REG - Everyman Media Grp - Final Results to 28 December 2023
16/04/2024 07:00
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RNS Number : 7118K Everyman Media Group PLC 16 April 2024
16 April 2024
Everyman Media Group PLC
("Everyman" the "Company" or the "Group")
Final Results to 28 December 2023
Everyman Media Group plc (AIM: EMAN) today announces its audited financial
results for the year ended 28 December 2023.
Highlights
Continued strong financial and operational performance
· Admissions of 3.75m (2022: 3.4m), +9.7%
· Revenue of £90.9m (2022: £78.8m), +15.3%
· Adjusted EBITDA of £16.2m (2022: £14.5m), +11.7%
· Food and Beverage Spend Per Head(1) of £ 10.29 (2022:
£9.34), +10.2%
· Paid for Average Ticket Price(1) of £11.65 (2022:
£11.29), +3.2%
· Market share increased to 4.8% (2022: 4.5%)
· Operating profit, excluding impairments, of £0.7m (2022:
£0.5m)
· Gross cash of £6.6m at year end (2022: £3.7m) and net
debt of £19.4m (2022: £18.5m)
Measured expansion
· Four organic openings during the year, in Salisbury,
Northallerton, Plymouth and Marlow.
· Highly complementary acquisition of Tivoli Bath and
Cheltenham from the Empire Cinemas administration process in December 2023.
· Three confirmed openings in 2024, in Bury St Edmunds,
Stratford (London) and Cambridge, with the Group continuing to focus on
reducing net debt and leverage.
Outlook
· With a focus on hospitality, Everyman is re-defining how film is
being consumed and is therefore outperforming the wider cinema market.
· Positive momentum in Q1 2024, with strong trading driven by
'Dune: Part II' and high-quality awards content.
· Management expects 2024 to outperform 2023 due to a stronger
slate, with more focus on original storytelling and quality content.
· Highlights include 'Paddington in Peru', 'Joker: Folie a Deux',
'Wicked', 'Mufasa: The Lion King' and an untitled 'Gladiator' sequel.
(1)Paid for Average Ticket Price and Food and Beverage Spend per Head have
been adjusted to remove the benefit of VAT reductions in 2022 in order to
provide a like-for-like comparison.
Alex Scrimgeour, Chief Executive Officer of Everyman Media Group PLC said:
"Again we have outperformed the wider cinema market and proven that the unique
Everyman proposition, with a core focus on exceptional hospitality, is the
most relevant form of cinema. Guests are returning to our venues in greater
numbers and spending more with us than they have in previous years, and the
progress made both financially and operationally is testament to the hard work
of the teams in our venues and Head Office, who have shown exceptional
dedication during the year.
Our measured approach to organic expansion continues, with three exciting and
confirmed openings for 2024. We are confident of delivering another year of
growth, as we move ahead with a larger footprint and continuously improving
film slate."
For further information, please contact:
Everyman Media Group plc Tel: 020 3145 0500
Alex Scrimgeour, Chief Executive
Will Worsdell, Finance Director
Canaccord Genuity Limited (NOMAD and Broker) Tel: 020 7523 8000
Bobbie Hilliam
Harry Pardoe
Alma (Financial PR Advisor) Tel: 020 3405 0205
Rebecca Sanders-Hewett
David Ison
Joe Pederzolli
About Everyman Media Group PLC:
Everyman is the fourth largest cinema business in the UK by number of venues,
and is a premium, high growth leisure brand. Everyman operates a growing
estate of venues across the UK, with an emphasis on providing first class
cinema and hospitality.
Everyman is redefining cinema. It focuses on venue and experience as key
competitive strengths, with a unique proposition:
· Intimate and atmospheric venues, which become a destination
in their own right
· An emphasis on a strong quality food and drink menu
prepared in-house
· A broad range of well-curated programming content, from
mainstream and independent films to theatre and live concert streams,
appealing to a diverse range of audiences
· Motivated and welcoming teams
For more information visit http://investors.everymancinema.com/
Chairman's statement
I am pleased to report that 2023 was another year of progress for the
business. The Group delivered double digit growth in both revenue and EBITDA,
despite the backdrop of a difficult consumer environment. Our results for the
year demonstrate that the Everyman offer is the most relevant form of cinema,
and that we are the market leader in what we do.
Review of the Business
The Group saw progress in all key performance indicators when compared to
2022. Admissions increased by 9.7%, and we delivered improvements in Paid for
Average Ticket Price and Food & Beverage Spend per Head. The 10.2%
increase in the latter is an exceptional result, demonstrating the effect of
ongoing focus and investment into our offer.
We opened four new venues during the year, in Salisbury, Marlow, Northallerton
and Plymouth, each of which showcase the exceptional quality and distinctive
look and feel that has become synonymous with Everyman. In addition, we
acquired the Tivoli cinemas in Bath and Cheltenham in December 2023. These are
two exciting venues in highly desirable locations for the Group and, during
2024, we will refurbish both to bring them in line with the high standards of
the wider estate. At the end of the year, the Group had 44 venues and 152
screens.
As ever, I extend my thanks to the Everyman teams in both venues and Head
Office, who have shown outstanding commitment to delivering exceptional
standards of hospitality. This is what sets Everyman apart, encourages guests
to return to us, and allows us to demonstrate ongoing progress.
Outlook
We look to the future with confidence. Despite the impact of the SAG-AFTRA and
WGA strikes in 2023, we anticipate a continuously improving film slate in 2024
and beyond. This year, we will proceed with our expansion plans at a measured
pace, with three new openings planned, mindful of reducing net banking debt
and leverage. Beyond this, our focus remains to do, what we do best, and to
deliver high-quality hospitality to our guests through our venues, people,
food and beverage and - of course - film.
Philip
Jacobson
Non-Executive Chairman
15 April 2024
Chief Executive's Statement
Business Model and Growth Strategy
The Everyman brand is positioned at the premium end of the UK leisure market.
The Group's proposition is based on high quality and unique venues in town
centre locations, and has a greater number of revenue-generating activities
than the traditional cinema or multiplex model. Everyman has a core focus on
exceptional hospitality, which it delivers through its venues, food and
beverage, people and film.
The Directors believe that the opportunities to develop new Everyman venues
both across the UK are significant. As a result, the Group's expansion
strategy is as follows:
· Expanding our geographical footprint by opening venues to reach
new audiences, including an ongoing assessment of the market for acquisition
opportunities
· Continually evolving the quality of experience and our film
programming
· Expanding our food and beverage offer through increased choice
and innovation
· Engaging in effective, revenue-generating marketing activity
Financial Overview
Everyman has delivered robust, double-digit growth in both revenue and EBITDA
against a challenging economic backdrop, delays to new openings and both
writers' and actors' strikes. Further operational progress has been made with
improvements in all key metrics. We are pleased to report a 15.3% increase in
Revenue to £90.9m (2022: £78.8m), and an 11.7% increase in Adjusted EBITDA,
to £16.2m (2022: £14.5m). In addition, Paid for Average Ticket Price
increased, and the upward trajectory of Spend per Head continued, resulting in
total spend per customer increasing by £1.34 when compared to the previous
year.
We continued our programme of measured expansion, organically opening four new
venues and acquiring the two Tivoli venues in Bath and Cheltenham. As such,
the cash flow statement for the year includes £18.6m on the acquisition of
Property, Plant & Equipment (2022: £18.9m). This amount also includes
work in progress on our 45(th) venue, in Bury St Edmunds, which opened in
February 2024.
The Group has been able to finance the majority of its expansion through
£17.9m of operating cash flow (2022: £11.8m). In addition, the Group raised
£6.5m (2022: £Nil) through the sale and leaseback of its freehold venues in
Crystal Palace and Salisbury, and received lease incentives of £4.1m (2022:
£5.0m) in the form of contributions to venue fit out costs.. The latter
illustrates landlords' ongoing desire to work with us, and the appeal of
having Everyman as a leisure tenant.
Net banking debt at the end of the period was £19.4m (2022: £18.3m). Despite
the small increase, the Group was pleased to have opened six new venues whilst
reducing leverage. With capital expenditure on these new openings excluded,
the Group would have generated significant free cash flow.
The Directors remain of the view that the property deal landscape is highly
favourable, with the majority of transactions attracting significant landlord
contributions. However, there is a balance to be found between continuing
expansion and making the most of attractive market conditions, and maintaining
sensible levels of net banking debt. In light of this, the Group now expects
to open three venues in 2024 and three or four venues in 2025, with the
fully-built venue in Durham currently expected to open in Q1 2025. The
Directors expect this to have a deleveraging effect, with a higher proportion
of expansion financed through operating cash flow. Strategic acquisitions,
such as the Tivoli venues in Bath and Cheltenham acquired in December 2023,
will continue to be judged on their merit.
The Directors consider that the Group balance sheet remains robust, with
sufficient working capital to service ongoing requirements and to support our
growth going forward.
The Group's financial performance is given in detail in the Finance Director's
statement later in this report.
KPIs
The Group uses the following key performance indicators, in addition to total
revenues, to monitor the progress of the Group's activities:
Year ended Year ended
28 December 29 December
2023 2022
(52 weeks) (52 weeks)
Admissions 3,749,120 3,418,599
Paid for average ticket price* £11.65 £11.29
Food and beverage spend per head** £10.29 £9.34
*Paid for average ticket price has been adjusted to remove the impact of the
Temporarily Reduced Rate of VAT in the first quarter of 2022 in order to
provide a like-for-like comparison.
**Food and beverage spend per head has been adjusted to remove the impact of
the Temporarily Reduced Rate of VAT in the first quarter of 2022 in order to
provide a like-for-like comparison, and includes income from Deliveroo.
New Venues
During 2023 the Group opened six new venues. Four were organic openings - a
two-screen venue in Marlow, a three-screen venue in Plymouth and four-screen
venues in Salisbury and Northallerton.
On 14(th) December 2023 the Group acquired the two Tivoli cinemas from the
Empire Cinemas administration process - a four-screen venue in Bath and a
five-screen venue in Cheltenham. These are two premium venues in desirable
locations and will be highly complementary to the Everyman estate. During 2024
we will refurbish both cinemas to bring them in line with the high standards
commensurate with our existing venues.
Trading across new openings has been encouraging. Management is confident that
they will create significant value moving forward, with new venues typically
taking four years to reach full maturity.
Post year end, in February 2024, we opened a new three-screen venue in Bury St
Edmunds. Two further venues in Cambridge and Stratford (London) are expected
to open later in the year. In 2025, the Group plans to open venues at The
Whiteley (Bayswater), Brentford Lock and Lichfield. Other venues are in
advanced stages of negotiation; however, the Board remains mindful of measured
expansion funded through free cash flow.
Our fully fitted out venue in Durham is ready to open, pending practical
completion of the wider Milburngate scheme. Our current expectation is that
the venue will open in the final quarter of 2024 or first quarter of 2025.
At the end of the year, the Group operated 44 venues with 152 screens:
Location Number of Screens Number of Seats
Altrincham 4 247
Bath 4 229
Birmingham 3 328
Bristol 4 476
Cardiff 5 253
Chelmsford 6 411
Cheltenham 5 369
Clitheroe 4 255
Edinburgh 5 407
Egham 4 275
Esher 4 336
Gerrards Cross 3 257
Glasgow 3 201
Harrogate 5 410
Horsham 3 239
Leeds 5 611
Lincoln 4 291
Liverpool 4 288
London, 13 venues 37 3,136
Manchester 3 247
Marlow 2 161
Newcastle 4 215
Northallerton 4 274
Oxted 3 212
Plymouth 3 190
Reigate 2 170
Salisbury 4 311
Stratford-Upon-Avon 4 384
Walton-On-Thames 2 158
Winchester 2 236
Wokingham 3 289
York 4 329
152 12,195
The Market
The film slate for 2023 emphasised our confidence in the enduring strength of
demand for high-quality, original content. With performance weighted towards
the second half of the year, the most compelling examples were the remarkable
performances of Barbie and Oppenheimer during July and August. The week
following the release of these two titles was a record week of admissions for
Everyman. The intimate atmosphere of our venues complemented the vibrant
energy of Barbie, with audiences arriving in fancy dress to savour themed
cocktails and our enticing food and beverage offer.
Barbie and Oppenheimer are, however, not an exception: in fact, at the UK Box
Office, five of the top fifteen highest grossing films of all time have been
post pandemic (Barbie, No Time to Die, Spiderman: No Way Home, Top Gun:
Maverick and Avatar: The Way of Water), which emphasises our belief that
consumer demand for high-quality, original content remains undiminished.
The Group was pleased that market share for the year was 4.8%, up from 4.5% in
2022. Positive momentum in market share has continued into the new year.
The Writers' Guild of America (WGA) and Screen Actors' Guild - American
Federation of Television and Radio Artists (SAG-AFTRA) strikes began in May
2023 and ultimately concluded in November 2023. We did see some impact to the
film slate as a result, the most notable change being the release of Dune:
Part II moving from November 2023 to March 2024. We continue to have
confidence in the continuously improving film slate during 2024; titles to
look forward to include Wicked, Despicable Me 4, Paddington in Peru, Joker:
Folie à Deux, Inside Out 2, Mufasa: The Lion King, Dune: Part II and an
untitled Gladiator sequel. The year ahead should continue an upward growth
trajectory, and we expect a full film slate by the end of the year.
Key Business Developments
Our new, best-in-class website launched in February 2023. The website features
new functionality for customers, including an improved Quick Book widget, and
more flexibility for members, including self-service ticket cancellation. It
has also given us greater visibility of the booking flow and the potential for
more targeted advertising based on customer profiles and web behaviours.
Average monthly visitors since the website launched have been c. 970,000, a
21% uplift on the comparative period in 2022. In addition, a new iOS and
Android app is currently in development and is set to launch in 2024.
Our Food and Beverage offer goes from strength to strength. We continued our
focus on speed of service, completing our digital ordering system roll out in
February 2023. Menu development during the year included a new Raclette Burger
and Prosciutto & Rocket Pizza, new sharing dishes such as Truffle &
Porcini Arancini, and new vegan items such as Corn "Ribs" and a Vegan Pizza.
New cocktails included Strawberry Daiquiri, Passionfruit Martini, Mezcal
Paloma and SoCo Sour, and we also had successful menu brand partnerships with
paid listings from Menabrea and Sipsmith, amongst others. In addition, we
evolved our menu architecture in the fourth quarter of the year to further
encourage sales of higher-value items. Our Food and Beverage offer is a
strategically important part of our business and one in which we continue to
invest time and resource. Further innovation is expected to continue to drive
spend per head moving forward.
During the year we launched a new partnership with American Express, who
hosted nationwide previews of Wes Anderson's Asteroid City, Past Lives and A
Haunting in Venice, as well as additional events at the Everyman Secret Garden
pop-up cinema at The Grove Hotel from
July to September. Our signature partnerships with Jaguar and Green &
Black's went from strength to strength, with Jaguar sponsoring an immersive
event for Babylon at our Crystal Palace venue in January and continuing their
support for the Screen on the Canal at King's Cross
during the summer months. Our relationship with AppleTV+ continued to grow,
with screenings of The Reluctant Traveller, Prehistoric Planet, Sharper and
Tetris.
Renewed Banking Facilities
In August we secured a new three-year £35m Revolving Credit Facility with
Barclays Bank Plc and National Westminster Bank Plc, extendable for up to two
years subject to lender consent, and replacing the previous £25m Revolving
Credit Facility and £15m Coronavirus Large Business Interruption Loan Scheme
("CLBILS") held with Barclays Bank Plc and Santander UK Plc. The new facility
ensures that the Group is soundly financially structured and well-positioned
to take advantage of opportunities moving forwards. There was strong appetite
from multiple lenders to work with Everyman, and the covenants and commercial
terms agreed were materially similar to the previous agreement.
People
We recognise the commitment our people have shown to Everyman, our guests and
to each other. Our teams' passion remains key to delivering our signature
brand of hospitality across all our venues, both existing and new.
We have invested in training programmes, and in our digital training and
engagement platforms, in support of our commitment to internal development. We
are delighted to see so many people progressing their careers with Everyman.
During the year we opened four and acquired two new venues, and our existing
teams supported our newest managers to deliver hospitality the Everyman way.
We would particularly like to welcome the teams at the two Tivoli venues as
they integrate into Everyman.
Outlook
Our results demonstrate that appetite for film is as strong as ever, and that
the Everyman model has become the most relevant form of cinema. Guests are
returning to our venues in greater numbers and spending more with us than they
have in previous years.
We were pleased to have financed the majority of 2023 openings through
Operating Cash Flow and to reduce leverage whilst growing our estate further.
Our new banking facilities, signed in August, ensure that we are soundly
financially structured and well-positioned to take advantage of opportunities
moving forwards.
We continue to take a measured approach to organic expansion. The deal
landscape remains favourable and landlords are as keen as ever to work with
Everyman, with several further exciting opportunities in the pipeline. We look
forward to 2024 with increasing optimism.
Alex
Scrimgeour
CEO
15 April 2024
Strategic Report
The Directors present their strategic report for the Group for the year ended
28 December 2023 (comparative period: 52 weeks 29 December 2022).
Review of the business
The Group made a loss after tax of £2,696,000 (2022: £3,504,000). Non-GAAP
adjusted EBITDA was £16.2m (2022: £14.5m).
The Finance Director's Statement contains a detailed financial review. Further
details are also shown in the Chief Executive's Statement and consolidated
statement of profit and loss and other comprehensive income, together with the
notes to the financial statements.
Principal risks and uncertainties
The Board considers risk assessment to be important in achieving its strategic
objectives. There is a process of evaluation of performance targets through
regular reviews by senior management to forecasts. Project milestones and
timelines are reviewed regularly.
1 Film release schedule - The level of the Group's box office revenues
fluctuates throughout the course of any given year and are largely dependent
on the timing of film releases, over which the Group has no control. Whilst
the film slate continued to recover from the pandemic during 2023, the Group
saw some disruption from the SAG-AFTRA and WGA strikes. The Group expects to
see the film slate continuously improve during 2024. The Group mitigates this
through high-quality programming, widening the sources for new content and
focusing on creating a great overall experience at venues independent from the
films themselves.
2 Consumer environment - A reduction in consumer spending because of broader
economic factors could impact the Group's revenues. During 2023, inflation and
interest rates have continued to increase due to geopolitical events.
Historically, the cinema industry has been resilient to difficult
macroeconomic conditions, with it remaining an affordable treat during such
times for most consumers. Whilst the Board considers that the impact has been
minimal in 2023, the Group continues to monitor long term trends and the
broader leisure market.
3 Alternative media channels - The proliferation of alternative media channels,
including streaming, has introduced new competitive forces for the film-going
audience, which was accelerated by the pandemic. To date this has proven to be
a virtuous relationship, both increasing the investment in film production and
further fuelling an overall interest in film with customers of all ages. The
Board considers that the Everyman business model works well alongside other
film channels. It remains an ever-present caution that to maintain this
position we must continue to deliver an exceptional experience in order to
deliver real added value for our customers who choose to see a film at our
venues.
4 Inflation - There is a risk to the cost base from inflation, given the current
economic and geopolitical situation. To mitigate this, the Group enters into
long-term contracts and works very closely with suppliers to improve
efficiencies and limit costs. In addition, and thanks to its size, the Group
can take advantage of lower price points for higher volumes, and payroll costs
are closely monitored and managed to the level of admissions. The Group
entered into a new fixed-rate energy agreement in November 2023 for a period
of one year, to allow the utilities market to settle further, and will seek a
longer-term agreement during 2024. We remain cautious when passing on price
increases to our customer base.
5 Climate change - The Group's business could suffer because of extreme or
unseasonal weather conditions. Cinema admissions are affected by periods of
abnormal, severe, or unseasonal weather conditions, such as exceptionally hot
weather or heavy snowfall. Climate change is also high on the agenda for
investors and increasingly institutional investors are looking closely at the
actions being taken by business to reduce carbon emissions. The Group is
working towards developing a net zero carbon emissions strategy to mitigate
this risk. The Group is compliant with climate-related financial disclosure
requirements under the Companies (Strategic Report) (Climate-Related Financial
Disclosure) Regulations 2022 ("CRFD"), which are aligned to the Taskforce on
Climate-Related Financial Disclosures framework ("TCFD").
6 Data and cyber security - The possibility of data breaches and system attacks
would have a material impact on the business through potentially exposing the
business to a reduction in service availability for customers, potentially
significant levels of fines, and reputational damage. To mitigate this risk
the IT infrastructure is upgraded to ensure the latest security patches are in
place and that ongoing security processes are regularly updated. This is
supported by regular pen testing and back-ups.
7 Film piracy - Film piracy, aided by technological advances, continues to be a
real threat to the cinema industry generally. Any theft within our venues may
result in distributors withholding content to the business. Everyman's
typically smaller, more intimate auditoria, with much higher occupancy levels
than the industry average, make our venues less appealing to film thieves. As
we see the numbers returning to cinema coming close to pre-pandemic levels, we
see this risk reducing to a pre-pandemic level.
8 Reputation - The strong positive reputation of the Everyman brand is a key
benefit, helping to ensure the successful future performance and growth which
also serves to mitigate many of the risks identified above. The Group focuses
on customer experience and monitors feedback from many different sources. A
culture of partnership and respect for customers and our suppliers is fostered
within the business at all levels. Since re-opening we have seen our market
share increase and received positive customer feedback.
Financial risks
The Group has direct exposure to interest rate movements in relation to
interest charges on bank borrowings, with a 1% increase in rates resulting in
an increase in interest charges of £0.3m on current forecast borrowings over
the next twelve months. The Board manages this risk by minimising bank
borrowings and reviewing forecast borrowing positions.
The Group takes out suitable insurance against property and operational risks
where considered material to the anticipated revenue of the Group.
Finance Director's Statement
Summary
· Group revenue of £90.9m (2022: £78.8m)
· Gross profit of £58.1m (2022: £50.5m)
· Non-GAAP adjusted EBITDA of £16.2m (2022: £14.5m)
· Operating loss of £0.1m (2022: £0.4m profit)
· Operating profit excluding impairment charges of £0.7m (2022:
£0.4m)
· Net banking debt £19.4m (2022: £18.3m), with significant
headroom in facilities
Revenue and Operating Profit
Admissions for the 52 weeks ending 28 December 2023 totalled 3.75m, an
increase of 9.7% on the prior year (2022: 3.4m). 2023 is the first year in
recent memory where the comparative period was not impacted by
government-imposed closures, with all venues trading through both periods
fully, aside from any temporary closures for refurbishments.
The uplift in admissions was driven both by four organic new openings during
the year (Marlow, Salisbury, Northallerton and Plymouth) as well as a
high-quality film slate, with performance weighted towards the second half the
year. In particular, the remarkable and well-publicised performance of Barbie
and Oppenheimer during July and August saw the Group achieve its highest ever
week of admissions, surpassing the previous record by a factor of 50%. At the
UK Box Office, five of the top fifteen highest-grossing films of all time have
now been released post-pandemic, which emphasises our belief that consumer
demand for high-quality, original content remains strong and undiminished.
Paid-for Average Ticket Price was £11.65, a 3.2% increase vs. the prior year
(2022: £11.29) and Food & Beverage Spend per Head was £10.29, a 10.2%
increase vs. the prior year (2022: £9.34). Both of these metrics have been
adjusted to remove the benefit from the Temporarily Reduced Rate of VAT in the
first quarter of 2022. In recognition of the challenging macroenvironment, the
Group has remained conservative when passing on price increases to guests, and
is therefore pleased to see such positive growth in these two metrics.
As a result of the above, revenue for the period was £90.9m, a 15.4% increase
on the prior year (2022: £78.8m).
The Group is pleased to report that Gross Margin remained consistent with 2022
at 64.0%, despite the inflationary headwinds faced during the year. This was
substantially due to continued strong cost control by our Film and Procurement
teams.
Other operating income was £0.6m (2022: £0.6m) and related entirely to
landlord compensation. 2023 was the first year post-pandemic in which the
Group received no Coronavirus-related grants or payments, with 2022 including
a £0.2m payment pertaining to the Omicron Hospitality and Leisure Grant.
Administrative Expenses for the period were £58.8m (2022: £50.7m). This was
driven in the main by increased admissions and trading activity, as well as
the impact of new venue openings and associated fixed asset depreciation.
Beyond this, the Group's people costs are inherently linked the National
Living Wage, which increased by 9.7% in April 2023.
Additionally, the Group's fixed-rate Utilities contracts came to an end in
October 2023. Whilst increases were below management expectations, the Group
has entered into a new one-year fixed rate agreement to allow the Utilities
market to settle further, and will seek a longer-term agreement during 2024.
Other than this, and despite the continued macroeconomic environment, the
Directors believe that the impact to the cost base from inflation has been
minimal.
The Board carried out an impairment review at the year end, based on a
judgement of future cash flows from venues considered to have indicators of
impairment. As a result of this, Administrative Expenses includes a charge of
£0.7m (2022: £Nil) relating to the impairment of our venue in Leeds. This is
based on the Board's assessment that, at the Balance Sheet date, the present
value of future cash flows was less than the carrying amount of the
Right-of-Use Asset and Property, Plant and Equipment. The Board anticipates
that the UK Box Office will continue to improve during 2024 and 2025 and will
closely monitor the impact of this on any venues with carried forward
impairment to Right-of-Use Assets and Property, Plant and Equipment, in the
event that any charges previously incurred can be reversed.
Financial Expenses
Financial expenses were £5.4m (2022: £3.9m) and relate mainly to interest
charges on the Group's banking facilities and on lease liabilities under IFRS
16. This increase relates mainly to an increased draw down on the Group's
Revolving Credit Facility as well as increases to underlying interest rates,
as well as the IFRS 16 impact of new leases entered into during the year.
Taxation
The Group's loss for the year includes a £2.8m credit relating to the
recognition of a Deferred Tax Asset. The Group has consulted the FRC's
thematic review of Deferred Tax Assets published in September 2022 and
concluded that an asset should be recognised on the basis of a sufficient
level of probable future taxable profits.
The Group has taken the decision to recognise the Deferred Tax Asset in 2023
due to increased certainty over future trading performance as we emerge
further from the pandemic, and following the conclusion of the WGA and
SAG-AFTRA strikes, which no longer pose the threat of long-term disruption to
the film slate.
Non-GAAP adjusted EBITDA
In addition to performance measures directly observable in the financial
statements, the following additional performance measures are used internally
by management to assess performance:
· Non-GAAP Adjusted EBITDA
· Admissions
· Paid-for Average Ticket Price
· Food & Beverage Spend per Head
Management believes that these measures provide useful information to evaluate
performance of the business as well as individual venues, to analyse trends in
cash-based operating expenses, and to establish operational goals and allocate
resources.
Non-GAAP adjusted EBITDA was £16.2m, compared with £14.5m in 2022. It is
worth nothing that the prior year figure includes a £0.9m benefit from the
Temporary Reduced Rate of VAT.
Non-GAAP adjusted EBITDA is defined as earnings before interest, taxes,
depreciation, amortisation, profit or loss on disposal of Property, Plant
& Equipment, impairment, share based payments, pre-opening expenses and
exceptional costs.
The reconciliation between operating (loss) / profit and non-GAAP adjusted
EBITDA is shown at the end of the consolidated statement of profit and loss.
Cash Flows
The Directors believe that the Group balance sheet remains well capitalised,
with sufficient working capital to service ongoing requirements. Net cash
generated in operating activities was £17.9m (2022: £11.8m) with a net cash
inflow for the year of £2.9m (2022: £0.5m outflow).
Cash flow used in investing activities was £14.2m (2022: £19.9m). This
related mainly to payments for new venues in Marlow, Salisbury, Northallerton
and Plymouth, as well as the acquisition of the two Tivoli venues in Bath and
Cheltenham from the Empire Cinemas Limited administration process in December
2023. The amount also includes £6.5m from the sale and leaseback of our two
freehold venues in Crystal Palace and Salisbury (2022: £Nil).
The Group financed the majority of its expansion from operating cash flow. The
remainder was financed via £4.1m landlord contributions (2022: £5.0m) and a
£4m draw on the Group's Revolving Credit Facility (2022: £9.5m).
The Group ended the year with cash and cash equivalents of £6.6m (2022:
£3.7m) and net banking debt of £19.4m (2022: £18.3m). Whilst net banking
debt is marginally higher than the prior year, the Group has invested in a
total of six new venues (four organically and two through acquisition) whilst
reducing leverage.
Pre-opening costs
Pre-opening costs, which have been expensed within administrative expenses,
were £0.9m (2022: £0.2m). These costs include expenses which are necessarily
incurred in the period prior to a new venue being opened but which are
specific to the opening of that venue.
Exceptional costs
The Group incurred exceptional costs of £0.5m during the year (2022: £0.2m),
which related both to transactional expenses pertaining to the two Tivoli
venues, as well as one-off reorganisational costs relating to certain Head
Office teams.
Banking
On 17(th) August 2023, the Group agreed a new three year loan facility of
£35m with Barclays Bank Plc and National Westminster Bank Plc, extendable by
a further two years subject to lender consent. The facility ensures that the
Group is soundly financially structured and well positioned to take advantage
of opportunities moving forwards. The facility also includes an additional
£5m accordion element, again subject to lender consent.
The new facility replaced the previous £25m Revolving Credit Facility and
£15m Coronavirus Large Business Interruption Loan Scheme ("CLBILS") held with
Barclays Bank Plc and Santander UK Plc.
The covenants on the new facility are based on Adjusted Leverage and Fixed
Charge Cover, as per the previous facility. The Group's current forecasts
demonstrate that the Group will remain within these covenants for the
foreseeable future.
At the end of the year the Group had drawn down £26m (2022: £22m) of the
available funds under the new facility, and therefore £9m of the £35m
facility was undrawn (2022: £18m of the £40m facility).
Acquisitions
On 14 December 2023 the Group acquired the trade and assets of the two Tivoli
cinemas in Bath and Cheltenham from T4051 Limited, a subsidiary of Empire
Cinemas Limited. The principal reason for this acquisition was to secure two
additional cinemas in desired regional areas.
Details of this acquisition are set out in Note 17 of the financial
statements.
Annual General Meeting
The Annual General Meeting of the Company will be held on 13 June 2024 at
9:30am at Everyman Cinema Hampstead, 5 Holly Bush Vale, London NW3 6TX.
Consolidated statement of profit and loss and other
comprehensive income for the year ended 28 December 2023
Year ended Year ended
28 December 29 December
2023 2022
Note £000 £000
Revenue 6 90,859 78,817
Cost of sales (32,724) (28,338)
Gross profit 58,135 50,479
Other Operating Income 11 647 622
Administrative expenses (58,834) (50,699)
Operating (loss)/profit (52) 402
Financial expenses 12 (5,449) (3,906)
Loss before tax (5,501) (3,504)
Tax credit 13 2,805 -
Loss for the year (2,696) (3,504)
Other comprehensive income for the year - -
Total comprehensive income for the year (2,696) (3,504)
Basic loss per share (pence) 14 (2.96) (3.84)
Diluted loss per share (pence) 14 (2.96) (3.84)
All amounts relate to continuing activities.
Non-GAAP measure: adjusted EBITDA Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Adjusted EBITDA 16,180 14,527
Before:
Depreciation and amortisation 15/18/19 (13,152) (11,725)
Loss on disposal of Property, Plant & Equipment 15 (121) (434)
Impairment 20 (724) -
Pre-opening expenses* (934) (195)
Exceptional** (481) (234)
Share-based payment expense 31 (820) (1,537)
Operating (loss)/profit (52) 402
*Pre-opening expenses mainly include venue staff costs (new venue preparation
and staff training) and property expenses (such as utilities, service charges
and business rates) incurred prior to a new venue opening.
**Exceptional costs mainly relate to transaction-related costs pertaining to
the acquisition of the Tivoli venues in Bath and Cheltenham, as well as
one-off reorganisational costs relating to certain Head Office teams.
Consolidated balance sheet at 28 December 2023
Registered in England and Wales
Company number: 08684079
28 December 29 December
2023 2022
Note £000 £000
Assets
Non-current assets
Property, plant and equipment 15 101,544 90,067
Right-of-use assets 18 68,088 58,920
Intangible assets 19 9,388 9,312
Deferred tax assets 29 2,805 -
Trade and other receivables 22 173 173
181,998 158,472
Asset held for sale 16 - 3,219
181,998 161,691
Current assets
Inventories 21 858 690
Trade and other receivables 22 5,216 5,840
Cash and cash equivalents 6,645 3,701
12,719 10,231
Total assets 194,717 171,922
Liabilities
Current liabilities
Trade and other payables 23 19,455 15,818
Lease liabilities 18 2,824 3,014
22,279 18,832
Non-current liabilities
Loans and borrowings 24 26,000 22,000
Other provisions 28 1,631 1,362
Lease liabilities 18 100,414 83,459
128,045 106,821
Total liabilities 150,324 125,653
Net assets 44,393 46,269
Equity attributable to owners of the Company
Share capital 30 9,118 9,118
Share premium 30 57,112 57,112
Merger reserve 30 11,152 11,152
Other reserve 83 83
Retained earnings (33,072) (31,196)
Total equity 44,393 46,269
These financial statements were approved by the Board of Directors and
authorised for issue on 15 April 2024 and signed on its behalf by:
Will Worsdell
Consolidated statement of changes in equity for the year ended 28 December
2023
Share capital £000 Share premium £000 Merger reserve £000 Other reserve £000 Retained earnings £000 Total Equity £000
Note
Balance at 30 December 2021 9,117 57,097 11,152 83 (29,229) 48,220
Loss for the year - - - - (3,504) (3,504)
Total comprehensive loss - - - - (3,504) (3,504)
Shares issued in the period 30 1 15 - - - 16
Share-based payments 31 - - - - 1,537 1,537
Total transactions with owners of the parent 1 15 - - 1,537 1,553
Balance at 29 December 2022 9,118 57,112 11,152 83 (31,196) 46,269
Loss for the year - - - - (2,696) (2,696)
Total comprehensive loss - - - - (2,696) (2,696)
Share-based payments 31 - - 820 820
Total transactions with owners of the parent - - 820 820
Balance at 28 December 2023 9,118 57,112 11,152 83 (33,072) 44,393
Consolidated cash flow statement for the year ended 28 December 2023
28 December 29 December
2023 2022
Note £000 £000
Cash flows from operating activities
Loss for the year (2,696) (3,504)
Adjustments for:
Financial expenses 12 5,449 3,906
Tax credit 29 (2,805) -
Operating (loss)/profit (52) 402
Depreciation and amortisation 15,18,19 13,152 11,725
Loss on disposal of property, plant and equipment 122 434
Impairment 20 724 -
Loss/(Gain) on lease modification 15 (99)
Share-based payment expense 31 820 1,537
14,781 13,999
Changes in working capital:
Decrease/ (Increase) in inventories (168) 21
(Decrease)/Increase in trade and other receivables 850 (187)
(Decrease)/Increase in trade and other payables 2,423 (1,658)
Increase in provisions - (378)
Net cash generated from operating activities 17,886 11,797
Cash flows from investing activities
Proceeds from sale of assets 18 6,490 -
Business combinations 17 (1,250) -
Acquisition of property, plant and equipment (18,586) (18,884)
Acquisition of intangible assets 19 (829) (1,058)
Net cash used in investing activities (14,175) (19,942)
Cash flows from financing activities
Proceeds from the issuance of shares 30 - 16
Repayment of existing loan facility (24,000) -
Drawdown of bank borrowings 25 28,000 9,500
Lease payments - interest 17 (3,410) (2,851)
Lease payments - capital 17 (3,103) (3,210)
Landlord capital contributions received 18 4,054 5,005
Loan arrangement fees paid (263) -
Interest paid (2,045) (854)
Net cash generated (used in)/from financing activities (767) 7,606
Net increase /(decrease) in cash and cash equivalents 2,944 (539)
Cash and cash equivalents at the beginning of the year 3,701 4,240
Cash and cash equivalents at the end of the year 6,645 3,701
The Group had £9,000,000 of undrawn funds available of a £35,000,000
facility (2022: £18,000,000 of a £40,000,000 facility) at the year end
Notes to the financial statements
1 General information
Everyman Media Group PLC and its subsidiaries (together, the Group) are
engaged in the ownership and management of cinemas in the United Kingdom.
Everyman Media Group PLC (the Company) is a public company limited by shares
registered, domiciled and incorporated in England and Wales, in the United
Kingdom (registered number 08684079). The address of its registered office is
Studio 4, 2 Downshire Hill, London NW3 1NR. All trade takes place in the
United Kingdom.
2 Basis of preparation and accounting policies
This final results announcement for the year ended 28 December 2023 has been
prepared in accordance with the UK adopted International Accounting Standards.
The accounting policies applied are consistent with those set out in the
Everyman Media Group plc Annual Report and Accounts for the year ended 28
December 2023.
The financial information contained within this final results announcement for
the year ended 28 December 2023 and the year ended 29 December 2022 is derived
from but does not comprise statutory financial statements within the meaning
of section 434 of the Companies Act 2006. Statutory accounts for the year
ended 29 December 2022 have been filed with the Registrar of Companies and
those for the year ended 28 December 2023 will be filed following the
Company's annual general meeting. The auditors' report on the statutory
accounts for the year ended 28 December 2023 is unqualified, does not draw
attention to any matters by way of emphasis and does not contain any statement
under section 498 of the Companies Act 2006.
The consolidated financial statements of the Group have been prepared in
accordance with UK adopted International Accounting Standards.
The financial statements are prepared on the historical cost basis.
The preparation of financial statements in compliance with UK adopted
International Accounting Standards requires the use of certain critical
accounting estimates, it also requires Group management to exercise judgements
and estimates in preparing the financial statements. Their effects are
disclosed in the notes below.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these Group financial
statements. The Group prepares its financial statements on a 52/53 week basis.
The year end date is determined by the 52nd Thursday in the year. A 53rd week
is reported where the year end date is no longer aligned with 7 days either
side of 31st December. The year ended 28 December 2023 is a 52-week period as
is the comparative year.
Amounts are rounded to the nearest thousand, unless otherwise stated.
Business combinations
On 14 December 2023 the Group acquired the trade and assets of T4051 Limited,
being the Tivoli cinemas in Bath and Cheltenham, from the Empire Cinemas
administration process. As the Group obtained control through payment of cash
consideration, the transaction has been presented under the scope of IFRS 3
(Business Combinations).
The application of IFRS 3 has resulted in the acquisition of property, plant
and equipment, lease liabilities and corresponding right of use assets.
Further details are outlined in Note 17.
At the acquisition date, the Group classified the identifiable assets acquired
and liabilities assumed by applying appropriate IFRSs. The Group made those
classifications on the basis of the contractual terms, economic conditions and
accounting policies as they existed at the acquisition date.
Going concern
Current trading is in line with management expectations. Given the increased
number of wide releases year-on-year, commitment to the theatrical window from
distributors and new investment from streamers in content for cinema,
management expect admissions to continue to recover towards pre-pandemic
levels. Paid for Average Ticket Price and Spend per Head have continued to
grow steadily despite well-publicised concerns over consumer spends.
Banking
On 17 August 2023, the Group signed a new three-year loan facility of £35m
with Barclays Bank Plc and National Westminster Bank Plc, repayable on 16
August 2026. The facility is extendable by up to a further two years, subject
to lender consent. This Group facility agreement is available to the Company.
At the end of the year, the Company had drawn down £26.0m on its facilities
and held £6.6m in cash; the undrawn facility was therefore £9m and net
banking debt £19.4m.
The new RCF has leverage and fixed charge cover covenants. The Board has
reviewed forecast scenarios and is confident that the business can continue to
operate with sufficient headroom. These forecasts consider scenarios in which
there is no further growth in admissions beyond 2023 levels and include
realistic assumptions around wage increases and inflation. Utilities contracts
have been fixed for a year from 1st November 2023 and rates achieved on both
gas and electricity are in line with management expectations and forecasts.
In light of this, the Board consider it appropriate to adopt the going concern
basis of accounting in preparing the financial statements.
Base case Scenario
The period forecast is up to 30 April 2025.
The forecast assumes that admissions grow in line with the new venue pipeline.
3 new venues are assumed to open in 2024, in Bury St Edmunds, Stratford
(London) and Cambridge. The forecast also assumes the opening of new venues in
Durham and Brentford Lock in the first quarter of 2025, and includes
corresponding capital investment for all aforementioned venues aside from
Durham, which is fully built.
Increases in forecasts costs reflect the current inflationary environment.
In this scenario the Group maintains significant headroom in its banking
facilities.
Stress testing
The Board considers budget assumptions on admissions to be very conservative,
particularly in light of current trading, the improving consumer environment
and additional investment in customer acquisition. A reduction in admissions
of 6% during 2024 and 2025 has been modelled. This scenario would cause a
breach in the Adjusted Leverage covenant in August and September 2024.
If such a scenario were to occur, Management would be able to temporarily
reduce administrative expenditure to increase EBITDA and avoid a breach,
without material impact to the Group's operations and the quality of customer
experience. The Group also has the ability to delay the deployment of capital
expenditure. In this scenario, the Group would remain compliant with the Fixed
Charge Cover covenant.
The Directors believe that the Group is well-placed to manage its financing
and other business risks satisfactorily and have a reasonable expectation that
the Group will have adequate resources to continue in operation for at least
12 months from the signing date of these consolidated financial statements.
The Board considers that a 6% reduction in budgeted admissions is very
unlikely, particularly in light of business performance in the first quarter
of 2024. As a result, the Board does not believe this to represent a material
uncertainty, and therefore consider it appropriate to adopt the going concern
basis of accounting in preparing the financial statements.
Use of non-GAAP profit and loss measures
The Group believes that along with operating profit, adjusted EBITDA provides
additional guidance to the statutory measures of the performance of the
business during the financial year. The reconciliation between operating loss
and adjusted EBITDA is shown on page 44.
Adjusted EBITDA is calculated by adding back depreciation, amortisation,
profit or loss on disposal of Property, Plant & Equipment, pre-opening
expenses and certain non-recurring or non-cash items. Adjusted EBITDA is an
internal measure used by management as they believe it better reflects the
underlying performance of the Group beyond generally accepted accounting
principles.
Exceptional items that have been added back when calculating adjusted EBITDA
relate to restructuring costs within the Head Office team and acquisition
costs.
Basis of consolidation
Where the Group has power, either directly or indirectly so as to have the
ability to affect the amount of the investor returns and has exposure or
rights to variable returns from its involvement with the investee, it is
classified as a subsidiary. The balance sheet at 28 December 2023 incorporates
the results of all subsidiaries of the Group for all years and periods, as set
out in the basis of preparation.
Intra-Group balances and transactions, and any unrealised income and expenses
arising from intra-Group transactions, are eliminated. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that
there is no evidence of impairment.
The consolidated financial statements include the results of the Company and
all its subsidiary undertakings made up to the same accounting date.
Merger reserve
On 29 October 2013 the Company became the new holding company for the Group.
This was put into effect through a share-for-share exchange of 1 Ordinary
share of 10 pence in Everyman Media Group PLC for 1 Ordinary share of 10 pence
in Everyman Media Holdings Limited (previously, Everyman Media Group Limited),
the previous holding company for the Group. The value of 1 share in the
Company was equivalent to the value of 1 share in Everyman Media Holdings
Limited.
The accounting treatment for group reorganisations is presented under the
scope of IFRS 3. The introduction of the new holding company was accounted for
as a capital reorganisation using the principles of reverse acquisition
accounting under IFRS 3. Therefore, the consolidated financial statements are
presented as if Everyman Media Group PLC has always been the holding company
for the Group. The Company was incorporated on 10 September 2013.
The use of merger accounting principles has resulted in a balance in Group
capital and reserves which has been classified as a merger reserve and
included in the Group's shareholders' funds.
The Company recognised the value of its investment in Everyman Media Holdings
Limited at fair value based on the initial share placing price on admission to
AIM. As permitted by s612 of the Companies Act 2006, the amount attributable
to share premium was transferred to the merger reserve.
Revenue recognition
Revenue for the Group is measured at the fair value of the consideration
received or receivable. The Group recognises revenue for services provided
when the amount of revenue can be reliably measured and it is probable that
future economic benefits will flow to the entity.
Most of the Group's revenue is derived from the sale of tickets for film
admissions and the sale of food and beverage, and therefore the amount of
revenue earned is determined by reference to the prices of those items. The
Group's revenues from film and entertainment activities are recognised on
completion of the showing of the relevant film. The Group's revenues for food
and beverages are recognised at the point of sale as this is the time the
performance obligations have been met.
Bookings, gift cards and similar income which are received in advance of the
related performance are classified as deferred revenue and shown as a
liability until completion of the performance obligation.
Contractual-based revenue from Everywhere (unlimited tickets) memberships is
initially classified as deferred revenue and subsequently recognised on a
straight-line basis over the year. Revenue from Everyman and Everyicon is
classified as deferred revenue and subsequently recognised in line with ticket
usage. Advertising revenue is recognised at the point the advertisement is
shown in the cinemas.
Fees charged for advanced bookings of tickets is recognised at the point when
the tickets are purchased.
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is
allocated to cash-generating units and is not amortised but is tested annually
for impairment. Goodwill represents the excess of the costs of a business
combination over the acquisition date fair values of the identifiable assets,
liabilities and contingent liabilities acquired. Goodwill is capitalised as an
intangible asset.
The recoverable amount of an asset or cash-generating unit (CGU) is the
greater of its value-in-use and its fair value less costs to sell. In
assessing value-in-use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the CGU), this is usually an
individual cinema venue. The goodwill acquired in a business combination, for
the purpose of impairment testing, is allocated to CGUs. Subject to an
operating segment ceiling test, for the purposes of goodwill impairment
testing, CGUs to which goodwill has been allocated are aggregated so that the
level at which impairment is tested reflects the lowest level at which
goodwill is monitored for internal reporting purposes. Goodwill acquired in a
business combination is allocated to groups of CGUs that are expected to
benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU
exceeds its estimated recoverable amount. Impairment losses are recognised in
the profit and loss. Impairment losses recognised in respect of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to the
units, and then to reduce the carrying amounts of the other assets in the
unit/group of units on a pro-rata basis. Once goodwill has been impaired, the
impairment cannot be reversed in future periods.
Property, plant and equipment
Items of property, plant and equipment are recognised at cost less accumulated
depreciation and accumulated impairment losses. As well as the purchase price,
cost includes directly attributable costs.
Depreciation on assets under construction does not commence until they are
complete and available for use. These assets represent fit-outs. Depreciation
is provided on all other leasehold improvements and all other items of
property, plant and equipment so as to write off their carrying value over the
expected useful economic lives. The estimated useful lives are as
follows:
Freehold properties - 50
years
Leasehold improvements - straight line on cost over the remaining life of
the lease
Plant and machinery - 5
years
Fixtures and fittings
- 8 years
Impairment
The carrying amounts of the Group's assets are reviewed at each Balance Sheet
date to determine whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated. For goodwill
assets that have an indefinite useful economic life, the recoverable amount is
estimated at each Balance Sheet date.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit ('CGU') exceeds its recoverable amount. Impairment
losses are recognised in the Consolidated Statement of Profit or Loss.
Impairment losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to CGUs and then to reduce the
carrying amount of the other assets in the unit on a pro-rata basis.
A CGU is the smallest identifiable group of assets that generates cash inflows
that are largely independent of the cash inflows from other assets or groups
of assets and relates to an individual cinema venue.
Non-current assets held for sale
During the year ended 29 December 2022 the policy applied was that non-current
assets are classified as held for sale when:
· They are available for immediate sale
· Management is committed to a plan to sell
· It is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn
· An active programme to locate a buyer has been initiated
· The asset or disposal group is being marketed at a reasonable
price in relation to its fair value, and
· A sale is expected to complete within 12 months from the date of
classification.
Non-current assets classified as held for sale are measured at the lower of:
· Their carrying amount immediately prior to being classified as
held for sale; and
· Fair value less costs of disposal.
Following their classification as held for sale, non-current assets are not
depreciated.
Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic benefits will
be required to settle the obligation. Lease dilapidation provisions are
recognised when entering into a lease where an obligation is created. This
obligation may be to return the leasehold property to its original state at
the end of the lease in accordance with the lease terms. Leasehold
dilapidations are recognised at the net present value and discounted over the
remaining lease period.
Leases
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. The majority of leases entered into determine the
lease commencement to be dependent on the date in which access to the property
is provided by the landlord, at this point we assess the Group gains control.
To assess whether a contract conveys the right to control the use an
identified asset, the Group assesses whether:
· the contract involves the use of an identified asset (this may be
specified explicitly or implicitly, and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset).
If the supplier has a substantive substitution right, then the asset is not
identified;
· the Group has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of use; and
· the Group has the right to direct the use of the asset. The Group
has this right when it has the decision-making rights that are most relevant
to changing how and for what purpose the asset is used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of their relative stand-alone prices.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used, the
incremental borrowing rate is most commonly used in the Groups recognition of
leases.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
· the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations - see note 28).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease.
If the Group revises its estimate of the term of any lease it adjusts the
carrying amount of the lease liability to reflect the payments to make over
the revised term, which are discounted using a revised discount rate. An
equivalent adjustment is made to the carrying value of the right-of-use asset,
with the revised carrying amount being amortised over the remaining (revised)
lease term. If the carrying amount of the right-of-use asset is adjusted to
zero, any further reduction is recognised in profit or loss.
Sale and Leaseback transactions
The Group has entered into two sale and leaseback transactions during the year
where the Group transferred an property to another entity and leased the
property back from the buyer-lessor. In both cases a sale was deemed to have
taken place and the Group de-recognised the underlying asset and applied the
lessee accounting model to the leaseback arrangement. A right-of-use asset is
recognised based on the retained portion of the previous carrying amount of
the asset and only the gain or loss is recognised related to the rights which
are transferred to the lessor.
Immediately before the initial classification of the asset as held for sale,
the carrying amount of the asset will be measured in accordance with
applicable IFRSs. The Group has previously held freehold assets which were
later classified as assets held for sale.
Assets that are classified as held for sale are measured at the lower of
carrying amount and fair value less costs to sell (fair value less costs to
distribute in the case of assets classified as held for distribution to
owners).
Impairment must be considered both at the time of classification as held for
sale and subsequently:
· At the time of classification as held for sale. Immediately prior
to classifying an asset or disposal group as held for sale, impairment is
measured and recognised in accordance with the applicable IFRSs. Any
impairment loss is recognised in profit or loss unless the asset had been
measured at revalued amount under IAS 16 or IAS 38, in which case the
impairment is treated as a revaluation decrease.
· After classification as held for sale. Calculate any impairment
loss based on the difference between the adjusted carrying amounts of the
asset/disposal group and fair value less costs to sell. Any impairment loss
that arises by using the measurement principles in IFRS 5 would be recognised
in profit or loss.
No impairment indicators were present at the time of the asset being held for
sale, or subsequently after the asset was held for sale. Therefore, the Group
have no impairment losses recognised against the carrying amount of the
Freehold property. Non-current assets or disposal groups that are classified
as held for sale are not depreciated.
Leaseback
On initial recognition, the Group measures the right of use assets as a
proportion of the carrying amount of the underlying asset. The lease
liabilities are recorded in adherence to the above principles on lease
recognition. The Group considers that the cash received for sale and
leaseback, up to the fair value of the underlying asset, relates to the
disposal of the asset and is presented in the statement of cash flows as an
investing cash flow.
When the lease liability is remeasured, a corresponding adjustment is made to
the carrying amount of the right-of-use asset, or is recorded in profit or
loss if the carrying amount of the right-of-use asset has been reduced to
zero.
Taxation
Tax on the profit and loss for the year comprises current and deferred tax.
Tax is recognised in the profit and loss except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in
equity. Current tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted or substantively enacted
at the balance sheet date, and any adjustment to tax payable in respect of
previous years.
Deferred tax assets and liabilities are recognised where the carrying amount
of an asset or liability in the consolidated balance sheet differs from its
tax base, except for differences arising on:
· The initial recognition of goodwill.
· The initial recognition of an asset or liability in a transaction
which is not a business combination and at the time of the transaction affects
neither accounting nor taxable profit.
· Investments in subsidiaries and jointly controlled entities where
the Group is able to control the timing of the reversal of the difference and
it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it
is probable that taxable profit will be available against which the difference
can be utilised.
The amount of the asset or liability is determined using tax rates that have
been enacted or substantively enacted by the reporting date and are expected
to apply when the deferred tax liabilities or assets are settled or recovered.
Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority on either:
· The same taxable Group company; or
· Different company entities which intend either to settle current
tax assets and liabilities on a net basis or to realise the assets and settle
the liabilities simultaneously, in each future period in which significant
amounts of deferred tax assets and liabilities are expected to be settled or
recovered.
Operating segments
The Board, the chief operating decision maker, considers that the Group's
primary activity constitutes one reporting segment, as defined under IFRS8.
The total profit measures are operating profit and profit for the year, both
disclosed on the face of the consolidated profit and loss. No differences
exist between the basis of preparation of the performance measures used by
management and the figures used in the Group financial information.
All of the revenues generated relate to cinema tickets, sale of food and
beverages and ancillary income, an analysis of which appears in the notes
below. All revenues are wholly generated within the UK. Accordingly, there are
no additional disclosures provided to the financial information.
Pre-opening expenses
Overhead expenses incurred prior to a new site opening are expensed to the
profit and loss in the year that they are incurred. Similarly, the costs of
training new staff during the pre-opening phase are expensed as incurred.
These expenses are included within administrative expenses, right-of-use
depreciation and financing expenses.
Employee
benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the
company pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
expense in the profit and loss in the periods during which services are
rendered by employees.
Share-based payments
Certain employees (including Directors and senior executives) of the Group
receive remuneration in the form of equity-settled share-based payment
transactions, whereby employees render services as consideration for equity
instruments (equity-settled transactions, through the Growth Share Scheme,
Approved and Unapproved Options Schemes). The cost of share-based payments is
recharged by the Company to subsidiary undertakings in proportion to the
services recognised.
Equity-settled share based schemes are measured at fair value, excluding the
effect of non-market based vesting conditions, at the date on which they are
granted. The fair value is determined by using an appropriate pricing model.
The cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (the vesting date). The
cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of equity
instruments that will ultimately vest. The profit or loss charge or credit for
a period represents the movement in cumulative expense recognised as at the
beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether or not the market condition has been
satisfied, provided that all other performance and/or service conditions are
satisfied. The dilutive effect of outstanding options is reflected as
additional share dilution in the computation of earnings per share.
3 Financial Instruments
The Group is exposed through its operations to the following financial risks:
· Credit risk
· Interest rate risk
· Liquidity Risk
In common with all other businesses, the Group is exposed to risks that arise
from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods
used to measure them. Further quantitative information in respect of these
risks is presented throughout these financial statements.
There have been no substantive changes in the Group's exposure to financial
instrument risks, it's objectives, policies and processes for managing those
risks or the methods used to measure them from previous periods unless
otherwise stated in this note.
The principal financial instruments used by the Group, from which financial
instrument risk arises are as follows:
· Trade receivables
· Cash and cash equivalents
· Trade and other payables
· Floating rate bank revolving credit facilities and lease
liabilities
Financial assets
All the Group's financial assets are subsequently accounted for at amortised
cost. These assets arise principally from the provision of goods and services
to customers (e.g. trade receivables), but also incorporate other types of
financial assets where the objective is to hold these assets in order to
collect contractual cash flows and the contractual cash flows are solely
payments of principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using a provision matrix in the
determination of the lifetime expected credit losses. During this process the
probability of the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the trade
receivables. For trade receivables, which are reported net, such provisions
are recorded in a separate provision account with the loss being recognised in
profit or loss. On confirmation that the trade receivable will not be
collectable, the gross carrying value of the asset is written off against the
associated provision.
The Group's financial assets measured at amortised cost comprise trade and
other receivables and cash and cash equivalents in the consolidated balance
sheet.
Cash and cash equivalents comprise cash balances, call deposits and cash
amounts in transit due from credit cards which are settled within seven days
from the date of the reporting period. Bank overdrafts that are repayable on
demand and form an integral part of the Group's cash management are included
as a component of cash and cash equivalents for the purpose only of the
Statement of Cash Flows.
Financial liabilities and
equity
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following conditions:
· They include no contractual obligations upon the Group to deliver
cash or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group
· Where the instruments may be settled in the Group's own equity
instruments, they are either a non-derivative that include no obligation to
deliver a variable number of the Group's own equity instruments or they are a
derivative that will be settled by the Group exchanging a fixed amount of cash
or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability and initially recognised at fair value net
of any transaction costs directly attributable. Such interest-bearing
liabilities are subsequently measured at amortised cost using the effective
interest rate method, which ensures that any interest expense over the period
to repayment is at a constant rate on the balance of the liability carried in
the consolidated statement of financial position. For the purposes of each
financial liability, interest expense includes initial transaction costs and
any premium payable on redemption, as well as any interest or coupon payable
while the liability is outstanding.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. The Group is mainly exposed to credit risk from credit sales. It
is Group policy, to assess the credit risk of new customers before entering
material contracts.
Credit risk also arises from cash and cash equivalents and deposits with banks
and financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "A" are accepted.
Further disclosures regarding trade and other receivables, which are neither
past due nor impaired, are provided in note 27.
Interest rate risk
The Group is exposed to cash flow interest rate risk from its revolving credit
facility at variable rates. During 2023 and 2022, the Group's borrowings at
variable rate were denominated in GBP.
The Group analyses the interest rate exposure on a monthly basis. A
sensitivity analysis is performed by applying various reasonable expectations
on rate changes to the expected facility drawdown.
Liquidity Risk
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to ensure that it will
always have sufficient cash to allow it to meet its liabilities when they
become due.
The Board receives rolling 12-month cash flow projections on a monthly basis
as well as information regarding cash balances. At the end of the financial
year, these projections indicated that the Group expected to have sufficient
liquid resources to meet its obligations under all reasonably expected
circumstances, through utilisation of its revolving credit facility.
4 Changes in accounting policies
New standards, interpretations and amendments adopted from 1 January 2023
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2023:
· IFRS 17 Insurance Contracts;
· Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement 2 Making
Materiality Judgements);
· Definition of Accounting Estimates (Amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors); and
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes).
The following amendments are effective for the period beginning 1 January
2024:
· IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);
· IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-Current)
· IAS 1 Presentation of Financial Statements (Amendment -
Non-Current Liabilities with Covenants)
The following amendments are effective for the period beginning 1 January
2025:
· Lack of Exchangeability (Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates)
The Group does not expect any other standards issued, but not yet effective,
to have a material impact on the Group.
5 Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
Impairment of cinemas
The Group determines whether the above are impaired when impairment indicators
exist or based on the annual impairment assessment. The annual assessment
requires an estimate of the value in use of the CGUs to which the intangible
and tangible fixed assets are allocated, which is predominantly at the
individual cinema site level.
Estimating the value in use requires the Group to make an estimate of the
expected future cash flows from each cinema and discount these to their net
present value at an appropriate discount rate. All venues are located in the
UK and therefore a single discount rate has been used for all CGUs. The
resulting calculation is sensitive to the assumptions in respect of future
cash flows and the discount rate applied. The Directors consider that the
assumptions made represent their best estimate of the future cash flows
generated by the CGUs and that the discount rates used are appropriate given
the risks associated with the specific cash flows. A sensitivity analysis has
been performed over the estimates (see Note 19).
Lease dilapidations
Future costs of repair and reinstatement obligations have been estimated by
management using quotes or historical costs incurred for similar work and
judgement based on experience and technical knowledge of employees with
detailed knowledge of the premises and experience managing the estate. The
costs are reviewed at least annually and updated based on physical inspections
performed periodically.
Deferred Tax Assets
The Group recognizes deferred tax assets to the extent that it is probable
that future taxable profits will be available against which temporary
differences can be utilised. The recognition of deferred tax assets based on
future taxable profits requires significant management judgment and
estimation.
In assessing the probability of future taxable profits, management considers
historical profitability, forecasts, and business plans. These assessments are
based on various factors including, but not limited to, expected future market
conditions, industry trends, regulatory environment, and specific operational
strategies.
The Company regularly reviews its forecasts and projections to assess the
likelihood of future taxable profits and adjusts the recognition of Deferred
Tax assets accordingly. However, actual results may differ from these
forecasts due to changes in economic conditions, market dynamics, or other
unforeseen events.
Incremental borrowing rate
The Group determines the incremental borrowing rates used to discount lease
payments for the purpose of measuring the lease liability and right-of-use
asset under IFRS 16, Leases. The determination of incremental borrowing rates
involves significant judgment and estimation by management. Key factors
considered are the nature and term of lease, market conditions and
availability of comparable financing.
6 Revenue
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Film and entertainment 44,718 39,764
Food and beverages 38,563 32,250
Venue Hire, Advertising and Membership Income 7,578 6,803
90,859 78,817
All trade takes place in the United Kingdom.
The following provides information about opening and closing receivables,
contract assets and liabilities from contracts with customers.
Contract balances 28 December 29 December
2023 2022
£000 £000
Trade receivables 1,565 3,308
Deferred income 4,330 4,143
Deferred income relates to advanced consideration received from customers in
respect of memberships, gift cards and advanced screenings.
7 Loss before taxation
Loss before taxation is stated after charging:
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Depreciation of tangible assets 8,808 7,721
Amortisation of right-of-use assets 3,591 3,342
Amortisation of intangible assets 753
662
Loss on disposal of property, plant and equipment 121 434
Operating lease income - (57)
Share-based payment expense 820 1,537
Impairment 724 -
8 Staff numbers and employment costs
The average number of employees (including Directors) during the year,
analysed by category, was as follows:
28 December 29 December
2023 2022
Number Number
Management 252 222
Operations 1,180 1,032
1,432 1,254
At the year end the number of employees (including Directors) was 1,689 (2022:
1,380). Management staff represent all full-time employees in the Group.
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Wages and salaries 22,800 20,374
Social security costs 1,809 1,718
Pension costs 356 306
Share-based payment expense 820 1,537
25,785 23,935
There were pension liabilities outstanding as at 28 December 2023 of £81,000
(29 December 2022:
£62,000).
9 Directors' remuneration
The remuneration of the Directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in
IAS24 Related Party Disclosures:
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Salaries/fees 815 807
Bonuses - 88
Other benefits 7 22
Pension contributions 17 14
839 931
Share-based payment expense 662 869
1,501 1,800
Information regarding the highest paid Director is as follows:
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
312 294
Salaries/fees
Bonuses - 44
Other benefits 6 21
Pension contributions 10 10
328 369
Share-based payment expense 368 598
696 967
Directors remuneration for each Director is disclosed in the Remuneration
Committee report. The costs relating to the Directors remuneration are
incurred by Everyman Media Limited for the wider Group. No Directors exercised
options over shares in the Company during the year (2022: None).
10 Auditor's remuneration
Year ended Year ended
28 December 29 December
2023 2022
Fees payable to the Group's auditor for: £000 £000
Audit of the Company's financial statements 36 24
Audit of the subsidiary undertakings of the Company 161 159
197 183
11 Other Operating Income
Year ended Year ended
28 December
29 December
2023 2022
£'000 £'000
Business Grants - 155
Landlord compensation 647 467
647 622
12 Financial expenses
Year ended Year ended
28 December 29 December
2023 2022
£000 £000
Interest on bank loans 1,934 983
Bank loan arrangement fees 148 60
Interest on lease liabilities 3,409 2,851
Revaluation of dilapidations (50) -
Interest on dilapidations provision 8 12
5,449 3,906
13 Taxation
Year ended Year ended
28 December 29 December
2023
2022
£000 £000
Deferred tax credit
Origination and reversal of temporary differences (2,805) -
Total tax credit (2,805) -
The reasons for the difference between the actual tax credit for the period
and the standard rate of corporation tax in the United Kingdom applied to the
loss for the year are as follows:
Reconciliation of effective tax rate Year ended Year ended
28 December 29 December
2023
2022
£000 £000
Loss before tax (5,501) (3,504)
Tax at the UK corporation tax rate of 23.5% (2022:19.00%) (1,293) (666)
Permanent differences (expenses not deductible for tax purposes) 1,313 840
Impact of difference in overseas tax rates 3 -
De-recognition of losses - 32
Effect of change in expected future statutory rates on deferred tax (196) (206)
Tax losses/temp. differences of deferred tax previously unrecognised (2,632) -
Total tax credit (2,805) -
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. This change is reflected in
the charge for the period.
14 Earnings per share
Year ended Year ended
28 December 29 December 2022
2023
Loss used in calculating basic and diluted earnings per share (£000) (2,696) (3,504)
Number of shares (000's)
Weighted average number of shares for the purpose of basic earnings per share 91,178 91,178
Number of shares (000's)
Weighted average number of shares for the purpose of diluted earnings per 91,178 91,178
share
Basic loss per share (pence) (2.96) (3.84)
Diluted loss per share (pence) (2.96) (3.84)
28 December 29 December
2023 2022
Weighted average Weighted average
no. 000's no. 000's
Issued at beginning of the year 91,178 91,163
Share options exercised - 15
Weighted average number of shares at end of the year 91,178 91,178
Weighted average number of shares for the purpose of diluted
earnings per share
Basic weighted average number of shares 91,178 91,178
Effect of share options in issue - -
Weighted average number of shares at end of the year 91,178 91,178
Basic earnings per share values are calculated by dividing net loss for the
year attributable to Ordinary equity holders of the parent by the weighted
average number of Ordinary shares outstanding during the year. The shares
issued in the year in the above table reflect the weighted number of shares
rather than the actual number of shares issued.
The Company has 7.2m potentially issuable Ordinary shares (2022: 7.0m) all of
which relate to the potential dilution from share options issued to the
Directors and certain employees and contractors, under the Group's incentive
arrangements. In the current year these options are anti-dilutive as they
would reduce the loss per share and so haven't been included in the diluted
earnings per share.
The Company made a post-tax profit for the year of £1,365,000 (2022:
£2,029,000).
15 Property, plant and equipment
Land & Leasehold Plant & Fixtures & Assets under
Buildings improvements machinery Fittings construction Total
£000 £000 £000 £000 £000 £000
Cost
At 30 December 2021 6,529 76,178 12,570 9,179 5,863 110,319
Acquired in the year 1,278 977 830 406 16,102 19,593
Disposals - (648) (284) (425) - (1,357)
Transfer on completion - 7,950 3,060 4,433 (15,443) -
Re-classified to non-current assets held for sale (3,398) - - - - (3,398)
At 29 December 2022 4,409 84,457 16,176 13,593 6,522 125,157
Acquired in the year - 613 1,065 786 17,617 20,081
Acquired in business combination - 1,232 389 326 - 1,947
Disposals (1,223) (210) - (15) - (1,448)
Transfer on completion - 8,372 1,600 5,977 (15,949) -
Transfer on sale of freehold* (3,186) 3,023 38 125 - -
At 28 December 2023 - 97,487 19,268 20,792 8,190 145,737
Depreciation
At 30 December 2021 207 16,470 7,360 4,434 - 28,471
Charge for the year 42 3,850 2,536 1,293 - 7,721
Re-classified to non-current assets held for sale (179) - - - - (179)
On Disposals - (523) (129) (271) - (923)
At 29 December 2022 70 19,797 9,767 5,456 - 35,090
Charge for the year 8 4,197 2,743 1,860 - 8,808
Impairment - 390 13 13 - 416
On Disposals (13) (95) - (13) - (121)
Transfer on sale of freehold (65) 65 - - - -
At 28 December 2023 - 24,354 12,523 7,316 - 44,193
Net book value
At 28 December 2023 - 73,133 6,745 13,476 8,190 101,544
At 29 December 2022 4,339 64,660 6,409 8,137 6,522 90,067
At 30 December 2021 6,322 59,708 5,210 4,745 5,863 81,848
*Transfer on sale of freehold relates to a reclassification of assets retained
after the sale and leaseback of Crystal palace freehold. Refer to note 18 for
further details.
For impairment considerations of tangible fixed assets this was considered
using the value in use basis disclosed in Note 19.
16 Non-current assets held for sale
General description:
In September 2022, the board announced its intention to sell the Freehold
Investment property, 25 Church Road, London SE19 2TE to a suitable buyer.
Therefore, as at 1 October 2022, the property was no longer depreciated and
was re-classified as held for sale.
The property is owned by ECPEE Limited, a subsidiary of the Group.
The sale and leaseback of 25 Church Road, London SE19 2TE was concluded
through exchange of contracts on 16 January 2023 with a suitable buyer. The
sale was concluded with a sale price of £3,900,000.
Assets and liabilities held for sale:
28 December 29 December
2023 2022
£'000 £'000
Freehold property - 3,219
Assets held for sale - 3,219
The freehold property transferred from Property, plant and equipment to assets
held for sale was valued immediately before the transfer, using a fair market
value carried out by external qualified valuers. Fair value less cost to sell
was higher than net book value and consequently no impairment charge is
required.
17 Business combinations
On 14 December 2023, the Group acquired the trade and assets of the Tivoli
cinemas in Bath and Cheltenham from the Empire Cinemas administration process
through the transfer of £1.25m cash on the completion date. The principal
reason for the acquisition was to secure two additional cinemas in desirable
locations.
Details of the fair value of identifiable assets and liabilities acquired are
as follows (note that fair value was not used as the measurement basis for
assets and liabilities that require a different basis, which includes leases):
Book Value Adjustment Fair value
£'000 £'000 £'000
Leases (7,369) - (7,369)
Right of use 6,672 - 6,672
Property, plant and equipment 6,168 (4,221) 1,947
Net assets 5,471 (4,221) 1,250
Acquisition costs of £277,000 arose as a result of the transaction. These
have been recognised as part of administrative expenses in the statement of
comprehensive income.
18 Leases
Nature of leasing activities
The Group leases all properties in the towns and cities from which it
operates. In some locations, depending on the lease contract signed, the lease
payments may increase each year by inflation or and in others they are reset
periodically to market rental rates. For some property leases the periodic
rent is fixed over the lease term. The Group also leases certain vehicles.
Leases of vehicles comprise only fixed payments over the lease terms.
The percentages in the table below reflect the current proportions of lease
payments that are either fixed or variable. The sensitivity reflects the
impact on the carrying amount of lease liabilities and right-of-use assets if
there was an uplift of 5% on the balance sheet date to lease payments that are
variable.
28 December 2023 Lease contract Fixed Variable Sensitivity
No. payments payments (+/-)
% % £'000
Property leases with payments linked to inflation 22 - 61% 2,854
Property leases with periodic uplifts to market rentals 23 - 28% 1,745
Property leases with fixed payments 5 10% - -
Vehicle leases 4 1% - -
54 11% 89% 4,599
During 2023 the Group entered into four property leases for new venues for a
period of 25 years each. The leases had not commenced by the year end and as a
result, a lease liability and right-of-use asset have not been recognised at
28 December 2023. The aggregate future cash outflows to which the Group is
exposed in respect of these contracts is fixed payments of £778,000 per year
for the next 5 years, with upward only rent reviews every 5 years.
29 December 2022 Lease contract Fixed Variable Sensitivity
No. payments payments (+/-)
% % £'000
Property leases with payments linked to inflation 21 - 50% 2,799
Property leases with periodic uplifts to market rentals 17 - 43% 1,316
Property leases with fixed payments 2 6% - -
Vehicle leases 3 1% - -
43 7% 93% 4,115
Right-of-Use Assets
Land & Buildings £'000 Motor Vehicles £'000
Total £'000
As at 30 December 2021 58,564 29 58,593
Additions 2,540 43 2,583
Amortisation (3,325) (17) (3,342)
Effect of modification to lease terms 1,086 - 1,086
At 29 December 2022 58,865 55 58,920
Additions 6,759 22 6,781
Business combinations 6,672 - 6,672
Negative addition* (1,361) - (1,361)
Amortisation (3,563) (28) (3,591)
Impairment (308) - (308)
Effect of modification to lease terms 975 - 975
At 28 December 2023 68,039 49 68,088
Lease incentives received prior to lease commencement during the year are
deducted directly from the right of use, these amounted to £Nil (2022:
£371k).
*Negative right-of-use asset addition relates to a lease in which lease
incentives exceed present value of fixed rent payments resulting in a negative
right-of-use asset. This materialised due to the nature of the lease agreement
in which rent payments are made up of turnover based rent and quarterly rent.
Turnover rent is excluded from the present value of lease liabilities on
recognition of the lease.
Lease liabilities
Land & Buildings £'000 Motor Vehicles £'000
Total £'000
At 30 December 2021 81,756 24 81,780
Additions 2,465 43 2,508
Interest expense 2,850 1 2,851
Effect of modification to lease terms 845 - 845
Lease payments (6,045) (16) (6,061)
Landlord contributions 4,550 - 4,550
At 29 December 2022 86,421 52 86,473
Additions 7,349 22 7,371
Acquired through business combination 7,369 - -
Interest expense 3,407 2 3,409
Effect of modification to lease terms 1,075 - 1,075
Lease payments (6,449) (64) (6,513)
Landlord contributions 4,054 - 4,054
At 28 December 2023 103,226 12 103,238
Landlord contributions received after lease commencement date are shown in the
table above. In 2023 further contribution of Nil (2022: £455,000 ) was
received prior to lease commencement. Therefore total cash received from
landlords during the year, as presented in the cash flow statement, was
£4,054,000 (2022: £5,005,000).
28 December 2023 29 December 2022
£'000 £'000
Lease liabilities
Current 2,824 3,014
Non-current 100,414 83,459
103,238 86,473
Maturity analysis of lease payments
28 December 2023 29 December 2022
£'000 £'000
Contractual future cash outflows
Land and buildings
Less than one year 7,056 5,998
Between one and five years 31,774 24,916
Over five years 119,354 90,989
158,184 121,903
Motor Vehicles
Less than one year 24 24
Between one and five years 22 29
46 53
Other lease disclosures
28 December 2023 29 December 2022
£'000 £'000
Expenses relating to variable lease payments not included in the measurement - 113
of lease liabilities
Sale and Leaseback
During the reporting period, the Group entered into two sale and leaseback
transactions for certain assets. Under these arrangements, the Group sold the
assets to respective third parties and simultaneously entered into a lease
agreement to lease back the same assets from the buyers. The group received
£6.49m in cashflow for both transactions detailed below:
Crystal Palace
The freehold for Cystal Palace was held as an asset held for sale at 29
December 2022. At this point the Group were intending to enter into a sale and
leaseback with an appropriate buyer. On 16 January 2023 the sale and leaseback
was completed for £3.9m. The leaseback agreement stipulates a term of 25
years with annual rent of £240,000 per year.
Salisbury
On 2 August 2022 the Group acquired the freehold for the cinema, the cinema
was refitted as an Everyman cinema. The cinema was transferred to a asset held
for sale in July 2023 with the intention to enter into a sale and leaseback
with suitable potential buyers.
On 1 December 2023 the Cinema was sold to a buyer for £2.6m. The leaseback
agreement stipulates a term of 30 years with annual rent of £200,000 per
year.
19 Goodwill and intangible assets
The Group is required to test, on an annual basis, whether goodwill has
suffered any impairment. The recoverable amount is determined based on value
in use calculations. The use of this method requires the estimation of future
cash flows and the determination of a discount rate in order to calculate the
present value of the cash flows. The Group has determined there is now
impairment on goodwill for the period ending 28 December 2023.
Goodwill £'000 Software £'000 Total
£'000
Cost
At 30 December 2021 8,951 2,868 11,819
Acquired in the year - 1,068 1,068
At 29 December 2022 8,951 3,936 12,887
Acquired in the year - 829 829
At 28 December 2023 8,951 4,765 13,716
Amortisation and impairment -
At 30 December 2021 1,599 1,314 2,913
Charge for the year - 662 662
At 29 December 2022 1,599 1,976 3,575
Charge for the year - 753 753
At 28 December 2023 1,599 2,729 4,328
Net book value
At 28 December 2023 7,352 2,036 9,388
At 29 December 2022 7,352 1,960 9,312
At 30 December 2021 7,352 1,554 8,906
Goodwill is allocated to the following CGUs:
28 December 29 December
2023 2022
£000 £000
Baker Street 103 103
Barnet 1,309 1,309
Esher 2,804 2,804
Gerrards Cross 1,309 1,309
Islington 86 86
Muswell Hill 1,215 1,215
Oxted 102 102
Reigate 113 113
Walton-On-Thames 94 94
Winchester 217 217
7,352 7,352
20 Impairment
The Group evaluates assets for impairment annually or when indicators of
impairment exist.
The impairment assessment requires an estimate of the value in use of each
cash-generating unit (CGU) to which goodwill, property, plant and equipment
and right-of-use assets are allocated, which is the individual cinema level.
The recoverable amount of a CGU is the higher of value in use and fair value
less cost of disposal. The Group determines the recoverable amount with
reference to its value in use.
Estimating the value in use requires estimates of the expected future cash
flows from each CGU and discount these to their net present value at a
post-tax discount rate. Forecast cash flows are derived from adjusted EBITDA
generated by each CGU which is based on management's forecast performance.
Cash flow forecasts have been prepared for each CGU by applying growth
assumptions to key drivers of cash flows, including admissions, average ticket
price, spend per head, direct and overhead costs.
As required by IAS 36, the Group assessed whether there was an indication that
a previously recognised impairment no longer exists or may have decreased. A
reversal of an impairment is only recognised if there has been a change in the
estimates used to determine the asset's recoverable amount since the last
impairment loss was recognised.
The key assumptions of this calculation are shown below:
28 December 29 December
2023 2022
Discount rate (post-tax) 11% 13%
Long term growth rate 2% 2%
Number of years projected 5 years 5 years
A post-tax WACC was used in the impairment calculation. The equivalent pre-tax
WACC was 14.7% (2022: 17.3%).
Adjusted EBITDA used for 2024 is based on the Board approved budget and
represents managements best estimate of future cashflows, it has been used as
the base assumption within the forecast after applying probability weighting
for positive and negative case scenarios. In the remaining five-year forecast
the following assumptions have been applied:
· Admissions: 5% like-for-like increase in FY25, followed by a 3%
like-for-like increases year-on-year thereon. A full film slate is expected in
FY25.
· Average Ticket Price: 5% increase in FY25, followed by 3%
increases year-on-year thereon, as inflation falls towards Government target
levels (i.e. 2%).
· Spend Per Head: 5% increase in FY25, followed by 3% increases
year-on-year thereon, as inflation falls towards Government target levels
(i.e. 2%).
In the above scenarios, FY 24 assumes no growth in admissions in response to
risk to film content caused by actor strikes.
An impairment charge of £724,000 has been recognised in the period (2022:
£Nil) relating to one venue, at which the value in use was deemed to be lower
than carrying value.
The cumulative impairment charges that have been recognised in previous
periods have not been reversed and are summarised in the below table.
29 December Impairment Charge 28 December
2022 2023 2023
£000 £000 £000
Goodwill 1,599 - 1,599
Right-of-use assets 724 308 1,032
Property, plant & equipment 808 416 1,224
Total 3,131 724 3,855
Sensitivity analysis
Impairment reviews are sensitive to changes in key assumptions. Sensitivity
analysis has been performed by considering incremental
changes in assumptions of admission levels and discount rates.
Goodwill cannot be written back once impaired. As a result, impairment of
goodwill brought forward of £1,599,000 was excluded from the calculations.
The following sensitivity scenarios have been applied to the cash flow
forecasts for stress testing purposes:
· Admissions levels were increased by 3% versus the base case in
each year in the upside case, and decreased by 3% versus the base case in each
year in the downside case; and
· WACC was decreased by 1% versus the base case in the upside case,
and increased by 1% versus the base case in the downside case.
The results of this were as follows:
Upside Additional number Downside Additional number of venues Impaired
of venues Impaired
£,000 £,000
Admissions sensitivity (777) 1 2,536 2
WACC sensitivity 289 1 1,114 2
Combined sensitivity (1,153) 1 3,585 4
Positive figures relate to additional impairment; negative figures relate to
reversal of brought forward impairment.
21 Inventories
28 December 29 December
2023 2022
£000 £000
Food and beverages 858 656
Projection - 34
858 690
Finished goods recognised as cost of sales in the year amounted to £9,393,000
(2022: £7,848,000). The write-down of inventories to net realisable value
amounted to £nil (2022: £nil).
22 Trade and other receivables
28 December 29 December
2023 2022
£000 £000
Included in current assets 5,216 5,840
Included in non-current assets 173 173
5,389 6,013
Trade receivables 1,565 3,308
Other receivables 291 241
Prepayments and accrued income 3,533 2,464
5,389 6,013
There were no receivables that were considered to be impaired. There is no
significant difference between the fair value of the other receivables and the
values stated above. Other debtors include deposits paid in respect of
long-term leases and have been recognised as non-current assets.
23 Trade and other payables
28 December 29 December
2023 2022
£000 £000
Trade creditors 3,385 2,305
Social security and other taxation 3,100 1,819
Other creditors 523 589
Accrued expenses 8,117 6,591
Deferred income 4,330 4,514
19,455 15,818
24 Loans and borrowings
28 December 29 December
2023 2022
£000 £000
Total Bank Debt 26,000 22,000
Cash (6,645) (3,701)
Net Bank Debt 19,355 18,299
On 17 August 2023, Everyman Media Group Plc, the company's ultimate parent
undertaking, replaced its existing £25m Revolving Credit Facility ("RCF") and
£15m Coronavirus Large Business Interruption Loan Scheme ("CLBILS") with a
new three-year £35m RCF held with Barclays Bank Plc and National Westminster
Bank Plc. Interest is charged at SONIA plus margin on the drawn-down balance
on a 365/ACT D-basis. The margin ranges between 2.30% and 3.05%. This facility
is available to the Company.
Commitment fees are charged quarterly on any balances not drawn at 40% of the
applicable rate of drawn funds. The face value is deemed to be the carrying
value. The Group had drawn down £26 million of the £35 million debt facility
as at 28 December 2023 (2022: £22 million of the £40 million debt facility).
25 Changes in liabilities from financing activities
Non- current loans and borrowings Lease liabilities Total
£000 £000 £000
At 29 December 2022 22,000 86,473 108,473
Cash flows 4,000 (2,459) 1,541
Non- cash flows:
Interest accruing in period - 3,409 3,409
Lease additions - 14,740 14,740
Effect of modifications to lease terms - 1,075 1,075
At 28 December 2023 26,000 103,238 129,238
At 30 December 2021 12,500 81,780 94,280
Cash flows 9,500 (1,056) 8,444
Non- cash flows:
Interest accruing in period - 2,851 2,851
Lease additions - 3,680 3,680
Effect of modifications to lease terms - (782) (782)
At 29 December 2022 22,000 86,473 108,473
26 Financial instruments
Investments, financial assets and financial liabilities, cash and cash
equivalents and other interest-bearing loans and borrowings are measured at
amortised cost and the Directors believe their present value is a reasonable
approximation to their fair value.
28 December 29 December
2023 2022
£000 £000
Financial assets measured at amortised cost
Cash and cash equivalents 6,645 3,704
Trade and other receivables 1,856 3,549
Accrued income 1,426 692
9,927 7,945
28 December 29 December
2023 2022
£000 £000
Financial liabilities measured at amortised cost
Bank borrowings 26,000 22,000
Trade Creditors 3,385 2,305
Leases 103,238 86,473
Other Creditors 523 589
Accrued expenses 8,117 6,591
141,263 117,958
27 Financial risks
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The overall objective of the Board is to
set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. The Group has not
issued or used any financial instruments of a speculative nature and the Group
does not contract derivative financial instruments such as forward currency
contracts, interest rate swaps or similar instruments.
The Group is exposed to the following financial
risks:
- Credit
risk
- Liquidity
risk
- Interest rate
risk
To the extent financial instruments are not carried at fair value in the
consolidated Balance Sheet, net book value approximates to fair value at 28
December 2023 and 29 December 2022.
Trade and other receivables are measured at amortised cost. Book values and
expected cash flows are reviewed by the Board and there have been no
impairment losses recognised on these assets.
Cash and cash equivalents are held in sterling and placed on deposit in UK
banks. Trade and other payables are measured at book value and held at
amortised cost.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from customers
and investment securities.
The Group is exposed to credit risk in respect of its receivables from its
subsidiary companies. The recoverability of these balances is dependent upon
the performance of these subsidiaries in future periods. The performance of
the Company's subsidiaries is closely monitored by the Company's Board of
Directors.
At 28 December 2023 the Group has trade receivables of £1,565,000 (2022:
£3,308,000). Trade receivables arise mainly from advertising and
sponsorship revenue. The Group is exposed to credit risk in respect of these
balances such that, if one or more of the customers encounters financial
difficulties, this could materially and adversely affect the Group's financial
results. The Group attempts to mitigate credit risk by assessing the credit
rating of new customers prior to entering into contracts and by entering into
contracts with customers with agreed credit terms. At 28 December 2023 the
Directors have recognised expected credit losses of £Nil (2022: £Nil).
The maximum exposure to credit risk at the balance sheet date by class of
financial instrument was:
28 December 29 December
2023 2022
£000 £000
Ageing of receivables
<30 days 1,005 2,224
31-60 days 322 914
61-120 days 171 63
>120 days 67 107
1,565 3,308
In determining the recoverability of trade receivables the Group considers any
change in the credit quality of the trade receivable from the date credit was
initially granted up to the reporting date. Credit risk is limited due to the
customer base being diverse and unrelated. There has not been any impairment
other than existing provisions in respect of trade receivables during the year
(2022: £nil). There were no material expected credit losses in the year.
Liquidity risk
Liquidity risk arises from the Group's management of working capital. It is
the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to ensure that it will
always have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances to meet
its expected cash requirements as determined by regular cash flow forecasts
prepared by management.
The Group's forecasts show sufficient headroom in banking covenants for the
next 12 months.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial
liabilities at the reporting date. The amounts shown are gross, not discounted
and include contractual interest payments and exclude the impact of netting
agreements.
Contractual cash flows
28 December 2023 Carrying amount Less than one year Between one and two years Between three and five years Over five years Total
£000 £000 £000 £000 £000 £000
Non-derivative financial liabilities
Secured bank facility 26,000 2,012 2,012 27,341 - 31,365
Trade creditors 3,385 3,385 - - - 3,385
Leases 103,238 7,080 8,146 23,604 119,354 158,184
Other creditors 523 523 - - - 523
Accrued expenses 8,117 8,117 - - - 8,117
141,263 21,117 10,158 50,945 119,354 201,574
Contractual cash flows
29 December 2022 Carrying Less than Between one Between three Over five
amount one year and two years and five years years Total
£000 £000 £000 £000 £000 £000
Non-derivative financial liabilities
Secured bank facility 22,000 1,228 22,818 - - 24,046
Trade creditors 2,305 2,305 - - - 2,305
Leases 86,473 5,998 6,230 18,687 90,988 121,903
Other creditors 589 589 - - - 589
Accrued expenses 6,591 6,591 - - - 6,591
117,958 16,711 29,048 18,687 90,988 155,434
Interest rate
risk
Interest rate risk arose from the Group's holding of interest-bearing loans
linked to SONIA. The Group is also exposed to interest rate risk in respect of
its cash balances held pending investment in the growth of the Group's
operations. The effect of interest rate changes in the Group's
interest-bearing assets and liabilities is set out below.
In respect of interest-earning financial assets and interest-bearing financial
liabilities, the following indicates their effective interest rates at the end
of the year and the periods in which they mature:
Effective Maturing Maturing Maturing
interest within between 1 to between 2 to
rate 1 year 2 years 5 years
% £000 £000 £000
At 29 December 2022
Bank borrowings* 5.58% 247 22,000 -
Bank current and deposit balances 0.01% 3,701 - -
At 28 December 2023
Bank borrowings* 7.74% 190 - 26,000
Bank current and deposit balances 0.01% 6,597 - -
*Bank borrowings comprises SONIA of 5.19% (2022: 3.43%) and margin of 2.55%
(2022: 2.15%).
The following table demonstrates the sensitivity to a reasonably plausible
change in interest rates, with all other variables held constant, of the
Group's profit and loss before tax through the impact on floating rate
borrowings and bank deposits and cash flows:
Change in 28 December 29 December
rate 2023 2022
% £000 £000
Bank borrowings 0.5% 130 111
1.0% 260 222
1.5% 390 333
Bank current and deposit balances 0.5% 33 18
1.0% 66 37
1.5% 99 55
Capital management
The Group's capital is made up of share capital, share premium, merger reserve
and retained earnings totalling £44.5m (2022 £46.3m).
The Group's objectives when maintaining capital are:
· To safeguard the entity's ability to continue as a going concern so
that it can continue to provide returns for shareholders and benefits for
other stakeholders.
· To provide an adequate return to shareholders by pricing products and
services commensurately with the level of risk.
The capital structure of the Group consists of shareholders equity as set out
in the consolidated statement of changes in equity. All funding required to
set-up new cinema sites and for working capital purposes are financed from
existing cash resources where possible. Management will also consider future
fundraising or bank finance where appropriate.
28 Provisions
Other provisions Leasehold Dilapidations Total
£'000 £,000
As at 30 December 2021 393 1,118 1,511
Utilised in the year (393) - (393)
Additions - 97 97
Other increases - 135 135
Unwinding of discount - 12 12
As at 29 December 2022 - 1,362 1,362
Additions - 311 311
Revaluation of net present value - (50) (50)
Unwinding of discount - 8 8
As at 28 December 2023 - 1,631 1,631
All provisions for lease dilapidations are due after more than five years.
Leasehold dilapidations relate to the estimated cost of returning leasehold
property to its original state at the end of the lease in accordance with
lease terms. The cost is recognised as depreciation of leasehold improvements
over the remaining term of the lease. The main uncertainty relates to
estimating the cost that will be incurred at the end of the lease term, the
average remaining lease term for leases held at 28 December 2023 was 18 years
(2022:18 years).
29 Deferred tax
28 December 29 December
2023 2022
£000 £000
Deferred tax gross movements
Opening balance - -
Deferred tax asset recognised in period 2,805 -
Closing balance 2,805 -
Recognised in profit and loss
Arising on loss carried forward (4,660) (1,455)
Net book value in excess of tax written down value 1,805 1,206
Movement on share option intrinsic value - 245
Amortisation of IFRS accumulated restatement 45 49
Lease acquired - (62)
Other temporary differences 5 17
Credit to profit and loss (2,805) -
Deferred tax comprises:
Temporary differences on property, plant and equipment 7,794 5,723
Temporary differences on IFRS 16 accumulated restatement (552) (598)
Share-option scheme intrinsic value - (28)
Available losses (10,302) (5,376)
Other temporary and deductible differences 255 279
(2,805) -
Deferred tax is calculated in full on temporary differences under the
liability method using the tax rates that have been substantively enacted for
future periods, being 25% from 1 April 2023. The deferred tax liability has
arisen due to the timing difference on property, plant and equipment, the
deferral of capital gains tax arising from the sale of property and other
temporary and deductible differences.
Deferred tax assets have been recognised in respect of tax losses and other
temporary differences giving rise to deferred tax assets where the Directors
believe it is probable that they will be recovered. The Group has consulted
the FRC's thematic review of Deferred Tax Assets published in September 2022
and concluded that an asset should be recognised on the basis of a sufficient
level of probable future taxable profits. The Group has taken the decision to
recognise the Deferred Tax Asset in 2023 due to increased certainty over
future trading performance.
30 Share capital and reserves
28 December 29 December
Nominal 2023 2022
value £000 £000
Authorised, issued and fully paid Ordinary shares £0.10
At the start of the year 9,118 9,117
Issued in the year - 1
At the end of the year 9,118 9,118
Number of shares 28 December 29 December
2023 2022
Number Number
Authorised, issued and fully paid Ordinary shares
At the start of the year 91,177,969 91,162,969
Issued in the year - 15,000
At the end of the year 91,177,969 91,177,969
The holders of Ordinary shares are entitled to one vote per share. During the
year the Company did not issue any Ordinary shares (2022: 15,000 Ordinary
shares at a price of 109.5p).
Merger reserve
In accordance with s612 of the Companies Act, the premium on Ordinary shares
issued in relation to acquisitions is recorded as a merger reserve.
Share premium
Share premium is stated net of share issue costs.
Dividends
No dividends were declared or paid during the period (2022: £nil)
31 Share-based payment arrangements
EMI, Non-Qualifying and LTIP Schemes
The Group operates three equity-settled share-based remuneration schemes for
employees. The schemes combine a long term incentive scheme, an EMI scheme and
an unapproved scheme for certain senior management, executive Directors,
non-executive Directors and certain contractors.
All equity-settled share options are measured at fair value as determined
through use of the Binomial technique, at the date of grant, aside from those
with market-based performance conditions, which are valued using the Monte
Carlo model. During the year, no equity-settled share options were issued with
market-based performance conditions.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Groups estimate of shares that will eventually vest and adjusted for
the effect of non-market-based vesting conditions.
Weighted average exercise
price per share in the year ended
28 December 29 December 28 December 29 December
2023 2022 2023 2022
Pence Pence Number Number
Options at the beginning of the year 104.3 142.0 6,973,833 6,925,003
Options issued in the year 28.6 75.4 1,202,808 1,518,543
Options exercised in the year - 109.0 - (15,000)
Option forfeited in the year 41.8 69.2 (979,807) (1,454,713)
Options at the end of the year 90.4 104.3 7,196,834 6,973,833
The exercise price of options outstanding at 28 December 2023 ranged between
10.0 pence and 184.0 pence (2022: 10.0 pence and 184.0 pence) and their
weighted average contractual life was 10 years (2022: 10 years).
The weighted average share price (at the date of exercise) of options
exercised during the year was n/a (2022: 109.0 pence)
The weighted average fair value of each option granted during the year was
63.3p (2022: 84.5p).
No options lapsed beyond their contractual life in the year (2022: nil).
The following information is relevant in the determination of the fair value
of options granted during the year and equity-settled share-based remuneration
schemes operations by the Group:
Option scheme conditions for options issued in the year: 28 December 28 December
2023 2022
Option pricing model used Binomial Binomial
Weighted average share price at grant date (pence) 82.4 94.5
Weighted average option exercise prices (pence) 30.1 10.0
Expected volatility 35% 40%
Expected option life (years) 2.9 4.0
Weighted average contractual life of outstanding share options (years) 10 10
Risk-free interest rate 3.56% 1.57%
Expected dividend yield 0.0% 0.0%
Fair value of options granted in the year (pence) 63.3 84.5
Volatility has been calculated based on historical share price movements of
the Company as at each grant date.
The share-based remuneration expense applicable to key management personnel
was as follows:
28 December 28 December
2023 2022
£000 £000
Equity-settled schemes 639 869
Changes to Option Terms
During the year, the Remuneration Committee resolved to modify 1,170,000
options over ordinary shares in the company (2022: Nil) pertaining to certain
employees, and including key management personnel. This was due to equity
market conditions and to ensure that potential incentives relating to options
previously granted remained appropriate.
Options modified were all part of the Unapproved Scheme, and were granted
between 2013 and 2022. Modifications made related mainly to changes in
exercise price and extensions of option lives.
The impact of changes to option terms has been recognised in the share-based
payment expense for the year.
Growth Shares
On 8th April 2021, the Group announced that Alex Scrimgeour, Chief Executive
Officer of Everyman, had been issued 2,000,000 A ordinary shares ("Growth
Shares") in a subsidiary company, Everyman Media Holdings Ltd. The Growth
Shares could be exchanged for new Ordinary Shares in the future, subject to
meeting certain vesting conditions and share price performance criteria.
Subsequent to this, on 23rd January 2023, the Remuneration Committee resolved
that the share price performance condition attached to the Growth Shares was
no longer appropriate. The Company announced that, subject to vesting
conditions and financial performance targets being met, the Growth Shares
would entitle Mr. Scrimgeour to receive an amount equivalent to the market
value of an Ordinary Share in the Company less 86.0p, being the closing share
price of the Company on 20th January 2023.
On 18(th) August 2023, the Remuneration Committee has resolved that, due to
equity market conditions, the terms of the Growth Shares should be amended so
that Mr. Scrimgeour will now receive an amount equivalent to the market value
of an Ordinary Share less 60.0p, being the closing share price of the Company
on 17 August 2023. All other terms and conditions relation the Growth Shares
remain unchanged.
Details of the outstanding shares under the A Growth Share Scheme are as
follows:
28 December 29 December
2023 2022
Outstanding at beginning of year 2,000,000 2,000,000
Lapsed in year (1,000,000) -
Outstanding at end of year 1,000,000 2,000,000
Following the amendments to the terms of the A Ordinary Shares noted above,
the Binomial model was used for fair valuing the A Growth Share awards at the
date of modification. The inputs to the model were as follows:
A Growth Share Scheme
Target 1 Target 2
Number of shares 1,000,000 1,000,000
Adjusted EBITDA Target £17.2m (2023) £19.3m (2024)
Expected volatility 30% 30%
Risk free interest rate 4.82% 4.76%
Option life (years) 5 5
Share price at valuation date £0.60 £0.60
In light of Adjusted EBITDA Target 1 not being met, 1,000,000 A Ordinary
Shares lapsed during the year (2022: Nil).
Share-based payments charged to the profit and loss were as follows:
28 December 29 December
2023 2022
£000 £000
Share options charge 470 939
Growth shares charge 350 598
Administrative costs 820 1,537
The charge for the Company was £nil (2022: £nil) after recharging subsidiary
undertakings with a charge of £820,000 (2022: £1,537,000). The relevant
charge is included within administrative costs.
There are 5,535,098 options exercisable at 28 December 2023 in respect of the
current arrangements (2022: 3,336,124). No options were exercised in the year
(2022: 15,000).
32 Commitments
There were capital commitments for tangible assets at 28 December 2023 of
£14,521,000 (2022: £15,878,000). This amount is net of landlord
contributions of £7,650,000 (2022: £7,055,000).
33 Events after the balance sheet date
No material events after the balance sheet date.
34 Related party transactions
In the year to 28 December 2023 the Group engaged services from entities
related to the Directors and key management personnel of £644,000 (2022:
£617,000 ) comprising consultancy services of £Nil (2022: £31,000 ), office
rental of £105,000 (2022: £100,000 ) and venue rental for Bristol, Harrogate
and Maida Vale of £539,000 (2022: £486,000 ). There were no other related
party transactions. There are no key management personnel other than the
Directors.
The Group's commitment to leases is set out in the above notes. Within the
total of £158,000,000 (2022:£ 122,000,000 ) is an amount of £499,000
(2022:£ 550,000 ) relating to office rental, £4,319,000 (2022:£4,523,000)
relating to Stratford-Upon-Avon, £3,036,000 (2022: £3,596,000) relating to
Bristol and £4,412,000 (2022: £4,670,000) relating to Harrogate. The
landlords of the sites are entities related to the Directors of the Company.
35 Ultimate controlling party
The Company has a diverse shareholding and is not under the control of any one
person or entity.
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