Kinemax – Case Study

Company presentation

© 365careers, 2014
Index 1

2
Group Structure 3

4
Historical Timeline
3 Business Formula 5

4 Geographical Footprint 6

5 Country Comparison 7

6 Future Growth Prospects 8

7 Financials at a Glance 9

8 Summary Table 10

2
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Group Structure

Kinemax Group:
Kinemax Group
– Kinemax Sarl was founded in 2009 by a prominent
Kinemax Sarl French entrepreneur. The company owns a chain of
2009 cinema multiplexes, targeted at children audiences.
Kinemax tries to take advantage of the fastest growing
niche within the cinema market
International expansion
Kinemax *100% *100% Kinemax – Soon after the company started its operations in
Italia Spa UK ltd France, it started looking abroad. Currently, the
2010 2010
company is present in 5 foreign markets – mainly in
Europe
Kinemax *100% *80% Kinemax – Two of Kinemax’s most recent investments are related
Deutschland
Turkey A.S to the fast growing markets of Turkey and Brazil. The
Saar 2011 2011
company owns a majority stake in its investment in
Turkey (80%), and decided to form a Joint Venture in
*49% Kinemax order to access the Brazilian market
Brasil Structure of the Group
LTDA 2012 – Kinemax Sarl, the French legal entity, is the Group’s
owner. The company has direct participation in all of
the other companies
Legend: – Kinemax consolidates fully all of its subsidiaries, given
that the company is the major shareholder in all five of
Kinemax Group Perimeter Joint Venture them and is able to exercise control
Parent Company Accounting principles
*% Percentage held by
Parent Company – All legal entities within the Kinemax Group prepare
Subsidiaries
their financial figures under IFRS

3
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Historical Timeline

Company was Country Country Country Country Country

founded opening opening opening opening opening
Future Developments
June February November March July November
2009 2010 2010 2011 2011 2012

Financing, 2009 Financing, 2012 New Service

Financing, 2010
First Round
Second Round
Third Round Line, 2014
€50 million €40 million Event rooms
€50 million
Acquisition
Moviez - €25 million

4
© 365careers, 2014
 Business Geographical Country Growth
Group Structure Timeline Financials Summary table
Formula Footprint comparison Prospects

Business Formula

Target a Niche International

Market Presence

Access Growth Extended Service

Markets
Kinemax’s Line

Business Model
Partnerships with Strong Bargaining
Local Players Power

Organize Promotional Leverage Customer

Events Behavior

5
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Geographical Footprint

Kinemax UK Kinemax Deutschland

€52.5m €43.4m
Total Revenues Total Revenues
Headcount: 192 Headcount: 134

Kinemax Sarl

€135.7m Kinemax Turkey

Total Revenues
€24.8m
Headcount: 342 Total Revenues

Headcount: 124

Kinemax Brasil Kinemax Italia

€4.4m €46.3m
Total Revenues Total Revenues

Headcount: 38 Headcount: 156

Kinemax operates on 3 continents and in 6 countries;

The company has a Headcount of 986 employees and its Total Revenues amount to €307.2m

6
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Country Comparison

Market Revenue Cinema Customers Gross

Penetration percentage Revenues Margin
Percentage Under
14-30
Over
Kinemax vs. Total
14 30 0% 20% 40% 60% 80%100%

26% Gross
High Margin
France 56 % vs.
56% 12% 32%
35 % of Revenues 44% 26%

25% Gross
Italy Medium 51 % vs. 50% 15% 35% Margin
49%
Countries of Operation

17 % of Revenues 25%

30% Gross
UK Medium 54 % vs.
54% 9% 37% Margin
46% 30%
18 % of Revenues

32% Gross
Germany Medium 50 % vs. 46% 21% 32% Margin
14 % of Revenues 50% 32%

22% Gross
Turkey Low 62 % vs. 57% 16% 27% Margin
13 % of Revenues 38% 22%

19% Gross
Brazil Low 68 % vs. 61% 7% 32% Margin
3 % of Revenues 32% 19%

7
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Future Growth Prospects

South American Market New European Markets

• The South American Market is one of the prime
opportunities ahead of Kinemax • Kinemax plans to start operations in the
Netherlands, Spain and in Norway
• The firm has already acquired some limited
experience from its Joint Venture in Brazil • The firm has acquired experience from its
activities in other European countries
• The South American Market is expected to grow in
double figures in the next 5 years

Kinemax Growth
Prospects
Penetration in existing Markets Extension of offered Services
• Cinemax will likely step up its effort to solidify its
• Kinemax plans to introduce a new service in its
leadership position in the markets, in which the
locations: “Event rooms”
company is already present
• Similar service lines reinforce its image as the
• There is significant room for growth in Turkey and
place to be for children in the “under 14” segment
in Brazil

8
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Financials at a Glance

FY11 FY12 FY13 Var % Var % Revenues development

€ in million Act Act Act FY11-FY12 FY12-FY13
– Kinemax’s revenues experienced a double digit
Cinema revenues 135.3 152.5 169.1 12.7% 10.9%
Other revenues 102.6 119.6 138.2 16.6% 15.6%
growth throughout the period under analysis
Total Revenues 237.9 272.1 307.3 14.4% 12.9% – Both cinema and other revenues grew by more
Cost of Sales (183.9) (207.3) (229.1) 12.8% 10.5% than 10%, although other revenues outpaced
Gross Margin 54.0 64.8 78.2 19.9% 20.8% the growth of cinema revenues (16% vs. 11%)
Operating expenses (35.9) (40.5) (46.6) 12.9% 14.9% – It seems that the company’s revenue mix is
EBITDA 18.1 24.2 31.7 33.9% 30.7% heading to a 50/50 split between Cinema and
Operating Cash Flow 16.1 22.8 24.1 41.4% 5.6% Other revenues
Gross Margin
KPIs
Cinema revenues % 56.9% 56.1% 55.0%
– Higher revenues transferred into a higher Gross
Other revenues % 43.1% 43.9% 45.0% Margin % (22.7% in FY11 vs. 25.5% in FY13)
Gross Margin % 22.7% 23.8% 25.5% – Kinemax is able to sell its products at a good
EBITDA % 7.6% 8.9% 10.3% margin
Cash conversion % 89.3% 94.3% 76.20% – Gross Margin % could be further improved by
Revenues and GM% development: FY11-FY13 ramping up the investments in Turkey and Brazil
EBITDA
400.0 26.0% – Kinemax improved its EBITDA margin as well in
the period under analysis (from 7.6% in FY11 to
Euro in millions

300.0 25.0%
10.3% in FY13)
138.2
200.0 102.6
119.6 24.0% – Operating expenses did not increase as fast as
Gross Margin, thus EBITDA increased
100.0 169.1 23.0% Cash Conversion Ratio
152.5
135.3 – The ratio between Operating Cash Flow and
0.0 22.0%
FY11 FY12 FY13 EBITDA varied between 76.2% and 94.3%
Act Act Act – It was lower in FY13 due to investments in new
projects
Cinema revenues Other revenues Gross Margin %

9
© 365careers, 2014
 Geographical Country Growth
Group Structure Timeline Business Formula Financials Summary table
Footprint comparison Prospects

Summary Table

Owned Start of Fill rate Avg. Ticket Gross

Legal Entity Country Company type
at Operations % Price Margin %

Kinemax Not
France Holding June 2009 43.9% 5.5€ 26.3%
Sarl applicable

Kinemax Italia Spa Italy Subsidiary 100% February 2010 37.4% 5.9€ 24.8%
Kinemax Group

United November
Kinemax UK Ltd Subsidiary 100% 37.1% 6.1€ 29.8%
Kingdom 2010

Kinemax
Germany Subsidiary 100% March 2011 42.3% 6.5€ 32.3%
Deutschland Saar

Kinemax Turkey A.S. Turkey Subsidiary 80% July 2011 42.9% 4.8€ 22.7%

November
Kinemax Brasil LTDA Brasil Joint Venture 49% 29.3% 3.9€ 18.6%
2012

10
© 365careers, 2014