Interim Results

28 September 2022

Everyman Media Group PLC

("Everyman" or the "Group")

Interim Results

Strong trading with financial performance expected to at least meet market expectations for full year and beyond

Everyman Media Group PLC, the independent, premium cinema group, reports its unaudited interim results for the 26 weeks ended 30 June 2022.

Strong financial performance

· Revenue of £40.7m (H1 2021: £7.7m)

· Adjusted EBITDA1 of £7.5m (H1 2021: £1.4m loss)

· Operating profit of £0.8m (H1 2021: £7.7m loss)

· Cash generated from operating activities £9.1m (H1 2021: £0.3m)

Encouraging strategic and operational progress

· 300,000 additional admissions (1.8m) vs. H1 2019, a 20% increase

· 4.5% market share, +1.5% vs. H1 2019

· Opened five-screen venue in Edinburgh in April 2022

· Bristol and Birmingham venues refurbished, maintaining high standards and differentiation

Robust financial position

· Net assets at 30 June 2022 £48.2m (H1 2021 £44.7m).

· Cash balance at 30 June 2022 £5.9m (H1 2021: £1.7m).

· Net debt (including cash balance) at 30 June 2022 £8.6m (H1 2021: £11.8m)

· Significant remaining headroom on facilities at £25.5m (H1 2021: £26.5m)

Momentum building into the second half

· Opened a four-screen venue in Egham in September 2022

· Durham due to open in November 2022; four further venues confirmed for 2023

· Four venues refurbished post-period end

· On track to at least meet expectations for the full year

1Adjusted for pre-opening costs, acquisition expenses, depreciation, amortisation, share based payments and costs incurred directly related to Covid-19 . IFRS 16 has been applied.

Alex Scrimgeour, Chief Executive of Everyman Media Group PLC, said:

"The first half of the financial year has been a period of progress on all fronts, with healthy admissions growth and robust spend per head, suggesting we are now back on track following the turbulence of recent years. Despite reduced film output due to the effect of low production during the pandemic, we've enjoyed three of the ten highest-ever box office releases in the past twelve months.

Looking ahead, we are optimistic about our prospects. We are confident that film production is back up to full speed and that the flow of excellent content will be bigger and better going forward, beginning with an attractive pipeline of new releases over the remainder of this year and next.

We have started the second half of 2022 in line with expectations and the outlook for the remainder is promising. The acceleration of our openings strategy is now well underway and we are excited about the wealth of opportunities emerging to bolster and supplement the Everyman brand outside of the core proposition.

Cinema will always be an important part of the fabric of the UK as a place to be entertained, and has historically remained as such during more difficult economic conditions and recession. We are confident that our unique brand of Everyman hospitality remains as relevant as ever."

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:

· 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/

Chief Executive's Statement

The first half of 2022 was very positive for Everyman despite the impact of the Omicron outbreak at the beginning of the period, with Group revenue of £40.7m, an increase of £11.8m vs. H1 2019. This was the last comparative period where the estate was open for a full 26 weeks. We welcomed nearly 1.8m customers into our venues, an increase of 0.3m vs. H1 2019, with our market share increasing from 3.0% to 4.5% accordingly. This demonstrates that the appetite for the Everyman offer remains strong, and is growing.

A number of titles performed particularly well in the period. Chief among them was Top Gun: Maverick at the end of May, a long-anticipated sequel to the 1986 original which has now grossed over £80m at the UK Box Office, with Everyman receiving a 5.8% market share to date. Other strong titles included The Batman in March and Doctor Strange in the Multiverse of Madness in May. Post-period end, NT Live: Prima Facie became our most successful Event Cinema ever, with Everyman taking an incredible 18.2% market share and the highest number of national admissions. For Where the Crawdads Sing, we took four of the top five venues nationally, and a 10.9% market share.

Building our team

In the period, we have bolstered our committed and enthusiastic team to over 1,200, including key hires in Procurement and Finance as well as local venue managers to support our growth ambitions.

Will Worsdell joined the Board as Finance Director in June, having formerly held senior Finance roles at several leisure and hospitality businesses, including Head of Commercial Finance at Côte Brasserie, and will support the Group as we continue to grow.

Baroness Ruby McGregor-Smith joined the Board as a Non-Executive Director post-period end on 20 September 2022. Ruby brings a wealth of experience to Everyman, having formerly been the Chief Executive of Mitie Group Plc, a strategic outsourcing company. Amongst other roles, Ruby is the Chair of MindGym Plc, the President of the British Chambers of Commerce and has also been a non-executive board member at the Department for Culture, Media and Sport and the Department for Education.

Enhancing the Everyman experience

We also continue to innovate on the core Everyman offer. In H1 2022 we added a series of multi-venue streaming events in partnership with AppleTV+, bringing exclusive programming to Everyman audiences across the country, including a high profile Q&A with actor Gary Oldman. We put on a strong events calendar, with - amongst others - opening parties held for both Downton Abbey: A New Era and Elvis and charity screenings to support those displaced by the war in Ukraine. We also branched out into immersive cinema, with events held for Nightmare Alley in January and, post-period end, for See How They Run. Such events elevate the Everyman experience further, and once again lead the exhibition circuit into more ambitious territory.

Post-period end, "Summer in the City" has seen Everyman pop-ups return to Screen on the Canal at Granary Square, London, The Secret Garden at The Grove Hotel, Hertfordshire, and, for the first time, to the iconic courtyard at Somerset House. These open-air venues have brought the magic of film and the Everyman brand to thousands of people over the July to September period.

Our food and beverage offer continues to evolve. With a focus on giving our customers more choice, we have added new vegan items and sharing dishes to our menus. An estate-wide rollout of new handheld devices has enabled our customers to order from their seats more seamlessly and efficiently, and we are seeing the impact of this on average spends.

Growing the estate

As at 28 September 2022, Everyman currently has 38 cinemas and 129 screens. We opened a new five-screen venue in Edinburgh on 2 April and, most recently, a new four-screen venue in Egham on 23 September.

Demonstrating our continued confidence in Everyman's prospects, our roll-out pipeline continues, with a new venue due to open in Durham in November 2022. The pipeline for 2023 is well-developed, with four further venues confirmed and another two nearing exchange.

The Board is constantly evaluating new opportunities to grow the Everyman estate, be that a new build, the conversion of an existing building or the acquisition of other cinemas, the key consideration always being that any new venue meets the Board's investment criteria. The Company is not currently actively evaluating the acquisition of any portfolio of cinemas.

To maintain our high standards and differentiation against the market we have continued to invest in our existing estate and, in the year to 28 September 2022, have fully refurbished our venues in Bristol, Birmingham, Canary Wharf, Esher and Hampstead.

Performance Review

The Group uses the key performance indicators of Admissions, Box Office Average Ticket Price and Food & Beverage Spend per Head to monitor the progress of the Group's activities.

*Average ticket price has been adjusted to reflect the reduction in VAT from 20% to 12.5% in H1 2022 (until 1 April 2022) and from 20% to 5% in H1 2021.

**Spend per head has been adjusted to reflect the reduction in VAT from 20% to 12.5% across certain items in H1 2022 (until 1 April 2022), and from 20% to 5% in H1 2021. Deliveroo income has also been removed to enable like for like comparison with H1 2019.

Admissions

Admissions continued to gather positive momentum in the first half of 2022. Comparison to the same period in 2021 is challenging due to government-mandated closure of all venues until 17th May last year. However, admissions increased by 20% vs. the first half of 2019, driven by organic growth and the opening of nine new venues in the intervening period.

On a non-VAT adjusted basis, Box Office revenue increased by 22% vs. the first half of 2019 and Everyman was the only national operator in growth, with the broader UK cinema industry experiencing a 20% decline. This shows that appetite for the Everyman experience continues to grow and that customers are returning to our cinemas in greater numbers.

Average Ticket Price and Spend per Head

With the VAT benefit removed, Spend per Head increased by 28.9% when compared to the same period in 2019, driven by continued investment in our menu and technology, giving our customers more choice and enabling quicker and more efficient service to seats.

The fall in average ticket price, whilst modest at 1.5%, has been driven by the opening of nine new venues between H1 2019 and the end of the period. With some exceptions, new venues open in lower pricing tiers, which can temporarily reduce average ticket price until those venues mature. Since H1 2019 we have also opened more venues outside of London, where ticket prices are typically lower.

Outlook

We continue to be optimistic about the future. As we move through the second half, with encouraging admissions levels to date and a strong film slate anticipated in Q4, we remain on track to at least meet expectations for the full year. The economic backdrop at present is characterised by uncertainty, but we believe our premium, differentiated offering and strong balance sheet stand us in good stead.

We remain confident in our offering and our ability to continue to grow sales, innovate and expand, and look forward to welcoming more and more customers to an Everyman over time. 

Alex ScrimgeourChief Executive28 September 2022

Finance Director's Statement

*Adjusted EBITDA refers to Operating Profit adjusted for the removal of depreciation, amortisation, profit / loss on disposal of fixed assets, pe-opening expenses, lease termination costs, impairment charges and share-based payment expenses.

Revenue and Operating Profit

Group revenue in H1 2022 was £40.7m compared to £7.7m in the same period last year and £28.9m in the first six months of 2019, due to the upward trajectory of admissions and the opening of nine new venues between H1 2019 and the end of the period.

Additionally, in July 2020 the Chancellor introduced a temporary reduced rate of VAT for the hospitality sector, from which Everyman was able to benefit. In H1 2022 the reduced rate of VAT was 12.5%, until 31 March 2022, at which point the standard rate of VAT resumed. For the entirety of H1 2021 the reduced rate of VAT was 5%.

The table below shows revenue adjusted for the removal of the VAT benefit in each relevant period.

The temporary reduced rate of VAT resulted in a £0.9m revenue benefit in H1 2022 and a £0.8m revenue benefit in H1 2021.

With the VAT benefit removed, like-for-like Box Office and Food & Beverage revenue increased by 2.1% vs. the same period in 2019.

Gross Profit Margin in H1 2022 was 62.5%, or 61.7% with the aforementioned VAT benefit removed. This is consistent with prior years.

We received significantly less government support in the period, the only contribution being £0.2m in the form of the Omicron Hospitality and Leisure Grant. In 2021 we received £2.8m from the Coronavirus Job Retention Scheme and £0.9m in the form of Coronavirus Business Support Grants.

Administrative Expenses increased from £16.3m in H1 2019 to £24.8m in H1 2022. This is commensurate with the increase in venues: 28 were open at the end of H1 2019 and 37 at the end of H1 2022. Our largest cost increase was Labour (a £4m increase vs. H1 2019), driven by the aforementioned new openings, a larger Head Office team to support the growing business and an 21% increase in National Living Wage from the beginning of H1 2019 to the end of H1 2022 driving pay increases for our teams.

Utilities costs were £0.9m during the period (H1 2019: £0.6m), increasing in line with the growing estate. A significant proportion of utilities contracts are fixed until October 2023.

Net finance costs

The Group's net bank interest payable was £288k in H1 2022, a £38k increase on the same period last year, as a result of the higher base rate and increased loan commitment fees due to the £10m extension of the facility in March 2021.

The Group's finance charge in H1 2022 was £1.4m (H1 2021 £1.3m) and is interest charges relating to the unwinding of the IFRS 16 lease liability in the period.

Share based payments

The share-based payment expense for the period was £784k (H1 2021: £1,129k) reflecting share option incentives provided to the Group's management and employees.

Cash flows

Net cash generated in operating activities was £9.1m (H1 2021: £0.3m; year ended 30 December 2021: £12.2m). The net cash inflow for the period was £1.7m (H1 2021: £1.3m; year ended 30 December 2021: £3.8m). This is largely represented by capital expenditure of £7.5m relating to build costs for new venues, existing venue refurbishment and new systems to support the growing business.

Cash held at the end of the period was £5.9m (1 July 2021: £1.7m, 30 December 2021: £4.2m). The cash held will be invested in the continuing development and expansion of the Group's business.

The Group has access to a £40m facility of which £14.5m was drawn at the end of the period.

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

Capital Expenditure

During the period, the Group opened a new five-screen venue in Edinburgh, on 2 April 2022. Post-period end, the Group opened a new four-screen venue in Egham, on 23 September 2022. We are on track to open a four-screen venue in Durham in November 2022, and six further venues in 2023.

The Group continues to invest in its existing estate to maintain high standards and differentiation against the wider market. During the period we refurbished our venues in Bristol and Birmingham and, post-period end, in Canary Wharf, Esher and Hampstead.

Capital investment during the period was £6.7m, of which £5.6m was on venues. The remainder related to infrastructure and head office costs to support the continued growth of the business. Key projects during the period included new handheld devices and kitchen screens in venues, to improve the speed, efficiency and accuracy of our food & beverage offer to customers.

Will Worsdell

Finance Director28 September 2022

Consolidated balance sheet at 30 June 2022 (unaudited)

*see Note 2 for details of restatement

Consolidated statement of changes in equity for the period ended 30 June 2022 (unaudited)

*see Note 2 for details of restatement

Consolidated cash flow statement for the period ended 30 June 2022 (unaudited)

Notes to the financial statements

In the 26-week period ended 30 June 2022, £0.2m Other Operating Income was received (H1 2021: £3.7m). This consisted of Omicron Hospitality & Leisure Grant.