READING INTERNATIONAL INC

SS

Where have we been, and where we are going.

We have discussed in some detail under the heading “Business Description” in Part I of this Report our views as to the impact of the COVID-19 pandemic, the 2023 Hollywood Strikes and spiking interest rates on our business and, while not repeating that disclosure here, we want to incorporate it by reference. As a general matter, the COVID-19 pandemic caused considerable economic instability all over the world and greatly affected our Company’s global operations from 2020 through 2022. It in someways created some big governmental winners and losers as privately held exhibitors were provided with hundreds of millions of dollars in government aid, the four publicly owned exhibitors (of which we are the smallest) received no assistance. Public stockholders suffered. Private interests were saved. But through determination and persistence we have survived. We have preserved our people and our core assets, and we are prepared and eager to go forward.

In 2021, as we began reopening our cinemas from the pandemic that began in March 2020, we faced strict operating guidelines that often prevented us from recouping our operational costs. Additionally, film availability was inconsistent, with major releases diverted to streaming platforms or postponed. Attendance remained low, and operating costs were further impacted by stricter cleaning protocols, which reduced the number of showtimes. However, in Australia and New Zealand, business on the real estate side began to return to normal.

To address our negative operating cash flow situation, we significantly cut back our capital expenditures and, in 2021, monetized five non-core real estate assets generating a net profit from such sales of $93.3 million and, more importantly, net cash of $144.8 million. We selected assets that were primarily non-cash flowing, had values that were not adversely impacted by the pandemic and that, if retained, would have required significant capital investment to achieve any material increase in value. In the two cases where we monetized properties with cinemas, we were able to lease back the cinema component, and consequently, suffered no loss in our cinema count. We used the cash from these monetizations to pay down debt ($59.1 million) and fund necessary capital expenditures ($24.2 million). During 2023 we monetized an underperforming cinema in Australia for $A2.8 million, and during the first quarter of

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2024, sold our underutilized administrative office building in Culver City, California for $10 million. At December 31, 2023, we had cash and cash equivalents of $12.9 million.

During 2022, our operations began to return to normal as health and safety restrictions loosened and as studio releases gradually improved. Although cinema attendances were still below pre-pandemic levels, the industry box office results significantly rebounded in 2022, compared to the prior two years, as audiences embraced the shared community experience of movies on the big screen. Despite reduced film releases and alternative distribution methods, the release of highly anticipated blockbuster films, such as Top Gun: Maverick and Avatar: The Way of Water, were among some of the highest grossing films since the start of the pandemic and provided optimism for the cinema industry.

As we stepped into 2023, the progress made in the previous year had established a hopeful setting for the world of cinema, reigniting audiences' passion for the immersive experience of the big screen. The release of The Super Marios Bros. Movie, Barbie, and Oppenheimer created a summer film season that drove audiences back to theaters. The anticipation and excitement surrounding the joint release of Barbie and Oppenheimer contributed to the cultural phenomenon, ‘Barbenheimer’, with new box office records being achieved as eager moviegoers flocked to experience these highly anticipated films on the big screen. The 2023 film slate also benefitted from the release of franchise favorites such as Guardians of the Galaxy Vol. 3, Fast X, and Spider-Man Across The Spider-Verse.

While the cinema industry continued to recover during 2023, the industry suffered another challenge during the year with the onset of the 2023 Hollywood Strikes. Though not as severe as the pandemic, these strikes negatively impacted our business in 2023 and we anticipate that we will continue to experience the fallout of these strikes throughout 2024. Many films that were scheduled for release in 2024 have now been pushed into 2025 as production was halted, and some films were pushed from 2023 into 2024 following the screen actor’s inability to promote those films.

However, despite these challenges, we remain optimistic about the future of our industry, and we believe that this new challenge will have a short-term impact on our operations and the industry as a whole. We are encouraged by the grosses achieved by recent releases such as Dune: Part Two and Kung Fu Panda 4. We are encouraged by the film line up scheduled for the remainder of 2024 and continuing into 2025. And, we are encouraged by the fact that the motion picture industry has once again realized that a theatrical release is important to getting the best return on investment for a major motion picture.

In order to get through this period, we have monetized a number of real estate assets. However, these have not been fire sales, and we believe that we have been able to get fair value for these assets. Every asset sold, save one, was sold at a material profit. None of the assets sold was core to our operations. And, we believe we have been able to preserve the assets which offer us the most in the way of future upside potential.

As of the date of this report, all of our cinemas are fully operating with the exception of our cinema in Wellington, New Zealand, which remains closed due to seismic concerns pending the redevelopment of that ETC. However, we still have remaining deferred occupancy costs that we are continuing to repay. At December 31, 2023, these rent deferrals totaled approximately $10 million.

With regard to our real estate business, all of our tenants are currently open for business at our Australian and New Zealand properties (with the exception of one tenant in Australia completing a new fit out). Most of the rentable retail portion of our Courtenay Central location in New Zealand continues to be closed due to seismic concerns, however, one tenant remains open at this property. On our Wakefield property a further digital billboard tenant and one tenant at our Napier property are open.

Our anticipated plans for 2024 and beyond are discussed in greater detail below.

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RECENT DEVELOPMENTS

Recent developments in our two business segments are discussed below. For an overview of our two business segments, including a breakdown of assets that we own and/or manage, please see Part I, Item 1 – Our Business of this 2023 Form 10-K.

Cinema Exhibition

Key Performance Indicators

Food and Beverage Spend Per Patron

A key performance indicator utilized by management in our cinema segment is Food and Beverage (“F&B”) Spend Per Patron (“SPP”), which is calculated based on our total F&B Revenues on a post-tax basis divided by our attendance during a specific period.

One of our strategic priorities has been to continue upgrading the food and beverage menu at several of our global cinemas. As of December 31, 2023, we have a total of 40 theater locations with an all-new upgraded food and beverage menus(i.e. menus that are beyond traditional popcorn, soda, and candy).

We use F&B SPP as a measure of our F&B operational performance as compared to that of our competitors. Although the profitability of our F&B operations is influenced by numerous factors, including labor and cost of goods, F&B SPP serves as an indicator of our ability to achieve consistent strong top-line performance. In addition, F&B SPP highlights our ability to optimize revenue by effectively promoting and selling supplementary products to our customers during each visit. Moreover, this metric assists in evaluating how well we can differentiate our F&B offerings from our competitors. Management in turn uses F&B SPP to adjust food and beverage pricing strategies at our individual theaters, measure the effectiveness of promotional marketing initiatives, optimize menu offerings, and to ensure price barriers are not created for our attendance.

Average Ticket Price Per Patron

An additional key performance indicator utilized by management in our cinema segment is Average Ticket Price (“ATP”) per patron, which is calculated based on our total box office revenues on a post-tax basis divided by our attendance during a specific period. ATP serves to measure our operational cinema performance when compared to that of our competitors. ATP is a useful metric for evaluating our ability to achieve a strong top line performance as we recover from the COVID-19 pandemic. In addition, ATP gauges the effectiveness of our cinemas’ pricing strategies and our ability to draw back audiences to our theaters. Management uses ATP to adjust and inform ticket pricing schemes for our individual theaters, measure the effectiveness of our content programming, and ensure that price barriers are not created for core guests.

Cinema Additions

The additions to our cinema portfolio during the 2021-2023 COVID years were as follows:

Busselton, Western Australia, Australia: On September 22, 2023, we opened a five-screen complex in the newly expanded Busselton Central Shopping Centre precinct of Busselton, Western Australia. The state-of-the-art complex features a TITAN LUXE screen, elevated F&B offerings, and recliner seating.

South City Square, Queensland, Australia: On August 24, 2023, we launched our first-ever Angelika Cinemas outside of the United States at South City Square in Woolloongabba, Brisbane. The location currently operates as an eight-screen complex, featuring elevated food and beverage offerings (including alcoholic beverages) and recliner seating.

Armadale, Western Australia, Australia: On January 13, 2023, we took over an existing six-screen cinema in Armadale, Australia, a suburb of Perth in Western Australia.

Traralgon, Victoria, Australia: On December 15, 2021, we opened a new state-of-the-art five-screen Reading Cinemas in Traralgon, Victoria.

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Millers Junction, Victoria, Australia: On June 16, 2021, we opened a new state-of-the-art six screen Reading Cinemas at the expanded Millers Junction Village featuring two TITAN LUXE auditoriums with DOLBY ATMOS immersive sound, luxury recliner seating in all auditoriums, and an enhanced F&B offering.

Upgrades to our Film Exhibition Technology and Theater Amenities

Prior to COVID-19, we invested in both (i) the upgrading of our existing cinemas and (ii) the development of new cinemas to provide our customers with premium offerings, including state-of-the-art presentation (including sound, lounges, and bar service) and luxury recliner seating. As of December 31, 2023, all of the upgrades to our theater circuits’ film exhibition technology and amenities over the years are as summarized in the following table:

(1)Gold Lounge: This is our "First Class Full Dine-in Service" in our Australian and New Zealand cinemas, which includes an upgraded F&B menu (with alcoholic beverages), luxury recliner seating features (intimate 25-50 seat cinemas) and waiter service.

(2)Premium Service: This is our "Business Class Dine-in Service" in our Australian and New Zealand cinemas, which typically includes upgraded F&B menu (some with alcoholic beverages) and may include luxury recliner seating features (less intimate 80-seat cinemas), but no waiter service.

(3)Spotlight Service: Our first dine-in cinema concept in the U.S. at Reading Cinemas in Murrieta, California. Six of our 17 auditoriums at this cinema feature waiter service before the movie begins with a full F&B menu, luxury recliner seating, and laser focus on customer service. Our Spotlight service has been temporarily suspended since the initial COVID-19 shutdown.

(4)Upgraded Food & Beverage Menu: Features an elevated F&B menu including a menu of locally inspired and freshly prepared items that go beyond traditional concessions, which we have worked with former Food Network executives to create. The elevated menu also includes beer, wine and/or spirits at most of our locations.

(5)Liquor Licenses: Licenses are applicable at each cinema location, rather than each cinema auditorium. As of December 31, 2023, we have pending applications

for additional liquor licenses in five cinemas in Australia.

Global Real Estate Developments

44 Union Square Redevelopment (New York, N.Y.) –We have made significant progress in the development of our 44 Union Square property in Manhattan. On January 27, 2022, we entered a long-term lease with Petco for the lower level, ground floor, and second floor of the building, representing 42% of the leasable area. Petco is in occupancy of its premises on a full rent cash paying basis and opened to the public on June 1, 2023.

Effective mid-March 2024, we engaged George Comfort & Sons (www.gcomfort.com), as the new exclusive leasing broker for the remaining space at 44 Union Square. While the space was originally designed for office uses, given the dramatic presence of the property on Union Square, the rebound in foot traffic being enjoyed by Union Square and our building’s significant branding potential, we are considering, a range of uses beyond traditional office tenants, including short term and special purpose uses. While we cannot guarantee the successful leasing of the remaining space, we anticipate that George Comfort & Sons with its varied and long experience in New York City real estate will bring a fresh approach and thinking to activating the remaining space at 44 Union Square.

Effective April 1, 2024, George Comfort & Sons will also take on the property management role at 44 Union Square.

Minetta Lane Theatre (New York, N.Y.) – Prior to COVID-19, our theatre was used by Audible to present plays featuring a limited cast of one or two characters and special live performance engagements on the Audible streaming service. Due to COVID-19, no shows were presented between March 2020 and October 8, 2021, the date on which public performances resumed, and during this period we provided certain abatements. We are currently in negotiations with Audible regarding an extension of the term of their current license to use our Minetta Lane Theatre for their productions.

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Orpheum Theatre (New York, N.Y.) – Prior to COVID-19, our theatre was the home of STOMP. Due to COVID-19, no shows were presented between April 2020 and June 2021. Thereafter, performances were intermittent. During this period, we provided certain abatements. STOMP ultimately closed (after 30 years at our theatre) on January 8, 2023. Under our termination agreement with the producers of STOMP, we have certain rights to provide the New York City venue for any future production of that show.

Following STOMP’s historic run at the Orpheum, The Empire Strips Backran for approximately three months, followed by a limited holiday engagement of Death, Let Me Do My Show starring comedian Rachel Bloom. The Off-Broadway solo version of William Shakespeare’s Hamlet starring Eddie Izzard opened at the Orpheum on March 19, 2024 and is expected to run through mid-April 2024. We are also finalizing another license agreement for an open-ended show anticipated to open in September 2024.

Cinemas 1,2,3 Redevelopment (New York, N.Y.) –Currently operated as the Cinemas 123, we have historically treated this property as an asset held for long term development. However, in light of a variety of factors, such as market conditions in Manhattan for real estate assets, cost of capital and demands on our liquidity, we have begun to explore alternatives for this property. These alternatives may include, again by way of example, the bringing in of a capital partner, the entering into a long-term ground lease (which could serve as the basis for medium to long term finance), and/or the sale (in whole or in part) of our interest in the property.

Australia:

Newmarket Village ETC, (Brisbane, Australia) – We continue to work on the expansion and upgrading of our Newmarket Village ETC. The site includes a 23,250 square foot parcel adjacent to the center, improved with an office building. Over the next few years, we will be evaluating development options for this space. The combined center and office building is currently 99% leased.

Cannon Park ETC, (Queensland, Australia) – We acquired two adjoining properties in Townsville, Queensland, Australia comprising of approximately 9.4-acres in 2015. The total gross leasable area of the Cannon Park City Center and the Cannon Park Discount Center is 132,731 square feet. Our multiplex cinema is the anchor tenant at the Cannon Park City Center. This site is currently 94% leased.

The Belmont Common, (Belmont, Perth, Australia): The total gross leasable area of the Belmont Common is 60,117 Sq ft. Our multiplex cinema is the anchor tenant with six third-party tenants and our Reading Cinemas, the site is currently 100% leased.

New Zealand:

Courtenay Central Redevelopment (Wellington, New Zealand) – Damage from the 2016 Kaikoura earthquake necessitated demolition of our nine-story parking garage at the site, and unrelated seismic issues caused us to close major portions of the existing cinema and retail structure in early 2019. Prior to the COVID-19 pandemic, our real estate team had developed a comprehensive plan featuring a variety of uses to complement and build upon the “destination quality” of the Courtenay Central location. Notwithstanding the COVID-19 pandemic, our real estate team is continuing to work with our consultants, tenants, potential tenants, and city representatives to advance our redevelopment plans for this property. We anticipate that this redevelopment opportunity will be a principal focus over the next few years. We remain optimistic about the development potential for our Courtenay Central property, in light of, among other things, (i) the successful June 3, 2023 opening of Takina (wcec.co.nz), this capital city’s first premium conference and exhibition space, (ii) the loosening of certain height and density restrictions, and (iii) the lack of comparable building sites.

Corporate Matters

Board Compensation and Stock Options Committee – Refer to Part II, Item 8 – Financial Statements and Supplementary Data—Notes to Consolidated Financial Statements-- Note 16 – Share-Based Compensation and Repurchase Plans for details regarding our Board, Executive and Employee stock-based remuneration programs.

OVERALL RESULTS OF OPERATI