothetical situation that the appeal is not successful. As you’ve noted, they are an unsecured creditor, so that your liquidity is lower than the fine. Given that [Indiscernible], you most know this, what outcome would you anticipate end of that scenario? Thank you.

Nisan Cohen

I’ll take the first question about the margin. I think that, when you look on the results of the SPP, which is really encouraging there, above 30% increase. Knowing that this is coming with higher EBITDA margin. And also on the cost savings, which we are estimating to be between $50 million to $75 million. I think, we can assume that if all goes well, with the admission and really we are referring to the best case scenario, we can say that, we also assume that the EBITDA margin will be very similar to 2019. But it can be a bit down, a bit up. But I think, that we worked very hard in the last two years to sustain the model of the businesses. And I think that this SPP, the cost saving all across the bulk and some other initiatives that we are implementing, including their innovation that in various strategic cinema, some good number, this will help us to, I think close the gap of some of the mission. I would say, admission gap, in order to maintain similar level of margin that we generated in 2019. Moshe.

Moshe Greidinger

So, with regards to the Canadian question, the Canadian issue. I think I made it very clear where we are, we fully trust the Canadian justice system, and we need to wait — for sure not going here to speculate about results to one way or another. We have strong base to believe this decision will be reversed and if not, we will then see all multi-direction for us to go but I will not go into more details.

Richard Taylor

Okay. Understood. Thank you very much.

Operator

The next question is from the line of Kiranjot Grewal with Bank of America, please go ahead.

Kiranjot Grewal

Hey, guys, morning. Just a couple of questions from me. Firstly, we can see your retail spend is up notably, do you think this is sustainable into 2022 and beyond? And given the admissions are a lot lower in H2 than we were expecting, are you still comfortable with the 85% base case assumption for recovery? The last question from me is, given the cost savings done during lockdown, where is the flexibility in you guys managing the higher cost inflation now? Thank you.

Moshe Greidinger

I will say like this. We were, as Nisan mentioned earlier, also surprised by this strong demand and strong increase in the spend per head. But seeing it now almost a year after we reopen in the United States. and we see it all across all territories, I think it is sustainable. There is some change in the habits here. People are buying the bigger portions. People are spending more in the concession. Our new offerings are also increasing the spend per head. We have the VIP, which includes also a more diversified food. We have more alcohol bars, all this is supporting the SPP, so it is for sure, sustainable. It’s not just coming because somebody decided to move for medium popcorn to a large popcorn. There are other ingredients and each one is contributing to these. So we feel it is sustainable and we feel good with it, it’s a very good news for the industry. We see it also in our competition. So we thought for the public. So, the 85% estimate of 2019, also Nisan said already, we feel confident, we look at the lineup.

We had some slowdown, as we said, January, February. But the line up is, really amazingly strong. And if there are no COVID surprises, we are there to reach these targets and even maybe beat it. And the last is, the cost savings. The cost savings are good. Some of the cost savings are helping us to adjust the increase in the costs that I mentioned, the hourly rates to employees, the energy costs. But we have other savings against it and we believe, that at the end of the day, we will not need to increase automatically the prices to change something very substantially. We want to say, the most affordable entertainment outside of home. Thank you.

Kiranjot Grewal

Thank you.

Operator

Next question is from the line of Ali Naqvi with HSBC, please go ahead.

Ali Naqvi

Hi. Good morning. I just have a couple of questions, please. In terms of the film royalties, is there a difference between the royalty rate you have to pay for films that are, let’s say day and date releases versus those that maintained level of exclusivity? And then, just on cost, maybe asking another way. What inflation you seem to [Indiscernible] on utilities and how much of that is hedged or can be hedged that you’ve put through? And finally, on the base case, how many of the major releases that you are currently relying on? I mean, how many of those could potentially slip and you would still meet that 85% versus potentially that 85% becoming a harder target to meet?

Moshe Greidinger

Okay. With regards, again, I said we’re not going into details with our deals with our movie suppliers, of course, but of course, when there is a day-and-date release we hardly do a day-and-date release. But if the window is shorter, we’re in most of the cases paying a bit less for the movie. And the longer windows, which are more in line of what we had before, are keeping the [Indiscernible] they will. The utility, energy, we have some hits deals, which are protecting us currently, but not also too long. So I think the longest one is another year in the UK. We feel the energy costs, but we also believe that it is now in a way, in kind of the climax, in view of not only the COVID results, but also, of course, Russian-Ukrainian war, and all these — this probably will stabilize at a certain stage. And there’s a huge burden on businesses and one household set-ups. But even in this level, this is not demanding from us to do any dramatic increases.

Here and there, we will need to go in line with the prices according to our cost, and according to the inflation. And your last question, I think this last big move of movies were done by Warner Brothers a week ago, in view of just delays in production. And the head because of COVID. This is — they are very confident about the business and want to be as much as they can in the cinemas, their Batman results probably convinced them. The deal is the way to be in, but sometimes you have delays in production that are out of control. I can say that for most of these blockbusters if you see, the movies are already ready, and the movies are already being screened in the studios. And so the chances of major delays do not exist. But after the two years that we have passed, will never say never. We hope there would be a minimal change that will not impact our estimate.

Ali Naqvi

Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference over back to Moshe for closing remarks.

Moshe Greidinger

Okay. So, again guys, thank you for listening to us and think it is an important day for us. We come really with a strong optimistic feeling. The lineup speaks for itself. We have an amazing team. Let have passed very difficult two years. Everybody very enthusiastic to welcome our customers again for the cinemas. I personally, on the weekend of the opening of Spider-Man, stayed in New York. And the huge — after a long time, huge screens that were filled until the first row. People are cheering, laughing, crying, being frightened and in front of the big screen. And it was really great experience, not only for them, but also for me. And we hope that we — no big COVID surprises. And we are going back into the normal thing. And to do what we do best and this is to run cinemas and give our customers the experience, making Cineworld Group the best place to watch a movie. Thank you very much.

Nisan Cohen

Thank you.

Operator

Ladies and gentlemen, this conference has now concluded, and you may disconnect your telephone. Thanks for joining and have a pleasant day. Goodbye.

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