TIDMEMAN
RNS Number : 7685U
Everyman Media Group PLC
08 April 2021
8 April 2021
Everyman Media Group PLC
("Everyman" the "Company" or the "Group")
Audited results for the 52 weeks ended 31 December 2020
Everyman Media Group PLC (AIM: EMAN) announces its audited final
results for the 52 weeks ended 31 December 2020. The year included
10 weeks of normal trading conditions, 25 weeks of full closure,
and 17 weeks of disrupted trading due to COVID-19 restrictions.
Highlights
Underlying offering remains in demand
-- Robust admissions levels and exceptional year on year
revenue growth experienced pre-March 2020 lockdown.
-- Trading performance during the summer re-opening period
was encouraging, despite limited new content, and demonstrated
continued demand for the Everyman offer.
Business strength maintained
-- Strong balance sheet boosted by GBP16.9m fundraise in
April 2020 and increased available banking facility to
GBP40m. New covenants agreed covering the period from
year end to June 2022.
-- Bank borrowing at the year-end was GBP9m (2019: GBP14m).
-- Successfully achieved rent concessions by continuing to
work closely with landlords.
-- Strong, sustained focus on cost management.
Positioned to perform strongly post-restrictions
-- Current estate of 35 sites and 117 screens as at 31 December
2020, with venues that are well designed for a post-COVID
environment.
-- Highly experienced CEO, Alex Scrimgeour, joined in January
2021 to lead the Company into its next stage of growth.
Performance review
-- Business performance has been severely impacted by the
pandemic and the resulting restrictions on opening and
trading throughout the year.
-- Total revenue for the period was GBP24.2m (FY19: GBP65.0m),
as a result of five months of closure.
-- Adjusted loss from operations loss of GBP1.1m (FY19: GBP15.3m
profit).
-- Operating loss of GBP19.2m (FY19: GBP4.8m profit).
Outlook
There has been a roadmap set out by the government to reopening
on May 17(th) when, if the vaccine roll out continues as planned,
we plan to reopen all our venues. We are highly optimistic for the
coming year post-lockdown and continue to be confident in people's
appetite to safely socialise and be entertained; we believe we will
be in a strong position once it is safe to welcome back our
customers and teams.
The coming year's film slate is strong and varied, set to
entertain people of all ages and demographics across the UK. We are
also looking forward to unveiling an enhanced venue experience in
the coming months. We have expanded our menu offering and have
upgraded our kitchens in order to provide improved hospitality. We
have made light refurbishments in a number of venues and upskilled
staff by offering training during lockdown. Whilst uncertainty does
of course remain around the future, we are eager to welcome back
customers and look forward to providing them with an exceptional
experience out, so deserved after nearly a year at home.
Alex Scrimgeour, Chief Executive Officer of Everyman said:
"Whilst it has been an unprecedented and extremely challenging
year, it is clear to me that the team has done an excellent job in
navigating those challenges. They minimised all costs during
periods of closure, strengthened the Group's balance sheet, worked
with our landlords to achieve rent concession and not least,
remained actively engaged with our people and customers
throughout.
During times in the year when our venues were able to open, the
Group continued to enjoy the strong demand for the Everyman
offering that it has seen for many years previously. Its innovative
approach to providing new content was also welcomed, with the
exclusive screening of Gorillaz concerts as well as old James Bond
films both proving popular, for example. Exciting, exclusive
programming will continue to be important to us as we look
ahead.
Since joining in January, I have been struck by our strong
foundation of supportive staff, customers, shareholders and of
course our Board. Moving forward we remain confident that the
nation's love of film remains and that our premium offering sets us
apart. We will be in a strong position to bounce back, with a great
opportunity to return to expansion once more when it is safe to
welcome back our customers and our staff in just over a month's
time."
For further information, please contact: Everyman Media Group PLC
Alex Scrimgeour Tel : +44 (0)20
3145 0500
Elizabeth Lake
Canaccord Genuity Limited (Nominated Adviser Tel : +44 (0)20
and Broker) 7523 8000
Bobbie Hilliam
Georgina McCooke
Alma PR (Financial PR Advisor) Tel: +44 (0)20
3405 0205
Susie Hudson
Harriet Jackson
Joe Pederzolli
About Everyman Media Group PLC:
Everyman is the fourth largest cinema business in the UK by
number of venues and a premium leisure brand. Everyman operates a
growing estate of venues across the UK, with an emphasis on
providing first class cinema and hospitality.
Everyman is redefining cinema. It focuses on venue and
experience as key competitive strengths, with a unique
proposition:
-- Intimate and atmospheric venues, which become a destination in their own right
-- An emphasis on a strong quality food and drink menu prepared in-house
-- A broad range of well-curated programming content, from
mainstream and independent films to theatre and live concert
streams, appealing to a diverse range of audiences
-- Motivated and welcoming teams
For more information visit
http://investors.everymancinema.com
Chairman's statement
Navigating a challenging year
We started the financial year in a strong position, gaining on
the momentum we had generated in 2019 and executing on our strategy
to deliver profitable growth together with the expansion of our
estate. This was demonstrated in revenue growth of 47% year-on-year
across January and February, as well as the addition of 0.57
percentage points to our market share.
And then COVID-19 hit. On 17 March 2020 we were required to
close all 33 of our venues as the UK entered a national lockdown,
which lasted four months.
Following a phased re-opening in July, we opened two new sites:
King's Road, Chelsea, on 24 July and Lincoln on 21 August, both of
which performed strongly enough to suggest that they will make a
significant contribution in due course. This took our estate to 35
venues with 117 screens.
By 21 August all venues were open and we enjoyed welcoming our
community back to our venues. The release of Christopher Nolan's
film 'Tenet' in August helped drive attendance and Everyman's
performance far outstripped the market at this time as we delivered
over twice our expected market share for the film at 8.95%. We were
delighted by the continued demand and support shown by our
customers.
From October more severe restrictions began to be re-introduced,
until we reached a point on 30 December when all venues were again
closed.
Each time we have been forced to close we have focused primarily
on the safety of our people, both staff and customers, alongside
careful cost management. Upon re-opening, we saw reassuring demand.
The importance of entertainment has been re-enforced during
lockdown and we are confident that when we are able to re-open the
appetite for the Everyman experience will be undiminished.
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
31 December 2 January
2020 2020
(52 weeks) (52 weeks)
Admissions -63% 1,197,248 3,271,166
Box office average ticket
price +5% GBP11.90 GBP11.37
Food and beverage spend
per head +11% GBP7.89 GBP7.13
Admissions were 63% down year on year due to the impact of five
months with most of the estate closed, and the impact of a reduced
film slate. Once the business can re-open, we expect admissions to
be above pre-pandemic levels over time.
The average ticket price grew by 5% with two factors at play,
the positive being the benefit to the Group from the temporary
reduction in VAT, then partially offset by a greater proportion of
admissions being from venues outside London where ticket prices are
lower.
Food and beverage spend per head has grown by 11%, this is
mainly the result of takeaway sales from a number of our venues
during periods of closure.
On-going COVID-19 response
Since March 2020 we have concentrated on reducing capital
expenditure and operating costs to a minimum. This included
Directors salary cuts, and the use of furlough. All but 18 of our
staff were put on furlough by April and the Government supported
80% of wages up to a maximum of GBP2,500 per month for people who
had been in place since the end of February. We have continued to
use the Government furlough scheme throughout the year and
currently have all but a handful of staff furloughed whilst our
whole portfolio remains closed.
Further Government support was received in terms of rates
relief, the VAT reduction and the Retail, Hospitality and Leisure
Business Grant. We are grateful for the support received thus far
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 worked closely with our landlords
throughout the year to successfully achieve variations to lease
agreements. Concessions have been agreed on 85% of the estate, and
further discussions are still ongoing. We would like to take this
opportunity to again thank our landlords for their support and
understanding.
We have also delayed a number of site refurbishments and new
site openings. In some cases, and as previously communicated in our
interim results, we have agreed to exit existing Agreements for
Lease. These actions have significantly reduced the Group's future
capital commitments with no obligations to open new venues in 2021,
whereas previously 9 were due to open in 2021. We now have a
pipeline for 2022/23 of 7 new venues.
With social distancing measures remaining until 21 June at the
earliest, we will continue to operate at 30% less seating capacity
and will remain focussed on managing costs to mitigate the impact
of any shortfalls in revenue.
Our financial position
On 8 April we raised GBP16.9m net through an accelerated
bookbuild in order to strengthen the Group's balance sheet, protect
its venues against an extended closure period, to ensure prudent
levels of debt and to allow the Group to re-engage with its
expansion and investment programme in due course. The Placing was
oversubscribed, and we again sincerely thank our shareholders for
their support.
Our banking partners have also been supportive and have made
appropriate changes to the covenants on the Group credit facility.
The Group will remain within its banking covenants for the next 12
months, and has s ignificant remaining headroom, with Bank net debt
of GBP8.7m (2019: GBP9.7m). Post-period end we announced an
increase in our debt facilities from GBP30m to GBP40m, improving
our liquidity position so we are able to take advantage of the many
growth opportunities we see going forward.
Continued engagement with key stakeholders
At the heart of Everyman's proposition is our people and we have
therefore consistently engaged with all our key stakeholders
throughout the pandemic.
Our Everyman 'lockdown house parties' continued to be
particularly successful, with households watching the same films
simultaneously on a Saturday evening, and associated social media
remaining strong. Our Instagram, Twitter and Facebook followers
have increased year-on-year +29% to 87k; +1% to 34k and +7% to
126k, respectively.
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.
Regular engagement with our team, focused on supporting their
wellbeing, has taken place throughout the period.
Business Model
Everyman's business model remains simple, our aim is to further
build our portfolio of venues. Additionally, growing our existing
estate by bringing together great food, drink, atmosphere, service
and of course film, to create exceptional experiences for our
customers.
During 2020 the ability to execute this model was hampered by
the impact of the pandemic on our business, however our ambitions
remain the same.
Our growth strategy is multi-faceted:
- Expanding the 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.
Our model is one 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
grow, we also benefit from increasingly efficient central costs,
allowing top line revenue growth to reflect in EBITDA growth.
Innovation
As a leader in cinema, innovation has and always will be
essential, and it is something that we take great pride in. This
year more than any other it has been critical to embrace innovation
to produce a compelling slate of programming.
Examples of our innovation include teaming up with Blue Peter
star Peter Duncan to co-produce a pantomime 'Jack and the
Beanstalk', the first pantomime to be filmed for use in the cinema.
The home-produced pantomime premiered at Everyman's King's Cross
cinema on Saturday 5 December, before being rolled out across
further Everyman venues in December. On Sunday 13 December Everyman
live streamed Gorillaz: Song Machine Live, making our venues the
only place where you could watch the concert with an audience.
In addition, when tier three restrictions were in place during
December, Everyman was able to trade Deliveroo at the following
sites: Crystal Palace, Hampstead, Barnet, Lincoln, Esher,
Wokingham, Horsham and Altrincham, reinforcing the strength of the
Group's food and drink offering.
Market developments
Whilst cinemas have been largely closed, film studios have begun
to experiment with various new film delivery models, however 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.
Following a year that has disrupted many people's social lives,
we believe there will be a strong level of demand for
experience-led cinema. This view is reflected in PWC's recent
report (1) : 'Where next for Travel and Leisure', where it is
stated that during the lockdown, people will have missed
experiences and there will be pent-up demand. Consumption of film
has been strong during lockdown, and with it having been shown in
previous years(2) that there is a positive relationship between
cinema attendance and streaming behaviour, this bodes well for
demand on reopening.
Outside of the UK there are encouraging signs that the pent-up
demand for cinema is being satisfied in countries where cases of
COVID-19 have fallen and lockdown has been eased. China, for
example, reported record-breaking box office sales over February,
with movie ticket sales totalling 11.2 billion yuan (US$1.7
billion). In the US, where cinemas have already re-opened, the
release of Tom & Jerry has been popular, selling millions more
tickets than expected. These trends indicate that consumers are
eager for a social trip to the cinema, where they can enjoy an
authentic movie experience following months of watching films in
their own homes.
(1)
https://www.strategyand.pwc.com/uk/en/reports/strategy-where-next-for-travel-and-leisure.pdf
(2)
https://www.natoonline.org/wp-content/uploads/2019/01/2020-Theatrical-and-Streaming-Study.pdf
Expansion of our geographical footprint
We had planned to open six new venues in 2020 but following the
impact of the pandemic we worked closely with landlords to push out
the spend on new venues, helping preserve our cash position.
However, both Chelsea and Lincoln were completed during the
period and opened in the summer. Both delivered encouraging
performances whilst open.
The Group currently has venues in the following locations:
Number of Number of
Location Screens 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, 1 2 venues 3 5 2 ,942
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
117 9,716
----------------------- -----------------------
*New venues in 2020
People
Following the resignation of Crispin Lilly, who served as CEO
for six years, in September the Group was delighted to confirm that
Alex Scrimgeour would be joining as CEO. Alex assumed the role of
CEO post period-end on 18 January 2021.
In Alex we have found an experienced leader whose understanding
of the leisure sector resonates well with the Group. The Board is
confident that Alex's commitment to strategy and innovation, as
well as experience in leading a highly motivated workforce to
success, will be vital in taking the Everyman brand forward in
years to come.
We recognise that this has been an incredibly 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 did re-open during the year, our staff showed true
professionalism and made sure that customers felt safe and
comfortable. We look forward to welcoming our staff back as soon as
we can.
Outlook
After spending the best part of a year at home, we believe that
people's appetite to socialise and to be entertained will be
stronger than ever. The financial performance of Everyman for the
current year will however be influenced by a number of factors
outside the control of the Group, including but not limited to
lifting of restrictions on social gatherings and the timing of new
film releases. Due to the prevailing environment, the Directors do
not believe it appropriate to provide market guidance at this time,
although they will do so as and when appropriate. However, we
remain confident that, upon reopening the Everyman offer of film,
food and fun in a safe environment will be as popular around the
country as it was previously.
Paul Wise
Executive Chairman
7 April 2021
Strategic Report
The Directors present their strategic report for the Group for
the year ended 31 December 2020 (comparative period: 52 weeks 2
January 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 GBP20,478,000 (2019:
GBP1,729,000 profit - 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
Since the pandemic, the growth strategy has been paused and the
focus has been on securing the balance sheet and increasing
liquidity, together with reducing costs. This has been achieved by
working closely with our partners including suppliers, landlords
and banks.
Chief Executive's Statement
Everyman is a quality brand with a passionate and dedicated
team, and it is these traits of the business that I identify with
and what originally drew me to joining the Company.
Since joining, I have been further struck by our strong
foundation of supportive staff, customers and shareholders. Whilst
I have only been with the business a couple of months, and under
very unusual circumstances, it is evident that Everyman is a
much-loved contemporary consumer brand and that the Group has
significant scope for expansion. Even during lockdown, we have been
assessing our offering and have identified several opportunities
that will allow us to modernise the experience for our customers'
needs, such as enhancing our technology and finance systems.
Looking ahead there are numerous reasons for confidence,
beginning with the fact that Everyman is a much loved consumer
brand with a unique offering, which we are confident will be in
demand post-reopening. Beyond this, we have an encouraging film
slate developing, we have identified opportunities to improve the
Everyman experience, and the impact of COVID-19 on site
availability has been to greatly increase the number of potential
new venues across the UK, often at much more attractive financial
arrangements. We have good liquidity, and supportive stakeholders
across the business and therefore look forward to what can be
achieved over the coming years.
Alex Scrimgeour
CEO
7 April 2021
Chief Financial Officer's Statement
Summary
-- The COVID- 19 pandemic has resulted in a material impact
in the performance of the business during 2020.
-- Group revenue decreased by 63% to GBP24.2m (2019: GBP65.0m)
due to the closure of all venues for 5 full months of
the year, and further localised closures, and restrictions
on capacity and operations.
-- Non-GAAP adjusted loss from operations was GBP1.1m (FY19:
GBP15.6m profit)
-- Operating loss of GBP19.3m (FY19: GBP4.7m profit)
-- Significant shareholder support raising GBP16.9m at the
start of the pandemic to strengthen the balance sheet.
-- Net banking debt GBP8.7m (2019: GBP9.7m) with significant
headroom in facilities
Revenue and Operating Profit
The business traded well until 16 March 2020, with revenue in
January and February ahead of the same period in 2019 by 47% due to
the level of admissions and the impact of five new venues opened in
2019. After March 16 all venues were shut, until a phased
re-opening commenced from 4 July with all venues open by 21 August
albeit with social distancing measures in place which reduced
capacity by around 40%. Two new venues were opened at this time
Kings Road Chelsea on 24 July and Lincoln on 21 July. From the
middle of September new restrictions were introduced in areas with
high rates of infection and in October the Government introduced a
Tier system for levels of lockdown. The Tier system marked the
start of venues being closed by the Government in certain areas and
this spread to a national lockdown in November affecting all
venues, Although the lockdown came to an end on 2 December, it was
replaced with a strengthened 3 tier system, and by mid-December all
venues in London and the South East were closed again. This
situation then extended to nationwide by Christmas, and all venues
have remained closed since then.
As a result, revenue in the period was down 63%
Reported gross margin was 62.2% (2019: 61.6%), with the increase
due to a greater proportion of food and beverage revenue which
carries a higher margin,
Other operating income of GBP6.2m is from Government support
through the Job Retention Scheme (JRS) and the Business Support
Grants (BSG). The Group received GBP5.7m 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 GBP2,500 maximum supported by the scheme, the business
has topped up their pay to 80%. Post the year end the business has
continued to benefit from the JRS and will continue to do so where
necessary until the end of the scheme in September 2021.
In addition to the JRS support from the Government the business
also received GBP285k in BSG, and GBP78k in Local Restrictions
Support Grant (Closed) (LRSGC). Since the year end the business
continues to receive the LRSGC grants and will qualify for the
Closed Business Lockdown Payment (CBLP) of up to GBP9k per
venue.
Further Government assistance in the form of a rates holiday
resulted in a saving of GBP1.1m.
Since March 2020 the focus has been on preserving the cash
position of the business and reducing costs where possible. The
business has worked closely with landlords to reach agreement on
rent concessions. As at the date of signing these have been
achieved in all but 5 venues, and the cash savings in 2020 equate
to GBP1.4m. We have also received temporary reductions in service
costs from a number of our suppliers. We would like to thank all
our partners for the support they have given throughout the
period.
Further savings were achieved through a 50% cut in Directors pay
and a restructure of roles in head office and venues resulting in
reduced headcount.
Within the operating loss there is a charge of GBP5.6m for
impairment of goodwill, 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 impact of COVID -19 on the net present value of future
cash flows, four venues were identified as having a lower value in
use value than the carrying value of the assets associated with the
venue. Details of the review carried out and the allocation of the
impairment against classes of assets is in note 17.
During the period the Board reviewed all future property
commitments and where desirable, and possible has exited to protect
future liquidity by reducing capital commitments. This has resulted
in some charges for exiting (GBP625k) as well as the write off of
costs already incurred on projects (GBP862k). The total of these
charges is GBP1.5m.
The operating loss of GBP19.3m has therefore been materially
impacted by the disruption from COVID-19, compared with a profit in
2019 of GBP4.7m
Non-GAAP adjusted loss from operations
Non-GAAP adjusted loss from operations was GBP1.1m, compared
with a profit in 2019 of GBP15.6m. In addition to performance
measures directly observable in the financial statements,
additional performance measures (Non-GAAP adjusted 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 and 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 on page 38.
Cash Flows
The Group raised GBP16.9m (net) from shareholders in April to
strengthen the balance sheet at the start of the pandemic, building
in resilience for the closure of venues required by the UK
Government response to the pandemic and the subsequent social
distancing measures required when venues were able to open. At the
same time the banking covenants were waived to remove the threat of
breaching under the exceptional circumstances, and a new liquidity
covenant introduced, which resulted in significant covenant
headroom.
The Directors believe the Group balance sheet remains well
capitalised, with sufficient working capital to service all of its
day-to-day requirements. Net debt at the balance sheet date was
GBP8.7m (2019: GBP9.7m). The funds raised from shareholders have
been used to fund EBITDA losses during periods of closure and
existing capital commitments.
Net cash used in operating activities was GBP5,394,000 (2019:
GBP15,889,000 generated). Net cash outflows for the year, before
financing, were GBP13,938,000 (2019: GBP8,217,000). This includes
GBP8,074,000 on the acquisition of property plant and machinery
(2019: GBP23,154,000), which was contracted spend relating to
ongoing projects.
Cash held at the end of the year was GBP328,000 (2019:
GBP4,271,000).
The Group had banking facilities totalling GBP30m in place at
the year end, under a 5 year revolving credit facility (RCF) ending
January 2024. At the year end the Group had drawn down GBP9.0 m
(2019: GBP14.0 m) of the available funds, and therefore GBP21m of
the facility was undrawn (2019: GBP16.0m).
Since the year end the facility has been amended to provide
longer term liquidity if required, should the roadmap out of the
pandemic extend further than anticipated. GBP5m of the GBP30m
Revolving Credit Facility (RCF) has been transferred to a new
Government backed Coronavirus Large Business Interruption Loan
Scheme (" CLIBILS") RCF, in addition a further GBP10m CLIBILS RCF
has been granted, bringing the total facility to GBP40m. Charges
have been put in place over the net assets of the Group as
collateral against the loan balance. New liquidity and EBITDA loss
covenants have been agreed which will be reviewed again in May
2022. The liquidity covenant requires cash plus undrawn facility to
exceed GBP7m, and there is a last twelve months rolling EBITDA
covenant set at 30% above management estimates. The Board has
reviewed forecast scenarios and believes the business can operate
with sufficient headroom.
Pre-opening costs
Pre-opening costs, which have been expensed within
administrative expenses, were GBP419,000 (2019: GBP1,044,000).
Included within depreciation and financial expense is GBP0.1m also
relating to pre-opening operating lease expenditure in the prior
year. 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 3 prior year adjustments
relating to accounting for leases under IFRS16. 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
10:00am on 2 June 2021 at Everyman Cinema Hampstead, 5 Holly Bush
Vale, London NW3 6TX.
Elizabeth Lake
CFO
7 April 2021
Consolidated statement of profit and loss and other
comprehensive income for the year ended 31 December 2020
Restated*
Year ended Year ended
31 December 2 January
2020 2020
Note GBP000 GBP000
Revenue 3 24,224 64,955
Cost of sales (9,147) (24,937)
------------------------- --------------------------
Gross profit 15,077 40,018
Covid -19 Government Support 6,062 -
Impairment of goodwill, property,
plant & machinery 5 (5,635) -
Administrative expenses (34,764) (35,274)
------------------------- --------------------------
Operating (loss)/profit (19,260) 4,744
Financial income - 1
Financial expenses (2,911) (2,490)
------------------------- --------------------------
(Loss)/Profit before tax (22,171) 2,255
Tax credit/(expense) 1,693 (526)
------------------------- --------------------------
(Loss)/Profit for the year (20,478) 1,729
Other comprehensive income for the
year (7) 1
------------------------- --------------------------
Total comprehensive income for the
year (20,485) 1,730
------------------------- --------------------------
Basic (loss)/ earnings per share
(pence) 4 (23.99) 2.39
------------------------- --------------------------
Diluted (loss)/ earnings per share
(pence) 4 (23.99) 2.36
------------------------- --------------------------
All amounts relate to continuing
activities.
* See note 2 for details regarding
the restatement.
Non-GAAP measure: adjusted profit Restated*
from operations Year ended Year ended
31 December 2 January
2020 2020
GBP000 GBP000
Adjusted (loss)/profit from operations (1,091) 15,588
Before:
Depreciation and amortisation 6,7 (10,502) (8,824)
Disposal of property, plant and
equipment - (52)
Acquisition expenses - (25)
Pre-opening expenses (419) (1,044)
Costs related to COVID- 19** (255) -
Lease termination costs (625) -
COVID-19 related rent concessions 813 -
Abortive property costs COVID-19 (862) -
Impairment of fixed assets (5,635) -
Share-based payment expense (671) (688)
Option-based social security (13) (211)
------------------------- --------------------------
Operating (loss)/profit (19,260) 4,744
------------------------- --------------------------
**Includes legal and professional, HR and other one off expenses
incurred as a result of the pandemic
Consolidated balance sheet at 31 December 2020
Restated* Restated*
31 December 2 January 2 January
2020 2020 2019
Note GBP000 GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 6 81,565 83,499 66,579
Right-of-use assets 7 55,446 58,023 -
Intangible assets 5 9,140 10,694 10,655
Deferred tax asset 63 - -
Trade and other receivables 173 173 173
--------------------- ------------------ --------------------
146,387 152,389 77,407
--------------------- ------------------ --------------------
Current assets
Inventories 381 507 406
Trade and other receivables 2,645 4,463 3,790
Cash and cash equivalents 328 4,271 3,517
--------------------- ------------------ --------------------
3,354 9,241 7,713
--------------------- ------------------ --------------------
Total assets 149,741 161,630 85,120
--------------------- ------------------ --------------------
Liabilities
Current liabilities
Other interest-bearing loans and
borrowings 43 122 56
Trade and other payables 9,476 14,408 12,398
Lease liabilities 7 2,641 2,421 -
Corporation tax liabilities - 186 -
--------------------- ------------------ --------------------
12,160 17,137 12,454
--------------------- ------------------ --------------------
Non-current liabilities
Other interest-bearing loans and
borrowings 9,000 14,000 7,000
Other payables - - 7,796
Other provisions 1,035 1,027 2,531
Lease liabilities 7 75,367 72,900 -
Deferred tax liabilities - 1,362 1,210
--------------------- ------------------ --------------------
85,402 89,289 18,537
--------------------- ------------------ --------------------
Total liabilities 97,562 106,426 30,991
--------------------- ------------------ --------------------
Net assets 52,179 55,204 54,129
--------------------- ------------------ --------------------
Equity attributable to owners
of the Company
Share capital 9,110 7,352 7,099
Share premium 57,038 41,920 39,066
Merger reserve 11,152 11,152 11,152
Forex reserve (6) 1 -
Retained earnings (25,115) (5,221) (3,188)
--------------------- ------------------ --------------------
Total equity 52,179 55,204 54,129
--------------------- ------------------ --------------------
*See note 2 for details regarding the restatement.
These financial statements were approved by the Board of
Directors on 7 April 2021 and signed on its behalf by:
Alex Scrimgeour
CEO
Consolidated statement of changes in equity for the year ended
31 December 2020
Share Share Merger Forex Retained Total
capital premium reserve reserve earnings Equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 4 January
2019 7,099 39,066 11,152 - (2,880) 54,437
Prior year adjustments 2 - - - - (308) (308)
--------- --------- --------- --------- ---------- ----------
Balance as at 4 January
2019 - restated for
prior year adjustment* 7,099 39,066 11,152 - (3,188) 54,129
Effect of adoption
of IFRS 16 (net of
tax) - - - - (2,594) (2,594)
Balance as at 4 January
2019 - restated for
IFRS 16 7,099 39,066 11,152 - (5,782) 51,535
Profit for the year
- restated - - - - 1,729 1,729
Retranslation of foreign
currency denominated
subsidiaries - - - 1 - 1
Total comprehensive
income - - - 1 1,729 1,730
Shares issued in the
period 253 2,854 - - - 3,107
Acquisition without
change in control - - - - (1,510) (1,510)
Share-based payments - - - - 688 688
Deferred tax on share-based
payments - - - - (346) (346)
--------- --------- --------- --------- ---------- ----------
Total transactions
with owners of the
parent 253 2,854 - - (1,168) 1,939
Balance at 2 January
2020 - restated* 7,352 41,920 11,152 1 (5,221) 55,204
Loss for the year - - - - (20,478) (20,478)
Retranslation of foreign
currency - - - (7) - (7)
denominated subsidiaries
--------- --------- --------- --------- ---------- ----------
Total comprehensive
income - - - (7) (20,478) (20,485)
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 9,110 57,038 11,152 (6) (25,115) 52,179
--------- --------- --------- --------- ---------- ----------
*See note 2 for details regarding the restatement.
Consolidated cash flow statement for the year ended 31 December
2020
Restated*
31 December 2 January
2020 2020
Note GBP000 GBP000
Cash flows from operating activities
(Loss)/ Profit for the year (20,478) 1,729
Adjustments for:
Financial income - (1)
Financial expenses 2,911 2,490
Income tax (credit)/expense (1,693) 526
--------------------------- ------------------
Operating (loss)/profit (19,260) 4,744
--------------------------- ------------------
Depreciation and amortisation 6,7 10,502 8,825
Impairment of goodwill, property, plant
and equipment and right-of-use assets 5 5,635 -
Loss on disposal of property, plant and
equipment 6 862 52
Acquisition and incorporation expenses (25)
Transfer of property, plant and equipment
to profit and loss - 5
Rent concessions (813) -
Bad debts - (79)
Acquisition and incorporation expenses - 25
Equity-settled share-based payments 671 688
--------------------------- ------------------
(2,403) 14,235
Changes in working capital:
Decrease/ (Increase) in inventories 126 (101)
Decrease/ (Increase) in trade and other
receivables 1,818 (1,333)
(Decrease)/Increase in trade and other
payables (4,935) 3,088
--------------------------- ------------------
Net cash (used in)/generated from operating
activities (5,394) 15,889
--------------------------- ------------------
Cash flows from investing activities
Acquisition of property, plant and equipment 6 (8,074) (23,154)
Proceeds from sale of property, plant
and equipment - -
Acquisition of intangible assets 5 (470) (953)
Interest received - 1
--------------------------- ------------------
Net cash used in investing activities (8,544) (24,106)
--------------------------- ------------------
Cash flows from financing activities
Proceeds from the issuance of Ordinary
shares 16,876 1,450
Proceeds from bank borrowings 10,000 13,000
Repayment of bank borrowings (15,000) (6,000)
Lease payments - interest (2,493) (2,114)
Lease payments - capital (473) (1,716)
Landlord capital contributions 1,625 4,680
Capitalised finance expenses 17 68
Loan arrangement fees (136) (58)
Interest paid (378) (339)
--------------------------- ------------------
Net cash generated from financing activities 10,038 8,971
--------------------------- ------------------
Exchange loss on cash and cash equivalents (43) -
Net increase/(decrease) in cash and cash
equivalents (3,943) 754
--------------------------- ------------------
Cash and cash equivalents at the beginning
of the year 4,271 3,517
--------------------------- ------------------
Cash and cash equivalents at the end
of the year 328 4,271
--------------------------- ------------------
The Group had GBP21,000,000 of undrawn funds available (2019:
GBP16,000,000) of the loan facility at the year end.
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 31 December
2020 has been prepared in accordance with the recognition and
measurement criteria of International Accounting Standards in
conformity with the requirements of the Companies Act 2006. The
accounting policies applied are consistent with those set out in
the Everyman Media Group plc Annual Report and Accounts for the
year ended 31 December 2020.
The financial information contained within this final results
announcement for the year ended 31 December 2020 and the year ended
3 January 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 3 January
2020 have been filed with the Registrar of Companies and those for
the year ended 31 December 2020 will be filed following the
Company's annual general meeting. The auditors' report on the
statutory accounts for the year ended 31 December 2020 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
In early 2020, the outbreak of COVID-19 was declared a global
pandemic by the World Health Organisation. In response, Everyman
introduced enhanced cleaning protocols and reduced capacity in
theatres to promote social distancing and comply with Government
guidelines. On 17 March 2020, the Group closed all venues as the UK
entered a national lockdown, lasting four months. Following a
phased re-opening all venues were trading by 21 August before more
severe restrictions began to be re-introduced in October. By the
year- end all venues were closed and this remains the case at the
date of approval of these financial statements. The Group
experienced reassuring demand each time venues re-opened providing
confidence demand will return when restrictions are lifted.
To mitigate the negative impact of COVID-19 a variety of
measures were introduced including cost reduction and the
postponement of new sites, refurbishments and other capital
expenditure projects. As significant part of the Group's costs are
property-related and variations to lease agreements have been
agreed with 85% of the estate to reduce cash costs to the
business.
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 ability to reopen, availability of film
content and recovery profile of admissions.
Liquidity
On 8 April 2020 the Group raised GBP16.9m net through an
accelerated book build in order to strengthen the balance sheet,
protect venues against an extended closure period, ensure prudent
levels of debt and to allow the Group to re-engage with its
expansion and investment programme in due course.
For the full year, the Group had a Revolving Credit Facility
("RCF") in place for GBP30m, 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 GBP9m of this facility and
closed the year with GBP0.4m of cash, therefore the net debt
position was GBP8.6m, with the undrawn facility at GBP21.4m. 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. This resulted in significant headroom in
the Group's banking facilities.
Since the year end the facility has been amended to provide more
liquidity if required, should the roadmap out of the pandemic
extend further than anticipated GBP5m of the GBP30m Revolving
Credit Facility (RCF) has been transferred to a new Government
backed Coronavirus Large Business Interruption Loan Scheme
("CLIBILS") RCF, in addition a further GBP10m CLIBILS RCF has been
granted, bringing the total facility to GBP40m. Charges have been
put in place over the net assets of the Group as collateral against
the loan balance. New liquidity and EBITDA loss covenants have been
agreed which will be reviewed again in May 2022. The liquidity
covenant requires cash plus undrawn facility to exceed GBP7m, and
there is a last twelve months rolling EBITDA covenant set at 30%
above management estimates, reflecting the uncertainty that still
remains. At the date of this report the undrawn facility is GBP26m
The Board has reviewed forecast scenarios and believes the business
can operate with sufficient headroom.
Base case Scenario
The Board's latest forecasts are based on a scenario where the
business remains closed until 17 May 2021 in line with the current
Government roadmap. The forecast assumes reduced admissions, around
25% of pre-pandemic admits, from re-opening until October 2021 as
there is uncertainty around the film slate at this period. From
October the Board have assumed that the last 3 months of the year
will deliver 75% of 2019 admissions, as a number of high-profile
new films are scheduled for release. The Board have assumed that
2022 admits return to 2019 levels as social distancing measures are
removed, this excludes the impact of increased capacity available
from the two new venues opened in the year.
All of the continued Government support is included in the
forecasts, this includes JRS continuing until the end of September
2021, 5% VAT until the end of September 2021 followed by 12.5% VAT
until the end of March 2022. The Business Restart Grant is assumed
to be received in May 2021 and the extension of the rates holiday
until the end of June 2021 followed by a one third reduction until
the end of March 2022.
In this scenario the Group maintains significant headroom in its
banking facilities.
Stress testing
Given the continued uncertainty around the impact of COVID-19
over the next 12 months and difficulties forecasting the impact on
consumer behaviour and admission profile the Board has also
considered the scenario of complete closure continuing until there
is a breach in the banking covenants. This scenario assumes that
the Government would extend JRS, the rates holiday and 5% VAT until
the month of re-opening. In this scenario the business would need
to remain shut until the end of December 2021 to cause a breach in
the last twelve months rolling EBITDA covenant. The business would
still have significant liquidity covenant headroom in this
scenario.
The Board has also considered a severe but plausible downside
scenario whereby, after reopening in May 2021 as planned, all
venues are required to close for two months during Autumn 2021 as
part of a circuit break imposed to contain a resurgence of the
virus or its variants. Under this scenario the Group forecast
continued compliance with banking covenants and sufficient
liquidity.
The forecasts are under continuous review given current market
conditions associated with COVID-19. 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.
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 closure until December 2021 is unlikely and that the
Group has sufficient headroom to navigate the severe but plausible
downside scenario described above. Therefore 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.
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 on page 38.
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 As previously Restatement Restatement Restated
year reported numbers reported 1 2 2 January
2 January 2020 2 January 2020
2020
GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------ ------------ -----------
Group Income Statement
Profit for the period 1,770 46 (87) 1,729
-------------- ------------ ------------ -----------
Group Statement of Changes
in Equity
Profit for the period 1,770 46 (87) 1,729
-------------- ------------ ------------ -----------
Balance Sheet
Right-of-use assets 58,415 (1,023) 631 58,023
Current Lease liabilities (2,386) (35) - (2,421)
Other provisions - - (1,027) (1,027)
Lease liabilities (74,005) 1,105 - (72,900)
Retained earnings (4,872) 46 (395) (5,221)
-------------- ------------ ------------ -----------
Net Assets and Total
Equity 55,553 46 (395) 55,204
-------------- ------------ ------------ -----------
Restatement of prior As previously Restatement Restatement Restated
year reported numbers reported 1 2 3 January
3 January 2019 3 January 2019
2019
GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------ ------------ -----------
Group Statement of Changes
in Equity
Total equity balance 54,437 - (308) 54,129
-------------- ------------ ------------ -----------
Balance Sheet
Property, plant and
equipment 66,150 - 429 66,579
Other provisions (1,794) - (737) (2,531)
Retained earnings (2,880) - (308) (3,188)
-------------- ------------ ------------ -----------
Net Assets and Total
Equity 54,437 - (308) 54,129
-------------- ------------ ------------ -----------
Restatement 1
For the Kings Cross venue, a length of lease of 25 years had
been used to calculate the transition to IFRS16 on 2 January 2019.
The length of the lease is 15 years and therefore the right of use
asset, lease liability, depreciation and finance charge have been
recalculated to correct the figures from 1 January 2019 when IFRS16
was adopted.
The result was a reduction in the right of use asset of
GBP1,023,000 and a corresponding reduction in the lease liability
of GBP1,140,000. This also gave rise to an increase in the
depreciation charge within Administrative expenses of GBP36,000 and
a reduction in the finance charge of GBP82,000. Therefore, the net
impact was an increase in profit of GBP46,000.
Restatement 2
Under the terms of the Group's leases an estimated dilapidations
provision should have been accounted for to recognise the potential
future liability at the point of signing the leases. Correcting for
this omission has given rise to a prior year adjustment.
There are two elements to the provision. For leases where there
is a strip out clause, the cost of stripping out at the end of the
lease has been estimated and discounted using the appropriate risk
free rate of 1.03% (2019:1.133%, 2018: 1.717%). This has given rise
to an adjustment in the balance sheet as at 2 January 2019 of
GBP429,000 to create the provision with the corresponding debit
going to Property, Plant and Equipment. In addition, the Group has
a number of full repairing leases and a provision of GBP308,000 has
been made for those venues in the balance sheet as at 3 January
2019, with the debit going to retained earnings. The overall
restatement in the balance sheet as at 2 January 2019 is a total
provision of GBP737,000.
After this date IFRS 16 has been adopted and the provision is
recognised differently, with the strip out provision being
recognised in the ROU asset. With the addition of 7 venues to the
estate in 2019, a further increase in the provision was needed, and
can be seen in the table above.
Restatement 3
Since the implementation of IFRS 16, lease payments and landlord
capital contributions have been shown separately within the
consolidated cash flow statement as part of financing activities.
In the comparative cash flow statement the cash flows were
presented as a net inflow of GBP850,000. In accordance with IFRS
the cash flows should have been presented gross and are now
reported as an outflow of GBP3,830,000 in respect of lease payments
and inflow of GBP4,680,000 in respect of landlord capital
contributions.
3 Revenue
Year ended Year ended
31 December 2 January
2020 2020
GBP000 GBP000
Film and entertainment 13,565 37,195
Food and beverages 9,447 23,310
Venue Hire, Advertising
and Membership
Income 1,212 4,450
------------------- ---------------
24,224 64,955
------------------- ---------------
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 31 December 2 January
2020 2020
GBP000 GBP000
Trade and other receivables 226 1,428
Deferred income 3,028 3,813
------------------- ----------------------
Deferred income relates to advanced consideration received from
customers in respect of memberships, gift cards and advanced
screenings. All deferred balances at the beginning of the year
(GBP3,813,000) were recognised in the profit and loss during the
year. All deferred income at the end of the year (GBP3,028,000) is
due to be recognised within 12 months.
4 Earnings per share
Restated*
Year ended Year ended
31 December 2 January
2020 2020
GBP000 GBP000
(Loss)/profit used in calculating basic
and diluted earnings per share (20,478) 1,729
----------------------- --------------------
Number of shares (000's)
Weighted average number of shares for
the purpose of basic earnings per share 85,372 72,245
----------------------- --------------------
Number of shares (000's)
Weighted average number of shares for
the purpose of diluted earnings per share 85,372 73,179
----------------------- --------------------
Basic (loss)/ earnings per share (pence) (23.99) 2.39
----------------------- --------------------
Diluted (loss)/ earnings per share (pence) (23.99) 2.36
----------------------- --------------------
Weighted average number of shares for
the purpose of basic
earnings per share 31 December 2 January
2020 2020
Weighted
Weighted average average
no. 000's no. 000's
Issued at beginning of the year 73,518 70,989
Share options exercised 76 623
Shares issued 11,778 -
Shares issued as consideration for acquisition
with no change of control - 633
------------------ ----------------------
Weighted average number of shares at
end of the year 85,372 72,245
------------------ ----------------------
Weighted average number of shares for
the purpose of diluted
earnings per share
Basic weighted average number of shares 85,372 72,245
Effect of share options in issue - 934
------------------ ------------------
Weighted average number of shares at
end of the year 85,372 73,179
------------------ ------------------
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 6.6m potentially issuable Ordinary shares (2019:
4,278,000) 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 GBP1.8m
(2019: GBP1,470,000).
*See note 2 for details regarding the restatement.
5 Goodwill, intangible assets and impairment
Goodwill Leasehold Software Total GBP'000
GBP'000 interests Assets
GBP'000 GBP'000
Cost
At 3 January 2019 8,951 674 1,632 11,257
Acquired in the year - - 953 953
Disposals - (674) (63) (737)
At 2 January 2020 8,951 - 2,522 11,473
Acquired in the year - - 470 470
Disposals - - - -
At 31 December 2020 8,951 - 2,992 11,943
--------- ----------- --------- --------------
Amortisation and impairment
At 3 January 2019 - 126 476 602
Charge for the year - - 366 366
On disposals - (126) (63) (189)
--------- ----------- --------- --------------
At 2 January 2020 - - 779 779
Charge for the year - - 420 420
Impairment 1,599 - 5 1,604
At 31 December 2020 1,599 - 1,204 2,803
--------- ----------- --------- --------------
Net book value
At 31 December 2020 7,352 - 1,788 9,140
--------- ----------- --------- --------------
At 2 January 2020 8,951 - 1,743 10,694
--------- ----------- --------- --------------
At 3 January 2019 8,951 548 1,156 10,655
--------- ----------- --------- --------------
All intangibles in the company were disposed of in the period
ended 2 January 2020 and balance is therefore also GBPnil at 31
December 2020.
Impairment Review
An impairment of GBP5,635,000 has been made in the period,
caused by the impact of COVID-19 on future cash flows due to
periods of closure, social distancing measures and the lack of new
film content. Whilst these impacts are short-term they result in 4
venues where the value-in-use was lower that the carrying value of
the assets.
Value-in-use calculations are performed annually and at each
reporting date for 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 pre-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:
31 December 2 January
2020 2020
GBP000 GBP000
Baker Street 103 103
Barnet 1,309 1,309
Belsize Park - 67
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
York - 1,532
7,352 8,951
--------------------- ---------------------
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:
31 December 2 January
2020 2020
Discount rate 9.8% 8.83%
Long term growth rate 2% 2%
Number of years projected 5 years 5 years
Most revenue streams have experienced significant reductions
since the pandemic's effects became widespread. The Company
considered the reduced sales and reductions in budgeted revenue as
indicators of impairment, 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 (70% weighting): Venues remain closed until the end
of May, with admission and CGU cash generation levels not returning
to close to pre-pandemic levels until October 2021 due to timing of
film releases and continuing social distancing measure in venues.
2022 cash generation levels per CGU are assumed at the same level
of 2019 (pre-pandemic) plus 2% growth, and then 2023 grows at 6%,
and 2024-2025 grow 5%.
2. Positive case (10% weighting): The assumptions in this case
are the same as the base case except that cash generation levels
per CGU increase by 8% between 2023-2025.
3. Downside case (20% weighting): Further closures assumed with
cash generated per CGU reducing by 25% from the base case in 2021.
For 2022 each CGU's cash generation has been assumed at 90% of
2019, plus 2% allowance for growth. All other assumptions
thereafter remain the same as the base case.
The terminal value includes a growth rate of 2%, which is set to
be consistent with the UK historic growth rate.
The cash flows were discounted at a rate of 9.8%, which
represents the time value of money and risks specific to the
Group's industry, which were not reflected in the value in use cash
flows.
The results of this review showed 4 cash generating units where
the carrying value of the assets exceeded their recoverable
amount.
Venue (CGU) Carrying amount Recoverable amount Impairment loss
GBP'000 GBP'000 GBP'000
---------------- ------------------- ----------------
Belsize Park 1,937 1,498 439
---------------- ------------------- ----------------
Leeds 6,563 4,347 2,216
---------------- ------------------- ----------------
Liverpool 3,849 2,894 955
---------------- ------------------- ----------------
York 6,807 4,782 2,025
---------------- ------------------- ----------------
Total 19,156 13,521 5,635
---------------- ------------------- ----------------
The impairment of the Group's assets is summarised as
follows:
Carrying Carrying
value before Recoverable Impairment value after
Class of Asset impairment amount GBP'000 impairment
GBP'000 GBP'000 GBP'000
Goodwill 8,951 1,599 7,352
-------------- -------------- ------------- -------------
Right-of-use assets 57,281 1,857 55,424
-------------- -------------- ------------- -------------
Corporate Assets 3,450 99 3,351
-------------- -------------- ------------- -------------
Leasehold improvements,
PPE, F&F 81,980 2,080 79,900
-------------- -------------- ------------- -------------
Total 151,662 255,788 5,635 146,027
-------------- -------------- ------------- -------------
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) 5 further venues being impaired, and
(II) an increase in the impairment charge of GBP4,169,000; or
-- Adjustment in the assumptions used in in the base case (i.e.
the most likely case) cash flow scenario, decreasing the 2022
expected cashflows to 70% of 2019 levels for each venue results
in:
(I) 1 further venue being impaired, and
(II) An increase in the impairment charge of GBP588,000
6 Property, plant and equipment
(Group)
Plant Fixtures
Land & Leasehold & & Assets under
Buildings improvements machinery Fittings construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 3 January
2019
* restated 6,339 52,637 10,603 7,803 3,403 80,785
Acquired in
the
year 190 15,329 4,130 1,694 1,811 23,154
Disposals - (150) (261) (592) - (1,003)
Transfer to
profit
and loss - - - - (5) (5)
Transfer to
ROU
assets - (429) - - - (429)
Transfer on
completion - 2,138 174 457 (2,769) -
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
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
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
Depreciation
At 3 January
2019
* restated - 6,760 4,383 3,063 - 14,206
Charge for the
year 109 2,615 2,197 827 - 5,748
On disposals - (99) (260) (592) - (951)
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
At 2 January
2020 109 9,276 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 220 14,354 9,173 4,402 - 28,149
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
Net book value
At 31 December
2020 6,309 61,269 6,825 5,538 1,624 81,565
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
At 2 January
2020 6,420 60,249 8,326 6,064 2,440 83,499
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
At 2 January
2019
* restated 6,339 45,877 6,220 4,740 3,403 66,579
----------------------- --------------------- ------------------- ------------------ ----------------------- ------------------
For impairment considerations of tangible fixed assets this was
considered using the value in use basis disclosed in Note 9.
*See note 2 for details regarding 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, 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.
31 December 2020 Lease Fixed Variable Sensitivity
contract payments payments GBP'000
numbers % %
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
---------- ---------- ---------- ------------
The percentages in the table below reflect the proportions of
lease payments that are either fixed or variable for the
comparative period.
02 January 2020 Lease Fixed Variable Sensitivity
contract payments payments GBP'000
numbers % %
Property leases with payments
linked to inflation 16 - 43% +2,151
Property leases with periodic
uplifts to market rentals 16 - 49% +1,425
Property leases with fixed payments 2 7% - -
Vehicle leases 3 1% - -
---------- ---------- ---------- ------------
37 8% 92% +3,576
---------- ---------- ---------- ------------
Right-of-Use Assets
(Group)
Land & Buildings Motor Vehicles
GBP'000 GBP'000 Total
GBP'000
On adoption of IFRS 16 * restated 48,804 - 48,804
Additions 11,880 50 11,930
Amortisation * restated (2,700) (11) (2,711)
----------------- --------------- ----------
At 2 January 2020* restated 57,984 39 58,023
----------------- --------------- ----------
Land & Buildings Motor Vehicles
GBP'000 GBP'000 Total GBP'000
At 2 January 2020* restated 57,984 39 58,023
Additions 712 - 712
Amortisation (3,093) (17) (3,110)
Impairment (1,857) - (1,857)
Effect of modification to lease terms 1,678 - 1,678
At 31 December 2020 55,424 22 55,446
----------------- --------------- ----------------
*See note 2 for details regarding the restatement.
Lease Liabilities
(Group)
Land Motor
& Buildings Vehicles Total GBP'000
GBP'000 GBP'000
Recognition on adoption of IFRS16 * restated 60,431 - 60,431
Additions 16,556 50 16,606
Interest expense 2,113 1 2,114
Lease payments (3,810) (20) (3,830)
------------- ---------- ----------------
At 2 January 2020 * restated 75,290 31 75,321
------------- ---------- ----------------
Land Motor
& Buildings Vehicles Total GBP'000
GBP'000 GBP'000
At 2 January 2020 * restated 75,290 31 75,321
Additions 2,297 - 2,297
Interest expense 2,492 1 2,493
Effect of modification to lease terms 1,678 - 1,678
Rent concession gains (see note below) (813) - (813)
Lease payments (2,954) (14) (2,968)
------------- ---------- ----------------
At 31 December 2020 77,990 18 78,008
------------- ---------- ----------------
Restated
31 December 2 January
2020 2020
GBP'000 GBP'000
Lease liabilities
Current 2,641 2,421
Non-current 75,367 72,900
------------ -----------
78,008 75,321
------------ -----------
* See note 2 for details regarding the restatement .
Rent Concessions
Due to Government policy, the Group had to suspend trading
across all venues during 2020 for differing time periods.
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 GBP813,355. 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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