KINEPOLIS GROUP

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KINEPOLIS GROUP
Moutstraat 132-146
B-9000 Gent
Belgium
T +32 9 241 00 00
E [email protected]
BTW BE 0415 928 179
RPR BRUSSELs
WWW.KINEPOLIS.COM
kinepolis group Annual Report 2007
kinepolis group
Kinepolis Group
Annual Report 2007
Summary
PART I
Board of Directors’ Report
2
6 |TECHNOLOGICAL LEADERSHIP
31
1 |LETTER TO THE SHAREHOLDERS
5
7 |CORPORATE GOVERNANCE
33
Organizational structure
8
Board of Directors and special committees
33
Executive management
37
2 |COMPANY PROFILE
9
Policy on conflict of interests
37
Vision and mission
9
Insider trading policy 37
9
Warrants and options 38
Major European player
10
Public disclosure of gross remunerations
38
Key figures
11
Compliance with the
3 |CORE ACTIVITIES
13
Ticket sales 13
Food, Beverage & Retail
16
Media & Events
17
Corporate Governance Code
39
8 |FINANCIAL REPORT
41
Film distribution
18
Real Estate
20
4 |DIVERSIFICATIONS
23
Alternative content
23
PART III
Kinepolis goes 3D
25
Decisions proposed to shareholders The new Kinepolis concept
26
PART II
Financial statements
49
summary
Profile
109
PART IV
5 |HUMAN RESOURCES
29
Information for shareholders
113
kinepolis group 2007
Board of
Directors’
Report
Board of Directors’ Report
PART I
1 |Letter to the Shareholders
2 | Company Profile
3 | Core Activities
4 | Diversifications
5 | Human Resources
6 | Technological Leadership
7 | Corporate Governance
8 | Financial Report
kinepolis group 2007
DaY 1
It’s marvellous, all the different emotions
you can experience at Kinepolis!
Tap in www.kinepolis.mobi to discover the programme
at your nearest Kinepolis by cell phone, PDA or PSP.
Also film information and a special events listing.
01 | Letter to the Shareholders
Dear Shareholder,
In 2007 Kinepolis was able to increase revenue by 0.5%,
Ticket sales represented a lower portion of total
despite a 3.4% fall in admissions. Revenue was boosted
revenue (59%) than in 2006 (61%), with a higher
by digitalization and other business activities like food,
portion coming from food, beverage & retail, and
beverages, retail, business-to-business and real estate.
from commercial lettings.
Food, beverage & retail rose by 5%, thanks to higher
Kinepolis Group ended 2007 with net profit of € 14.7 m,
consumption per-visitor and increased sales prices.
operating profit of € 25.1 m, EBITDA of € 49.6 m and
Business-to-business activities in the cinema environ-
revenue of € 212.3 m. Net income was up 1% on 2006
ment remained a source of growth, with revenue from
(€ 14.6 m).
events, screen advertising etc. up 5%.
Revenue from Kinepolis’s film distribution division
(KFD) rose, thanks to the success of Flemish films
Revenue
(Man zkt Vrouw, Ben X, Vermist) and of The Golden
Compass.
In 2007 Kinepolis Group generated total revenue of
Real estate income surged by 25%, the main factor
€ 212.3 m, 0.5% more than the year before.
here being the letting of the Polish Cinema City
19 January 2007 onwards.
down 3%, reflecting lower admissions, partially offset by
53% of global revenue was generated in Belgium, the
the higher average ticket price thanks to the success of
Group’s home country, 25% in France, 20% in Spain,
digital film.
and 2% in Poland and Switzerland.
01 | LETTER TO THE SHAREHOLDERs
Kinepolis facility to the ITIT cinema group from
The gross box office (income from ticket sales) was
Real estate development
Kinepolis’s land and buildings are a vital business
asset. The fact of owning a good 90% of its real
estate sets Kinepolis apart from most other cinema
(1) EBITDA is not a recognized IFRS term. Kinepolis has defined the concept by adding back
charges for depreciation, amortization, impairments and provisions to the operating profit, and
subtracting any reversals or uses of the same items.
groups, giving it the independence, freedom and
flexibility to come up with a number of innovative
kinepolis group 2007
projects and concepts, both inside and outside its
Kinepolis Group and digital cinema
own walls.
Kinepolis is continuing to install digital equipment in
The real estate division is being further extended
every country in which it operates, to allow the ever
and given managerial independence in 2008. In
growing number of digital films to be presented on
this context an additional real estate manager was
Kinepolis screens. Digitalization of the cinema medium
recently appointed, and the board of directors was
is providing better sound and image quality and offering
strengthened by a further director from the real
a whole range of new entertainment possibilities and
estate sector.
business-to-business applications.
Unveiling of the new ‘open foyer’ Kinepolis model
3D Digital Cinema
The latest Kinepolis complexes (Kinepolis Ostend
The very latest application of digital cinema is 3D Digital
and Kinepolis Bruges) incorporate a highly innovative
Cinema (Kinepolis, Dolby Laboratories, Barco). Kinepolis
design concept. Setting the tone are the ‘open foyer’
has 19 3D-installations at its various international loca-
with extensive shopping opportunities, seat reserva-
tions. In November 2007, Kinepolis presented its first 3D
tion and ticket control facilities (the latter functioning
film Beowulf, followed in the early part of 2008 by the
automatically using sensors built into the seats), and
3D-film Fly me to the Moon and the concert film U2 3D.
the extensive digitalization of film, data and communication channels.
Prospects
This ‘home-grown’ total concept was first implemented in December 2007, with Kinepolis Kortrijk
Whereas the 2007 film year had one clear ‘blockbuster
(10 screens) becoming, on its tenth birthday, the first
season’ running from early May to the end of August,
of the Kinepolis complexes to be converted into a
the expected success titles for 2008 are much better
new generation Kinepolis.
distributed over the year.
In most Kinepolis complexes the seats are now
I am Legend continued its international year-end suc-
numbered, allowing film fans to reserve tickets and
cess into the new year. Asterix at the Olympic Games
seats in advance.
and Bienvenue chez les Ch’tis got off to an overwhelming
start in France and French-speaking Belgium and
In February 2008 the downtown cinema Forvm
Aanrijding in Moskou scored well in Flanders. Thus
Nîmes (4 screens) also reopened after many months,
the admission figures for January and February were
totally renovated and with a seat reservation system.
influenced positively.
A word of thanks
Still to come are highly promising film titles like
10 000 BC, Indiana Jones 4, Chronicles of Narnia:
Prince Caspian, The Mummy 3, the 22nd Bond film
On behalf of the Board of Directors we would like to
Quantum of Solace, Harry Potter and the Halfblood
thank our employees for their hard work and devotion to
Prince and Escape from Madagascar.
Kinepolis Group.
2008 is also promising to be a strong year for
Kinepolis is determined to achieve its strategic goal
local films like Los and Suske en Wiske (Flanders),
of sustainable and profitable growth. For successfully
Disco (France) and Mortadelo & Filemon 2 and Los
meeting the challenges it faces at various levels, Kinepolis
Crimenes de Oxford (Spain).
Group knows that it can count on the efforts and commitment of its employees and their understanding of the vital
importance of creating value for both shareholders and
Dividend of € 0.65 per share
cinema-goers. An essential factor here is digitalization,
which is offering our visitors new opportunities.
Customer-directed thinking, real estate development
Meeting of 16 May 2008 that the company declare a
and a continuous process of innovation are the Kinepolis
gross dividend of € 0.65 per share in respect of 2007
Group’s greatest assets in maintaining its lead over the
(2006: € 0.64 per share). The payout ratio of 30%
competition. Together with the Board of Directors we
has now been maintained for four years in a row.
express our total confidence in the future.
01 | Letter to shareholders
The Board of Directors will be proposing the General
Joost Bert
Joint CEO
Eddy Duquenne
Joint CEO
Baron Hugo Vandamme
Chairman of the Board of Directors
kinepolis group 2007
Joost Bert and Eddy Duquenne
Co-CEOs
Organizational structure
Eddy Duquenne, the former top man at Sunparks,
The two co-CEOs are supported by, among others,
joined Joost Bert as co-CEO on 18 December 2007.
Jan Staelens as CFO, Tom Lambert as General Manager
Mr Duquenne’s appointment follows the decision by the
of Kinepolis Belgium, France and Switzerland and
Board of Directors to significantly strengthen operating
Manu Claessens as General Manager of Kinepolis Spain
management.
The present organizational structure of Kinepolis will be
As co-CEO, Eddy Duquenne will carry full operating respon-
streamlined and optimized in 2008 towards customer
sibility, with Joost Bert remaining responsible for strategy,
care, professionalization of the real estate activities and
concept definition and project development in the Group.
effective decision-making.
02 | Company Profile
VISION AND MISSION
Kinepolis Group stands for a world in which people enjoy the entertainment they choose for
themselves – when, where and with whom – and decide themselves how they wish to experience
their emotional thrills.
Kinepolis Group intends to strengthen its leadership positions where it is already a strong player, and
to become a leader on the other markets on which it is present. It also wants its audiences to enjoy
top quality leisure activities and business experiences. To achieve this, it is meeting the changing
needs of its audiences in a variety of ways.
Kinepolis is gradually reshaping its cinemas into ‘moving’ film environments where customers
become the directors of their own emotions.
PROFILE
Since it was founded in 1997 and its subsequent SPO
02 | COMPANY PROFILE
in 1998, Kinepolis has grown into the market leader
in Belgium and a trendsetting player on the European
market. With 23 cinema complexes in Belgium, France,
Spain, Poland and Switzerland, welcoming 22 million
visitors in 2007, Kinepolis is one of the leading cinema
operators in Europe and employs almost 1 600 people.
The Kinepolis concept is driven by a concern for innovation and customer focus. Kinepolis Group is one of a
select group of cinemas in the world that are able to offer
digital cinema, using the revolutionary DLP technology.
Kinepolis now has an extensive platform of digital
Kinepolis Ostend (B)
kinepolis group 2007
Kinepolis Ostend (B)
1
11
projectors in Belgium, France and Spain. Alongside
Hollywood productions, film lovers can also experience
7
alternative content in digital format, such as prestige
1
events, TV serials, gaming, live concerts and sports
competitions.
3
With a number of pioneering innovations each time,
every new cinema complex is an additional step into the
future. The most striking of these are the accessibility of
the new foyers, the seat reservation system, the ticket
pricing and control system, and the extensive digitalization of film, information and communication channels.
Kinepolis in Europe
COUNTRY
Belgium
COMPLEXES
11
SCREENS
EMPLOYEES*
138
786
France
7
87
395
Spain
3
64
375
Poland
1
20
1
Switzerland
Total
1
8
49
23
317
1 588
(*) number of staff contracts on 31/12/07
10
KEY FIGURES (in € thousands) (1)
31/12/2007
31/12/2006
%
22.0
22.8
-3.4%
Revenue
212 324
211 191
0.5%
EBITDA(2)
49 579
48 720
1.8%
Operating profit
25 146
26 507
-5.1%
Net financing cost
-6 890
-6 693
-2.9%
Profit before tax
18 256
19 814
-7.9%
Income tax expense
-3 530
-5 179
-31.8%
Net profit
14 726
14 635
0.6%
2.15
2.14
0.4%
Total admissions (in millions)
Earnings per share – basic
Earnings per share – diluted
Net Financial Debt (NFD)
EBITDA/Revenue
2.15
2.09
2.6%
138 868
136 570
1.7%
23.4%
23.1%
0.3%
02 | COMPANY PROFILE
(1) The IFRS valuation rules are available on
www.kinepolis.com/investors under the ‘financial information’ heading.
(2) EBITDA is not a recognized IFRS term. Kinepolis has defined the
concept by adding back charges for depreciation, amortization, value
impairments and provisions to the operating profit, and subtracting any
reversals or uses of the same items.
Kinepolis Liège (B)
Kinepolis Madrid (E)
kinepolis group 2007
11
DaY 2
Nearly there...
The Kinepolis open foyer is a meeting place where
you can reserve film tickets in advance, shop and play
computer games, alone or with friends.
12
03 | Core Activities
2007 will go down as a moderately good year. Despite a
number of exceptional factors which worked at the cost of
the number of visitors to Kinepolis cinema and cinemas
in general, all core activities produced proper results. In
2007 Kinepolis was again able to count on the unbridled
commitment and unequalled professionalism of its
employees.
TICKET SALES
In 2007 Kinepolis Group welcomed 22.0 m visitors to
its cinema complexes, 3.4% fewer than the year before
(22.8 m visitors). The main reasons are the very strong
2006 admissions figures, a warm spring and an unexciting international film line-up.
The recently opened Kinepolis complexes in Bruges
03 | Core activities
(2006), Nancy and Granada (2004) all achieved significant growth in 2007. The newly opened Kinepolis Ostend
(July 2007) got off to a cautious start.
September and April proved the weakest months of the
year for Kinepolis Group, and July the absolute top month.
Top films in 2007 were Pirates of the Caribbean: At
World’s End, Harry Potter and the Order of the Phoenix,
Ratatouille, Shrek the Third, Spider-man 3 and The
Simpsons Movie.
kinepolis group 2007
13
Ben X and Vermist were notable local film successes in
Flemish-speaking Belgium. The Departed, La Môme,
Elizabeth and Eastern Promises were the main hits in the
Cinémanie segment (screening of authors’ films). Taxi
4 and La Môme proved popular with audiences in the
French-speaking part of the country.
French films drew much applause in 2007, thanks in
part to the film topper Taxi 4. The French top 10 also
included La Môme and Arthur et les Minimoys, but
Ensemble c’est tout and Le cœur des hommes also
did very well.
‘Lumière sur’, the French label awarded to ‘better’
films (comparable with Cinémanie in Belgium and
Spain), meant that many more such films were
screened such as We own the night, Le Scaphandre
et le Papillon, Dialogue avec mon jardinière, La vérité
ou presque and Ennemi intime.
In Spain the Spanish thrillers El Orfanato and Rec
became real blockbusters.
14
Still to come are highly promising film titles like
10 000 BC, Indiana Jones 4, Chronicles of Narnia: Prince
Caspian, The Mummy 3, the 22nd Bond film Quantum
of Solace, Harry Potter and the Halfblood Prince and
Escape from Madagascar.
2008 is also promising to be a strong year for local
films like Los, Samson en Gert and Suske en Wiske
(Flanders), Disco (France) and Mortadelo & Filemon 2
and Los Crimenes de Oxford (Spain).
Whereas the 2007 film year had one clear ‘blockbuster
season’ running from early May to the end of August,
the expected success titles for 2008 are much better
distributed over the year.
I am Legend continued its international year-end success into the new year. Asterix at the Olympic Games
and Bienvenue chez les Ch’tis got off to an overwhelming start in France and French-speaking Belgium, and
Aanrijding in Moscou scored well in Flanders. In this
way admissions for January and February are already
03 | Core activities
very positive.
kinepolis group 2007
15
FOOD, BEVERAGE & retail
F&B revenues and margins were again outstanding in
2007, thanks to an extended F&B range and innovative
sales concepts.
Kinepolis Ostend (B)
The most notable trend in 2007 was the further progression in sales of healthy food and by both ‘film-related’
and ‘non-film-related’ merchandising in a number of
Kinepolis complexes. Alongside the traditional sweet
popcorn, Kinepolis Belgium also introduced salt popcorn.
Following the model of Kinepolis Bruges, Kinepolis
Nancy, Kinepolis Lomme and Kinepolis Madrid, Kinepolis
Ostend and Kortrijk also introduced a new sales concept.
Self service outlets replace the traditional fast lanes, and
the average F&B offering has been extended. Alongside
the traditional favourites like coke, chips and popcorn,
Kinepolis Ostend and Kortrijk are also offering a choice
of healthy food and drink, like fruit juices, water, drinking
yoghurt, rolls and sandwiches and fruit, in line with the
current trend. Concern for customer comfort means
that visitors no longer have to first go and eat elsewhere,
but can enjoy a snack in a friendly atmosphere in the
complex itself.
Kinepolis Ostend (B)
16
MEDIA & EVENTS
In 2007 the Kinepolis complexes again organized a
number of successful B-to-B and B-to-C events, which
generated substantial Media & Events revenue.
Successful B-to-B events are putting Kinepolis complexes
more firmly on the map as congress and media centres.
Digitalization is giving Kinepolis a unique positioning in
the B-to-B landscape. Excellent customer service and
state-of-the-art installations have made Kinepolis a trusted
partner for events organizers.
Prestigious names like Microsoft, Telefónica and Renault
[email protected]
again opted for Kinepolis as the venue for launching their
latest products.
In January 2007 the operation of Kinepolis Poznan was
Kinepolis’, the cinema is being strongly promoted as a
transferred to ITIT. Kinepolis is nonetheless continuing
B-to-B location with forceful prospecting and intensive
the B-to-B activities. Under the new name ‘Cinema City
media campaigns.
In 2007 Kinepolis organized various events for specific
target groups. It continued the Sunday programme for
the kids and family segment (‘Magic Sundays’, ‘Matinées
Magiques’) and the successful ‘[email protected]’
programme. Fully sold out theatres showed the [email protected]
03 | Core activities
theMovies concept to be right on the ball. We are now
working in Belgium on a ‘[email protected]’ concept.
­Popular themes and events are not forgotten either, with
special initiatives around Halloween, St Valentine’s Day
and Christmas.
In 2007 the Kinepolis website was redesigned. The site’s
popularity with both customers and businesses is shown
among other things by the success of bannering and
advertising on the site.
Kinepolis Ostend (B)
kinepolis group 2007
17
FILM DISTRIBUTION
KFD confirms its success
Kinepolis Film Distribution (KFD) continued its close
collaboration with the Dutch company RCV. 2007 was
another good year, in which KFD strengthened its
reputation as an independent distributor and again treated
Belgian cinema-goers to a wide choice of films, including
Belgian success stories. Toppers included Man Zkt Vrouw,
Ben X, Vermist and the Studio 100 productions Plop en
de Pinguïn and K3 en de Kattenprins.
In 2007 Flemish films seduced a record number of
visitors to the cinema, with five Flemish film productions
among the top twenty cinema hits for 2007.
Another media channel that is advancing more and
Film distribution in 2007
more is the network of digital screens in Kinepolis
foyers.
KFD, which specializes in distributing Flemish films, has
become a permanent and valued part of the Belgian film
Numerous international film and TV stars again
landscape. Kinepolis has continued to support Flemish
dropped in at Kinepolis in 2007, thereby strengthening
films by bringing onto the big screen most of the TV films
its image as a film temple par excellence.
Exclusive film promotions, foyer events and special
film decors made sure that there was always something for Kinepolis customers to experience.
On-screen advertising also did well, with a number
of media campaigns placing Kinepolis more than
ever top-of-mind with Belgian, French and Spanish
cinema-goers.
18
and Chris Lomme, the thriller Linkeroever by Pieter van
Hees with Matthias Schoenaerts, Los, Jan Verheyen’s
film based on the eponymous book by Tom Naegels,
to more subtle works like Patrice Toye’s Spring Ritual.
Young people can look forward to a number of box office
hits, including the first Samson and Gert full-length film
Hotel op Stelten, the Studio 100 productions Piet Piraat
3 and Het Huis Anubis, along with the digital versions of
Suske & Wiske en de Texasrakkers.
2008 also marks the start of a new 3D era with the full
length cartoon film Fly me to the Moon.
from the second Faits Divers series, in collaboration with
the VMMa (Vlaamse Mediamaatschappij).
Internationally KFD scored particularly well with, among
others, Premonition (Sandra Bullock) and Fracture (Anthony
Hopkins), proving once again that well-known names
continue to draw audiences. Huge Belgian audiences enjoyed
Hairspray, the revival of the musical, and the epic fairy tale
The Golden Compass, the first part of a trilogy, with actors
03 | Core activities
including Nicole Kidman and Daniel Craig.
Looking forward to 2008
In 2008 KFD and RCV will together be tempting us once
again with a very attractive film line-up. At international film
markets they have already been able to sign distribution
contracts for The Eye (Jessica Alba), Bangkok Dangerous
(Nicolas Cage) and Incendiary (Ewan McGregor). In addition,
a whole row of Flemish products will again be providing lots
of film pleasure, from the romantic comedy Aanrijding in
Moskou with Barbara Sarafian, the drama Happy Together
by Geoffrey Enthoven, starring Ben Van Ostade, Kürt Rogiers
kinepolis group 2007
19
REAL ESTATE
In 2007 Real Estate continued work on existing or new
cinema projects, as well as initiating a number of socalled stand-alone projects. 2007 was also a busy year
for the Real Estate letting activities.
Kinepolis is growing
At the end of 2007 Kinepolis had 23 complexes, with
317 screens and 94 226 seats. The total surface area
being operated is around 1 million m², with 55 000 m²
Kinepolis Ostend (B)
of lettable commercial space.
This impressive real estate portfolio is in the good
hands of the Real Estate division, which is responsible
within Kinepolis for managing and developing a number
Activities in 2007
of existing and new, special projects and a number of
stand-alone projects.
Ostend
In July 2007 Kinepolis opened a new cinema complex
in Ostend with 8 screens, 1 755 seats and 320 parking
spaces on a 1.7 hectare site. This striking, sober-styled
building has character and blends into its environment.
Designed to be human sized and easily accessible, it
immediately imparts a sense of space and calm. At last
Ostend’s film fanatics can feel properly catered for.
Poznan
Since 19 January 2007 the operation of the Polish
Kinepolis complex has been in the hands of the Israeli
group IT International Theaters (ITIT). 18 of the 20 theatres are let to ITIT. The two remaining theatres continue
to be operated by Kinepolis for commercial purposes.
The good cooperation between the two reputed
international cinema operators made 2007 a successful
Kinepolis Kortrijk (B)
20
operating year.
Stand-alone developments
Looking forward to 2008
In 2007 Real Estate continued work on a number of
so-called ‘stand-alone’ projects, that is real estate
In 2008 Real Estate is examining whether possibilities
developments that are separate from cinema projects,
exist to build more new cinemas in Belgium, France
but complementary to them. In Ghent a building licence
and Spain. It is also completing a number of current
has been obtained for an apartment project. In Hasselt
Kinepolis projects, including Longdoz/Liège, Ghent
a leisure centre is shortly to be developed. At Kinepolis
and Hasselt.
Bruges a B-to-B reception room is being completed to
The outdated catering businesses in the concessions
meet demand for events. Other sites in Belgium and
are gradually being given a new and more trendy look.
France have also been examined with a view to similar
developments.
Longdoz
Kinepolis is partnering with Walloon project developer
Concessions
Wilhelm & Co to build an 8-screen, 1 264-seat
In 2007 a dance school and a TV studio moved into the
cinema complex in Longdoz, Liège, with opening
Kinepolis Poznan premises, and various catering busi-
scheduled for the second half of 2009.
nesses into the Belgian and French Kinepolis complexes.
Poznan
has the Lazer Game in Mulhouse. In this way the Poznan,
The development of the planned shopping centre
Nîmes, Mulhouse and Braine complexes were able to
next to Cinema City Kinepolis in collaboration with
offer a wider range of attractions and welcome greater
the Spanish group Bogaris may possibly be started
numbers of visitors.
in 2008.
03 | Core activities
The karting in Poznan has proved a great success, as
Mediacité Liège (B)
kinepolis group 2007
21
DaY 3
Cool, there are comic strips here too.
Kinepolis is not just top films. It’s also the best
books, comic strips, CDs and of course DVDs, all on
sale in the multimedia store.
22
04 | Diversifications
ALTERNATIVE CONTENT
Alternative content: an integral part of today’s
cinema scene
In 2007, successful live sports events like basketball
championships, as well as cast previews, concerts,
operas and TV series and even surgical operations or
gaming on the big screen, are increasingly supplementing programming at Kinepolis cinemas, and are proving
massively popular each time with target audiences.
Opera in the cinema
Opera in the cinema
For the second season in a row, the New York Metropolitan Opera, one of the world’s most prestigious opera
houses, is partnering with a number of cinemas to show
8 of its productions worldwide live in HD. This season
Take That
including the Belgian Kinepolis complexes at Ostend,
At the end of 2007, Metropolis Antwerp and Kinepolis
Ghent, Brussels and Antwerp. The season got under
Brussels, in collaboration with Vue Entertainment, one
way on 15 December with Gounod’s Romeo and Juliette,
of Britain’s leading multiplex operators, screened a live
produced by Flemish director Guy Joosten.
concert in HDDC (high definition digital camera) by
04 | Diversifications
the number of cinemas taking part has tripled to 600,
Take That, the most successful English band since the
In collaboration with Telefónica and the Spanish National
Beatles. The concert took place in London’s O2 entertain-
Opera, Kinepolis Madrid projected the opera Madame
ment temple, as part of the fully booked new Take That
Butterfly with a guest performance by Spain’s best known
tour – Beautiful World – following the release last year of
opera singer, Placido Domingo.
the album of the same name.
kinepolis group 2007
23
Let’s go XL Gaming
In 2007, XL Gaming or ‘big screen gaming’ with the
new Playstation 3 (PS3) was introduced in all European
Kinepolis complexes. ‘XL Gaming’ is a further application
of digital cinema.
During school holidays the game rooms are open daily.
Outside the holidays gamers can reserve screens in their
local Kinepolis cinema on Wednesday and Saturday
afternoons.
In cooperation with EA Games and Spain’s largest youth
FIFA 2008, Kinepolis Madrid (E)
radio station, Kinepolis Madrid organized the Spanish final
of FIFA 2008. Various players from the Real Madrid team
were present at the event. Kinepolis Madrid’s emblematic
screen 25 was packed to the last seat for this unique
gaming experience.
Sports competitions
Following the success with the World Cup football
championship in 2006, Kinepolis Spain again organized in
2007 a number of live projections of major sports events.
In collaboration with a number of national sponsors, the
Spanish matches in the European basketball championship and the main America’s Cup races were broadcast
live at Kinepolis Madrid and Kinepolis Valencia. Kinepolis
Spain also projected nine Formula-1 races on the big
screen in cooperation with Tele Cinco, Spain’s largest
commercial TV station, allowing Spanish aficionados of
F1 world champion Fernando Alonso to admire their idol’s
performances in optimal conditions.
At the start of 2007 Kinepolis Ostend programmed the
live broadcast of the basketball match between Telindus
Ostend and Red Star Belgrado. More than 300 fans
attended this event, and were delighted at the concept,
XL Gaming
24
the atmosphere and the cheerleaders.
… and much more
Kinepolis is also ready to give a ‘digital stage’ to other
alternative content forms, including even more live
concerts, sports competitions, and projections for the
business world.
KINEPOLIS GOES 3D
Kinepolis Belgium, France and Spain launch
Dolby 3D Digital Cinema
100 Days Moto, Kinepolis Madrid (E)
With its revolutionary 3D system Kinepolis Group is
adding a new dimension to film experience.
During simultaneous press conferences in Brussels,
Lomme (Lille) and Madrid, the Kinepolis Group presented
In September Kinepolis Hasselt presented live the ‘Motor-
its 3D system to the press in November 2007.
cross of Nations’, the single most important motorcross
competition of the year.
On its path towards full digitalization with HDDC (High
Definition Digital Cinema), Kinepolis is taking the road to
3D Digital Cinema in cooperation with Dolby Laboratories
TV series in preview:
Inc., Barco and Texas Instruments (DLP Cinema®).
04 | Diversifications
from Heroes to De Kampioenen
At the start of 2007 fans of American serials were able
to watch the pilot version of the popular NBC Heroes
series at Kinepolis Madrid. This successful experiment
led Fox TV to choose Kinepolis Madrid for the high
definition projection of a never-before shown episode of its
successful Prison Break series. 1 000 fans were invited to
this exclusive event, where they could also meet various
members of the cast.
At the end of 2007 the digital première of popular Flemish
series FC De Kampioenen took place in the presence of
the players in various Belgian complexes.
kinepolis group 2007
25
Kinepolis shop
Open foyer, Kinepolis Kortrijk (B)
This latest generation relief cinema is based on the
extensive shopping opportunities, the seat reservation
digital DLP®-technology and forms a new milestone in
and ticket control facilities and the extensive digitaliza-
Kinepolis’s technological development.
tion of film, data and communication channels.
Until now 19 Kinepolis complexes have been fitted out
This ‘home-grown’ concept was first implemented in
with a 3D-room: all Kinepolis complexes in Belgium,
December 2007 in an existing complex, with Kinepolis
France and Spain.
Kortrijk (opened in 1997) the first of the Kinepolis complexes to be converted to the new Kinepolis concept.
In November 2007, Kinepolis presented its first
3D film Beowulf, followed in Belgium in early 2008 by
Kinepolis Kortrijk has been turned into a hightech
Fly me to the Moon. The concert film U2 3D became
cinema complex, and now serves as a showcase for
the third 3D film on the bill in March 2008. The merg-
the new Kinepolis concept.
ing of digital sound and relief images offered U2 fans a
concert experience that was almost the real thing.
Open foyer
The central, open foyer is a meeting place for
THE NEW KINEPOLIS CONCEPT
everyone, and not just for film-goers. There is room
for leisure in the film corner, for play in the gaming
26
The latest Kinepolis complexes (Kinepolis Ostend and
corner, for shopping pleasure in the Kinepolis shop or
Kinepolis Bruges) integrate a highly innovative design
for a friendly drink or snack with friends in one of the
concept. Setting the tone are the ‘open foyer’ with
eating areas.
Digitalizing of film, data and
communication channels
Kinepolis Kortrijk has gone the full digital path, not only
with digital 2K projectors and films (High Definition
Digital Cinema, THX), but with numerous digital
signposting, advertising, programming and information
screens throughout the complex. Communication is
both better and environmentally friendlier (less paper!).
The digitalization of the medium offers better sound
and image quality and a number of new entertainment
possibilities like XL Gaming (gaming on the large
Digital signposting, advertising, programming and information screens
screen) and 3D Digital cinema.
Seat reservation
When buying their tickets, film-goers can choose their
own seat: either the most central, free seat, presented
automatically by the ticketing software, or another,
for which the visitor can also consult the crystal clear
overview of the theatre seating on the digital screens
in the foyer.
04 | Diversifications
Automatic ticket control
The visitor has only to show a film ticket on entering
the theatre. A built-in sensor registers every seat
that has been taken. The control mechanism then
compares the number of tickets sold with the number
of people present in the theatre. In this way the ticket
control is conclusive, efficient and customer-friendly.
High Definition Digital Cinema
kinepolis group 2007
27
DaY 4
We are the champions!
Live broadcasts are also possible at Kinepolis
with digital cinema. Come to Kinepolis and
cheer on your favourite basketball, football or
Formula-1 team.
28
05 | Human Resources
Kinepolis attaches major importance to sustainable quality, efficiency and flexibility and similar aspects in all HR
policies, and indeed at every level of the business. The
HR department is also constantly striving to offer added
value to Kinepolis employees.
Key moments in Belgium in 2007 included the opening
of the Ostend complex, the first steps towards introducing new time registration systems in the complexes,
assistance from HR with the move of Kinepolis Group’s
main office from Brussels to Ghent, and preparing the
social elections due to take place in 2008.
In France an in-house planning system, developed
05 | Human Resources
and tested to enable the personnel and operating
departments to work more closely together, is to be
definitively introduced in spring 2008.
Following on the other French complexes, ‘polyvalence’
or multi-skilling has also been introduced in Lomme
and Nîmes to optimize productivity and service provision. As well as a wider range of tasks, employees can
now also carry out different tasks during the various
screenings.
kinepolis group 2007
29
Day 5
Wow, that spear just missed me!
19 Kinepolis theatres are equipped with 3-D. Latest
generation relief cinema based on digital DLP technology
provides even more intense film experience. As a spectator
you’re right in the middle of the action.
30
06 | Technological Leadership
Digitalization
medium is providing better sound and image quality
and offering a whole range of new entertainment pos-
Kinepolis is continuing to install digital equipment
sibilities and business-to-business applications.
in every country in which it operates, to allow the
ever growing number of digital films to be presented
ICT will be playing a key role in guaranteeing perform-
on Kinepolis screens. Digitalization of the cinema
ance during the transition from analog to digital screening. Digital cinema goes hand in hand with higher
infrastructure quality. Both will improve the operational
infrastructure of tomorrow.
The ‘new theatrical business’ is also firming up now
that more and more alternative content is becoming
available in digital format.
Despite the slow uptake of the digital medium
Kinepolis has already fitted half of its Belgian theatres
06 | Technological leadership
with Barco projectors and Dolby servers. In France and
Spain too, many films are already being projected in
digital format.
3D
A new world is opening for 3D cinema. Until now
Kinepolis has already fitted 19 theatres with digital
3D projection. This is a specific Dolby system that is
partly built into the digital projector, and allows a film
to be viewed in 3D through special glasses. The first
3D films (Beowulf, Fly me to the Moon and U2 3D)
have already proved a great success.
kinepolis group 2007
31
3D is today a hot topic for American studios and
for major directors like James Cameron and Steven
Spielberg, who are all planning their own 3D films
for 2009.
ICT
In 2007 all Belgian Kinepolis theaters were fitted with
a new seat reservation system allowing visitors to
chose their own seats. In 3 Belgian complexes, seat
detection has also been introduced, making possible
the open foyer concept.
Numbered seats with detection system
The cash till system has also been updated with an inhouse developed platform which registers everything
in a single transaction, with big time savings for both
visitors and staff. This system will shortly be extended
authorities have tested and approved the system, the
with a number of major new customer functionalities
new cash tills will also be installed in other countries.
and will be operationally simplified. Once local
For 2008 ICT has again a busy agenda: not only will
administration be further automated, but there will
be a lot to do in digitalizing foyers and projection, and
developing new operating concepts.
Business Intelligence
Kinepolis continues to make extensive use of its
Business Intelligence department and data warehouse
system for the refined analysis and models which
enable it to fine-tune its strategy and improve
profitability.
32
07 | Corporate Governance
On 18 December 2007, the Kinepolis Board of Directors approved a revision of its Corporate
Governance Charter. This has been drawn up in accordance with the principles and provisions of the
Belgian Corporate Governance Code, published on 9 December 2004 by the Corporate Governance
Committee chaired by Count Maurice Lippens. The Charter can be consulted on the Kinepolis website
under Investor Relations.
The present report contains factual information about Corporate Governance in the Company,
including any changes in this policy area and relevant events that have taken place during the financial
period. All disclosures required by the Code can be found below.
BOARD OF DIRECTORS AND SPECIAL COMMITTEES
The table below gives the composition of the Board
The Board regularly reviews the criteria for its composition
of Directors.
and for that of its committees in the light of prevailing and
07 | CORPORATE GOVERNANCE
Composition of the Board of Directors
future developments and expectations.
In recognition of her contribution to the Kinepolis Group,
Ms Claeys-Vereecke has received the honorary title of
In this spirit the Board decided recently to propose
Co-founder and Honorary President.
Marc Van Heddeghem, Managing Director of Redevco
Belgium, and Geert Vanderstappen, a partner in Penta-
At 31 December 2007 the Board of Directors consisted of
hold, as external, independent directors.
eight members, three of whom should be viewed as independent of the reference shareholders and management.
Mr Florent Gijbels’s mandate ends at the General Meeting
Since his appointment as Joint Chief Executive Officer,
of 16 May 2008. The Board is highly appreciative of Mr
Mr Duquenne is not longer viewed as an independent
Gijbels’s services as a director.
director.
kinepolis group 2007
33
F.l.t.r. Hugo Vandamme, Eddy Duquenne, Philip Ghekiere, Joost Bert, Philippe Haspeslagh, Marie-Suzanne Bert-Vereecke and Mimi Lamote
(not present at the photo: Florent Gijbels).
BOARD OF DIRECTORS AT 31 DECEMBER 2007
NAME
Position
end of
MANDATE
OTHER POSITIONS IN QUOTED COMPANIES
Baron Hugo Vandamme,
permanent representative of nv HRV (1) (2)
Chairman
2008
Roularta Media Group nv: Chairman of the Board
Picanol Group nv: Vice-Chairman of the Board
All meetings
Ms Marie-Suzanne Bert-Vereecke,
permanent representative of nv Pentascoop (7)(1)(3)
Honorary
President
2008
/
6 meetings
Mr Philip Ghekiere (3) (4)
Vice-Chairman
2010
Punch Graphix Plc:
Member of the Supervisory Board
All meetings
Mr Joost Bert (3)
Managing
Director (CEO)
2008
/
All meetings
Mr Eddy Duquenne (5)
Managing
Director (CEO)
2009
/
All meetings
Mr Florent Gijbels, permanent representative
of BVBA Gijbels-Claeys Mgt (1)(6)
Director
2008
/
7 meetings
Ms Mimi Lamote, permanent representative
of bvba Eugenius (1) (2)
Director
2009
Belgacom nv: Director
All meetings
Mr Philippe Haspeslagh, permanent representative of nv Euro Invest Management (1) (2)
Director
2008
Quest Management nv: Chairman of the Board
Quest for Growth nv: Director
6 meetings
(1)Non-executive director
(2)Independent director
(3)Representing the majority shareholders
(4)Coopted by the Board of Directors of 18 December 2007 to replace PGMS NV, which resigned as director effective 18 December 2007
(5)Coopted by the Board of Directors of 18 December 2007 to replace BVBA Eddy Duquenne, which resigned as director effective 18 December 2007
(6)Coopted by the Board of Directors of 20 June 2007 to replace Florent Gijbels, who resigned effective 20 June 2007
(7) In the past named ‘Bert Brothers NV’. The name ‘Bert Brothers NV’ has been changed into ‘Pentascoop NV’
34
ATTENDANCE
AT MEETINGS
The change in the composition of the Board of Directors
and Pentahold NV (created in 2006). He is currently
follows the restructuring of the ownership of Kinepolis
a director of Pentahold NV, Spector Photo Group NV,
Group in September 2006 and the intention, expressed
Vergokan International NV, Mondi Foods NV and Interio
at the time, of strengthening the Board with professional
International NV.
external, independent directors having significant experience of business life and bringing complementary skills to
Philip Ghekiere, until now Deputy Chairman, becomes
the company.
Chairman of the Board of Directors from the 2008
General Meeting. He will additionally undertake execu-
In the course of 2006, Philip Ghekiere, Mimi Lamote
tive assignments and tasks.
and Eddy Duquenne were already proposed as directors.
They bring expertise in the legal, retail and financial fields
Mr Hugo Vandamme will continue as a director and
respectively. Since 1 January 2007, Eddy Duquenne has
provide continuity.
been joint Chief Executive Officer (CEO) with Joost Bert.
Marc Van Heddeghem en Geert Vanderstappen now
Activity Report of the Board of Directors
directors have built up significant expertise in real estate
The Board of Directors met 9 times in 2007. This
development and corporate finance respectively.
high frequency reflects the dynamism of the Board of
By proposing them the Board of Directors confirms its
Directors, which was keen to closely monitor a number
commitment to the principles of good governance.
of strategic issues.
Marc Van Heddeghem (59) is an industrial building
In addition to the duties assigned to the Board under
engineer with formal post-academic training in general
the Companies Code, the following issues were
management and real estate finance. After a successful
addressed:
career in the real estate sector (including the Royale Belge
- monthly admissions at the various complexes and
Group), he was managing director from 1998 to 2003
07 | CORPORATE GOVERNANCE
fulfill two additional directors’ mandates. Both candidate
the financial results of Kinepolis and its subsidiaries;
of Wilma Project Development. Since 2003 he has been
- newly proposed cinema projects;
Managing Director of Redevco Belgium. He is presently
- progress of ongoing cinema projects;
also a director of Leasinvest Real Estate Bevak, Compag-
- evolution of the cash situation;
nie Het Zoute, Befimmo NV and Mons Revitalisation SA.
- digitalization of the cinemas;
- defining the long and short-term strategy;
Geert Vanderstappen (46) is an electronics engineer with
- investment plans for 2008 and after;
a post-graduate diploma in business management. He has
- the proposed profit plan for 2008;
built up solid financial expertise, first at Generale Bank,
- introduction of a share option plan and buying
then at Spector Photo Group where he became CFO and
a member of the executive committee in 1996, and then
as a partner in Buy-Out Fund C.V.A. (created in 1999)
in of own shares;
- reports from the Audit Committee and the
Nomination and Remuneration Committee.
kinepolis group 2007
35
7 meetings are scheduled for 2008.
Composition and activities report
of the Audit Committee
Composition and activities report of Nomination
The Board of Directors noted on 18 December 2007
and Remuneration Committee
the resignation of Eddy Duquenne BVBA as member of
the Audit Committee and appointed Mr Philip Ghekiere
The Board of Directors appointed Mr Philip Ghekiere
as a member to replace resigning member PGMS NV.
as chairman of the Nomination and Remuneration
Committee on 18 December 2007, replacing
In this way the Audit Committee consists of the follow-
PGMS NV, the resigning chairman, and at the same
ing directors:
time took note of the resignation of Eddy Duquenne
- Mr Philippe Haspeslagh (NV Euro Invest
BVBA as a member of the Committee.
Management) (Chairman)
- Mr Florent Gijbels
In this way the committee consists exclusively of ­the
- Mr Philip Ghekiere.
directors listed below with a majority of ­independent
directors:
The Financial Director and the Chief Executive Officers
- Mr Philip Ghekiere (Chairman)
attend the meetings of the Audit Committee. The
- Baron Hugo Vandamme (NV HRV)
representatives of the majority shareholders may attend
- Mr Philippe Haspeslagh (NV Euro Invest
meetings upon invitation.
Management)
In 2007 the Audit Committee met three times,
The CEOs attend the meetings of the Nomination
with all its members attending. The main agenda
and Remuneration Committee when invited.
items were:
- discussion of unconsolidated financial statements of
The Nomination and Remuneration Committee
Kinepolis Group NV, the consolidated financial state-
met three times in 2007 in the presence of its
ments and the annual report;
members.
- review of the management representation letter;
- discussion of the half-yearly results and the half-
The main subjects discussed at these meetings
- discussion of the interim information;
- the proposal to appoint a Joint Chief Executive
- discussion of the press releases on the annual
Officer;
- proposed remuneration policy for directors and
managing directors;
- proposal to introduce a stock option plan.
36
yearly report;
were:
and half yearly results;
- setting and monitoring the programme of work for
the internal auditor;
- discussion of internal procedures and systems.
EXECUTIVE MANAGEMENT
Conflicts of interest concerning transactions not
falling under the legal rules on conflicts of interest
Since 18 December 2007 the Executive Management
has consisted of the two Chief Executive Officers. The
In addition to the rules concerning conflicts of inter-
Board of Directors is authorized to appoint further
est set out in the Companies Code, the Corporate
members of Executive Management.
Governance Charter stipulates that all acts, views or
interests which are in conflict with, or might give the
Where reference is made in the text to the Executive
impression of being in conflict with the interests of
Management as previously composed(1) (in place
Kinepolis Group nv, must be avoided, and that the
before 18/12/2007), the term ‘Executive Management
company is to be informed of the parties associated
2007’ will be used.
with the member of the Board of Directors and of any
transactions with these associated parties. No such
situations have arisen in 2007.
POLICY ON CONFLICT OF INTERESTS
On18 December 2007three resolutions were passed
INSIDER TRADING POLICY
by the Board of Directors with due application of
article 523 of the Companies Code.
The Company’s policy on insider trading was updated
by the Board of Directors of 18 December 2007 and
These resolutions relate to:
included in an Insider Trading Protocol that applies
- the appointment of Mr Eddy Duquenne as Joint
to the members of the Board of Directors, the Chief
Chief Executive Officer and the setting of his
Executive Officers and other persons who might be
remuneration, including 69 308 share options,
in possession of ‘advance knowledge’.
The protocol is aimed at ensuring that share trading
remuneration
by the persons in question takes place strictly in
- the allotment of 69 308 share options, to be
­offered to Mr Joost Bert
- the allotment of 69 308 share options, to be
07 | CORPORATE GOVERNANCE
as well as concluding a management agreement with BVBA Eddy Duquenne and setting its
accordance with the Law of 2 August 2002 on supervision of the financial sector, and also in accordance
with the Guidelines issued by the Board of Directors.
­offered to Mr Philip Ghekiere.
The Chief Financial Officer is responsible, as CompliThe extract from the minutes can be found on the
ance Officer, with monitoring compliance with the
Report of the Board of Directors in the unconsolidated
rules concerning market abuses as set out in the
Kinepolis Group NV financial statements.
Protocol.
(1) J. Bert, M. Verhofstede, T. Lambert, J. Huyghe, G. Deley M. Claessens, J. Staelens,
E. Somers and L. Van Baelen
kinepolis group 2007
37
WARRANTS AND OPTIONS
PUBLIC DISCLOSURE
OF GROSS REMUNERATIONS
The warrants still outstanding in the early part of 2007,
being in all 221 500 warrants allotted under the 28 May
The amount available for directors’ remunerations
2003 warrant plan, were exercised as follows in 2007
was set by the Annual Meeting on 18 May 2007
by the Executive Management 2007 and by a number of
at € 665 000.
other employees.
The distribution of this amount was determined by
the Board of Directors as a function of participation
In the context of a cashless exercise of these warrants,
at the meetings of the Board and of its Committees,
Kinepolis Group NV granted in 2007 a securities loan
plus a fixed amount for directors undertaking a
in an amount of 210 250 shares with dividend rights
particular role.
for 2006 at market interest rates to a stockbroking
company, which lent on these shares to the warranthold-
The directors, with the exception of the Chief
ers who had exercised their warrants. The newly created
­Executive Officers and the vice-chairman, do not
shares were used to pay back the securities loan,
receive any performance-related remuneration like
whereby a ‘remuneration of missing coupon’ was paid by
bonuses or long-term share-related incentive pro-
way of compensation for the missing dividend right.
grammes. Nor do they receive pension plan-related
benefits.
The Board of Directors approved on 5 November
2007 a Share Option Plan in order to support and
The remuneration of the Chief Executive Officers is
realize the company and human resources objectives
set by the Board of Directors based on the opinion
mentioned below:
of the Nomination and Remuneration Committee,
- to encourage and reward selected Directors and
and is largely based on a market-oriented system of
senior managers of the Company and its Associated
performance-related pay.
Enterprises, who are able to contribute to the longterm growth of the Company and its Associated
The Board of Directors of 18 December 2007
Companies;
approved the 69 308 options per person to the Chief
- to help the Company and its Associated Enterprises
Executive Officers and to the vice-chairman.
retain and attract Directors and senior managers having the required experience and skills; and
- to bind the interests of Directors and senior managers
The remuneration of the members of the Executive
Management 2007 consisted of a fixed and a
more closely to those of the Company’s shareholders
variable portion. Furthermore the members of the
and to grant them an opportunity of sharing in the
Executive ­Management 2007 enjoyed the same
value creation and growth of the Company.
supplementary benefits as the other employees
of the Company (hospitalization insurance, group
277 231 options may be allotted under said share option
plan.
38
insurance, etc.)
REMUNERATION
Name
Title
REMUNERATION
BOARD OF DIRECTORS
Hugo Vandamme (NV HRV)
Chairman
€ 112 500
Marie-Susanne Vereecke (NV Pentascoop)
Honorary Chair
€ 216 996
Joost Bert
CEO
€ 29 700
Philip Ghekiere (NV PGMS)
Vice-Chairman
€ 70 000
Philippe Haspeslagh (NV Euro Invest Management)
Independent Director
€ 33 000
Florent Gijbels (BVBA Gijbels-Claeys Mgt)
Director
€ 26 500
Eddy Duquenne (BVBA Eddy Duquenne)
Independent Director
€ 30 500
Mimi Lamote (BVBA Eugenius)
Independent Director
€ 22 500
CEOs
Joost Bert (1)
Fixed remuneration
€ 320 300
Eddy Duquenne
/
EXECUTIVE MANAGEMENT 2007
9 people (1)
Fixed remuneration
€ 1 273 720
The above amounts exclude employer’s social security contributions.
(1) In 2007 a bonus of € 200 000 was paid to Mr Joost Bert, and a global bonus of € 252 500 was accredited to the Executive Management 2007. The bonusses relate to performances during the 2006 financial year.
COMPLIANCE WITH THE CORPORATE
Code. The company believes that the 5% threshold
GOVERNANCE CODE
for ­requiring the company to place any motion on the
20% threshold better reflects the Company’s share-
Corporate Governance code.
holder structure.
In line with the ‘apply or explain’ principle, the company
07 | CORPORATE GOVERNANCE
agenda of the General Meeting is too low, and that the
Kinepolis complies with the principles of the Belgian
- Mr Gijbels was invited by the Board of Directors to
decided that it was in the best interests of the company
join the Audit Committee because of his expertise and
and its shareholders to depart from the Code in a
his historical knowledge of the Company. The Board
limited number of specific cases. These departures are
of Directors is therefore of the opinion that, despite
explained below:
the fact that, as a result of this appointment, the
Audit Committee no longer consists of a majority of
-Kinepolis uses the threshold of 20% for the submis-
independent directors, as stipulated in the Corporate
sion of motions to the General Meeting, as stipulated
Governance Code, this committee is strengthened by
in the Companies Code, rather than the threshold
the presence of Mr Gijbels and is able to continue to
of 5% recommended in the Corporate Governance
discharge its duties in a totally independent manner.
kinepolis group 2007
39
DaY 6
Wow, all those pretty girls this evening...
[email protected] Movies: an evening without men, but with a
top film, goody bag and a drink. The bar’s mixed, so the
men too can enjoy all that beauty!
40
08 | Financial Report
Revenue
In 2007 Kinepolis Group generated revenue of
€ 212.3 m, 0.5% more than the year before.
The gross box office (income from ticket sales) was
down 3%, reflecting lower admissions, partially
offset by higher sales prices.
Ticket sales represented a lower portion of total
revenue (59%) than in 2006 (61%), with a higher
portion coming from food, beverage & retail, and
from commercial lettings.
Food, beverage & retail rose by 5%, thanks to higher
consumption per-visitor and increased sales prices.
Business-to-business activities in the cinema enviEBITDA
08 | Financial report
ronment remained a source of growth, with revenue
from events, screen advertising etc. up 5%.
Revenue from Kinepolis’s film distribution division
EBITDA is not a recognized IFRS term. Kinepolis
(KFD) rose, thanks to the success of Flemish films
has defined the concept by adding back charges
(Man zkt Vrouw, Ben X, Vermist) and of The Golden
for depreciation, amortization, impairments and
Compass.
provisions to the operating profit, and subtracting any
Real estate income surged by 25%, the main
reversals or uses of the same items.
factor here being the letting of the Polish facility
In 2007 EBITDA rose by 1.8% to € 49.6 million
Cinema City Kinepolis to the ITIT cinema group from
(2006: € 48.7 m).
19 January 2007 onwards.
53% of global revenue was generated in Belgium,
In comparison with 2006 sales and marketing costs
the Group’s home country, 25% in France, 20% in
rose by € 2.4 m (primarily advertising costs). Adminis-
Spain, and 2% in Poland and Switzerland.
trative costs fell slightly.
kinepolis group 2007
41
Partially offsetting this cost increase was the increase
Operating profit (EBIT)
in other operating income and costs (+ € 0.9 m). In
2007 a capital gain of € 0.8 m was realized on the
Operating profit amounted to € 25.1 m, compared
sale of property, plant and equipment and another of
with € 26.5 m in 2006. The € 1.4 m decrease
€ 0.7 m on the sale of a ‘building right’ in Valencia.
in EBIT is explained by higher depreciation and
The capital gain on the transfer of the cinema activity
amortization (including on the tax shelters) and
in Poland is offset by the derecognition of the goodwill
additional depreciations on the Liège inner city
related to this activity.
complex (Palace).
In 2007 non-recurrent items contributed € 2.3 m
to net profit (2006: € 0.5 m). Excluding these items,
Net financing cost and debt position
current profit after tax is € 12.5 m (2006: € 14.2 m).
Net financing cost in 2007 was -€ 6.9 m
The recently opened Belgian complexes have made
(2006: -€ 6.7 m).
a positive contribution to EBITDA right from the
This amount consists mainly of interest on
first year. Kinepolis Bruges, opened in July 2006, per-
financial debt and the results of derivative financial
formed remarkably well compared with the average
instruments (covering of interest rate fluctuations).
cinema complex. Kinepolis Ostend, opened in July
The net debt position (NDP) at 31/12/2007 was
2007, got off to a slower start but also contributed
€ 138.9 million, as against € 136.6 m at 31/12/2006.
positively to EBITDA.
Profit before tax
Profit before tax was € 18.3 million (2006: € 19.8 m),
a fall of 7.9%.
Profit for the reporting period
Net profit shows a contrary movement: For the year
to 31 December 2007 this amounted to € 14.7 m, up
0.6% on the 2006 figures (€ 14.6 m). The lowering
of the tax rate in Spain, the recognition of future tax
benefits on the liquidation of a subsidiary, and the
notional interest deduction produced a considerable
reduction in tax from € 5.2 m to € 3.5 million.
Kinepolis Bruges (B)
42
Balance sheet and cash flow analysis
No less than 88% (€ 320.5 million) of the balance
sheet total at 31/12/2007 consisted of property, plant
and equipment (including those intended for sale).
This includes land and buildings (including those
intended for sale and real estate investments) with a
carrying value of € 237 m.
At 31/12/2007 equity amounted to € 113.5 m,
or 31.2% of the balance sheet total.
Net cash flows from operating activities were
Kinepolis Kortrijk (B)
€ 36.6 m (2006: € 33.2 m). In 2007 the Group
invested € 32.8 million in acquiring new property,
plant and equipment. Much of this amount relates to
the new complex at Ostend (Belgium), which opened
on 8 July this year. The group also invested heavily in
imposed on Kinepolis in 1997. After this decision
the renovation of complexes, digital projectors, seat
was contested by international cinema groups UGC
reservation and other.
and Utopolis, supported by the Belgian Cinema
Federation, the Court of Appeal called on the Com-
The majority of these investments were paid out
petition Board, in its decision of 18 March 2008, to
of proper cash flows, € 4.0 m has been funded by
reconsider the case.
additional loans.
08 | Financial report
In December the Board of Directors decided
to appoint Eddy Duquenne, former top man at
Significant events in 2007
Sunparks, as joint Chief Executive Officer alongside
Joost Bert. Mr Duquenne’s appointment fits with
On 19 January 2007 the operation of the Polish
the desire of the Board of Directors to significantly
Kinepolis complex was transferred to the Israeli group
strengthen operating management.
IT International Theaters (ITIT). 18 of the 20 theatres
are let to ITIT. The two remaining theatres continue to
be operated by Kinepolis for commercial purposes.
The Belgian competition authority, the Competition
Board, decided in April 2007 to lift the conditions
kinepolis group 2007
43
Capital
SHAREHOLDER STRUCTURE 31/12/07
ShareholdeR
Number
of shareS
%
Kinohold Bis sa
2 385 038
34.41%
Joost Bert
41 600
0.60%
Kinepolis Group nv
31 118
0.45%
Free Float, of which
4 473 022
64.54%
- Axa SA
1 092 751
15.77%
- Best Inver Gestion
714 635
10.31%
- Petercam SA
266 635
3.85%
6 930 778
100%
TOTAL
On 20 April 2007 and 5 June 2007, capital was
increased by the Board of Directors, within the framework
of the authorized capital, to € 48 883 132.15 and
€ 48 962 557.15 respectively, following the exercise of
210 250 and 11 250 warrants respectively, with the creation of 210 250 and 11 250 new shares respectively.
In this way the share capital of the company amounted
at 31/12/2007 to € 48 962 557.15, represented by
6 930 778 shares without nominal value, all enjoying the
same rights.
The authorization of the Board of Directors to increase
the company capital in one or more instalments by up to
€ 48 883 132.15 was renewed by the Extraordinary Gen-
Amendments to the Articles of Association
eral Meeting of 18 May 2007 for five years until 17 May
2012. The authorization to increase the company capital
The Extraordinary General Meeting of 18 May 2007
after notification of a public takeover bid was also renewed
- renewed the statutory authorization of the Board
by the Extraordinary General Meeting of 18 May 2007 for
of Directors to increase the issued capital by a
three years from publication of the deed of amendment to
maximum amount of € 48 883 132.15;
the articles of association, being until 7 June 2010.
- adapted the articles of association to the Law of
14 December 2005 abolishing bearer securities;
- made a number of small changes to reflect the
Buy-in of own shares
introduction of the function of the Vice-Chairman
as well as the sale by one of the former reference
By way of exercise of the discretionary mandate granted
shareholders, Claeys Invest NV, of its sharehold-
by the Board of Directors to Delta Lloyd Securities NV
ing in the company.
under the conditions of the Transitional Provision no. 2 of
the Articles of Association, a total of 141 383 shares were
purchased in 2007 for an amount of € 7 032 778.60.
44
Research and development
No shares were sold.
There are no research and
The Extraordinary General Meeting of 18 May 2007
development activities.
proceeded to the destruction, without reduction of capital,
of 221 500 treasury shares of Kinepolis Group NV,
financial debt outstanding of € 139 m. Kinepolis has
which had been bought in accordance with the authori-
concluded interest rate agreements (IRSs) and interest
zation granted by the Extraordinary General Meeting of
options in order to control the risk associated with
19 May 2006.
interest rate fluctuations. At 31 December 2007 these
interest rate hedges amounted to € 119 million.
At 31 December 2007, Kinepolis Group nv held 31 118
of its own shares, representing 0.45% of the total
number of shares, having a capital value of € 219 833.
Significant events after the balance sheet date
The Extraordinary General Meeting of 12 February
Use of financial instruments
2008 renewed the authorization to buy in own shares
for a period of 18 months from the deed of amendment
As an international enterprise Kinepolis Group is
of the articles of association, and this solely for the
exposed to various kinds of financial risk, most impor-
purchase of own shares to cover the options to be
tantly exchange rate and interest rate risk. The global
subscribed under the 2007-2016 share option plan,
risk management system used by Kinepolis seeks to
approved by resolution of the Board of Directors of
minimize the negative impact on the Group’s financial
5 November 2007.
results by using financial instruments to hedge these
risks.
Exchange rate risk
Kinepolis is an international company, with subsidiaries
that do not report in euros. These results are exposed
to fluctuations of local currencies against the euro when
08 | Financial report
consolidated into the accounts of the Kinepolis Group.
Kinepolis does not hedge this risk.
Financing of Kinepolis enterprises in a currency other
than the local currency is hedged using forward foreign
exchange contracts or swaps.
Interest rate risk
Kinepolis Group manages its debt with a combination
of short, medium and long-term borrowings. The mix
of fixed and floating rate debt is determined at Group
level. At the end of December 2007 the Group had net
Kinepolis Mulhouse (F)
kinepolis group 2007
45
Announcements in the framework
of the takeover legislation
the Companies Code) represent less than thirty-five
per cent (35%) of the capital of the company, Kinohold Bis SA or its respective successors-in-law are
Relevant information
entitled to propose candidates for the Board of Directors only on the basis of one candidate per tranche of
Rights to propose members of the Board of Directors
five percent (5%) of the capital of the company.
The articles of association provide that 8 directors
As long as the above shareholding condition is
are to be appointed from candidates proposed by
fulfilled, the General Meeting will be required to fill
‘Kinohold Bis’, a limited liability company under
the required number of directorships from candidates
Luxembourg law, in so far as this company, or its
chosen from the list proposed by Kinohold Bis SA successors in law, as well as all entities controlled by
in accordance with the provisions of the previous
(one of) them or (one of) their respective successors
paragraph.
in law control (within the meaning of Article 11 of the
Companies Code), alone or jointly, at the time both
Shareholder agreements
of the proposal of the candidate-director and his
No shareholder agreements are known to the
appointment by the general meeting, at least 35% of
company which could potentially limit the transfer of
the shares of the company, it being understood that
securities and/or the exercise of voting rights in the
if the shares held by Kinohold Bis SA or its respective
context of a public takeover bid.
successors-in-law, as well as all entities controlled
directly or indirectly by (one of) them or (one of) their
Authorization of the Board of Directors
successors-in-law (within the meaning of Article 11 of
to buy in own shares
The Board of Directors is authorized by the General
Meeting of 19 May 2006 to acquire or dispose of
own shares, where such acquisition or disposal is
necessary to prevent serious immanent harm to the
company. This authorization runs until 16 June 2009.
Change of control
The Term and Revolving Facilities Agreement concluded between Kinepolis Group nv and a syndicate
of financial institutions on 26 November 2004, and
amended on 10 February 2006 and 13 July 2007,
stipulates that a participating financial institution
is entitled to terminate its participation in said
agreement, with the portion of the loan in question
becoming immediately due and payable, in the event
Kinepolis Valencia (E)
46
that other natural or legal persons than Kinohold Bis
and the Stichting Administratiekantoor Kinohold
acquire control over Kinepolis Group nv.
Notifications received
In the context of Article 74 of the law of 1 April
2007 on public takeover bids, Kinepolis Group nv
received on 20 February 2008 notifications from the
following persons, which act in mutual consultation
(either because they are ‘associated persons’ within
the meaning of article 11 of the Companies Code,
or because mutual consultation exists otherwise
Kinepolis, Le Chateau du Cinéma, Lomme (F)
between them), and who together own more than
30% of the voting shares of Kinepolis Group nv:
Kinepolis Group NV, Kinohold Bis SA, Stichting
-Kinepolis Group NV was controlled by Kinohold Bis SA,
Administratiekantoor Kinohold, Marie-Suzanne
above-named; Kinepolis Group NV held on 1 September
Bert, Joost Bert, Koenraad Bert, Geert Bert and
2007 31 118 or 0.45% of its own shares.
Peter Bert.
From these notifications it appeared that,
Principal risks and uncertainties
on 1 September 2007:
The Company is of the opinion that the annual report and
or 34.41% of the shares of the company;
the annual financial statements offer a true and fair view
Kinohold Bis SA was controlled by Kinohold, a
of the development and position of the company and that
Stichting Administratiekantoor under Dutch law,
there are no specific risks and uncertainties specific to the
which in turn was controlled jointly by the follow-
company that need to be disclosed.
08 | Financial report
-Kinohold Bis SA held 2 385 038 shares
ing natural persons (in their capacity as directors
of the Stichting Administratiekantoor): Marie-
The company’s business environment is characterized,
Suzanne Bert-Vereecke, Joost Bert, Koenraad
though, by uncertain factors such as the quality and local
Bert, Geert Bert and Peter Bert; Kinohold
character of films available, the culture-specific nature of
Bis SA also acted in mutual consultation with
cinema-going and weather conditions in various countries.
Mr Joost Bert;
Kinepolis Group has no direct influence over these factors,
- Joost Bert held 41 600 shares or 0.6% of the
but has the resulting consequences under control through
shares of the company, and acted in joint consul-
operating efficiency and flexibility in terms of manning
tation with Kinohold Bis SA;
levels, activities mix, etc.
kinepolis group 2007
47
Appropriation of the profits and dividend
In making its proposal to the General Meeting concerning
the appropriation of the profit and the payment of a dividend, the Board of Directors takes into account a series
of factors, including the company’s financial situation,
operating profit, current and expected future cash flows
and expansion plans.
With a view to a pay-out ratio of 30%, it is proposed that
a gross dividend of € 0.65 per share be paid in respect
of 2007. Subject to approval by the General Meeting,
the Board of Directors has decided that the dividend will
be payable to shareholders at the financial institutions
of their choice on 23 May 2008 upon presentation of
coupon no. 8.
FROM THE UNCONSOLIDATED FINANCIAL
STATEMENTS OF KINEPOLIS GROUP NV
Profit for the financial year
available for appropriation
€ 16 608 440.52
Profit brought forward from
the previous financial year
€ 27 040 712.32
To the legal reserve
To reserves
Profit to be carried forward
Dividends
48
€ 830 422.03
€ 7 032 693.18
€ 31 301 258.63
€ 4 484 779.00
Kinepolis Brussels (B)
Financial Statements
PART II
Financial statements
• Consolidated income statement
• Consolidated balance sheet
• Consolidated cash flow statement
• Consolidated statement of changes in equity
• Notes to the consolidated annual accounts
• Extract from the unconsolidated financial statements
of Kinepolis Group NV, drawn up under Belgian
accounting standards
kinepolis group 2007
49
50
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT
in ’000 €
NOTE
Revenue
31/12/2007
31/12/2006
212 324
211 191
-162 637
-161 584
Gross profit
49 687
49 608
Distribution expenses
-13 130
-10 737
Administrative expenses
-14 397
-14 472
Cost of sales
Other operating Income and expenses
3
Operating profit before financing costs
Net financing cost
6
Profit before tax
Income tax expense
2 109
26 507
-6 890
-6 693
18 256
19 814
-3 530
-5 179
14 726
14 635
14 700
14 587
25
48
14 726
14 635
Basic earnings per share (€)
2,15
2,14
Diluted earnings per share (€)
2,15
2,09
Profit for the period
7
2 987
25 146
Equity holders of the company
Minority interests
Profit for the period
kinepolis group 2007
Financial Statements
Attributable to
51
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
IN ’000 €
NOTE
31/12/2006
Intangible assets
8
2 270
2 385
Goodwill
9
18 761
20 485
Property, plant and equipment
10
251 266
256 445
Investment property
11
15 008
0
Deferred tax assets
12
2 056
1 593
Derivative financial instruments
24
1 432
1 333
Non-current trade and other receivables
14
17 621
16 921
Other financial assets
16
1 832
2 329
310 247
301 491
Total non-current assets
Inventories
13
2 189
2 388
Trade and other current receivables
14
24 688
21 098
116
0
Income tax receivable
Cash and cash equivalents
15
16 240
14 573
Derivative financial instruments
24
171
222
43 403
38 281
10 234
11 002
363 884
350 774
Total current assets
Assets classified as held for sale
TOTAL ASSETS
52
31/12/2007
17
CONSOLIDATED BALANCE SHEET
IN ’000 €
NOTE
31/12/2007
31/12/2006
Issued capital
18
48 963
47 443
Share premium
18
1 154
0
Consolidated reserves
63 695
60 929
Translation differences
-1 373
-1 402
112 438
106 969
1 116
1 090
113 554
108 059
139 231
119 656
Total equity attributable to equity holders of the company
Minority interests
18
Total equity
Interest bearing loans and borrowings
21
Provisions
22
2 016
1 680
Deferred tax liabilities
12
13 959
15 485
Derivative financial instruments
24
3 292
2 638
Trade and other payables
23
13 340
12 634
171 838
152 093
Total non-current liabilities
Bank overdraft
49
677
Interest bearing loans and borrowings
21
15 828
30 809
Trade and other payables
23
57 683
55 599
Provisions
22
1 549
64
Derivative financial instruments
24
0
449
Current income tax liabilities
Total current liabilities
TOTAL EQUITY AND LIABILITIES
3 383
3 022
78 492
90 622
363 884
350 774
kinepolis group 2007
Financial Statements
CONSOLIDATED BALANCE SHEET
53
CONSOLIDATED CASH FLOW STATEMENT
Consolidated statement of CASH FLOWs
IN ’000 €
NOTE 31/12/2007 31/12/2006 18 256
19 814
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation and amortization
Provisions
5
22
Government grants
Gains (losses) on sale of fixed assets
3
Unrealized foreign exchange (gains)/losses
Derivative financial instruments
Warrants
4
Interest expense
Movement trade and other receivables
Movement in inventories
13
Movement in trade and other payables
Cash from operations before interests and taxes
Interest paid
Interest received
23 632
21 850
5
-295
-1 054
-1 224
-537
-825
0
112
134
-1 601
0
307
6 822
7 828
- 1 795
-973
199
-306
3 281
874
48 943
45 563
-7 168
-8 101
106
338
Income taxes paid / received
-5 250
-4 544
Net cash from operating activities
36 631
33 256
Cash flows from investing activities
Acquisition of intangible assets
Acquisition of property, plant and equipment
Sale of intangible assets
Sale of property, plant and equipment
Net cash used in investing activities
54
-1 547
-1 575
-32 812
-17 552
1 000
0
3 182
1 615
- 30 177
-17 512
➔
Consolidated statement of CASH FLOWs
IN ’000 €
NOTE 31/12/2007 31/12/2006 2 674
0
Cash flows from financing activities
Capital increase (and share premium)
New loans
28 315
1 678
Repayment of borrowings
-24 349
-27 428
Repurchase of own shares
-7 033
-372
Dividends paid
Net cash used in financing activities
-4 436
-2 390
-4 829
-28 513
Net cash flow
1 625
-12 768
Cash and cash equivalents
Cash and cash equivalent at beginning of the period
15
14 573
27 355
Cash and cash equivalent at end of the period
15
16 240
14 573
Effect of exchange rate fluctuations on cash held
42
-14
1 625
-12 768
Financial Statements
Net cash flow
kinepolis group 2007
55
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated statement of changes in EQUITY
(IN ’000 €)
Issued capital
31/12/2006
TRANSLATION
DIFFERENCES
CHANGE
IN FAIR
VALUE OF
FINANCIAL
DERIVATIVES
CHANGE IN
FAIR VALUE
OF FINANCIAL
ASSETS
AVAILABLE
FOR SALE
47 443
Issue premium
Consolidated reserves:
60 929
Accumulated results
61 252
Hedging reserves
Treasury shares
-1 921
1 126
Translation differences
Minority interest
TOTAL EQUITY
Consolidated statement of changes in EQUITY
(IN ’000 €)
29
29
-16
-450
108 059
29
-16
-450
31/12/2005
TRANSLATION
DIFFERENCES
CHANGE
IN FAIR
VALUE OF
FINANCIAL
DERIVATIVES
CHANGE IN
FAIR VALUE
OF FINANCIAL
ASSETS
AVAILABLE
FOR SALE
709
-900
1 090
47 443
48 988
Accumulated results
49 955
Warrants
Translation differences
Equity attributable to equity holders of the company
56
-1 402
Issued capital
Hedging reserves
-16
106 969
Consolidated reserves:
Treasury shares
-450
-450
471
Warrants
Equity attributable to equity holders of the company
-16
-900
-238
709
-1 548
819
-1 459
57
94 971
57
709
-900
57
709
-900
Minority interest
1 043
TOTAL EQUITY
96 014
TOTAL
RESULT
RECOGNIZED
DIRECTLY IN
EQUITY
PROFIT
FOR THE YEAR
TOTAL
recognized
income and
expenses
ISSUE OF
ordinary
SHARES
DIVIDENDS
to equity
holders
PURCHASE/
SALE OF
TREASURY
SHARES
31/12/ 2007
1 520
48 963
1 154
1 154
-466
14 700
14 234
-4 436
-450
14 700
14 250
-4 436
-16
SHARE-BASED
PAYMENTS
1 126
-7 033
63 695
-7 442
64 750
-16
456
409
-1 511
-1 126
-437
29
14 700
14 263
25
25
-437
14 726
TOTAL
RESULT
RECOGNIZED
DIRECTLY IN
EQUITY
-1 373
2 674
-4 436
-7 033
112 438
14 288
2 674
-4 436
-7 033
113 554
PROFIT
FOR THE YEAR
TOTAL
recognized
income and
expenses
ISSUE OF
ordinary
SHARES
DIVIDENDS
to equity
holders
SHARE-BASED
PAYMENTS
PURCHASE/
SALE OF
TREASURY
SHARES
31/12/2006
-191
14 587
14 396
-2 390
307
-372
60 929
-900
14 587
13 687
-2 390
1 116
Financial Statements
29
47 443
709
61 252
709
471
-372
307
57
-134
-134
1 126
57
14 587
14 453
48
48
14 635
14 501
-1 921
-1 402
-2 390
307
-372
106 969
1 090
-2 390
307
-372
108 059
kinepolis group 2007
57
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.Significant accounting policies
17. Assets classified as held for sale
2.Segment reporting
18. Capital and reserves
3.Other operating income and expenses
19. Earnings per share
4.Personnel expenses
20.Share based payments
5. Additional information on operating
21.Interest-bearing loans & borrowings
22.Provisions
expenses by nature
6. Finance income and expenses
23. Trade and other payables
7.Income tax expense
24. Financial instruments
8.Intangible assets
25.Operating leases
9. Goodwill
26. Capital commitments
10.Property, plant and equipment
27. Contingencies
11. Investment property
28.Related parties
12. Deferred tax assets and liabilities
29.Subsequent events
13.Inventories
30. Group entities
14. Trade and other receivables
31. Mandates and remuneration of
15. Cash and cash equivalents
the Statutory auditor
Financial Statements
16.Other financial assets
kinepolis group 2007
59
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies have been applied consistently
across the Group and are consistent with those applied
Kinepolis Group NV (the ‘Company’) is a company esta-
in the previous financial year.
blished in Belgium. The consolidated financial statements
of the company for the year ending on 31 December 2007
The preparation of the financial statements under IFRS
include the company and its subsidiaries (together the
requires management to make judgments, estimates
‘Group’) and the Group’s interest in affiliated enterprises.
and assumptions that influence the application of
These consolidated financial statements were approved by
the policies and the reported amounts of assets and
the Board of Directors for publication on 9 April 2008.
liabilities, income and expenses. The estimates and
related assumptions are based on past experience and
on various other factors that are considered reasonable
Statement of compliance
in the given circumstances. The outcomes of these
form the basis for the judgment as to the carrying value
The consolidated financial statements have been prepared
of assets and liabilities where this is not evident from
in accordance with the International Reporting Standards
other sources. Actual results can differ from these
(IFRS) as published by the International Accounting
estimates. The estimates and underlying assumptions
Standards Board (IASB) and adopted by the European
are reviewed on an ongoing basis. Revisions of estimates
Community on 31 December 2007. The Company has not
are recognized in the period in which the estimate is
applied any European exceptions to IFRS, which means
revised, when the revision affects only this period, or in
that the financial statements comply in full with the IFRS
the revision period and future periods, where the revision
standards.
affects both the reporting period and future periods.
Basis of preparation
Basis of consolidation
The consolidated financial statements are presented in
Subsidiaries
euros, rounded to the nearest thousand. They are drawn
Subsidiaries are those entities over which the Company
up on a historical cost basis, with the exception of the
exercises control. Control is understood as meaning that
following assets and liabilities which are recorded at fair
the Company can, directly or indirectly, determine an
value: derivative financial instruments and financial assets
entities’ financial and operating policy. In determining
available for sale.
whether a situation of control exists, potential voting
rights that can be exercised at the time are taken into
Non-current assets held for sale are valued, in accordance
account.
with IFRS 5, at the lower of carrying value and fair value
60
less costs to sell. Hedged assets and liabilities included in
The financial statements of subsidiaries are recognized in
the balance sheet are valued at fair value in the amount of
the consolidated financial statements from the date that
the hedged risk.
control commences until the date that control ceases.
Associates
recognized in the income statement. Non-monetary
Associates are entities over which the Group exercises
assets and liabilities expressed in foreign currency
significant influence, but not control, over the financial
are converted at the exchange rate at the transaction
and operational policies. Significant influence is deemed
date. Non-monetary assets and liabilities in foreign cur-
to exist where the group holds between 20 and 50 per
rencies which are recognized at fair value are converted
cent of the voting rights of another entity. The consolida-
into euro at the exchange rates at the date on which the
ted financial statements include the Group’s share in the
fair value was determined.
income and expenses of the participating interest, which
is recorded following the equity method, from the starting
Financial statements of foreign operations
to the ending date of this significant influence. Whenever
Assets and liabilities relating to foreign operations,
the Group’s share in the losses exceeds the carrying
including goodwill and fair value adjustments on
value of the investments in associated participations, the
acquisition, are converted into euro at the exchange
carrying value is reduced to zero and future losses are
rate at balance sheet date. Income and costs of foreign
no longer recognized, except to the extent that the Group
entities are converted into euro at exchange rates
has an obligation on behalf of the investee.
approaching the exchange rates prevailing on the
transaction dates.
Transactions eliminated on consolidation
The exchange rate differences arising from the
Intra-group balances and transactions, along with any
translation are recognized immediately in equity.
unrealized gains and losses on transactions within the
group or gains or losses from such transactions, are
eliminated in the consolidated financial statements.
Financial instruments
Unrealized gains arising from transactions with equity
accounted investees are eliminated proportionally to the
All financial instruments are recorded on
group’s interest in the investee. Unrealized losses are
the transaction date
Financial Statements
eliminated in the same way as unrealized gains, but only
where there is no indication of impairment.
Derivative financial instruments
Foreign currency
The Group uses derivative financial instruments to
manage the exchange rate and interest risks deriving
Transactions in foreign currencies
from operational, financial and investment activities.
Transactions in foreign currencies are converted into
Under its treasury management policy the Group does
euro at the exchange rate on transaction date. Monetary
not use derivative financial instruments for trading
assets and liabilities expressed on the balance sheet
purposes. Derivative financial instruments that do
date in foreign currencies are converted into euro at the
not meet the requirements of hedge accounting are,
exchange rate at the balance sheet date. Exchange rate
however, accounted for in the same way as derivates
differences occurring in the translation are immediately
held for trading purposes.
kinepolis group 2007
61
Derivative financial instruments are initially valued at
place, the cumulative gains or loss remains in equity
cost price. Attributable transaction costs are expensed
and will be recognized in accordance with the above
as incurred. Subsequent to initial recognition these
policies once the transaction takes place. When
instruments are measured at fair value. The accounting
the covered transaction is not longer probable,
treatment of changes therein is as described below.
the cumulative gains or loss included in equity is
immediately taken into the income statement.
The fair value of derivative financial instruments
is the estimated amount that the Group will obtain or
Economic hedges
pay at balance sheet date at the end of the contract
Hedge accounting is not applied to derivative
in question, with reference to present interest and
instruments which are used for economic hedging
exchange rates and the creditworthiness of the
of foreign currency denominated monetary assets
counterparty.
and liabilities. Changes in the fair value of such
derivatives are recognized in profit or loss as a part
of the currency translation gains and losses.
Hedging
Cash flow hedges
Non-derivative financial instruments
Whenever derivative financial instruments serve to
hedge the variability in cash flows of a liability or a
Non-derivative financial instruments comprise
highly probable future transaction, the effective portion
investments in equity and debt securities, trade and
of the changes in fair value of these derivatives is
other receivables, cash and cash equivalents, loans
recorded directly in equity. When the future transaction
and borrowings, trade and other payables.
results in the recording of a non-financial asset, the
cumulative profits or losses are removed from equity
Non-derivative financial instruments are initially
and transferred to the carrying amount of the asset.
recognized at fair value plus, for instruments not at
In the other case the cumulative profits or losses
fair value through profit or loss, any directly attri-
are removed from equity to the income statement at
butable transaction costs. After initial recognition,
the same time as the hedged transaction. The non-
non-derivative financial instruments are valued as
effective portion is included immediately in the income
described below.
statement. Profits or losses deriving from changes
in the time value of derivatives are not taken into
Cash and cash equivalents
consideration in determining the effectiveness of the
Cash and cash equivalents are the cash on hand
hedging transaction and are recognized immediately in
and all call deposits. Bank overdrafts that are
the income statement.
repayable on demand, which are an integral part of
the Group’s cash management are viewed as a part
62
Whenever a hedging instrument or hedge relationship
of cash and cash equivalents in the presentation of
is ended, but the hedged transaction still has not taken
the cash flow table.
Financial assets available for sale – Investments in
Property, plant and equipment
equity securities
Investments in equity securities consist of participating
Owned assets
interests in enterprises in which the group has no control
Items of property, plant and equipment are measured
or no significant influence.
at cost less accumulated depreciation (see below)
and impairments. The cost of self-constructed assets
In those cases in which the Group has directly or indirectly
includes the cost price of the materials, direct personnel
more than 20% of the votes and/or exercises significant
expenses and a proportionate share of the production
influence on the financial and operating policy, the parti-
overhead, any costs of dismantling and removal of the
cipating interests are viewed as associates. Participating
asset and the costs of restoring the location where the
interests in associates are recorded by the equity method,
asset is located. Where parts of an item of property,
except when classified as financial assets held for sale in
plant and equipment have different useful lives, these
accordance with IFRS 5 (Non-current assets held for sale
are accounted for as separate plant, property and
and discontinued operations). When there is reason to
equipment items.
apply an impairment, the accounting policy for impairments
is applied.
Gains and losses on the sale of property, plant and
Other investments in equity securities are classified as
equipment are determined by comparing the sales
financial assets available for sale and recorded at fair
proceeds with the carrying value of the assets and are
value on initial recognition, except for equity securities
recognized within ‘other operating income’ in the income
not listed on an active market and for which the fair value
statement.
eligible for valuation at fair value are recorded at historical
Leased assets
cost. Profits and losses from the change in fair value of a
Lease agreements that transfer to the Group nearly
participating interest classified as a financial asset available
all the risks and rewards attached to the ownership of
for sale and which is not hedged are taken directly into
an asset are viewed as finance leases. Buildings and
equity. Where the investment is sold, received or otherwise
equipment acquired under finance leases are recorded
transferred, or when the carrying value of the investment is
at the lower of the fair value or the present value of
impaired, the accumulated profit or loss previously included
the minimum lease payments at the beginning of the
in equity is transferred to profit or loss.
lease agreement, less cumulative depreciation and
Financial Statements
cannot reliably be determined. Participating interests not
impairments.
The fair value of financial assets available for sale is their
listed bid price on the balance sheet date.
Subsequent costs
The cost price of replacing part of a property, plant
Other non-derivative financial instruments
and equipment is included in the carrying value of the
Other non-derivative financial instruments are measured
asset whenever it is probable that the future economic
at amortized cost price using the effective interest rate
benefits relating to the assets will flow to the group and
method less any impairment losses.
the cost price of the assets can be measured reliably. The
kinepolis group 2007
63
cost of daily maintenance of property, plant and equipment
value of the acquired identifiable net assets. Goodwill
is recognized as an expense in profit or loss as and when
is valued at cost less impairment losses. In respect
incurred.
of associated companies the carrying value of the
investment in the enterprise also includes the carrying
Depreciation
value of the goodwill. Goodwill is not amortized. Instead,
Depreciation is charged to the income statement using the
it is subject to an annual impairment test.
straight-line method over the expected useful life of the
asset, or of the separately recorded major components of
Negative goodwill
an asset. The residual value, useful lives and depreciation
Negative goodwill from an acquisition is the negative
methods are reviewed annually. Land is not depreciated.
difference between the group’s share in the fair value of
the acquired net identifiable assets and the purchase
The estimated useful lives are:
price. Negative goodwill is immediately charged to the
- buildings 30 years
income statement.
- fixtures 5-15 years
- computers 3 years
Acquisitions of minority interests
- machinery and equipment 5-10 years
When a minority interest is acquired in a subsidiary,
- furniture and vehicles 3-10 years
the goodwill corresponds to the difference between the
cost price of the additional investment and the carrying
Investment property
value of the net assets that are acquired on the date of
Investment property is property that is held in order to
exchange.
earn rental income or for capital appreciation or both, but
is not intended for sale in the context of usual business
Other intangible assets
operations, for use in the production or delivery of goods or
Other intangible assets acquired by the Group are
for administrative purposes.
valued at cost less accumulated amortization (see
Investment property is measured at cost, less cumulative
below) and impairment losses. Costs of internally
depreciation and impairments. The accounting policies given
generated goodwill and brands are recognized in profit
under ‘Property, plant and equipment’ apply.
or loss as incurred.
Rental income from investment property is accounted for as
Internally developed software
described below in the accounting policy for the ‘Income’.
Internally developed software is capitalized whenever
the development costs can be reliably determined, the
product or process is technically and commercially
Intangible assets
feasible, the future economic benefits are probable, and
the group intends and has sufficient resources in order
64
Goodwill
to complete the development and to actively use or sell
Goodwill from an acquisition is the positive difference
it. The cost of internally developed software includes all
between the purchase price and the Group’s share in the fair
costs directly attributable to the asset.
Other development costs are expensed to the income
with an undetermined useful life or which are not yet
statement as and when incurred.
available for use, the recoverable amount is estimated at
Subsequent expenditure
every balance sheet date. An impairment loss is recorded
Subsequent expenditure in respect of intangible assets
whenever the carrying value of an asset, or the cash flow
is capitalized only when it increases the future economic
generating unit to which the asset belongs, is higher than
benefits specific to the related asset.
the recoverable amount. Impairment losses recorded in
All other expenditure is expensed as incurred.
respect of cash flow generating units are first deducted
from the carrying value of any goodwill assigned to
Amortization
cash flow generating units (or groups of units) and then
Amortization is charged to the income statement
proportionally from the carrying value of the assets of the
by the straight-line method over the expected useful life of
unit (or group of units). Impairment losses are charged to
the intangible asset. Intangible assets are amortized from
the income statement. A cumulative loss on a financial
the date they are ready for use. Their estimated useful life
asset available for sale previously recognized in equity is
is 3 to 10 years.
transferred to the income statement.
Calculation of the recoverable amount
Inventories
Individually significant financial assets are tested
individually for impairment. The remaining financial assets
Inventories are valued at the lower of cost or net realizable
are divided into groups having similar credit risk features
value. The net realizable value is equal to the estimated
and are assessed collectively. The recoverable amount of
sale price in the ordinary course of the business, less the
the Group’s financial assets measured at amortized cost
estimated costs of completion and selling expenses.
is calculated as the present value of expected future cash
The cost price of inventories includes the costs incurred in
receivables are not discounted. The recoverable value of
acquiring the inventories and bringing them to their current
other assets is the greater of the sales price less selling
location and condition. Inventories are measured using the
expenses and the value in use.
FIFO method.
To assess the value in use, the expected future cash flows
Financial Statements
flows at the interest rate inherent to these assets. Current
are discounted to their present value, using a discount
rate before taxes that reflects both the current market rate
Impairment
and the risks specific to that asset. Where an asset does
not itself generate significant cash flows, the recoverable
The carrying values of the Group’s assets, other than
value is determined based on the cash flow generating
inventories and deferred tax assets are reviewed at
unit to which the asset belongs.
each balance sheet date to determine whether there is
any indication of impairment. Where there is indication
Reversal of impairments
of impairment, the recoverable amount of the asset is
An impairment is reversed when the reversal can be
estimated. In the case of goodwill and intangible assets
objectively connected with an event occurring after
kinepolis group 2007
65
the impairment was recorded. A previously recorded
measurement are recognized in profit or loss. Gains
impairment is reversed where a change has occurred in
are not recognized in excess of any cumulative
the estimates used in determining the realizable value,
impairment loss.
but not in a higher amount than the net carrying value
that would have been determined if no impairment had
been recorded in previous years. Goodwill impairments
Share capital
are not reversed.
Ordinary shares
In the case of financial assets that are measured at
Ordinary shares are classified as equity. Additional
amortized cost and financial assets available for sale in
costs which are directly attributable to the issue of
the form of bonds, the reversal is against the income
ordinary shares and share options are deducted from
statement. In the case of available-for-sale financial
equity, after deducting any tax effects.
assets that are equity securities, the reversal is taken
directly to equity.
Repurchase of share capital
Where share capital classified as Equity is reacquired
by the Company, the amount paid, including directly
Assets classified as held for sale
attributed costs, is viewed as a change in equity.
Purchase of treasury shares are recognized as a
Non-current assets (or groups of assets and liabilities
deduction from equity.
being disposed of), that are expected to be recovered
mainly via a sales transaction and not through the
Dividends
continuing use thereof, are classified as “held for sale”.
Dividends are recognized as amounts payable in the
Directly prior to this classification the assets (or the
period in which they are declared.
components of a group of assets being disposed of) are
remeasured in accordance with the group’s financial
accounting policies. Hereafter the assets (or a group of
Employee benefits
assets to be disposed of) are measured on the basis of
their carrying value or, if lower, fair value less cost to sell.
Post employee benefits
Any impairment loss on a disposal group is allocated in
Post employee benefits contain the pension plans.
the first place against goodwill and then, proportionally,
The Group provides post-retirement remuneration for
against the remaining assets and liabilities, except
the majority of its employees in the form of ‘defined
that no impairments are allocated against inventories,
contribution’ pension plans via an independent fund or
financial assets, deferred tax assets, employee-benefit
pension schemes.
assets, investment property and biological assets,
66
which will continue to be measured in accordance with
Defined contribution plans
the group’s accounting policies. Impairment losses on
The contribution paid for defined contribution plans is
initial classification and gains and losses on subsequent
immediately recognized in the income statement.
Share based payments and related benefits
Onerous contracts
The warrant plan enables Group employees to acquire
A provision for onerous contracts is set up whenever the
shares of the Company. The warrant exercise price is
economic benefits expected from a contract are lower
equal to the market price of the underlying shares on
than the unavoidable costs of meeting the contract
the date of offer and no compensation cost or liability is
obligations.
recorded.
Share transactions with employees are charged to the
income statement over the vesting period based on the
Revenue and other income
fair value on the date of offering with a corresponding
increase in equity. The fair value is determined using an
Sales of goods and services
option price definition model.
On the sale of goods the income is recognized in the
income statement upon transfer to the purchaser of
the essential risks and rewards. Where services are
Provisions
provided the income is recognized in the income
statement upon delivery of this service. Income is not
A provision is recorded in the balance sheet whenever
recorded where significant uncertainty exists as to
the Group has an existing obligation (legal or de facto) as
the collection of the receivable, related costs and the
a result of a past event and where it is probable that the
possible return of the goods.
settlement of this obligation will result in an outflow from
the company of resources containing economic benefits.
Rental income
Where the effect is material, provisions are measured by
Rental income is taken into income on a straight-line
discounting the expected future cash flows at a pre-tax
basis over the rental period. Lease incentives granted
discount rate that reflects both the current market
are regarded as an integral part of rental income.
assessment of the time value of money and, where
Government grants
Financial Statements
applicable, the risks inherent to the obligation.
Government grants are initially regarded as accrued
Restructuring
income in the balance sheet whenever reasonable
A provision for restructuring is set up whenever the
certainty exists that they will be received and that the
Group has approved a detailed, formal restructuring plan
Group will fulfil the associated conditions. Grants that
and the restructuring has either been commenced or
compensate incurred costs are systematically taken
publicly announced. No provisions are taken for future
into profit in the same period as the costs are incurred.
operating costs.
Grants that compensate costs incurred in respect of
assets are systematically taken into income over the
Site restoration
useful life of the assets.
In accordance with the Group’s contractual obligations a
provision for site restoration is set up whenever the Group
is obliged to restore land to its original condition.
kinepolis group 2007
67
Expenses
Current income taxes consist of the expected tax payable
on the taxable profit of the year, calculated according to
Payments relating to operating lease agreements
the tax rates in effect at the balance sheet date, as well as
Payments relating to operating lease agreements are
tax adjustments in respect of prior years.
taken into profit or loss on a straight-line basis over the
lease period.
Deferred taxes are recorded based on the balance
sheet method, for all temporary differences between
Payments relating to finance lease agreements
the taxable base and the carrying value for financial
The minimum lease payments are recorded partly
reporting purposes, for both assets and liabilities. No
as finance expenses and partly as repayment of the
deferred taxes are recorded for the following temporary
outstanding liability. Finance expenses are allocated to
differences: non-tax deductible goodwill, initial recording
each period of the total lease period in such a way as to
of assets and liabilities that do not affect the accounting
give a constant periodical interest rate over the remaining
or taxable profits and differences relating to investments
balance of the liability.
in subsidiaries to the extent that an offsetting entry is
unlikely in the near future. The amount of the deferred
Finance income and expenses
tax is based on expectations as to the realization of the
Finance income and expenses consist of interest payable
carrying value of the assets and liabilities, using the tax
on loans and borrowings, interest income on funds
rates in effect or those of which the enactment has been
invested, dividends, foreign exchange profits and changes
substantively completed at balance sheet date.
in fair value on hedging instruments recognized in profit
or loss.
A deferred tax asset is recorded in the balance sheet only
when it is probable that adequate future taxable profits
Rental income is taken into profit or loss pro rata
are available against which temporary differences can
temporis. Dividend income is included in the income
be utilized. Deferred tax assets are reduced whenever it
statement on the date that the dividend is declared.
is no longer probable that the related tax benefit will be
realized.
The rent component of payments on finance leases is
taken into profit or loss.
Additional income tax resulting from the declaring of
dividends is recorded simultaneously with the liability to
pay the dividend in question.
Income taxes
Income tax expense consist of current and deferred tax.
Segment information
Taxes are recorded in profit or loss except where they
68
relate to elements recorded directly in equity. In this case
A segment is a clearly distinguishable component of the
the taxes are recognized directly in equity.
Group that produces individual goods or individual servi-
ces within a defined economic environment (geographic
Own shares are purchased by means of a share buy-in
segment) or within a particular Business segment and
programme through a financial institution operating
which has a return and risk profile different to that of
under a discretionary mandate. These shares are
other segments.
intended for issuing shares under the group’s share
option scheme. Buy and sell decisions are taken on an
individual basis by the Board of Directors, as the group
Discontinued operations
does not have a defined share buy-back plan.
Classification as discontinued operations occurs upon
No changes were made in the past year to the group’s
the earlier of disposal or when the business activity
capital management approach.
fulfils the criteria for classification as held for sale.
Subsequently non-current assets and disposal groups,
New standards and interpretations that
when first recorded as held for sale, are measured at
have not yet been applied
the lower of carrying value and fair value less cost to
A number of new standards, amendments and
sell. Whenever an activity is classified as a discontinued
interpretations were not yet effective in 2007 and
operation, the comparative income statement figures are
are therefore not applied to the present consolidated
restated as if the activity had been discontinued from
financial statements
the start of the comparative period.
Capital management
management approach to segment reporting. Under
Board policy is aimed at maintaining a strong capital
IFRS 8, which will become applicable to the group’s
position in order to retain the confidence of investors,
financial statements in 2009, this segment informa-
lenders and markets and to safeguard the future
tion needs to be reported on the basis of internal re-
development of the business activities. The Board
ports which are used on a regular basis by the group’s
of Directors monitors the return on equity, which is
‘chief operating decision maker’ in order to assess the
defined by the group as the net operating result divided
development of each segment and to allocate resour-
by equity, excluding minority interests. The Board of
ces. Right now the group presents segment informa-
Directors also monitors the level of the dividend payable
tion for business units and geographic segments (see
to ordinary shareholders.
Financial Statements
-IFRS 8 Operating Segments introduces the so-called
note no 6) to the financial statements).
-In the revised version of IAS 23 Borrowing Costs,
The Board seeks a conservative balance between the
the existing choice of expensing borrowing costs
higher return that is potentially available with a higher
immediately or capitalizing them disappears. Under
level of borrowing, and the benefits and security of a
the revised rules, an entity is required to capitalize
solid equity position. In seeking this balance, the Board
the financing costs that are directly attributable to the
of Directors’ objective is to not exceed a pre-defined
acquisition, construction or production of a qualifying
ratio of debt to EBITDA
asset as part of the costs of that asset. The revised
kinepolis group 2007
69
version of IAS 23 will become mandatory to the
pension premiums under defined pension schemes
group’s financial statements in 2009. In accordance
are regarded as available and provides guidance on
with the transitional provisions the group will apply
the impact of minimum funding requirements on
the revised IAS 23 to qualifying assets for which
such assets. It also indicates when a minimum fun-
the capitalization of the borrowing costs comes into
ding requirement can give rise to the recognition of a
effect on or after the effective date.
liability. IFRIC 14, which becomes mandatory to the
-IFRIC 11 IFRS 2 – Group and Treasury Share
group’s financial statements in 2008, is not expected
Transactions require that a share-based payment
to have any impact on the consolidated financial
arrangement in which an entity receives goods or
statements.
services in exchange for rights to its equity instruments be treated as a share-based payment transaction settled in shares, regardless of how the equity
2. SEGMENT REPORTING
instruments are acquired. IFRIC 11 will become
mandatory to the group’s financial statements in
Segment information is given for the Group’s geographic
2008, with retroactive effect. IFRIC 11 is not expec-
and business segments. The primary basis of
ted to have any impact on the consolidated financial
segmentation is geographic and reflects the countries
statements.
in which the Group operates. Prices for inter-segment
-IFRIC 12 Service Concession Arrangements sets out
transactions are determined at arm’s length.
guidelines for recognition and measurement issues
that arise in accounting for public-to-private service
Segment results, assets and liabilities of a particular
concesion arrangements. IFRIC 12, which becomes
segment include those items that can be attributed,
mandatory to the group’s financial statements in
either directly or reasonably, to that segment.
2008, is not expected to have any impact on the
consolidated financial statements.
The capital expenditures of a segment are all costs
-IFRIC 13 Customer Loyalty Programmes covers the
incurred during the reporting period to acquire assets
treatment of customer loyalty programmes that en-
that are expected to remain in use in the segment for
tities apply or in which they participate. It relates to
longer than one reporting period.
customer loyalty programmes under which the customer can redeem credits for awards such as free
or discounted goods of services. IFRIC 13, which
Geographic segments
becomes mandatory applicable to the group’s financial statements in 2009, is not expected to have any
The Group’s activities are managed and followed up
impact on the consolidated financial statements.
on a country-by-country basis. The main geographic
- IFRIC 14 IAS 19 – The Limit on a Defined Benefit
70
markets are Belgium, France and Spain. The Polish and
Asset, Minimum Funding Requirements and their
Swiss activities are combined in the ‘other’ geographic
Interaction clarifies when repayments or lower future
segment.
In presenting information on the basis of geographic
segments, revenue from the segment is based on the
geographic location of the customers. The basis used for
the assets of the segments is the geographic location of
the assets.
Business segments
The Group distinguishes the following business segments:
- Cinema: All cinema-related activities, such as Box
Office, Food & Beverage, Media Events, etc.
- Concessions: Covers the leasing of part of the building
to third parties, mainly for restaurant and/or café-related
activities. This segment also includes the cinema complex in Poland that is leased to Cinema City Kinepolis.
- Other: Covers the activities of Kinepolis Film Distribution
and the Technical Division. The technical division provides mainly technical support relating to the use and
Financial Statements
maintenance of projectors.
kinepolis group 2007
71
2.1 PRIMARY SEGMENT: GEOGRAPHIC
SEGMENT INFO
in ’000 €
Segment revenue
BELGIUM
31/12/2007
SPAIN
FRANCE
31/12/2006
31/12/2007
31/12/2006
114 766
-5 695
-4 808
Revenue
110 670
109 958
54 068
51 271
42 810
40 204
Cost of sales
-80 395
-78 991
-45 229
-44 101
-33 431
-31 001
Gross profit
30 275
30 967
8 839
7 170
9 378
9 203
Distribution expenses
-8 879
-6 456
- 2 252
-1 600
-1 814
-2 250
Administrative expenses
51 271
31/12/2007
116 366
Inter-segment revenue
54 068
31/12/2006
42 810
40 204
-11 237
-11 209
-1 638
-1 644
-1 176
-1 127
Other operating income
222
1
1 645
1 224
670
1045
Other operating expenses
-221
-10
-154
-303
0
-7
10 161
13 292
6 440
4 847
7 058
6 865
Operating profit before net finance expenses
Finance expenses
Finance income
Profit before tax
Income tax expense
PROFIT FOR THE PERIOD
Intangible assets
1 689
1 714
435
417
145
173
Goodwill
7 281
7 281
2 603
2 603
2 374
2 374
108 086
93 858
84 575
85 638
52 496
55 020
33
206
16 512
16 452
274
263
57 831
Property, plant and equipment
Investment property
Deferred Tax Assets
Derivative financial instruments
Non-current trade and other receivables
Other financial assets
Non-current assets
117 090
103 059
104 126
105 110
55 289
Inventories
1 738
1 853
245
265
194
181
Trade receivables
7 953
6 962
2 708
1 966
1 890
2 064
Other receivables
3 248
2 627
2 932
1 730
114
92
12 939
11 442
5 885
3 962
2 197
2 338
130 029
114 502
110 011
109 072
57 486
60 168
Income tax receivable
Advances
Cash and cash equivalents
Derivative financial instruments
Total Current Assets
Assets classified as held for sale
TOTAL ASSETS
72
NOT ALLOCATED
31/12/2006
4 775
31/12/2007
TOTAL
31/12/2006
9 759
31/12/2007
31/12/2006
SEGMENT INFO
in ’000 €
218 019
216 000
Segment revenue
-5 695
-4 808
Inter-segment revenue
4 775
9 759
212 324
211 192
Revenue
- 3 582
-7 491
- 162 637
-161 584
Cost of sales
1 194
2 268
49 687
49 608
Gross profit
-186
-432
-13 130
-10 737
Distribution expenses
-346
-492
-14 397
-14 472
Administrative expenses
825
159
3362
2 429
Other operating income
-375
-320
Other operating expenses
1 487
1 503
25 146
26 507
Operating profit before net finance expenses
-11 098
-11 014
-11 014
-11 014
Finance expenses
4 209
4 321
4 209
4 321
Finance income
18 256
19 814
Profit before tax
-3 530
-5 179
-3 530
-5 179
Income tax expense
14 726
14 635
PROFIT FOR THE PERIOD
Intangible assets
2
81
2 270
2 385
6 502
8 226
18 761
20 485
Goodwill
6 109
21 929
251 266
256 445
Property, plant and equipment
15 008
15 008
Investment property
2 056
1 593
2056
1 593
Deferred Tax Assets
1 432
1 333
1 432
1 333
Derivative financial instruments
17 621
16 921
Non-current trade and other receivables
1 832
2 329
1 832
2 329
Other financial assets
5 320
5 255
310 247
301 491
Non-current assets
801
28 423
30 236
11
88
2 189
2 388
Inventories
418
151
12 969
11 144
Trade receivables
62
111
11 720
9 954
5364
5 394
116
116
Financial Statements
OTHER (PL+CH)
31/12/2007
Other receivables
Income tax receivable
Advances
491
28 914
350
30 586
16 240
14 573
16 240
14 573
Cash and cash equivalents
171
222
171
222
Derivative financial instruments
21 891
20 189
43 403
38 281
Total Current Assets
10 234
11 002
10 234
11 002
Assets classified as held for sale
37 444
36 446
363 884
350 774
TOTAL ASSETS
kinepolis group 2007
73
2.1 PRIMARY SEGMENT: GEOGRAPHIC (CONTINUATION)
SEGMENT INFO
IN ’000 €
BELGIUM
31/12/2007
SPAIN
FRANCE
31/12/2006
31/12/2007
31/12/2006
31/12/2007
31/12/2006
Issued Capital & share premium
Consolidated reserves
Translation differences
Equity attributable to equity holders
of the company
Minority interest
Total equity
Interest bearing loans and borrowings
Employee benefits
Provisions
979
951
168
13 320
12 614
979
951
13 487
12 614
33 369
31 415
13 810
12 872
1 549
64
Deferred tax liabilities
Derivative financial instruments
Trade and other payables
Non-current liabilities
Bank overdraft
Interest bearing loans and borrowings
Trade and other payables
Provisions
6 849
6 029
Derivative financial instruments
Current income tax liabilities
Current liabilities
33 369
31 415
15 360
12 936
6 849
6 029
TOTAL EQUITY AND LIABILITIES
34 348
32 366
28 847
25 550
6 849
6 029
CAPEX
IN ’000 €
Capex
NON-CASH ELEMENTS
IN ’000 €
Depreciation & amortization
Other
Total
74
BELGIUM
31/12/2007
26 472
14 447
BELGIUM
31/12/2007
SPAIN
FRANCE
31/12/2006
31/12/2007
31/12/2006
5 901
3 045
31/12/2007
1 974
31/12/2007
1 510
SPAIN
FRANCE
31/12/2006
31/12/2006
31/12/2006
11 470
9 073
6 839
6 976
72
401
688
172
11 543
9 474
7 527
7 148
31/12/2007
31/12/2006
4390
4 306
4 390
4 306
OTHER (PL+CH)
31/12/2007
NOT ALLOCATED
31/12/2006
31/12/2007
TOTAL
31/12/2006
31/12/2007
31/12/2006
SEGMENT INFO
IN ’000 €
50 116
47 443
50 116
47 443
Issued Capital & share premium
63 695
60 929
63 695
60 929
Consolidated reserves
-1 373
-1 402
- 1 373
-1 402
Translation differences
112 438
106 969
112 438
106 969
Equity attributable to equity holders
of the company
1 116
1 090
1 116
1 090
Minority interest
113 554
108 059
113 554
108 059
Total equity
139 231
119 656
139 231
119 656
Interest bearing loans and borrowings
Employee benefits
729
20
20
889
750
673
1 114
2 016
1 680
Provisions
13 959
15 485
13 959
15 485
Deferred tax liabilities
3 292
2 638
3 292
2 638
Derivative financial instruments
13 340
12 634
Trade and other payables
156 483
137 779
171 838
152 093
Non-current liabilities
49
677
49
677
Bank overdraft
15 828
30 809
15 828
30 809
Interest bearing loans and borrowings
2 982
4 168
57 683
55 599
Trade and other payables
1 549
64
Provisions
0
449
0
449
Derivative financial instruments
3 383
3 022
3 383
3 022
Current income tax liabilities
673
1 114
22 241
39 127
78 492
90 622
Current liabilities
1 562
1 864
292 278
284 965
363 884
350 774
TOTAL EQUITY AND LIABILITIES
OTHER (PL+CH)
31/12/2007
NOT ALLOCATED
31/12/2006
12
31/12/2006
125
OTHER (PL+CH)
31/12/2007
31/12/2007
TOTAL
31/12/2007
34 359
NOT ALLOCATED
31/12/2006
31/12/2006
31/12/2007
31/12/2006
19 127
TOTAL
31/12/2007
31/12/2006
Financial Statements
869
CAPEX
IN ’000 €
Capex
NON-CASH ELEMENTS
IN ’000 €
888
1 496
23 587
21 850
Depreciation & amortization
86
96
846
670
Other
974
1 592
24 433
22 520
Total
kinepolis group 2007
75
2.2 SECONDARY SEGMENT: BUSINESS UNIT
SECUNDARY SEGMENT INFO
IN ’000 €
Segment revenue
CONCESSIONS
Cinema
31/12/2007
31/12/2006
200 846
31/12/2007
201 635
7 301
FILM DISTRIBUTION
31/12/2006
5 792
Intersegment revenues
31/12/2007
31/12/2006
7 020
6 310
-2 966
-2 634
Revenues
200 846
201 635
7 301
5 792
4 054
3 676
Segment Assets
284 984
281 896
37 353
28 817
1 996
971
33 628
18 876
383
217
9
4
Capex
3. OTHER OPERATING INCOME (EXPENSES)
in ’000 €
31/12/2007
31/12/2006
537
825
Government grants
1 054
1 224
Other
1 396
60
TOTAL
2 987
2 109
Capital gain/(loss) on disposal of property, plant and equipment
Capital gain on the disposal of property, plant and equipment
Other
This capital gain derives mainly from the sale of land, plant and
This heading contains, as well as number of smaller items,
equipment.
the sale of a ‘building right’ in Valencia (SP) for € 0.7m and
the reversal of a provision in relation to the VAT risk in France.
Government grants
The capital gain of € 1.7m realized on the transfer of the
The Group receives government grants in France for building
cinema activity in Poland is offset by the derecognition of the
cinema complexes. These subsidies come from a fund which
goodwill related to the activity.
is financed by contributions from cinema operators in the
form of a percentage of ticket sales. The grants are recorded
as liabilities and taken into income over the useful life of the
assets in question.
76
TECHNICS
31/12/2007
UNALLOCATED
31/12/2006
31/12/2007
TOTAL
31/12/2006
31/12/2007
31/12/2006
SECUNDARY SEGMENT INFO
IN ’000 €
2 720
2 850
217 887
216 587
Segment revenue
-2 597
-2 762
-5 563
-5 396
Intersegment revenues
122
89
2 055
2 289
339
30
37 496
36 801
212 324
211 192
Revenues
363 884
350 774
Segment Assets
34 359
19 127
Capex
4. PERSONNEL EXPENSES
Wages & salaries
Social security contributions
Pension plan contributions (defined contribution)
31/12/2007
31/12/2006
-27 171
-25 265
-7 478
-7 273
-342
-354
-2 015
-1 850
-37 006
-35 049
1 438
1 755
Share-based payments
Other personnel expenses
TOTAL
Total full-time equivalents
-307
kinepolis group 2007
Financial Statements
in ’000 €
77
5. ADDITIONAL INFORMATION ON OPERATING EXPENSES BY NATURE
Personnel expenses and depreciation and amortization are charged to profit or loss in the following lines:
in ’000 €
31/12/2007
31/12/2006
-28 387
-27 805
Personnel expenses
Cost of sales
Distribution expenses
-2 389
-1 816
Administrative expenses
-6 230
-5 428
-37 006
-35 049
Other operating income / expenses
TOTAL
Depreciation & amortization
Cost of sales
-22 464
-20 947
Distribution expenses
-211
-170
Administrative expenses
-912
-733
-23 587
-21 850
31/12/2007
31/12/2006
Other operating income / expenses
TOTAL
Barter agreements
Income includes € 6.6m of barter deals (2006: 5.3m).
6. FINANCe INCOME (AND EXPENSES)
in ’000 €
Interest income
Interest expenses
106
338
-6 731
-7 420
Net foreign exchange gains
1 559
128
Net foreign exchange losses
-1 267
-479
-572
728
873
891
Bank charges (fee)
-104
-139
Other
-754
-741
-6 890
-6 693
Changes in fair value of derivative financial instruments
Government grants
TOTAL
The use of derivative financial instruments for hedging of interest and exchange rate risks is discussed further in note 24.
78
7. INCOME TAX EXPENSE
Recognized in profit or loss
in ’000 €
Current tax expenses
Deferred tax
TOTAL INCOME TAX RECOGNIZED IN INCOME STATEMENT
31/12/2007
31/12/2006
-5 505
-5 472
1 974
292
-3 530
-5 179
31/12/2007
31/12/2006
in ’000 €
Profit Before Tax
18 256
19 814
Belgian tax rate
33,99%
33,99%
-6 205
-6 735
441
-52
Income tax using the company’s domestic tax rate
Effect of Tax Rates in foreign juridictions
Non-deductible expenses
-846
-881
1 813
2 208
Recognition/(use) of previously unrecognized losses
418
-103
Under/(over) provided in prior periods
165
160
Change in tax rate
716
Other adjustments
32
223
-3 530
-5 179
19%
26%
Tax-exempt income
Total
Effective tax rate
Financial Statements
Calculation of effective tax rate
The effective tax rate has fallen from 26% in 2006 to 19% in 2007. The lower tax rate in Spain, the recognition of additional tax
benefits on the liquidation of a subsidiary and the notional interest deduction resulted in a significant tax reduction.
Deferred income tax recognized directly to equity
Relating to financial instruments to which hedge accounting is applied:
in ’000 €
On the effective portion of the change in fair value of the cashflow hedges
31/12/2007
31/12/2006
8
-304
kinepolis group 2007
79
8. INTANGIBLE ASSETS
Intangible assets (other than goodwill)
PATENTS AND
LICENCES (2007)
OTHER
(2007)
Total
(2007)
Total
(2006)
Acquisition value
2 124
3 571
5 695
4 122
Amortization and impairment losses
in ’000 €
-1 275
-2 035
-3 310
-2 284
Net carrying value at end of previous period
849
1 536
2 385
1 837
Net carrying value at end of previous period
849
1 536
2 385
1 837
Purchases
415
1 132
1 547
1 575
Sales/disposals
Transfer to other categories
-49
11
-38
-681
-942
-1 624
791
-91
700
534
1 736
2 270
2 385
Acquisition value
2 399
4 681
7 081
5 695
Amortization and impairment losses
-1 865
-2 945
-4 810
-3 310
534
1 736
2 270
2 385
Amortization
Effect of exchange rate fluctuations
-1 027
Impairment losses
Net carrying value at end of period
NET CARRYING VALUE AT END OF PERIOD
The intangible assets other than goodwill consist mainly of software. To this also belongs the ticketing system that was
developed internally.
9. Goodwill
in ’000 € Balance at end of previous period
31/12/2007
31/12/2006
20 485
20 485
Impairment losses
80
Disposals
-1 724
BALANCE AT END OF CURRENT PERIOD
18 761
20 485
This heading contains the differences expressed at the time of
from the acquisition of participating interests in subsequent
the first consolidation as at 1 January 1996, and those arising
periods. Goodwill was subjected to impairment tests at cinema
level (one level lower than the segments). In particular, the real-
cost of the cinema’s capital. This weighted average cost varied
izable value or the discounted cash flow (whichever is greater)
between 6.42% and 8.3%. These tests did not lead to the
was taken into consideration. The realizable value is based on
recording of an impairment loss against goodwill.
the valuation made by an external expert. The discounted cash
flows are based on business plans as approved by the board
On 19 January 2007 the activity of the Polish subsidiary was
of directors over the years 2008-2012. For the next years the
transferred to the ITIT cinema group. A capital gain of € 1.7m
business plans were extrapolated based on consumer indexes
was realized on this transfer. This capital gain was offset by the
and on key performance indicators which are inherent to the
above-mentioned derecognition of the goodwill attached to this
business plans. The projections were performed in the cinemas’
activity.
functional currency and discounted at the weighted average
10.PROPERTY, PLANT AND EQUIPMENT
PLANT
& EQUIPMENT
(2007)
Assets UNDER
CONSTRUCTION
(2007)
Acquisition value
346 702
115 446
440
Depreciation and impairment losses
-121 516
-84 628
Net carrying value at end of period
225 186
30 818
Net carrying value at end of previous period
225 186
14 922
Sales / disposals
-231
-940
Transfer to assets classified as held for sale
-538
Purchases
Total
(2006)
462 589
452 880
-206 144
-190 816
440
256 445
262 064
30 818
440
256 445
262 064
16 948
943
32 812
17 552
-28
-1 200
-790
-538
-1 407
Transfer to other categories
-14 712
361
Depreciation
-12 795
-8 773
-25
-40
211 807
Effect of exchange rate fluctuations
Total
(2007)
-270
-14 621
6
-21 567
-20 822
1
-64
-158
38 373
1 086
251 266
256 445
1 086
Financial Statements
LAND
& BUILDINGS
(2007)
in ’000 €
Other movements
Impairment losses
Net carrying value at end of period
Acquisition value
Depreciation and impairment losses
NET CARRYING VALUE AT END OF PERIOD
341 748
129 301
-129 941
-90 928
211 807
38 373
1 086
472 136
462 589
-220 869
-206 144
251 266
256 445
kinepolis group 2007
81
Purchases
the building became the direct property of the Group. In
The purchases under the Land and Buildings heading relate
the context of the transfer of the Polish activities to the ITIT
mainly (€ 12.2m) to investments in respect of the Ostend
group, this building is being leased since 18 January 2007
complex which opened in July 2007.
to ITIT.
The acquisitions under Plant & Equipment consist primarily
of the digital projectors and the remodelling of a number of
The Group continues to lease machinery and installations
complexes.
in Spain under finance leasing agreements. The Group has
an option to purchase the installations at an advantageous
Leased buildings, machinery and equipment
price at the end of each lease agreement. At 31 December
The Group leased the Polish complex (Poznan) until the end of
2007 the carrying value of the leased machinery and
August 2006, when the leasing debt was repaid (€ 11.8m) and
installations was € 4.2m (2006: € 5.4m).
11. INVESTMENT property
in ’000 €
LAND AND
BUILDINGS
(2007)
MACHINERY
AND EQUIPMENT
(2007)
ASSETS UNDER
CONSTRUCTION
(2007)
Total
(2007)
Acquisition value
Depreciation and impairment losses
Net carrying value at end of previous period
Net carrying value at end of previous period
Purchases
1
1
Sales / disposals
Transfer to assets available for sale
Transfer to other categories
14 406
253
14 659
-335
-58
-393
730
11
741
Net carrying value at end of period
14 802
206
15 008
Acquisition value
18 107
664
18 771
Depreciation and impairment losses
-3 305
-458
-3 763
NET CARRYING VALUE
at end of period
14 802
206
15 008
Depreciation
Effect of exchange rate fluctuations
Other movements
Impairment losses
82
Total
(2006)
Since 18 January 2007 the land, buildings and equipment at
question have been reclassified under this heading.
Poznan (Poland) are no longer used for Kinepolis’ own opera-
The rental income from investment property amounts to
tions, but have been leased out to Cinema City Kinepolis, owned
€ 1.3m. The fair value of the investment property on a going
by the ITIT cinema group.
concern basis as recently determined by an independent
As required by IAS 40 (investment property), the assets in
expert amounts to € 16.1m.
12.DEFERRED TAX ASSETS AND LIABILITIES
Recognized deferred taxes
in ’000 €
31/12/2007
31/12/2006
Property, plant and equipment and intangible assets
1 682
1 263
Investment grants receivable
2 909
2 250
371
799
Deferred tax assets
Government grants
Derivative financial instruments through profit or loss
Tax losses carry forward and other deferred tax assets
5 183
4 364
TOTAL
10 145
8 675
Tax offsetting
-8 089
-7 082
2 056
1 593
-18 978
-20 159
Deferred tax assets
Property, plant and equipment and intangible assets
Provisions
Government grants
-137
-164
-2 588
-1 805
Derivative finacial instruments through profit or loss
-110
-195
Derivative financial instruments recorded in equity
-235
-243
-22 048
-22 567
8 089
7 082
-13 959
-15 485
TOTAL
Tax offsetting
Deferred tax liabilities
Temporary differences for which no deferred
differences that would result in a deferred tax asset in an
tax assets are recognized
amount of € 39.3m (2006: 28.3m) given it is not probable
No deferred tax asset is recognized in the balance sheet
that future taxable profit will be available against which the
in respect of tax losses carried forward and temporary
group can utilize the benefits therefrom
kinepolis group 2007
Financial Statements
Deferred tax liabilities
83
Temporary differences for which no deferred tax
If an active dividend policy were to exist for all subsidiar-
liabilities are recognized
ies, this would require an additional deferred tax liability of
There is no Group policy with respect to the payment of
€ 0.9m (2006: € 0.9m).
dividends by subsidiaries to the parent company.
13.INVENTORIES
in ’000 €
31/12/2007
Raw materials and consumables
31/12/2006
60
87
Goods purchased for resale
2 129
2 301
Total
2 189
2 388
Inventories include also the inventory of the group’s technical department for an amount of € 1.2m (2006: € 1.3m). The cost of sales
of inventories recorded in profit or loss in 2007 is € 78.0m (2006: € 74.5m).
14.TRADE AND OTHER RECEIVABLES
Non-current trade and other receivables
in ’000 €
Cash guarantees
Trade receivables
31/12/2006
318
480
801
Other amounts receivable
16 502
16 442
Total
17 621
16 921
Trade receivables
Other non-current receivables
The non-current trade receivables relate to a receivable from
The other non-current receivables relate to the government
the ITIT cinema group in relation to the transfer of the activity
grants obtained in France.
in Poland to this group. This receivable is payable in January
2012 and is guaranteed by a Corporate Guarantee.
84
31/12/2007
Current trade and other receivables
in ’000 €
Trade receivables
31/12/2007
31/12/2006
12 968
11 144
Taxes receivable, other than income taxes
5 364
5 394
Deferred charges and accrued income
2 553
2 477
484
229
Tax shelter receivables
Other receivables
Total
3 319
1 854
24 688
21 098
Tax shelter receivables
Other current receivables
The tax shelter receivables consist of loans granted to third
The other current receivables consist primarily of the short-
parties to finance audiovisual works.
term portion of the French government grants. These other
current receivables contain no financial assets.
The ageing of the current trade receivables can be summarized as follows:
Net carrying value
Gross 2007
12 969
Not yet due on reporting date
4 176
Less than 30 days past due
Between 31 and 120 days past due
Between 120 days and 1 year past due
Over 1 year past due
Total
impairment
2007
Gross 2006
impairment
2006
11 144
-4
4 082
-4
3 763
-29
3 963
-35
2 746
-67
2 002
-192
1 906
-338
1 368
-395
4 117
-3 302
3 122
-2767
16 709
-3 740
14 537
-3 393
Financial Statements
in ’000 €
The movement on the allowances for impairment in respect of trade receivables can be summarized as follows:
in ’000 €
Situation at 1 January
Impairment loss recognized
31/12/2007
31/12/2006
-3 393
-2 827
-325
-589
-23
22
-3 740
-3 393
Effect of exchange rate fluctuations
Situation at 31 December
No impairment allowance has been taken on past-due amounts where collection continues to be deemed likely.
kinepolis group 2007
85
15.CASH AND CASH EQUIVALENTS
in ’000 €
31/12/2007
31/12/2006
Cash at bank and in hand
16 240
14 573
Total
16 240
14 573
31/12/2007
31/12/2006
1 800
2 250
16.OTHER FINANCIAL ASSETS
in ’000 €
Financial assets available for sale
Other
Total
32
79
1 832
2 329
Financial assets available for sale
The financial assets classified available for sale consist of
under IAS 39 and recorded under ‘Financial assets available
Kinepolis’s share in CinemaxX. This investment is recorded at
for sale’. CinemaxX is listed on the German stock exchange,
fair value. In the IFRS transitional balance sheet at 1 January
and fluctuations in its fair value are recorded directly in equity.
2004, the Company still had a 25% participating interest in
86
CinemaxX, which was consolidated using the equity method.
Sensitivity analysis
Given CinemaxX’s negative equity at the time, CinemaxX was
The financial assets classified as available for sale consist
then recorded at zero. By decision of 28 October 2004 of the
solely of the participating interest in CinemaxX. The latter
General Shareholders’ Meeting of CinemaxX AG, shareholders
company is listed in Germany.
agreed to increase the capital of the company by incorporating
On 31 December 2007, CinemaxX was listed at € 0.60 per
outstanding loans from Telemünchen Gruppe AG. This
share (2006: € 0.75 per share). A 25% increase in the share
diluted Kinepolis’s interest from 25% to 12.61%. Given that
price would positively impact equity by € 0.4 m (2006:
the Company has no significant influence on CinemaxX, the
€ 0.6m). A 15% fall in the share price would reduce equity by
investment is viewed as a financial asset available for sale
€ 0.3m (2006: € 0.3m).
17. ASSETS CLASSIFIED AS HELD FOR SALE
in ’000 € Net carrying value at end of previous period
31/12/2007
31/12/2006
11 002
9 557
Acquisitions
Sales and disposals
-1 446
Transfer to/from other categories
538
1 407
140
38
10 234
11 002
Other movements
Effects of exchange rate fluctuations
NET CARRYING VALUE AND END OF PERIOD
The assets held for sale on 31 December 2007 consist of land,
dispose of these assets are ongoing. The sales are expected to
in Poznan (Poland), land in Valencia (Spain), a cinema in Liège
take place within the year.
(Belgium) and a plot of land in Ghent (Belgium). Efforts to
18.SHAREHOLDERS’ EQUITY
The various components of equity and the changes between
On 31 December 2007 the Group owned 31 118 of its
31 December 2006 and 31 December 2007 are set out in the
own shares (2006: 111 235). The authorization of the
Consolidated Statement of Changes in Equity.
Board of Directors to increase the share capital in one or
renewed by the Extraordinary General Meeting of share-
The share capital at 31 December 2007 amounts to € 49.0m
holders of 18 May 2007 for five years until 17 May 2012.
(2006: 47.4m), represented by 6 930 778 ordinary shares
The authorization to increase the share capital after
without nominal value. The share premium at 31 December 2007
notification of a public takeover bid was also renewed
amounts to € 1.2m (2006: € 0m). Ordinary shareholders are
by the Extraordinary General Meeting of shareholders of
entitled to dividends as declared from time to time and to cast
18 May 2007 for three years until 7 June 2010.
Financial Statements
more instalments to a maximum of € 48 883 132.15 was
Issued capital
one vote per share at the Company’s shareholder meetings.
kinepolis group 2007
87
During the financial year the following movements have taken place in respect of the number of shares (in units):
in units
Situation at 1 January
Capital increase following the exercise of warrants (20 April 2007)
31/12/2007
31/12/2006
6 930 778
6 930 778
210 250
Capital increase following the exercise of warrants (5 June 2007)
11 250
Destruction of own shares, without capital reduction (18 May 2007)
-221 500
Situation at 31 December
6 930 778
6 930 778
Hedging reserves
The hedging reserve contains the effective portion of the
per warrant (see note 20). These warrants were exercised in
cumulative net change in the fair value of the cash flow hedges
2007 and at 31 December 2007, there were no more warrants
in respect of which the hedged future transaction has not yet
outstanding.
taken place.
Dividends
Translation differences
On 29 February 2008 a dividend of € 4.5m or € 0.65 per
‘Translation differences’ includes all exchange rate differences
share (2006: € 4.4m or € 0.64 per share). was proposed.
resulting from the translation of the financial statements of
This dividend has not yet been approved by the General
foreign entities.
­Meeting of Shareholders of Kinepolis Group NV and for
this reason is not yet included in the consolidated financial
Warrants
statements.
At 31 December 2006 a total of 221 500 warrants were
outstanding. These warrants entitle their holders to one share
19.EARNINGS PER SHARE
in ’000 €
Profit attributable to equity holders of the company
Weighted average number of ordinary shares
31/12/2007
31/12/2006
14 700
14 587
6 850
6 827
Effect of warrants
Weighted average number of ordinary shares (diluted)
88
144
6 850
6 972
Basic earnings per share (in €)
2,15
2,14
Diluted earnings per share (in €)
2,15
2,09
Earnings per share
Diluted earnings per share
The earnings per share is based on the profit of € 14.7m
The diluted earnings per share is based on the net profit of
attributable to equity holders of the company (2006: € 14.6m)
€ 14.7m attributable to equity holders of the company (2005: €
and on a weighted average number of 6 850 222 ordinary
14.6) and on a weighted average number of 6 850 222 diluted
shares outstanding during the year (2006: 6 827 442).
ordinary shares outstanding during the year (2006: 6 971 859).
20.Share based payment transactions
Incentive Plan
The exercise price of the warrants is € 12.07.
The Board of Directors of Kinepolis Group NV approved a
On 13 December, a second offering of warrants was made,
warrant plan on 28 May 2003.
with a total of 13 000 warrants issued and distributed to
beneficiaries under the same conditions as the first offering.
On 27 July 2003 an initial offering of warrants was made to
The exercise price of this second offering is € 12.07.
certain executives. Each warrant entitled its holder to purchase
one ordinary share of the Company. In total 235 250 warrants
The warrants were exercised during 2007 and at 31
were issued and distributed free of charge.
December 2007, there were no more warrants outstanding.
Under the programme the warrants can be exercised from
At the time of exercising the warrants, the share price on the
April 2007 to May 2008, after which they become worthless.
stock exchange was € 57.
WARRANTS
248 250
Warrants surrendered in 2004
2 000
Warrants surrendered in 2005
15 000
Warrants surrendered in 2006
9 750
Warrants surrendered in 2007
0
Warrants exercised in 2007
Financial Statements
Issued warrants
221 500
Outstanding warrants at 31 December 2007
0
Share option plan
under this option plan. At the Board meeting of 18 December
On 5 November 2007 the Board of Directors approved a share
2007 it has been decided to set the exercise price at the
option plan to encourage and reward selected Directors and
average stock market price of the 30 days preceding the offer.
executives who are able to contribute to the success and to the
The option will expire 10 years after the date of its approval by
long-term growth of the group. 277 231 options can be allocated
the Board of Directors (see also item 29: Subsequent events).
kinepolis group 2007
89
21.INTEREST-BEARING LOANS & BORROWINGS
This note provides information on the contractual stipulations
For further information on the Group’s exposure to interest and
of the Group’s interest-bearing loans and borrowings.
exchange rate risks, see Note 24.
Non-current loans and borrowings
in ’000 €
Leasing and similar liabilities
31/12/2007
31/12/2006
231
1 656
Guaranteed loans and borrowings with credit institutions
139 000
118 000
Total non-current loans and borrowings
139 231
119 656
31/12/2007
31/12/2006
Current loans and borrowings
in ’000 €
Subordinated loans and borrowings
Leasing and similar liabilities
Guaranteed loans and borrowings with credit institutions
Other loans and borrowings
Total current loans and borrowings
90
1 513
1 804
14 312
29 001
3
5
15 828
30 809
The table below gives an overview of the contractual maturities for the financial liabilities, including the estimated interest.
Non-derivative financial liabilities
Trade payables
1 YEAR
OR LESS (2007)
1–5 years
(2007)
more than
5 years (2007)
Total
(2007) 33 385
33 385
Tax shelter payables
266
266
Third party current account payables
340
Subordinated loans
Leasing and similar rights
0
340
0
0
0
1 569
236
0
1 805
15 018
132 137
33 073
180 228
Other loans and borrowings
3
0
0
3
Financial derivatives
Guaranteed loans and borrowings with credit institutions
Interest rate swaps
CCIRS
Interest rate options
Forward exchange agreements
Total
in ’000 €
Non-derivative financial liabilities
Trade payables
-848
-694
-1 542
370
2 792
0
3 162
0
0
0
0
0
50 103
134 471
33 073
217 647
1 YEAR
OR LESS (2006)
1–5 years
(2006)
more than
5 years (2006)
Total
(2006) 30 322
30 322
Tax shelter payables
123
123
Third party current account payables
436
436
Subordinated loans
Leasing and similar rights
0
0
0
0
1 952
1 710
0
3 662
30 474
143 752
0
174 226
Other loans and borrowings
5
0
0
5
Financial derivatives
Guaranteed loans and borrowings with credit institutions
Interest rate swaps
-426
-554
-980
CCIRS
413
1 813
0
2 226
Interest rate options
-80
Forward exchange agreements
Total
450 63 669
146 721
0
Financial Statements
in ’000 €
-80
450
210 390
kinepolis group 2007
91
Finance lease liabilities
The future minimum lease payments amount to:
in ’000 €
PAYMENTS
2007
INTEREST
2007
CAPITAL
2007
PAYMENTS
2006
INTEREST
2006
CAPITAL
2006
1 569
56
1 513
1 952
148
1 804
236
5
231
1 710
55
1 656
1 805
61
1 744
3 662
203
3 460
Less than one year
Between one and five years
More than five years
Total
22.PROVISIONS
in ’000 €
Total
Net carrying value at end of previous period
1 744
Provisions set up
1 844
Use of provisions
-40
Reversal of provisions
-38
Effect of exchange rate fluctuations
56
Net carrying value at end of period
3 565
Net carrying value at end of period (non-current)
2 016
Net carrying value at end of period (current)
1 549
Total
3 565
The provisions relate primarily to the reinstatement of land, a
VAT on food and beverages in France
provision for VAT on food and beverages in France, a provision for
In France, Kinepolis has applied the reduced VAT rate on food
authors’ rights in Poland and a number of minor disputes.
and beverages. Other cinema groups and similar enterprises
also apply this reduced VAT rate. Given the uncertainty as to
Reinstatement of land
whether this reduced rate will be accepted by the tax authorities,
The Brussels cinema complex’s lease on the land owned by the
a provision of € 1.5m has been set up.
City of Brussels ends in 2025. The Company has a contractual
92
obligation to restore the land to its original state. At 31 December
Author’s rights in Poland
2007 the balance sheet included a provision of € 0.9m for the
Uncertainty exists in Poland with regard to the collection of
demolition of the building and to restore the land to its original
authors’ rights. A provision has been set up of € 0.8m at 31
state (2006: € 0.8m).
December 2007 (2006: € 0.8m).
23.TRADE AND OTHER PAYABLES
Non-current trade and other payables
in ’000 €
31/12/2007
31/12/2006
Other payables
13 340
12 634
Total
13 340
12 634
The other non-current payables consist primarily of the
nized as other operating income in line with the depreciation
government grants received in France. These government
of the assets for which these grants were obtained.
grants, amounting to € 13.0m (2006: € 12.3m), are recog-
in ’000 €
31/12/2007
31/12/2006
33 835
30 322
Employee benefits
5 148
4 542
Taxes payable, other than income taxes
2 982
4 168
Trade payables
Tax shelter payables
266
123
Third party current account payables
340
436
Other payables
663
1274
Accrued charges and deferred income
14 449
14 734
Total
57 683
55 599
Accrued charges and deferred income
Other payables
The accrued charges and deferred income relate primarily
The other payables do not include any financial liabilities
Financial Statements
Current trade and other payables
to ticket prepayments.
kinepolis group 2007
93
24.FINANCIAL INSTRUMENTS
Financial risk management
a) interest rate swaps and FRAs in which the Group
The Group’s principal financial instruments are bank loans,
agrees to exchange, at specified intervals, the dif-
finance leases and cash.
ference between fixed and variable interest amounts
The Group has various other financial instruments such as
calculated by reference to a pre-agreed principal
trade debtors and trade creditors, which arise directly from
amount.
its operations.
b) interest rate derivatives with fixed ceilings, hence
limiting the impact of interest rate movements whilst
The Group also enters into derivative transactions, principally
leaving the opportunity to benefit from low short term
FRAs, interest rate swaps, interest rate options and cross
floating interest rates.
currency interest rate swaps. The purpose is to manage the
interest rate and currency risks arising from the Group’s
At balance sheet date the Group had various interest rate
activities and its sources of financing.
swaps outstanding, on which the Group receives a variable
It is Group policy not to undertake any trading positions in
interest rate equal to EURIBOR, and on which it pays a
derivative financial instruments.
fixed interest rate. These swaps are used to cover the
variability in the cash flows of the underlying loans.
The main risks arising from the Group’s financial instruments
are interest rate risk, liquidity risk, foreign currency risk and
In accordance with the IAS39 hedge accounting rules
credit risk. It is Group policy to negotiate the terms of the
these interest rate swaps are viewed as cash flow hedges.
hedge derivatives to match the terms of the hedged item so
Therefore the effective portion of the change in fair value of
as to maximize hedge effectiveness.
the interest rate swaps is recognized directly in equity. The
changes in fair value of the interest rate swaps recognized
The board of Directors and approves policies for managing
in equity give a loss of k€ 24 at 31.12.07 (2006: a profit of
each of these risks. These policies are summarized below.
k€ 1 013).
The Group’s accounting policies in relation to derivatives are
set out in the accounting policies.
As well as the interest rate swaps, the group had various
other interest rate derivatives outstanding. These are
Interest rate risk
viewed as freestanding. Therefore the changes in the fair
The Group’s exposure to market risk for changes in interest
value of these interest rate derivatives are recognized in
rates relates primarily to the Group’s short and long-term
profit or loss.
loans and borrowings.
At 31 December 2007, after taking into account the effect
94
Group policy is to manage interest rate costs with a mixture
of interest rate swaps and options, 49% of the Group’s
of fixed and variable interest rate liabilities. To manage this
borrowings were at a fixed interest rate, and 27% of
mix in a cost-efficient manner, the Group enters into:
borrowings had caps at specific interest rates.
Interest risk sensitivity analysis
Foreign currency risk
The interest-bearing loans with a variable interest rate
The Group has a foreign currency risk on positions deriving
amounted at balance sheet date to € 155.1m (2006:
from sales or purchases and from outstanding borrowings
€ 150.5m), equal to 100% of the total interest-bearing loans.
by group companies in currencies other than the functional
The total interest charged to profit or loss in 2007, after
currency (EUR) (transaction risk).
taking into account the effect of the derivative interest rate
instruments, amounted to € 7.2m (2006: € 8.4m).
Less than 1% of the Group’s sales and purchases are
denominated in currencies other than the functional
According to the company’s estimates the market interest
currency. Loans between Kinepolis Financial Services NV
rate applicable to the variable interest rate can reasonably
and other group companies are expressed in the currency
be expected to change as follows:
of the latter. The loans in CHF and PLN from Kinepolis
Financial Services NV to Kinepolis Schweiz, Kinepolis
Poznan Sp.z.o.o and Kinepolis Sp.z.o.o. are hedged with
Euribor 3 M
Interest
Rate
31/12/07
Theoretical
Volatility
Possible interest
rate 31/12/07
AS used for the
sensitivity
analysis
4,68%
10%
4,22% – 5,14%
cross-currency interest rate swaps. These instruments are
viewed as freestanding. The changes in the fair value of the
CCIRSs are therefore recognized in profit or loss
The group incurs a foreign currency risk from consolidating
foreign companies not having the EUR as their functional
currency (currency translation risk).
interest rates as given above to our variable rate borrowings
At 31 December 2007, the Group had hedged 89% (2006:
at 31/12/2007, and all other variables being constant,
95%) of its foreign currency exposure.
Financial Statements
Applying the possible increases/decreases in the market
the 2007 profit would be € 0.7m lower/higher. We have
estimated that this effect would be partially neutralized by
In the table below the foreign currency risks to which the
the € 0.3m higher or € 0.4m lower interest income from
group is exposed are given on the basis of the notional
interest rate derivatives.
amounts.
2007
in ’000 €
PLN
Loans Receivable
Interest rate swaps in different currencies (CCIRS)
Net Exposure
CHF
2006
PLN
CHF
61 784
13 381
72 344
13 890
(59 750)
(10 224)
(72 500)
(11 587)
2 034
3 157
(156)
2 303
kinepolis group 2007
95
Currency risk sensitivity analysis
Kinepolis presentation currency, which is the euro, a transla-
Foreign currency translation risk
tion risk occurs. The currencies in which Kinepolis’s foreign
Only 2% of the income of Kinepolis is realized by subsidiaries
subsidiaries operate are the Polish zloty and the Swiss franc.
which are viewed as foreign entities because their activities
Based on a theoretical volatility of these currencies against the
are undertaken in a currency other than the euro. When the
euro we have estimated the potential change in the exchange
financial data of these foreign entities is converted into the
rates of these currencies against the euro as follows:
Closing rate
31/12/07
Average rate
2007
Theoretical
volatility
Possible closing
rate 31/12/07
POSSIBLE AVERAGE
RATE 2007
Polish zloty
3,5820
3,7925
10%
3.22 – 3.94
3.41 – 4.17
Swiss franc
1,6587
1,6432
10%
1.49 – 1.83
1.48 – 1.81
1 euro is equal to :
If the euro had strengthened/weakened in 2007 as above,
Credit risk
and all other variables being constant, the 2007 profit
The credit risk with respect to trade receivables is deemed
would have been € 0.2m (2006: € 0.2m) higher/lower,
limited due to the large number of customers who pay cash. It
and the net translation differences in equity would have
is Group policy that all customers who wish to trade on credit
been € 0.4m (2006: € 0.4m) higher/lower.
terms are subject to credit verification procedures. In addition,
receivable balances are monitored on an ongoing basis,
Foreign currency transactional risk
with the result that the Group’s exposure to bad debts is not
Most of Kinepolis’s financial instruments are expressed
significant.
in the company’s operating currencies. Where this is not
the case, derivatives are used in order to cover the foreign
With respect to the credit risk arising from the other financial
currency risk.
assets of the Group, including cash and cash equivalents,
available-for-sale financial assets and certain derivative
For 2007 the transactional currency risk consists primarily
instruments, the Group’s exposure to credit risk consists of the
of loans in currencies (PLN and CHF) other than the
counterparty default risk, with a maximum exposure equal to
company’s operating currency. The currency risks on
the carrying amount of these instruments.
these loans are covered by EUR variable / CHF variable
and EUR variable / PLN variable interest rate swaps
There are no significant concentrations of credit risk within
(CCIRS) in a total amount of € 20.1m with final maturities
the Group.
in 2012, 2014 and 2015.
The extent of the Group’s credit risk exposure is represented
96
If during 2007 the Polish zloty and the Swiss franc had
by the aggregate balance of the financial assets. The maximum
weakened/strengthened as above, and all other variables
nominal credit risk in the event that all parties were to fail to
being constant, the 2007 profit would have been € 0.3m
meet their obligations amounted at 31 December 2007 to
lower/higher.
€ 33.9m million (2006: € 29.8m).
Liquidity risk
Fair value
The Group seeks to maintain a balance between continua-
Fair value is the amount at which an asset can be traded or a liability
tion in funding and flexibility through the use of credit lines,
settled between well-informed, willing parties, following the ‘arm’s
bank loans and finance leases.
length’ principle. The table below gives the fair value and the carrying value of the main interest-bearing financial loans and borrowings.
in ’000 €
CARRYING VALUE
31/12/2007
Bank overdrafts
FAIR VALUE
31/12/2006
31/12/2007
31/12/2006
49
677
49
677
Finance lease liabilities
1 744
3 460
1 744
3 460
Variable rate borrowings
153 315
147 006
153 315
147 006
155 108
151 143
155 108
151 143
Fixed rate borrowings
Total
The fair value of interest rate derivative financial instruments
contracts are taken into account. The fair value of these
is determined by discounting the expected future cash flows
instruments is equal to the carrying value.
based on current market interest rates and the interest rate
curve for the remaining life of the investment. The fair value
The table below gives the nominal or contractual amounts
of forward foreign exchange contracts is calculated as the
and the clean fair value of all outstanding derivative financial
discounted value of the difference between the contract value
instruments.
and current forward exchange rates.
derivative financial instruments outstanding at balance sheet
estimated amounts that the Group would receive or pay to
date. As such they do not in any way represent the Group’s risk
end the contract. Unrealized profits or losses on outstanding
on these transactions.
in ’000 €
FX contracts
CCIRS
NOMINAL OR CONTRACTUAL AMOUNT
Financial Statements
The nominal or contractual amounts reflect the volume of the
The fair value of these instruments reflects in general the
FAIR VALUE
31/12/2007
31/12/2006
31/12/2007
31/12/2006
0
725
0
-449
20 176
24 393
-2 705
-2 374
118 957
95 486
1 015
1 232
0
25 000
139 133
145 603
FRA’s
Interest Rate Swaps
Options (collars)
Total
59
-1 689
-1 532
kinepolis group 2007
97
For other financial assets and liabilities, the fair value is equal to the carrying value.
The fair value of these derivative financial instruments is included in the Group’s balance sheet as follows:
in ’000 €
ASSETS
LIABILITIES
Net
31/12/2007
31/12/2006
31/12/2007
31/12/2006
31/12/2007
31/12/2006
1 432
1 333
-3 292
-2 638
-1 860
-1 305
171
222
0
-449
171
-227
1 603
1 556
-3 292
-3 088
-1 689
-1 532
Non-current
Current
Total
Debt portfolio
The Term and Revolving Facilities Agreement contains certain
Under the Syndicated Loan Agreement (€ 175 m) of 26
financial covenants, including a maximum leverage ratio, a
November 2004, amended on 13 July 2007, Kinepolis Group
minimum interest coverage and a minimum solvency ratio, as
granted pledge mandates on business assets and mortgage
well as a number of potentially restrictive undertakings limiting
mandates on property in the amount of the outstanding
or preventing specific business transactions.
financial debt. These mandates can be converted into actual
pledges only if Kinepolis Group fails to meet certain commit-
In respect of interest-bearing loans and borrowings, the
ments under the Loan Agreement.
following table indicates the periods in which they reprice.
in ’000 €
Syndicated loan
Finance lease agreements
Other loans
Total
98
31/12/2007
31/12/2006
Total
< 1 YEAR
Total
< 1 YEAR
153 000
153 000
146 000
146 000
1 744
1 744
3 459
3 459
364
364
684
684
155 108
155 108
150 143
150 143
Hedging activities
The Group uses derivative financial instruments to hedge
marked to market. The following table gives the remaining term
underlying transactional currency exposure and the interest
of the outstanding derivative financial instruments at closing
rate risk. All derivative financial instruments are valued at
date. The amounts given in this table are the notional amounts.
in ’000 €
<1 YEAR (2007)
1-5 YEARS (2007)
>5 YEARS (2007)
Total (2007)
1 902
16 073
2 200
20 176
18 828
92 628
7 500
118 957
<1 YEAR (2006)
1–5 YEARS (2006)
>5 YEARS (2006)
Total (2006)
Foreign currency
Forward Exchange Contracts
Cross Currency Interest Rate Swaps
Interest Rate Interest Rate Swaps
Options (collars)
in ’000 €
Foreign currency
Forward Exchange Contracts
Cross Currency Interest Rate Swaps
724
724
3 777
7 610
13 006
24 393
Interest Rate Swaps
17 000
78 486
95 486
Options (collars)
20 000
5 000
25 000
Interest Rate Financial Statements
25.OPERATING LEASES
Leases as Lessee
Non-cancellable operating lease rentals are payable as follows:
in ’000 €
Less than one year
Between one and five years
31/12/2007
31/12/2006
1 861
2 020
8 260
8 704
More than five years
29 901
26 844
Total
40 022
37 568
1 861
2 630
Expense in profit or loss in respect of operating leases
kinepolis group 2007
99
Leases as Lessor
The Group has leased out parts of its property under operating leases. The future minimum lease payments under non-cancellable
leases are as follows:
in ’000 €
31/12/2007
31/12/2006
Less than one year
5 421
5 447
Between one and five years
9 884
12 260
More than five years
9 203
11 443
24 508
25 450
6 294
5 018
Total
Rental income in profit or loss in respect of operating leases
The properties leased out consist on the one hand of the
The lease on the complex in Poland started in January 2007
concessions, but the largest part of this amount consists of the
and for a period of 10 years (extendable by 5 years). The
Cinema City Kinepolis complex in Poznan (Poland) that has
rent consists of a fixed and a variable portion, the latter is
been leased to ITIT).
expressed as a percentage of box office turnover. This variable
rent amounted to € 0.6 mio in 2007.
26.capital COMMITMENTS
Commitment to purchase a plot of land in Liège (Belgium) for building a cinema complex, subject to obtaining the necessary permits.
27.CONTINGENCIES
-Purchase option granted to a third party on land in
-
Valencia next to Kinepolis Paterna, Spain.
a put option on its shares, as soon as their share-
-Put option to Tele München Gruppe on the shares of
holding falls under 20%. The price is dependant on
Kinepolis, Senator and Flebber, with the exception of sales
on the stock exchange or in the context of a SPO as from
EBITDA.
-Sale, subject to fulfilment of conditions precedent,
of part of the land in Poznan adjacent to Kinepolis
1 January 2005, with Tele München Gruppe receiving the
Poznan (Poland).
right to purchase during a three-day period at the closing
price as from the notification date of the planned sale.
-
100
The minority shareholders in Forvm Kinepolis have
-
A Building Right was assigned to a third party to build
The minority shareholders in Forvm Kinepolis have a call
a.o. apartments on the land next to Kinepolis Ghent.
option on up to 25% of the shares until 4 July 2008 at a
In exchange the Company will acquire a percentage
price dependant on EBITDA.
of these apartments.
28. RELATED PARTIES
Identity of related parties
Transactions with managers in key positions:
There is a related party relationship between the Group, its
1. The managers in key positions are the persons belonging
subsidiaries, its directors and management in key positions.
in 2007 to the Executive Committee and the Operational
Committee.
2. The remuneration of managers in key positions is as follows:
in ’000 €
Short-term employee benefits
Termination benefits
31/12/2007
31/12/2006
1 707
1 797
385
Share-based payments
Managers in key positions took part in the group warrant plan (Incentive Plan) (see Note 20).
3. Directors’ remuneration
in ’000 €
Directors’ remuneration
31/12/2006
542
711
4. Related party transactions
shareholder group and the termination of all current agree-
The Palace cinema complex in inner city Liège is leased from
ments, compensation of € 1.1 million was paid in 2006.
another related party, for € 0.25m a year.
29. SUBSEQUENT EVENTS
A new organization structure has been drawn up within the
The Belgian competition authority – the Competition Board
group. This is expected to generate restructuring costs of no
– decided in April 2007 to lift the conditions imposed on
more than € 0.5m.
Kinepolis in 1997. This decision was attacked by cinema
groups UGC and Utopolis, supported by the Belgian
Exercise price of the share option plan. In March 2008 the
Cinema Federation, upon which the Appeal Court judged
exercise price for 207 924 out of the 277 231 options within
on 18 March 2008 that the Competition Board should
the new share based payment plan (see note 20 above) was
reconsider the case.
set at € 28.18 per option.
kinepolis group 2007 101
Financial Statements
In the context of the departure of the family Claeys from the
31/12/2007
30.GROUP ENTITIES
Changes to the consolidation scope
-
-Liquidations: Kinepolis Film Production (KFP) BVBA
Newly included participating interests: no new companies
(Belgium) is in liquidation.
-
were founded or acquired during 2007.
Mergers: European Mega Cinema SA(EMC) merged in
December 2007 with Majestiek International sa.
LIST OF FULLY CONSOLIDATED COMPANIES
102
NAME
MUNICIPALITY
COUNTRY
VAT OR ENTERPRISE NUMBER
%
Kinepolis Liège NV
Hasselt
B
BE 0459.469.796
100
Decatron NV
Brussels
B
BE 0424.519.114
100
Eden Panorama SA (Max Linder)
Lomme
F
FR 02340483221
100
Kinepolis France SA
Lomme
F
FR 20399716083
100
Kinepolis Immo St.Julien-lès-Metz SAS
Metz
F
FR 51398364331
100
Kinepolis Braine SA
Braine-L’alleud
B
BE 0462.688.911
100
Kinepolis Immo Hasselt NV
Hasselt
B
BE 0455.729.358
100
Kinepolis Immo Liège NV
Hasselt
B
BE 0459.466.234
100
Kinepolis Immo Multi NV
Brussels
B
BE 0877.736.370
100
Kine Invest SA
Pozuelo de Alarcon
S
ESA 824.896.59
100
Kinepoleast BV
Middelburg
N
NL 807225605B01
100
Kinepolis Espana SA
Pozuelo de Alarcon
S
ESA 814.870.27
100
Kinepolis Film Distribution (KFD) NV
Brussels
B
BE 0445.372.530
100
Kinepolis Film Production (KFP) BVBA (in liquidation)
Brussels
B
BE 0459.997.061
100
Kinepolis Granada SA
Pozuelo de Alarcon
S
ESA 828.149.55
100
Kinepolis Holding BV
Middelburg
N
NL 807760420B01
100
Kinepolis Jerez SA
Pozuelo de Alarcon
S
ESA 828.149.22
100
Kinepolis Le Château du cinéma SAS
Lomme
F
FR 60387674484
100
Kinepolis Madrid SA
Pozuelo de Alarcon
S
ESA 828.149.06
100
Kinepolis Mega NV
Brussels
B
BE 0430.277.746
100
Kinepolis Mulhouse SA
Mulhouse
F
FR 18404141384
100
Kinepolis Multi NV
Kortrijk
B
BE 0434.861.589
100
Kinepolis Paterna SA
Pozuelo de Alarcon
S
ESA 828.149.14
100
Kinepolis Poznan Spzoo
Poznan
P
NIP 5252129575
100
Kinepolis St. Julien-lès-Metz SAS
Metz
F
FR 43398364331
100
Kinepolis Schweiz AG
Schaffhausen
ZW
CH 2903013216-5
100
Kinepolis Spzoo
Poznan
P
NIP 5252184717
100
Kinepolis Thionville SA
Metz
F
FR 09419251459
100
Kinepolis Immo Thionville SA
Metz
F
FR 10419162672
100
Kinepolis Nancy SAS
Nancy
F
FR 00428192819
100
Kinepolis Prospection SAS
Lomme
F
FR 45428192058
100
Majestiek International SA
Luxemburg
L
LU19942206638
100
Forum Kinepolis SA
Nîmes
F
FR 86421038548
79,92
Megatix NV
Brussels
B
BE 0462.123.341
100
31. MANDATES AND REMUNERATION OF THE STATUTORY AUDITOR
The Statutory Auditor for the Company is KPMG Bedrijfsrevisoren, represented by Mr. L. Ruysen. For the entire Kinepolis Group,
in €
31/12/2007
31/12/2006
436 746
626 246
Remuneration for other services or assignments performed
within the company by the statutory auditor
37 983
12 352
Other audit related services
12 500
12 352
Remuneration of the statutory auditor
Tax services
Other
Remuneration for other services or assignments performed
within the company by persons associated with the statutory auditor
25 483
182 866
157 103
182 866
155 581
Other audit related services
Tax services
Other
Total
1 522
657 595
795 701
kinepolis group 2007 103
Financial Statements
the mandates and remuneration can be summarised as follows:
Statutory auditors’ report to the general meeting of shareholders
of Kinepolis Group NV on the consolidated financial statements
for the year ended 31 December 2007 (Free translation)
In accordance with legal and statutory requirements, we
to fraud or error; selecting and applying appropriate
report to you on the performance of our audit mandate.
accounting policies; and making accounting estimates
This report includes our opinion on the consolidated
that are reasonable in the circumstances.
financial statements together with the required additional
Our responsibility is to express an opinion on these
comment.
consolidated financial statements based on our audit.
We conducted our audit in accordance with International
Standards on Auditing, legal requirements and auditing
Unqualified audit opinion on the consolidated
financial statements
standards applicable in Belgium, as issued by the ‘Institut
des Réviseurs d’Entreprises/Instituut der Bedrijfsrevisoren’. Those standards require that we plan and perform
We have audited the consolidated financial statements of
the audit to obtain reasonable assurance whether the
Kinepolis Group NV (‘the company’) and its subsidiaries
consolidated financial statements are free from material
(jointly ‘the group’), prepared in accordance with
misstatement.
International Financial Reporting Standards, as adopted
by the European Union, and with the legal and regulatory
In accordance with these standards, we have performed
requirements applicable in Belgium. These consolidated
procedures to obtain audit evidence about the amounts
accounts comprise the consolidated balance sheet as
and disclosures in the consolidated financial statements.
of 31 December 2007 and the consolidated statements
The procedures selected depend on our judgment,
of income, changes in equity and cash flows for the
including the assessment of the risks of material
year then ended, as well as the summary of significant
misstatement of the consolidated financial statements,
accounting policies and the other explanatory notes.
whether due to fraud or error. In making those risk
The total of the consolidated balance sheet amounts to
assessments, we have considered internal control relevant
€ 363 884 (000) and the consolidated income statement
to the company’s preparation and fair presentation of the
shows a profit for the year of € 14 700 (000).
consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances
104
The board of directors of the company is responsible for
but not for the purpose of expressing an opinion on the
the preparation of the consolidated financial statements.
effectiveness of the group’s internal control. We have also
This responsibility includes: designing, implementing and
evaluated the appropriateness of the accounting policies
maintaining internal control relevant to the preparation
used, the reasonableness of accounting estimates made
and fair presentation of consolidated financial statements
by the company and the presentation of the consolidated
that are free from material misstatement, whether due
financial statements, taken as a whole. Finally, we have
obtained from management and responsible officers of
law and is consistent with the consolidated financial
the company the explanations and information necessary
statements. We are, however, unable to comment on
for our audit. We believe that the audit evidence we have
the description of the principal risks and uncertainties
obtained provides a reasonable basis for our opinion.
which the group is facing, and on its financial situation,
In our opinion, the consolidated financial statements give
its foreseeable evolution or the significant influence
a true and fair view of the group’s net worth and financial
of certain facts on its future development. We can
position as of 31 December 2007 and of its results and
nevertheless confirm that the matters disclosed do not
cash flows for the year then ended in accordance with
present any obvious inconsistencies with the informa-
International Financial Reporting Standards, as adopted
tion that we became aware of during the performance
by the European Union, and with the legal and regulatory
of our mandate.
requirements applicable in Belgium.
Additional comment
Kontich, 23 April 2008
The preparation of the management report and its content
Klynveld Peat Marwick Goerdeler
are the responsibility of the board of directors.
Bedrijfsrevisoren/Réviseurs d’Entreprises
Our responsibility is to supplement our report with the
Statutory Auditor
audit opinion on the financial statements:
Represented by
- The management report on the consolidated finan-
Ludo Ruysen
cial statements includes the information required by
Financial Statements
following additional comment, which does not modify our
Bedrijfsrevisor/Réviseur d’entreprises
kinepolis group 2007 105
EXTRACT FROM THE UNCONSOLIDATED FINANCIAL STATEMENTS
OF KINEPOLIS GROUP NV, DRAWN UP UNDER BELGIAN ACCOUNTING
principles
The following information is an extract from the
statements give only a limited view of the financial position
unconsolidated financial statements of Kinepolis Group
of Kinepolis Group NV. For these reasons the Board of
NV, drawn up in accordance with Belgian accounting
Directors has deemed it appropriate to present only a
principles. These unconsolidated financial statements,
condensed unconsolidated balance sheet and income
together with the Board of Directors’ report to the General
statement, prepared according to Belgian accounting
Shareholders’ Meeting and the Auditor’s report, will be
principles for the year ending on 31 December 2007.
filed with the National Bank of Belgium within the legal
deadline. It should be noted that only the consolidated
The statutory auditor’s report on these statements
financial statements as presented above give a true and
is unqualified and confirms that the unconsolidated
fair view of the financial position and performance of the
financial statements of Kinepolis Group NV, prepared in
Kinepolis Group.
accordance with Belgian accounting principles for the
year ending on 31 December 2007, give a true and fair
Given that Kinepolis Group NV is essentially a holding
view of the financial position of Kinepolis Group NV in
company that accounts for its investments at cost in
accordance with all legal and regulatory provisions.
its unconsolidated statements, these separate financial
106
condensed UNCONSOLIDATED BALANCE SHEET OF KINEPOLIS GROUP NV
in ’000 €
31/12/2007
31/12/2006
157 847
59 600
ASSETS
Fixed assets
Formation expenses
Intangible fixed assets
Property, plant and equipment
Financial fixed assets
9
23
703
673
1 237
441
155 897
58 463
Current assets
97 628
202 170
Total ASSETS
255 475
261 770
LIABILITIES
Equity
90 192
82 837
Issued capital
48 963
47 443
1 154
Legal reserve
4 415
3 584
Unavailable reserves
1 511
1 921
Available reserves
2 849
2 849
31 301
27 041
Profit carried forward
Provisions and deferred taxes
Long-term liabilities
Current liabilities
Accrued charges and deferred income
TOTAL EQUITY AND LIABILITIES
556
56
139 000
130 556
24 910
44 631
816
3 690
255 475
261 770
➔
kinepolis group 2007 107
Financial Statements
Share premium
condensed UNCONSOLIDATED INCOME STATEMENT OF KINEPOLIS GROUP NV
in ’000 €
31/12/2007
31/12/2006
Operating income
21 656
18 927
Operating expenses
-19 556
-17 054
2 101
1 873
Operating profit
Net financial income
19 586
-4 594
Net extraordinary income/(charges)
-5 003
-11 000
Income tax expenses
Gain/(loss) from the financial year to be incorporated
-76
-1 095
16 608
-14 816
MANDATS AND REMUNERATION OF THE STATUTORY AUDITOR AT KINEPOLIS GROUP NV
108
The total remuneration of the Statutory Auditor amounted to
charged Kinepolis € 12,500 (2006: € 12,352) for other audit
€ 232 500 for the year 2007. In addition to its remuneration
assignments, € 12,192 (2006: € 0) for other assignments
within its audit mandate, the statutory auditor or persons
outside the auditing mandate and € 146,860 (2006: 141,955)
with whom it has professional cooperation arrangements
for tax advisory services.
Resolutions
part III
Resolutions
proposed to the
shareholders
kinepolis group 2007 109
AGENDA FOR THE GENERAL MEETING
of shareholders OF 16 MAY 2008
1. Acquaintance with and discussion of the Board
of Directors’ report of the unconsolidated and
consolidated financial statements for the financial
Proposal for resolution:
Granting discharge to the statutory auditor for its mandate
over the financial year ending 31 December 2007.
year ending 31 December 2007.
7. Appointment of directors and remuneration
2. Acquaintance with and discussion of the auditor’s
report on the unconsolidated and the consolidated
Proposal for resolution:
financial statements for the financial year ending
- Confirmation of the co-optation as decided upon by
31 December 2007.
the Board of Directors meeting of 18 December 2007,
of Mr Philip Ghekiere as director until the general mee-
3. Acquaintance with, discussion and approval of
ting of shareholders of 2010 to complete the mandate
the unconsolidated financial statements for the
of PGMS nv, having as its permanent representative
financial year ending 31 December 2007 and
Mr Philip Ghekiere, resigning; and subsequently rene-
the proposed allocation of profit.
wal of the appointment of Mr Philip Ghekiere starting
from the annual general meeting held on 16 May 2008
Proposal for resolution:
Approval of the unconsolidated financial statements
for the financial year ending 31 December 2007,
for a ­period expiring at the end of the annual general
­meeting of 2012.
- Confirmation of the co-optation as decided upon by
including the allocation of profit and declaring the
the Board of Directors meeting of 18 December 2007
dividend at € 0.65 gross per share.
of Mr Eddy Duquenne as director until the completion
of the term ending at the general meeting of share-
4. Acquaintance with and discussion of the
holders of 2009 in replacing BVBA Eddy Duquenne,
consolidated financial statements for the financial
having as its permanent representative Mr Eddy
year ending 31 December 2007.
Duquenne, resigning, and subsequently renewal of
the appointment of Mr Eddy Duquenne starting from
5. Discharge of the directors
the annual general meeting held on 16 May 2008
for a ­period expiring at the end of the annual general
Proposal for resolution:
Granting discharge to the directors for their mandate
over the financial year ending 31 December 2007.
meeting of 2012.
- Appointment of BVBA Management Center Molenberg,
having as its permanent representative Mr Geert
Vanderstappen, as director for a term beginning from
6. Discharge of the statutory auditor
the annual general meeting held on 16 May 2008 and
ending at the general meeting of shareholders of 2011.
110
He is considered as an independent director since
he fulfils the criteria of Article 524, §4, para 2, 2°, 3°
and 4° of the Companies Code.
- Appointment of Mr Marc Van Heddeghem as a
director for a period commencing from the annual
shareholders’ meeting of 16 May 2008 and ending
at the general meeting of shareholders of 2011. He
general meeting of 16 May 2008 and ending at the
General meeting of Shareholders of 2012.
- Extension of the directorship of Mr Joost Bert, for a
term beginning from the annual general meeting of
16 May 2008 and ending at the general meeting of
shareholders of 2012.
- Extension of the directorship of NV Euro Invest
is considered as an independent director since he
Management, having as its permanent representative
fulfils the criteria set forth in Article 524, §4, second
Mr Philippe Haspeslagh, for a term beginning from
paragraph, 2°, 3° and 4° of the Companies Code.
the annual general meeting of 16 May 2008 and en-
- Extension of the directorship of NV HRV, having as
ding at the general meeting of shareholders of 2010.
its permanent representative Mr Hugo Vandamme,
He remains an independent director since he fulfils
for a term beginning from the annual general
the criteria of Article 524, §4, para 2, 2°, 3° and 4°
meeting of 16 May 2008 and ending at the general
of the Companies Code.
meeting of shareholders of 2010. He remains an
- Pursuant to Article 21 of the Articles of Association,
independent director since he fulfils the criteria
the General Meeting proposes a total amount of
of Article 524, §4, para 2, 2°, 3° and 4° of the
€ 485 746 as overall remuneration for the entire
Companies Code.
Board of Directors for 2008.
- Extension of the directorship of NV Pentascoop,
8. Acquaintance with and discussion of the Corporate
Suzanne Bert, for a term beginning from the annual
Governance Charter within the Kinepolis Group.
Resolutions
having as its permanent representative Mrs Marie-
kinepolis group 2007 111
112
INFORMATION FOR THE SHAREHOLDER
part IV
Information
for the
shareholder
kinepolis group 2007 113
Financial calendar
Kinepolis Group on the stock exchange
Friday
16 May 2008
General and Extraordinary
Meeting of Shareholders
Publication of business update
Wednesday
16 July 2008
Publication of admission figures
Q2 2008
Friday
29 August 2008
Publication of 2008 half-year
results + press and analyst meeting
Monday
13 October 2008
Publication of admissions figures
Q3 2008
Friday
14 November 2008
Publication of business update
Tuesday
13 January 2009
Publication of
admissions figures 2008
February 2009
Publication of 2008
results + press and analyst meeting
Friday
10 April 2009
Publication of admission figures
Q1 2009
Friday
15 May 2009
General and Extraordinary
Meeting of Shareholders
Kinepolis Group (ISIN: BE0003722361 / Mnemo:
KIN) is listed on NYSE Euronext Brussels, under
compartment B, Mid Caps.
How did the Kinepolis share perform?
Graph with indication of the evolution of the price and
Dividend
volume over the last 5 years:
Since mid-2003 through March 2008, the lowest listed closing quote
was € 10.65 and the highest was € 57.20.
Over the year 2007, the lowest price was € 33.94 and the highest
price was € 57.30. During 2007, total trading volume for Kinepolis was
3,834,242 shares.
For financial year 2007, taking into account a payout
ratio of 30%, the proposal is to declare a gross
dividend of € 0.65/share. In this way the pay-out ratio
of 30% will have been maintained for 4 years in a
Closing price at 31/12/2007
€ 34,40
to approval by the General Meeting, for 23 May 2008
Average daily trading volume
14 321
available for payment at a financial institution of the
Trading volume, as per 31/12/2007
row. The Board of Directors has the dividend, subject
shareholder’s choice by means of submission of
coupon no. 8.
114
Overview of Kinepolis share in 2007
Market capitalization at 31/12/2007
3 834 242
€ 238 418 763,20
Relationships with shareholders and investors
Roadshows and meetings with institutional investors
Shareholders and investors who wish to receive the annual
For the benefit of the professional environment (analysts,
report, press releases or other information on the Kinepolis
share portfolio administrators, media,...), the Kinepolis
Group, can find these on the website www.kinepolis.
Group regularly organises roadshows and one-on-one
com/investors. On this investor site they can find the annual
meetings with the management of the group.
report in an interactive version, full financial data on the
group, the press releases, stock market price, the financial
In the course of 2007 there were more than 70 personal
calendar and data regarding Corporate Governance of
contacts during meetings in Europe (Brussels, London,
Kinepolis Group NV All this information is available in Dutch,
Paris, Frankfurt, Geneva, Madrid, Edinburgh, Dublin,
French and English.
Rotterdam and Amsterdam). On the occasion of the
publication of the 2007 annual results on 29 February
Investor clubs and individual investors
2008, more than 30 personal meetings have again taken
place with institutional investors in Europe.
The Kinepolis Group was in close contact with individual
investors in 2007. A few examples:
The Kinepolis Group invites its analysts and the financial
press to a press and analyst meeting twice a year on the
occasion the publication of half-yearly and annual results.
sponsor of the VFB (Flemish Federation of Investors), after
Since the second semester of 2006, these meetings are
having already been a member for 2 years. VFB is a wor-
also followed up by management with webcasts. These
king member of the European Shareholders Organisation
webcasts are placed on the Investor Relations website of
and an active member of the World Federation.
Kinepolis Group and contain a full financial explanation
- Twice a year, Kinepolis Group organizes an info stand
based on the slides of the press and analyst meetings.
at the largest investment events in Belgium: the VFB
This makes all the financial information available to each
Investment Happening and the VFB Tips Day, both of
investor, whether institutional or individual.
which take place at Metropolis Antwerp.
-Since January 2007, the Kinepolis Group is also a mem-
The Kinepolis Group explicitly thanks all of its shareholders,
ber of the French-speaking investors club Investa. The
analysts and journalists for the confidence they have shown
aim is to create more visibility especially in the French-
in the group.
speaking part of Belgium. INVESTA was originated in
March 2003 from the merger of the EVB (European
Investor Relations – contact details
Association for Individual Investors) and the FBCI
Kinepolis Group NV
(Fédération Belge des Clubs d’Investissements).
Moutstraat 132-146
INVESTA has approximately 3 500 members and until
B – 9000 Gent
now has concluded agreements with 51 members. We
Mr Jan Staelens, CFO
also hope to be able to organise several investor events
Tel.: +32.9.241.00.22
with them.
Mail: [email protected]
kinepolis group 2007 115
INFORMATION FOR THE SHAREHOLDER
-Since the end of 2005, the Kinepolis Group has been a
Colofon
Kinepolis Group NV • Moutstraat 132-146, B-9000 Gent, België • T +32 9 241 00 00 • E [email protected] • www.kinepolis.com • Corporate Communication:
Myriam Dassonville, T +32 9 241 00 16, [email protected] • Investor Relations: CFO – Jan Staelens, T +32 9 241 00 22, [email protected]
kinepolis.com • Creation: www.linknv.be • Photography: Bart Lasuy • General coordination: Myriam Dassonville
Dit verslag is beschikbaar in het Nederlands, het Frans en het Engels. • Ce rapport est disponible en français, néerlandais et anglais. • This report is available in English,
French and Dutch. • This Annual report is also published on our Investor Relations Website: www.kinepolis.com/investors • Thanks to all who contributed in one way or
another to the realisation of the annual report.
116
Moutstraat 132-146
B-9000 Gent
Belgium
T +32 9 241 00 00
E [email protected]
BTW BE 0415 928 179
RPR BRUSSELs
WWW.KINEPOLIS.COM
kinepolis group Annual Report 2007
kinepolis group
Kinepolis Group
Annual Report 2007

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