REG - Everyman Media Grp - Final Results to 30 December 2021
25/03/2022 07:16
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RNS Number : 9995F Everyman Media Group PLC 25 March 2022
25 March 2022
Everyman Media Group PLC
("Everyman" the "Company" or the "Group")
Final Results to 30 December 2021
Everyman Media Group plc (AIM: EMAN) today announces its audited final results
for the year ended 30 December 2021. The year included normal trading with
full capacity for 24 weeks, nine weeks of reduced capacity due to COVID-19
restrictions, and 19 weeks full closure.
Highlights
Promising recovery with positive adjusted operating profit re-established
· Admissions increased 67% to 2.0m (2020: 1.2m)
· Group sales of £49.0m (2020: £24.2m), an increase of 102% year
on year with 24 weeks normal trading, nine weeks of reduced capacity, and 19
weeks full closure, compared with 10 weeks of normal trading conditions, 17
weeks of disrupted trading due to COVID-19 restrictions and 25 weeks of full
closure in 2020.
· Average Ticket Price(1) was £11.44 (2020: £11.81) and Spend Per
Head(1) of £8.96 (2020: £7.08)
· Increased market share of 4.5% (2020: 4.46%)
· A return to an adjusted profit from operations(2) of £8.3m
(2020: £0.3m loss)
· Operating loss reduced by 88% to £2.2m (2020: £18.8m)
Admissions momentum continues
· Admissions are returning to pre-Covid levels, with H2 admissions
97% of H2 2019 on a non-like-for-like basis.
· Admissions between re-opening on 17 May and the period end were
ahead of management expectations, at 87% of 2019 levels.
New site roll out recommenced
· Current estate of 36 venues, with one new venue at Borough Yards
opened in December 2021. The total number of screens now operated by the
Group is 119 (2020: 117).
· Committed pipeline for 2022 of 4 new venues, Edinburgh, Plymouth,
Marlow, and Egham.
Significant liquidity headroom and positive adjusted operating profit
· Since re-opening on 17 May 2021, the Group has been adjusted
operating profit positive and operating cash generative each month.
· At the year end, the Group had cash of £4.2m (2020: £0.3m) and
net debt of £8.4m (2020: £8.7m). Liquidity headroom is £24.6m,
demonstrating continued careful cash management.
Outlook
We are optimistic for the coming year, with customers continuing to appreciate
the unique Everyman experience. Alongside this, a strong and varied film slate
is anticipated, with a good mix of both the major releases and the
well-watched independent films that our customers enjoy. So far in 2022
admissions momentum has continued and we remain focussed on delivering quality
customer service throughout food, drink, staff and film.
(1) The average ticket price has been adjusted to remove the benefit of VAT
reductions in both 2021 and 2020 to provide a like for like comparison. The
unadjusted average ticket price was £12.43 (2020: £11.90). The spend per
head has also been adjusted to remove Deliveroo income and the impact of VAT
to provide a like for like comparison. The unadjusted spend per head was
£10.06 (2020: £7.89). These adjustments have been made to provide a like for
like comparison with 2020
(2) Adjusted for pre-opening costs, acquisition expenses, depreciation,
amortisation, impairment, and share based payments. IFRS 16 has been applied.
Alex Scrimgeour, Chief Executive Officer of Everyman Media Group PLC said:
"Despite more twists and turns than Kenneth Branagh's "Death on the Nile",
these last two years have conclusively proved our belief that Everyman has an
enduring place at the hearts of the communities we serve. Thanks in no small
part to our loyal customers, we have achieved remarkable levels of admissions,
profitability, market share and customer satisfaction since government-imposed
restrictions were lifted. We continue to invest in our venues, our people and
enhancing the Everyman proposition. Off the back of a return to quasi business
as usual, our outlook is increasingly optimistic, consequently we will be
looking to accelerate our openings strategy in the short and medium term. Of
course, none of this would be possible without our incredible venue teams and
head office who have worked tirelessly and selflessly throughout."
For further information, please contact:
Everyman Media Group PLC
Alex Scrimgeour Tel: +44 (0)20 3145 0500
Elizabeth Lake
Canaccord Genuity Limited (Nominated Adviser and Broker) Tel: +44 (0)20 7523 8000
Bobbie Hilliam
Georgina McCooke
Alma PR (Financial PR Advisor) Tel: +44 (0)20 3405 0205
Rebecca Sanders-Hewett
Susie Hudson
Lily Soares Smith
Joe Pederzolli
The information communicated in this announcement contains inside information
for the purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014 as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018 (as amended) ("UK MAR").
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:
I. Intimate and atmospheric venues, which become a destination in
their own right
II. An emphasis on a strong quality food and drink menu prepared
in-house
III. 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
IV. Motivated and welcoming teams
For more information visit http://investors.everymancinema.com/
(http://investors.everymancinema.com/)
Chairman's statement
A year of two halves
Early 2021 was dominated by Covid and Covid-related restrictions. However, by
May 21 all venues were open and the Everyman community returned to our venues
in very encouraging numbers.
We are very pleased to have been able to re-engage with our customers face to
face, with good admissions levels enabling a return to our growth agenda.
Since re-opening we have delivered positive adjusted profits every month as
well as enjoying admission levels and average spends higher than our
expectations, supported by a strong film slate and our great food and drink
offer.
Review of the business
Our share of the box office has grown to 4.5% from 4.46% in 2020. We remain
the fifth largest UK cinema business, as defined by gross box office revenue
(source: ComScore) reinforcing our position as a respected and highly regarded
UK leisure brand.
In the year we were excited to open Borough Yards and to fully refurbish our
Belsize Park venue, With 36 venues now open we continue to be proud of the
positive impact that our venues have on the high streets and communities,
breathing new life into public spaces through regeneration, or new
developments.
We were delighted that Alex Scrimgeour joined us as CEO on 18 January 2021.
Alex's contribution has been impactful from the start with a number of new
initiatives across the business. We were also very pleased to welcome Maggie
Todd to the Board as an independent non-executive Director on 14 July,
bringing with her a wealth of experience working with Disney and its
associated brands.
We are conscious that our successful return has depended in large part on our
teams, who have been amazing through what has been a year with some
exceptionally difficult moments.
Outlook
We remain confident of people's appetite to enjoy making and watching films,
as demonstrated by the strong demand seen for our offering once reopened.
Everyman remains a great place to enjoy films of all genres, great
hospitality, and to have an entertaining, affordable night out.
Current trading is in line with our expectations, and we look to the future
with optimism.
Paul
Wise
Executive Chairman
25 March 2022
The Directors present their strategic report for the Group for the year ended
30 December 2021 (comparative period: 52 weeks 31 December 2020). Comprising
the Chief Executive's statement and the Chief Financial Officer's statement.
Chief Executive's Statement
Business Model
Everyman's business model remains simple, it is to bring together great food,
drink, atmosphere, service and of course film, to create exceptional
experiences for our customers.
Our model is a premium cinema experience that delivers benefits, with the
premium experience warranting a premium price point and with more revenue
generating activities offered than the traditional cinema. As we emerge from
the pandemic and return to sustained growth, we will also benefit from
increasingly efficient central costs, allowing top line revenue growth to
reflect in adjusted profit/(loss) from operations growth.
Our growth strategy is multi-faceted:
- 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.
During 2021 the ability to execute this model was hampered by the impact of
the pandemic on our business, however our ambitions remain the same, and
leaving 2021 we are increasingly confident in a return to the execution of our
multi-faceted strategy.
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
30 December 31 December
2021 2020
(52 weeks) (52 weeks)
Admissions +69% 2,023,390 1,197,248
Box office average ticket price* -3% £11.44 £11.81
Food and beverage spend per head** +27% £8.96 £7.08
Admissions were up 69% year on year, and since re-opening on 17 May 2021
admissions have been ahead of management expectations. For the period from 17
May 2021 to the year end admissions have been 87% of 2019 levels for the same
period (on a non-like-for-like basis), and since restrictions were lifted
towards the end of July, admissions have been 103% of 2019 for the same period
(on a non-like-for-like basis).
*The impacts of the different VAT rates throughout 2020 and 2021 have been
removed from the Average Ticket Prices (ATP) above. The reduction in ATP of 3%
is due to the film slate year on year resulting in the proportion of
children's tickets being 6.5% higher in 2021, together with the regional split
of ticket sales which was 5% higher outside London and the South East in 2021
vs. 2020.
**The Spend Per Head (SPH) has been adjusted to remove Deliveroo income and
the impact of the different VAT rates throughout 2020 and 2021. Food and
beverage spend per head has grown by 27%, driven by the roll out of hand-held
ordering units, kitchen upgrades and consumer confidence growing, with
customers showing a desire to treat themselves on returning to hospitality.
Expansion of our geographical footprint
Pre-pandemic we had planned to open six new venues in 2021 but following the
work we did last year to reduce our capital commitments the pipeline of new
openings was successfully pushed out. Once we were able to re-open and restart
our growth plans, we were able to progress the development of our new two
screen venue in Borough Yards, and were delighted to open to the public on 14
December 2021.
We have a pipeline of at least four new openings this year, Edinburgh (April),
followed by Egham, Plymouth and Marlow We also have two new venues signed and
due to open in 2023 (Northallerton and Aberdeen), and have a strong pipeline
under legal negotiations which will add to this list for 2023 over the coming
weeks.
The Group currently has venues in the following locations:
Location Number of Screens Number of Seats
Altrincham 4 247
Birmingham 3 328
Bristol 3 439
Cardiff 5 253
Chelmsford 5 379
Clitheroe 4 255
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
119 9,910
*One new venue opened in 2021 at Borough Yards, London
COVID-19 response
With venues closed until 17 May 2021, the Group continued to work hard to
preserve cash through working with our partners and using Government support.
Whilst we continue to monitor the situation closely, since being able to
re-open and the relaxation of all COVID restrictions, we are optimistic for
the future.
Government support was received in terms of rates relief, the VAT reduction,
and the grants for the hospitality sector. We are grateful for the support
received and have used it in the spirit it was intended, to protect jobs and
our business, and safeguard its future.
A significant part of our costs are property related, and we are therefore
pleased to have continued to work closely with our landlords. We would like to
take this opportunity to again thank our landlords for their support and
understanding throughout the pandemic.
We also continued to delay a number of site refurbishments and new venue
openings, which significantly reduced the Group's capital commitments in the
first half of 2021. With the removal of Government restrictions we have
returned to our growth strategy and were able to open one new venue in
December 2021 and have at least four new openings in 2022.
Continued engagement with key stakeholders
At the heart of Everyman's proposition are our customers and our people, we
have consistently engaged with all our key stakeholders throughout the
pandemic.
We used social media to maintain a wide dialogue with customers during the
period of closure at the beginning of the year. By the end of 2021 the website
had seen 6.5 million users, up 55% on 2020.
We continued to engage with our loyal members through digital communications
and the sending of small gifts and cards. Our members' ongoing support and
enthusiasm for film has been greatly appreciated during lockdown. It has been
incredibly pleasing to see this engagement reciprocated since reopening, with
our loyal members returning to our venues.
Supporting the wellbeing of staff during the pandemic has been paramount.
Regular engagement with our team during the period of closure at the beginning
of the year has continued since we re-opened.
Innovation
As a leader in cinema, innovation has and always will be essential, and it is
something in which we take great pride in. This year it has continued to be
critical to embrace innovation to produce a compelling slate of programming,
as well as innovating in our food and beverage offering.
We have used the period of closure to our advantage in terms of a programme of
minor kitchen upgrades and relatively small refurbishments. Kitchen upgrades
have been completed in 22 venues, with ordering, payment and kitchen
technology upgrades in all 36 venues.
We have successfully launched a new seafood range with additions to the
offering including the shrimp burger and tempura prawns.
Since 5 January 2022, across all venues, we have added some exciting new items
such as Nduja, caramelised onion and fresh oregano pizza, vegan artichoke and
sun-dried tomato pizza, truffle artichoke dip and flat bread, hot honey
halloumi, and a vegan Bischoff milkshake. In addition, we added buttermilk
chicken, truffle burger and a vegan cheeseburger to our Spielburger venues.
Market developments
As a result of the pandemic and its impact on theatrical releases, film
studios began to experiment with various new film delivery models.
Notwithstanding this experimentation, we firmly believe there will always be a
strong demand for cinema. Cinema offers a unique experiential component and at
Everyman we provide customers with not just the chance to enjoy a film, but a
chance to enjoy it as part of a social event - an evening of entertainment
with food, drink, and exceptional service.
Since re-opening, the industry has moved away from the 16-week window and
towards a minimum of 31 or 45 days based on the scope of the release. We do
not anticipate this having a significant impact on the box office as
historically films take the bulk of their revenue in the first few weeks. What
it has led to is greater flexibility on show requirements, which has allowed
us to screen a broader range of titles and diversify our offering.
We are also seeing an increase in films being released into the market,
notably from streamers such as Netflix, Amazon and Apple. We continue to
believe that streaming and cinema can not only co-exist but in fact complement
each other, paving the way for more creative opportunities and partnerships.
People
We recognise that this has been another challenging period for our team, and
we would like to thank them for their ongoing patience and understanding
during such unprecedented times. When our sites re-opened on 17 May, our staff
showed true professionalism and made sure that customers felt safe and
comfortable.
While for some weeks during the year we faced the same recruitment challenges
that were felt across the whole of the hospitality industry, Everyman is an
attractive proposition, and we were therefore able to fill our vacancies.
Our staff also rose to the challenge as we headed into winter and the Omicron
variant started to dominate, and were very flexible in filling in gaps and
moving locations to ensure that we maintained our signature level of
hospitality.
I would like to thank all our dedicated staff for their commitment and
enthusiasm to our customers, to each other and to the business.
Outlook
Since full re-opening on 21 July 2021, we have been encouraged by a strong
recovery in admissions levels, with interest generated across all venues and
excellent customer feedback. Admission levels since 21 July have reached 103%
of 2019 levels (on a non-like-for-like basis) for the same period, exceeding
management expectations and signalling the sustained consumer demand for a
premium cinema experience. Highlights since re-opening include hosting the
world premiere of 'Cinderella' at Broadgate, Everyman parties across all sites
on the opening night of 'No Time To Die', premieres in collaboration with
Netflix and an opening party for Everyman Borough Yards in collaboration with
Disney, recreating a scene from 'West Side Story' to mention just a few.
Looking ahead we are optimistic. Everyman is a much loved consumer brand with
a unique offering, which we are confident will be in demand for the longer
term. The 2022 film slate is very strong, we have good opportunities to
further develop the Everyman experience, and to increase the number of
potential new venues across the UK. We have significant liquidity, with a
strong balance sheet, and supportive stakeholders across the business and
therefore look forward to returning to our growth strategy.
Alex
Scrimgeour
CEO
25 March 2022
Strategic Report
The Directors present their strategic report for the Group for the year ended
30 December 2021 (comparative period: 52 weeks 31 December 2020). Comprising
the Chief Executive's statement and the Chief Financial Officer's statement.
Review of the business
The Group made a loss after tax of £5,430,000 (2020: £20,119,000 -
restated).
The Chief Financial Officers report contains a detailed financial review.
Further details are also shown in the Chairman's statement and consolidated
statement of profit and loss and other comprehensive income, together with the
related notes to the financial statements.
Impact of COVID-19 on strategy
Due to the pandemic, the growth strategy was paused and the focus shifted to
securing the balance sheet and increasing liquidity, together with reducing
costs. This was achieved by working closely with our partners including
suppliers, landlords, banks and shareholders.
Since re-opening on 17 May 2021 we have seen a strong return of customers to
Everyman venues and have returned to our growth strategy, albeit with a
prudent level of caution, whilst we navigate through to what hopefully appears
to be the end of the pandemic.
Situation in Ukraine
Following the year end we have seen the geopolitical situation deteriorate
with the Russian invasion of Ukraine. This has brought further uncertainties
outside the normal range of risks we see. The Board has considered the
potential impacts on the business and have concluded that there is no current
material impact. Whilst one of the immediate results of the war has been to
see a significant rise in energy prices, the Group has a fixed rate agreement
in place with one of the largest energy suppliers which continues until
October 2023.
In response to the humanitarian issues that have resulted Everyman is donating
£1 for every Spielburger that is sold from our Spring menu.
The principal risks and uncertainties reflect the new risks that have arisen
due to the pandemic.
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. A risk register is in place which the Board
reviews and updates on an ad-hoc basis during meetings.
1 COVID-19 pandemic - Group revenues are entirely dependent on being open and
able to show films and serve food and beverage. The pandemic meant that until
17 May 2021 all venues were closed as part of Government policy to tackle the
pandemic. On re-opening, capacity was restricted to 50%, this was then lifted
on 21 July. Whilst the situation has improved significantly the Group remains
vigilant to further impacts which may arise. To mitigate this, the Group has
processes and policies that can be brought back if needed. The Group has
successfully negotiated reduced costs with certain landlords/suppliers during
periods of enforced Government closure. In addition, the Group has more
flexible employment contracts allowing temporarily reduced working hours. The
Group also has effective opening and closure procedures in place to reduce
costs. 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.
2 Banking - The Group's ability to manage liquidity during the pandemic has
partly depended on the Group's banking arrangements. This risk is managed
through maintaining ongoing dialogue with our banking partners through which
achievable covenants are set for the facility. These are monitored closely to
ensure the Group remains within those covenants. In addition the Board ensure
there are alternative sources of funding available.
3 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.
4 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. This risk
has increased during the pandemic, with major studios delaying releases of
tent pole films until confidence in the level of expected admissions returns.
However, we are cautiously optimistic about the film slate going forward as
there are many exciting films that were delayed and will be released in 2022.
The Board mitigates this risk by widening the sources for new content to
include streaming platforms and TV, as well as focusing on creating a great
overall experience at venues independent from the films themselves.
5 Inflationary environment - 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 for the supply of power and works
very closely with suppliers to improve efficiencies and limit costs. 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 considering passing on price
increases.
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 National events and consumer environment - Specific large events can
temporarily reduce cinema admissions, for example large sporting events,
elections or royal weddings. These are managed by working the release schedule
around large known events. In addition, a reduction in consumer spending
because of broader economic factors could impact the group's revenues. The
risk of inflation and higher interest rates due to the pandemic and
geopolitical events have increased. Historically, the cinema industry has been
incredibly resilient to recession with it remaining an affordable treat during
such times for most consumers. However, the Group constantly monitors long
term trends as well as the broader leisure market.
8 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.
9 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.
10 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 positive customer feedback.
11 Brexit - Risks linked to Brexit include consumer confidence, a lack of
availability of certain food items and staff. Whilst the full business impacts
of Brexit will unfold in the future, the Board believes the Group is well
positioned to react to the potential challenges and opportunities ahead. The
Group has no exchange rate exposure and is only directly impacted by a fall in
sterling through cost pressure on a small number of imported food and beverage
purchases.
Financial risks
The pandemic created a liquidity risk due to the business having to close
venues through the Government response to controlling the pandemic. The
business successfully mitigated this risk through raising shareholder funds in
2020 and negotiating new banking covenants in March 2021. The Group reverts to
the original banking covenants in June 2022 and is already operating within
those covenants as at 24 March 2022. The Board monitors this risk on a regular
basis through reviewing forecasts and working closely with banking partners.
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.
Chief Financial Officer's Statement
Summary
· Since re-opening on 17 May 2021 the business has performed well
with admissions ahead of management expectations.
· The COVID-19 pandemic had a material impact in the performance of
the business during 2021 due to closure of all venues until 17 May 2021.
· Group revenue however increased by 102% to £49.0m (2020:
£24.2m) with trading returning close to pre-pandemic levels once the venues
re-opened and all restrictions had been lifted on 21 July. In 2021 we were
closed for 4.7 months, with a further 2 months at 50% capacity, compared with
2020.
· Non-GAAP adjusted profit from operations was £8.3m (2020: £0.3m
loss).
· Operating loss of £2.2m (2020: £18.8m loss).
· Net banking debt £8.4m (2020: £8.7m) with significant headroom
in facilities.
Revenue and Operating Profit
The business was closed except for Deliveroo trade from a handful of venues
until 17 May 2021. Since re-opening the business has traded well, reaching 87%
of 2019 admissions (on a non-like-for-like basis), despite a further two
months of 50% capacity restrictions. Since venues have been fully opened with
no capacity restrictions, admissions have been 103% of 2019 admissions (on a
non-like-for-like basis). The prior year was impacted by five full months of
closure and then further localised closures and restrictions on capacity and
operations.
During the period since re-opening on 17 May 2021, average spend per head
excluding Deliveroo and the VAT benefit has grown 27%, driven by handheld
ordering technology, menu enhancements and customers desire to treat
themselves when returning to cinema. The film slate has been much stronger
compared with 2020 as studios had more confidence to release films as the
risks of further lockdowns receded.
As a result, revenue in the period was up 102%.
Reported gross margin was 63.0% (2020: 62.2%), with the increase due to a
greater proportion of food and beverage revenue which carries a higher margin.
Other operating income of £3.8m (2020: £6.1m) is from Government support
through the Job Retention Scheme (JRS) and the Business Support Grants (BSG).
The Group received £2.8m (2020: £5.7m) in JRS income and has taken full
advantage of the scheme with all but a skeleton staff working during periods
of closure. For staff where 80% of their pay is above the £2,500 maximum
supported by the scheme, the business topped up their pay to 80%.
In addition to the JRS support from the Government the business also received
£1.0m (2020: £0.4m) in BSG. In December 2021 further support was announced
for the hospitality sector, in the form of one-off grants of up to £6k per
premises, which is being administered by local authorities, and Everyman has
claimed these additional grants.
Further Government assistance in the form of a rates holiday and reduced rates
since April 2021 resulted in a saving of £0.8m (2020: £1.1m). Further
assistance was received through the reduction in VAT rates with the standard
rate for hospitality (excluding alcoholic beverages) of 5% from May to
September, increasing to 12.5% from October.
Further landlord discussions were held to complete agreements on rent
concessions. The cash savings from variations to lease agreements were £0.9m
in the year (2020: £1.4m). We would like to thank all our partners for the
support they have given throughout the period.
Within the operating loss there is a reversal of £2.5m for impairment of
right-of-use assets and property, plant and equipment. The Board carried out a
full impairment review at the year end, based on judgement of future cash
flows by each venue. Due to the improved outlook compared with 31 December
2020, forecast performance has improved and therefore the impairment review
resulted in a reversal for all four venues. Details of the review carried out
and the allocation of the impairment against classes of assets is in note 5.
During the period there was a development in IFRS relating to software
capitalisation following an IFRIC agenda decision in April 2021. This decision
relates to the treatment of customisation and configuration costs in
cloud/SaaS computing arrangements. Historically implementation costs have been
capitalised in line with Everyman accounting policy, however in light of the
IFRIC decision the policy has been changed in 2021 to expense the costs to the
P&L as incurred. This has resulted in a charge to administrative expenses
of £0.5m. There is no material impact on amounts capitalised in previous
periods. The impact in the current period arises due to the implementation of
a new ERP system and developments to other back office systems.
The operating loss of £2.2m has improved significantly compared with the loss
in 2020 of £18.8m.
Non-GAAP adjusted loss from operations
Non-GAAP adjusted profit from operations was £8.3m, compared with a loss in
2020 of £0.3m. In addition to performance measures directly observable in the
financial statements, additional performance measures (Non-GAAP) adjusted
profit/(loss) from operations, Admissions, Average Ticket Price and Spend per
Head are used internally by management to assess performance. Management
believes that these measures provide useful information to evaluate
performance of the business as well as individual venues, to analyse trends in
cash-based operating expenses, and to establish operational goals and allocate
resources.
Non-GAAP adjusted loss from operations is defined as earnings before interest,
taxes, depreciation, amortisation, impairment, share based payments and
one-off lease costs arising due to COVID-19.
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 above.
Cash Flows
The Directors believe the Group balance sheet remains well capitalised, with
sufficient working capital to service all of its day-to-day requirements. Net
banking debt at the balance sheet date was £8.4m (2020: £8.7m). The funds
raised from shareholders in April 2020 have been used to fund losses during
periods of closure and existing capital commitments.
Net cash generated in operating activities was £12.2m (2020 restated: £5.4m
outflow). Net cash inflows for the year, before financing, were £4.4m (2020
restated: £13.9m outflow). This includes £7.4m on the acquisition of
property plant and machinery (2020: £8.1m), which was contracted spend
relating to ongoing projects.
Cash held at the end of the year was £4.2m (2020: £0.3m).
The Group has banking facilities totalling £40m in place at the year end.
£25.0m is in a Revolving Credit Facility (RCF) and £15.0m is in a Government
backed Coronavirus Large Business Interruption Loan Scheme ("CLIBILS") RCF,
both of which mature in January 2024. At the year end the Group had drawn down
£12.5 m (2020: £9.0m) of the available funds, and therefore £27.5m of the
facility was undrawn (2019: £21.0m).
As part of extending banking facilities from a £30.0m RCF at the end of 2020
to the facilities above, new liquidity and EBITDA loss covenants were agreed
which are in place until June 2022 to support the business through the
pandemic. The liquidity covenant requires cash plus undrawn facility to exceed
£7.0m, and there is a last twelve months rolling EBITDA covenant set at 30%
below management estimates. The Board reviews forecast scenarios on an ongoing
basis and believes the business can operate with sufficient headroom.
From June the arrangements revert to the original covenants, from December
2021 the business has been operating within the original covenants and the
current forecasts show that the business will remain within the covenants
going forward.
Pre-opening costs
Pre-opening costs, which have been expensed within administrative expenses,
were £0.1m (2020: £0.2m restated). 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.
Restatement of accounting for leases
The financial statements include the correction of prior period errors in
respect of two leases and a change in accounting policy relating to the
application of the practical expedient for Covid related rent concessions
which impact lease payments prior to June 2022. A detailed explanation and
reconciliation of previously reported numbers is included in Note 2.
Annual general meeting
The annual general meeting of the Company will be held at 09:30am on 1 June
2022 at Everyman Cinema Hampstead, 5 Holly Bush Vale, London NW3 6TX.
Consolidated statement of profit and loss and other comprehensive income for
the year ended 30 December 2021
Restated*
Year ended Year ended
30 December 31 December
2021 2020
Note £000 £000
Revenue 3 49,027 24,224
Cost of sales (18,129) (9,147)
Gross profit 30,898 15,077
Covid -19 Government Support 3,800 6,062
Impairment reversal/ (loss) 5 2,504 (5,635)
Administrative expenses (39,363) (34,342)
Operating loss (2,161) (18,838)
Financial expenses (3,255) (2,939)
Loss before tax (5,416) (21,777)
Tax credit/(loss) (14) 1,658
Loss for the year (5,430) (20,119)
Other comprehensive income for the year 69 (7)
Total comprehensive income for the year (5,361) (20,126)
Basic loss per share (pence) 4 (5.96) (23.57)
Diluted loss per share (pence) 4 (5.96) (23.57)
All amounts relate to continuing activities.
* See note 2 for details regarding the restatement.
Non-GAAP measure: adjusted profit from operations Year ended Restated*
Year ended
30 December 31 December
2021 2020
£000 £000
Adjusted profit/ (loss) from operations 8,281 (293)
Before:
Depreciation and amortisation 5/6/7 (11,727) (10,531)
Pre-opening expenses (147) (208)
Lease termination costs - (625)
Abortive property costs COVID-19 - (862)
Impairment of fixed assets 2,504 (5,635)
Share-based payment expense (1,072) (671)
Option-based social security - (13)
Operating loss (2,161) (18,838)
*See note 2 for details regarding restatement
Consolidated balance sheet at 30 December 2021
Registered in England and Wales
Company number: 08684079
Restated* Restated*
30 December 31 December 2 January
2021 2020 2020
Note £000 £000 £000
Assets
Non-current assets
Property, plant and equipment 81,848 81,565 83,499
Right-of-use assets 7 58,593 56,745 58,945
Intangible assets 5 8,906 9,140 10,694
Deferred tax asset - 14 -
Trade and other receivables 177 173 173
149,524 147,637 153,311
Current assets
Inventories 711 381 507
Trade and other receivables 5,649 2,900 4,463
Cash and cash equivalents 4,240 328 4,271
10,600 3,609 9,241
Total assets 160,124 151,246 162,552
Liabilities
Current liabilities
Other interest-bearing loans and borrowings 119 43 122
Other provisions 393 -
-Trade and other payables 15,994 9,677 14,408
Lease liabilities 2,633 2,533 2,372
Corporation tax liabilities - - 186
19,139 12,253 17,088
Non-current liabilities
Other interest-bearing loans and borrowings 12,500 9,000 14,000
Other provisions 1,118 1,035 1,027
Lease liabilities 79,147 76,535 73,986
Deferred tax liabilities - - 1,362
92,765 86,570 90,375
Total liabilities 111,904 98,823 107,463
Net assets 48,220 52,423 55,089
Equity attributable to owners of the Company
Share capital 9,117 9,110 7,352
Share premium 57,097 57,038 41,920
Merger reserve 11,152 11,152 11,152
Other reserve 83 (6) 1
Retained earnings (29,229) (24,871) (5,336)
Total equity 48,220 52,423 55,089
*See note 2 for details regarding the restatement.
These financial statements were approved by the Board of Directors on 25 March
2022 and signed on its behalf by:
Alex Scrimgeour
CEO
Consolidated statement of changes in equity for the year ended 30 December
2021
Share capital £000 Share premium £000 Merger reserve £000 Forex reserve £000 Retained earnings £000 Total Equity £000
Note
Balance at 2 January 2020 7,352 41,920 11,152 1 (5,221) 55,204
Prior period adjustment - - - - (115) (115)
Balance at 2 January 2020 restated for prior period adjustment 7,352 41,920 11,152 1 (5,336) 55,089
Loss for the year - restated* - - - - (20,119) (20,119)
Retranslation of foreign currency - - - (7) - (7)
denominated subsidiaries
Total comprehensive income - - - (6) (20,119) (20,126)
Shares issued in the period 1,758 15,813 - - - 17,571
Share issue expenses - (695) - - - (695)
Share-based payments - - - - 671 671
Deferred tax on share-based payments - - - - (87) (87)
Total transactions with owners of the parent 1,758 15,118 - - 584 17,460
Balance at 31 December 2020 - restated* 9,110 57,038 11,152 (6) (24,871) 52,423
Loss for the year - - - - (5,430) (5,430)
Retranslation of foreign currency
denominated subsidiaries - - - 69 - 69
Total comprehensive income - - - 69 (5,430) (5,361)
Shares issued in the period 7 59 - - - 66
Share-based payments - - - - 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
*See note 2 for details regarding the restatement
Consolidated cash flow statement for the year ended 30 December 2021
Restated*
30 December 31 December
2021 2020
Note £000 £000
Cash flows from operating activities
Loss for the year (5,430) (20,119)
Adjustments for:
Financial expenses 3,255 2,939
Income tax (credit)/expense 14 (1,658)
Operating (loss)/profit (2,161) (18,838)
Depreciation and amortisation 5,6,7 11,727 10,531
Impairment of goodwill, property, plant and equipment and right-of-use assets 5 (2,504) 5,635
Loss on disposal of property, plant and equipment 488 862
Rent concessions (701) (1,266)
Equity-settled share-based payments 1,072 671
7,921 (2,405)
Changes in working capital:
Decrease/ (Increase) in inventories (326) 126
Decrease/ (Increase) in trade and other receivables (2,844) 1,568
(Decrease)/Increase in trade and other payables 7,067 (4,699)
(Decrease)/ Increase in provisions 384 8
Net cash generated/ (used in) from operating activities 12,202 (5,402)
Cash flows from investing activities
Acquisition of property, plant and equipment 8 (7,391) (8,074)
Acquisition of intangible assets 5 (422) (470)
Net cash used in investing activities (7,813) (8,544)
Cash flows from financing activities
Proceeds from the issuance of shares 20 16,876
Proceeds from exercise of share options 66 -
Drawdown of bank borrowings 6,000 10,000
Repayment of bank borrowings (2,500) (15,000)
Lease payments - interest (2,587) (2,561)
Lease payments - capital (1,526) (405)
Landlord capital contributions received 500 1,625
Capitalised finance expenses - 17
Loan arrangement fees - (136)
Interest paid (519) (370)
Net cash (used in)/ generated from financing activities (546) 10,046
Exchange loss on cash and cash equivalents 69 (43)
Cash and cash equivalents at the beginning of the year 328 4,271
Cash and cash equivalents at the end of the year 4,240 328
The Group had £27,500,000 of undrawn funds available (2020: £21,000,000) of
the loan facility at the year end.
*See note 2 for details regarding the restatement.
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 30 December 2021 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
30 December 2021.
The financial information contained within this final results announcement for
the year ended 30 December 2021 and the year ended 31 December 2020 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 31 December 2020 have been filed with the Registrar of Companies and
those for the year ended 30 December 2021 will be filed following the
Company's annual general meeting. The auditors' report on the statutory
accounts for the year ended 30 December 2021 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
At the beginning of the year the Group had a Revolving Credit Facility ("RCF")
in place for £30m, this was agreed on 16 January 2019 and is repayable in
full on or before 15 January 2024. As at 31 December 2020, the Group had drawn
down £9m of this facility and closed the year with £0.4m of cash, therefore
the net opening debt position in January 2021 was £8.7m, with the undrawn
facility at £21.4m. The banking covenants for the facility had been waived
for the period April 2020 to March 2021, and a single liquidity covenant
introduced for the period.
The Group's financing arrangements were amended in the first quarter of 2021
to provide longer term liquidity if required should the roadmap out of the
pandemic extend further than anticipated. The arrangement consists of a
£25m Revolving Credit Facility ("RCF") and a £15m Coronavirus Large Business
Interruption Loan Scheme ("CLIBILS") and both are repayable in full on or
before 15 January 2024.
The facility covenants were amended temporarily to provide liquidity through
the pandemic, when the facility amendments were made in the first quarter of
2021. The liquidity covenant requires cash plus undrawn facility to exceed
£7m, and there is a last twelve months rolling EBITDA covenant set at 30%
below management estimates.
From June 2022, the covenants return to the pre-pandemic tests based on
leverage and fixed cover charge. Since December 2021 the business has operated
within all sets of covenants.
The continuing uncertainty due to the COVID-19 pandemic has been considered as
part of the Group's adoption of the going concern basis. In particular the
recovery profile of admissions in the sensitivity of forecasts. The forecast
period considered is the 15 months from the balance sheet date up to 31 March
2023.
Base case Scenario
The Board approved budget and latest forecasts are based on a scenario where
the business remains open with no further Government enforced closures. The
forecast assumes admits return to pre-pandemic levels on a non-like-for-like
basis in 2022, excluding the impact of increased capacity from venues opened
since 2019. Increases in forecast costs reflect the current inflationary
environment and the increases announced in national insurance rates. New
openings are forecast at 4 for 2022, with the corresponding capital
investments.
In this scenario the Group maintains significant headroom in its banking
facilities.
Stress testing
The Board is cognisant of the potential for COVID-19 to impact further whilst
the pandemic continues. Given this possibility the Board have considered a
severe but plausible scenario of reduced admissions on the basis that COVID-19
may continue to affect consumer behaviour and there could potentially be
further disruption to the film slate . A reduction in budgeted admissions of
20% each month from January 2022 has been modelled and a corresponding
reduction in capital expenditure for non-committed projects This scenario
would cause a breach in the leverage covenant in October 2022.
If this scenario were to arise there are a number of levers to secure the
financial position and covenants that would be brought into play, including
mothballing projects to reduce borrowings and reducing costs to reduce the
impact on EBITDA. Taking mitigating actions into consideration, the leverage
covenant would not be breached in October 2022.
The Directors believe that the Group is well placed to manage its financing
and other business risks satisfactorily and have a reasonable expectation that
the Group will have adequate resources to continue in operation for at least
12 months from the signing date of these consolidated financial statements.
The Board considers that an 20% reduction in budgeted admissions is plausible
but unlikely, particularly in light of business performance in January and
February 2022 and the current film slate, and that the Group has sufficient
levers to navigate the severe but plausible downside scenario described above.
As a result, the Board does not believe this to represent a material
uncertainty, therefore the Board consider it appropriate to adopt the going
concern basis of accounting in preparing the financial statements. The
forecasts are under continuous review given current market conditions. The
business has the ability to remain trading for a period of at least 12 months
from the date of signing of these financial statements.
Use of non-GAAP profit and loss measures
The Group believes that along with operating profit, the 'adjusted profit from
operations' provides additional guidance to the statutory measures of the
performance of the business during the financial year. The reconciliation
between operating profit and non-GAAP loss from operations is shown above the
Profit and Loss statement.
Adjusted profit or loss from operations is calculated by adding back
depreciation, amortisation, pre-opening expenses and certain non-recurring or
non-cash items. Adjusted profit is an internal measure used by management as
they believe it better reflects the underlying performance of the Group beyond
generally accepted accounting principles.
Restatement of accounting for leases
Restatement of prior year reported numbers As previously reported 31 December 2020 Restatement 1 Restatement 2 Restated 31 December 2020
31 December 2020
£'000 £'000 £'000 £'000
Group Income Statement
Loss for the period (20,478) (84) 443 (20,119)
Group Statement of Changes in Equity
Loss for the period (20,478) (84) 443 (20,119)
Balance Sheet
Right-of-use assets 55,446 893 406 56,745
Lease liabilities (Current) (2,641) 50 58 (2,533)
Lease Liabilities (Non-Current) (75,367) (1,168) - (76,535)
Trade and other payables (9,476) 10 (211) (9,677)
Trade and other receivables 2,645 16 239 2,900
Deferred Tax 63 - (49) 14
Retained earnings (25,115) (199) 443 (24,871)
Net Assets and Total Equity 52,179 (199) 443 52,423
Restatement of prior year reported numbers As previously reported 2 January 2020 Restatement 1 Restatement 2 Restated 2 January 2020
2 January 2020
£'000 £'000 £'000 £'000
Group Statement of Changes in Equity
Total equity balance 55,204 (115) - 55,089
Balance Sheet
Rights-of-use 58,023 922 - 58,945
Lease Liabilities (Current) (2,421) 49 - (2,372)
Lease Liabilities (Non-Current) (72,900) (1,086) - (73,986)
Retained earnings (5,221) (115) - (5,336)
Net Assets and Total Equity 55,204 (115) - 55,089
Restatement 1 - Prior period error
The previously reported results have been restated to correct errors
identified in respect of two leases as follows:
Canary Wharf
An assumption was made that rent would increase from March 2020, however, this
was not the case. Due to this error the opening lease liability and right of
use asset were wrong as the discounted cashflows were greater than actually
payable.
Correcting this error led to a reduction in the right of use asset of
£223,000 with a corresponding decrease in the lease liability of £344,000
and increase in retained earnings of £160,000.
This also gave rise to a decrease in depreciation charge of £45,000 and
decrease in finance charge of £24,000. An adjustment to the gain on
concession was made to reduce the gain by £21,000.
Chelmsford
Implicit in the lease is a contractual 2.5% compound increase in rent every 5
years. This meets the definition of an in-substance fixed payment and so
should have been accounted for when discounting the future cash flows upon
recognition of the lease.
Accounting for this error has led to an increase in right of use asset of
£1,174,000 with a corresponding increase of £1,462,000 to the lease
liability and a decrease in retained earnings of £197,000.
Correcting this error led to an increase in depreciation charge of £103,000
and an increase in finance charge of £107,000.
The net impact of both adjustments in restatement one is a reduction in profit
across 2019 and 2020 of £199,000.
Restatement 2 - Change in accounting policy - rent concessions
After finalisation of the prior period financial statements there was a change
to the Practical Expedient for rental concessions to include those effecting
lease payments up to 30 June 2022. The original practical expedient was
limited to arrangements that impacted rent payments up to 30 June 2021. This
meant that some concessions that had previously been treated as modifications,
could now be accounted for using the Practical Expedient.
Accounting for these concessions using the practical expedient gave rise to an
increase in the group right of use assets of £406,000 and an increase in the
lease liability of £58,000.
Gain on concessions was increased £474,000, finance charge and depreciation
increased and as a result of changing profits the deferred tax asset was
reduced by £49,000
The net impact to group profits in 2020 of restatement 2 was an increase of
£443,000.
The impact of the change in accounting policy above impacts certain leases in
the parent Company. The impact of the change in accounting policy on the
parent Company balance sheet is to increase net assets by £18,000.
3 Revenue
Year ended Year ended
30 December 31 December
2021 2020
£000 £000
Film and entertainment 25,150 13,565
Food and beverages 20,360 9,447
Venue Hire, Advertising and Membership Income 3,517 1,212
49,027 24,224
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 30 December 31 December
2021 2020
£000 £000
Trade and other receivables *restated 3,847 653
Deferred income 4,284 3,028
Deferred income relates to advanced consideration received from customers in
respect of memberships, gift cards and advanced screenings.
4 Earnings per share
Year ended Year ended
30 December 2021 31 December 2020 re-stated
2021 2020
£000 £000
Loss used in calculating basic and diluted earnings per share (5,430) (20,119)
Number of shares (000's)
Weighted average number of shares for the purpose of basic earnings per share 91,129 85,372
Number of shares (000's)
Weighted average number of shares for the purpose of diluted earnings per 91,129 85,372
share
Basic loss per share (pence) (5.96) (23.57)
Diluted loss per share (pence) (5.96) (23.57)
Weighted average number of shares for the purpose of basic 30 December 31 December
earnings per share
2021 2020
Weighted average Weighted average
no. 000's no. 000's
Issued at beginning of the year 91,095 73,518
Share options exercised 34 76
Shares issued as consideration for acquisition with no change of control - 11,778
Weighted average number of shares at end of the year 91,129 85,372
Weighted average number of shares for the purpose of diluted
earnings per share
Basic weighted average number of shares 91,129 85,372
Effect of share options in issue - -
Weighted average number of shares at end of the year 91,129 85,372
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 (2020: 6.6m) all of
which relate to the potential dilution from share options issued to the
Directors and certain employees and contractors, under the Group's incentive
arrangements. In the current year these options are anti-dilutive as they
would reduce the loss per share and so haven't been included in the diluted
earnings per share.
The Company made a post-tax profit for the year of £2,528,000 (2020:
£1,825,000).
*See note 2 for details regarding the restatement.
5 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 Assets £'000 Total £'000
Cost
At 2 January 2020 8,951 2,521 11,472
Acquired in the year - 470 470
At 31 December 2020 8,951 2,991 11,942
Acquired in the year - 423 423
Disposed in the year - (546) (546)
Transfer on completion - - -
At 30 December 2021 8,951 2,868 11,819
Amortisation and impairment
At 2 January 2020 - 778 778
Charge for the year - 420 420
Impairment 1,599 5 1,604
At 31 December 2020 1,599 1,203 2,802
Charge for the year - 619 619
Charge on disposals for the year - (503) (503)
Impairment - (5) (5)
At 30 December 2021 1,599 1,314 2,913
Net book value
At 30 December 2021 7,352 1,554 8,906
At 31 December 2020 7,352 1,788 9,140
At 2 January 2020 8,951 1,743 10,694
Impairment Review
The Group evaluates assets for impairment annually or when indicators of
impairment exist. As of 30 December 2021, there was no indicator that an
impairment exists as forecasts were improved from the year ended 31 December
2020. 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 loss should only be 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 recoverable amount of a CGU is the higher of value-in-use or fair value
less cost of disposal. The Group determines the recoverable amount with
reference to its value-in-use. Where the recoverable amount is less than the
carrying value, an impairment charge to reduce the assets down to recoverable
amount is recognised.
Each cash-generating unit (CGU) which represents each site acquired.
Value-in-use was calculated as the net present value of the projected
risk-adjusted post-tax cash flows plus a terminal value of the CGU. A post-tax
discount rate was applied to calculate the net present value of pre-tax cash
flows. The discount rate was calculated using a market participant weighted
average cost of capital. Whilst there is some sensitivity to the inputs, the
methodology is not significantly impacted by reasonable fluctuations in
inputs. Goodwill and indefinite life intangible assets considered significant
in comparison to the Group's total carrying amount of such assets have been
allocated to CGUs or groups of CGUs as follows:
30 December 31 December
2021 2020
£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
The recoverable amount of each CGU has been calculated with reference to its
value-in-use. The key assumptions of this calculation are shown below:
30 December 31 December
2021 2020
Discount rate 9.8% 9.8%
Long term growth rate 2% 2%
Number of years projected 5 years 5 years
The Group considered the budgets and forecasts in light of the trading
environment and reasonable expectations going forward which has resulted in
forecast future revenue increasing versus the expectations at 31 December
2020, and therefore determined the recoverable amount for all of its cash
generating units. The recoverable amount is the higher of fair value less
costs of disposal and value in use.
The cash flow forecasts were probability weighted based on the following
scenarios:
1. Base Case (65% weighting): Venues remain open going forward, with
non-like-for-like admissions, and CGU cash generation levels returning to
pre-pandemic levels by 2022 Cash generation levels per CGU are assumed to grow
at 3% in 2023 and then 5% per annum in 2024-2026.
2. Positive case (15% weighting): The assumptions in this case are the
same as the base case except that cash generation levels per CGU increase by
5% in 2023 and 8% between 2024-2026.
3. Downside case (20% weighting): The assumptions in this case are the
same as the base case except that cash generation levels per CGU and reduced
by 10% in 2022, and then annual growth from the lower base is at 3% for
2023-2026. The terminal value includes a growth rate of 2%, which is set to be
consistent with the UK historic growth rate.
Under IAS 38, goodwill cannot be written back once impaired and therefore the
£1,559,000 goodwill impaired in 2020 was excluded from the calculations
The results of this review showed all 4 cash generating units that were
impaired in 2020 had higher recoverable amounts at 31 December 2021 and
therefore a reversal of £2,504,000 previously recognised impairment has been
made. This is shown in the table below.
Venue (CGU) 2020 impairment (excl goodwill) 2021 write back 2021 carried forward impairment
£'000 £'000 £'000
Belsize Park 372 (51) 321
Leeds 2,216 (1,005) 1,211
Liverpool 955 (955) -
York 493 (493) -
Total 4,036 (2,504) 1,532
The write back of the Group's assets is summarised as follows:
Class of Asset 31 December 2020 Impairment 2021 write back 30 December 2021 Impairment
£'000 £'000 £'000
Goodwill 1,599 - 1,599
Right-of-use assets 1,857 (1,133) 724
Corporate assets 99 - 99
Leasehold improvements, PPE F&F 2,080 (1,371) 709
Total 5,635 (2,504) 3,131
The amount by which the impairment changes is sensitive to the discount rate
used and the assumptions on future trading levels, the potential impact is
demonstrated in the scenarios below (independent of each other);
· Increasing the discount rate by 1% in the base case results in
(I) 1 further venue being impaired, and
(II) An impairment increase of £513,000.
· Adjustment in the assumptions used in in the base case (i.e. the
most likely case) cash flow scenario, decreasing the 2022 expected cashflows
by 10% for each venue results in:
(I) 1 further venue being impaired, and
(II) An increase in the impairment charge of £614,000
6 Property, plant and equipment
Land & Leasehold Plant & Fixtures & Assets under
Buildings improvements machinery Fittings construction Total
£000 £000 £000 £000 £000 £000
Cost
At 2 January 2020 6,529 69,525 14,646 9,362 2,440 102,502
Acquired in the year - 1,809 1,471 417 4,377 8,074
Disposals - - (380) - (482) (862)
Transfer on completion - 4,289 261 161 (4,711) -
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
Depreciation
At 2 January 2020 48 9,337 6,320 3,298 - 19,003
Charge for the year 111 3,233 2,633 995 - 6,972
Impairment - 1,845 220 109 - 2,174
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
Net book value
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
At 2 January 2020 6,481 60,188 8,326 6,064 2,440 83,499
For impairment considerations of tangible fixed assets this was considered
using the value in use basis disclosed in note 5.
*See note 2 for details of the restatement.
7 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 a weighted average incremental borrowing rate of 3.2% was
applied to all leases across the portfolio.
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).
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.
30 December 2021 Lease contract numbers Fixed Variable Sensitivity
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
The percentages in the table below reflect the proportions of lease payments
that are either fixed or variable for the comparative period.
31 December 2020 Lease contract numbers Fixed Variable Sensitivity
payments payments £'000
% %
Property leases with payments linked to inflation 17 - 46% +2,333
Property leases with periodic uplifts to market rentals 16 - 49% +1,313
Property leases with fixed payments 2 4% - -
Vehicle leases 3 1% - -
38 5% 95% +3,646
Right-of-Use Assets
Land & Buildings £'000 Motor Vehicles £'000
Total £'000
At 2 January 2020 57,984 39 58,023
Prior Year adjustments:
Additions 951 - 951
Amortisation (29) - (29)
As at 2 January 2020* restated 58,906 39 58,945
Additions 712 - 712
Amortisation* restated (3,122) (17) (3,139)
Impairment (1,857) - (1,857)
Effect of modification to lease term* restated 2,084 - 2,084
At 31 December 2020* restated 56,723 22 56,745
Additions 4,357 30 4,387
Amortisation (3,055) (23) (3,078)
Impairment 1,133 - 1,133
Effect of modification to lease terms (594) - (594)
At 30 December 2021 58,564 29 58,593
*See note 2 for details regarding the restatement.
Rent Concessions
Due to Government policy, the Group had to suspend trading across all venues
at the beginning of the year until 21 May.
Due to Government policy, the Group had to suspend trading across all venues
at the beginning of the year until 17 May.
The Group has received numerous forms of rent concessions from lessors due to
the Group being unable to operate for significant periods of time, including:
- Rent forgiveness (e.g. reductions in rent contractually due under
the terms of lease agreements); and
- Deferrals of rent (e.g. payment of April - June rent on an
amortised basis from January to March 2021).
As discussed in note 2 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 of the rent concessions entered into during
the year satisfy 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 has resulted in the reduction of
total lease liabilities of £701,000 (Restated 2020: £1,265,000). The effect
of this reduction has been recorded as a gain in the period in which the event
or condition that triggered those payments occurred.
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