REG - Everyman Media Grp - Final Results to 29 December 2022
12/04/2023 07:00
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RNS Number : 8989V Everyman Media Group PLC 12 April 2023
12 April 2023
Everyman Media Group PLC
("Everyman" the "Company" or the "Group")
Final Results to 29 December 2022
Everyman Media Group plc (AIM: EMAN) today announces its audited financial
results for the year ended 29 December 2022.
Highlights
Strong operational and financial performance
· Admissions of 3.4m (2021: 2.0m).
· Revenue of £78.8m (2021: £49.0m).
· Adjusted EBITDA of £14.5m (2021: £8.3m).
· Paid for Average Ticket Price(1) of £11.29 (2021: £11.00).
· Food and Beverage Spend Per Head(2) of £9.34 (2021: £9.07).
· Market share maintained at 4.5%.
· Operating profit of £402,000 (2021: £2.2m operating loss).
· £3.7m of cash at year end (2021: £4.2m) and net debt of £18.5m (2021:
£8.7m).
Growing momentum in our expansion strategy
· Two new cinemas opened in April and September 2022 respectively taking the
Group to a total of 130 screens (2021: 119) across 38 venues.
· Six venues confirmed to open in 2023 with an exciting pipeline of further
opportunities for 2024 and 2025.
Evolving the brand and optimising operations
· Continued to innovate in Food & Beverage offer with new dishes, seasonal
specials and improved menu architecture.
· New best-in-class website launched post year end delivering improved
functionality and enhanced targeted advertising based on customer profiles and
web behaviours.
· Signature partnerships with Jaguar and Green & Black's renewed, launched a
new collaboration with The Times to drive mid-week admissions and extended our
events partnership with Apple TV+.
Outlook
· Financial performance in the new financial year has been in line with
expectations.
· Admissions in 2023 are expected to benefit from an increased number of wide
releases, commitment to the theatrical window from distributors and new
investment from streamers.
· Successfully navigated inflationary headwinds in FY22.
· We anticipate continued financial improvement from higher admissions, strong
management of costs and new site openings, despite the current difficult
macroeconomic environment and its impact on consumer spends.
· Management is confident of another year of strong operational and financial
progress.
(1)Paid for average ticket price has been adjusted to remove the benefit of
VAT reductions in both 2022 and 2021 in order to provide a like-for-like
comparison. The directors believe that this metric, which excludes any
complimentary tickets, is more representative of actual customer spend and
will be used as a KPI moving forward.
(2)Food and beverage spend per head has been adjusted to remove the benefit of
VAT reductions in both 2022 and 2021 in order to provide a like-for-like
comparison. The prior year metric has been adjusted to include Deliveroo
income, which had previously been excluded. This is consistent with the
treatment for the current year.
Alex Scrimgeour, Chief Executive Officer of Everyman Media Group PLC, said:
"We were encouraged by strong growth in admissions in the year, marking a
return to business as usual. Everyman remains a popular and affordable choice
for consumers, combining great film, hospitality and atmosphere to provide an
exceptional cinema experience.
We opened two new venues in Edinburgh and Egham in 2022 and are excited to
welcome audiences to new openings in Durham, Salisbury, Northallerton,
Plymouth, Marlow and Bury St Edmunds in the second half of 2023. As a result
of our strong performance in year, we are actively returning to an agenda of
managed organic expansion. The Company is also assessing acquisition
opportunities of existing cinemas which are suitable to be converted into
Everyman venues.
Supported by an increasingly strong pipeline of new releases, commitment to
the theatrical window from studios and new investment from streamers in films
for theatrical release, we view our prospects with increasing confidence.
Moving through 2023 and beyond, the Everyman proposition feels as relevant as
ever."
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 PR (Financial PR Advisor) Tel: 020 3405 0205
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 2022 was a positive year for the business, with
financial performance ahead of management's initial expectations. Audiences
returned to Everyman in encouraging numbers, and we delivered solid increases
in revenue and adjusted EBITDA.
With an improving number of year-on-year releases, continued commitment to the
theatrical window from distributors and an exciting pipeline of new venues, we
look ahead with cautious optimism.
Having served as a Non-Executive Director since 2013, I have come to know
Everyman, its culture and what it stands for and I am delighted to have taken
up the mantle as Chairman in 2023.
Review of the business
The Group's key performance indicators all saw healthy increases on 2021.
Admissions saw significant improvement and we successfully delivered increases
in average ticket price and spend per head.
We were pleased to open two new cinemas in the period, taking us to a total of
130 screens across 38 venues. A further six venues are confirmed to open in
the coming months and, with landlords increasingly keen to work with Everyman,
an exciting pipeline of opportunities exists for 2024 and 2025.
During the year, we continued to innovate and optimise our operations. From a
technology perspective, our app has gone from strength to strength and, post
year end, we launched a new website. Both will play important roles in helping
us to grow admissions and spend per head through taking an increasingly
data-driven approach to marketing.
The teams in our venues and head office continue to be our greatest asset,
again demonstrating an exemplary commitment to customer satisfaction. Without
them, this year's performance would not have been possible, and I would like
to extend my thanks to them all.
I would also like to express my gratitude to Paul Wise, who retired as
Chairman in 2023, for his immense contribution to Everyman during his time
with the business.
Outlook
We look to the future with increasing confidence, bolstered by a robust
pipeline of upcoming releases and ongoing admissions momentum. Our focus for
2023 will be to continue to deliver the high standards of service, atmosphere,
food and drink and of course film that Everyman is known for, and to continue
our expansion plans at a measured pace.
Philip
Jacobson
Non-Executive Chairman
12 April 2023
Chief Executive's Statement
Business Model
Everyman brings together great service, atmosphere, food and drink and of
course film to create an exceptional cinema experience for our customers. In
addition, Everyman delivers a more premium price point and a greater number of
revenue-generating activities than the traditional cinema model.
Emerging from the pandemic, our growth strategy has returned to the following:
- Expanding our geographical footprint by establishing new venues in
order to reach new customers.
- Continually evolving the quality of experience and breadth of
choice we offer at our venues.
- Engaging in effective marketing activity.
As an affordable treat, cinema and Everyman specifically has historically
remained resilient to economic downturn. Not only is this reflected in
Everyman's year-on-year admissions below, but also by the fact the our
customers are spending more with us than they were in 2021. We remain
convinced that appetite for film remains undiminished, and that the Everyman
offer remains more relevant in a post-pandemic environment.
Financial Overview
The Group delivered solid full year financial results, demonstrating a return
to business as usual. Despite a decreased number of wide releases due to
pandemic-related production delays, revenue for the period was £78.8m, a 61%
increase on the prior year (2021: £49.0m).
The Group achieved an operating profit of £402,000 (2021: £2.2m operating
loss). The improvement is particularly pleasing given that the prior year
operating loss included £3.8m of Covid-related government support a £2.5m
reversal of previously-recognised impairment.
As we accelerate our programme of organic expansion, the cash outflow for the
year included £18.9m on the acquisition of Property, Plant & Equipment
(2021: £7.4m), driven by payments for venues opened during the year and new
venues in Durham, Northallerton, Salisbury, Plymouth and Marlow, which are
currently under construction and due to be opened in 2023.
The Group was able to finance much of this expansion with £11.8m of cash
generated from operating activities (2021: £12.2m) as well as capital
contributions of £5.0m from landlords (2021: £0.5m), demonstrating the
ongoing appetite of landlords to work with Everyman. A further proportion was
financed through a £9.5m draw on the Group's banking facilities (2021:
£6.0m). As a result, net banking debt at the balance sheet date was £18.5m
(2021: £8.4m). The Company retains £18m headroom on its £40m debt
facilities.
The Directors believe that the Group balance sheet remains well capitalised,
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 below.
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
29 December 30 December
2022 2021
(52 weeks) (52 weeks)
Admissions 3,418,599 2,023,390
Paid for average ticket price* £11.29 £11.00
Food and beverage spend per head** £9.34 £9.07
Admissions were 69% ahead of last year on a non like-for-like basis. However,
in 2021, the venues were closed from the beginning of the year to 17(th) May
as a result of pandemic-related trading restrictions.
*Paid for average ticket price has been adjusted to remove the benefit of VAT
reductions in both 2022 and 2021 in order to provide a like-for-like
comparison. The directors believe that this metric, which excludes any
complimentary tickets, is more representative of actual customer spend and
will be used as a KPI moving forward.
**Food and beverage spend per head has been adjusted to remove the benefit of
VAT reductions in both 2022 and 2021 in order to provide a like-for-like
comparison. The prior year metric has been adjusted to include Deliveroo
income, which had previously been excluded. This is consistent with the
treatment for the current year.
Expansion of our geographical footprint
During 2022 we opened two new venues, in Edinburgh in April and in Egham in
September, and both venues are trading in line with expectations.
We have a pipeline of six new openings in 2023, with new venues planned in
Durham, Salisbury, Northallerton, Plymouth, Marlow and Bury St Edmunds. The
outlook is promising for 2024 with Cambridge and Stratford (London) under
contract, and - with landlords increasingly interested in working with
Everyman - many further exciting opportunities to grow the estate. We expect
to open a total of six new venues in both 2024 and 2025.
The Group currently has venues in the following locations:
Location Number of Screens Number of Seats
Altrincham 4 247
Birmingham 3 328
Bristol 4 476
Cardiff 5 253
Chelmsford 6 411
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
Newcastle 4 215
Oxted 3 212
Reigate 2 170
Stratford-Upon-Avon 4 384
Walton-On-Thames 2 158
Winchester 2 236
Wokingham 3 289
York 4 329
130 10,661
Market developments
2022 marked the first full year of trade for cinemas since the pandemic, with
total box office revenue across the UK & Ireland at £979m, an increase of
64% against 2021.
Whilst last year the market saw a reduction in blockbusters due to production
delays, the signs of recovery are clear with audiences coming back to enjoy a
broader range of titles. We expect the number of larger releases to return to
near pre-pandemic levels in 2023.
The diversity of content was bolstered by streamers demonstrating a further
commitment to cinema, moving away from day-and-date releases, and increasingly
seeing the value in original content for theatrical release. Key examples of
this were Netflix's "Knives Out: A Glass Onion Mystery" and Apple's
"Spirited". We continue to benefit from working cooperatively and creatively
with streaming partners.
With film production increasingly back up to full speed, the breadth and
quality of the slate in 2023 places the market in a robust position, and the
year should continue an upward growth trajectory.
Technology
In 2022, our website saw 9m users, up from 6.5m in 2021. The Everyman App
ended the year with 116k users, up from 76k in 2021, representing increases of
54% and 53% respectively.
Post year end we launched a new website with improved user experience and a
more flexible content management system. The technology that underpins this
will improve our customer segmentation and targeted, personalised marketing.
This is a key step in our digital transformation.
Food & Beverage
During the year we have continued to add exciting new dishes to our menu,
including quarterly burger specials, most recent of which were the Halloumi
Burger and the Korean Chicken Burger. In sharing plates, our top selling dish
is the new Garlic and Parsley Doughballs. Our vegan range continues to grow,
with the addition of the Vegan Hotdog, and we have also evolved the menu
layout to make it clearer for the customer. Amending the dish placement on the
menus has had a demonstrable impact on sales of hot food.
Innovation in our food and beverage offering is expected to continue to drive
spend per head moving forward.
Partnerships and Events
During the year, we renewed our signature partnerships with Jaguar and Green
& Black's. We added Land Rover Discovery as a new brand partner, deepening
our relationship with the Jaguar group. In conjunction with Waitrose, we
launched a nationwide membership activation with Green & Black's. In
addition, we launched a collaboration with The Times, offering Times+
subscribers two-for-one tickets on Wednesdays as well as access to exclusive
events, and our partnership with Apple goes from strength to strength.
Our open-air venues returned to the canal-side at Kings Cross and the
luxurious grounds of The Grove Hotel, introducing the Everyman brand to
thousands of people over the summer period. This year, we also began a
partnership with This Bright Land, a new festival with a three-year residency
at Somerset House.
2022 also saw show-stopping parties and exclusive events with our partners.
Christmas came early for a November preview of the AppleTV+ film Spirited, we
treated Times+ members to a sneak-peek of Steven Spielberg's The Fabelmans,
and the great and good of the film and music business took to our stages for
special events week after week, with every event exclusive to us.
People
We recognise the commitment our people have shown to Everyman, our guests and
to each other. Our teams' passion is key to delivering our signature brand of
hospitality across all our venues, both existing and new.
Our unique proposition has meant we have been able to attract and retain
talented people, despite well-publicised challenges in hospitality sector
recruitment. Our new careers website has also enabled a smoother,
brand-focused recruitment process.
During the year we opened two new venues, and our existing teams supported our
newest managers to deliver hospitality the Everyman way. Our commitment to
development saw numerous management roles filled internally.
Outlook
We are pleased to report solid financial results despite the reduced number of
blockbuster releases in 2022. However, with Top Gun: Maverick and Avatar: The
Way of Water now the 12th and 3rd highest grossing films of all time
respectively, it is clear that the consumer appetite for film remains
undiminished. We remain an affordable treat for our customers, and with film
production back up at pace and the number of larger releases returning to
pre-pandemic levels, we are confident that customers will return to our venues
in greater numbers.
2022 has been a year of progress for Everyman, as we continued to focus on
evolving the quality of experience and breadth of choice we offer at our
venues. We opened with two new cinemas opened in Edinburgh and Egham and - to
ensure the conservation of high standards and differentiation - we refurbished
our venues in Hampstead, Canary Wharf, Esher, Bristol and Birmingham.
We look to 2023 with cautious optimism. We continue with our expansion
programme, with new venues due to open in Durham, Salisbury, Northallerton,
Plymouth, Marlow and Bury St Edmunds, and several further exciting
opportunities in the pipeline.
Alex Scrimgeour
CEO
12 April 2023
Strategic Report
The Directors present their strategic report for the Group for the year ended
29 December 2022 (comparative period: 52 weeks 30 December 2021).
Review of the business
The Group made a loss after tax of £3,504,000 (2022: £5,430,000).
The Finance Director's report contains a detailed financial review. Further
details are also shown in the CEO's statement and consolidated statement of
profit and loss and other comprehensive income, together with the related
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. The film
release schedule remained adversely impacted by the pandemic in 2022, mainly
as a result of production delays during 2020 and 2021. As the impact of this
reduces and the volume of releases increases, the Board remains optimistic
about the film slate going forward. The Group mitigates this risk by widening
the sources for new content to include streaming platforms, TV and theatre, as
well as focusing on creating a great overall experience at venues independent
from the films themselves.
2 COVID-19 pandemic - Group revenues are entirely dependent on being open and
able to show films, and to serve food and beverage. Although there were no
Covid-related closures in 2022, the beginning of the period was negatively
impacted by the spread of the Omicron variant. Whilst the situation has
improved substantially, the Board remains vigilant to new developments and
further impacts which may arise. In addition, the Group has processes and
policies that can be brought back if needed, and has more flexible employment
contracts allowing temporarily reduced working hours, if required. Everyman
works closely with the UK Cinema Association and the Department for Culture,
Media and Sport to ensure that the interests of the business are represented
in all policy discussions.
3 Consumer environment - A reduction in consumer spending because of broader
economic factors could impact the Group's revenues. During 2022, inflation and
interest rates have increased due to the pandemic and 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 2022, the Group continues to monitor long term trends and the
broader leisure market.
4 Alternative media channels - The proliferation of alternative media channels,
including streaming, has introduced new competitive forces for the film-going
audience and this has been 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.
5 Inflation - Given the current economic and geopolitical situation there is a
risk to the cost base from inflation. To mitigate this the Group enters into
long term contracts and works very closely with suppliers to improve
efficiencies and limit costs. The Group has a fixed rate agreement in place
with one of the largest energy suppliers until the end of October 2023. Whilst
the Board expects energy costs to increase from the current rate, forward
prices for Gas and Electricity continue to fall. The Group is confident that
any increases can be absorbed without material impact to unit economics. In
addition, and thanks to its size, the Group can take advantage of lower price
points for higher volumes. Furthermore, payroll costs are closely monitored
and managed to the level of admissions. We remain cautious when passing on
price increases to our customer base.
6 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.
7 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.
8 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.
9 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
consistently 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 £0.2m 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 £78.8m (2021: £49.0m)
· Gross profit of £50.5m (2021: £30.9m)
· Non-GAAP adjusted EBITDA of £14.5m (2021: £8.3m)
· Operating profit of £0.4m (2021: £2.2m loss)
· Net banking debt £18.5m (2021: £8.4m), with significant
headroom in facilities
Revenue and Operating Profit
Admissions for the 52 weeks ending 29 December 2022 totalled 3.4m, an increase
of 69.0% on the prior year (2021: 2.0m). In 2021, venues were closed for the
first 19 trading weeks of the year due to pandemic-related restrictions. 2022
was not impacted by any government-imposed closures and all venues traded
through the year, aside from any temporary closures for refurbishments.
Whilst the film slate was impacted in 2022 by Covid-related production delays,
it was clear from a number of titles that the consumer appetite for film
remained undiminished. Chief amongst these were Top Gun: Maverick, released at
the end of May, and Avatar: The Way of Water, released in December, which are
now the 12th and 3rd highest-grossing films of all time, respectively. As a
result, and due also to the new venues opened during the year, admissions were
4.5% ahead of 2019 on a non like-for-like basis.
Paid-for Average Ticket Price was £11.29, a 2.6% increase on the prior year
(2021: £11.00), and Food & Beverage Spend per Head was £9.34, a 3.0%
increase on the prior year (2021: £9.07). In order to enable like-for-like
comparison, both of these metrics have been adjusted to remove the benefit
from the temporarily reduced rate of VAT during 2021 and the first quarter of
2022. Given the challenging macroenvironment, the Group has remained
conservative when passing on price increases to customers.
As a result of the above, revenue for the period was £78.8m, a 61% increase
on the prior year (2021: £49.0m).
Reported Gross Margin was 64.0% (2021: 63.0%). The increase was driven by a
greater proportion of Venue Hire, Advertising and Membership Income, which
carries a higher margin.
Other operating income was £0.6m (2021: £3.8m). £0.2m of this related to
the Omicron Hospitality and Leisure Grant, and £0.4m to other landlord
compensation. In the prior year, the Group received £2.8m of support in
relation to the Job Retention Scheme and a £1.0m Business Support Grant.
Administrative Expenses for the period were £50.7m, a 28.6% increase on the
prior year (2021: £39.4m). This is commensurate with the increased levels of
trading activity and admissions. The Group's people costs are inherently
linked to changes in National Living Wage, which increased by 6.6% in April
2022. Beyond this, and despite the macroeconomic environment, the Directors
believe that the impact to the cost base from inflation during the year has
been minimal. This is, in part, due to the recruitment of a new Procurement
Director and the resultant re-negotiation of a number of key contracts.
The Group's Utilities contracts are fixed until the end of October 2023. The
Directors expect costs to rise, but note that forward prices for Gas and
Electricity continue to fall and believe that increases can be absorbed
without material impact to the Group's unit economics.
The Board carried out a full impairment review at the year end, based on a
judgement of future cash flows by venue and concluded that, due to positive
ongoing trading performance, no indicators of impairment existed. Within the
prior year operating loss was a £2.5m reversal of impairment of right-of-use
assets and property, plant and equipment.
The Directors are pleased to report an operating profit of £0.4m (2021:
£2.2m operating loss), particularly given both the greater levels of
government support and the gain from the reversal of impairment in the prior
year.
Financial Expenses
Financial expenses were £3.9m (2021: £3.3m) and relate mainly to interest
charges on the Group's banking facilities and on lease liabilities under IFRS
16. The increase was as a result of an increased draw down the Group's
Revolving Credit Facility, increases to underlying interest rates and new
leases entered into during the year.
Non-GAAP adjusted loss from operations
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.
In prior years, Average Ticket Price has been used as an additional
performance measure. The directors believe that Paid-for Average Ticket Price,
which excludes any complimentary and unpaid tickets, is more representative of
actual customer spend and will be used as an additional performance measure
moving forward.
Non-GAAP adjusted EBITDA was £14.5m, compared with £8.3m in 2021.
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 and non-GAAP adjusted loss from
operations 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 £11.8m (2021: £12.2m) and the net cash
outflow for the year was £0.5m (2021: £3.9m inflow).
The cash outflow for the year included £18.9m on the acquisition of Property,
Plant & Equipment (2021: £7.4m). This was driven by payments for new
venues in Edinburgh and Egham, which opened during the year, and for Borough
Yards, which opened in December 2021. Additionally, payments were made towards
new venues in Durham, Northallerton, Salisbury, Plymouth and Marlow, which are
currently under construction and due to be opened in 2023.
The Group was able to finance much of its expansion during the year from
operating cash flows as well as landlord contributions of £5.0m (2021:
£0.5m), demonstrating the ongoing appetite of asset holders to work with
Everyman. A further proportion was financed through a £9.5m draw on the
Group's banking facilities (2021: £6.0m). As a result, net banking debt at
the balance sheet date was £18.5m (2021: £8.4m).
Cash held at the end of the year was £3.7m (2021: £4.2m).
The Group has banking facilities totalling £40m in place at the year end.
£25m is in a Revolving Credit Facility (RCF) and £15m is in a
Government-backed Coronavirus Large Business Interruption Loan Scheme
("CLBILS") RCF. At the year end the Group had drawn down £22m (2021: £12.5m)
of the available funds, and therefore £18m of the facility was undrawn (2021:
£27.5m).
The Group returned to its original banking covenants, based on Adjusted
Leverage and Fixed Cover Charge, in June 2022. Current forecasts demonstrate
that the Group will remain within these covenants going forward.
The Revolving Credit Facility matures in April 2024, having been extended by 3
months in March 2023. The CLBILS, which cannot be extended, matures in January
2024, as per the previous maturity date. The Group is working with its banking
partners to re-finance both facilities and expects to complete this process in
due course.
Pre-opening costs
Pre-opening costs, which have been expensed within administrative expenses,
were £0.2m (2021: £0.1m). 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 £0.2m during the year (2021: £Nil),
which related to restructuring costs within the Head Office team.
Annual general meeting
The annual general meeting of the Company will be held at 09:30am on 15 June
2023 at Everyman Cinema Hampstead, 5 Holly Bush Vale, London NW3 6TX.
Will Worsdell
Finance Director
12 April 2023
Consolidated statement of profit and loss and other
comprehensive income for the year ended 29 December 2022
Year ended Year ended
29 December 30 December
2022 2021
Note £000 £000
Revenue 6 78,817 49,027
Cost of sales (28,338) (18,129)
Gross profit 50,479 30,898
Other Operating Income 11 622 3,800
Impairment reversal - 2,504
Administrative expenses (50,699) (39,363)
Operating profit /(loss) 402 (2,161)
Financial expenses 12 (3,906) (3,255)
Loss before tax 7 (3,504) (5,416)
Tax charge 13 - (14)
Loss for the year (3,504) (5,430)
Other comprehensive income for the year - 69
Total comprehensive income for the year (3,504) (5,361)
Basic loss per share (pence) 14 (3.84) (5.96)
Diluted loss per share (pence) 14 (3.84) (5.96)
All amounts relate to continuing activities.
Non-GAAP measure: adjusted EBITDA Year ended Year ended
29 December 30 December
2022 2021
£000 £000
Adjusted EBITDA 14,527 8,281
Before:
Depreciation and amortisation 15/17/18 (11,725) (11,727)
Disposal of Property, Plant & Equipment 15 (434) -
Impairment reversal - 2,504
Pre-opening expenses (195) (147)
Exceptional (234) -
Share-based payment expense 30 (1,537) (1,072)
Operating profit / (loss) 402 (2,161)
Consolidated balance sheet at 29 December 2022
Registered in England and Wales
Company number: 08684079
29 December 30 December
2022 2021
Note £000 £000
Assets
Non-current assets
Property, plant and equipment 15 90,067 81,848
Right-of-use assets 17 58,920 58,593
Intangible assets 18 9,312 8,906
Trade and other receivables 21 173 177
158,472 149,524
Asset held for sale 16 3,219 -
161,691 149,524
Current assets
Inventories 19 690 711
Trade and other receivables 21 5,840 5,649
Cash and cash equivalents 20 3,701 4,240
10,231 10,600
Total assets 171,922 160, 124
Liabilities
Current liabilities
Loans and borrowings 23 247 119
Other provisions 27 - 393
Trade and other payables 22 15,571 15,994
Lease liabilities 17 3,014 2,633
18,832 19,139
Non-current liabilities
Loans and borrowings 23 22,000 12,500
Other provisions 27 1,362 1,118
Lease liabilities 17 83,459 79,147
106,821 92,765
Total liabilities 125,653 111,904
Net assets 46,269 48,220
Equity attributable to owners of the Company
Share capital 29 9,118 9,117
Share premium 29 57,112 57,097
Merger reserve 29 11,152 11,152
Other reserve 83 83
Retained earnings (31,196) (29,229)
Total equity 46,269 48,220
These financial statements were approved by the Board of Directors and
authorised for issue on 11 April 2023 and signed on its behalf by:
Will Worsdell
Finance Director
Consolidated statement of changes in equity for the year ended 29 December
2022
Share capital £000 Share premium £000 Merger reserve £000 Other reserve £000 Retained earnings £000 Total Equity £000
Note
Balance at 31 December 2020 9,110 57,038 11,152 (6) (24,871) 52,423
Loss for the year - - - - (5,430) (5,430)
Retranslation of foreign currency - - - 69 - 69
denominated subsidiaries
Total comprehensive income - - - 69 (5,430) (5,361)
Shares issued in the period 29 7 59 - - - 66
Share-based payments 30 - - - - 1,072 1,072
Growth Shares - - - 20 - 20
Total transactions with owners of the parent 7 59 - 20 1,072 1,158
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 income - - - - (3,504) (3,504)
Shares issued in the period 29 1 15 - - - 16
Share-based payments 30 - - - - 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
Consolidated cash flow statement for the year ended 29 December 2022
29 December 30 December
2022 2021
Note £000 £000
Cash flows from operating activities
Loss for the year (3,504) (5,430)
Adjustments for:
Financial expenses 12 3,906 3,255
Income tax expense 13 - 14
Operating profit/(loss) 402 (2,161)
Depreciation and amortisation 15,17,18 11,725 11,727
Impairment reversal - (2,504)
Loss on disposal of property, plant and equipment 434 488
Rent concessions - (701)
Gain on lease derecognition (99) -
Share-based payment expense 30 1,537 1,072
13,999 7,921
Changes in working capital:
Decrease/ (Increase) in inventories 21 (326)
Increase in trade and other receivables (187) (2,844)
(Decrease)/Increase in trade and other payables (1,658) 7,067
(Decrease)/ Increase in provisions (378) 384
Net cash generated from operating activities 11,797 12,202
Cash flows from investing activities
Acquisition of property, plant and equipment (18,884) (7,391)
Acquisition of intangible assets (1,058) (422)
Net cash used in investing activities (19,942) (7,813)
Cash flows from financing activities
Proceeds from the issuance of shares 29 16 86
Drawdown of bank borrowings 24 9,500 6,000
Repayment of bank borrowings 24 - (2,500)
Lease payments - interest 17 (2,851) (2,587)
Lease payments - capital 17 (3,210) (1,526)
Landlord capital contributions received 17 5,005 500
Interest paid (854) (519)
Net cash generated from/ (used in) financing activities 7,606 (546)
Net (decrease)/ increase in cash and cash equivalents (539) 3,843
Exchange loss on cash and cash equivalents - 69
Cash and cash equivalents at the beginning of the year 4,240 328
Cash and cash equivalents at the end of the year 3,701 4,240
The Group had £18,000,000 of undrawn funds available (2021: £27,500,000) of
the loan 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 29 December 2022 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 29
December 2022.
The financial information contained within this final results announcement for
the year ended 29 December 2022 and the year ended 30 December 2021 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 30 December 2021 have been filed with the Registrar of Companies and
those for the year ended 29 December 2022 will be filed following the
Company's annual general meeting. The auditors' report on the statutory
accounts for the year ended 29 December 2022 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.
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
The Group's banking arrangements consist of a £25m Revolving Credit Facility
("RCF") and a £15m Coronavirus Large Business Interruption Loan Scheme
("CLBILS"). On the 14(th) March 2023 the RCF was extended by 3 months, to
17(th) April 2024. The CLBILS, which cannot be extended, will mature on the
previous maturity date of 17(th) January 2024. The Group's forecasts
demonstrate headroom without the CLBILS component of the facility.
The Group is actively engaged with its banking partners on a re-finance of
both the RCF and the CLBILS and expects to complete this process in the coming
months.
At the end of the year, the Group had drawn down £22.2m on its facilities and
held £3.7m in cash; the undrawn facility was therefore £18m and net banking
debt £18.5m.
The facility covenants were amended temporarily to provide liquidity through
the pandemic, when the facility amendments were made in the first quarter of
2021. From June 2022, the covenants returned to the pre-pandemic tests based
on leverage and fixed cover charge. The Group has operated within these
covenants all year and expects to continue to do so going forward.
Sale of Crystal Palace Freehold
On 16 January 2023, the Group completed the sale and leaseback of its freehold
property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after
associated fees and disbursements, were £3.8m. At the balance sheet date, the
property was held for sale in ECPee Limited, with a carrying value of £3.2m.
This additional liquidity has reduced the Group's reliance on debt to finance
its expansion programme during 2023.
Salisbury Freehold
During the year the Group acquired the freehold at Gala Clubs, Endless Street,
Salisbury SP1 1DP, which will open as a new four-screen cinema during 2023.
The Group's forecasts do not consider the sale of this freehold and subsequent
leaseback within the next 12 months. However, should the need for additional
liquidity arise, management are of the view that this could be brought
forward, as required.
Base case Scenario
The period forecast is up to 30 June 2024.
The business has now traded for in excess of 18 months without
Government-enforced closures due to the pandemic, and the Board approved
budget and latest forecasts assume that this will continue indefinitely. The
forecast assumes growth in like-for-like admissions vs. 2022, given the fuller
film release schedule as the industry recovers from pandemic-related
production delays, but remain below pre-pandemic levels. Increases in forecast
costs reflect the current inflationary environment. New openings are forecast
at 6 for 2023, with corresponding capital investment.
In this scenario the Group maintains significant headroom in its banking
facilities and complies with covenants.
Stress testing
The Board considers budget assumptions on admissions to be very conservative,
given that they do not demonstrate a return to pre-pandemic levels until 2025.
A reduction in budgeted admissions of 8% each month from March 2023 has been
modelled. This scenario would cause a breach in the Fixed Cover Charge
covenant in May 2023.
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. In this scenario, the Group would remain compliant with the
Adjusted Leverage 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 approval of the financial statements. The Board considers
that an 8% reduction in budgeted admissions is unlikely, particularly in light
of business performance in January and February 2023 and the increase in the
number of wide releases expected over the remainder of the year. 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
profit and adjusted EBITDA is shown after the consolidated statement of profit
and loss and other comprehensive income.
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.
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 29 December 2022 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 IFRS3. The introduction of the new holding company was accounted for
as a capital reorganisation using the principles of reverse acquisition
accounting under IFRS3. 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.
All contractual-based revenue from memberships is initially classified as
deferred revenue and subsequently recognised on a straight-line basis over the
year. 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 total acquisition date fair values of the identifiable
assets, liabilities and contingent liabilities acquired. Goodwill is
capitalised as an intangible asset. Costs incurred in a business combination
are expensed as incurred with the exception that for business combinations
completed prior to 1 January 2010, cost comprised the fair value of assets
given, liabilities assumed and equity instruments issued, plus any direct
costs of acquisition.
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.
Intangible assets
Software and website assets acquired by the Group are stated at cost less
accumulated amortisation and impairment losses. Amortisation is provided on
all software assets so as to write off their carrying value over the expected
useful economic lives. The estimated useful lives are as follows:
Software assets - 3 to 5 years
Amortisation on software in development does not commence until it is complete
and available for use.
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
Depreciation methods, useful lives and residual values are reviewed at each
balance sheet date. Land is not depreciated.
Impairment (excluding inventories)
Impairment tests on goodwill and other intangible assets with indefinite
useful economic lives are undertaken annually at the financial year end. Other
non-financial assets are subject to impairment tests whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Where the carrying value of an asset exceeds its recoverable
amount (i.e. the higher of value in use and fair value less costs to sell),
the asset is written down accordingly.
Where it is not possible to estimate the recoverable amount of an individual
asset, the impairment test is carried out on the smallest group of assets to
which it belongs for which there are separately identifiable cash flows; its
cash generating units ('CGUs'). Goodwill is allocated on initial recognition
to each of the Group's CGUs that are expected to benefit from a business
combination that gives rise to the goodwill.
Impairment losses (including reversals of impairment losses or impairment
gains) are included in profit or loss, except to the extent they reverse
gains previously recognised in other comprehensive income. An impairment loss
recognised for goodwill is not reversed.
Non-current assets held for sale
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
in accordance with the group's accounting policy; and
- Fair value less costs of disposal.
Following their classification as held for sale, non-current assets are not
depreciated.
Inventories
Inventories are valued at the lower of cost and net realisable value. The cost
incurred in bringing each product to its present location and condition is
accounted for as follows:
Food and beverages - purchase cost on a first-in, first-out
basis
Projection stock - purchase cost on a
first-in, first-out basis
Net realisable value is the estimated selling price in the ordinary course of
business.
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. 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.
Leases in which the Group is a lessee
The Group recognises a right-of-use asset and a lease liability at the lease
commencement date. The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term. The
right-of-use asset is periodically reduced by impairment losses, if any, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease
payments at the commencement date, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the lessee's
incremental borrowing rate.
Lease payments included in the measurement of the lease liability comprise the
following:
· fixed payments
· variable lease payments that depend on an index or a rate,
initially measured using the index or rate as at the commencement date
· amounts expected to be payable under a residual value guarantee
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Group's
estimate of the amount expected to be payable under a residual value
guarantee, or if the Group changes its assessment of whether it will exercise
a purchase, extension or termination option.
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.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less
and leases of low-value assets. The Group recognises these lease payments as
an expense on a straight-line basis over the lease term.
IFRS 16: Leases - Covid-19 Related Rent concessions amendment
The Group has adopted the amendment to IFRS 16 that provides an optional
practical expedient for lessees from assessing whether a rent concession
related to Covid-19 is a lease modification. Where the rent concession is a
direct consequence of the Covid-19 pandemic, the revised consideration for the
lease is substantially the same or less, the reduction affects only payments
originally due on or before 30 June 2021, this was subsequently extended to 30
June 2022, and there were no other substantive changes to the lease then the
concessions can be credited to the profit and loss in the period in which the
event or condition that triggers the rent concession occurs, rather than as a
lease modification.
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 is 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 26.
Interest rate risk
The Group is exposed to cash flow interest rate risk from its revolving credit
facility at variable rates. During 2022 and 2021, 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 2022
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:
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8); and
· Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
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 Group is currently assessing the impact of these new accounting standard
and amendments.
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 goodwill, right-of-use assets and property, plant and equipment
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 18).
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.
6 Revenue
Year ended Year ended
29 December 30 December
2022 2021
£000 £000
Film and entertainment 39,764 25,150
Food and beverages 32,250 20,360
Venue Hire, Advertising and Membership Income 6,803 3,517
78,817 49,027
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 29 December 30 December
2022 2021
£000 £000
Trade and other receivables 3,308 3,847
Deferred income 4,143 4,284
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
29 December 30 December
2022 2021
£000 £000
Depreciation of tangible assets 7,721 8,030
Amortisation of right-of-use assets 3,342 3,078
Amortisation of intangible assets 662 619
Impairment reversal on right-of-use asset and property plant and equipment - (2,504)
Loss on disposal of property, plant and equipment 434 533
Operating lease income (57) (87)
Share-based payment expense 1,537 1,072
Rent concession gains from practical expedient - (701)
8 Staff numbers and employment costs
The average number of employees (including Directors) during the year,
analysed by category, was as follows:
29 December 30 December
2022 2021
Number Number
Management 222 186
Operations 1,032 731
1,254 917
At the year end the number of employees (including Directors) was 1,380 (2021:
1,342)
Management staff represent all full-time employees in the Group.
Year ended Year ended
29 December 30 December
2022 2021
£000 £000
Wages and salaries 20,374 14,982
Social security costs 1,718 1,211
Pension costs 306 224
Share-based payment expense 1,537 1,072
Other staff benefits 31 5
23,966 17,494
There were pension liabilities outstanding as at 29 December 2022 of £62,000
(30 December 2021: £66,000).
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
29 December 30 December
2022 2021
£000 £000
Salaries/fees 807 748
Bonuses 88 115
Other benefits 22 18
Pension contributions 14 15
931 896
Share-based payment expense 869 720
1,800 1,616
Information regarding the highest paid Director is as follows:
Year ended Year ended
29 December 30 December
2022 2021
£000 £000
294 244
Salaries/fees
Bonuses 44 40
Other benefits 21 15
Pension contributions 10 9
369 308
Share-based payment expense 598 750
967 1,058
Directors remuneration for each Director is disclosed in the Remuneration
Committee report. The costs relating to the Directors remuneration are wholly
incurred by Everyman Media Limited for the wider Group. No Directors exercised
options over shares in the Company during the year (2021: None).
10 Auditor's remuneration
Year ended Year ended
29 December 30 December
2022 2021
Fees payable to the Company's auditor for: £000 £000
Audit of the Company's financial statements 24 12
Audit of the subsidiary undertakings of the Company 159 77
Taxation services to the Group - 20
183 109
11 Other Operating Income
Year ended Year ended
29 December
30 December
2022 2021
£'000 £'000
Coronavirus Job Retention Scheme - 2,801
Business Grants 155 999
Landlord compensation 467 -
622 3,800
12 Financial expenses
Year ended Year ended
29 December 30 December
2022 2021
£000 £000
Interest on bank loans and overdrafts 983 595
Bank loan arrangement fees 60 85
Interest on lease liabilities 2,851 2,587
Interest on dilapidations provision 12 9
Reassessment of dilapidations NPV - (21)
3,906 3,255
13 Taxation
Year ended Year ended
29 December 30 December
2022
2021
£000 £000
Tax expense
Current tax - -
Adjustment in respect of prior years - -
Total current tax credit
Deferred tax expense
Origination and reversal of temporary differences - 416
Adjustment in respect of prior years - (101)
Effect of tax rate change - (301)
Total tax (credit)/expense - 14
The reasons for the difference between the actual tax charge for the period
and the standard rate of corporation tax in the United Kingdom applied to the
(loss)/ profit for the year are as follows:
Reconciliation of effective tax rate Year ended Year ended
29 December 30 December
2022
2021
£000 £000
Loss before tax (3,504) (5,416)
Tax at the UK corporation tax rate of 19.00% (666) (1,029)
Permanent differences (expenses not deductible for tax purposes) 840 750
Impact of difference in overseas tax rates - 1
De-recognition of losses 32 605
Effect of change in expected future statutory rates on deferred tax (206) (217)
Impact of a drop in share-based payments intrinsic value - 5
Adjustment in respect of previous periods - (101)
Other - -
Total tax (credit)/expense - 14
A reduction to 17% (effective 1 April 2020) was substantively enacted on 6
September 2016. In March 2020, it was announced that a rate of 19% would
continue to apply with effect from 1 April 2020 and this change was
substantively enacted from 17 March 2020.
An increase in the UK corporation rate from 19% to 25% (effective 1 April
2023) was substantively enacted on 24 May 2021. This will increase the
company's future current tax charge accordingly.
14 Earnings per share
Year ended Year ended
29 December 30 December 2021
2022
2021 2020
£000 £000
Loss used in calculating basic and diluted earnings per share (3,504) (5,430)
Number of shares (000's)
Weighted average number of shares for the purpose of basic earnings per share 91,178 91,129
Number of shares (000's)
Weighted average number of shares for the purpose of diluted earnings per 91,178 91,129
share
Basic loss per share (pence) (3.84) (5.96)
Diluted loss per share (pence) (3.84) (5.96)
29 December 30 December
2022 2021
Weighted average Weighted average
no. 000's no. 000's
Issued at beginning of the year 91,163 91,095
Share options exercised 15 34
Weighted average number of shares at end of the year 91,178 91,129
Weighted average number of shares for the purpose of diluted
earnings per share
Basic weighted average number of shares 91,178 91,129
Effect of share options in issue - -
Weighted average number of shares at end of the year 91,178 91,129
Basic earnings per share values are calculated by dividing net profit/(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 7m potentially issuable Ordinary shares (2021: 7m) 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.
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 31 December 2020 6,529 75,623 15,998 9,940 1,624 109,714
Acquired in the year - 1,648 954 395 4,394 7,391
Disposals - (1,189) (4,382) (1,156) (59) (6,786)
Transfer on completion - 96 - - (96) -
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
Depreciation
At 31 December 2020 159 14,415 9,173 4,402 - 28,149
Charge for the year 48 4,104 2,574 1,304 - 8,030
Impairment - (1,124) (75) (167) - (1,366)
On Disposals - (925) (4,312) (1,105) - (6,342)
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
On Disposals - (523) (129) (271) - (923)
Re-classified to non-current assets held for sale (179) - - - - (179)
At 29 December 2022 70 19,797 9,767 5,456 - 35,090
Net book value
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
At 31 December 2020 6,433 61,143 6,825 5,538 1,626 81,565
For impairment considerations of tangible fixed assets this was considered
using the value in use basis disclosed in Note 18.
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.
Subject to contract, ECPEE will sell the freehold interest in the property to
the buyer, and the buyer will then grant the lease back to ECPEE. The sale was
not completed as at 29 December 2022, and therefore the property has been
classified as held for sale.
Disposal activities after reporting period not recognised:
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.
Assets and liabilities held for sale:
29 December 30 December
2022 2021
£'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 Leases
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.
On initial recognition, the carrying value of the lease liability also
includes:
· amounts expected to be payable under any residual value
guarantee;
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 27).
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 or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
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.
Nature of leasing activities
The Group leases a number of 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.
During 2022 the Group entered into two property leases for new venues for a
period of 20 and 25 years. The leases had not commenced by the year end and as
a result, a lease liability and right-of-use asset has not been recognised at
29 December 2022. The aggregate future cash outflows to which the Group is
exposed in respect of these contracts is fixed payments of £222,000 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
The percentages in the table below reflect the proportions of lease payments
that are either fixed or variable for the comparative period.
30 December 2021 Lease contract Fixed Variable Sensitivity
No. payments payments (+/-)
% % £'000
Property leases with payments linked to inflation 19 - 51% 2,635
Property leases with periodic uplifts to market rentals 16 - 41% 1,255
Property leases with fixed payments 2 7% - -
Vehicle leases 3 1% - -
40 8% 92% 3,890
Right-of-Use Assets
Land & Buildings £'000 Motor Vehicles £'000
Total £'000
As at 31 December 2020 56,723 22 56,745
Additions 4,357 30 4,387
Amortisation (3,055) (23) (3,078)
Impairment reversal 1,133 - 1,133
Effect of modification to lease terms (594) - (594)
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
Lease Liabilities
Land & Buildings £'000 Motor Vehicles £'000
Total £'000
At 31 December 2020 79,050 18 79,068
Additions 5,003 30 5,033
Interest expense 2,586 1 2,587
Effect of modification to lease terms (594) - (594)
Rent concession gains (701) - (701)
Lease payments (4,088) (25) (4,113)
Landlord contributions 500 - 500
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
Landlord contributions received after lease commencement date are shown in the 29 December 2022 30 December 2021
table above. A further contribution of £455,000 (2021: £nil) was received
prior to lease commencement and therefore total cash received from landlords £'000 £'000
during the year, as presented in the cash flow statement, was £5,005,000
(2021: £500,000).
Lease liabilities
Current 3,014 2,633
Non-current 83,459 79,147
86,473 81,780
Rent Concessions
During 2020 and 2021, the Group received numerous forms of rent concessions
from lessors due to the Group being unable to operate for significant periods
of time. These concessions included rent forgiveness and deferrals.
As discussed in note 2 in the annual financial statements for the year ended
30 December 2021, the Group has elected to apply the practical expedient
introduced by the amendments to IFRS 16 to all rent concessions that satisfy
the criteria. Substantially all the rent concessions entered into during 2021
satisfied the criteria to apply the practical expedient. For any of the
modifications that did not meet the practical expedient requirements; the
lease liability was remeasured using the discount rate applicable at the date
of modification, with the right of use being adjusted by the same amount.
The application of the practical expedient in 2021 resulted in the reduction
of total lease liabilities of £701,000. During the year ended 29 December
2022 no new rent concessions were agreed.
Maturity analysis of lease payments
29 December 2022 30 December 2021
£'000 £'000
Contractual future cash outflows
Land and buildings
Less than one year 5,998 5,291
Between one and five years 24,916 22,794
Over five years 90,989 87,239
121,903 115,324
Motor Vehicles
Less than one year 24 13
Between one and five years 29 11
53 24
Other lease disclosures
29 December 2022 30 December 2021
£'000 £'000
Expenses relating to variable lease payments not included in the measurement 113 38
of lease liabilities
Maturity analysis of lease receipts
(Receipts arising from the Group being a lessor)
29 December 30 December 2021
2022 £'000
£'000
Contractual future cash inflows
Land and buildings
Less than one year 4 65
Between one and five years - 16
4 81
The reduction in future cash inflows at 29 December 2022 arises from a
termination in the leasing arrangement for the property.
18 Goodwill, intangible assets and impairment
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.
Goodwill £'000 Software £'000 Total
£'000
Cost
At 31 December 2020 8,951 2,991 11,942
Acquired in the year - 423 423
Disposed in the year - (546) (546)
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
Amortisation and impairment -
At 30 December 2020 1,599 1,203 2,802
Charge for the year - 619 619
Disposed in the year - (503) (503)
Impairment - (5) (5)
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
Net book value
At 29 December 2022 7,352 1,960 9,312
At 30 December 2021 7,352 1,554 8,906
At 2 January 2020 7,352 1,788 9,140
Impairment Review
The Group evaluates assets for impairment annually or when indicators of
impairment exist. 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 annual 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.
Goodwill is allocated to the following CGUs:
29 December 30 December
2022 2021
£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
Estimating the value in use requires estimate of the expected future cash
flows from each CGU and discount these to their net present value at a pre-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.
The key assumptions of this calculation are shown below:
29 December 30 December
2022 2021
Discount rate 15.3% 13.1%
Long term growth rate 2% 2%
Number of years projected 5 years 5 years
Adjusted EBITDA used for 2023 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. In the remaining five-year forecast
the following assumptions have been applied:
· Admissions increase by 5.5% in 2024 representing continued
recovery from impact of the pandemic. In 2024, forecast admissions remain 10%
below pre- Covid19 levels.
· EBITDA growth from 2025 -2027 includes lower admission growth
rate than 2024 and expectations about increases in average ticket prices and
spend per head.
· For venues opened since 2019 that are early in their maturity
curve, specific assumptions have been applied to the key drivers over the
five- year forecast period.
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.
Scenarios
The following sensitivity scenarios have been applied to the cash flow
forecasts for stress testing purposes:
· Admissions levels were increased by 1% in the upside case and
decreased by 1% in the downside case; and
· WACC was decreased by 1.5% in the upside case and increased by
1.5% in the downside case. WACC has been included in sensitivity analysis due
to the increase in the cost of debt over the past financial year and relative
uncertainty over the cost of debt going forward.
Upside Case Downside Case
Change Reversal of Previous Impairment Change Additional Impairment
£000 £000
Admissions +1.0% 360 -1.0% (699)
WACC -1.5% 895 +1.5% (1,514)
Reversal of previous impairment relates to two venues impaired in prior
periods. Additional impairment relates to two venues impaired in prior periods
and three further venues.
The impact on the total impairment charge of applying the different scenarios
explained above relates to two venues that were impaired in previous years. An
impairment charge would not be triggered on any other venues based on the
changes in these assumptions.
The following cumulative impairment charges have been recognised in previous
periods and have not been reversed. Bought forward impairment of right-of-use
assets and property, plant and equipment relates to two venues.
29 December 30 December
2022 2021
£000 £000
Goodwill 1,599 1,599
Right-of-use assets 724 724
Property, plant & equipment 808 808
Total 3,131 3,131
19 Inventories
29 December 30 December
2022 2021
£000 £000
Food and beverages 656 638
Projection 34 73
690 711
Finished goods recognised as cost of sales in the year amounted to £7,848,000
(2021: £5,054,000). The write-down of inventories to net realisable value
amounted to £nil (2021: £nil).
20 Cash and cash equivalents
29 December 30 December
2022 2021
£000 £000
Per balance sheet 3,701 4,240
Per cash flow statement 3,701 4,240
21 Trade and other receivables
29 December 30 December
2022 2021
£000 £000
Included in current assets 5,840 5,649
Included in non-current assets 173 177
6,013 5,826
Trade receivables 3,308 3,847
Social security and other taxation - 1
Other receivables 241 210
Prepayments and accrued income 2,464 1,768
6,013 5,826
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.
22 Trade and other payables
29 December 30 December
2022 2021
£000 £000
Trade creditors 2,305 3,640
Social security and other taxation 1,819 1,051
Other creditors 589 10
Accrued expenses 6,344 7,009
Deferred income 4,514 4,284
15,571 15,994
23 Loans and borrowings
29 December 30 December
2022 2021
£000 £000
Bank borrowings
Current 247 119
Non-current 22,000 12,500
Total Bank Debt 22,247 12,619
Cash (3,701) (4,240)
Net Bank Debt 18,546 8,379
The Company agreed a £25 million RCF and £15m CLBILS loan facility with
Barclays Bank PLC and Santander UK PLC in March 2021. Interest is charged at
LIBOR/SONIA on the drawn-down balance on a 365/ACT D-basis (the nominal
interest rate ranging between 1.65% and 2.65%). The capital sum of the RCF is
repayable in full on or before 17 April 2024. The capital sum of the CLBILS is
repayable in full on or before 17 January 2024.
Commitment fees are charged quarterly on any balances not drawn at 35% of the
applicable rate of drawn funds. The face value is deemed to be the carrying
value. The Group had drawn down £22 million of the £40 million debt facility
as at 29 December 2022 (2021: £12.5 million).
24 Changes in liabilities from financing activities
Non- current loans and borrowings Current loans and borrowings Lease liabilities Total
£000 £000 £000 £000
At 31 December 2021 12,500 119 81,780 94,399
Cash flows 9,500 - (1,056) 8,444
Non- cash flows:
Interest accruing in period - 128 2,851 2,979
Lease additions - - 3,680 3,680
Effect of modifications to lease terms - - (782) (782)
At 29 December 2022 22,000 247 86,473 108,720
At 1 January 2021 9,000 43 79,068 88,111
Cash flows 3,500 (3,613) (113)
Non- cash flows:
Interest accruing in period - 76 2,587 2,663
Lease additions - - 5,033 5,033
Effect of modifications to lease terms - - (701) (701)
Rent concessions - - (594) (594)
At 30 December 2021 12,500 119 81,780 94,399
25 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.
29 December 30 December
2022 2021
£000 £000
Financial assets measured at amortised cost
Cash and cash equivalents 3,704 4,240
Trade and other receivables 3,549 4,057
Accrued income 692 221
7,945 8,518
29 December 30 December
2022 2021
£000 £000
Financial liabilities measured at amortised cost
Bank borrowings 22,247 12,619
Trade Creditors 2,305 3,640
Leases 86,473 81,780
Other Creditors 589 8
Accrued expenses 6,344 7,009
117,958 105,056
26 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 29
December 2022 and 30 December 2021.
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 29 December 2022 the Group has trade receivables of £3,308,000 (2021:
£4,243,000). 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 29 December 2022 the
Directors have recognised expected credit losses of £Nil (2021: £109,000).
The maximum exposure to credit risk at the balance sheet date by class of
financial instrument was:
29 December 30 December
2022 2021
£000 £000
Ageing of receivables
<30 days 2,224 3,927
31-60 days 914 84
61-120 days 63 232
>120 days 107 -
3,308 4,243
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
(2021: £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
29 December 2022 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 22,247 247 22,000 - 22,247
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 6,344 6,344 - - - 6,344
117,958 15,483 28,230 18,687 90,988 153,388
Contractual cash flows
30 December 2021 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
Secured bank facility 12,619 2 496 13,992 - 14,490
Trade creditors 3,640 3,640 - - - 3,640
Leases 81,780 5,290 5,990 16,804 87,239 115,323
Other creditors 8 8 - - - 8
Accrued expenses 7,009 7,009 - - - 7,009
105,056 15,949 6,486 30,796 87,239 140,470
Interest rate
risk
Interest rate risk arose from the Group's holding of interest-bearing loans
linked to LIBOR/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 30 December 2021
Bank borrowings 2.72% 119 - 12,500
Bank current and deposit balances 0.01% 4,240 - -
At 29 December 2022
Bank borrowings 2.40% 247 22,000 -
Bank current and deposit balances 0.01% 3,701 - -
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 29 December 30 December
rate 2022 2021
% £000 £000
Bank borrowings 0.5% 111 63
1.0% 222 126
1.5% 333 189
Bank current and deposit balances 0.5% 18 19
1.0% 37 37
1.5% 55 56
Capital management
The Group's capital is made up of share capital, share premium, merger reserve
and retained earnings totalling £46.3m (2021 £48.2m).
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.
27 Provisions
Leasehold Dilapidations
Other provisions £,000 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
Due within one year or less - - -
Due within one to five years - 44 44
Due after more than five years - 1,318 1,318
- 1,362 1,362
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 29 December 2022 was 18 years
(2021:18 years).
28 Deferred tax
29 December 30 December
2022 2021
£000 £000
Deferred tax gross movements
Opening balance deferred tax liability - (14)
Recognised in profit and loss
Arising on loss carried forward (1,455) (426)
Net book value in excess of tax written down value 1,206 784
Movement on share option intrinsic value 245 (257)
Amortisation of IFRS accumulated restatement 49 (144)
Lease acquired (62) (29)
Other temporary differences 17 86
Credit/Charge to profit and loss - 14
Deferred tax comprises:
Temporary differences on property, plant and equipment 5,723 4,627
Temporary differences on IFRS 16 accumulated restatement (598) (646)
Temporary differences on leases acquired - 62
Share-option scheme intrinsic value (28) (273)
Available losses (5,376) (4,030)
Other temporary and deductible differences 279 260
- -
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 a 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 unused tax losses of approximately £30.0m in
relation to UK losses and an unprovided deferred tax asset of £2.1m.
29 Share capital and reserves
29 December 30 December
Nominal 2022 2021
value £000 £000
Authorised, issued and fully paid Ordinary shares £0.10
At the start of the year 9,117 9,110
Issued in the year 1 7
At the end of the year 9,118 9,117
Number of shares 29 December 30 December
2022 2021
Number Number
Authorised, issued and fully paid Ordinary shares
At the start of the year 91,162,969 91,095,469
Issued in the year 15,000 67,500
At the end of the year 91,177,969 91,162,969
The holders of Ordinary shares are entitled to one vote per share. During the
year the Company issued 15,000 Ordinary shares at a price of 109.5p (2021
67,500 Ordinary shares at prices ranging from 93.5p to 100p)..
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 (2021: £nil)
30 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.
The terms and conditions of the grants are as follows:
Method of Instruments outstanding Vesting Contractual life
Persons entitled Grant date Settlement 000's Conditions* of options
Management employees, Directors and contractors 29.10.2013 Equity-settled 98 1 10 years
Management employees, Directors and contractors 29.10.2013 Equity-settled 150 2 10 years
Directors 04.11.2013 Equity-settled 50 2 10 years
Management employees, Directors and contractors 29.10.2015 Equity-settled 218 3 10 years
Management employees 15.12.2016 Equity-settled 80 4 10 years
Management employees 10.01.2017 Equity-settled 30 4 10 years
Directors 13.03.2017 Equity-settled 250 4 10 years
Management employees and contractors 11.10.2017 Equity-settled 425 4 10 years
Management employees and Directors 23.11.2017 Equity-settled 87 5 10 years
Management employees and Directors 23.04.2018 Equity-settled 30 6 10 years
Management employees and contractors 02.10.2018 Equity-settled 205 4 10 years
Management employees 03.10.2018 Equity-settled 15 7 10 years
Management employees 05.11.2018 Equity-settled 1 7 10 years
Management employees and Directors 24.09.2019 Equity-settled 698 4 10 years
Management employees and Directors 30.04.2020 Equity-settled 550 4 10 years
Management employees 30.09.2020 Equity-settled 250 4 10 years
Directors 12.11.2020 Equity-settled 1,600 4 10 years
Management employees and Directors 22.12.2020 Equity-settled 150 4 10 years
Directors 08.04.2021 Equity-settled 1,000 8 10 years
Management employees 22.11.2021 Equity-settled 75 4 10 years
Management employees 17.03.2022 Equity-settled 585 4 10 years
Management employees 30.04.2022 Equity-settled 5 4 10 years
Management employees and Directors 05.05.2022 Equity-settled 175 4 10 years
Management employees and Directors 27.06.2022 Equity-settled 125 4 10 years
Management employees and Directors 24.10.2022 Equity settled 123 9 10 years
6,974
*1 EMI options. These vest in equal tranches on the first, second and third
anniversaries of the date of grant.
*2 Unapproved options. These vest in equal tranches on the first, second and
third anniversaries of the date of grant.
*3 Unapproved options. These vest in equal tranches on the first, second and
third anniversaries of the date of grant. Each tranche is exercisable if the
Company share price exceeds £1.30, £1.50 and £1.80 respectively for 15
consecutive trading days.
*4 Unapproved options. These vest on the third anniversary of the date of
grant.
*5 Unapproved options as part of the long-term incentive plan. These vest on
the fifth anniversary of the date of grant. Half of the options are
exercisable if the share price exceeds £2.10 for 2 consecutive trading days
within 60 days following the announcement of the preliminary results for 2017.
The other half of the options are exercisable based on internal Adjusted
EBITDA targets.
*6 Unapproved options as part of the long-term incentive plan. These vest 4
years and 7 months from the date of grant. 45% of the options are exercisable
if the share price exceeds £2.95 for 2 consecutive trading days within 60
days following the announcement of the preliminary results for 2018. The other
55% of the options are exercisable based on internal Adjusted EBITDA targets.
*7 Unapproved options as part of the long-term incentive plan. These vest 4
years and 2 months from the date of grant. 45% of the options are exercisable
if the share price exceeds £2.95 for 2 consecutive trading days within 60
days following the announcement of the preliminary results for 2018. The other
55% of the options are exercisable based on internal Adjusted EBITDA targets.
*8 Unapproved options. These vested on the 31(st) December 2021 and can be
exercised subject to continued employment. The exercise price is £1.50.
*9 Unapproved options as part of the long-term incentive plan. These vest 3
years and 2 months from the date of grant. Between 40% and 100% of the options
are exercisable based on internal Adjusted EBITDA targets.
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 Group and Company's estimate of shares that will eventually vest and
adjusted for the effect of non-market-based vesting conditions.
The inputs into the Binomial model for the share options issued in the year
were as follows:
Option scheme conditions for options issued in the year: 29 December 29 December
2022 2022
Performance No performance
criteria criteria
Weighted average share price at grant date (pence) 0.95 120.0
Weighted average option exercise prices (pence) 0.10 120.0
Expected volatility 40.0% 40.0%
Expected option life 4 years 3 years
Weighted average contractual life of outstanding share options 10 years 10 years
Risk-free interest rate 1.57% 1.57%
Expected dividend yield 0.0% 0.0%
Fair value of options granted in the year (pence) 0.85 0.54
Volatility has been calculated based on historical share price movements of
the Company as at each grant date. Prospective volatility estimates have been
adjusted to remove the impact of high volatility experienced in mid-March
2020, related to Covid-19.
Weighted average exercise
price per share in the year ended
29 December 30 December 29 December 30 December
2022 2021 2022 2021
Pence Pence Number Number
Options at the beginning of the year 142.00 109.50 6,925,003 6,559,818
Options issued in the year 0.75 0.72 1,518,543 1,860,888
Options exercised in the year 1.09 0.94 (15,000) (67,500)
Option forfeited in the year 0.69 0.89 (1,454,713) (1,428,203)
Options at the end of the year 104.28 142.00 6,973,833 6,925,003
No options lapsed beyond their contractual life in the year (Year ended 2021:
nil).
Growth Shares
Under the A Growth Share Scheme, Alex Scrimgeour was issued with 2,000,000 A
shares in Everyman Media Holdings Limited on 8 April 2021. The rights
attaching to the A shares include a put option which, when exercised, enable
the shareholder to convert the shares into ordinary shares of the Company. The
Growth Shares in Everyman Media Holdings Ltd will vest subject to the
achievement of share price targets. 1,000,000 Growth Shares in Everyman Media
Holdings Ltd will vest if the Company has an average closing mid-market price
of £2.25 or more over any 15 consecutive trading days ("Target 1"). The
remaining 1,000,000 Growth Shares in Everyman Media Holdings Ltd will vest if
the Company has an average closing mid-market price of £3.00 or more over any
15 consecutive trading days ("Target 2").
To the extent that the performance targets have been met, the Growth Shares in
Everyman Media Holdings Limited will entitle Mr Scrimgeour to receive an
amount equivalent to the market value of an ordinary share in the Company less
£1. The vested Growth Shares shall be exchanged for ordinary shares in the
Company on or after 31 December 2022 if Target 1 has been achieved and on or
after 31 December 2023 if Target 2 has been achieved, provided that if a
change of control of the Company occurs at any time, any vested Growth Shares
which have not been exchanged by then, shall be exchanged on the change of
control of the Company.
Details of the outstanding shares under the A Growth Share Scheme are as
follows:
29 December 30 December
2022 2021
Outstanding at beginning of year 2,000,000 -
Granted in year - 2,000,000
Exercised in year - -
Outstanding at end of year 2,000,000 2,000,000
The Monte Carlo model was used for fair valuing the A Growth Share awards at
the date of grant. 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
Share price target £2.25 £3.00
Expected volatility 45% 45%
Risk free interest rate 0.10% 0.10%
Option life (years) 5 5
Starting share price £1.41 £1.41
Share-based payments charged to the profit and loss were as follows:
29 December 30 December
2022 2021
£000 £000
Share options charge 939 625
Growth shares charge 598 447
Administrative costs 1,537 1,072
The charge for the Company was £nil (2021: £nil) after recharging subsidiary
undertakings with a charge of £1,537,000 (2021: £1,072,000). The relevant
charge is included within administrative costs.
There are 3,336,124 options exercisable at 29 December 2022 in respect of the
current arrangements (2021: 1,488,103). 15,000 options were exercised in the
year (2021: 67,500).
Volatility for options issued was determined by reference to movements in the
share price over 5 years prior to the grant date. The market value conditions,
where applicable, are reflected in the forfeited options following 60 days of
the announcement of the annual results since the performance conditions are
met/not met prior to the vesting period and as such no estimate of potential
achievement of market values is required.
31 Commitments
There were capital commitments for tangible assets at 29 December 2022 of
£15,878,000 (2021: £9,407,000). This amount is net of landlord contributions
of £7,055,000 (2021: £7,820,000).
32 Events after the balance sheet date
Sale and Leaseback of Crystal Palace Venue
On 16 January 2023, the Group completed the sale and leaseback of its freehold
property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after
associated fees and disbursements, were £3.8m. At the balance sheet date, the
property was held for sale in ECPee Limited, with a carrying value of £3.2m.
As a result of the transaction, the Group will recognise a net profit on
disposal of £0.6m in 52-week period ended 28 December 2023.
The leaseback element of the transaction is accounted for as a finance lease
under IFRS 16. This will result in the recognition of a right of use asset and
a lease liability in 2023.
Under the terms of the lease agreement, the Group has leased back the property
for a period of 25 years at annual rent of £240,000. The rent is to be
reviewed every five years. The first and second reviews are to be upwards only
on an indexed basis by reference to increases in the Retail Prices All Items
Indexed with a collar of 1% per annum and a cap of 4% per annum. The third and
fourth reviews are on an upwards only basis to be the higher of the indexed
rent (increased in accordance with the mechanism agreed for the first two
reviews) and the open market rent pursuant to an open market rent review
mechanism.
Extension of Banking Facilities
On 14th March 2023, the Group extended its £25m revolving credit facility
("RCF") by a period of 3 months, to 17 April 2024. The Group's residual £15m
facility is a Coronavirus Large Business Interruption Loan Scheme ("CLBILS")
and cannot be extended beyond its original maturity date of 17 January 2024.
The Group has begun a process to re-finance both the RCF and the CLBILS and
expects to complete this in due course.
33 Related party transactions
In the year to 29 December 2022 the Group engaged services from entities
related to the Directors and key management personnel of £617,000 (2021:
£566,000) comprising consultancy services of £31,000 (2021: £10,000),
office rental of £100,000 (2021: £98,000) and venue rental for Bristol,
Harrogate and Maida Vale of £486,000 (2021: £458,000). Due to the pandemic
the Group received rent discounts on the related properties amounting to a
saving in 2022 of £nil (2021: £123,000). 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 £122,000,000 (2021:£116,000,000) is an amount of £550,000
(2021:£650,000) relating to office rental, £4,523,000 (2021:£4,800,000)
relating to Stratford-Upon-Avon, £3,596,000 (2021:£2,100,000) relating to
Bristol and £4,670,000 (2021:£4,900,000) relating to Harrogate. The
landlords of the sites are entities related to the Directors of the Company.
34 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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