ALTHOUGH local movie operator Palace Amusement Company Limited has been able to restart operations since July, the varying curfew hours and diminished turnout have left it nursing a $94.7-million net loss for the first quarter, on top of a material uncertainty raised by its auditors in its most recent audited financials.

In what has been the most challenging year for the company in its 99-year history — even with Palace Amusement now allowed to offer movie services — its revenues were still down by 92 per cent at $29.5 million, which was a slight improvement over its fourth quarter during which it was only able to generate $5 million from the sale of some confectionary items and other services.

This slight revenue generation, however, was not enough to bring the company into the black as direct expenses of $100.7 million left it with a $71.2-million gross loss.

When compounded with administrative expenses being 58 per cent over the prior year, the operating loss amounted to $91.4 million. These monumental losses, low attendance and curfew forced it to close its Palace Cineplex and Palace Multiplex locations, which were haemorrhaging cash faster than its other operations.

Despite the company entering into an agreement with Victoria Wealth Pension Management Limited to rent the Dominica Drive space as a drive-in cinema, the company is currently constrained to on show due to the curfew. As a result, the Cable and Wireless Jamaica pension plan which owns the property currently charges Palace $600,000 per month to utilise the space, which will be increased to $1 million once the curfew is lifted.

Due to the impact of the novel coronavirus pandemic, Palace Amusement has maintained a very small workforce on top of deferral requests on income tax, pensions and lease expenses, as it tries to preserve cash. Palace has had to top up its balance sheet with a fresh infusion of $90.2 million in loans as cash outflow from operating activities climbed to $76.2 million, with a negative working capital of $191.4 million.

Palace has been provided with waivers of its financial covenants for loans with the Development Bank of Jamaica Limited and its other debtors as overall debt is 302 per cent higher at $182.4 million. The company’s overall equity base has been eroded by 42 per cent to $302.2 million when compared with the prior quarter.

Movie operators across the globe have been hit hard by the pandemic with Regal Movies closing 536 of its movie theatres and AMC Entertainment Holdings reporting a US$905.8-million ($129.9 billion) loss in its September quarter. The situation hasn’t got any better as Warner Brothers stated its intention to stream all its movies on the same days they are released in the theatres for the 2021 theatrical calendar.