(17/09/2004) KINEPOLIS GROUP: EUR 4 million net first-half profit

Brussels, 17 September 2004 Kinepolis Group ended the first half of 2004 with a net profit of E 4.0 million. Consistent cost control, debt reduction and an emphasis on business-to-business activities, along with more cinema-friendly weather and a balanced spread of successful films during the first half, produced a half-yearly profit figure ahead of both 1H 2003 (E -1.9m) and the full year 2003 (E 2.7m). KINEPOLIS GROUP - RESULTS AT 30/6/2004

EUR mill.	1H 2004	1H 2003	VAR.		LIKE-FOR-LIKE (*)
					1H 2004	1H 2003	VAR.
Visitors (mill.)	12.1	11.6	5.0%		12.1	11.1	9.1%
Total turnover	96.4	89.4	7.8%		96.3	85.7	12.3%
Total turnover from cinema operations	94.5	87.2	8.4%		94.4	83.5	13.08%
EBITDA[1]	20.3	16.1	26.3%		20.5	15.7	30.6%
Operating profit (EBIT)	7.6	2.5	201.2%		7.7	2.6	203.1%
Financial result	-2.9	-6.4	54.1%		-2.9	-6.4	54.3%
Proft/loss on ordinary activities	4.6	-3.9			4.8	-3.8
Extraordinary result	2.0	2.2			2.0	2.1
Pre-tax profit/loss	6.7	-1.7			6.8	-1.7
Taxes and deferred tax liability	-2.7	-0.6			-2.7	-0.6
Consolidated net profit/loss	4.0	-2.3			4.1	-2.3
Consolidated net profit/loss of the Group	4.0	-1.9
Current net profit/loss	3.6	-2.8
Current net profit/loss of the Group	3.6	-2.4
Net financial debts[2]	159.2	175.3	-9.1%

(*) On a like-to-like basis, i.e. excluding contributions from entities sold, liquidated or opened 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 modification of the increased participation in Forum Kinepolis Nîmes in 2003 and the closing of the cinema complex Opera in Liège is not included in the comparable figures. [1] Earnings before interest, tax, depreciation and amortisation [2] Net financial debts: financial debts less the GIMV subordinated loan, short-term investments and cash at bank and in hand Visitor figures Between January and June this year, Kinepolis Group welcomed 12.1 million visitors to its cinema complexes. Like-to-like, i.e. excluding visitor figures from the Italian complex at Treviso (sold in May '03), the Max Linder cinema in Paris (sold in February '04) and Kinepolis' most recently-opened complex in Granada, this represents a 9.1% increase in visitor figures compared with the same period in 2003. This very favourable growth figure is due largely to the strong film line-up and cinema-friendly weather. - BELGIUM: visitor figures up 7.9% on 2003. National top 3 films are "Harry Potter 3", "Troy" and "Podium". The temporary closing of the Palace complex in Liège for renovation and difficult access to the Metropolis due to work on the Antwerp ring road held back visitor growth in downtown Liège and Antwerp. - FRANCE impressive 15.6% rise in visitor figures (like-for-like, i.e. ex-Max Linder) - SWITZERLAND: Visitors to Kinepolis Schaffhausen up 6.1%. - SPAIN: half-yearly visitor figure remains constant (+ 0.6%). The Madrid complex suffered somewhat in a highly competitive market, but Kinepolis Valencia did well. The 15-screen Kinepolis Granada complex opened its doors on 24/06/04. - POLAND: Kinepolis Poznan grew no less than 24.6% compared with last year. Turnover and operating income Turnover of E 96.4m in absolute figures is 7.8% up on the same period in 2003, or 12.3% on a like-for-like basis. Total operating income of E 100.6 million is up 9.1% in absolute figures, 13.6% on a like-for-like basis. - Turnover from cinema operations rose like-for-like by 13.1%. Ticket, beverage and snacks and media sales (events, screen advertising, etc.) all developed positively. - Film distribution turnover (Kinepolis Film distribution) dipped slightly from 1H 2004 figures. Biggest income generators were 'The Alzheimer Case', 'Team Spirit 2' and 'Kill Bill'. EBITDA EBITDA rose by 26.3% to E 20.3 m (30.06.03: E 16.1 million), or no less than 30.6% on a like-for-like basis. The EBITDA margin (EBITDA/operating income) was 20.2% (30.06.03: 17.5%). Operating profit (EBIT) Operating profit rose from E 2.5m at 30.06.03 to E 7.6m this year (+ 201.2%). Depreciation charges were down E 1.1m to E 12.9m, including E 0.4m ascribable to the divestment of Cinecity Treviso (Italy) and Max Linder (France). The EBITDA margin (EBIT/operating income) is 7.51% (30.06.03: 2.72%). Financial result The financial result for the first half was E -2.9m (30.06.03: E -6.4m). - Debt costs fell 36.9%, owing mainly to debt reduction and lower interest rates. - Translation gains/losses and hedging costs in 1H 2004 amounted to 2004 E 0.5m (30.06.03: E 1.4m). - A capital gain of E 0.5% was realised on the sale of own shares. Own shares in portfolio represented a latent capital gain of E 1.2m at the end of June 2004. Profit/loss on ordinary activities The profit/loss on ordinary activities rose by E 8.5m from a loss of E 3.9m at 30.06.03 to a profit of E 4.6m Extraordinary result The extraordinary result of E 2.0m represents mainly of a capital gain on the sale of land relating to the Granada project. Taxes and deferred tax liability Taxes and deferred tax liability amount to E 2.7m (30.06.03: E 0.6 m). Last year a change in the valuation rules permitted the reversal of E 0.4m of deferred tax liability. Consolidated net profit/loss Consolidated net profit/loss increased by E 6.3m to give a profit of E 4.0m (30/6/03: E -2.3 m). Consolidated net profit/loss (Group share) rose by E5.9m to a profit of E 4.0 m (30.06.03: E -1.9m). Current net profit/loss of the Group rose by E6.0m to a profit of E 3.6m (30.06.03: E -2.4m). Debt reduction The net financial debt position (financial debts less GIMV subordinated loan (E 7.4m), short-term investments and cash at bank and in hand) rose from E 151.0 at the end of 2003 to E 159.2m at 30/06/04. This increase is due primarily to the project financing of Kinepolis Granada, which opened its doors on 26/06/04. In so doing Kinepolis Group has reached its goal of bringing its net debt below 3.5 x EBITDA. The actual ratio [Net debt / Cumulative EBITDA for the past 12 months] is 3.39. IFRS In accordance with 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 the 2005 accounting year. The various accounting reworkings to be undertaken compared with Belgian accounting rules have been identified, as well as the impact on the equity shown on the balance sheet as at 1 January 2004. Consolidated equity at 1 January 2004 increases by E 21.8m: from E 61.4m (Belgian accounting rules) to E 83.2m (IFRS). This 35% increase reflects mainly: - Revaluation of land and buildings by an outside expert, and changing the depreciation period on buildings from 20 to 30 years, increase tangible fixed assets by E 45.3m. The equity impact (after offsetting latent taxation) is E 24.7m. - The inclusion of a 'deferred tax asset' of E 9.7m regarding the fiscally carry-forwardable losses The fact of no longer including capital subsidies from the CNC (Centre National du Cinéma) in France in equity (IFRS) reduces equity by E 10.5m. - Reclassification of own shares (E 1.2m) as a deduction from equity. - Other items: E 0.9m. The impact of the restatement of the 2004 half-yearly results will be positive, mainly because: - Goodwill will no longer be amortised. - The extension of the depreciation period on buildings from 20 to 30 years easily compensates the increased depreciation caused by the revaluation of the buildings. - Latent taxation Key events in 2004 - 2004: Kinepolis Group pioneers Digital Cinema - February 2004: - Sale of the Max Linder complex in Paris (France) - Purchase of the land for the Kinepolis Nancy project (France) and start of building works - March 2004: GIMV sells its 10% interest in Kinepolis Group to various institutional investors. - June 2004: Agreement in principle signed by which media group Telemünchen takes a stake in CinemaxX in the form of debt take-over and converting debt into capital. - June 2004: - Reopening of the Palace cinema in downtown Liège after lengthy renovation work. - Opening of Kinepolis Granada - August 2004: Kinepolis appeals to the Permanent Deputation against the negative opinion by the Arohm (regional planning authority) on the Kinepolis project in Bruges. Kinepolis Group and digital cinema The digital platform developed in cooperation with Barco and EVS has enabled Kinepolis in recent months to offer full-length digital films, as well as alternative content, including screenings of prestigious events or concerts (live and pre-recorded) and TV fiction serials and programmes with a particular human interest. These are constantly finding their way to the Kinepolis big screen and represent a successful diversification. - Digital full-length films, January - August 2004: 'Brother Bear', 'The Day after Tomorrow', 'Shrek 2' and 'I Robot' - February - April 2004: Successful digital pre-premières of the 10-part VTM crime series 'Aspe' - February - April 2004: VTM news live daily at 19.00. - 4 July 2004: EURO 2004 football final live on the big screen at Kinepolis Brussels and Palace Liège. - 31 August 2004: digital launch event by VRT for the 6th series of the TV1 serial 'Flikken' at Kinepolis Ghent. All 3 digital performances of the first 'high definition' version of 'Flikken' were sold out. Guidance For 2004 as a whole Kinepolis Group is aiming for at least 25 million visitors in 2004 and a further increase in profitability. From 2005 onwards the phased expansion programme (Kinepolis Granada- June 2004, Kinepolis Nancy -2005) will generate increased overall audience numbers. Kinepolis Group is also planning additional building projects in Bruges and Ostend. Statutory Auditor's report FREE TRANSLATION REPORT OF THE STATUTORY AUDITOR ON THE LIMITED REVIEW OF THE HALF YEAR CONSOLIDATED FINANCIAL STATEMENTS OF THE KINEPOLIS GROUP S.A. AS PER JUNE 30 JUNE, 2004 We have performed a limited review of the half year consolidated financial statements of the NV/SA Kinepolis Group as per June 30, 2004, prepared in accordance with the accounting principles generally accepted in Belgium as stipulated in the Royal Decree of January 30, 2001, which show a consolidated balance sheet total of EUR 310,991(´000) and a profit for the group for the half year period of EUR 3,986(´000). Our audit was performed within the scope of a half-year financial report . Our audit consisted principally in applying analytical review procedures, comparisons and inquiries on the financial information communicated to us and was performed in accordance with the auditing standards of the Instuut der Bedrijfsrevisoren/Institut des Reviseurs d'Entreprises with respect to the limited review. Its scope is therefore substantially less than a full audit of the consolidated annual accounts. As part of the half-year consolidated reporting, the company has included an overview of the effect on the consolidated equity as at January 1, 2004 of the most significant adjustments required to present these figures in accordance with the International Financial Reporting Standards (IFRS). We have also performed audit procedures on this overview in the context of our limited review. Our review did not reveal any elements requiring significant corrections of the figures stated in the half-year consolidated report and quoted in this press release within the context of our limited review. Antwerp, September 16, 2004 Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren/Reviseurs d'Entreprises, represented by L. Ruysen, Partner Financial diary Friday 15 October 2004: Publication of 3Q visitor figures Friday 7 January 2005: Publication of 2004 visitor figures Friday 18 March 2005: Publication of 2004 annual results Friday 20 May 2005: General Meeting Kinepolis Group NV Friday 16 September 2005: Publication of 2005 half-year results Contact: Myriam Dassonville Corporate Communication Tel: +32 2 474 26 91 E-mail: mdassonville@kinepolis.com The appendices related to the press release are available on http://www.companynewsgroup.com © CompanynewsGroup