Good day, ladies and gentlemen, and welcome to IMAX China's full year 2020 earnings conference call. Please be advised that this call is being recorded. At this time, all participants are in a listen-only mode. After prepared comments, there will be a question and answer session. To ask a question, please press star one on your telephone keypad, and if you're on speakerphone, make sure that your mute function is turned off to allow your signal to reach our equipment. At this time, I would like to turn the conference over to Ms. Karen Chan, Vice President of Investor Relations. Please go ahead.
Good morning, everyone, and thank you for joining us on IMAX China's full year 2020 earnings conference call. Joining me today is our Chairman, Rich Gelfond, CEO of IMAX, and Jim Athanasopoulos, our CFO and COO, who will have prepared remarks. For the purpose of this call, all financial figures will be provided in USD unless stated otherwise. Furthermore, the financials we provide to you today will follow IFRS accounting standards, which may differ in some respects to US GAAP. I would also like to remind you of the following information regarding forward-looking statements. Our comments and answers to your questions on this call may include statements that are forward-looking and pertain to future results or outcomes. Forward-looking statements involve a number of risks, uncertainties, or other factors beyond our control. Actual future results or occurrences may differ materially from these forward-looking statements.
We are under no obligation to, and expressly disclaim any such obligation to, update the forward-looking statements as a result of new information, future events, or otherwise. The full text of our full year 2020 earnings release, along with supporting financial statements and the slide presentation we have prepared for this call, are available on our website, imax.cn. Today's conference call is also being webcast in its entirety on our website. With that, let me now turn the call over to Rich Gelfond. Rich?
Thank you, Karen, and good morning, everyone. As a global platform for blockbuster entertainment, we at IMAX continue to see that around the world, audiences are eager to return to the cinema where the virus is under control and people feel safe. Nowhere is this more apparent than in China. With last month's record Lunar New Year, the stunning rebound of the Chinese box office continues to exceed even our most optimistic expectations. Indeed, China has emerged as a beacon of hope for the global theatrical industry and has demonstrated the strong pent-up demand for moviegoing. Today, I am excited to share with you our results, which reflect positive momentum and the enduring strength of the IMAX brand as China continues to emerge from the pandemic.
We are capitalizing on strong demand for moviegoing to strengthen our position as the premium and preferred choice to view both local and Hollywood tentpole movies. We continue to strengthen our local language programming and work with our exhibition partners to grow our network across all-tiered cities. Our gratitude goes out to our studio and exhibition partners, and our fans in China, who continue to choose IMAX, and to our employees, who have shown tremendous dedication and agility as we all navigated through a challenging year. Our strong, growing position in the Chinese entertainment ecosystem will continue to propel our core business and create new opportunities for the IMAX brand. Today, I will share updates on where we are seeing encouraging signs of demand for the IMAX experience in China.
Edwin will provide an update on our installations, new signings, local programming, and why we believe IMAX China could benefit in the event of any consolidation in the exhibition industry. Lastly, Jim will review the financial results and our strong financial position. With respect to performance, during our first half earnings call, when theaters were just about to reopen, I indicated that prolonged theater closures and the global travel restrictions currently in place would lead to pent-up demand for at-home domestic entertainment as theaters reopened in China mainland and when new content returned to the big screen. The second half of 2020 has proven us right. We are excited to see audiences embracing the theatrical experience, especially excellent local content, with the box office hitting new highs.
In 2020, China generated over CNY 20 billion box office under capacity constraints, and for the first time, surpassed North America as the world's largest market by box office. In the early months of 2021, China box office has already surpassed 15 billion CNY, not only continuing to recover, but breaking many records. The Chinese New Year holiday generated record-breaking overall box office of approximately CNY 7.8 billion , attendance of approximately 160 million people, and the highest three-day opening weekend of all time. Wanda's "Detective Chinatown 3" was shot entirely with IMAX cameras. "Detective Chinatown 3" set the stage for an unprecedented new year, shattering presale, opening day, and weekend records overall and in IMAX.
Its performance and that of the other highly rated titles, which included the IMAX versions of "A Writer's Odyssey" and "New Gods: Nezha Reborn," demonstrates the release of this pent-up demand and is a testament to the importance of moviegoing entertainment in China. IMAX China has led the industry recovery in many ways. In the second half of 2020, we generated $92 million of box office, representing an approximately 3.6% market share, up from 2.8% from the same prior year period. We further grew our network to 745 screens across over 200 cities. Our average daily admission and box office recovered to approximately 80% of what it was in the second half of 2019, ahead of both the industry and the other branded offerings, despite capacity limitations that had only been raised to 75% since late September, and a lack of Hollywood major tent-pole films.
Our average box office market share on local titles continued to increase across multiple local blockbusters to levels approaching Hollywood tent poles. Replicating our Hollywood success for local titles is strategically important given the dominance of local films in the market, and the fact that IMAX China earns a higher take rate on these films. Not only are consumers willing to return to cinemas given a safe and controlled environment, but when they are, they are returning to IMAX in large numbers. Structural tailwinds and our strategic initiatives that gave us the ability to outgrow the industry in 2019 have continued to play out and even accelerating post-pandemic. This includes blockbusterization in both content creation and consumption as big-budget local productions increasingly lend themselves to the IMAX format.
In 2020, the top five grossing titles in mainland China, all of which were available on IMAX, accounted for close to half of the industry box office, up from 31% in 2019. The theatrical business has always been, and will increasingly be, centered around blockbusters, those that audiences want to watch in IMAX. Since reopening in July 2020, the industry has seen eight titles cross the CNY 1 billion box office milestone, including "Detective Chinatown 3," "The Eight Hundred," "My People, My Homeland," "Legend of Deification," "Shock Wave 2," and "The Sacrifice," which were all available on IMAX. First two of which were almost shot entirely with IMAX cameras and are now ranked within the top 15 all-time releases in Chinese mainland box office. An impressive achievement given the industry just emerged from the pandemic.
On the local language side, the Chinese consumers association of the IMAX brand and experience with blockbusters has extended beyond Hollywood and into local Chinese films. "Detective Chinatown 3," shot entirely with IMAX cameras, drove record-setting box office of approximately 190 million CNY over the critical Chinese New Year's holiday in IMAX. The title now stands as the third highest grossing local film of all time for IMAX, along with "A Writer's Odyssey" and "New Gods: Nezha Reborn," as screens captured over one million admissions in a single day for the first time for IMAX in any global market. "The Eight Hundred," another local language title, shot entirely with IMAX cameras, delivered more than CNY 3 billion in box office and was the highest grossing title of 2020 worldwide. Notwithstanding a 50% capacity limit at the time of release.
IMAX accounted for around 6% of its opening weekend box office. We have also set our best national holiday record with the box office up 23% year-over-year, representing our largest market share gain in the country's second biggest holiday window. This was headlined by "Legend of Deification," which earned IMAX China's best opening weekend for an animated film and second best for local language title. We started 2021 on a strong note with record high New Year's Day holiday box office, more than tripled over the prior year, attributable to Shock Wave 2, a local title in which IMAX represented approximately 12% of the film's box office, an indexing level comparable to a Hollywood blockbuster. It has been a great last seven months with IMAX and local Chinese language films.
As the production value of local language content increasingly rivals that of Hollywood and genres gravitate towards those that lend themselves to IMAX, we see a vast opportunity to drive market share in domestic titles towards that of what we have experienced with Hollywood films. As local filmmakers start to develop their content into franchises, much like their Hollywood counterparts, we are the only player actively working with local directors to create and deliver their work in the most visual way, leveraging on IMAX technology. Films with IMAX DNA offer an exclusive, differentiated experience for audiences, which historically translates into a greater box office share. Meanwhile, as North American theaters in key markets such as New York begin their reopening process, we look forward to the big screen return of a highly anticipated 2021 Hollywood film slate, many of which are filmed in IMAX with IMAX cameras.
Three Marvel titles, "Black Widow," "The Eternals," and the first Asian superhero movie, "Shang-Chi." New installments of blockbuster franchises, including "Bond: No Time to Die," "Fast & Furious," and "Mission: Impossible." And of course, "Top Gun: Maverick," a reprise of the Tom Cruise classic, which has gotten great buzz so far. The fact that studios are holding on to the theatrical release for their key blockbusters speaks to the irreplaceable cultural and commercial value of the theatrical window, especially in China. Looking into 2021 and beyond, with our growing market share in local titles, our strong footprint in Hollywood tentpoles, and a compelling content pipeline empowered with IMAX DNA, we feel very well-positioned to deliver above-industry growth. Despite the challenging environment in 2020, we closed a total of 38 theater signings, including deals with leading exhibitors Wanda and Jinyi.
Our top five exhibition partners have been commanding higher box office market share since theaters reopened. As they seek network expansion opportunities, IMAX remains a major part of these conversations. Edwin will provide more details shortly. Financial strength. Finally, IMAX China's financial strength and strong balance sheet, with approximately $88.5 million in cash that was built upon a unique technology licensing model, gives us the confidence and flexibility to manage our business for long-term growth while continuing to deliver value to our shareholders. Our financial strength also allowed us to help our exhibitor partners during the closure period. We believe that our proactive waiver and deferrals of contractual maintenance and minimum payments during this time, along with contract extensions, was the right thing to do, helping our partners in the short term and further strengthening our relationship with them in the long term.
On behalf of the board, IMAX China announced a proposed final dividend of two cents per share, consistent with prior years in absolute terms, despite the COVID-related earnings impact in 2020. As business returns to normalcy in 2021, we are happy to announce an increase in our dividend payout ratio from 33% of net income during 2017 through 2019, to 50% from 2020 onwards, underscoring our confidence in our business, the continued recovery of the entertainment industry, and the future cash flow generation ability of our theaters. The post-COVID theatrical business will increasingly call upon differentiated offerings in both content and exhibition, driving consolidation towards top grossing movies and top performing theaters.
IMAX China's unique premium positioning, the strength of our brand, technology, and content pipeline that is increasingly catered towards IMAX DNA is why we remain confident in our future growth post-pandemic as theatrical entertainment business becomes more and more blockbuster-driven. Thank you for joining us today, and please continue everything you can to stay well and healthy. With that, I would like to now pass the call to Edwin.
Thanks, Rich, and a very good morning to everyone. Chinese consumers are increasingly seeking premium content with a premium experience. This has only accelerated post-pandemic, and as a result, further strengthened the value of IMAX to consumers, filmmakers, and exhibitions. We achieved higher indexing in local language blockbusters, delivered box office market share, and continued network growth while driving expansion in new theater signings, all within 5 months of operation in 2020. Our sharpened focus on execution and disciplined cost management also resulted in a strong rebound in earnings. Since theaters reopened, we set new all-time records in key screening windows, notwithstanding capacity limitations and the lack of major Hollywood tentpoles, which typically account for 70% of our box office.
Our sharpened focus on local language film programming has shown consistent success from "The Wandering Earth," "Ne Zha" in 2019, to "The Eight Hundred," "Legend of Deification," and "Shock Wave 2" in 2020, and of course, "Detective Chinatown 3" and "A Writer's Odyssey" in 2021. All of which demonstrates the gravitation of local content towards high production value genres presents us with a proven opportunity to gain market share in local titles. Currently at 2.7%, and that is up from 2% in 2019. That compared to our 7% market share in Hollywood titles, is what we see as an opportunity, and we are capturing that quickly through active injection of IMAX DNA. For decades, IMAX has played an instrumental role in the development of Hollywood blockbuster franchises.
We believe in the same, if not bigger, opportunity in China as local filmmakers are starting to build their brands and IP in the same way as Hollywood. We remain focused on this strategic initiative. For example, "Mozart from Space," the first installment of a new IP developed by Director Chen Sicheng of the Detective Chinatown franchise, is currently shot with IMAX cameras and is scheduled for release in July this year. Another highly anticipated title, "Creation of the Gods," is an Eastern fantasy trilogy that recreates the mythical war between humans and immortals. The sequel to "The Wandering Earth," fourth highest grossing title of all time and IMAX China's highest grossing local title, is also being planned for Chinese New Year 2023. The unique value of IMAX is further differentiated through our in-depth partnership with top Chinese filmmakers who are strong advocates of IMAX cameras.
We hosted master classes with Cao Yu, Director of Photography of "The Eight Hundred," and Lu Yang, Director of "A Writer's Odyssey," both of which attracted a live audience of more than two million across online streaming platforms. As we broaden our partnership with local talent, we expect more announcements to be made in the near future. While the outbreak caused short-term disruption to our installation schedule, momentum has picked up meaningfully upon theater reopening, with a total of 42 installations in 2020 and a healthy backlog of 251 theaters. We brought in 38 new signings with leading exhibitors, including Wanda and Jinyi, which includes major updates of their top-grossing IMAX theaters and the addition of IMAX cinemas in new locations across the country. Including backlog, this brings the total number of contracted IMAX theaters in Greater China to 996.
This represents a good runway towards our estimated of approximately 1,400 IMAX locations. We are encouraged that our partners continue to see the value to their customers and business that our single screen contributes closely.
Pardon the interruption. It looks like Edwin Tan has disconnected.
I've just lost connection on my phone. I've come back. Looking into 2021, we expect installations to see further pickup as the industry continues to navigate towards a full return to normalcy, and as the exceptional Hollywood 2021 lineup we just talked about eventually makes its way into China. We remain focused on driving network upgrades and expansion across all tiered cities with a balanced mix between full sale and revenue-sharing arrangements. In the event of any industry consolidation, we see ourselves as a beneficiary with our footprint heavily concentrated in top-performing multiplexes and still expanding. Approximately 95% of our box office is generated from the top 20% of complexes in China. We could potentially gain market share in terms of both capacity and box office given our premium positioning as we have experienced since opening.
To conclude, 2020 has definitely been an unusual and challenging year, but we have navigated through these uncharted waters with nothing more than consistent focus on operational excellence. Our competitive positioning built upon our premium brand, technology, and network scalability has only been further strengthened post-pandemic, and the abundance of upcoming blockbusters, both Hollywood and local language, should play to our sweet spot. With this, I would now like to pass the call to Jim for a review of our financial results. Jim?
Thanks, Edwin. Good morning, everyone. Due to the COVID-19 pandemic, all of our approximately 700 IMAX theaters in Chinese mainland have only resumed operation since July 24, which has significantly impacted our full-year financial results. That said, our strong balance sheet, disciplined cost management, and asset-light business model contributed to our financial resilience and quick profitability turnaround upon theater reopening. For the second half of 2020, we generated $45.6 million in total revenue, $10.9 million in adjusted earnings, and $9.6 million in free cash flow from the reopening of theaters and increased installation activity since July. Now let me go through our financial results for the year. Total revenue was approximately $52.3 million, down approximately 58% year-on-year.
IMAX technology network business revenue declined by 71% due to our box office loss in the first half of 2020, partially offset by an increase in take rate to 15.3%, up 80 basis points year-over-year. We expect our takeaways to see further upside in the long term as local language titles account for rising contribution to our box office. For the second half of 2020, we delivered $92 million in box office, representing a 3.6% market share, up 80 basis points year-over-year, driven primarily by our higher indexing on local language titles. IMAX technology sales and maintenance revenue was down approximately 48% to $36.9 million due to muted installation activity through the first half and the maintenance holiday we offered to our exhibition partners during the time of theater closure.
For the full year of 2020, we installed a total of 42 theaters, including 36 new installations, three laser upgrades, and three relocations. Of these new installs, 15 were sales, three were hybrid, and 18 were full revenue share. Including the two laser upgrades, this brings our total sale installations to 17. Our Greater China network now stands at 745 theaters, up 4% year-on-year, with a coverage of over 200 cities. Despite the extended business shutdown in 2020, we remain actively engaged with exhibition partners in both new signings and laser upgrades. As Edwin mentioned, we signed agreements for 38 theater systems, 27 of which were sales, including upgrades. We ended the year with a contractual backlog of 251 systems, providing a tangible path to future installations. This includes 87 full sales, 114 in hybrid, and 15 full revenue-sharing arrangements. Moving to operating expenses.
SG&A, excluding stock-based compensation, declined by 23% year-over-year to $11 million, benefiting from the cost actions we took in response to the pandemic. Operating expenses, including stock-based compensation, were approximately $25.8 million, which includes approximately $10.9 million in provisions taken mainly in relation to COVID-19. Excluding the provisions, adjusted operating expenses would've been approximately $14.9 million, down 29% year-over-year. Given the inherent operating leverage of our asset-light business model, we returned to profitability almost immediately upon demand recovery and delivered a strong rebound to $10.9 million in adjusted net profit for the second half of 2020. For full year, we recorded an adjusted net loss of approximately $4.6 million. Capital expenditures for the year were $4.7 million, down from $19.3 million in 2019.
We expect CapEx predominantly related to our JV network growth to pick up in 2021 on increased installation activities, but lower than historical levels as our network expansion becomes less CapEx-driven on rising scalability. Factoring in $14 million of dividends paid and share repurchases of $1.5 million, we ended the year with $88.5 million in cash, largely in line with 2019. Earlier in the quarter, we sold down our position in Maoyan for total gross proceeds of $17.8 million. While sale of our stake is to maximize liquidity and redeploy capital to other potential initiatives, our strategic partnership with Maoyan remains intact. As a result of the above and collections early in the first quarter of 2021, our cash position today stands at close to $110 million.
Our financial strength and solid balance sheets enables us to consistently return capital to shareholders through dividends and share buybacks. As Rich indicated, despite COVID-related earnings impact in 2020, we're pleased to announce the recommendation of final dividend payments of approximately $7 million, or $0.02 per share, or the equivalent of 15.155 Hong Kong cents per share. IMAX China also announced an increase in dividend payout ratio from 33% of net income to 50% starting from 2021 onwards. This reflects our confidence in our long-term outlook, as well as our ongoing commitment to increase shareholder returns while growing our earnings power. To close, we're encouraged by the strong recovery shown across our network, giving us even greater confidence in IMAX China's premium positioning in the post-pandemic theatrical space as we capitalize on China's premiumization trend to drive continued market share gains.
With that, I'll turn it over to the operator for Q&A.
Thank you. As a reminder, you may press star one on your telephone keypad if you would like to ask a question. If you are on speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. We will go to a question first from Thomas Chong of Jefferies.
Hi, good morning. Thanks, management, for taking my questions. May I ask about getting more color about the 2021 outlook, in particular, how we should see the box office this year versus 2019? With that, may I ask about how we should think about the first half and the second half outlook? I am not sure if the special events or any regulatory issues or industry trend that we should think about with respect to foreign films getting approval despite the reopening. Thank you.
Jim, why don't you take that one?
Sure. I think in terms of box office for this year versus 2019, Chinese New Year obviously set the stage for hopefully what we expect to be as a really solid 2021, given what happened, 160 million people going to the theaters that week. It was obviously very encouraging and was driven by a number of different titles, which we are really excited about. Edwin mentioned in the script earlier some of the titles that are coming up on the local language side for the balance of the year, all of which are very blockbuster in nature and we hope to expect to see good things from them.
As Rich mentioned as well earlier in the call, the Hollywood slate has been delayed, but when you look at it on the surface, there is a number of really promising titles that could lend themselves to a really great 2021. So, whether it is Black Widow, Fast & Furious, Venom, all of the Marvel titles, Bond, Dune, Mission: Impossible, Spider-Man, these are all titles that have played in the market before and have done well. So a combination of Hollywood titles and local language titles for 2021, plus sort of how we have opened up the year, I think sets the stage quite promising for 2021. So we will see how it goes with all the theaters opening the good slate of titles when they actually get in. We are sort of looking forward to kind of how that comes together for the year.
In terms of regulatory issues or industry trends and stuff like that, I think, Hollywood titles getting in, there is really nothing to be said about that. The issues with Hollywood titles being slow to come into the China market recently have to do with the pandemic overall and their release dates in North America being delayed. I think, as far as what we can see, once that sort of resolves itself and things appear to be getting better in North America over the next few months, China represents obviously a really important market to Hollywood, a really powerful market to sort of generate incremental box office dollars on their big IP. I do not think there is anything to read into that other than the delays with Hollywood in the past in China have been driven predominantly by the pandemic.
Yeah. That is really. I think I have covered your questions. Let me know if there is anything else. Rich, I do not know if you have anything to add.
Thank you.
No, I do not, Jim, other than, as we all said during our script, if you look at the results in the second half of the year, 80% of normal and without Hollywood films, which are usually around half of our box office, that sort of puts it in perspective. Once the Hollywood films return, with how we have done so far at our Chinese slate, we feel very good about the box office this year.
Thank you.
As a reminder, it is star one if you do have a question at this time. We'll go next to Shan Chao of China International Capital Corporation.
Thanks, management, for taking my questions. My question is about the plan for screen installation. Could you address more on how to review our regional extension and cooperation with theaters in China?
Jim, do you want to answer that one also?
Yeah. Could you clarify that question? I am sorry, you said plan for. I missed the last part of it. Plan for screen installation?
Yeah.
I think she was asking about the plan for.
What part?
The first question is about the plan for screen installation. Could you address more on how to review our regional extension and cooperation with theaters in 2021?
Sure. As we talked about, the theaters that we signed in 2021, about 40 theater signings in, sorry, in 2020. We have a backlog of 250 theaters that we're working with for installation. We saw some obviously accelerated activity in the back half of the year, given that we were shut down for the 6 or 7 months, and there was a ramp-up period involved as well. There is active activity going on. We're continuing to sign new agreements with our existing clients like Wanda, like Jinyi, like many others, and I think that's been a trend that's happened not just this past year in 2020, but in the past. The partners that work with us continue wanting to work with us in the future. While we sort of look forward into 2021, we expect obviously installations to do better than what we did in 2020.
We're not going to get back to those levels that we were at in 2019, in 2021. But again, given the sort of backlog of 250 theaters, the signing activity that's going on, the customers that are doing deals with us who are the big exhibitors, we're feeling pretty good about our installation activity. Just to remind everybody, our installation activity generally is back-end loaded in the year, predominantly sort of Q3, and the majority of which is Q4. That's been a trend that's been consistent with our business for many years. We would expect that trend to continue in 2021 as well.
Thank you. Thanks.
As a reminder, you may press star one on your telephone keypad if you have a question at this time. That is star one. We'll pause just a moment. With no other questions in the queue at this time, I will now turn the call back to Rich Gelfond for any additional or closing remarks.
Yes, thank you, operator. Just briefly, we were quite gratified with the reopening in the second half, which we are reporting on today. I think if you had told us that we would have performed as well as we did on the heels of the pandemic, even our most optimistic thoughts wouldn't have gone there. The box office has really come back extremely quickly. I think the fact that we are a major brand, I think the fact that we are well-known, I think the fact that when people left the pandemic, they wanted to do something they couldn't do at home. I think IMAX really fit that bill at a lot of levels. Then we got a great start to 2021 with Chinese New Year.
Our dividend payout ratio is a symbol of that, where we feel confident enough in the company and our cash flows and future where we feel it is appropriate to share a more significant part of our profitability with our shareholders. So thank you all very much, and we look forward to reporting to you on our continued progress on reopening.
This concludes today's call. Thank you for your participation. You may now disconnect.