Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
A N N U A L R E P O R T 2 0 0 4
K I N E P O L I S G R O U P
KINEPOLIS GROUP NV Eeuwfeestlaan 20 – 1020 Brussels - BelgiumTel +32 2 474 26 01 – Fax +32 2 474 26 06
Trade number : 0415 928 179 www.kinepolis.com
AN
NU
AL
RE
PO
RT
20
04
Kin
ep
oli
s
An
nu
al
re
po
rt
Kin
ep
oli
s
An
nu
al
re
po
rt
20
04
Contact:
Investor Relations
Kinepolis Group
Tel +32 2 474 27 92
www.kinepolis.com/investors
ww
w.c
om
fi.b
e
Kinepolis Group NV at 31/12/04
100%
100%
50% 50%
Kinepolis Multi NV
F.M.C. SA Immo Roc NV
CCE Liège NV
Imagibraine S.A.
CCi&H NV
Decatron NV
K.F.P. BVBA
K.F.D. NV
E.M.C. NV
Kinepolis Nacka
Kinepolis Holding BV
Megatix NV
Eurocasino NV
100%
Majestiek Int. SA
Kinepolis Schweiz
I.O.B. NV
Kinepolis Invest SA
Kinepolis España SA
Kinepolis Madrid SA
Kinepolis Paterna SA
Kinepolis Granada SA
Kinepolis Metz SA
F.M.C.I. SA
Kin.Le Château du Cinéma SAS
Kinepolis Mulhouse SA
Kinepolis Thionville SA
Kinepolis Immo Thionville SA
Forum Kinepolis SA
Kinepolis Nancy SAS
Eden Panorama SA
Kinepolis Prospection SAS
Kinepolis Mega NV Bruvision NV
Ditjaarverslag is eveneens beschikbaar in het Nederlands.Ce rapport annuel est également disponible en version française.
100%
Kinepoleast BV
Kinepolis Spzoo
Kinepolis Poznan
01000020000300004000050000600007000080000
2005200415
20
25
30
SHARE PRICE EVOLUTION + VOLUME
KINEPOLIS SHARE PRICE IN 2004
Share price (Euronext Brussels)
High (in EUR) 25.7
Low (in EUR) 15.5
Closing price at 31/12/2004 (EUR) 24.4
Average number of shares traded per day 4,131
Total number of shares traded during the year at 31/12/2004
1,120,424
Capitalisation (in EUR) at 31/12/2004 194,061,784
KEY FIGURES PER SHARE (CONSOLIDATED)
Net result of the Group per share 1.22
Dividend 0.29
Number of shares at 31/12/2004 6,930,778
FINANCIAL CALENDAR
Friday 20 May 2005:
Kinepolis Group NV Annual General Meeting
Friday 15 July 2005:
Publication of 1st half 2005 audience figures
Friday 16 September 2005:
Publication of 2005 half-year results
Friday 14 October 2005:
Publication of 3Q 2005 audience figures
Monday 9 January 2006:
Publication of 2005 visitor figures
Friday 10 March 2006:
Publication of 2005 annual results
Friday 14 April 2006:
Publication of 1Q 2006 visitor figures
Friday 19 May 2006:
Kinepolis Group NV Annual General Meeting
INFORMATION FOR THE SHAREHOLDERS
1
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
SUMMARY
COMPANY PROFILE 2
Mission & Vision 3
Strategic advantages 3
Company profile 4
Divisional structure of Kinepolis Group 6
Kinepolis management 7
LETTER TO THE SHAREHOLDERS 8
ACTIVITY OVERVIEW 12
GEOGRAPHIC OVERVIEW 13
Belgium 13
France 14
Spain 15
Poland 16
Switzerland 17
ACTIVITY OVERVIEW 19
Ticket sales 19
Food & Beverage 21
Events & Media 22
Concessions 24
Kinepolis Film Distribution 25
BOARD OF DIRECTOR ’S REPORT 26
Declaration concerning
Corporate Governance 27
Technological leadership 32
Real Estate 34
ICT 36
Corporate Marketing 37
Business Intelligence 39
Human Resources 40
Turnover and operating income 42
INFORMATION FOR THE SHAREHOLDERS 46
Information for the shareholders 47
Financial Calendar 47
Key figures per share 47
Capital 48
Payment of the dividend 48
Shareholders structure 48
ANNUAL ACCOUNTS 49
THE MANCHURIAN CANDIDATE - UIP
Company profile
3
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
MISSION & VISION
Kinepolis Group intends to bring the ultimate cinema
experience to a broad audience, to specific customer
groups in European, multifunctional customer and
family-focused cinema complexes.
Kinepolis plans to accomplish this in a way that offers
the highest quality and that is profitable through an
innovative and personalised approach.
HIGH LEVEL OF EXPERTISE
The so-called “Kinepolis Experience” is based on a series
of well-balanced features such as:
• Suitable, easily accessible locations
• The design and building of 5th-generation
multifunctional leisure centres with restaurants, cafes,
exhibition and meeting facilities, etc.
• Broad knowledge in the area of film programming,
ticketing, comfort and safety
• Unparalleled image and sound quality
ON A HUMAN SCALE
Customer friendliness and satisfaction are essential
at Kinepolis. To imbue the entire organisation with
this “customer Focus,” a strategic training project was
initiated at the beginning of 2004 under the name
“Service with a Smile.”
To better promote the “Kinepolis Experience,” personnel
also received improved support in the area of internal
communication and recruitment.
WITH AN EYE FOR INNOVATION
Kinepolis has always been a pioneer in technological
innovation. It is continuously looking for the best
state-of-the-art technology in the entertainment
industry, including innovations in the area of sound and
projection technology.
Evidence of this is THX certification – THE standard for
perfect image and sound quality in the cinema industry
– that was awarded to each Kinepolis cinema hall.
Co
mp
any
pro
file
STRATEGIC ADVANTAGES
6
3
19
1
4
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Kinepolis Group is present in fi ve countries.
With 24.5 million visitors in 2004, it belongs to the top
European cinema operators.
PIONEER IN DIGITAL CINEMA
In collaboration with a number of partners that have achieved worldwide fame in the meantime, including
EVS for server technology and Barco for projection technology, Kinepolis was the fi rst European operator to jump on the digital train.
The Kinepolis Group already has a unique platform of 11 high resolution digital projectors in Belgium and France.Alongside digital Hollywood productions (e.g. The Incredibles) visitors can also experience alternative content in digital format, as the TV newscast, prestige events (e.g. De Kampioenen special), TV serials (Aspe), live concerts (Sioen) and sports competitions (e.g. Euro 2004).The further digitalisation will help Kinepolis Group to develop its international market position.
CINEMANIE
In Belgium the new Cineanie quality label has generated remarkable results. With “Cinemanie, viewing the other
fi lm better”, Kinepolis Belgium is seeking to attract fans of authors’ fi lms from all over the world.
Every day at least 1 Cinemanie-movie is shown in each of the Belgian complexes since the start of 2004. The Passion of the Christ, Lost in Translation and Fahrenheit 9/11 fi gured in the top 3. In 2005 Cinemanie will also be launched internationally.
COMPLEXES SCREENS EMPLOYEES
Belgium 9 123 966
France 6 77 371
Spain 3 64 427
Poland 1 20 101
Switzerland 1 8 43
Total 20 292 1,908
COMPANY PROFILE
MAJOR EUROPEAN PLAYER
5
64% 20%
13%
2%1%
0
10
20
30
40
50
0
5000
10000
15000
20000
25000
30000
00 01 02 03 04
22 455
25 997*27 334*
24 219 24 512
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Co
mp
any
pro
file
EUR mill. 2004 2003 VAR
LIKE-FOR-LIKE (*)
2004 2003 VARAudience figures (mill.) 24.5 24.2 1.2% 24.2 23.7 2.0%
Total turnover 203.4 198.1 2.7% 201.4 193.9 3.9%
Total turnover from cinema operations 191.6 186.9 2.5% 189.7 182.8 3.8%
EBITDA1 42.9 42.7 0.3% 43.1 42.5 1.4%
Operating profit (EBIT) 16.2 14.4 11.9% 16.6 14.6 13.5%
Financial result -6.7 -10.8 37.7%
Profit/loss on ordinary activities 9.4 3.6 160.0%
Extraordinary result 1.6 2.2 -26.9%
Pre-tax profit/loss 11.0 5.8 89.3%
Consolidated net profit/loss 6.6 2.1 214.9%
Consolidated net result of the Group 6.5 2.7 140.2%
Net current profit/loss 2 8.3 3.0 178.8%
Net current profit loss of the Group 8.3 3.6 130.3%
Net financial debts 3 147.1 151.0 -2.6%
1 Ebitda Operating profit before depre-ciation, amortization, reductions in value and provisions
2 Net current profit included €0.5m of income from sale of own shares
3 Net financial debt position: financial debts less the GIMV subordinated loans (balance 2003: €7.4m; balance 2004: €10.4m), cash at bank and in hand and short-term investments
(*) On a like-for -like basis, i.e. excluding the contributions from units sold, liquidated, opened or closed in 2004 and 2003: CinecityTreviso (Italy, May ’03), RMBe, RUM and Frontine (Belgium, June ‘03), Max Linder (France, February ’04), Kinepolis Granada (Spain, June ’04). The like-for-like figures do not reflect the increase in the shareholding in Forum Kinepolis Nîmes in 2003 and the closing of the Opéra complex in Liège.
AUDIENCE FIGURES (MILL.)
Box Office
Food & Beverage
Events & Media
KFD/KFP
Rent concessions
* 2001 and 2002: including the audience figures of the recently sold Italian units
TOTAL TURNOVER
F. GijbelsCEOKinepolis Group
J. Bert CEOKinepolis Group
G. DeleyManaging DirectorKinepolis Cinema
L. Van BaelenManaging DirectorKinepolis Real Estate
J. StaelensCFO Kinepolis GroupDeputy Managing Director Kinepolis Cinema
6
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
DIVISIONAL
STRUCTURE OF
KINEPOLIS GROUP
On 4 February 2004 the Board of Directors decided to
split Kinepolis Group into two internal divisions for the
following reasons:
- Better comparisons of Kinepolis Group’s cinema
activities with those of other international cinema
groups,
- Proper development of the real estate and
operating activities,
- Far-reaching professionalization of the property
activities.
KINEPOLIS REAL ESTATE
Kinepolis Real Estate acts as a project developer,
manager of land and buildings, facility manager and
concessions. Florent Gijbels is responsible for the Real
Estate division. The general management lies with Luc
Van Baelen, Managing Director of Kinepolis Real Estate,
assisted by the Kinepolis Real Estate Management
Committee.
KINEPOLIS CINEMA
Kinepolis Cinema sells tickets and manages Food &
Beverage, Events & Media and other cinema related
activities.
Joost Bert is responsible for the Cinema division, with
general management in the hands of Gilbert Deley,
Managing Director of Kinepolis Cinema, supported
by Jan Staelens, Deputy Managing Director Kinepolis
Cinema and CFO of Kinepolis Group, and the other
members of the Kinepolis Cinema Management
Committee.
CORPORATE FINANCE & ADMINISTRATION
Corporate F&A is in charge of financial, legal and
administrative activities of the Kinepolis Group on an
international scale. Florent Gijbels and Jan Staelens are
responsible for this corporate department.
UNITY
The Kinepolis Group Cinema and Real Estate divisions
as well as Corporate F&A remain linked in 2004 via
the Coordination Committee including the CEO, the
CFO and the Managing Directors. Time, energy and
cooperation are key words in achieving the synergy
which will give Kinepolis Group greater transparency
and focus.
7
1
2
3
45 6 7
89
10 11
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Co
mp
any
pro
file
Kinepolis Real Estate Management Committee
3. L.Van Baelen: Managing Director Kinepolis Real Estate
1. E.Himpens: Director Development Kinepolis Real Estate
Kinepolis Cinema Management Committee
7. G.Deley: Managing Director Kinepolis Cinema
9. J.Staelens: CFO Kinepolis Group, Deputy Managing Director Kinepolis Cinema
2. J.Huyghe: Director Sales, Operations & Marketing
5. M.Van de Velde: Content Director
11. Bob Claeys: Director Projection & Sound, Director Food & Beverage
6. Bart Claeys: Director Business Intelligence and Operations Support
8. N.Vanderplancke: Director Human Resources
4. A.De Roovere: ICT Director
10.M.Dassonville: Corporate Communication Manager
KINEPOLIS MANAGEMENT
DE KUS - KINEPOLIS FILM DISTRIBUTION
Letter to the shareholders
9
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Dear Shareholders,
In terms of visitor numbers 2004 was an atypical year
for Kinepolis Group, with a very strong first half but an
end-of-year period below expectations.
Notwithstanding, Kinepolis Group ended 2004 with a
consolidated net profit up € 3.8m to € 6.5m and a net
current profit up € 5.3m to € 8.3 m despite the only
limited increase in visitor figures.
Consistent cost management and reduced financial
charges are the main reasons for this improvement.
AUDIENCE FIGURES
In 2004 Kinepolis Group welcomed 24.5m viewers
to its cinema complexes. On a like-for-like basis this
represents a growth of 2% compared with 2003.
January to August 2004 were top months with a strong
film line-up. During this period the Kinepolis Group
international film top consisted of Harry Potter and the
Prisoner of Azkaban, Shrek 2 and Troy.
In the following months there were no real box office
hits. The 2004 year-end season could not match the
same period in 2003 which included blockbusters
like Finding Nemo, Lord of the Rings 3 and De Zaak
Alzheimer (The Alzheimer Case).
- The most visible progress was achieved by
Kinepolis Poznan (Poland), with growth of 20% on
2003, thanks among other things to the upturn in
the Polish economy and the success of
The Passion of the Christ. The extension of public
transport services in the region also made the
complex much more accessible.
- The French complexes increased their shares
of local French markets. A 10% rise in audience
figures on a like-for-like basis is due to the superb
French film line-up in 2004 with Les Choristes and
Un long Dimanche de Fiançailles heading the bill.
- In Belgium, construction work on the Antwerp
ringroads, impairing access to the Metropolis,
placed a temporary halt on growth (2.5%).
- Spanish ticket sales stagnated like-for-like (1%).
Including audiences at the newest Kinepolis
complex in Granada (opened in June 2004),
ticket sales in Spain were nonetheless up 5%.
Kinepolis Granada welcomed fewer visitors than
expected owing to delays by project developer
Detea-Commercia in developing leisure activities
around the complex.
- Audience figures at Kinepolis Schaffhausen fell
by 5%, with a weak film offering depressing ticket
sales in the German-speaking part of Switzerland.
European cinema visitors are increasingly turning
to local titles and away from traditional Hollywood
offerings. In future Kinepolis Group will be aiming
more at local content, among other things by
continuing to invest in digital film projectors,
Cinemanie programming and in Belgian productions
like De Indringer (The Intruder) and Windkracht 10
(Wind Force 10).
Lett
er t
o t
he
shar
eho
lder
s
10
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
KINEPOLIS GROUP AND DIGITAL CINEMA
Kinepolis Group is an absolute leader in the digital
revolution in Europe. In Belgium and France it has
created a platform of 11 high resolution digital
projectors that is unique in Europe.
In the past year film fans not only enjoyed the
advantages of digitalization - more stable images, no
wear, perfect subtitling, better colours – but above all a
wider choice of entertainment.
Alongside digital Hollywood productions visitors can
also experience alternative content in digital format,
including screenings of prestige events, TV serials, live
concerts and sports competitions.
- The digital pre-premiers of the VTM crime
series Aspe, the digital launch of the TV1 serial
Flikken and the digital special marking the 15th
anniversary of TV1’s De Kampioenen were major
successes.
- The daily live broadcasting of the 19.00 TV news
and the coverage of the EURO 2004 football final
live on the big screen proved very popular.
- In March the Sioen concert was transmitted live
via satellite to all digital Kinepolis theatres.
CINEMANIE
In Belgium the new Cineanie quality label has
generated remarkable results. With “Cinemanie,
viewing the other film better”, Kinepolis Belgium is
seeking to attract fans of authors’ films from all over
the world. In 2004 almost 400,000 Belgian cinema fans
were tempted by the Cineanie label. In 2005 Cinemanie
was also launched internationally.
ORGANIZATION
On 4 February 2004 the Board of Directors decided to
split Kinepolis Group into two internal divisions for the
following reasons:
- Better comparison of Kinepolis Group’s cinema
activities with those of other international cinema
groups;
- Proper development of the real estate and
operating activities;
- A far-reaching professionalization of the property
activities.
11
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
OUTLOOK
In the coming years Kinepolis Group will continue to
focus on:
- Increasing operating efficiency in existing cinema
complexes
- Generating profit in every one of the group’s
cinema entities
- The phased expansion programme: Kinepolis
Nancy in September 2005, Kinepolis Bruges in
2006 and Kinepolis Ostend in 2007.
Given the further growth of Kinepolis Granada and with
Kinepolis Nancy scheduled to open during the year,
Kinepolis Group expects global audiences in excess of
the 2004 figure.
A WORD OF THANKS
On behalf of the Board of Directors we wish thank our
employees for their hard work and their devotion to
Kinepolis Group.
Kinepolis Group is determined to achieve its
strategic goal of sustainable and profitable growth.
In successfully meeting the future challenges,
Kinepolis Group was able to count on the efforts of
its employees, who are very aware of the importance
of value creation for our shareholders and for
cinema visitors. An essential factor in this process is
digitalization and the new opportunities it opens up
to our cinema visitors. Customer care, quality and
continuous innovation are Kinepolis Group’s greatest
assets in maintaining its lead over the competition.
Together with the Board of Directors we express our
full confidence in the future.
Lett
er t
o t
he
shar
eho
lder
s
Florent Gijbels
CEO
Joost Bert
CEO
Baron Hugo Vandamme
Chairman of the Board
of Directors
THE TERMINAL - UIP
Geographic Overview
13
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
KINEPOLIS BELGIUM
Kinepolis Belgium visitor figures in 2004 gave grounds
for satisfaction, with the exception of Metropolis
Antwerp. Significantly contributing to this was the
good line-up of French language films in the French-
speaking parts of the country. Revenues from Food &
Beverage and Media & Events were also up.
AUDIENCE FIGURES
For Kinepolis Belgium, 2004 was a year of differing
speeds.
The Kortrijk, Liège and Braine complexes produced
good audience figures, up 2%, 2% and 17% respectively
on 2003. French-language line-up with films like Les
Choristes, Les Daltons, Narco and Podium.
A further positive factor was the renovation of the
downtown Palace complex in Liège, which reopened to
visitors in June.
The less good news came from Antwerp, where
roadworks on the Ring, lasting right through from
June to November, weighed heavily on final results.
Indeed the entire cinema market in Belgium’s northern
metropolis suffered
from these perceived
difficulties of access.
TURNOVER AND MARGINS
TRENDING UPWARDS
In terms of financial
parameters, 2004 was a
good year.
Average ticket prices were
up 2% on 2003. Candy,
soft drinks and popcorn
sales also increased.
Revenue per customer
was up by 9%.
Another reason for the
good annual results lies
in the split screenings, or staggered film timings,
resulting in splitted queues and more time for revenue
generation.
A last and major area of growth was sales revenues
from business-to-business channels.
The sharp 15% increase in revenues from these activities
reflects in part the improved economic environment,
but also the Kinepolis Group’s growing reputation as an
organizer of business-to-business activities.
OUTLOOK
The competition situation is set to remain largely
unchanged in 2005. Kinepolis Belgium continues
nonetheless to invest in renovating its theatres, and in
a number of conceptual innovations from which much
is expected in terms of both income and cost control.
Visitor figures in Antwerp are expected to turn round
from 2006 onwards, with the roadworks a thing of the
past and a number of investments carried out. Finally,
Kinepolis Belgium is continuing to invest in market
research to provide it with information with which to
strengthen its market position.
GEOGRAPHIC OVERVIEW
Geo
grap
hic
ove
rvie
w
14
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
KINEPOLIS FRANCE
French cinema audiences rose overall by 11% in 2004
compared with 2003, reflecting the opening of around 10
new multiplexes and a good film line up.
Strong films like Les Choristes, Podium and Un long
Dimanche de Fiançailles produced a significant market
share for native French films: 38% of all film tickets sold.
STRONGLY RISING AUDIENCE FIGURES
Kinepolis France reached the milestone of 6.5 million
tickets for the first time, with over 10% more visitors
than in 2003, and confirming Kinepolis position as the
fourth largest player on the French cinema market.
With a locally directed commercial approach Kinepolis
Lomme welcomed 10% more visitors than in 2003*,
taking its local market share up to 67%. Kinepolis
Thionville raced ahead by 11%, whilst Kinepolis
St. Julien-lès-Metz
advanced by a more
modest 2%, despite
the arrival of two new
competitors.
The recently opened
leisure centre will increase
the pull of this site and
underscore the synergy
between film and fun.
Kinepolis Mulhouse’s
audiences rose by 6%,
taking it past the 1 million
visitor level for the first time since opening in 2000.
Kinepolis Nîmes’ strong local competition strategy
again bore fruit.
A 17% upsurge in audience figures, thanks to the
arrival of a new commercial centre within walking
distance of the cinema complex, made it the strongest
growing complex within the Kinepolis Group.
A number of changes in the Food & Beverage range
and new operational processes carried Food &
Beverage sales per ticket up more than 5% on 2003.
* Excluding the Max Linder entity in Paris, the trade fund was sold in February 2004.
15
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
INNOVATION
By being the first cinema in France to install the High
Definition Digital Cinema 2K projector, Kinepolis
Lomme put its stamp even more firmly on the French
cinema sector as an innovator.
Continuing the process of innovation, improved
cost control and higher quality service, all Kinepolis
complexes in France are being fitted with innovative,
high performance Automatic Ticketing Machines.
The HR and Operations
departments also
developed internal
programmes like
Mystery Shopping and
Service With a Smile.
These programmes are
designed to evaluate the operational excellence of each
individual complex and to bring them up to Kinepolis
standards and values.
OUTLOOK
Kinepolis France will be continuing its targeted
investment policy in 2005, with innovative measures to
control operating costs, increase turnover and improve
competitiveness. The total renovation of Kinepolis
Lomme, new Food & Beverage points of sale and a
further roll-out of the automatic ticketing machines are
just some of the planned investments. The opening of
an innovative cinema complex in Nancy, scheduled
for September 2005, will make Kinepolis France the
leading player in the east of France.
KINEPOLIS SPAIN
After a weak 2003, the Spanish cinema market grew by
5% in 2004.
This increase in ticket sales is paralleled, however, by a
rise in the number of cinema screens.
MADRID FILM TEMPLE
For the sixth successive year Kinepolis Madrid
confirmed its undisputed leadership of the Spanish
cinema world. Kinepolis
Group’s largest megaplex
reached the 20 million
visitor mark in 2004
in the record time of 6
years and 2 months. In
2004 Kinepolis Madrid
was again proud to
welcome international filmstars like Matt Damon
(Bourne Supremacy), Tobey Maguire and Kirsten Dunst
(Spiderman 2), in so doing further confirming its image
as a film temple par excellence.
The opening of four new multiplexes within its
catchment area produced a slight drop in visitors at
Kinepolis Madrid. This fall was, however, limited to
just 4% thanks to Kinepolis infrastructural advantages
and its customer-directed approach. To maintain
these advantages, a major replacement investment
programme was set in train in 2004.
Geo
grap
hic
ove
rvie
w
16
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
VALENCIA – A SOLID NUMBER 2
Kinepolis Valencia strengthened its position as Spain’s
number two cinema after Kinepolis Madrid. Despite the
opening of a UGC multiplex in the city centre, visitor
numbers at Kinepolis Valencia were again up 3%. Its
good location in the Heron City leisure centre makes
Kinepolis Valencia Spain’s best performing ”summer
cinema“.
GRANADA MULTIPLEX OPENED
The most important event for Kinepolis in Spain
was without doubt the
opening of Kinepolis
Granada, a state-of-the-
art multiplex with 15
theatres and over 4,710
seats, close to Granada’s
historic centre. The high
satisfaction level of
clients switching from existing cinemas is expressed in
Kinepolis Granada’s growing market share.
For 2005 Kinepolis wants to become the leading local
complex once and for good.
KINEPOLIS POLAND
2004 was a very good year for Kinepolis Poznan. Visitor
numbers were up 20% on 2003, passing the 1,5 million
mark in the fourth year of operation. Kinepolis Poznan
also remains by far Poland’s largest cinema in terms of
visitors and income.
BLOCKBUSTERS SCORE WELL
The first reason for this spectacular growth lies in the
good film line-up, in particular in the first eight months
of the year. Shrek 2 turned out to be the strongest
release in Poland, drawing nearly 120,000 visitors at
Kinepolis Poznan. Other major blockbusters such as
Harry Potter 3, Lord Of The Rings 3, Shark Tale and The
Day After Tomorrow performed excellently.
A second cause was the great success of films like The
Passion of the Christ, Der Untergang and a number
of Polish productions that drew large numbers of
(school) groups. These groups together represented
almost 200,000 tickets. School groups are traditionally
a strong-scoring segment in Poland, because of the
significant place of images in general and films in
particular in education.
Thirdly the release dates of films in Poland came
last year ever closer to those in Western Europe
17
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
and America. In this way films benefit from global
advertising and the risk of pirating is reduced.
POLISH ECONOMY LOOKING UP
The improved economic climate, influenced by Poland’s
joining the European Union on 1 May 2004, expressed
itself in changing consumption patterns. Polish families
now have more money to spend on leisure activities.
According to figures from ING Bank GDP grew by 6%.
Along with the above reasons the continuing building
of new complexes (7 in the past 18 months) is another
major factor in the growth of Polish cinema audiences,
even if with a frequency of 0.8 visits per year, Poland
lags well behind Belgium, with an average of 2.2.
We can therefore expect that, with further development
and better economic conditions, the Polish market will
continue to grow in the coming years.
OUTLOOK
Growth in Poznan is likely to be slower in 2005 than
in 2004, for two reasons. First, the 2005 film line-
up is expected to be weaker than in 2004. Second,
competition is set to grow in 2005, with a new 10-
screen, 2,500 seat cinema complex opening its doors
in Poznan in May. In 2005 Kinepolis Poland will also
be taking on other challenges, such as introducing a
number of labels in the film area (including Cinemanie),
the HR area (Service with a Smile or SWAS) and the
quality area (Mystery Shopping).
In terms of customers, even more attention will be paid
in 2005 to target groups like students, families and
business clients.
KINEPOLIS SWITZERLAND
The Swiss cinema sector rose globally by +4%
compared with 2003.
AUDIENCE FIGURES
The success of Les Choristes was one explanation for
the strong performance of the French language cinema
market (+10%), whereas the Italian language market
stagnated at 1%.
The German language market, on the contrary, in
which Kinepolis Schaffhausen is active, fell in 2004 by
5%. Lower audience figures in this language area are
explained mainly by a weak German film line-up in
2004. The year before (2003) a much stronger German
film line-up had put its stamp on box office receipts,
among others with “Achtung Fertig Charlie” which
drew record audiences.
The 5% fall in audience figures in 2004 at Kinepolis
Schaffhausen to 267,830 visitors is therefore in line with
the market. The weak German film-line up depressed
visitor figures, as did increased competition from
Pathé Dietlikon in the German-speaking area.
Geo
grap
hic
ove
rvie
w
19
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ACTIVITY OVERVIEW
TICKET SALES
Overall, 2004 was a good, but not outstanding year in
terms of audience numbers. In all the Kinepolis Group
welcomed some 24.5 million visitors, 2% more than in
2003, at its 20 cinema complexes.
The reason for this modest growth is to be sought
in the lack of really outstanding films, despite a
reasonable line-up.
THE FILM LINE-UP
Seen from an international vantage point, the following
films achieved the hoped-for ticket office successes in
2004: Harry Potter and the Prisoner of Azkaban, Shrek 2
and Troy. The traditional animation styles of Sharktale,
The Incredibles and Shrek 2 proved popular during
holiday periods. Epic narratives -
King Arthur, Kill Bill 2, The Last Samurai, Troy and The
Village also scored exceptionally well.
The release of the third Harry Potter film was worth
a good 1 million visitors in Belgium. On the French-
speaking side everyone was pleasantly surprised by
the success of Les Choristes, Podium and Un long
dimanche de Fiançailles.
2005 promises well with both good family films and a
number of promising sequels.
CINEMANIE
In Belgium the new Cinemanie quality label has
generated remarkable results. With Cinemanie
Kinepolis Belgium is trying to attract lovers of author
films from every corner of the world. Since the start of
2004 at least one Cinemanie film has been shown daily
in every Belgian complex. The Passion of the Christ,
Lost in Translation and Fahrenheit 9/11 were the top 3
quality films.
In 2005 Cinemanie is also being launched in foreign
complexes.
DIGITAL CINEMA
In addition to digital Hollywood productions like
Brother Bear and The Incredibles, film fans could also
experience alternative content in 2004 in digital format,
such as sports contests (EURO 2004 football final live),
television series (the Aspe crime serial, Flikken and
Witse) and the daily 7 pm TV news.
AUDIENCE FIGURES THROUGHOUT THE YEAR
During the first half of 2004 audience figures were up
9% on the first half of 2003, reflecting mainly the strong
film line-up and cinema-favourable weather conditions.
During the second half visitor figures fell, however,
by 4%. The fourth quarter was unable to confirm the
positive third quarter trend, mainly in the absence of
major blockbusters.
INTERNATIONAL ACCENTS
Kinepolis Poland made the greatest leap forward with
20% more visitors in 2004 than in the year before. This
is due entirely to the success of The Passion of the
Christ, to the recovering economic climate and to Polish
families paying more attention to leisure than in 2003.
Act
ivit
y ov
ervi
ew
20
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
The French Kinepolis complexes also performed
impressively, with a full 10% more visitors than in
2003, owing entirely to the opening of individual new
complexes and the strong French fi lm line-up. Ticket
sales in Spain fell slightly (-1%) like-to-like compared
with 2003, but grew by 5% counting in Kinepolis
Granada, which opened at the end of the June 2003.
Kinepolis Madrid also takes fi rst place for ticket sales
both in the Kinepolis Group and in the Spanish cinema
market as a whole.
Kinepolis Belgium had a somewhat less successful year
(-2.5%), owing mainly to the roadworks on the Antwerp
ring which made the Metropolis less accessible.
The cinema complexes in Kortrijk, Liège and, in
particular, Braine, performed excellently with visitor
numbers up 2%, 2% and 17%.
Kinepolis Switzerland, fi nally, suffered from a weak
German fi lm line-up in 2004, with audience levels down
5% on 2003.
21
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
FOOD & BEVERAGE (F&B)
Income from food and beverage sales in Kinepolis
cinemas remains buoyant. In 2004 F&B was again
able to report a rise in “spend per head”. This figure,
obtained by dividing total turnover by the number
of cinema visitors, is by far the most important
performance indicator in the Kinepolis F&B
department.
FOCUS IN 2004
In 2004 F&B devoted considerable attention to
international Food & Beverage sales and purchasing
policy.
Partnership agreements were negotiated and
concluded in consultation with the Marketing
department.
Various policy points were assiduously monitored
throughout the year: analysis of sales figures,
tracking of margins, inventory management, category
management, sales promotions, developing new
concepts, staff training and motivation, preparation
and roll-out of new complexes, auditing “HACCP”
(“Hazard Analysis by Critical Control Points”)
hygiene procedures, and maintenance of the F&B IT
infrastructure.
BETTER PER CAPITA MARGINS
For years eating and drinking during film shows have
been a permanent feature of the cinema experience.
Regular sales promoting initiatives, good category
management and infrastructure monitoring, combined
with an optimal price policy enabled Kinepolis to
improve its margin per capita.
Soft drinks, candy, popcorn and Nacho’s predominated
again in 2004, but ice cream, chocolate and salted
snacks also sold well.
POINTS OF SALE
Until now Kinepolis F&B has had two types of sales
outlets: “Fastlanes”, which are optimally structured
sales counters where customers can select the fully
product range and be served quickly and efficiently,
and self-service candy corners where customers pay at
the check-out.
PREFERENCE PARTNERS
For branded products Kinepolis cooperates with a
number of preferential food partners: Coca-Cola,
Unilever (Ola), Masterfoods, Nestlé, Lay’s, Ferrero, Spa,
Inbev, Bacardi Breezer. Kinepolis popcorn is produced
fresh daily. Therefore industrial kitchens are installed in
the cinema complexes themselves.
Act
ivit
y O
verv
iew
22
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
OUTLOOK
A number of major projects are taking shape for 2005.
Various points of sales will be renovated to a new
“retail module” concept, with an extended offering,
and focusing on the unique shopping experience. Also
on the agenda for 2005 is the introduction of a number
of light Products.
EVENTS & MEDIA
BUSINESS TO BUSINESS (B-TO-B)
Four key focal points of attention for the B2B division
in 2004 were extending the range of services for
B2B customers, the follow-up of regular customers,
continuing to extend the POS network and managing
the portfolio of preference partners.
LOCATION – MEDIUM - PREMIUM
Customer care is the motto of the B2B division.
The price structure of sales promotions was reviewed
(interesting prices for volume sales) and new products
launched: Canned Emotions (Belgium, Carte Clap and
Carte Duo (France) and the Kinebono 10 Plus (Spain).
Kinepolis Belgium introduced specially reduced
rates for advertising and events agencies which use
Kinepolis as a medium or as a location without film
screenings.
LOYALTY PROGRAMMES
Kinepolis knows how to express its appreciation of
customer loyalty by keeping its faithful customers
regularly updated on special offers and novelties.
Get Togethers have become a well-known concept
in Belgium, immersing visitors each time, with an
appropriate buffet and animation, into the atmosphere
of the programmed film. The French Works Councils
continue to play a key role in the B2B approach.
EXTERNAL POINTS OF SALE
In offer better service to potential visitors, Kinepolis
continued, as in 2003, to extend its network of external
points of sale. As well as buying loose vouchers in Jet
filling stations, customers can also buy film boxes and
greetings cards in Belgian post offices.
PREFERENCE PARTNERS
Ferrero became a new commercial partner. The F&B
offered more in line with cinema visitor tastes. Among
existing partners Coca-Cola continued to play a very
active role (including special student offers, appropriate
decoration and a gigantic Crazy Coke & Popcorn
roadshow), whilst Proximus upped the success of its
2003 Proximus Film Experience with 10 editions in 2004
as against 4 in 2003.
23
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
BUSINESS-TO-CONSUMER (B-TO-C)
As well as its technological excellence, Kinepolis uses
a wide range of events to offer visitors unforgettable
evenings. In Belgium there were the memorable
pre-weekends of, among others, King Arthur,
School of Rock, The Bourne Supremacy and
Spiderman 2, with very varied animation and
entertainment. Star visits are an increasingly popular
attraction: in 2004 Kinepolis Madrid again treated its
visitors to appearances by world-famous fi lmstars
including Matt Damon, Colin Farrell, Oliver Stone,
Tobey Maguire…
MEDIA PRESENCE
Kinepolis is continuously scanning medialand for new
opportunities to reconfi rm its “top-of-mind” status. In
2004 new, well-known media partners were brought on
board: MSN, Sanoma, Vitaya, Het Belang van Limburg).
Kinepolis continues to aim high with its website:
www.kinepolis.com took professional magazine Clickx’s
silver award for the best professional site in 2004.
Individual records were again recorded last year:
405,500 pageviews in1 day and 21,200 trailers in 1 day.
OUTLOOK
The B2B division is continuing its task of renewing
existing partner contracts and prospect for possible
additional partners. The number of external sales
channels is also being extended to make purchasing of
sales promotions ever easier for the consumer.
The Kinepolis motto in B2C is “less but bigger”, that
is major events centring around blockbusters (e.g.
Star Wars) which will, it is hoped, leave an indelible
impression on visitors.
The Media division will also be more than busy in
2005. The site too will undergo a complete facelift in the
course of the year.
Act
ivit
y ov
ervi
ew
24
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CONCESSIONS
Kinepolis Group develops a number of m2 of commercial
space in each cinema complex. Alongside their main
activity of providing cinema entertainment, the Kinepolis
multiplexes are evolving more and more towards “Family
Entertainment Centres”.
SIDE ACTIVITIES
What cinema visitors increasingly want is an evening out
rather than just watching a movie: have a bite to eat with
family or friends, visit a DVD shop where the latest releases
can be bought or hired, or enjoy a hour’s bowling before or
after a film and other side activities are very much in.
One question when designing a Kinepolis multiplex is
always how many m2 of commercial space to include as a
function of incoming and outgoing visitor flows, existing
facilities in the neighbourhood, the size of the city, etc.
SUFFICIENT SPACE
Kinepolis complexes have between a few hundred and
several thousand m2 of lettable space. This space is filled
with catering outlets (fast food, better restaurants, cocktail
bars, pizzerias), bowling, retail (sale of cinema products,
gadgets, CDs, DVDs, etc), billiard cafés, disco, karting etc.
These activities are complementary to the cinema activity
and go to make the total offering more attractive to the
client.
SELECTED ACHIEVEMENTS
At Lomme (France), 100m2 was leased to pastry chain
Subway and 935m2 to the Merlin Group (farm produce).
At Nîmes (France) an agreement has been negotiated to
develop a 3,500m2 bowling alley. In Spain 12,000m2 in the
new Kinepolis complex has been let out to the Commercia
Group (bowling, catering, etc).
DIVERSIFICATION
Kinepolis Group is currently examining other
diversification opportunities centring around cinema
visiting. Sites will be strengthened by including leisure
and commercial activities. In this way, visitors who in
the past came mostly at evenings and weekends will be
attracted increasingly during the day by the additional
activities.
2005
A 2,600m2 karting is planned to open at Kinepolis Poznan
(Poland) in 2005. A bowling arcade is also being considered
for the Mulhouse (France) complex.
Kinepolis wants to offer more than just cinema. Customers
are calling for additional leisure opportunities and Kinepolis
policy is to meet this demand as far as possible. Past and
future realizations prove this to be the right choice.
25
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
KINEPOLIS FILM DISTRIBUTION
For the second year running Kinepolis Film Distribution
posted a respectable profi t, even if it was unable to
equal the record earnings of 2003. But then 2003 was
an exceptional year with fi lms like Gangs of New York,
Team Spirit 2 and De Zaak Alzheimer.
THE APPROACH IN 2004
The respectable results obtained by Kinepolis Film
Distribution was a direct consequence of the further
optimization of release and operating costs and the
recruiting of one additional staff member.
2004 brought few outstanding releases.The leading fi lms
were Scary Movie 3, Kill Bill 2, Blade Trinity and Plop en
Kwispel. The last two fi lms, however, were released in
December and provided most of their sales at the start of
2005. The division has also worked hard in recent years
to increase income from the back catalogue by putting
together educational projects and extending the “better
fi lm” catalogue.
In 2004 this approach began to bear fruit in the form of
sales right through the year at no additional cost.
KFD will of course also be continuing on its existing path.
LONG LIVE LOCAL FILMS
2005 is set to confi rm the policy of promoting local
fi lms and the implementation of a tax shelter system.
These include new fi lm productions as Dominique
Deruddere’s Bloedbruiloft, KFD’s fi rst Walloon fi lm
release Miss Montigny, as well as Ieder zijn Geluk (from
upcoming talent Fien Troch), Piet Piraat, a new Plop
fi lm, and Windkracht 10, the new print from the makers
of De Zaak Alzheimer with equal box offi ce potential.
INTERNATIONAL PURCHASES
Strong international purchases in our partnership with
the Dutch company RCV include Hotel Rwanda, a fi lm
as gripping as Schindler’s List, The Son of the Mask (the
follow-on from the hit fi lm with Jim Carrey and Cameron
Diaz), Domino, The New World and The Brothers Grimm.
With this well balanced local-international fi lm line-up the
KFD can look to the future with confi dence.
Act
ivit
y O
verv
iew
THE HOUSE OF FLYING DAGGERS - KINEPOLIS FILM DISTRIBUTION
Board of Director’s Report
27
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Kinepolis Group nv in general attaches great
importance to Corporate Governance, and does
everything possible to organize as efficiently as
possible the relations of power and influence within
the company, in particular the structures and channels
within which management, the exercise of this
management and the protection of stakeholders are
undertaken.
In so doing Kinepolis Group strives to apply the
principles of the Belgian Corporate Governance
Code (the “Lippens Code”) as far as possible, with
due account for the particularities of the company.
Kinepolis Group is also working on producing its own
Corporate Governance Charter as recommended in the
Lippens Code.
BOARD OF DIRECTORS AND SPECIAL
COMMITTEES
COMPOSITION OF THE BOARD OF DIRECTORS
The articles of the association state that the Board of
Directors can consist of up to 10 members, at least
two of whom should be regarded as independent of
the reference shareholders and of management.
As long as Kinohold sa and/or CCM&H nv (today Claeys
Invest nv), as well as all entities directly or indirectly
controlled by them own, alone or jointly, at least 35%
of the shares of the company, 8 directors shall be
appointed from candidates put forward by Kinohold
and CCM&H (today Claeys Invest nv). Where the
shareholding percentage is less than 35%, Kinohold sa
and/or CCM&H nv (today Claeys Invest nv) are entitled
to put forward one candidate per tranche of shares
representing 5% of the capital.
To ensure that a director’s qualification as an inde-
pendent director conforms with the Lippens Code, the
Board of Directors will be proposing to the Extraordinary
General Meeting of 20 May 2005 to amend the Articles of
Association to state that «as long as Kinohold nv and/or
Claeys Invest nv), and all entities directly or indirectly
controlled by them, own, alone or jointly, at least 35% of
the shares of the company, the majority of the directors
shall be appointed from among candidates put forward
by Kinohold sa and Claeys Invest nv.”
This clause of the articles of association does not change
the fact that the Board of Directors is of the opinion that
the independent directors appointed in the past can be
properly considered as independent.
The articles of association provide for directors to be
appointed for a maximum term of 6 years. In practice
directors have now been appointed for a maximum term
of 4 years.
The articles of association do not impose any age limit
on the appointment of directors.
At 31 December 2004 the Board of Directors consisted
therefore of nine persons, four of whom should be
regarded as independent of the reference shareholders
and the management.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
DECLARATION CONCERNING CORPORATE
GOVERNANCE
28
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
NAME POSITION END OF
MANDATE
OTHER MANDATES
NV Claeys Invest, represented by
Mrs Marie-Rose Claeys-Vereecke
(1)(3)(4)
Co-Chair 2006
NV HRV, represented by Baron Hugo
Vandamme, Chair (1) (2)
Chairman 2005 Roularta Media Group nv: Chairman of the Board
Barco nv: Vice-Chairman of the Board
Maatschappij van de Brugse Zeevaartinrichtingen nv: Director
Sara Lee/DE International bv: Member of the Supervisory Board
Mrs Marie-Suzanne Bert-Vereecke,
(1) (3)
Honorary Chair 2006
Mr Joost Bert (3)
Mr Florent Gijbels (3)
Managing Directors 2005
2005
Mr Peter Bert, (1) (3) Director 2006
Mr André Meers, (1) (2)
NV Euro Invest Management,
represented by Philippe Haspeslagh
(1) (2)
BVBA Gerard Van Acker, represented
by Mr Gerard Van Acker, (1) (2)
Director
Director
Director
2007
2005
2006
Machiels Group nv: General Manager
Dujardin Foods nv: Chairman of the Board
Quest Management nv: Chairman of the Board
Quest for Growth nv: Director
Capricorn Venture Partners: Director
Vandemoortele nv: Director
Sabena Technics nv: Chairman of the Board
Language & Computing nv: Chairman of the Board
Besix Group nv: Director
Carestel nv: Director
ABO nv: Director
Bofort nv: Director
(1) Non-executive director - (2) Independent director
(3) Represent the majority shareholders - (4) Coopted by the Board of Directors on 6 October 2004
29
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Bo
ard
of
Dir
ecto
r’s
Rep
ort
OPERATION OF THE BOARD OF DIRECTORS
The Board of Directors is chaired by Mr. Hugo
Vandamme.
As the highest governing body of the company, the
Board of Directors is responsible, in addition to its
statutory tasks, for developing the general policy and
investment plan.
The Board of Directors confirms in the ongoing
consultation with the managing directors:
• the short and long-term strategy, and where
necessary adapts
• the profit plans
• the financial means and human resources
to realise the pools
The Board of Directors also supervises:
• the daily management and ensures that
the internal audit procedures are correctly
and fully followed
• the statutary auditor and the internal
auditor
• the progress of strategic decisions and profit plans
• the use of financial means and human resources
The Board of Directors proposes to the General
Meeting its remuneration, establishes the strategic
objectives, forms of assessment, results, profit plans,
business plans of the management and remuneration
of the managers of the company and the general
remuneration policy.
In principle the Board of Directors meets every two
months. Each meeting’s agenda includes at least:
• the monthly visitor figures of the various complexes
and the financial results of Kinepolis Group and its
subsidiaries
• newly proposed projects
• the progress of ongoing projects
• the reports of the Audit Committee and the
Appointments and Remuneration Committee.
Special board meetings are held to discuss:
• the consolidated and unconsolidated financial
statements and annual reports
• the investment budgets for the coming year
• short and long-term strategy
• general remuneration policy.
The articles of association require
resolutions to be passed by a majority
of votes, but in practice decisions are
reached by consensus. The Board of
Directors met 10 times in 2004.
THE REMUNERATION COMMITTEE
The Remuneration Committee, set up in
1998 from among the members of the
Board of Directors, was converted on 26 January 2005
into an Appointments and Remuneration Committee.
This committee consists exclusively of non-executive
directors.
- NV Claeys Invest, represented by Mrs Marie-Rose
Claeys-Vereecke
- Mrs Marie-Suzanne Bert-Vereecke
- NV HRV, represented by Baron Hugo Vandamme
- Mr André Meers
The chairman is Mr André Meers.
The Appointments and Remuneration Committee is
responsible for drawing up general guidelines for the
30
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
company’s remuneration policy, and the remuneration
of the managers of the company.
The Remuneration Committee has an advisory role
vis-à-vis the Board of Directors.
The Remuneration Committee met three times in 2004:
• On 14 January 2004 in the presence of André Meers,
Hugo Vandamme, Marc Vercruysse1, Marie-Rose
Vereecke and Marie-Susanne Vereecke
• On 17 March 2004 in the presence of André Meers,
Hugo Vandamme, Marc Vercruysse, Marie-Rose
Vereecke and Marie-Susanne Vereecke
• On 14 September 2004 in the presence of André
Meers, Hugo Vandamme, Marie-Rose Vereecke and
Marie-Susanne Vereecke.
The Managing Directors attend the meetings of the
Appointments and Remuneration Committee when
invited.
THE AUDIT COMMITTEE
The Audit Committee, which was set up in 2001,
consists exclusively of non-executive directors,
the majority of whom are independent.
The Audit Committee is comprised of:
- NV Claeys Invest, represented by Mrs Marie-Rose
Claeys-Vereecke
- Mr Peter Bert2
- BVBA Gerard Van Acker, represented by Mr Gerard
Van Acker
- NV Euro Invest Management, represented by
Mr Philippe Haspeslagh
- Mr André Meers3.
The Audit Committee advises and assists the Board of
Directors in fulfilling its responsibilities with regard to
the organization and control of:
- the internal financial and accounting control system;
- the rules and procedures to be followed in drawing up
the annual accounts;
- the company’s audit, accounting and financial
reporting processes.
The internal auditor reports directly to the Audit
Committee, which establishes the auditor’s annual
work programme.
The Audit Committee can also be entrusted with special
assignments by the Board of Directors.
In 2004 the Audit Committee met five times with Mr
Gerard Van Acker in the chair:
• On 14 January 2004 in the presence of Gerard Van
Acker, Marc Vercruysse1 and Philippe Haspeslagh;
• On 8 March 2004 in the presence of Gerard Van Acker,
Marc Vercruysse and Mrs Claeys
• On 21 June 2004 in the presence of Gerard Van Acker,
Philippe Haspeslagh and Peter Bert
• On 3 September 2004 in the presence of Gerard
Van Acker, Philippe Haspeslagh and Mrs Claeys
• On 20 December 2004 in the presence of Gerard
Van Acker, Philippe Haspeslagh and Mrs Claeys.
The auditor, the chief financial officer and the
managing directors attend the meetings of the Audit
Committee.
1 No longer member of the Board of Directors since May 2004. 2 Appointed by the Board of Directors of 17 March 2004, in order to replace M.S. Bert-Vereecke. 3 Appointed by the Board of Directors of 26 January 2004.
31
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
REMUNERATION
In 2004 a total of € 1,352,622 was
paid to the members of the Board of
Directors for the Kinepolis Group and all
subsidiaries.
A total amount of € 1,164,684 was paid
to the executive management, that is the
members of the two management committees and the
managing directors, for the same companies.
DAY-TO-DAY MANAGEMENT
Day-to-day management is undertaken by the two
Managing Directors (CEOs), Mr Joost Bert and
Mr Florent Gijbels.
RULES OF BEHAVIOUR
The Board of Directors of Kinepolis Group nv has
approved a “Business Conduct Policy” setting out the
fundamental principles which each Kinepolis Group
director and employee is expected to abide by.
In particular this conduct policy contains guidelines
covering trading in Kinepolis shares by board members
and other employees whose job brings them into
contact with price-sensitive information, as well as
guidelines for making a distinction between business
and private interests.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
32
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
TECHNOLOGICAL
LEADERSHIP
There is as yet no clearly developed business model for
digital cinema. A host of questions remain unanswered:
who is going to pay for the equipment, which will be the
final standards, how will digital films be distributed? ....
Despite this, Kinepolis Group is anxious not to deprive
its customers of this outstanding quality. The group is
therefore continuing unperturbed with its switchover to
digital, thereby further enhancing its global reputation as a
high tech partner.
SELECTED ACHIEVEMENTS
In 2004 Kinepolis Group confirmed its number one
position on the digital cinema market by increasing to 11
the number of digital theatres.
These digital theatres are equipped with Barco projectors
supplemented with EVS servers. In early February 2005
the line-up of digitally-equipped cities was: Brussels 2
projectors, Antwerp 2 projectors, Ghent, Hasselt, Kortrijk,
Liège, Leuven, Braine-l’Alleud and Lomme (France).
QUALITATIVE DIGITAL BENEFITS
The benefits of digital cinema as against traditional 35mm
lie especially in the exceptional image quality (improved
stability and focus) and in the better aligned subtitles.
Digital technology also maintains film quality better in the
longer term.
A traditional cellulose film will begin to show wear
– lines and specks on the image – after certain number of
showings. In digital projection this wear is a thing of the
past: the projection quality is as good on the last day of the
screening as at the pre-premiere.
NEW CONTENT OPPORTUNITIES
All of Kinepolis digital installations are fitted with special
auxiliary apparatus which can serve to host special
events. Images can be projected from computers (incl.
presentations) together with live camera shots taken in the
33
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
theatre itself (e.g. conferences or roadshows) or images
beamed in directly by satellite.
These multifaceted installations mean that Kinepolis is no
longer limited to “Hollywood content» – classical 35mm
fi lm projections – but can also offer all sorts of alternative
content.
At the start of 2004 a handful of digital experiments were
undertaken with the VTM TV newscast and the fi ction
series Aspe. The results were promising and led Kinepolis
to come up from August 2004 onwards – this time in close
cooperation with VRT – with projects like TV serials Witse,
Flikken etc. Locally produced full-length digital fi lms
(Shrek 2, K3 and the magic Medaillon for example),
together with Hollywood productions, accounted for
448,105 visitors in 2004. We can expect the number of
digital productions to rise sharply in the near future.
OUTLOOK
A host of technological changes can be expected in the
coming months and years.
One example is the additional peripheral equipment which
was connected up to the digital projectors at the start of
2005.
With these developments digitalization has entered once
and for all into the cinema world.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
© Publicis-Hourra!
34
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
REAL ESTATE
OBJECTIVES
Kinepolis is seeking to implement an active
policy of drawing maximum benefit from its
fixed assets.
To this end it set up an internal “Real Estate”
division in 2004, which is looking to achieve
the following objectives in consultation with
the Cinema division:
• Evaluation and management of a portfolio
of land, parking lots and buildings. Real Estate managers
this property maintains it and supervises the necessary
repairs and improvements.
• Development of new cinema projects. Real Estate
coordinates the design and implementation work and
acts as primary contact point for contractors. Examples of
its work are the newly opened Granada complex
(15 theatres), the renovated Palace in Liège, and the
projects in Nancy (2005), Bruges (2006) and Ostend
(2007).
• Making optimal use of existing space with new
commercial projects. The goal here is to increase the
attractiveness of sites and create added value.
PROPERTY PORTFOLIO
Kinepolis Group has right now 20 complexes with 292
screens and 88,740 seats, 45,000 m2 of space is available
for commercial letting.
The group owns a total surface area of 836,000 m2.
Various initiatives were started or completed in the course
of 2004 to meet the above objectives.
INITIATIVES
In connection with real estate management,
lands in Granada, Nîmes and Stockholm were
sold .
New uses are also being examined for other
sites.
In Poznan (Poland) an application has been
made to redevelop the parking areas in front
of the cinema.
Real Estate will be erecting a number of
shopping and retail buildings there together
with a partner.
In Schaffhausen (Switzerland) a building permit has been
obtained for a complex including a bowling arcade, disco
and restaurants on the cinema parking lot.
PARKING LOTS
In several locations the parking problem is being re-
examined, with paid parking introduced wherever
possible.
In Kortrijk an agreement has been concluded with Parko to
jointly operate the parking lots belonging to Kortrijk Xpo,
the city and Kinepolis.
A paying private parking lot has also been created in
Ghent next to the complex.
Whilst the parking price for the cinema visitor is minimal,
on an annual basis this mounts up to a substantial added
value for Kinepolis Group.
NEW COMPLEXES
As described below, Real Estate is continuing to plan and
build new complexes.
35
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
GRANADE
The 4710 seat, 15 theatre Kinepolis complex in Granada
was opened last year. This complex applies a new formula
in which the cinema is integrated into a retailing centre.
The entire site has taken the Kinepolis name.
LIÈGE
In Liège the downtown Palace complex has been fully
renovated to modern standards. 5 theatres have been kept,
with 1,300 seats.
NANCY
Building work continues on the Nancy complex close to
the city centre.
Major attention is being paid to the concessions, which will
occupy the entire area underneath the theatres. A 22-alley
bowling centre, restaurant, creperie and bistro will be
housed here.
The cinema complex and the concessions will be finished
in summer, ready for the scheduled opening in September
2005.
This cinema will also be the first premises in which the
entrance, foyer and shops will follow the new styling
developed in 2004.
BRUGES
In Bruges a building permit for an 8-theatre complex has
been obtained on a site at the corner of the Expresweg and
the Koning Albertlaan. Work will begin in 2005, with the
opening scheduled for mid-2006.
OSTEND
In Ostend a building permit amendment is being put
together for the land around the Wellingtonbaan,
where Kinepolis will be erecting an 8 theatre complex,
architecturally integrated into the surrounding
environment.
OUTLOOK
The main focus of attention in 2005 will be to continue
completion work on the projects that have already been
started.
A number of complexes will be transformated to the new
styling.
Kinepolis will also be paying special attention to filling the
still vacant concessions at Mulhouse and Poznan.
Finally the Real Estate group will be working together
with the Cinema division to ensure the future geographic
expansion of the group, through joint prospecting and
examination of various opportunities in Europe.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
36
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ICT
In 2004 the IT department was rechristened ICT,
reflecting the increasing integration of communications
in general into modern-day IT technical infrastructures.
Integrating the entire telecommunications process into
a single department enables Kinepolis to adapt better
to new technological developments and make more
effective use of the existing infrastructure.
INTRANET SCORE WELL
Last year the Kinepolis Intranet was opened up to all
departments.
Since then it has proven an ideal platform for making
general internal information available to all employees.
Intranet has already demonstrably improved the
efficiency of information transfer within Kinepolis.
INTEGRATION OF APPLICATIONS
The ASW software package to support financial
activities was implemented internationally in 2004.
All financial operations are now bundled into a single
application, centralized in Brussels.
The commissioning of phase one of a data warehouse
also marks a further step on the path to integration,
and will certainly make consolidated data more easily
available for the balanced scorecards
operated within Kinepolis.
Work has also begun on the functional
analysis of the new ticketing application.
This application is of major strategic
importance for Kinepolis, with all
departments involved in its development.
IMPROVED SECURITY
Viruses and spam are a constant threat, not just for
Kinepolis, but also for other users. Security procedures
were therefore refined in 2004, with a new system of
constant monitoring in order to achieve better security.
To increase the security of internet payments, Kinepolis
has switched to the 3D-secure standard.
2005
The main priority for 2005 is the development of the
new ticketing application. The further extension of the
data warehouse will offer even greater integration
of the various Kinepolis data flows. Continuous
improvement of internal and external and security will
be another focal point during the year.
37
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CORPORATE
MARKETING
After the consolidation and renewal
in 2003, 2004 was a transitional year.
The new structuring into B-to-C, B-
to-Be and Theatre and Media divisions
was extended to achieve an even higher quality of
service. Watchwords for 2004 were optimizing existing
programmes and launching a number of new concepts.
BUSINESS-TO-CONSUMER (B-to-C)
The four cornerstones of B-to-C operations in 2004 were
a targeted approach to individual customer groups,
continuing and extending the volume generation
campaigns and loyalty programmes, and organizing
image-supporting corporate events.
SPECIFIC TARGET GROUPS
Four target groups received particular attention in 2004:
1. Families: The specifi c family programmes - Happy
Sundays (Belgium), Matinées Magiques (France) and
Magic Sundays (Poland) – were slightly adapted,
with the aim of emphasizing that Kinepolis not only
offers fi lms in an optimal environment, but also
guarantees that ‘little extra’, from creative samplings
to original animation. In so doing Kinepolis confi rms
its added value as a supplier of both top fi lms and top
entertainment.
2. Schools: The well-known
KineScola mix of educational and
entertainment fi lms was continued
in Belgium. In Poland too, schools
particularly enjoyed the fi lm
line-up, with a record number of
schools screenings attended by
no less than 140,000 pupils.
3. Students: Kinepolis continues to profi le itself to the
student population as the ultimate cinema experience.
The existing formulas in Belgium and Poland were
extended, with new accents which make the Student
Card, a “must-have” for today’s modern student: new
partners, 100% on-line registration and application for
the Student Card in Belgium, and the introduction of
exclusive student premieres in Poland.
4. Film lovers: As part of its effort to provide an as broad
fi lm line-up as possible on a continuous basis, Kinepolis
launched a special programme – better known as
“Cinémanie” specially directed at lovers of quality fi lms.
The idea behind these projects is to allow fi lm lovers to
enjoy the jewels of world cinema in an environment of
optimal technology and comfort.
VOLUME GENERATION CAMPAIGNS AND LOYALTY PROGRAMMES
Under the motto of ‘more visitors, more fun’ various
countries introduced small-scale campaigns aimed
at boosting visitor numbers, including a Christmas
initiative in Poland and the Winterticket in France. The
success of the Summerticket initiative (return within 5
days for just 5 euros) was repeated in Belgium, France,
Poland and Switzerland.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
38
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Loyalty is also rewarded at Kinepolis. The success of the
100 Days Card in 2003 inspired to continue it in 2004 in
Belgium and also to launch this successful concept in
France.
CORPORATE EVENTS
2004 was also a year of celebrations: 20 years of
Kinepolis Lomme, 5 years of Kinepolis Thionville, 3
years of Kinepolis Poznan, and the openings of Palace
Liège and Kinepolis Granada. True to Kinepolis’s
fi lm&fun tradition, all this took place in style, with
pre-premieres and special events. Poland
and Spain both undertook image-support
campaigns, each with its own accents.
THEATRE
The Theatre division, focused on two
fi elds: making cinema visiting an even
better experience (with harmonized
signing and sensitising staff through
Service with a Smile) and undertaking two
major corporate campaigns.
The THX campaign served to acquaint both customers
and staff in a light-hearted way with the THX quality
standard which is available to all Kinepolis theatres.
The High Defi nition Digital Camera campaign served to
confi rm Kinepolis as a pioneer in technical innovation.
OUTLOOK
Kinepolis’s target group programmes are and remain
very important, and will be further developed in
2005. With the international relaunch of Cinémanie,
fi lm lovers will certainly not go hungry. For students
Kinepolis will again be out looking to provide the best
possible deal, and Happy Sunday remains for families.
A loyalty programme directed at children will be
introduced in the second half of the year. The focus will
again be on THX. The common factor behind all these
initiatives is to make the entire cinema experience even
more fun, so that visiting the cinema is
not just watching a fi lm, but a fully-fl edged
entertainment event.
39
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
BUSINESS
INTELLIGENCE
Growing competitiveness and increasing specialization
are forcing Kinepolis management to constantly improve
its performance.
There is also a growing need for more quantitative
and qualitative operational
information to support the
business strategy.
To meet this need, Kinepolis Group
set up in 2003 a new department,
BI2OS (Business Intelligence
& International Operations
Support), tasked with supporting
the formulation, communication,
implementation and monitoring
of Kinepolis strategy.
BALANCED SCORECARD
The Balanced Scorecard (BSC)
is the methodological radar
that Kinepolis has chosen to provide proper support
to its strategy. This methodology consists of deriving a
selected number of critical success factors and critical
performance indicators from the Kinepolis Group
strategy.
BI2OS then takes care of the formulation,
communication, operational translation,
implementation and monitoring of this methodology.
BSC is being phased in with precedence to priority
information needs. A strategic data warehouse (SDW)
serves as a data source for meeting all operational,
tactical and strategic reporting, analysis and research
needs within the organisation.
REPORTING
Operational reporting was optimised in 2004 with
the installation of a new operational reporting tool
(SDWRep) and the creation of a number of new and
innovative reports.
This information is
continuously available to
users with the aim of greater
time saving, efficiency and
more optimal decision-
making. Each Kinepolis
complex can now call down
key operating results, missed
film opportunities and the
evolution of its local market
share on a weekly basis.
Corporate F&A developed a
new financial ERP-system,
which was implemented in 5
countries in less then one and a half year.
RESEARCH
Last year, in various analysis and research projects, the
group monitored its Belgian market share, examined
over- and understaffing, screened new cinema markets
in various countries and produced corresponding
feasibility studies.
Bo
ard
of
Dir
ecto
r’s
Rep
ort
40
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Finally much attention was paid in 2004 to mystery
shopping and customer satisfaction surveys. Both
programmes are part of the “Service with a Smile”
project aimed at operational excellence.
2005
The basic Balanced Scorecard was ready for use by
the end of 2004, enabling the group to move on in
2005 to causal research. This will include investigating
the financial implications of non-optimal personnel
planning in the Food & Beverage points of sale. The
main factors affecting the financial results will also be
carefully studied and quantified. All this opens the way
to more pro-active decision-making.
By revealing real causal relationships BI2OS can
enrich business intelligence, to the ultimate benefit
of all internal and external stakeholders, including
shareholders, employees and cinema viewers.
HUMAN RESOURCES
People make the difference in today’s competitive
cinema market.
Selection and recruitment, compensation, training and
career planning and employee motivation are just some
of the many tasks of the HR department.
In 2004 the number of Kinepolis staff increased
worldwide from 1823 to 1908. The opening of Kinepolis
Granada increased numbers by 69.
SERVICE WITH A SMILE
In 2003 the “Service with a Smile” concept took shape
for the first time as part of Kinepolis Group’s strategic
training policy.
In 2004 this initiative blossomed into a fully-fledged
policy tool, covering customers, employees and the
entire operating process. Service with a Smile is aimed
41
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Bo
ard
of
Dir
ecto
r’s
Rep
ort
at customer care in all its forms, with the requisite
attention also paid to the continuous improvement
of operating procedures. Work satisfaction and
involvement of Kinepolis staff are vital components of
customer care “with a smile”.
KINEPOLIS INTRANET
The successful launch of the Kinepolis Intranet in May
2004, thanks to the joint efforts of various departments,
has given an additional impulse to the quality of
internal communication. Intranet provides a tailored
and cost-friendly solution for disseminating information
within the international Kinepolis organization.
In the course of the year the volume of available
information and data called up via this platform
increased considerably. By the end of 2004 the number
of users was at its maximum level.
ERP - HR
Phase one of the HR module of the Enterprise Resource
Planning (ERP) package was implemented in Belgium
in the second half of the year. The system will produce
a further harmonization and automation and will
greatly simplify administration processes within the HR
department.
OUTLOOK
In 2005 Kinepolis Intranet will be developed further
technically, professionally and internationally.
Implementation of the ERP package will also be
extended.
Use of an HR scorecard will permit the organization’s
HR architecture to be managed as a strategic resource.
In 2005 a satisfaction study will be undertaken in order
to structure, assess and improve the HR and general
policy of Kinepolis Group.
42
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
TURNOVER AND
OPERATING INCOME*
TURNOVER AND TOTAL OPERATING INCOME
Total operating income of �203.4 million is up 2.7%, or
3.9% on a like-for-like** basis. 63% of operating income
came from ticket sales, 20% from the sale of food,
beverages and other consumer items, and 13% from
media sales (events, screen advertising, etc.).
• Turnover from cinema activities rose like-for-like by
3.8%. Tickets, Food & Beverage and events & media all
developed positively
• Film distribution turnover (Kinepolis Film
Distribution) was down 35% on 2003.
Unlike 2003, which proved an exceptional
year with films like Gangs of New York,
Team Spirit 2 and De Zaak Alzheimer
(The Alzheimer Case), 2004 brought few
outstanding releases. Front runners were
Scary Movie 3 and Kill Bill 2.
EBITDA
EBITDA rose by 0.3% to € 42.9m (2003: € 42.7m), or 1.4%
on a like-for-like** basis.
EBITDA was positively influenced by the good audience
figures in Poland and France and by well-targeted cost
saving plans in the different countries.
Moderate visitor figures in Belgium, Spain and
Switzerland, and the costs of implementing ERP, IFRS and
Balanced Scorecard software systems had a downward
effect on EBITDA. The relative EBITDA margin (EBITDA/
operating income) was 21.1% (2003: 21.6%), or 21.4% on a
like-for-like basis**.
OPERATING PROFIT (EBIT)
Operating profit rose by 11.9% to € 16.2m (2003:
€ 14.4m), or 13.5% on a like-for-like basis**.
• Depreciation charges (including goodwill amortization)
were down € 0.9m to € 26.7m, including € 0.4m relating
to the divestment from Cinecity Treviso (Italy) and the
Max Linder complex (France).
• It should be remembered that the 2003 figures included
a 0.9m write-back of a contractor’s claim in Poland.
FINANCIAL RESULT
At € 6.7m, the financial result for 2004 is considerably
better than in 2003 (€ -10.8m).
• With reducing debt levels and lower
interest rates, debt servicing charges fell
by 31% to € 7.0 m (2003: € 10.1m).
• Realised foreign currency translation
losses and hedging costs together
amounted to € 0.8m (2003: € 1.6m).
• A capital gain of € 0.5% was realised on
the sale of own shares.
Own shares in portfolio represented a latent
capital gain of € 1.5m at the end of 2004.
PROFIT ON ORDINARY ACTIVITIES
Profit on ordinary activities rose by € 5.8m to € 9.4m
(2003: € 3.6m).
EXTRAORDINARY RESULT
The extraordinary result of €�1.6 m relates primarily to
real estate developments at various cinema sites:
• capital gains on the sale in 2004 of various plots at
Granada (Spain)
• a capital gain on the sale of a plot in Nîmes (France) in
July 2004
(*) Summary of the key figures : see Company Profile p.5(**) Definition of a like-for-like base : see Company Profile p.5
43
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Bo
ard
of
Dir
ecto
r’s
Rep
ort
• a capital loss on the sale of a plot in Stockholm
(Sweden) in October 2004.
TAXES AND DEFERRED TAX LIABILITIES
Better earnings had the effect of raising taxes and deferred
taxes together by € 0.7m to € 4.4m (2003: € 3.7m). Among
other things, the tax shelter programme contributed to
reducing average tax pressure to 40% (2003: 64%).
In 2003 a change in the valuation rules permitted the
reversal of � 0.4m of deferred tax liability.
CONSOLIDATED NET PROFIT
The consolidated net profit amounts to � 6.6m more than
three times the 2003 figure of € 2.1m.
Consolidated net profit of the Group rose by € 3.8m to �
6.5m (2003: € 2.7m), beating the forecast doubling of net
profit.
Net current profit of the Group rose by € 4.7m to € 8.3m
(2003: € 3.6m).
DEBT POSITION
The net financial debt position (financial debts less the
GIMV subordinated loans (balance 2003: € 7.4m; balance
2004: € 10.4 m), cash at bank and in hand and short-term
investments) fell from € 151.0m at 31.12.03 to € 147.1m
at 31.12.04. The expansion investments at Granada and
Nancy in 2004 should be borne in mind in evaluating this
figure.
With this debt position Kinepolis Group has achieved its
goal of a net debt/EBITDA ratio of under 3.5.
SYNDICATED LOAN
In November a € 175m syndicated loan was successfully
concluded. The facility was placed internationally with
banks with which the group has close connections.
Fortis Bank SA/NV and KBC Bank NV were together the
Mandated Lead Arrangers.
The group itself took the initiative of negotiating
this credit facility, repayable over 7 years, in order to
centralise various local borrowings.
The proceeds of the facility are being used to refinance
existing debt and for general corporate purposes.
IFRS
Under European regulations, Euronext requires
companies in the “Next Prime” and “Next Economy”
segments to produce their consolidated accounts in
conformity with IAS/IFRS as from 1 January 2005.
The opening balance at 1 January 2004 was published in
September 2004 along with the half-yearly results.
The financial statements for 31 December 2004 according
to IFRS rules are currently in preparation.
IMPORTANT EVENTS IN 2004
• In the course of 2004 a number of plots of land on the
Kinepolis Granada site were sold as part of the group’s
real estate activities.
• In February Kinepolis Group purchased the land for
the Kinepolis Nancy (France) project and building
work commenced. In the same month the Max Linder
complex in Paris was sold. At organizational level an
internal divisional structure was introduced, with the
company divided operationally into Kinepolis Cinema
and Kinepolis Real Estate.
• In March GIMV sold its 10% interest in Kinepolis Group
to various institutional investors.
(*) Summary of the key figures : see Company Profile p.5(**) Definition of a like-for-like base : see Company Profile p.5
44
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
• In June the Palace cinema in downtown Liège (Belgium)
was reopened after thoroughgoing renovation.
The brand-new 15-screen Kinepolis Granada complex
opened its doors at the end of same month.
• In July the Real Estate division completed the sale of
a site in Nîmes. In October the site in Stockholm was
disposed of. Both sales fit in with Kinepolis Group’s real
estate strategy.
• Finally, in November the first digital projector was
installed in France at Kinepolis Lomme. During the
same period Kinepolis Group successfully negotiated a
€ 175m syndicated loan.
KEY EVENTS AFTER THE BALANCE SHEET DATE
On 13 January 2005 the Permanent Deputation approved
the building permit application for a new cinema complex
in Bruges. Appeals against this decision must be lodged
by early May 2005.
Also on 13 January 2005 the capital increase decided
in 2004 by the General Meeting of CinemaxX was
formally carried out. This reduces Kinepolis Group nv’s
shareholding in the company to 12.61%.
OUTLOOK
Given the further growth of Kinepolis Granada and with
Kinepolis Nancy scheduled to open during the year,
Kinepolis Group expects global audiences in excess of
the 2004 figure of 24.5m.
The group is also continuing its phased expansion
programme and is developing its building projects in
Bruges and Ostend.
Kinepolis is looking to further improve profitability in
2005.
APPROPRIATION OF THE PROFIT
In its proposal to the General Meeting concerning the
appropriation of the profit and the payment of a dividend,
the Board of Directors has taken various factors into
account, including the company’s financial situation, the
operating results, current and expected future resources,
and expansion plans.
It is proposed that a gross dividend of € 0.29 per share be
paid in respect of 2004.
Profit of the year available for appropriation € 1,249,924.55
Profit brought forward from previous year € 49,084,414.09
Withdrawal from equity: -
to reserves € 224,833.52
Addition to equity: -
to legal reserves: € 62,496.22
Dividends € 1,981,013.20
Profit to be carried forward € 48,515,662.74
If the General Meeting approves this proposal, a gross
amount of € 0.29 will be payable from 1 July 2005 against
presentation of coupon no 5.
USE OF FINANCIAL INSTRUMENTS
As an international enterprise Kinepolis Group is exposed
to financial risks of various kinds.
The main ones of these are exchange rate risk
and interest rate risk. Kinepolis Group’s global risk
management seeks to limit the negative impact on the
financial results of Kinepolis Group by using financial
instruments to hedge these risks.
45
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Bo
ard
of
Dir
ecto
r’s
Rep
ort
EXCHANGE RATE RISK
Kinepolis is an international company, with certain
facilities not reporting in euros. These earnings of these
facilities are exposed to fluctuations of local currencies
against the euro when consolidated into the accounts of
the Kinepolis Group. Kinepolis does not hedge this risk.
Loans to Kinepolis Group companies in currencies
other than their local currency are hedged using foreign
exchange futures contracts or swaps.
An additional exchange risk can arise when the parent
company finances Kinepolis Group companies in local
currency. Each loan within the Kinepolis Group in a
different currency is hedged using foreign
exchange futures contracts or swaps.
INTEREST RATE RISK
Kinepolis Group manages its debt using a
combination of short, medium and long-
term debt. The combination of fixed and
floating rate debt is established at group
level. At the end of December 2004 the
group had net financial debt outstanding
of € 147m. Kinepolis Group has concluded interest rate
swaps and options to manage the risk of interest rate
fluctuations by converting a part of the floating-rate
debt into fixed-rate debt. At 31 December 2004 a total of
€ 122m of debt was covered in this way, with maturity
dates of between 1 and 7 years.
CREDIT RISK
The activities of Kinepolis Group are cash generating, this
risk is therefore negligible.
PRICE RISK
This risk as well is negligible.
RESEARCH AND DEVELOPMENT
In 2004 further investments in the ERP-system and in R&D
for the new ticketing platform were realised.
OTHER MANDATES GIVEN TO THE STATUTORY AUDITOR
During 2004 a total of € 112,637 was paid to the Statutory
Auditor, KPMG Bedrijfsrevisoren and its affiliates, in fees
for additional work, € 140,148 for fiscal advise and
€ 26,250m fees for other work.
TROY - WARNER
Information for the shareholders
47
01000020000300004000050000600007000080000
2005200415
20
25
30
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
SHARE PRICE EVOLUTION + VOLUME
KINEPOLIS SHARE PRICE IN 2004
Share price (Euronext Bruxelles)
High (in EUR) 25.7
Low (in EUR) 15.5
Closing price at 31/12/2004 (in EUR) 24.4
Average number of shares traded per day 4,131
Total number of shares traded during the year at 31/12/2004 1,120,424
Capitalisation at 31/12/2004 (in EUR) 194,061,784
KEY FIGURES PER SHARE (CONSOLIDATED)
Net result of the Group per share (in EUR) 1.22
Dividend (in EUR) 0.29
Number of shares 31/12/2004 (in EUR) 6,930,778
FINANCIAL CALENDAR
Friday 20 May 2005:
Kinepolis Group NV Annual General Meeting
Friday 15 July 2005:
Publication of 1st half 2005 audience figures
Friday 16 September 2005:
Publication of 2005 half-year results
Friday 14 October 2005:
Publication of 3Q 2005 audience figures
Monday 9 January 2006:
Publication of 2005 visitor figures
Friday 10 March 2006:
Publication of 2005 annual results
Friday 14 April 2006:
Publication of 1Q 2006 visitor figures
Friday 19 May 2006:
Kinepolis Group NV Annual General Meeting
Info
rmat
ion
fo
r th
e sh
areh
old
ers
INFORMATION FOR THE SHAREHOLDERS
48
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CAPITAL STRUCTURE
The capital of the company amounted at 31.12.2004 to �
€ 47,442,919.65, 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 a
maximum amount of € 47,442,919.65, was renewed by the
Extraordinary General Meeting of 21 May 2004 for a 5 year
period until 12 July 2009.
The authorization to increase the company capital following
the publication of a public take-over bid, was also renewed
by the Extraordinary General Meeting of 21 May 2004 for a
3 year period until 12 July 2007.
The Extraordinary General Meeting of 21 May 2004
renewed the authorization of the Board of Directors to
acquire the number of the company’s own shares or
warrants permitted under article 620 of the
Companies’ Code.
PAYMENT OF THE
DIVIDENDIn its proposals to the General Meeting concerning
the appropriation of the result and the payment of a
dividend,
the Board of Directors took into account various factors,
including the company’s financial situation,
the operating results, current and expected future
resources, and expansion plans.
The Board of Directors proposes the General Meeting
the payment of € 1,981,013.20, this is a gross amount of
€ 0.29.
The Board of Directors proposed that a dividend of
€ 0.29 per share will be payable on 1 July 2005, under
the condition of approval by the General Meeting.
Shareholders Number of Shares at 31/12/04 %
Kinohold bis NV and Claeys Invest NV 4,429,038 64%Best Inver Gestion sgiic 534,631 8%Schröder Investment Management ltd 494,807 7%Kinepolis Group – own shares* 99,698 1% Public 1,372,604 20%Total 6,930,778 100 %
* Under the terms of the “Market Maintenance Agreement” with stock market company “Delta Lloyd nv” and subject to the conditions of the resolution of the Extraordinary General Meeting of 21 May 2004, a total of 8 318 shares were purchased for a total amount of 199 527.23 EUR, and 42 909 shares were sold. At 31/12/04 Kinepolis Group nv, had 99 698 own shares, this represents 1.44% of the total number of shares, with a capital value of 682 458 EUR.
SHAREHOLDERS STRUCTURE AT 31/12/04
49
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ANNUAL ACCOUNTS OF KINEPOLIS GROUP
Consolidated annual accounts 50
Cash fl ow statement 54
Notes to and discussion of the consolidated annual accounts 55
Auditor’s report on the consolidated fi nancial statements 80
Discussion of the ordinary accounts 82
Ordinary balance sheet of Kinepolis Group NV 84
Ordinary income statement Kinepolis Group NV 86
Ordinary appropriation of the result 87
Social balance sheet 96
Valuation rules 98
Transition to IAS / IFRS 103
Organogram 104
50
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CONSOLIDATED ANNUAL ACCOUNTS
ASSETS (IN € ‘000) 2004 2003FIXED ASSETS 250,036.12 263,348.33Formation expenses 260.40 552.27Intangible fixed assets 2,561.86 2,150.69Consolidation differences 16,337.01 19,680.01Tangible fixed assets 230,492.96 240,390.67
A. Land and buildings 183,431.85 184,640.21B. Plant, machinery and equipment 21,841.92 27,611.61C. Furniture and vehicles 2,253.61 2,896.77D. Leasing and similar rights 17,246.27 15,225.29E. Other tangible fixed assets 748.41 677.40F. Assets under construction and advance payments 4,970.91 9,339.40
Financial fixed assets 383.89 574.68A. Enterprises accounted for using the equity method
1. Participating interests 2. Amounts receivable
B. Other enterprises 383.89 574.681. Participating interests and shares 78.55 90.152. Amounts receivable and cash guarantees 305.34 484.53
CURRENT ASSETS 66,750.17 65,861.68Amounts receivable after one year 18,698.26 21,040.62
A. Trade debtorsB. Other amounts receivable 18,698.26 21,040.62
Stocks and contracts in progress 1,941.02 2,078.00A. Stocks 1,741.81 1,794.49
1. Raw materials and consumables 89.25 59.392. Work in progress3. Finished goods4. Goods purchased for resale 1,652.57 1,735.105. Real estate destined for resale6. Advance payments
B. Contracts in progress 199.21 283.51Amounts receivable within one year 19,201.09 27,157.56
A. Trade debtors 10,127.21 13,624.10B. Other amounts receivable 9,073.88 13,533.47
Investments 943.28 1,968.03A. Own shares 943.28 1,168.03B. Other investments 800.00
Cash at bank and in hand 23,962.79 12,282.38Deferred charges and accrued income 2,003.73 1,335.08TOTAL ASSETS 316,786.28 329,210.00
51
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
LIABILITIES (IN € ‘000) 2004 2003EQUITY 66,028.51 61,395.31Capital 47,442.92 47,442.92Share premium accountRevaluation surplusesConsolidated reserves 6,872.41 2,322.39Consolidation differences 2,906.80 2,906.80Translation differences (461.38) (1,815.64)Investment grants 9,267.76 10,538.84MINORITY INTERESTS 562.71 528.38PROVISIONS, DEFERRED TAXES AND LATENT TAX LIABILITIES
8,700.52 10,092.23
A. Provisions for liabilities and charges 3,097.12 3,939.401. Pensions and similar obligations 114.00 126.002. Taxes 64.483. Major repairs and maintenance 63.564. Other liabilities and charges 2,918.64 3,749.85
B. Deferred taxes and latent tax liabilities 5,603.40 6,152.83
CREDITORS 241,494.55 257,194.08
Amounts payable after one year 151,715.85 139,247.43A. Financial debts 151,555.23 139,218.91
1. Subordinated loans 5,936.81 7,436.812. Unsubordinated loans3. Leasing and similar obligations 17,944.84 16,526.834. Credit institutions 127,673.58 115,014.195. Other loans 241.08
D. Other amounts payable 160.62 28.52Amounts payable within one year 72,560.26 99,958.85
Current portion of amounts payable after one year 13,830.41 25,444.49B. Financial debts 17,029.38 8,047.26
1. Credit institutions 17,029.38 8,047.262. Other loans
C. Trade debts 31,106.47 36,842.361. Suppliers 31,106.47 36,842.36
D. Advances received on contracts in progressE. Taxes, remuneration and social security 7,330.04 17,605.20
1. Taxes 3,638.84 11,770.872. Remuneration and social security 3,691.21 5,834.32
F. Other amounts payable 3,263.95 12,019.55Accrued charges and deferred income 17,218.44 17,987.80TOTAL LIABILITIES 316,786.28 329,210.00
52
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CONSOLIDATED ANNUAL ACCOUNTS
INCOME STATEMENT (IN € ‘000) 2004 2003
Operating income 203,386.40 198,072.00
A. Turnover 194,822.68 191,455.44
B. Increase/decrease in stocks of finished goods, works and contracts in progress (84.30) 208.56
C. Fixed assets – own construction 2,259.18 666.57
D. Other operating income 6,388.83 5,751.44
Operating charges 187,232.22 (183,631.64)
A. Raw materials, consumables and goods for resale 74,722.38 70,003.22
1. Purchases 74,641.62 70,248.41
2. Increase/decrease in stocks 80.75 (245.19)
B. Services and other goods 45,500.66 43,749.87
C. Remuneration, social security costs and pensions 33,024.93 32,108.74
D. Depreciation and amounts written off formation expenses and tangible and intangible fixed assets 23,354.47 24,754.01
E. Amounts written off stocks, orders in progress and trade debtors 96.73 838.10
F. Increase/decrease in provisions for liabilities and charges (85.28) (141.89)
G. Other operating charges 7,275.34 9,481.46
H. Operating charges capitalized as restructuring costs
I. Amortization of positive consolidation differences 3,343.00 2,838.13
Operating profit/loss 16,154.17 14,440.37
Financial income 2,507.40 2,634.62
A. Income from financial fixed assets 1.04 430.79
B. Income from current assets 30.15 74.17
C. Other financial income 2,476.21 2,129.67
Financial charges (9,240.95) (13,451.26)
A. Interest and other debt charges 7,008.04 10,094.21
B. Amounts written off positive consolidation differences
C. Increase/decrease in amounts written off current assets 175.00 (195.33)
D. Other financial charges 2,057.92 3,552.37
Profit/loss on ordinary activities before taxes 9,420.62 3,623.73
53
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
INCOME STATEMENT (IN € ‘000) 2004 2003
Extraordinary income 3,360.14 2,488.54
A. Reversal of depreciation and amounts written off tangible and intangible fixed assets
B. Reversal of amounts written off consolidation differences
C. Reversal of amounts written off financial fixed assets 250.00
D. Reversal of provisions for extraordinary liabilities and charges 362.84
E. Gains on disposal of fixed assets 2,684.94 2,195.73
F. Other extraordinary income 312.36 42.81
Extraordinary charges (1,748.31) (283.14)
A. Extraordinary depreciation of and amounts written off formation expenses and tangible and intangible fixed assets
B. Extraordinary amounts written off positive consolidation differences
C. Amounts written off financial fixed assets
D. Provisions for extraordinary liabilities and charges 117.57 104.99
E. Losses on disposal of fixed assets 1,031.00 149.90
F. Other extraordinary charges 599.74 28.25
G. Extraordinary charges capitalized as restructuring costs
H. Negative consolidation differences
Net profit for the year before taxes 11,032.45 5,829.13
Transfer from deferred taxes and latent tax liabilities 680.37 1,099.27
Transfer to deferred taxes and latent tax liabilities (130.08) (362.22)
Income taxes (4,992.06) (4,472.83)
A. Income taxes (5,004.07) (4,494.90)
B. Adjustment of income taxes and write-back of tax provisions 12.01 22.07
Consolidated result 6,590.69 2,093.34
Share in the result of the enterprises accounted for using the equity method
Consolidated result 6,590.69 2,093.34
A. Share of minority interests 59.65 (625.59)
B. Share of the group 6,531.04 2,718.95
54
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
CONSOLIDATED INCOME STATEMENT
CASH FLOW (IN € ‘000) 2004 2003OPERATING ACTIVITIES
Operating profit 16,154.17 14,440.37Depreciation and amounts written off 23,354.47 24,754.01Amounts written off stocks and trade debtors 96.73 838.10Provisions for liabilities and charges (85.28) (141.89)Amounts written off positive consolidation differences 3,343.00 2,838.13Gains on the disposal of fixed assets 2,684.94 2,195.73Other extraordinary income 312.36 42.81Losses on the disposal of fixed assets (1,030.99) (149.90)Other extraordinary charges (599.74) (28.25)
Gross self-financing margin 44,229.65 44,789.10Taxes (4,992.06) (4,472.83)
Cash-flow 39,237.60 40,316.27WORKING CAPITALNet working capital flow (20,155.78) 28,567.73INVESTMENTS
Investments (9,634.40) (15,885.19)Changes in debts as a result of investment
Net cash flow from investments (9,634.40) (15,885.19)FINANCIAL INVESTMENTS
Financial investments 190.55 (151.10)Income from financial fixed assets 1.04 430.79Income from current assets 30.15 74.17
Net cash flow from financial investments 221.74 353.85FINANCING ACTIVITIES
Financing through long-term financial debt 10,262.44 (17,572.71)Financing through short-term financial debt (2,686.20) (23,370.71)Interest and other debt charges (7,008.04) (10,094.21)Other financial income 2,476.21 2,129.67Other financial charges (2,057.92) (3,552.37)
Net cash flow from financing activities 986.50 (52,460.34)NET MOVEMENT IN CASH AT BANK AND IN HAND 10,655.66 892.32CASH AT BANK AND IN HAND (Cash at bank and in hand + short-term investments)
Beginning of the period: 14,250.41 13,162.76End of the period: 24,906.07 14,250.41Movements 10,655.66 1,087.65Amounts written off current assets -195.33
Movement in Liquid Assets 10,655.66 892.32
55
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
1. CONSOLIDATION CRITERIA
All Group and associated companies are included in
the Kinepolis Group consolidation according to the
following consolidation methods:
Full consolidation: this method is applied to those
companies where Kinepolis Group holds more than
half the shares or over which it exercises de facto
control.
Proportional consolidation: this method is applied to
those companies which are controlled by Kinepolis
Group together with other shareholders.
Equity method: this method is applied to those
companies where Kinepolis Group has a significant
influence in guiding policy.
2. CHANGES TO THE SCOPE
OF CONSOLIDATION
Newly included participating interests:
None
Participating interests sold during the year:
None
Changes in the participation percentage:
By decision dd. 28 October 2004 of the General
Shareholders’ Meeting of CinemaxX, CinemaxX
shareholders agreed to increase the capital of the
company by incorporating outstanding loans from
Tele München Gruppe. The formal implementation of
this capital increase in January 2005 had the effect of
reducing Kinepolis Group’s participating interest from
25.01% to 12.61%.
Liquidations:
None
Merger/contribution:
None
3. NAME CHANGES
None
NOTES TO AND DISCUSSION OF THE
CONSOLIDATED ANNUAL ACCOUNTS
56
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
4. SCOPE OF CONSOLIDATION
List of fully consolidated subsidiaries
COMPANY NAME CITY C. VAT %Bruvision NV Brussels B BE 418.314.676 100CCE Liège NV (2) Hasselt B BE 459.469.796 100CCI&H NV Herk-de-stad B BE 455.740.543 100Decatron NV Brussels B BE 424.519.114 100Eden Panorama SA (Max Linder) (4) Paris F FR 02340483221 100European Mega Cinema SA (EMC) Luxembourg L LU 19942205972 100France Mega Cinema SA (FMC) Lomme F FR 20399716083 100France Mega Cinema Immo SA (FMCI) Metz F FR 51398364331 100Imagibraine SA Braine-L’alleud B BE 462.688.911 100Immo den Ouden bampt NV Herk-de-stad B BE 455.729.358 100Immo Roc NV Herk-de-stad B BE 459.466.234 100Kine Invest SA Pozuelo de Alarcon S ESA 824.896.59 100Kinepoleast BV Middelburg N NL 807225605B01 100Kinepolis España SA Pozuelo de Alarcon S ESA 814.870.27 100Kinepolis Film Distribution (KFD) NV Brussels B BE 445.372.530 100Kinepolis Film Production (KFP) NV Brussels B BE 459.997.061 100Kinepolis Granada SA Pozuelo de Alarcon S ESA 828.149.55 100Kinepolis Holding BV Middelburg N NL 807760420B01 100Kinepolis Jerez SA Pozuelo de Alarcon S ESA 828.149.22 100Kinepolis Le Château du cinéma SA* Lomme F FR 60387674484 100Kinepolis Madrid SA Pozuelo de Alarcon S ESA 828.149.06 100Kinepolis Mega NV (1) Brussels B BE 430.277.746 100Kinepolis Mulhouse SA Mulhouse F FR 18404141384 100Kinepolis Multi NV (3) Courtrai B BE 434.861.589 100Kinepolis Nacka AB (4) Göteborg SU 556.589.2295 100Kinepolis Paterna SA Pozuelo de Alarcon S ESA 828.149.14 100Kinepolis Poznan SPZOO Poznan P NIP 5252129575 100Kinepolis St-Julien-lès-Metz SA Metz F FR 43398364331 100Kinepolis Schweiz AG Schaffhausen SW CH 2903013216-5 100Kinepolis SPZOO Poznan P NIP 5252184717 100Kinepolis Thionville SA Thionville F FR 09419251459 100Kinépolis Immo Thionville SA Thionville F FR 10419162672 100Kinépolis Nancy SAS Lomme F FR 00428192819 100Kinepolis Prospection SAS Lomme F FR 45428192058 100Majestiek International SA Luxembourg L 100Forum Kinepolis SA Nîmes F FR 86421038548 79,92Megatix SA Brussels B BE 462.123.341 100
(1) Kinepolis Mega nv comprises the activities of Kinepolis Brussels
and Metropolis Antwerp(2) CCE Liège sa: Opéra Liège, Palace Liège and Group Claeys R.
(3) Kinepolis Multi comprises the activities in Leuven, Hoog-Kortrijk, Ghent and Hasselt
(4) Activity sold, shell companies
* SAS at 07/03/2005
57
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
List of proportionally consolidated companies
None
List of companies accounted for using the equity method
None
List of non-consolidated subsidiaries or associated companies
Company name City Country R %
Kinepolis Czeska Prague CZ 1 100
Cinemaxx AG Hamburg D 2 12.6
R: Reasons for non-consolidation:
1: minimal impact on consolidation, inclusion would involve disproportionate costs.
2: shares held solely with a view to subsequent sale.
List of companies that are neither subsidiaries or associated companies
Company name City Country TVA R %
Eurocasino nv Brussels B BE
467.730.2381 19
Kortrijk expo cvba Kortrijk B BE
405.979.0481
5. ACCOUNTING PRINCIPLES AND VALUATION RULES
A) GENERAL
The accounting principles and valuation rules used in preparing the consolidated accounts comply with Belgian
accountancy legislation and the provisions of the Royal Decree of 30 January 2001.
The consolidated annual accounts are prepared as at 31 December, which is the balance sheet date of the parent
company Kinepolis Group NV and all consolidated companies.
The consolidated financial statements are prepared after the appropriation of profits by Kinepolis Group NV.
The financial statements of the other consolidated companies are included before appropriation of profits.
The valuation rules used for the consolidation are those of the parent company Kinepolis Group NV,
58
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
supplemented by certain rules specific to the consolidation. Where there are significant differences, recalculations
are always carried out for companies included by the full and proportional consolidation methods. Until now this has
only given rise to adjustments in connection with the depreciation of tangible fixed assets. The other valuation rules
are virtually the same for the entire Kinepolis Group and the remaining departures have no material influence on the
consolidated position.
After merging the balance sheets and income statements, as recalculated using the group valuation rules.
intercompany balances and transactions and the associated results are eliminated. As in 2003, the turnover of
Decatron nv was offset against the fixed assets produced and the direct costs within Decatron. This concerns invoices
issued for specific Kinepolis projects undertaken by Decatron.
B. VALUATION RULES
Formation expenses and intangible fixed assets
Formation expenses and the costs of capital increases are valued at acquisition value and amortized at 20% per year.
Intangible fixed assets are carried in the balance sheet at cost. Annual amortization is applied by the straight-line
method pro rata temporis from the month of acquisition at 20% a year.
Consolidation differences (goodwill)
The consolidation differences, or goodwill, represent the divergence between the acquisition cost and the
corresponding portion of equity.
In so far as these differences originate in the over- or undervaluation of specific asset or liability items, these
differences are posted to these items. The remaining difference is included in the consolidated accounts under
“consolidation differences”, as an asset or liability, depending on whether the acquisition value is greater or less than
the share in equity (recalculated if necessary).
When drawing up Kinepolis Group NV’s first consolidated financial statements as at 31 December 1996, the
opportunity was taken to calculate the initial goodwill at the starting date of the financial year to which the first
consolidated financial statements relate, in this case 1 January 1996 (art. 50 of the Royal Decree of 6 March 1990)
Goodwill is in principle amortized on a straight-line basis over a period of 10 years, but the period actually adopted
depends on the Board of Directors’ assessment of the anticipated economic useful life of the item(s) in question.
Additional or extraordinary amortization is applied to this goodwill when, as a result of changes in economic
circumstances, carrying it at this value in the consolidated balance sheet is no longer justified. Negative consolidation
differences are carried unchanged until if and when the participating interest concerned is sold.
59
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Tangible fixed assets
Tangible fixed assets are valued at acquisition value including acquisition costs or at contributed value less cumulative
depreciation plus the respective capitalized interest, where this relates to the period before they became operational.
Straight-line depreciation is applied for consolidation purposes on the basis of the anticipated economic useful life of
the assets concerned, without taking account of any residual value of these assets.
Car parks 33%
Buildings 5%
Furnishings 6.67 to 20%
Computers 33%
Plant and machinery 10 to 20%
Furniture and vehicles 10 to 33%
Investments in completely new complexes are depreciated pro rata temporis from the month in which they become
ready for use. Other investments are depreciated pro rata temporis from the month of acquisition.
Expenditure on extensions, major renovation work and improvements is capitalized. Expenditure on repairs,
maintenance and replacements that do not materially extend the economic life of the assets is recorded as costs.
Financial fixed assets
The book value of participating interests in companies to which the equity method is applied is adjusted to the
proportional share of the equity of these companies, determined according to the consolidation rules.
The participating interests mentioned under “other enterprises” are valued at acquisition value, less any write-downs
applied in the event of a permanent reduction in value.
Stocks
Stocks are valued at the lower of acquisition or market value (realizable value). The acquisition value is determined
using the FIFO method.
Contracts in progress are valued at production cost by the completed contract method.
Receivables and debts
Receivables and debts are valued on a nominal value basis. Reductions in value are recorded on receivables that are
wholy or partly are uncertain or doubtful.
60
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Short-term investments and cash at bank and in hand
Fixed-interest securities, shares and units are valued at purchase cost, including additional charges, or at market value,
if it is lower.
Deferred charges and accrued income
These items are recorded and valued at purchase cost and included in the balance sheet for the component which is
carried forward to the next year.
Consolidated reserves
Group reserves include the reserves and transfered results of the consolidating company, plus the Group’s share in the
results of the other fully and proportionally consolidated companies and companies to which the equity method has
been applied, after deducting any distributions.
Translation differences
For financial statements of subsidiaries that are expressed in a currency other than EUR, all items of the balance sheet
are converted at the closing rate for the year and those on the income statement at the average exchange rate for the
year. Equity items are retained at their historic value in EUR. The resulting difference with the closing exchange rate
is transferred to translation differences. The difference between the results calculated at the closing rate and at the
average rate is also transferred to this account.
Provisions for liabilities and charges
On the basis of a cautious estimate, the Board of Directors decides which provisions should be made to cover the cost
of major repairs and extensive maintenance and any other liabilities and charges that are probable or certain on the
balance sheet date, but whose extent is not yet precisely known.
Deferred taxes and latent tax liabilities
Deferred taxes are calculated on the temporary differences between the fiscal result and the result calculated
according to Group rules, at the applicable rates for the companies concerned.
No latent tax assets are included in Kinepolis Group’s consolidated accounts. Existing latent tax liabilities may,
however, be reduced by calculated latent tax assets, but only up to the amount of these latent tax liabilities.
Conversion of foreign currency
Receivables and debts in foreign currency are converted at the year end closing rate. The resulting translation
differences are charged to the income statement where the calculation per currency gives rise to a negative difference
61
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
and are included under accrued charges and deferred income if the calculation for that currency gives rise to a positive
difference.
C. CHANGE IN THE VALUATION RULES
The valuation rules remained unchanged in 2004.
6. FORMATION EXPENSES
FORMATION EXPENSES (IN € ‘000)
Net book value at the end of the preceding period 552.27
Movements for the period
Amortization -250.38
Translation differences 8.91
Other changes -50.40
Net book value at the end of the period 260.40
Costs of incorporation, capital increases, loans issues and other formation expenses 260.40
VII. Statement of formation expenses
Formation expenses fell mainly as a result of the amortization recorded during the financial year
62
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
7. INTANGIBLE FIXED ASSETS
INTANGIBLE FIXED ASSETS (IN € ‘000) CONCESSIONS. LICENSES. ETC.
Acquisition cost
At the end of the preceding period 7,265.79
Movements during the period
Acquisitions, including fixed assets - own construction 974.21
Sales and disposals -42.42
Transfers from one heading to another -97.54
Translation differences 24.45
Other movements
At the end of the period 8,124.50
Depreciation and amounts written off
At the end of the preceding period 5,115.10
Movements during the period
Recorded 569.61
Written off after sales and disposals -7.70
Transfers from one heading to another -125.01
Translation differences 10.63
Other movements
At the end of the period 5,562.63
Net book value at the end of the period 2,561.86
VIII. Statement of intangible fixed assets
Further investments were made in 2004 in renewing the ERP system and in Research and Development for the new
ticketings system.
Intangible fixed assets had a net book value at the end of 2004 of € 2.56m. consisting mainly of software licences and
the business value (amortizable) of the Nîmes complex.
63
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
8. POSITIVE CONSOLIDATION DIFFERENCES
POSITIVE CONSOLIDATION DIFFERENCES (IN € ‘000)
Net book value at the end of the preceding period 19,680.01
New differences during the period
Cancellation
Amortization -3,343.00
Net book value at the end of the period 16,337.01
XII. Statement of consolidation differences
This heading contains the differences expressed at the time of the first consolidation as at 1 January 1996. and those
arising from the acquisition of participating interests in later periods.
The valuation rules require these consolidation differences to be amortized over 10 years. Amortization during 2004
amounted to € 3.3m, giving a net book value of € 16.3m.
9. TANGIBLE FIXED ASSETS
Tangible fixed assets declined in 2004 from € 240.4m to € 230.5m.
Investments in 2004 amounted to € 18.7m. The largest investments relate to the new complexes at Granada (Spain)
and Nancy (France), along with replacement investments.
Sold and decommissioned assets had a net book value of € 9.4m. The main sales were of land in Stockholm (Sweden),
Granada (Spain) and Nîmes (France).
Depreciation during 2004 amounted to € 22.5m (2003: € 23.2m, 2002: € 27.9m).
The change in the parities of the Polish zloty and Swiss franc (see “translation differences” below) had a € 3.9m
positive impact on the book value of the tangible fixed assets, compared with a negative impact of € 5.6m in 2003.
64
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
TANGIBLE FIXED ASSETS (IN € ‘000)
LAND AND BUIL-
DINGS
PLANT. MACHI-NERY & EQUIP-MENT
FURNI-TURE AND
VEHICLES
LEASING AND
SIMILAR RIGHTS
OTHER TFA:
ASSETS UNDER
CON- STRUC-
TION
Acquisition value
At the end of the preceding period 291,897.33 91,867.26 13,539.51 23,096.80 2,184.60 9,339.40
Movements during the period
Acquisitions, including fixed assets - own construction
9,102.56 3,365.15 459.65 2,381.27 268.04 3,168.35
Transfers and withdrawals from service
-8,448.59 -449.95 -60.37 -1,293.78 -884.94
Transfers from one heading to another
18,442.66 -14,810.90 -5,842.27 -6,718.51
Translation differences 2,299.66 602.52 284.61 1,521.19 66.62
Other movements
At the end of the period 313,293.62 80,574.08 8,381.12 26,999.25 1,158.87 4,970.91
Depreciation and amounts written down
At the end of the preceding period 107,257.12 64,255.66 10,642.74 7,871.51 1,507.21
Movements during the period
Recorded 13,994.60 6,021.54 730.78 1,631.39 156.17
Transfers and withdrawals from service
-90.71 -398.61 -25.24 -1,252.92
Transfers from one heading to another
8,460.21 -11,373.86 -5,358.34
Translation differences 240.56 227.44 137.56 250.09
Other movements
At the end of the period 129,861.78 58,732.16 6,127.51 9,752.98 410.46
Net book value at the end of the period
183,431.85 21,841.92 2,253.61 17,246.27 748.41 4,970.91
Land and buildings 17,246.27
IX. Statement of tangible fixed assets
65
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
10. FINANCIAL FIXED ASSETS
FINANCIAL FIXED ASSETS (IN € ‘000) OTHER ENTERPRISES
Participating interests
At the end of the preceding period 90.15
Movements during the period
Acquisitions
Sales and disposals -11.36
Transfers from one heading to another
Translation differences -0.25
Other movements
At the end of the period 78.55
Amounts receivable and guarantees
At the end of the preceding period 484.53
Movements during the period
Additions
Reimbursements -179.19
Translation differences
Other movements
At the end of the period 305.34
X. Statement of financial fixed assets
There were almost no changes in financial fixed assets during 2004.
11. AMOUNTS RECEIVABLE AFTER ONE YEAR
Amounts receivable after one year consist mainly of the discounted long-term portion of investment grants allotted to
the Lomme, Metz and Nîmes projects by the French government via the CNC (Centre National de la Cinématographie).
Investment grants are included, after deducting deferred taxes, under the equity heading “investment grants” and
are released into income pari passu with the depreciation of the various underlying investments. Disbursement of the
investment grant by the CNC is directly linked to the taxes paid on cinema tickets sold.
66
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
AMOUNTS RECEIVABLE AFTER ONE YEAR (IN € ‘000) 31/12/2004
Lomme 13,240.39
Metz 5,690.67
Nîmes 283.35
Max Linder 37.84
Discounting of receivables -553.98
At the end of the period 18,698.26
12. STOCKS AND CONTRACTS IN PROGRESS
STOCKS AND CONTRACTS IN PROGRESS (IN € ‘000) 31/12/2004 31/12/2003
Raw materials and consumables 89.25 59.39
Goods for resale 1,652.57 1,735.10
Technical support (Decatron) 833.42 897.68
Cinema operations 819.15 837.42
Contracts in progress 199.21 283.51
At the end of the period 1,941.02 2,078.00
The stock of raw materials and consumables consists of the maintenance stores and smaller repair materials held by
various operating companies.
The stock of goods for resale can be broken down into those held by Decatron, consisting of goods for the repair and/
or maintenance of sound, projection and informatics equipment (for own and third party complexes) and the stock of
snacks and drinks at the various complexes.
The contracts in progress item represents the costs already incurred by Decatron in constructing new complexes,
more specifically at Nancy (France).
13. AMOUNTS RECEIVABLE WITHIN ONE YEAR
TRADE DEBTORS
The following table shows the evolution of trade debtors at balance sheet date by type of activity.
67
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
TRADE DEBTORS (IN € ‘000) 31/12/2004 31/12/2003
Cinema operations 9,525.07 11,123.88
Other activities 602.13 2,500.21
At the end of the period 10,127.21 13,624.09
Trade debtors included under other activities consist mainly of outstanding receivables of KFD (distribution) and
Decatron (technical services). The fall in trade debtors is due almost entirely to the somewhat lower activity level at
year-end.
OTHER AMOUNTS RECEIVABLE
The following table compares other amounts receivable at balance sheet date by type of activity:
OTHER AMOUNTS RECEIVABLE (IN € ‘000) 31/12/2004 31/12/2003
Cinema operations 8,577.12 12,928.37
Other activities 496.76 605.09
At the end of the period 9,073.88 13,533.46
This heading consists primarily of:
• recoverable VAT balances
• recoverable taxes
• investment grants receivable within the year under the French CNC scheme.
14. SHORT-TERM INVESTMENTS AND CASH AT BANK AND IN HAND
OWN SHARES
The value of the own shares held by Kinepolis Group NV can be derived from the table below:
OWN SHARES 31/12/2004 31/12/2003
Book value at the end of the previous period in € 943,282 1,168,033
Number of shares 99,698 134,289
Average price per share in € 9.37 8.70
Euronext year-end closing price in € 24.44 15.45
Latent capital gain in €m 1.50 0.91
Own shares represented a latent capital gain of € 1.5m at the end of 2004.
68
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
SHORT-TERM INVESTMENTS AND CASH AT BANK AND IN HAND
A cash pooling system ensures that temporary surpluses in one company are set off against cash deficits in another
company under a so-called ‘zero balancing system’.
The shares in CinemaxX AG (3 million shares) were already fully written off in 2001. Kinepolis Group is still
endeavouring to sell these shares, but the market conditions are far from favourable. The capital restructuring
undertaken at CinemaxX in mid-January 2005 has had the effect of reducing the Kinepolis group’s participating
interest to 12.6%.
15. DEFERRED CHARGES AND ACCRUED INCOME
This item consists primarily of expenditure already incurred for future financial periods.
16. EQUITY
The following table shows the composition and evolution of the consolidated equity of Kinepolis Group.
EQUITY (IN € ‘000) 31/12/2003 + - 31/12/2004
Capital 47,442.92 47,442.92
Consolidated reserves 2,322.38 6,531.04 1,981.01 6,872.41
Consolidation differences 2,906.80 2,906.80
Translation differences -1,815.64 1,354.26 -461.38
Investment grants 10,538.84 1,271.08 9,267.76
Equity 61,395.31 7,885.30 3,252.09 66,028.51
XI. ‘Statement of consolidated reserves’ is incorporated into the above table.
Equity rose by 7.5% in 2004 to € 66m.
The changes in the consolidated reserves reflect:
• the profit for the year - share of the group: € 6.53m (2003: € 2.72m).
• the proposal to pay a dividend of € 0.29 per share, which will reduce available reserves by € 1.98m.
69
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Negative consolidation differences remain unchanged.
NEGATIVE CONSOLIDATION DIFFERENCES (IN € ‘000) 31/12/2004
Net book value at the end of the preceding period – fully consolidated companies 2,906.79
Changes 0.00
Net book value at the end of the period – fully consolidated companies 2,906.79
Net book value at the end of the preceding period- equity-consolidated companies 0.00
Changes 0.00
Net book value at the end of the period – equity-consolidated companies 0.00
XII. Statement of consolidation differences
Translation differences have changed by € 1.35m with the parity changes of the Polish zloty and Swiss franc
(2003: € -1.72m). A major role was played here by the strengthening of the Polish zloty against the euro.
Investment grants comprise the part not yet release to income, after deduction of relevant deferred taxation, of
investment grants received from the Belgian government for the cinema complex in Hasselt and from the French
government (CNC) for the Lommes, Metz and Nîmes projects. These grants are taken into income pari passu with the
depreciation of the various elements of the underlying investments via the financial income heading.
17 MINORITY INTERESTS
Minority interests record the share held by third parties in the equity of the companies in question,. and relate entirely
to the Nîmes (France) complex in which Kinepolis group holds 79.92% of the shares.
The movement in 2004 relates to the minority interest in the result for the financial year, less the minority interest in
the portion of the investment grants released to income.
(IN € ‘000) 31/12/2004 31/12/2003
Nîmes 562.71 528.38
Minority interests 562.71 528.38
70
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
18. PROVISIONS FOR LIABILITIES AND CHARGES, DEFERRED TAXES AND LATENT TAX LIABILITIES
PROVISIONS FOR LIABILITIES AND CHARGES
This heading consists of the provisions made by individual companies for pensions, major repair and maintenance
work and other liabilities and charges. The provisions for liabilities and charges amounted to € 3.10m (2003: € 3.94m)
at the end of the year.
DEFERRED TAXES AND LATENT TAX LIABILITIES
Deferred taxes relate to the future tax effect of the release of investment grants into income, as mentioned above.
Latent tax liabilities relate to theoretical taxation on the difference between depreciation charges as recorded in the
present consolidation and fiscally accepted depreciation rates. In 2003 the valuation rules were altered so that these
latent taxes are now reduced by the tax benefits deriving from any carryforwardable losses. Latent tax assets are not
shown.
(IN € ‘000) 31/12/2004
Deferred taxes 4,916.45
Latent tax liabilities 686.95
Deferred taxes and latent tax liabilities 5,603.40
19. AMOUNTS PAYABLE
Amounts payable at the end of 2004 and their development are shown below
(IN € ‘000) 31/12/2004 31/12/2003
Long-term financial debts 151,555.23 139,218.91
Other long-term amounts payable 160.62 28.52
Current portion of long-term financial debts 13,830.41 25,444.49
Short-term financial debts 17,029.38 8,047.26
Trade debts 31,106.47 36,842.36
Taxes 3,638.84 11,770.87
Remuneration and social security 3,691.21 5,834.32
Other amounts payable 3,263.95 12,019.55
Accrued charges and deferred income 17,218.44 17,987.80
Total 241,494.55 257,194.09
71
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
The following table shows the development of the Net Financial Debt:
(IN € ‘000) 31/12/2004 31/12/2003
Long-term financial debts 151,555.23 139,218.91
Current portion of long-term financial debts 13,830.41 25,444.49
Short-term financial debts 17,029.38 8,047.26
LT portion of subordinated loan from GIMV (10,436.81) (7,436.81)
Short-term investments (943.28) (1,968.03)
Cash at bank and in hand (23,962.79) (12,282.38)
Net Financial Debt 147,072.14 151,023.43
The above table shows that the Kinepolis group once again sharply reduced its Net Financial Debt position (NFD) in
2004. In the process it has more than achieved its self-imposed goal of a NFD/EBITDA ratio of under 3.5 by the end of
2004.
In November 2004 Kinepolis Group signed a Syndicated Loan Agreement with an international banking consortium.
This € 175m credit has been used to refinance outstanding debts and finance new investments. This operation has
reduced annual financial debt repayments from around € 25m to around € 14m, meaning that the group will in future
be able to finance a greater portion of investments out of its own cash flow.
Financial debt payable after one year breaks down into:
FINANCIAL DEBTS (IN € ‘000)
PAYABLE WITHIN 1 YEAR
PAYABLE AFTER 1 YEAR AND WITHIN 5 YEARS
PAYABLE AFTER MORE THAN 5 YEARS
Subordinated loans 5,936.81
Unsubordinated loans
Leasing and similar debts 6,326.05 17,944.84
Credit institutions 7,504.36 82,224.83 45,448.75
Other loans 160.62
Total at end 2004 13,830.41 106,267.10 45,448.75
Total at end 2003 25,444.49 104,449.08 34,769.84
XIII. Statement of debts A; Breakdown by residual term
72
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Trade debts and remuneration and social security payables reduced from 2003 levels, owing largely to the payments
of trade debts relating to the building of complexes (Granada and Nancy).
Tax liabilities fell. This should, however, to be viewed in conjunction with the advance tax payments included under
other amounts receivable.
Other amounts payable fell from € 12.0m at the end of 2003 to € 3.3m at the end of 2004. The main components (and
changes since 2003) here are:
• the booking out of a € 3.8m advance received on the sale of land as part of the project development at Granada
(Spain).
• the payment of the € 5.5m debt to Déficom following the sale of the remaining shares in the Polish complex at
Poznan.
• the change in the royalties payable by Kinepolis Film Distribution.
• the change in the dividends payable.
Amounts payable guaranteed by real guarantees given or irrevocably promised on the assets of companies included
in the consolidation
(IN € ‘000) 31/12/2004
Financial debts 171,978.22
1 Subordinated loans 5,936.81
2 Unsubordinated bond loans
3 Leasing and similar obligations 20,699.21
4 Credit institutions 145,342.20
5 Other loans
Trade debts
Other amounts payable
Total 171,978.22
XIII. Statement of debts B; guarantees
Accrued charges and deferred income reduced by € 0.8m to € 17.2m. This heading comprises mainly
• income still to be recognized from unredeemed vouchers. Income from sales of these vouchers is recognized
only when the vouchers are presented at the box office.
• advances received for screen advertising
• accrued interest charges
• other accrued charges.
73
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
20. OPERATING INCOME
TURNOVER
In 2004, Kinepolis recorded turnover of € 194.8m, up 1.8% on 2002. This turnover breaks down as follows:
TURNOVER (IN € ‘000) 31/12/2004 31/12/2003
Cinema operations 191,631.76 186,868.75
Mature complexes 189,764.28 168,238.70
Non-mature (new) complexes 1,867.49 18,630.05
Other activities 3,190.92 4,576.69
Total 194,822.68 191,445.44
New in 2004: Granada
New in 2003: Valencia, Poznan
Turnover from other activities comes primarily from KFD (film distribution) and Decatron (technical services). KFD’s
turnover fell significantly from the exceptionally high 2003 level due primarily to the success of “Alzheimer”. Decatron’s
turnover also was also lower than in 2003 (when it was still working on the third party Turnhout project).
The geographical breakdown of the turnover from cinema operations is as follows:
TURNOVER (IN € ‘000) 31/12/2004 % 31/12/2003 %
Belgium 99,454.39 51.90% 98,529.59 52.73%
France 45,470.99 23.73% 42,149.15 22.56%
Spain 36,128.78 18.85% 33,425.68 17.89%
Italy 3,255.44 1.74%
Other 10,577.60 5.52% 9,508.89 5.09%
Total 194,822.68 186,868.75
Total group turnover in Belgium is as follows:
TURNOVER (IN € ‘000) 31/12/2004 31/12/2003
Belgium 102,645.31 103,106.28
XIV: A.2. Total group turnover in Belgium
74
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
INCREASE/DECREASE IN STOCKS OF FINISHED GOODS, WORKS AND CONTRACTS IN PROGRESS
This heading consists primarily of changes in contracts in progress at Decatron.
Fixed assets – own production
Reported here are the investment goods delivered by Decatron to group companies. In 2004 this item consisted
primarily of projection and sound equipment delivered by Decatron to the new complex in Granada.
Other operating income
Other operating income consists mainly of income from the renting of concessions, car parks and advertising space.
21. OPERATING CHARGES AND OPERATING PROFIT/LOSS
OPERATING CHARGES (IN € ‘000) 31/12/2004 31/12/2003
Raw materials, consumables and goods for resale 74,722.38 70,003.22
Services and other goods 45,500.66 43,749.87
Payroll, social security charges and pensions 33,024.93 32,108.74
Other operating charges 7,275.34 9,481.46
Sub-total A 160,523.31 155,343.29
Depreciation, amounts written off and provisions 23,365.91 25,450.22
Amortization of consolidation differences 3,343.00 2,838.13
Sub-total B 26,708.92 28,288.34
Total operating charges (A+B) 187,232.22 183,631.63
Operating income C 203,386.40 198,072.00
Operating profit/loss, EBIT (C – A – B) 16,154.17 14,440.37
EBIT as % of operating income (EBIT margin) 7.94% 7.29%
EBITDA (C – A) 42,863.09 42,728.71
EBITDA as % of operating income (EBITDA margin) 21.07% 21.57%
A 1.9% rise in operating charges combined with a 2.7% rise in operating charges together improved the EBIT margin to
7.94%.
Operating charges excluding depreciation, amounts written off and provisions rose by 3.3%. As a result EBITDA
remained almost the same as in 2003 (2004: 42 863; 2003: 42 728).
Raw materials, consumables, services and other goods and other operating charges
75
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
OPERATING OF CINEMA COMPLEXES
The main direct income and charges at any cinema complex are:
Income Direct charges
Box office (ticket sales) City taxes, royalties, film rental costs
Food & Beverage sales Food & Beverage purchases
Media sales (screen advertising, events, partnerships, barter deals...)
Directly attributable media sales costs (catering, ….)
Concession rentals Commissions, etc.
Along with these specific costs, operating companies have to bear other costs, primarily:
• Rental costs: these are limited as most of the land and buildings are company-owned. Rent is paid to outside
parties in Brussels, Metropolis (Antwerp), Lomme and Valencia.
• Levies and taxes on all sorts of movable and immovable assets
• Maintenance and decoration
• Electricity, gas and water
OTHER ACTIVITIES
Other activities generate the following direct income and charges
Income Direct charges
Film distribution (KFD) P&A (print & advertising) costs, royalties
Film production (KFP) Direct firm production charges
Technical services (Decatron) Purchases of equipment, project costs
Apart from these direct charges, the indirect charges are largely the same as for cinema activities.
KFP did not undertake any productions in 2004.
76
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Depreciation, amounts written off and provisions
(IN € ‘000) 31/12/2004 31/12/2003
Depreciation and amounts written off formation expenses and tangible and intangible fixed assets
23,354.47 24,754.01
Amounts written off stocks, orders in progress and trade debtors 96.73 838.10
Provisions for liabilities and charges (85.28) (141.89)
Total 23,365.91 25,450.22
Depreciation, amounts written off and provisions excluding goodwill amortization fell by 8.2% compared to 2003.
This lower figure reflects mainly lower depreciation charges and lower provisions for doubtful receivables.
Amortization of Goodwill
In accordance with the group’s valuation rules, all Goddwill was amortized over 10 years. The increase since 2003 is
due primarily to additional amortization of the goodwill arising last year on the Poznan (Poland) and Nîmes (France)
complexes.
22. FINANCIAL RESULT
(IN € ‘000) 31/12/2004 31/12/2003
Financial income 2,507.40 2,634.62
A. Income from financial fixed assets 1.04 430.79
B. Income from current assets 30.15 74.17
C. Other financial income 2,476.21 2,129.67
Financial charges (9,240.95) (13,451.26)
A. Interest and other debt charges 7,008.04 10,094.21
B. Amortization of positive consolidation differences
C. Amounts written off current assets 175.00 (195.33)
D. Other financial charges 2,057.92 3,552.37
Financial result (6,733.55) (10,816.64)
77
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
The main components of the financial result are debt charges (interest paid on outstanding borrowings), translation
differences and the net cost of hedging open positions in foreign currencies, investment grants received (net of latent
tax liabilities), the cost of discounting these investment grants to current value, revaluations of own shares and bank
charges
Interest and other debt charges again fell sharply in 2004. As well as reducing interest charges, the debt reduction
of recent years is enabling the group to borrow at better conditions In November a syndicated loan agreement was
concluded with an international banking consortium (see also 19 “amounts payable”). Lower market interest rates also
had a positive effect.
Results from the revaluation of open items in foreign currencies (mainly EUR positions in Poland and Switzerland
and the related hedging results fell from € -1.6m in 2003 to € -0.8m in 2004. Most of this fall was achieved in the
first quarter of 2003. Until then only around 70% of total open items in foreign currencies were hedged. Following a
sharp fall in the Polish zloty and the Swiss franc, which produced a significant exchange loss, it was decided in March
2003 to almost fully hedge the exchange risk. With the exchange risk almost 100% hedged, the hedging costs relate
primarily to the interest rate differential between the EUR and local currency (PLN or CHF) interest rates.
In 2003 it was decided to discount the outstanding amount of capital subsidies still to be received from the French CNC
to their net present value. T he effective payment of these subsidies is linked to ticket sales. This discounting produced
a charge of € 0.5m. In 2004 the discounting had a minimal impact on the income statement.
23. EXTRAORDINARY RESULTS
The extraordinary results consist principally of the results on the sale of plots of land in Stockholm (Sweden), Granada
(Spain) and Nîmes (France).
24. WITHDRAWALS FROM AND TRANSFERS TO DEFERRED TAXES AND LATENT TAXATION
This item consists mainly of changes in deferred taxes produced by the release of capital subsidies pari passu with the
depreciation of the related investments (see also notes 16 and 18).
This heading also contains changes in latent tax liabilities, calculated on differences between the accounting and fiscal
depreciation of tangible fixed assets held by various companies. In 2003 it was decided to reduce existing latent tax
liabilities by calculated latent tax assets deriving from fiscally carryforwardable losses, but only up to the amount of
these latent tax liabilities. This change had a positive impact of € 0.4m in 2003.
78
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
25. TAXES
Taxes rose from € 4.5m in 2003 to € 5.0m. With the sharp rise in pre-tax profit, the relative tax burden fell from 77%
in 2003 to 45% in 2004. The main reason for this improvement is of course the change in geographic distribution of
results. Further optimization was also helped by the new tax sheltering programme in Belgium.
26. AVERAGE NUMBER OF PERSONS EMPLOYED AND PERSONNEL CHARGES
FULLY CONSOLIDATED COMPANIES 31/12/2004 31/12/2003
Average number of persons employed 1,478 1,312
Blue-collar workers 889 858
White-collar employees 564 426
Management staff 25 28
Other
Personnel charges (in € ‘000) 33,024.93 32,108.74
Average number of persons employed in Belgium 729 719
PROPORTIONALLY CONSOLIDATED COMPANIES 31/12/2004 31/12/2003
Average number of persons employed
Blue-collar workers
White-collar employees
Management staff
Other
Personnel charges
Average number of persons employed in Belgium
XIV: Average number of persons employed and personnel charges
79
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
27. RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET
OTHER RIGHTS AND COMMITMENTS
• Kinepolis has an obligation to purchase a plot of land at Ostend with a condition precedent.
• Tele München Gruppe has the right to acquire the shares of Kinepolis, Senator and Flebbe, excluding the market
sales following an SPO from 01.01.2005 onwards. Tele München Gruppe obtained the right to buy at the closing
price of the day of announcement, and this for 3 days.
• The minority shareholder in Forvm Kinepolis has a call-option on up to 25% of the shares until 4 July 2008 at a
price related to EBITDA.
• The minority shareholder in Forvm Kinepolis has a put option on its shares, as soon as its shareholding falls
under 20%, at a price related to EBITDA.
• Kinepolis has a number of outstanding IRS, FRA and option contracts in a total amount of € 62,871,000 (IRS)
€�39,502,000 (FRA) and € 20,000,000 (options), on which fixed interest is paid and floating rate interest received.
• Kinepolis has hedging contracts outstanding in respect of PLN to cover € -denominated debts contracted in
Poland. Under these contracts PLN are sold against EUR in a total amount of € 16,333,000.
• Kinepolis has hedging contracts outstanding in respect of CHF to cover €-denominated debts contracted in
Switzerland. Under these contracts CHF are sold against € in a total amount of € 9,122,480.
28. FINANCIAL RELATIONSHIPS WITH DIRECTORS OF THE CONSOLIDATING COMPANY
(PARENT COMPANY)
(IN € ‘000) 31/12/2004
A. Total remuneration granted to directors in respect of their activities in the consolidating company, its subsidiaries and associated companies, including retirement pensions to former directors, and charged during the financial period.
1,357.62
B. Total amount of advances and loans granted by the consolidating company, by a subsidiary or by an associated enterprise
0
XVII. Financial relationships with directors
80
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Report of the Statutory Auditor on the consolidated accounts for the year ended 31 December 2004 submitted to the General Shareholders’ Meeting of Naamloze Vennootschap Kinepolis Group
In accordance with legal and regulatory requirements, we are reporting to you on the completion of the mandate
which you have entrusted to us.
We have audited the consolidated financial statements for the year ended 31 December 2004 with a balance sheet total
of EUR 316.786.(000) and of which the Income Statement closes with a share of the group in the profit for the year of
EUR 6.531.(000).
These consolidated financial statements have been prepared under the responsibility of the Board of Directors of the
Company. In addition we have reviewed the directors’ report.
Unqualified audit opinion on the consolidated financial statements
Our audit was performed in accordance with the standards of the Institut des Réviseurs d’Entreprises-Instituut der
Bedrijfsrevisoren. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement, taking into account the Belgian legal
and regulatory requirements relating to the consolidated financial statements.
In accordance with these standards we have considered the administrative and accounting organisation of the
group as well as the system of internal control. The group’s management have provided us with all explanations
and information which we required for our audit. We have examined on a test basis, the evidence supporting the
amounts included in the consolidated financial statements. We have assessed the accounting policies used, the basis
for consolidation and the significant accounting estimates made by the Company and the overall presentation of the
consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements of Kinepolis Group for the year ended 31 December 2004 present
fairly the financial position of the group and the results of its operations, in conformity with the prevailing legal and
regulatory requirements, and the disclosures made in the notes to the accounts are adequate.
REPORT OF THE STATUTORY AUDITOR
81
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Additional assertions
As required by generally accepted auditing standards the following additional assertion is provided. This assertion
does not alter our audit opinion on the consolidated financial statements.
• The consolidated directors’ report contains the information required by law and is in accordance with the
consolidated financial statements.
Antwerp, 21 April 2005
Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren - Réviseurs d’Entreprises
Statutory Auditor
represented by
Ludo Ruysen
Bedrijfsrevisor
82
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
1. Comments on the ordinary annual accounts of Kinepolis Group NV
The shareholders’ equity of Kinepolis Group NV amounted at 31 December 2004 to € 103.27m compared with
€ 104.00 million at the end of 2003. This increase is primarily due to the dividend payment for the year.
The balance sheet amounts to € 252,154,308 compared with € 178,108, 622 at the end of 2003. This increase is due to
the centralisation of the credits after the closing of a club deal.
1. Ordinary balance sheet: discussion of the most important asset items
1.1. Formation expenses
The change in formation expenses is explained by the amortization of costs relating to the market surveys.
1.2. Fixed assets
During the financial year, research regarding new concepts was done. The company invested in ASW software to
support the financial activities.
1.3. Financial fixed assets
The main changes during the financial year relate to the obligation to purchase the remaining shareholding in
Kinepoleast from Kinepolis España. This results in an increase of € 3.95m.
1.4. Amounts receivable within one year
The increase in trade debtors is due mainly to the closing of a club deal, which takes over all bank debts and
centralises the credits within the Kinepolis Group NV.
1.5. Amounts receivable after one year
The decrease is due mainly to the closing of a club deal, inter company amounts receivable within one year were
transformed into inter company amounts receivable after one year.
1.6. Short-term investments and cash at bank and in hand
Regarding the above mentioned club deal, cash is reserved on a separate account.
DISCUSSION OF THE ORDINARY ACCOUNTS
83
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
2. Ordinary balance sheet: discussion of the most important liabilities items
2.1. Capital, share premium account and profit carried forward
The profit carried forward decreased, due to the fact that the dividend is higher then the result for the year.
2.2. Amounts payable after one year
The decrease in amounts payable after one year is due to the club deal, which centralizes all credits within the
Kinepolis Group NV. The inter company amounts payable within one year were transformed into inter company
amounts payable after one year.
2.3. Amounts payable within one year
The increase in amounts payable after one year is due the club deal, which centralizes all credits within the Kinepolis
Group NV.
3. Discussion of the ordinary income statement for the year ended 31 December 2004.
The result for the financial year decreased by € 48.15m from € 49,40m to € 1.25m.
This year counted almost no extraordinary results, € 12,804m compared with € 33.50m.
The operating result decreased by 3.62m to € 1.28m, owing mainly to a decrease in operating income.
The financial result, decreased from € 12.27m to € 0.28m, owing mainly to the absence of an intra-group dividend.
Debt reduction and lower interest rates, lower the cost of debts, this effect was neutralised by the loss on the disposal
of fixed assets and latent exchange rate losses.
84
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ORDINARY BALANCE SHEET OF KINEPOLIS GROUP
ASSETS (IN € ’000) 2004 2003FIXED ASSETS 74,562.84 70,219.92Formation expenses 70.94 126.12
Intangible fixed assets 844.18 402.25
Tangible fixed assets 162.18 189.55B. Plant, machinery and equipment 137.22 150.89C. Furniture and vehicles 18.16 31.87E. Other tangible fixed assets 6.79 6.79
Financial fixed assets 73,485.53 69,501.99A. Associated enterprises 73,410.60 69,452.41
1. Participating interests 73,410.60 69,452.41B. Other enterprises linked by participating interests 49.58 49.58
1. Participating interests, shares and deposit certificates 49.58 49.58C. Other financial assets 25.35
2. Amounts receivable and cash guarantees 25.35
CURRENT ASSETS 177,591.47 107,888.70Amounts receivable within one year 143,493.70
B. Other amounts receivable 143,493.70Amounts receivable within one year 12,751.72 103,786.85
A. Trade debtors 5,124.22 4,494.73B. Other amounts receivable 7,627.50 99,292.12
Investments 943.28 1,168.03A. Own shares 943.28 1,168.03B. Other investments
Cash at bank and in hand 19,869.88 2,508.33
Deferred charges and accrued income 532.89 425.79
TOTAL ASSETS 252,154.31 178,108.62
85
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
LIABILITIES (IN € ’000) 2004 2003CAPITAL AND RESERVES 103,274.71 104,005.80Capital 47,442.92 47,442.92
A. Issued capital 47,442.92 47,442.92Reserves 7,316.13 7,478.46
A. Legal reserves 3,524.12 3,461.63B. Reserves not available for distribution 943.28 1,168.12
1. In respect of own shares held 943.28 1,168.12D. Reserves available for distribution 2,848.72 2,848.72
Accumulated profits/losses 48,515.66 49,084.41
PROVISIONS FOR LIABILITIES AND CHARGES 365.94 520.38 A. Provisions for liabilities and charges 365.94 520.38
1 Pensions and similar obligations 420.384 Other liabilities and charges 365.94 100.00
CREDITORS 148,513.66 73,582.45
Amounts payable after one year 117,329.98 33,622.31 A. Financial debts 117,329.98 33,622.31
1. Subordinated loans 5,936.81 7,436.814. Credit institutions 100,000.00 26,185.515. Other amounts payable 11,393.17
Amounts payable within one year 26,846.92 35,624.84A. Current portion of amounts payable after one year 4,668.39 6,535.58B. Financial debts 15,237.22 5,020.36
1. Credit institutions 15,237.22 5,020.36C. Trade debts 4,645.53 4,764.36
1. Suppliers 4,645.53 4,764.36E. Taxes, remuneration and social security 315.86 295.71
1. Taxes 109.89 13.402. Remuneration and social security 205.97 282.32
F. Other amounts payable 1,979.91 19,011.83Accrued charges and deferred income 4,336.77 4,335.29
TOTAL LIABILITIES 252,154.31 178,108.62
86
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ORDINARY INCOME STATEMENT
DESCRIPTION (IN € ’000) 2004 2003Operating income 17,271.55 19,657.72
A. Turnover 14,361.82 17,598.44D. Other operating income 2,909.73 2,059.28
Operating charges (15,744.36) (16,037.02)A. Raw materials, consumables and goods for resale 620.82 674.16
1. Purchases 620.82 674.16B. Services and other goods 11,848.84 10,063.16C. Remuneration, social security costs and pensions 2,982.93 3,918.07D. Depreciation and amounts written off formation expenses,
intangible and tangible fixed assets 439.66 900.69E. Amounts written off stocks, contracts in progress and trade debtorsF. Provisions for liabilities and charges (154.44) 468.38G. Other operating charges 6.54 12.56
Operating result 1,527.20 3,620.70Financial income 5,749.49 17,781.58
A. Income from financial fixed assets 12,059.01B. Income from current assets 5,140.59 5,065.66C. Other financial income 608.90 656.91
Financial charges (5,467.38) (5,508.22)A. Financial charges 2,799.32 5,018.18B. Losses on current assets C. Other financial charges 2,668.06 490.03
Profit / (loss) on ordinary activities before tax 1,809.31 15,894.05
DESCRIPTION (IN € ’000) 2004 2003Extraordinary income 229.90 33,553.64
D. Gain on disposal of fixed assets 229.90 3,533.41E. Other extraordinary income 0.22
Extraordinary charges (13.07) (44.76)D. Loss on disposal of fixed assets 11.81 44.76E. Other extraodinary charges 1.27
Result for the period before taxes 1,796.47 49,402.93Income taxes (546.54)
A. Taxes (546.54)Profit / (loss) for the period 1,249.92 49,402.93
87
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
ORDINARY APPROPRIATION OF THE RESULT
DESCRIPTION (IN € ’000) 2004 2003A. PROFIT TO BE APPROPRIATED 50,334.34 52,980.45
Loss to be appropriated1. Profit/(loss) for the period available for appropriation 1,249.92 49,402.932. Profit/(loss) brought forward from previous year 49,084.41 3,577.52
B. TRANSFERS FROM CAPITAL AND RESERVES 224.83 178.351 Allocation to capital and share premium account2. To the reserves 224.83 178.35
C. APPROPRIATIONS TO CAPITAL AND RESERVES (62.50) (3,190.85)2. Allocation to legal reserves 62.50 2,470.153. To other reserves 720.70
D. RESULT TO BE CARRIED FORWARD2. Profit / (loss) to be carried forward (48,515.66) (49,084.41)
F. PROFIT FOR APPROPRIATION (1,981.01) (883.54)1. Allocation to capital 1,981.01 883.54
I. STATEMENT OF FORMATION EXPENSES (in € ’000) Net book value at the end of the preceding period 126.12 556.46Movements during the year:
New expenses during the period 132.75Depreciation (55.18) (563.08)
Net book value at the end of the period: 70.94 126.12of which: - Restructuring costs 70.94 126.12
II. STATEMENT OF INTANGIBLE FIXED ASSETS (in € ’000)
R & D Costs
Concessions, licences etc
A. Acquisition cost At the end of the preceding period: 911.49Movements during the period:
Acquisitions, including fixed assets - own construction 358.88 349.21Transfers and discontinuations (0.57)
At the end of the period 358.88 1260.12C. Depreciation and amounts written off
At the end of the preceding period 509.24Movements during the period:
recorded 17.08 249.08Reinstated after transfers and discontinuations (0.57)At the end of the period 17.08 757.74
D. Net book value at the end of the period (a) - (c) 341.80 502.38
88
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
III. STATEMENT OF TANGIBLE FIXED ASSETS (in € ’000)
Plant, machinery and equipment
Furniture and vehicles
A. Acquisition cost At the end of the preceding period 802.32 379.81Movements during the period
- Acquisitions, including fixed assets - own construction 90.95At the end of the period 893.27 379.81
C. Depreciation and amounts written off At the end of the preceding period 651.43 347.95Movements during the period
- Recorded 104.63 13.70At the end of the period 756.05 361.65
D. Net book value at the end of the period (b) - (c) 137.22 18.16
Other tangible fixed assets
A. Acquisition cost At the end of the preceding period 6.79At the end of the period 6.79
D. Net book value at the end of the period (a) - (c) 6.79
IV. STATEMENT OF FINANCIAL FIXED ASSETS
Affiliated enterprises Companies with participating interest
1. Participations and shares A. Acquisition cost
At the end of the preceding period 69,452.41 49.58Movements during the period
Acquisitions 3,970.00At the end of the period 73,422.41 49.58
C. DepreciationsMovements during the period
Recorded 11.81At the end of the period 11.81
Net book value at the end of the period 73,410.60 49.58
Other entreprises
2. Amounts payableNet book value at the end of the preceding period
Movements during the period
Additions 25.35
Net Book value at the end of the period 25.35
89
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Name and registered office
The company (directly)
Subsidiaries Financialstatement
as at
Currency Capital and reserves
Net result
QTY % % (+) ou (-)
NV DECATRON Kampioenschapslaan 11020 Brussels, BELGIUMBE 424.519.114Ordinary shares 82,467 99.99 0.01 31/12/2003 EUR 164,494
NV KINEPOLIS MEGAEeuwfeestlaan 201020 Brussels, BELGIUMBE 430.277.746Ordinary shares 20,439 99.99 0.01 31/12/2003 EUR 14,287,815 3,037,746
NV KINEPOLIS FILM DISTRIBUTIONEeuwfeestlaan 201020 Brussels, BELGIUMBE 445.372.530Ordinary shares 199 99.50 0.50 31/12/2003 EUR 656,198 601,803
NV MAJESTIEK INTERNATIONALVal Sainte Croix, 7L 1371 Luxembourg,LUXEMBURGOrdinary shares 449 99.78 0.22 31/12/2003 EUR 1,802,303 (281,446)
NV EUROPEAN MEGA CINEMA Val Sainte Croix, 7 L 1371 LuxembourgLUXEMBURGOrdinary shares 16,999 99.99 0.01 31/12/2003 EUR 3,928,218 175,807
BVBA KINEPOLIS FILM PRODUC.Eeuwfeestlaan 201020 Bruxelles, BELGIUMBE 459.997.061Shares without nominal value 749 99.87 0.13 31/12/2003 EUR (1,033,915) (141,683)
A. PARTICIPATING INTERESTS AND CORPORATE RIGHTS IN OTHER ENTERPRISES
Corporate rights held by
Data obtained from last available financial statement
90
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Name and registered office
the company (directly) Subsidiaries Financialstatement
as at
Currency Capital and reserves
Net result
Qty % % (+) ou (-)
NV C.C.I.&H.Sint-Truidersteenweg 263540 Herk-de-Stad, BELGIUMBE 455.740.543Ordinary shares 248 99.20 0.8 31/12/2003 EUR 848,683 (3,107)
NV C.C.E. LIEGEUniversiteitslaan 113500 Hasselt, BELGIUMBE 459.469.796Ordinary shares 13,471 99.95 0.05 31/12/2003 EUR 3,253,000 (971,000)
NV IMMO ROCSint-Truidersteenweg 263540 Herk-de-Stad, BELGIUMBE 459.466.234Ordinary shares 998 99.80 0.20 31/12/2003 EUR 372,173 (41,595)
NV KINEPOLIS MULTI President Kennedylaan 100a8500 Kortrijk, BELGIUMBE 434.861.589Ordinary shares 78,803 99.89 0.01 31/12/2003 EUR 24,996,250 924,290
NV BRUVISIONKampioenschapslaan 11020 Brussels, BELGIUMBE 418.314.676Ordinary shares 2 0.05 99.95 31/12/2003 EUR (521,092) (182,074)
BV KINEPOLEASTPB 325 10 4330 AH MiddelburgTHE NETHERLANDSOrdinary shares 17,471,169 100.00 - 31/12/2003 EUR 15,117,524 (735,379)
Corporate rights held by
Data obtained from last available financial statement
91
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Name and registered office
the company (directly) Subsidiaries Financialstatement
as at
Currency Capital and reserves
Net result
Qty % % (+) ou (-)
NV IMAGIBRAINEBoulevard de France1420 Braine l’Alleud, BELGIUMBE 462.688.911Ordinary shares 99,999 99.99 0.01 31/12/2003 EUR 746,253 (258,510)
NV EUROCASINO Jean Dubrucqlaan 1601080 Brussels, BELGIUMBE 467.730.238Ordinary shares 1,900 19.00 31/12/2003 EUR
4,046 (35,446)
NV MegatixEeuwfeestlaan 201020 Brussels, BELGIUMBE 462 123 341Ordinary shares 499 99.80 0.20 31/12/2003 EUR 1,233,965 298,258
NV KINEPOLIS ESPANACalle Edgar neville Pozuelo de Alarcon28223 Madrid, SPAINOrdinary shares 95 0.46 99.64 31/12/2003 EUR 9,381,381 135,200
BV KINEPOLIS HOLDINGPB 325 104330 AH MiddelburgTHE NETHERLANDS 4 100.00 - 31/12/2003 EUR (1,563,834) (214,890)
CinemaxX AG (Consolidé)Mittelweg 17620148 Hamburg, GERMANYOrdinary shares 12.61 31/12/2004 EUR 2,592,039 12,883,380
Corporate rights held by
Data obtained from last available financial statement
92
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
VII. Deferred charges and accrued income (in € ’000) 2004Interest receivable 43.23Costs of partnerships to be carried forward 184.19Cost to be carried forward 305.47
VIII. Statement of capital (in € ’000) Capital Number of shares
A. Share capital 1. Issued capital
At end of the preceding period 47,442.92 At the end of the period 47,442.92
2. Structure of the capital 2.1 Types of shares
Ordinary shares without indication of nominal value 47,442.92 6,930,7782.2 Registered or bearer shares
Registered shares 5,172,554 Bearer shares 1,758,224
Capital Number of sharesC. Own shares held by:
- The company 943.28 99,698D. Commitments to issue shares
2. Following the exercise of subscription rights- Outstanding subscription rights 246,250- Amount of capital to be issued 2,972.24- Maximum number of shares to be issued 294,250
Capital Number of sharesE. Authorised capital not issued 47,442.92
G. Shareholder structure of the company at balance sheet date, as evidenced by the declarations received by the company
Shareholder Number of shares %Kinohold bis SA and Claeys Invest SA 4,429,038 64%Kinepolis Group – own shares* 99,698 1%Public 1,372,604 20%Best Inver Gestion sgiic 534,631 8%Schröder Investment Management Ltd. 494,807 7%
Total 6,930,778 100%
IX. Provisions for liabilities and charges (in € ’000)
Breakdown of item 163/5 when an important amount occurs
- Provision for charges relating to foreign participations 209.94- Provisions for other litigations 156.00
* Under the terms of the “Market Maintenance Agreement” with stock market company “Delta Lloyd nv” and subject to the conditions of the resolution of the Extraordinary General Meeting of 21 May 2004, a total of 8 318 shares were purchased for a total amount of 199 527.23 EUR, and 42 909 shares were sold. At 31/12/04 Kinepolis Group nv, had 99 698 own shares, this represents 1.44% of the total number of shares, with a capital value of 682 458 EUR.
93
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
debts with a residual term of
Maximum one year
More than one year but
maximum five years
More than five years
Financial debts 4,668.39 5,936.81 44,000.001. Subordinated Loans 5,936.81
4. Credit Institutions 4,668,.39 56,000.00 44,000.005. Other loans 11,393.17
Total 4,668.39 73,329.98 44,000.00
Debts garanteed by
B. Garanteed debts Real guarantees, given or irrevocably promised on the assets of the enterprises
Financial debts 118,668.394. Credit institutions 118,668.39C. Liabilities concerning: taxes, remuneration and social
security 20041. Taxes
b) Non-lapsed tax liabilities 109.892. Remuneration and social security
b) Other payroll and social security liabilities 205.97
XI. Accrued charges and deferred income (in € ’000) 2004Income from screen publicity to be carried forward 2,300.00Provisions for interest payments 541.61Provisions for consultants’ fees 158.20Other 1,172.74
XII. Operating results 2004 2003C1.Employees entered on the personnel register
a) Total number at balance sheet date 34 38b) Average workforce in full-time equivalents 30.7 53.2c) No. of hours actually worked 51,913 90,076
C2. Personnel costs (in € ’000) 2004 2003a) Remuneration and direct social benefits 2,050.64 2,732.92b) Employer’s contribution for social security 562.18 882.54c) Employer’s premium for extra statutory insurance 106.28 108.89d) Other personnel charges 263.83 193.73
X. Statement of amounts payable (in € ’000)
A. Breakdown of amounts originally payable after more than one year, by residual term
94
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
E. Other liabilities and charges (in € ’000) 2004 2003Increase 119.07 468.38Investments and write-backs (273.51)
F. Other operating charges (in € ’000) 2004 2003Taxes and duties on the conduct of the business 0.50 0.65Other 6.04 11.91
G. Temporary staff and persons placed at the company’s disposal 1. Total number at balance sheet date 2. Average number in full-time equivalents 1.8 0.5No. of hours actually worked 3,615 886Expenses borne by the company 140.42 51.34
XIII. Financial results (in € ’000) 2004 2003A. Other financial income
Positive exchange differences 37.97 28.10Other financial income 58.10 13.77Financial income market actions 512.76
E. Other financial charges Bank charges 133.90 93.64Other financial charges 1,026.78 317.33Negative exchange differences 1,507.39 10.00
XV. Income taxes (in € ’000) 2004A. Analysis of heading 670/3
1. Income taxes of the current period 546.54a) Taxes and withholding taxes due or paid 546.54
XVI. Other taxes and taxes supported by third parties (in € ’000) 2004 2003A. Value added taxes charged
1. To the company (deductible) 4,321.28 3,249.802. By the company 3,677.88 4,666.75
B. Amounts retained on behalf of third parties for1. Payroll withholding taxes 724.56 891.402. Taxes withheld 69.87
XVII. Off-balance sheet rights and commitments (in € ’000) Real guarantees given or irrevocably promised by the company on its own assets as security for debts and commitments 2004
Pledge of other assets Book value of pledged assets 42,500.00
95
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Substantial commitments to acquire fixed assets:• IRS contracts in a total amount of € 62,871,000 and FRA contracts in a total amount of € 39,592,000 and € 20,000,000
options. • Kinepolis has hedging contracts outstanding in respect of PLN to cover denominated debts contracted in Poland. Under these
contracts PLN are sold against EUR in a total amount of € 3,904,270. • Kinepolis has hedging contracts outstanding in respect of CHF to cover denominated debts contracted in Switzerland.
Under these contracts CHF are sold against EUR in a total amount of € 9,122,480. • Tele München Gruppe has the right to acquire the shares of Kinepolis, Senator and Flebbe, excluding the market sales
following an SPO from 01.01.2005 onwards. Tele München Gruppe obtained the right to buy at the closing price of the day of announcement, and this for 3 days.
XVIII. Relationships with associated undertakings and undertakings in which the company has a participating interest (in € ’000)
ASSOCIATED
ENTERPRISES
ENTERPRISES IN WHICH THE COMPANY HAS A
PARTICIPATING INTEREST
2004 2003 2004 20031. Financial fixed assets. 73,410.60 69,452.41 49.58 49.58
- Participating interests 73,410.60 69,452.41 49.58 49.58- Amounts receivable
2. Amounts receivable 153,685.46 100,262.18- For a term not exceeding 1 year 143,493.70- For a term exceeding 1 year 10,191.72 100,262.18
4. Amounts payable 12,277.06 11,668.36- For a term not exceeding 1 year 11,393.17- For a term exceeding 1 year 883.89 11,668.36
ASSOCIATED ENTERPRISES7. Financial results 2004 2003
- Income from financial fixed assets 12,059.01- Income from current assets 5,127.10 5,066.66- Other financial income 41.87- Interest and other debt charges 385.87 5,018.18- Other financial charges 1,021.01 420.98
8. Disposal of fixed assets- Gains on disposals 33,525.67- Losses on disposals
XIX. Financial relationships with 2004A. Directors and general managers
4. Direct and indirect remuneration and pensions charged against the income statement, as long as this disclosure does not concern exclusively or mainly the situation of a single identifiable person:
- to directors and general managers: 1,357.62
Important obligations to purchase fixed assetsObligation to purchase with a condition precedent on a ground in Ostend 1,000.00
96
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
SOCIAL BALANCE SHEET
I. Statement of persons employed A. Employees entered on the register of personnel 1. During the year and in the previous year
1. Full-time 2. Part-time 3. Total (T) in full-time
equivalents (ETP)
4. Total (T) in full-time
equivalents (ETP)
2004 2004 2004 2003Average number of employees 27.6 5.0 30.7 53.2No. of hours actually worked 46,793 5,120 51,913 90,076Personnel costs (in € ’000) 2,638.40 344.53 2,982.93 3,918.07Benefits in addition to wages 34.10 52.96
2. On balance sheet date
1. Full-time 2. Part-time 3. Total in full-time
equivalents
a. No. of employees entered on the register of personnel 29 5 31.9b. By type of employment contract
Permanent contract 29 5 31.9c. By gender
Men 15 2 16.3Women 14 3 15.6
d. By occupational category Employees 29 5 31.9
B. Temporary employees and employees on permanent contract Temporary employees
Average number of persons employed 1.8No. of hours actually worked 3,615Costs to the company (in € ’000) 140.42
II. Schedule of personnel movements during the year Full-time Part-time Total
A. Entering service a. No. of employees added to the register of
personnel during the year 6 6.0b. By type of employment contract
Permanent contract 4 4.0Fixed-term contract 2 2.0
97
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
1. Full-time 2. Part-time 3. Total in full-time
equivalents
c. By gender and educational level Men:
Secondary education 3 3.0Women:
Secondary education 3 3.0B. Left service
a. No. of employees with a date entered in the register of personnel on which their contract was terminated during the year 8 1 8.3
b. By type of employment contract Permanent contract 6 1 6.3Fixed-term contract 2 2.0
c. By gender and educational level Men:
Secondary education 1 1.0Women:
Secondary education 7 1 7.3d. By reason for terminating the contract
Dismissal 2 2.0Other reason 6 1 6.3
III. Statement on the use of measures to promote employment during the financial year
Measures to promote employment Number of employees
Measures (in € ’000)
1. Number 2. In full-time equivalents
3. Financial advantage (in € ’000)
1.6. Structural reduction in social security contributions 36 33.9 55.81Number of employees affected by one or moremeasures to promote employment
Total for financial year 36 33.9Total for previous financial year 79 77.0
98
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
VALUATION RULES
1. PRINCIPLE
The valuation rules are determined in accordance with the provisions of Chapter II of the Royal Decree of 30 January
2001 and the former Royal Decree of 8 October 1976 concerning company financial statements.
2. SPECIAL RULES
Formation expenses
Formation expenses and the cost of capital increases are valued at cost and depreciated on a straight-line basis over
a period of five years. Loan expenses, if any, can be capitalized and written off annually in relation to the period of the
loan.
Intangible fixed assets
Intangible fixed assets are shown on the balance sheet at cost. Annual depreciation is applied by the straight-line
method at 20% per year.
Tangible fixed assets
Acquisitions of tangible fixed assets are valued at cost plus additional expenses such as non- deductible VAT.
Depreciation is applied on the basis of the anticipated useful life of the assets concerned.
99
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Depreciation recorded during the year
ASSETS METHODL
(STRAIGHT)
LINE
BASISNR (NON
REVALUED)
DEPRECIATION PERCENTAGE
CAPITAL SUM MIN-MAX
ADDITIONAL COST
1. Industrial, administrative or commercial buildings
L NR 5% - 20% 5% - 20%
2. Plant, machinery and equipment (on lease)
LLLLL
NRNRNRNRNR
10% - 10%20% - 20%25% - 25%50% - 50%33% - 33%
-----
3. Vehicles L NR 20% - 20% 20% - 20%
4. Office equipment and furniture L NR 20% - 33%
Accelerated or reducing-balance depreciation is applied with due regard to tax provisions. Expenditure on
conversions, major renewals and improvements is capitalized. Expenditure on repairs, maintenance and replacements
that do not significantly extend the economic useful life of the assets concerned is entered as expenses.
Financial fixed assets
Participating interests and shares are valued at cost. Additional expenses relating to their acquisition are not capitalized
but transferred to the ‘Other financial expenses’ item for the year in which they are incurred. Adjustments are made
if the estimated value of participating interests or shares is lower than their book value and if the reduced value thus
ascertained appears permanent. The estimated value of each participating interest or share is fixed at the end of each
financial year according to one or more criteria. In general the value of the last published balance sheet is taken into
account, unless more significant data is available.
Stocks
Goods for resale are valued at cost calculated by the FIFO method or at market value on the balance sheet date if lower
Amounts receivable within one year
Debtors are shown on the balance sheet at nominal value. Fixed-income securities are valued at cost. Adjustments are
made if there is uncertainty regarding all or part of the receivable as to payment of the claim on the due date or if the
market value on the balance sheet date is lower than the nominal or book value.
100
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Short-term investments and cash at bank an in hand
Fixed-income securities and shares are valued at the lower of purchase price or market value.
Deferrals and accruals
Deferrals and accruals are recorded and valued at cost and shown on the balance sheet in the section relating to the
next financial year (costs) or are allocated to the present year (income).
Provisions for liabilities and charges
Provisions for liabilities and charges are made to meet the requirements of caution, integrity and good faith. The
amount of the provisions is decided by the company’s governing body on the basis of a cautious estimate.
Foreign currency
Credit balances, debts and obligations in foreign currency are converted at a fixed exchange rate, which is adjusted
monthly. Translation gains or losses therefore occur when these are settled.
In addition, credit balances and debts in foreign currency on the balance sheet are converted at the closing rate on the
balance sheet date.
The results of this conversion are recorded:
- if the result is a profit: under «accruals and deferred income» in liabilities
- if the result is a loss: under «other financial expenses» in the income statement.
101
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
REPORT OF THE STATUTORY AUDITOR
Report of the Statutory Auditor on the statutory accounts for the year ended 31 December 2004 submitted to the
general shareholders’ meeting of Naamloze Vennootschap Kinepolis Group
In accordance with legal and statutory requirements, we are reporting to you on the completion of the mandate, which
you have entrusted to us.
We have audited the financial statements as of and for the year ended 31 December 2004 with a balance sheet total of
EUR 252.154.307,84 and a profit for the year of EUR 1.249.924,55. These financial statements have been prepared under
the responsibility of the Board of Directors of the Company. In addition we have carried out the specific additional audit
procedures required by the Company law.
Unqualified audit opinion on the financial statements
We conducted our audit in accordance with the standards of the “Institut des Réviseurs d’Entreprises-Instituut der
Bedrijfsrevisoren”. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, taking into account the legal and regulatory
requirements applicable to financial statements in Belgium.
In accordance with these standards we have considered the Company’s administrative and accounting organisation
as well as its internal control procedures. The Company’s management have provided us with all explanations and
information, which we required for our audit. We examined, on a test basis, evidence supporting the amounts in
the financial statements. We assessed the accounting policies used and significant accounting estimates made by
the Company, as well as the overall presentation of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, taking into account the prevailing legal and regulatory requirements, the financial statements present
fairly the Company’s net worth and financial position as of 31 December 2004 and the results of its operations for the
year then ended and the disclosures made in the notes to the financial statements are adequate.
102
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
Additional assertions
As required by generally accepted auditing standards the following additional assertions are provided. These assertions
do not alter our audit opinion on the financial statements.
• The directors’ report contains the information required by law and is consistent with the financial statements.
• The appropriation of results proposed to the general meeting complies with the legal and statutory provisions.
• There are no transactions undertaken or decisions taken in violation of the Company’s statutes or Company Law, which
we have to report to you.
• Without prejudice to certain formal aspects of minor importance, the accounting records are maintained and the
financial statements have been prepared in accordance with the applicable Belgian legal and regulatory requirements.
Antwerp, 21 April 2005
Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren - Réviseurs d’Entreprises
Statutory Auditor
represented by
Ludo Ruysen
Bedrijfsrevisor
103
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
TRANSITION TO IAS / IFRS
Following European regulations, Euronext requires companies in the “Next Prime” and “Next Economy” segments to
produce their consolidated accounts in conformity with IAS/IFRS as from 1 January 2005.
The IFRS opening balance at 1 January 2004 was published in September 2004 together with the half-yearly results
according to Belgian accounting principles,
Following further research and new comments on some IFRS rules, changes in the balance sheet may occur, and if so,
will be published on 30/06/2005.
The IFRS results for 30 June and 31 December 2004 are being finalized during April and May 2005.
The half-yearly results as at 30 June 2005 will be prepared and published in accordance with IFRS.
The main differences between the currently applied valuation principle and the IFRS standards are found in the
following areas:
• Following IFRS 1 the land and buildings of all cinemas have been revalued by an independent expert. Depreciation on
buildings is restated retroactively on a 30-year instead of 20-year basis.
• Under IFRS rules investment grants are no longer recorded in Equity.
• Latent taxes are recalculated pursuant to IAS 12.
104
Kin
ep
oli
s I
An
nu
al
rep
ort
20
04
BOARD OF DIRECTORS
H. Vandamme, M.R. Claeys-Vereecke, M.S. Bert-Vereecke, F. Gijbels, J. Bert, P. Bert, G. Van Acker, Ph. Haspeslagh, A. Meers
AUDIT COMMITTEE
CORPORATE F&A
J. Staelens
CFO
KINEPOLIS REAL
ESTATE
L. Van Baelen
Managing Director
KINEPOLIS CINEMA
G. Deley
Managing Director
J. Staelens
Deputy Managing
Director
REMUNERATION COMMITTEE
COORDINATION COMMITTEE
F. Gijbels
CEO
L. Van Baelen J. Staelens G. Deley J. Bert
CEO
ORGANOGRAM
Kin
ep
oli
s
An
nu
al
re
po
rt
Kin
ep
oli
s
An
nu
al
re
po
rt
20
04
Contact:
Investor Relations
Kinepolis Group
Tel +32 2 474 27 92
www.kinepolis.com/investors
ww
w.c
om
fi.b
e
Kinepolis Group NV at 31/12/04
100%
100%
50% 50%
Kinepolis Multi NV
F.M.C. SA Immo Roc NV
CCE Liège NV
Imagibraine S.A.
CCi&H NV
Decatron NV
K.F.P. BVBA
K.F.D. NV
E.M.C. NV
Kinepolis Nacka
Kinepolis Holding BV
Megatix NV
Eurocasino NV
100%
Majestiek Int. SA
Kinepolis Schweiz
I.O.B. NV
Kinepolis Invest SA
Kinepolis España SA
Kinepolis Madrid SA
Kinepolis Paterna SA
Kinepolis Granada SA
Kinepolis Metz SA
F.M.C.I. SA
Kin.Le Château du Cinéma SAS
Kinepolis Mulhouse SA
Kinepolis Thionville SA
Kinepolis Immo Thionville SA
Forum Kinepolis SA
Kinepolis Nancy SAS
Eden Panorama SA
Kinepolis Prospection SAS
Kinepolis Mega NV Bruvision NV
Ditjaarverslag is eveneens beschikbaar in het Nederlands.Ce rapport annuel est également disponible en version française.
100%
Kinepoleast BV
Kinepolis Spzoo
Kinepolis Poznan
01000020000300004000050000600007000080000
2005200415
20
25
30
SHARE PRICE EVOLUTION + VOLUME
KINEPOLIS SHARE PRICE IN 2004
Share price (Euronext Brussels)
High (in EUR) 25.7
Low (in EUR) 15.5
Closing price at 31/12/2004 (EUR) 24.4
Average number of shares traded per day 4,131
Total number of shares traded during the year at 31/12/2004
1,120,424
Capitalisation (in EUR) at 31/12/2004 194,061,784
KEY FIGURES PER SHARE (CONSOLIDATED)
Net result of the Group per share 1.22
Dividend 0.29
Number of shares at 31/12/2004 6,930,778
FINANCIAL CALENDAR
Friday 20 May 2005:
Kinepolis Group NV Annual General Meeting
Friday 15 July 2005:
Publication of 1st half 2005 audience figures
Friday 16 September 2005:
Publication of 2005 half-year results
Friday 14 October 2005:
Publication of 3Q 2005 audience figures
Monday 9 January 2006:
Publication of 2005 visitor figures
Friday 10 March 2006:
Publication of 2005 annual results
Friday 14 April 2006:
Publication of 1Q 2006 visitor figures
Friday 19 May 2006:
Kinepolis Group NV Annual General Meeting
INFORMATION FOR THE SHAREHOLDERS
A N N U A L R E P O R T 2 0 0 4
K I N E P O L I S G R O U P
KINEPOLIS GROUP NV Eeuwfeestlaan 20 – 1020 Brussels - BelgiumTel +32 2 474 26 01 – Fax +32 2 474 26 06
Trade number : 0415 928 179 www.kinepolis.com
AN
NU
AL
RE
PO
RT
20
04