Everyman Media Regulatory News (EMAN)

24 September 2019

Everyman Media Group PLC

("Everyman" or the "Group")

Interim Results

Continued growth and delivery against strategy

Everyman Media Group PLC, the independent, premium cinema group is pleased to report its unaudited interim results for the 26 weeks ended 4 July 2019.

Financial Highlights:

·; Revenue for the six months up 16% to £28.9m (H1 2018: £24.9m)

·; Adjusted EBITDA1 increased 61% to £6.6m (H1 2018: £4.1m)

·; Operating profit increased 14% to £1.6 million (H1 2018: £1.4m)

Operational Highlights:

·; Admissions up 9.4% to 1.5m (H1 2018: 1.3m)

·; Continued growth in average food and beverage ('F&B') spend up 13.2% to £6.95 (H1 2018: £6.14)

·; Reached record market share of 3.0%

·; Two new venues added (Horsham and Newcastle), expanding the current estate to 28 venues and 92 screens

·; Full refurbishment of Walton-On-Thames and addition of a third screen at Gerrards Cross with new kitchen

·; Committed to a further 15 new venues of which four are expected to open in H2 2019

·; Trading since the period end has continued in line with the Board's expectations

1Adjusted for pre-opening costs, acquisition expenses, depreciation, amortisation and share based payments. IFRS 16 has been applied. Pre IFRS 16 EBITDA would have been £4.9 million, an increase of 20%

Crispin Lilly, Chief Executive Officer of Everyman Media Group PLC said:

"The appetite for Everyman has never been stronger with our continued roll-out allowing us to deliver exceptional experiences to more audiences across the UK with our increasing footprint. As a result, we have seen progress across both our financial and operational KPIs, with growth in revenue and operating profit driven by increasing admissions and F&B spend. This has resulted in the record market share we are reporting today."

"Our ambitious roll out continues both in the UK and with our first international site, which is due to open in Ireland next year. We are confident that there is significant room for expansion. We look forward to delivering our proven model to additional communities in both countries in the current period and beyond."

A video overview of the results from the CEO, Crispin Lilly, is available to watch here: http://bit.ly/EMANH12019

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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. The business has over 900 employees and is headquartered in London.

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

Once again, I am pleased to be reporting on a strong period of growth, where the Group has continued to live up to its ambitions and customers have continued to embrace and enjoy our Everyman offer all throughout the UK; from Glasgow in the North, Chelmsford in the East, Horsham in the South and Bristol in the West. We have further expanded our geographic footprint, now operating 28 venues across the UK, and have continued to deliver high quality and engaging experiences for our customers. This has resulted in an increase in both the number of admissions and average spend on food and beverage.

Everyman's place in today's world

We believe that the entire experience is what defines cinema, and this is the heart of what we do at Everyman. It is not only the film, but all of its complementary components. The venue, food, drink and staff, all make up the experience.

There is significant appetite for all forms of entertainment, with continued strong leisure spend in the UK*, and cinema continues to be a much loved medium. In 2018, there were 177 million admissions, the highest since 1970, and in the same year there were around 900 film and event cinema releases theatrically. This is a huge opportunity for growth in the UK; not only have we continued to take more market share over the reported period, from 2.5% in the first six months of 2018, to 3.0% in 2019, but we are also set to benefit from being part of an expanding market. Importantly, Everyman's venues, location, food, drink, staff and film make us relevant, modern and much loved within our communities, making us less dependent on any specific film or upcoming slate.

These market dynamics and diverse content provide us with the foundation to continue expanding our footprint and to be confident that the appetite to consume the Everyman offer continues to go from strength to strength.

*source: Deloitte UK leisure consumer report 2019

Enhancing local communities

We are proud of the positive impact that our venues are having on high streets and communities.

Our aim is to breathe new life into public spaces, either through regeneration, or new developments. The Newcastle venue was previously a nightclub, which had lain disused for four years. It has now become a beautiful space with screens able to seat 200 people at capacity, and with a premium menu that can be enjoyed either in the bar or through a waiter service to the cinema seats. Meanwhile, in Horsham we were proud to be the key leisure anchor of a broader redevelopment project in the town centre.

More recently we added a further screen at Gerrards Cross and completed a significant refurbishment of our Walton-On-Thames venue, illustrating our long term commitment to maintaining the standard of our older venues and also providing us with an uplift in local trade.

Building our team

In the period, we have bolstered our committed and enthusiastic team to over 900 in total, including key hires in digital marketing and finance as well as local venue managers to support our growth ambitions.

Elizabeth Lake joined us as Chief Financial Officer post-period end, on 16 September 2019. Elizabeth is an excellent addition to the team and will support the Group as we continue to grow.

Continued momentum

Our business model and offering has been proven to work across the UK and has once again proved its success over the last six months. Trading since the period end has been robust, and we continue to trade in line with expectations for the full year.

We have innovative and ambitious plans for the remainder of the year and beyond and remain confident and excited of what lies ahead.

Paul WiseChairman23 September 2019

Chief Executive's Statement

The first half of 2019 was a demonstration of Everyman's ability to not only deliver, but to deliver ahead of the market, with our box office market share growing significantly to 3.0% from 2.5% for the same period in 2018. This has been predominantly driven by an increase in the number of venues, and the box office performance of our existing estate continues to perform well alongside an improved spend per head on food and beverages.

Growth has been delivered across revenue and operating profit, with all of our KPIs showing an improvement. A reflection of our quality F&B offering, spend per head grew to £6.95, up 13.2%. This was driven partly by our estate expansion with new venues having larger and better equipped bars, but also the continued menu development and an ongoing investment in the use of technology to improve service across all venues.

Alongside our commercial progress, the business continued on its ambitious path to further expand its footprint, with the opening of our Horsham and Newcastle venues, with seven screens between them. Furthermore, we delivered a successful 'Summer Love' outdoor pop-up experience at Kings Cross and announced several new partnerships with renowned F&B brands, alongside launching the Everyman app, to further enhance the customer experience.

Business model and growth strategy

Delivering exceptional leisure experiences to all

Everyman's business model is simple; our aim is to further build our portfolio of venues whilst successfully growing our existing estate by bringing together great food, drink, atmosphere, service and of course film, to create exceptional experiences for our customers.

Our growth strategy is multi-faceted:

i. Expanding the geographical footprint by establishing new venues in order to reach new customers

ii. Continually evolving the quality of experience and breadth of choice we offer at our venues

iii. Engaging in effective brand and marketing activity, to expand awareness of Everyman and increase the frequency of visits from our existing loyal customers.

Our model is one that delivers financial benefits, with the premium experience warranting a premium price point, and with more revenue-generating activities offered than the traditional cinema. As we grow, we also benefit from increasingly efficient central costs, allowing top line revenue growth to drop to bottom line.

Progress against strategy

KPIs

The Group uses the following key performance indicators, in addition to total revenue, to monitor the progress of the Group's activities:

* 2018 was a 53 week year with extra week in the 27 weeks ended 5 July 2018

Progress in the Group's KPIs is driven by a number of factors: acquiring more customers, encouraging more frequent visits to venues, upgrading customers onto membership schemes and the provision of a broader range of opportunities to spend during the visits.

Enhancing the Everyman experience

Maintaining a focus on enhancing the quality of its venues, F&B offering, staff service and content programming is vital for Everyman and its continued growth.

Our Everyman venues are each uniquely designed to deliver stylish, welcoming and comfortable spaces using high quality materials whether within a brand new building or an older, traditional space. 

In addition to the £0.25m refurbishment of our Walton On Thames venue, we invested £1.0m building a completely new third screen at Gerrards Cross along with an expanded bar and new kitchen now capable of serving our full Spielburger menu. These investments are important to maintain the customer experience and continued profitability of existing venues such as Walton, or as additional stand-alone investment opportunities such as Gerrards Cross.

As our best asset and at the front line of delivering an exceptional experience to our customers, we are committed to ensuring that our teams are fully supported, developed and provided with outstanding opportunities. As such, amongst a number of initiatives, we introduced new means of internal communications across the Group to drive collaboration and enhanced our training programmes to support our staff's development. I would like to thank all our teams for their unrelenting enthusiasm, passion, hard work and exceptional delivery in the period.

We were very pleased to have launched our Everyman app in June and have subsequently launched an updated version this month. The app will enhance the Everyman customer journey with improved access to upcoming venue schedules and booking, food and drink functionality, and Apple music. The technology we use as part of our infrastructure has also been upgraded to ensure we remain cutting edge, including the implementation of the next iteration of Vista (EPOS) software which delivers better remote functionality for our bar teams and the adoption of Apple music playlists throughout our venues.

The Everyman offering was once again expanded in the period, with partnerships announced with key brands including Apple, Green & Blacks, Wild Turkey, Grey Goose, Campari and American Airline. Not only have these initiatives proven to be revenue-generating, but they also broaden our audience reach and enhance the experience they have in venue.

Expansion of our geographic footprint

We were delighted to have opened a three-screen venue in Horsham and a four-screen venue in Newcastle during the period.

In addition, we were pleased to announce that we have plans in place to open our first international venue in Dublin, Ireland. International expansion represents an entirely incremental opportunity for Everyman and one we will look to pursue cautiously. There remains however continued scope for significant expansion in the UK and we will continue our ambitious roll-out in our primary market.

Whilst continuing to grow our pipeline at an exciting pace, we remain as diligent as ever in ensuring that each opportunity is correct for our business and is fully funded at the time of agreement. As with all investment opportunities, we ensure it fits our strict criteria and a minimum financial return on capital invested on any new project.

Building the Everyman brand

Everyman's marketing activity is focused on creating memorable moments and events, exceeding customer expectations, and fostering and garnering strong authentic word of mouth advocacy. In the period, we have hosted several events including our 'Summer Love' pop up cinema at Kings Cross, our fifth annual Everyman Film Festival and many Q&A sessions with high profile individuals in the film community, such as Danny Boyle and Alex Garland.

Delivering on our ambitions

We have a further 15 committed venues, with a variety of lead times through to 2022. In addition, we have a further eight sites on which we have instructed lawyers and we continue to consider a range of new opportunities, some that can be delivered quickly, often within twelve months, once signed. Specifically, we look forward to opening London Broadgate, Manchester St Johns, Clitheroe, Wokingham and Cardiff before the end of the calendar year.

Alongside geographic expansion, we will continue to enhance the quality of experience for our customers and develop our F&B offerings.

Trading in the first 26 weeks of 2019 was robust and has continued in line with expectations post period. The Board is confident of meeting expectations for the full year and driving growth in the period ahead.

Crispin LillyChief Executive Officer23 September 2019

Chief Financial Officer's Statement

Revenue for the period was up 16.1% on last year to £28.9 million (5 July 2018: £24.9 million, full year to 3 January 2019: £51.9 million). This result is particularly pleasing given the extra week of trading in the 2018 comparable period.

The Group's adjusted operating profit before depreciation, amortisation, pre-opening expenses, and share-based payments was £6.6 million (5 July 2018: £4.1 million, full year to 3 January 2019: £9.2 million). The pre-IFRS16 equivalent as has historically been reported would have been £4.9 million for the period.

The Group generated a profit for the period of £0.6 million (Pre-IFRS equivalent £1.1 million, 5 July 2018 £0.8 million, full year to 3 January 2019 £2.0 million). The impact of the implementation of IFRS 16 has resulted in a reduction in reported profit due to the charge for depreciation on right-of-use assets and the interest charge on lease liabilities being greater than the charge for rent that would have been reported pre IFRS 16. The interest charge on the lease liabilities is higher in the earlier years of a lease, as a significant number of the Group's leases are relatively new, this has resulted in a reduction in reported profit. This net impact on reported profit is £0.5 million.

The effective tax rate is lower than the standard rate of corporation tax for the six-month period ended 4 July 2019 due to the effect of deferred tax arising from the valuation of share options (both exercised and unexercised).

The share-based payment expense for the period was £0.4 million (5 July 2018: £0.2 million, full year to 3 January 2019: £0.5 million) reflecting share option incentives provided to the Group's management and employees.

The Board does not recommend the payment of a dividend at this stage of the Group's development.

Cash flows

Net cash generated in operating activities was £2.9 million (5 July 2018 cash used: £2.3 million from operating activities, full year to 3 January 2019: £7.6 million generated from operating activities). Net cash outflows for the year, before financing, were £6.0 million (July 2018: £9.3 million, full year to 3 January 2019: £15.5 million). This is largely represented by capital expenditure £8.4 million on the expansion of the business through build costs and refurbishment of venues.

The movement in trade and other payables in the period is largely due to construction invoices relating to the new venues in Horsham and Newcastle.

Cash held at the end of the period was £1.9 million (5 July 2018: £3.1 million, 3 January 2019: £3.5 million). The cash held will be invested in the continuing development and expansion of the Group's business.

The Group has access to a £30m facility of which £11m was drawn by the end of the period.

Openings and capital expenditure

During the period, the Group opened a new three-screen venue in Horsham at the end of March 2019, and a four-screen cinema in Newcastle at the beginning of May 2019.

During the period the Group exchanged contracts on further venues at Kings Road Chelsea, Dawson Street Dublin and Egham. This is in addition to the pre-existing contracts for London Broadgate, Cardiff, Manchester, Clitheroe, Northallerton, Plymouth, Lincoln, London's Borough Market, Tunbridge Wells, Durham, Wokingham and Edinburgh.

The Group continues to invest in its infrastructure and head office to support the growth of new venues, investment in capital spend was £8.8 million, of which £8.4 million was on venues, the remainder being development of the Everyman App and general infrastructure.

Elizabeth LakeCFO23 September 2019

Consolidated statement of profit and loss and other comprehensive income for the period ended 4 July 2019 (unaudited)

Consolidated balance sheet at 4 July 2019 (unaudited)

 C Lilly

CEO

Consolidated statement of changes in equity for the period ended 4 July 2019 (unaudited)

Consolidated cash flow statement for the period ended 4 July 2019 (unaudited)

Notes to the financial statements