Everyman Media Group PLC
Registered number: 08684079
Annual report and financial statements
53 weeks ended
3 January 2019
Contents
Company information
Chairman's statement
Corporate governance
Strategic report
Directors' report
Statement of Directors' responsibilities in respect of the annual report and financial statements
Independent auditor’s report to the members of Everyman Media Group PLC
Consolidated statement of profit and loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
Company balance sheet
Company statement of changes in equity
Notes to the financial statements
Explanatory notes to the notice of annual general meeting
Notice of annual general meeting
Page
1
2-3
4-7
8-11
12-15
16
17-19
20
21
22
23
24
25
26-48
49
50-51
Everyman Media Group PLC
Annual report and financial statements
Company information
Directors
Adam Kaye
Charles Dorfman
Crispin Lilly
Jonathan Peters FCA
Michael Rosehill FCA
Paul Wise
Philip Jacobson FCA
Streisan Bevan
Company secretary
Jonathan Peters FCA
Executive Director
Non-Executive Director
Chief Executive Officer
Finance Director
Non-Executive Director
Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director (appointed 18th January 2019)
Registered office address of the Company
Studio 4
2 Downshire Hill
London
NW3 1NR
Company registration number
08684079 (registered in England & Wales)
Nominated adviser and broker
Canaccord Genuity Ltd
88 Wood Street
London
EC2V 7QR
Auditor to the Company
KPMG LLP
15 Canada Square
Canary Wharf
London
E14 5GL
Solicitor to the Company
Howard Kennedy
No. 1 London Bridge
London
SE1 9BG
Registrar to the Company
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
1
Everyman Media Group PLC
Annual report and financial statements
Chairman's statement
I am pleased to report on the Group’s results for the 53 weeks ended 3 January 2019.
With 5 new openings in the year in York, Glasgow, Altrincham, Crystal Palace and Liverpool, 2018 marked another year of strong growth. The business
delivered performance in line with the Board’s expectations across all key areas.
The Group now operates 26 venues (84 screens) as at 12 March 2019, up from 21 (65 screens) at the beginning of 2018.
Review of the business
The Everyman experience continues to be embraced and enjoyed by our customers across our ever-growing variety of locations throughout the UK.
Whether our venues are located as part of urban communities in larger cities, or smaller, more rural towns, the business model continues to deliver
against our expectations.
By the end of 2018, Everyman had become the fifth largest UK cinema business, as defined by gross box office revenue (source: ComScore), and
continues to be seen as a trusted and highly regarded national brand. This is set against a background of the UK cinema industry which delivered a
modern-day record of 177 million admissions in 2018, the highest since 1970 (source: UK Cinema Association). Once again, this demonstrates the power
of cinema during times of economic uncertainty, with people’s appetite for entertainment continuing to be an important trend.
Our growing team of employees, now numbering more than 900, continues to be our greatest strength, with their enthusiasm and consistent attention
to customer experience remaining an important differentiator for Everyman.
The Board’s long-held confidence in the business and it’s differentiated proposition continues to be vindicated by the significant opportunities that
continue to arise in order to expand the business. Currently, Everyman has a further 14 committed venues, of which 7 are expected to open in 2019, and
a strong pipeline of opportunities well beyond that.
Results
Revenue for the year was up 27.7% on last year to £51,880,000 (2017: £40,620,000).
The Group’s adjusted operating profit (before depreciation, amortisation, pre-opening expenses, acquisition costs and share-based payments) was up
38.2% to £9,150,000 (2017: £6,619,000). This is an adjusted IFRS measure which has been further explained in note 2 and on the face of the statement
of profit and loss and other comprehensive income. The Group generated a operating profit for the year of £2,876,000 (2017: £1,624,000) and generated
a profit after tax for the year of £2,037,000 (2017: £1,268,000).
The Directors believe that the Group’s balance sheet remains well capitalised, with sufficient working capital to service all its day-to-day requirements.
The Directors take a prudent approach to the Group’s leverage ratio and regularly review its balance sheet with this in mind. The Board does not
recommend the payment of a dividend at this stage of the Group's development (2017: £nil).
Openings
The Group opened new sites during the year in York (4 screens, 29 December 2017), Glasgow (3 screens, October 2018), Altrincham (4 screens,
November 2018), Crystal Palace (4 screens, November 2018) and Liverpool (4 screens, December 2018). The opening of four sites in a 2 month period at
the end of 2018 was especially pleasing as it demonstrated the ability of the Group to manage numerous openings successfully in a short time period.
The Group conditionally exchanged contracts on 6 further sites in Cardiff, London Broadgate, Manchester, Clitheroe, Northallerton and Plymouth during
the year.
In March 2018, the Group completed on the purchase of the freehold of a site in Crystal Palace, London for £3.225m.
Cash flows
Net cash generated from operating activities was £7,611,000 (2017: £13,737,000). Net cash outflows for the year, before financing, were £15,510,000
(2017: £3,538,000). This is largely represented by capital expenditure on the expansion of the business through build and fit-out costs of new sites and
refurbishment of existing sites during the year.
Cash held at the end of the year was £3,517,000 (2017: £18,366,000). The cash held will be invested in the continuing development and expansion of
the Group’s business in 2019.
After the year end on 16 January 2019 the Group agreed a new 5 year loan facility of £30m with Barclays Bank PLC and Santander UK PLC. This
replaced the £20m loan facility signed in March 2017 with Barclays Bank PLC. At the year end the Group had drawn down £7,000,000 (2017: £7,000,000)
of the available funds. Charges have been put in place over the net assets of the Group as collateral against the loan balance.
2
Everyman Media Group PLC
Annual report and financial statements
Chairman's statement (continued)
Pre-opening costs
Pre-opening costs, which have been expensed within administrative expenses, were £1,099,000 (2017: £916,000). 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.
Current trading
Since the year end, trading has been in line with expectations and the film release schedule for 2019 looks both strong and diverse.
Marketing activity
We continue to materially invest in marketing within the business, including investment in digital technology (with our new mobile app launching soon)
and social media. Typically, we avoid more conventional advertising, preferring to focus on delivering in-venue events and experiences that surprise and
exceed our customers’ expectations. This in turn builds loyalty and goodwill whilst fostering tremendous word of mouth, increasingly shared on social
media. Such events in 2018 included a ‘premiere’ opening night party for ‘Mamma Mia! Here We Go Again’, several exclusive Q&A screenings as well
as the 4th annual Everyman Music & Film Festival.
Staff
Our team of employees averaged 777 in 2018 (2017: 677). Once again I would like to recognise them all, and thank them, for their continued efforts and
support that are a major part of our business success.
Annual general meeting
The Directors look forward to welcoming shareholders to the annual general meeting of the Company which will be held at 10:30am on 9 May 2019 at
Everyman Cinema Hampstead, 5 Holly Bush Vale, London NW3 6TX.
Future of the Group
The Group continues to balance the development and growth of the pipeline for new venues with the opportunities for growth within our existing
estate. Progress in this latter area has been strong in 2018 with admissions, food & beverage revenue and other ancillary income from the continuing
estate growing well. The Directors believe that continuing to achieve growth in both of these areas will enable us to increase our customer base and
frequency of visits in communities across the country whilst continuing to deliver exciting growth for the business and for our shareholders.
Paul Wise
Executive Chairman
12 March 2019
3
Everyman Media Group PLC
Annual report and financial statements
Corporate Governance
It is the responsibility of the Chairman of the Board of Directors of Everyman Media Group PLC to ensure that the Group has both sound corporate
governance and an effective Board. This is managed by ensuring that the Group and the Board are acting in the best interests of shareholders, and by
making sure that the Board discharges its responsibilities appropriately. This includes creating the right Board dynamic and ensuring that all important
matters, in particular strategic decisions, receive adequate time and attention at Board meetings. The Executive Chairman also has a key role in
creating and planning the strategic direction of the Group and is intimately involved in the branding and creative direction of the Group and its venues.
Key governance matters which have occurred during the year include the adoption of the Quoted Companies Alliance corporate governance code (QCA
code) in September 2018, the appointment of a second independent non-executive director, changes to committee memberships so that only non-
executive directors attend the relevant committee meetings, and the adoption of a risk register.
The Board considers that the Group complies with the QCA Code so far as it is practicable having regard to the size, nature and current stage of
development of the Group. The Board recognises that the Group does not fully comply with the 10 principles and general provisions of the QCA code
but does use it as a benchmark in assessing its corporate governance standards. Areas of non-compliance are disclosed below.
While seeking to build a strong governance framework the Board is mindful to ensure that the Group takes a proportionate approach and that
processes remain fit for purpose as well as embedded within the culture of the organisation. The Group continues to evolve its approach and make
ongoing improvements as part of building a successful and sustainable business. Good governance provides a framework that allows the right
decisions to be taken by the right people at the right time. As the Group grows over the medium term, the Board is targeting full compliance with the
QCA code.
QCA principles
A description of the Group’s business model and strategy can be found in the strategic report along with key challenges in their execution and
information in relation to the Group’s risk management.
Directors
The Board comprises the Executive Chair, Paul Wise; the CEO, Crispin Lilly; Executive Director, Adam Kaye; Finance Director, Jonathan Peters; two
independent Non-Executive Directors, Streisan Bevan and Philip Jacobson; and two non-independent Non-Executive Directors, Charles Dorfman and
Michael Rosehill.
Philip Jacobson has an interest in 86,336 Ordinary Shares and holds 100,000 options over Ordinary Shares which were granted to him as part of the
Group’s admission to AIM. Neither Philip Jacobson nor the other Directors believe his shareholding or options are significant in assessing his
independence.
All Directors are encouraged to challenge and to bring independent judgement to bear on all matters, both strategic and operational.
Biographical details of the Directors can be found on the Group’s website.
All Non-Executive Directors are expected to dedicate at least one day per month to the Group. The Chairman dedicates approximately 10 days per
month. The Board is satisfied that each of the Directors are able to allocate sufficient time to the Group to discharge their responsibilities effectively.
The number of meetings of the Board and its Committees are outlined below:
Attendance by Directors
Paul Wise*
Crispin Lilly
Adam Kaye
Jonathan Peters
Streisan Bevan**
Philip Jacobson
Charles Dorfman
Michael Rosehill***
Total meetings held
*Resigned from audit committee and remuneration committee during the year.
**Appointed after the year on 18 January 2019.
***Appointed to the audit committee and remuneration committee during the year.
Board
Audit
Remuneration
Nomination
10
10
7
10
-
10
8
8
10
1
n/a
n/a
n/a
-
3
n/a
2
3
1
n/a
n/a
n/a
-
3
3
2
3
n/a
n/a
n/a
n/a
-
1
1
n/a
1
4
Everyman Media Group PLC
Annual report and financial statements
Corporate governance (continued)
The Group accepts that having a Chairman and two Non-Executive Directors who are not independent is not in line with best practice or the
recommendations made by the QCA. However, the Board believes that the skill-sets of the Chairman and non-independent Directors are appropriate
and beneficial for all shareholders and stakeholders. Each of the Chairman and non-independent Directors has significant experience in building
successful businesses and offer key expertise to the Executive Directors that are beneficial to the Group as a whole.
To enable each Director to keep their skill-set up to date, individual training needs are identified as part of the annual Board evaluation process and
training is provided as required. All Directors receive regular updates on legal, regulatory and governance issues. In addition, there are regular ‘deep
dives’ from across the business at Board level to ensure the Directors’ understanding of the operational aspects of the business are kept up to date.
From time to time Board meetings are held away at operational sites away from the head office to further enhance the Directors’ understanding of the
business.
Advisors
Jonathan Peters acts as Group Secretary and the Group has also engaged ONE Advisory as support for its Group secretarial function to ensure the
necessary information is supplied to the Group Secretary and Directors on a timely basis and to enable them to discharge their duties effectively. All
Directors have access to the advice of the Group’s solicitors as well as access to independent professional advice, at the Group’s expense, as and
when required.
Everyman also engaged the services of ONE Advisory who supported the Board in their development of the Group’s corporate governance, assisting
with the Group’s application of the QCA code and amendments in relation to AIM rule 26.
Neither the Board nor its Committees have sought external advice on a significant matter.
Board evaluation
The Group intends to formulate a detailed evaluation procedure over the coming months and will disclose it in more in detail on its website when this
has been implemented. The Board evaluation will be based on clear and relevant objectives and seek continuous improvement. Therefore, the Board
accepts that the Group does not comply with this aspect of the QCA code, although in the frequent Board meetings, Directors can discuss any areas
where they feel a change would benefit the Group, and the Group Secretary and other Group advisers remain on hand to provide impartial advice.
Culture
The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Group as a whole and that this will impact
the performance of the Group. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Group as a whole
and the way employees behave. The Corporate Governance arrangements that the Board has adopted are designed to ensure that the Group delivers
long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Group in a manner that
encourages open dialogue with the Board. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Group to
successfully achieve its corporate objectives.
A large part of the Group’s activities are centred on an open and respectful dialogue with employees, customers and other stakeholders. Therefore, the
importance of sound ethical values and behaviours is crucial to the ability of the Group to successfully achieve its corporate objectives. The Board
places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Group does. The Directors consider that
the Group has an open culture facilitating comprehensive dialogue and feedback that enables positive and constructive challenge.
The Board also recognises that as an operator of cinemas within local communities, it has responsibility to engage openly, transparently and
effectively with community stakeholders, local planning and government agencies.
The Group places considerable emphasis on maintaining good relations with all its employees. The Group places great importance on managers at
each venue being well trained and capable of recruiting, training and developing a strong team and equips them with the necessary tools in order to
provide a positive working environment. The Group regularly communicates important updates with employees and seeks engagement and
consultation whenever making decisions that affect them or their interests. Employees are provided with regular on-the-job training, including a staff
handbook and career development opportunities. The Group places a significant importance on developing from within.
The Group is an equal opportunities employer and is committed to the employment of people with disabilities and guarantees an interview for those
who meet the minimum selection criteria. The Group provides training and development for people with disabilities tailored, where appropriate, to
ensure they have the opportunity to achieve their potential. If an employee becomes disabled while in our employment the Group will do its best to
retain them, including consulting with them about their requirements, making reasonable and appropriate adjustments and providing alternative
suitable employment where possible.
The Group has an anti-bribery and confidentiality policy in place to ensure the highest standards of personal and professional ethical behaviour are
adhered to.
5
Everyman Media Group PLC
Annual report and financial statements
Corporate governance (continued)
The Company has adopted a code for Directors’ and employees’ dealings in securities in relation to its Ordinary Shares and related securities which is
compliant with AIM as well as being in accordance with the requirements of the market abuse regulation which came into effect in 2016.
There is a system in place for financial reporting and the Board receives regular reports to enable it to carry out these functions in the most efficient
manner. These procedures include the preparation of management accounts, forecast variance analysis and other ad-hoc reports. There are clearly
defined authority limits throughout the Group, including those matters which are reserved specifically for the Board.
The Board has responsibility for the effectiveness of the internal financial control framework. Such a system can only provide reasonable and not
absolute assurance against material misstatement. The Group does not currently have, nor considers there is currently a need for, an internal audit
function. As the number of venues operated by the Group increases, the Board intends to regularly assess the ongoing need for strengthening internal
financial controls.
The Board’s financial risk management, objectives and policies together with the Board’s policies in respect of credit risk, liquidity risk and cash flow
risk are set out in the notes to the financial statements.
6
Everyman Media Group PLC
Annual report and financial statements
Audit committee
The audit committee has the primary responsibility of monitoring the quality of internal controls and ensuring that the financial performance of the
Group is properly measured and reported on. It receives and reviews reports from the Group’s management and external auditors relating to the
interim and annual accounts and the accounting and internal control systems in use throughout the Group. The audit committee meets no less than
twice a year and has unrestricted access to the Group’s external auditors. The audit committee is chaired by Philip Jacobson and also includes Michael
Rosehill.
The audit committee met 3 times during the year. The external auditors attended each of these meetings at the invitation of the committee chairman.
The committee also met with the external auditors without the presence of the Finance Director.
Remuneration committee
The remuneration committee is chaired by Philip Jacobson and also includes Charles Dorfman and Michael Rosehill. The remuneration committee
reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their remuneration and terms of
service. The remuneration committee also makes recommendations to the Board on proposals for the granting of share options and other equity
incentives pursuant to any employee share option scheme or equity incentive plans in operation. The remuneration committee meets as and when
necessary.
Base salary, benefits in kind and Company pension contributions are determined by the committee with reference to the experience and
responsibilities of each individual and having regard to prevailing market conditions.
Bonus plans, share option awards and the Company’s LTIP scheme are regularly reviewed by the committee to ensure that they are appropriately
incentivising key management.
The committee met 3 times during the year.
7
Everyman Media Group PLC
Annual report and financial statements
Strategic report
The Directors present their strategic report for the Group for the 53 weeks ended 3 January 2019.
Principal activity
The Group is a leading independent cinema group in the UK. The principal activity of the Company is that of a holding company.
Review of the business
The Group made a profit after tax of £2,037,000 (2017: £1,268,000).
Further details are 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.
Development of the Group's business
The Everyman offering
The positioning of the Everyman brand remains unchanged at the premium end of the UK leisure/cinema market. We deliver unique, high quality,
intimate venues, usually of a smaller capacity than traditional multiplexes and in relatively central high street locations. Hospitality is our primary
focus.
The true differentiation lies in our ambition to deliver a personal, exceptional experience for all our customers whenever they visit. This is achieved by
combining the strengths of our cinema design with a strong, credible food and drink offer, expansive programming and our tremendous front of house
team members and managers.
Our customers enjoy a wide and diverse range of films, live streamed events or corporate hospitality, in venues fitted with high end digital projection
and sound equipment.
Growth strategy
The Directors continue to focus both on the growth of our footprint as well as increasing our customer base, frequency and ancillary spends from our
existing venues.
In 2018 the Group signed a further 7 agreements for lease for new venues, which brings the committed pipeline to 14 on top of the existing 26 venues
now open. The opportunities for further new venues is strong through a combination of larger developer-led builds and smaller high street
opportunities. The latter, in particular, is encouraging with spaces continuing to become available in line with our desire to be a core part of the
regeneration of town centres.
At the same time, an increased focus on digital engagement, membership and understanding of our existing customers is helping to increase
frequency and the ongoing development of our food and beverage offering is increasing dwell time and associated spends. The introduction of freshly
made baked cookies, the development of a range of small sharing plates and a brand new wine list were particular successes in this area in 2018.
Investment in the underlying business, as well as in new venues, continues with the imminent launch of our first mobile app, new training programmes
for our venue teams, as well as improved IT infrastructure.
In addition, a full refurbishment of our Maida Vale venue took place during the year and a programme of planned maintenance work and other building
improvements across the growing estate is in place.
These investments and the continuing expansion will be financed from current resources including the new extended bank facility and retained
earnings.
8
Everyman Media Group PLC
Annual report and financial statements
Strategic report (continued)
Current estate
The Group currently has venues in the following locations:
Location
Altrincham*
Birmingham
Bristol
Chelmsford
Esher
Gerrards Cross
Glasgow*
Harrogate
Leeds
Liverpool*
London, Baker Street
London, Barnet
London, Belsize Park
London, Canary Wharf
London, Crystal Palace*
London, Hampstead
London, Islington
London, Kings Cross
London, Maida Vale*
London, Muswell Hill
Oxted
Reigate
Stratford-Upon-Avon
Walton-On-Thames
Winchester
York*
Number of
Screens
Number of
Seats
4
3
3
5
4
2
3
5
5
4
2
5
1
3
4
2
1
4
2
5
3
2
4
2
2
4
84
247
328
439
379
336
215
201
410
611
288
118
429
129
266
313
194
125
276
149
478
212
170
384
158
236
329
7,420
*Venues added/significantly refurbished during the year.
Over the course of 2018 the Group conditionally exchanged contracts on a further 6 new venues in Cardiff, London Broadgate, Manchester, Clitheroe,
Northallerton and Plymouth, as well as acquiring the freehold of Crystal Palace. In 2019 we expect to open 7 venues in total, including Horsham, which
is due to open in March.
The Directors are confident of being able to grow the existing pipeline beyond the 14 new sites which are already committed and expected to open by
2021. To help achieve this, on 16 January 2019, the Group agreed a new loan facility of £30 million provided by Barclays Bank PLC and Santander UK
PLC. This replaced the previous £20 million facility signed in March 2017 with Barclays Bank PLC. This new facility has a term of 5 years and supports
growth opportunities for the Group.
UK cinema market
Market performance
Admissions in the UK increased in 2018, ending the year up 6.4m to 177m, the highest level since 1970 (source: UK Cinema Association). Gross box
office for the UK decreased marginally by 0.1% to £1.28bn (source: UK Cinema Association) reflecting the growth in family and subscription audiences.
Our share of UK & Ireland box office revenue in 2018 rose from 2.11% in 2017 to 2.53% (source: ComScore).
The volume of films and event cinema being released theatrically in the UK continues to be very healthy with over 900 titles in 2019. The breadth and
quality of this content remains strong. With these factors as a backdrop, the Directors continue to believe that the cinema market is healthy and that
the Group's continued focus on delivering great value in the overall experience puts us in a strong and robust position within that market.
Competition
The UK cinema market continues to be dominated by the 3 main multiplexes: Cineworld, Odeon and Vue. All of these chains continued to invest in their
UK sites in 2018 as well as in new sites.
Empire and The Light, both smaller multiplex operators, opened new sites in 2018, the former with a new boutique style offer; Tivoli. Picturehouse and
Curzon both continue to open a small number of new sites, with Picturehouse opening Ashford and West Norwood at the end of the year.
9
Everyman Media Group PLC
Annual report and financial statements
Strategic report (continued)
Key performance indicators
The growth in revenue in the current 53-week year reflects the effect of an increase in the number of venues and admissions, an increase in box office
pricing and an improved spend per head on food and beverage.
The Group uses the following key performance indicators, in addition to total revenues, to monitor the progress of the Group’s activities:
Admissions
Box office average ticket price
Food and beverage spend per head
Year ended
3 January
2019
Year ended
28 December
2017
25%
0%
6%
2,795,359
£11.26
£6.30
2,227,885
£11.28
£5.97
The average ticket price remains flat due to the disproportionate increase in admissions being generated by the Group at new venues outside London.
Like for like, the Group is continuing to realise annual increases in ticket prices in line with inflation.
In contrast, the food and beverage spend per head continues to grow off the back of enhanced menu development and the success of new products
such as cookies. Actual price increases are kept in line with inflation. The average spends in our new venues remain disproportionately strong as we
continue to improve the design and operational support that we put into new openings.
Principal risks and uncertainties
Risks relating to the Group's business
The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets
through regular reviews by senior management to forecasts. Project milestones and timelines are reviewed regularly. A risk register has been
introduced which the Board plans to review and update on an ad-hoc basis during meetings.
The identified risks remain largely unchanged from our last annual report:
1
2
3
4
5
6
Admissions - The Group’s revenues are dependent on admissions. Nearly all revenues (box office, food & beverage, screen advertising) are
linked to this. As a result, the Group’s financial position is largely reliant on the continued popularity and the overall quantity and quality of the
films (and other content) which it shows. The Board believes that the Group’s strategy of focusing on customer experience, the venue
environment and hospitality mitigates this risk somewhat as customers are more willing to try smaller, more diverse films that may not get the
same exposure either in above-the-line advertising spend or through wider platform releases by the industry.
Film licensing - The Group’s ability to license films on acceptable terms is also largely dependent on its relationships with film distributors and
remains a core risk to the costs of the business. This risk is managed through healthy partnership-based relations with distributors of all sizes as
well as careful weekly negotiation on specific titles.
Alternative media channels - The proliferation of alternative media channels, including streaming, has introduced new competitive forces for the
film-going audience. To date this has proven to be a more virtuous relationship, both increasing the investment in film production and further
fuelling an overall interest in film with customers of all ages. It remains an ever-present caution however, that we must continue to deliver an
exceptional experience in order to deliver real added value for our customers who choose to see a film at our venues.
Piracy - Film piracy, aided by technological advances, continues to be a real threat to the cinema industry generally. Any theft within our venues
may result in distributors withholding content to the business. Everyman’s typically smaller, more intimate auditoria, with much higher occupancy
levels than the industry average, make our venues less appealing to film thieves. In addition, higher levels of staffing further mitigate this risk.
Seasonality - Release schedules affect the Group’s box office revenues as they fluctuate throughout the course of any given year and are largely
dependent on the timing of release of films, over which the Group has no control. As a result, the Group’s revenues may vary significantly from
month to month and within any given financial year. The Board mitigates this risk by reviewing changes in the release schedule and through the
development and promotion of special events at certain times of the year.
Extreme weather - The Group’s business may suffer as a result of periods of abnormal, severe or unseasonal weather conditions. Cinema
admissions are affected by periods such as exceptionally hot weather or heavy snowfall. This is mitigated somewhat by becoming a national
player, ensuring that localised extreme weather has a decreasing impact on the overall business.
10
Everyman Media Group PLC
Annual report and financial statements
Strategic report (continued)
Risks relating to the Group's business (continued)
7
Extraordinary events and consumer environment - Specific large events can temporarily reduce cinema admissions, for example royal weddings,
elections or large sporting events. In addition, a reduction in consumer spending because of broader economic factors could impact the group’s
revenues. Film release schedules tend to work around large, known events such as a World Cup, so that admissions are typically lower at these
times anyway. Historically, cinema has been incredibly resilient to recession with it remaining an affordable treat during such times for most
consumers. However, the Group constantly monitors long term trends as well as the broader leisure market.
8
9
10
11
12
13
14
Food & Beverage - Retail sales of food & beverage form an important part of the revenues of the Group. Our cinemas sell freshly prepared food
and drink which also presents food hygiene risks. Stringent operational procedures exist to ensure compliance with all necessary regulations and
the Group retains the services of an external health, safety and food hygiene audit company to check standards regularly.
Advertising revenue - The Group earns revenue from advertising which may fluctuate due to broader macro-economic factors. Revenue earned
from advertising is influenced by the level of admissions and the size of the Group’s portfolio of properties and as such, may decrease in line with
any reduction of admissions. The Group over-indexes on this revenue stream due to its reputation for partnership-driven sponsorship activity and
this, combined with the growth of other revenue streams, helps mitigate any decline in traditional advertising revenues.
Property - The Group’s operating costs include rent and energy costs. These costs may be volatile due to increased market fluctuations in the
price of property rental, business rates, gas and electricity. The Board mitigates this risk by regularly assessing alternative energy suppliers,
rating and rental costs when open market rent reviews are due on each property.
Competition - Where the Group has an existing cinema, it may be subject to competition from the introduction of new and/or upgraded cinema
operated by other chains. The Board continuously monitors competing operators and significant capital budget is set aside for refurbishments.
We believe the Everyman offer represents great value to our customers and is more resilient to competition than more traditional cinema offers.
Key suppliers - The Group is reliant on certain key contracts and arrangements with partners and suppliers. The loss of some of these
arrangements may cause temporary disruption to the operations and financial performance of the Group. The Board mitigates this risk by
maintaining relationships with a number of alternative suppliers as well as appropriate reviews of these contracts.
Reputation - The strong positive reputation of the Everyman brand is a key benefit, helping to ensure the successful future performance and
growth which also serves to mitigate many of the risks identified above. The Group consistently focuses on customer experience and monitors
feedback from many different sources. A culture of partnership and respect for customers and our suppliers is fostered within the business at all
levels.
Brexit - Risks linked to Brexit include consumer confidence, foreign exchange rate risk, a lack of availability of certain food items and staff.
Whilst the full business implications of Brexit remain uncertain, and will do for some time, the Board believes the Group is well positioned to
react to the potential challenges and opportunities ahead. The Group has no exchange rate exposure and is only directly impacted by the fall in
sterling due to cost pressure on a small number of imported food and beverage purchases. These are, for the most part, offset by increased
buying power due to our rapid expansion. The cinema industry is historically resilient to recessionary pressures however, the Board is continuing
to monitor the situation closely. The Group has secured financing to allow it to fully fund its next phase of expansion.
Financial risks
The Group does not have a direct exposure to foreign currency movements and does not contract any hedging arrangements in respect of currency
positions.
The Group takes out suitable insurance against property and operational risks where considered material to the anticipated revenue of the Group.
On behalf of the Board
C Lilly
CEO
12 March 2019
11
Everyman Media Group PLC
Annual report and financial statements
Directors' report
The Directors present their annual report and the audited financial statements for the Group for the 53 weeks ended 3 January 2019.
Results and dividends
The results of the Group are included in the strategic report. Further details are shown in the consolidated statement of profit and loss and other
comprehensive income and the related notes to the financial statements. The Group generated a profit after tax for the year of £2,037,000 (2017:
£1,268,000). As mentioned in the Chairman’s statement, the Directors do not recommend the payment of a dividend (2017: £nil).
Principal activity
The Group is a leading independent cinema group in the UK. Further information is contained in the strategic report. The principal activity of the
Company is that of a holding company. The subsidiaries of the Group are set out in the related notes to the financial statements.
Financial risk management: objectives and policies
The financial and other risks to which the Group is exposed, together with the Group’s objectives and policies in respect of these risks, are set out in
the strategic report.
Capital structure
962,200 new shares were issued in 2018. The number of Ordinary shares in issue at 3 January 2019 was 70,989,303 (2017: 70,027,103).The Company
has also issued options over the share capital of the Company to members of the Board and to certain employees and contractors which amounted to
5,575,344 Ordinary shares (2017: 5,861,152 Ordinary shares) which, if exercised, would comprise 7.9% (2017: 8.66%) of the current issued share capital
of the Company (see also Directors’ interests below and the related notes). Of these, 1,392,864 (2017: 1,392,864) are represented by ‘A’ Ordinary
shares issued by Everyman Media Holdings Limited which are convertible into Ordinary shares of the Company, subject to certain market conditions.
The shares of the Company are quoted on the London AIM market.
Going concern
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for 12 months from the date
of signing these accounts. Therefore, they continue to adopt a going concern basis in preparing the financial statements. In adopting a going concern
basis for preparing the financial statements, the Directors have considered the business activities and the principal risks and uncertainties set out in
the strategic report. The balance sheet of the Group, its cash flows, liquidity position and borrowing facilities, as well as the Group’s objectives,
policies and processes for managing capital, are described in the strategic report. Financial risk management objectives, details of financial
instruments and hedging activities and exposure to credit risk and liquidity risk are described in the proceeding notes to the financial statements.
Letters of support have been given to the Group's subsidiaries that financial obligations will be met and that it will not seek repayment of any amounts
currently made available.
Substantial shareholdings
As at 3 January 2019 the Company was aware of the following interests in 3% or more of the Company’s Ordinary share capital as set out below. Killik
& Co LLP subsequently reduced their interests below 3% though no other notifications relating to major shareholdings have been made to the Company
under disclosure and transparency rule 5 (vote holder and issuer notification rules) since this date.
Shareholder
Blue Coast Private Equity LP
Canaccord Genuity Group Inc
Schroders PLC
Charles Dorfman*
Adam Kaye
Samuel Kaye
BlackRock Inc
Killik & Co LLP
Paul Wise**
Phillip Kaye
Jonathan Kaye
% of issued
share capital
2018
% of issued
share capital
2017
19.44%
10.85%
8.33%
7.56%
7.38%
6.20%
5.41%
4.67%
3.26%
3.19%
3.08%
19.70%
9.23%
9.87%
7.86%
8.12%
6.29%
3.90%
4.76%
4.09%
3.24%
3.12%
*Of the 5,370,027 Ordinary shares Charles Dorfman is interested in, 3,592,565 (2017: 3,592,565) Ordinary shares are held by the Lloyd Dorfman Children's Settlement. Charles Dorfman is one of the potential
beneficiaries of the settlement.
**Of the 2,311,479 Ordinary shares Paul Wise is interested in, 2,260,052 (2017: 2,812,374) Ordinary shares are held by the Paul Wise Family Trust. Paul Wise is one of the potential beneficiaries of the Trust.
12
Everyman Media Group PLC
Annual report and financial statements
Directors' report (continued)
Directors
The Directors of the Company during the financial year were:
Name
Adam Kaye
Charles Dorfman *1 *2
Crispin Lilly
Jonathan Peters FCA
Michael Rosehill FCA *1 *3
Paul Wise
Philip Jacobson FCA *1 *2 *3
Streisan Bevan
*1 Member of the remuneration committee
*2 Member of the nominations committee
*3 Member of the audit committee
Function
Executive Director
Non-Executive Director
Chief Executive Officer
Finance Director
Non-Executive Director
Executive Chairman
Independent Non-Executive Director
Independent Non-Executive Director (appointed 18th January 2019)
Biographical details of continuing Directors are set out on the Company’s website: investors.everymancinema.com.
Directors' interests in the Company
The following Directors held shares in the Company at the year end (there were no significant changes between the shareholdings at the year end and
one month before notice of the annual general meeting):
Director
Charles Dorfman
Adam Kaye
Paul Wise
Michael Rosehill FCA*
Philip Jacobson FCA
Number of
Ordinary shares
2018
% of issued
share capital
2018
Number of
Ordinary shares
2017
% of issued
share capital
2017
5,370,027 7.56% 5,505,041
5,239,682 7.38% 5,686,280
2,311,479 3.26% 2,863,840
198,710 0.28% 188,410
86,336 0.12% 73,776
7.86%
8.12%
4.09%
0.27%
0.11%
*Michael Rosehill is a director of Blue Coast Private Equity LP and therefore has an interest in its shareholding.
As at the date of this document, the following options over Ordinary shares were held by the Directors (see also notes to the financial statements):
Director
Crispin Lilly
Jonathan Peters FCA
Paul Wise
Adam Kaye
Philip Jacobson FCA
Charles Dorfman
Michael Rosehill FCA
Grant
date
**Vesting
conditions
Exercise price
Pence
28 December
2017
Number
Issued
in the year
Number
Exercised
in the year
Number
3 January
2019
Number
1 Dec 14
1 Dec 14
29 Oct 15
13 Mar 17
23 Nov 17
23 Apr 18
20 Apr 15
20 Apr 15
29 Oct 15
23 Nov 17
23 Apr 18
29 Oct 15
29 Oct 13
29 Oct 15
29 Oct 13
29 Oct 13
29 Oct 13
29 Oct 13
5
6
9
10
11
12
7
8
9
11
12
9
*4
9
*4
2
2
2
83
83
85
109.5
10
10
85
85
85
10
10
85
83
85
83
83
83
83
287,356
257,009
352,942
250,000
52,746
-
174,725
233,349
90,130
35,659
-
499,977
696,432
499,977
696,432
100,000
50,000
50,000
-
-
-
-
-
43,617
-
-
-
-
32,051
-
-
-
-
-
-
-
287,356
257,009
235,295
-
-
-
70,000
-
-
-
-
-
-
-
-
-
-
-
-
-
117,647
250,000
52,746
43,617
104,725
233,349
90,130
35,659
32,051
499,977
696,432
499,977
696,432
100,000
50,000
50,000
* The benefit of holding 'A' Ordinary shares in Everyman Media Holdings Limited is considered by the Board to be similar to the benefit of holding an EMI option.
** See note 28 in the notes to the financial statements for vesting conditions.
13
Everyman Media Group PLC
Annual report and financial statements
Directors' report (continued)
Directors' interests in the Company (continued)
Details of the option scheme vesting and performance conditions are set out at note 28 of the financial statements.849,660 share options (2017:
100,000) were exercised by Directors during the year, resulting in a gain of £1,244,916 (2017: £102,000).
Directors' remuneration
For the year ended 3 January 2019
Director
Crispin Lilly
Jonathan Peters FCA
Paul Wise
Adam Kaye
Philip Jacobson FCA
For the year ended 28 December 2017
Director
Crispin Lilly
Jonathan Peters FCA
Paul Wise
Adam Kaye
Philip Jacobson FCA
Salary
£000
Fees
£000
Pension
contributions
£000
Other
benefits
£000
Bonus
£000
Share-based
payments
£000
172
123
50
30
30
405
-
-
75
-
-
75
17
12
-
-
-
29
2
-
2
2
-
6
55
15
-
-
-
70
97
48
24
24
-
193
Salary
£000
Fees
£000
Pension
contributions
£000
Other
benefits
£000
Bonus
£000
Share-based
payments
£000
168
112
50
30
30
390
-
-
50
-
-
50
17
8
-
-
-
25
-
-
2
2
-
4
59
39
-
-
-
98
77
43
30
30
-
180
Total
£000
343
198
151
56
30
778
Total
£000
321
202
132
62
30
747
Other benefits include interest in respect of an amount of uncalled share capital due in respect of the issue of performance shares in Everyman Media
Holdings Limited, a subsidiary of the Company, to certain members of the Board.
Share-based payments are valued using the share price at the original grant date.
Policy and practice on the payment of creditors
The policy of the Group is to settle supplier invoices within the terms and conditions of trade agreed with individual suppliers.
Employees
Employee involvement
The Group places considerable emphasis on maintaining good relations with all its employees. The Group places great importance on managers at each
venue being well trained and capable of recruiting, training and developing a strong team and the Group equips them with the necessary tools in order
to provide a positive working atmosphere. The Group regularly communicates important updates with employees and seeks engagement and
consultation whenever making decisions that affect them or their interests. Employees are provided with regular on-the-job training and career
development opportunities and the Group places a significant importance on developing from within.
Employment of disabled persons
The Group is an equal opportunities employer and is committed to the employment of people with disabilities and guarantees an interview for those
who meet the minimum selection criteria. The Group provides training and development for people with disabilities tailored, where appropriate, to
ensure they have the opportunity to achieve their potential. If a Group employee becomes disabled while in our employment the Group will do its best
to retain them, including consulting with them about their requirements, making reasonable and appropriate adjustments and providing alternative
suitable employment where possible.
Political and charitable donations
The Group made charitable donations of £36,000 in the year (2017: £12,000).
Post balance sheet events
On 16 January 2019, the Group agreed a new loan facility of £30 million provided by Barclays Bank PLC and Santander UK PLC. This replaced the
previous £20 million facility signed in March 2017 with Barclays Bank PLC. This new facility has a term of 5 years.
14
Everyman Media Group PLC
Annual report and financial statements
Directors' report (continued)
Disclosure of information to auditor
In the case of each person who was a Director at the time this report was approved:
- So far as that each Director was aware, there was no relevant available information of which the Company’s auditor is unaware.
- Each Director has taken all steps that they ought to have taken as a Director to make himself aware of any relevant audit information and to establish
that the Company’s auditor was aware of that information.
Auditor
In accordance with s489 of the Companies Act 2006, a resolution for the re-appointment of KPMG LLP as auditor of the Company is to be proposed at
the forthcoming annual general meeting.
Internal financial control
The Group operates a system of internal financial controls commensurate with its current size and activities, which is designed to ensure that the
possibility of misstatement or loss is kept to a minimum. There is a system in place for financial reporting and the Board receives regular reports to
enable it to carry out these functions in the most efficient manner. These procedures include the preparation of management accounts, forecast
variance analysis and other ad hoc reports. There are clearly defined authority limits throughout the Group, including those matters which are reserved
specifically for the Board.
The Board has responsibility for the effectiveness of the internal financial control framework. Such a system can only provide reasonable and not
absolute assurance against material misstatement. The Group does not currently have, nor considers there is currently a need for, an internal audit
function. As the number of sites operated by the Group increases the Board intends to regularly assess the ongoing need for strengthening internal
financial controls.
The Board’s financial risk management, objectives and policies together with the Board’s policies in respect of price risk, credit risk, liquidity risk and
cash flow risk are set out in the notes to the financial statements.
On behalf of the Board
C Lilly
CEO
Everyman Media Group PLC
Studio 4, 2 Downshire Hill
London
NW3 1NR
12 March 2019
15
Everyman Media Group PLC
Annual report and financial statements
Statement of Directors' responsibilities in respect of the annual report and financial statements
The Directors are responsible for preparing the annual report and the Group and parent Company financial statements in accordance with applicable
laws and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. As required by the AIM rules of
the London Stock Exchange they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU and applicable law and have elected to prepare the parent Company financial statements in accordance with UK
accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS101 Reduced Disclosure Framework.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and Parent company financial
statements, the Directors are required to:
- Select suitable accounting policies and then apply them consistently.
- Make judgements and estimates that are reasonable, relevant, reliable and prudent.
- For the Group financial statements, state whether they have been prepared in accordance with IFRS as adopted by the EU.
- For the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements.
- Assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern.
- Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no
realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a strategic report and a Directors' report that complies with that
law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
16
Independent auditor's report to the members of Everyman Media Group PLC
1 Our opinion is unmodified
We have audited the financial statements of Everyman Media Group PLC (the Company) for 53 weeks (year) ended 3 January 2019 which comprise
the consolidated statement of profit and loss and other comprehensive income, the consolidated balance sheet, the consolidated statement of
changes in equity, the consolidated cash flow statement, the Company balance sheet, the Company statement of changes in equity and the related
notes, including the accounting policies in note 2.
In our opinion:
- The financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 3 January 2019 and of the
Group’s profit for the year then ended;
- The Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
- The parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS101 Reduced
Disclosure Framework; and
- The financial statements have been prepared in accordance with the requirements of the Companies Act 2006;
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) and applicable law. Our responsibilities are described below.
We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the
FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our
opinion.
2 Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance,
were as follows:
Recoverability of property, plant and equipment, goodwill and parent company investment in subsidiary (risk vs 2017: ◄►)
Group: Goodwill - £9m (2017: £9m), property, plant and equipment £66.2m (2017: £48.2m), parent: £30.3m (2017: £30.3m) - refer to accounting
policy note 2 and financial disclosures notes 14-16 in the notes to the financial statements.
The risk: forecast-based valuation
Plant, property and equipment and goodwill in the Group, and the carrying amount of the parent Company’s investment in its trading subsidiary, are
significant and at risk of potential impairment due to the Group operating in a competitive industry where box office and food & beverage revenues
and associated profits are dependent on admissions. The estimated recoverable amount of these balances is subjective due to the inherent
uncertainty involved in forecasting and discounting the related future cash flows.
The effect of these matters is that, as part of our risk assessment, we determined that the recoverable amount of property, plant and equipment,
goodwill and the recoverable amount of the cost of investment in subsidiaries has a degree of estimation uncertainty, with a potential range of
reasonable outcomes greater than our materiality for the financial statements as a whole.
Our response: our procedures included:
Our sector experience
- We challenged the cash flow forecasts, and the assumptions behind them, based on our knowledge of the business and market for all cinema
sites with goodwill, and those others where there was an indicator of impairment such as potential loss-making sites, identified by inspecting the
Group’s records of performance by site.
Historical comparisons
- We compared the EBITDA of each site against budget and prior year results for any changes that could have a potential impairment impact.
- We assessed the historical accuracy of the forecast used in the impairment model by considering actual prior year performance to budget.
Benchmarking assumptions
We compared the Group’s assumptions to externally derived data in relation to key inputs such as projected growth and the discount rate using our
own valuation specialists.
Sensitivity analysis
- For all cinemas with goodwill, and those with impairment indicators over plant, property and equipment, we calculated the degree to which the
key inputs and assumptions would need to fluctuate before an impairment was triggered and considered the likelihood of this occurring.
17
Independent auditor's report to the members of Everyman Media Group PLC (continued)
2 Key audit matters: our assessment of risks of material misstatement (continued)
Comparing valuations
- We compared the carrying amount of the parent company’s investment in its trading subsidiary with the expected value of the business based on
the Group’s year end market capitalisation.
Assessing transparency
- We assessed whether the Group’s disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions
reflected the risks inherent in the valuation of goodwill.
We continue to perform procedures over business combinations. However, as none were made in the year, we have not assessed this as one of
the most significant risks in our current year audit and, therefore, it is not separately identified in our report this year.
3 Our application of materiality and an overview of the scope of our audit
Materiality for the parent company financial statements as a whole was set at £400,000 (2017: £323,000), determined with reference to a
benchmark of total assets, of which it represents 0.5% (2017: 0.4%) and chosen to be lower than materiality for the Group financial statements as
a whole.
Materiality for the parent company financial statements as a whole was set at £400,000 (2017: £323,000), determined with reference to a
benchmark of total assets and chosen to be lower than materiality for the Group financial statements as a whole.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £23,000 (2017: £14,000), in addition
to other identified misstatements that warranted reporting on qualitative grounds.
The Group audit team subjected all (2017: all) of the Group’s three reporting components to full scope audits for Group purposes and performed the
audit of the parent Company. The Group team approved the component materialities, which ranged from £50,000 to £440,000, having regard to the
mix of size and risk profile of the Group across the components.
4 We have nothing to report on going concern
The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or the Group or to
cease their operations, and as they have concluded that the Company’s and the Group’s financial position means that this is realistic. They have
also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at
least a year from the date of approval of the financial statements (the going concern period).
Our responsibility is to conclude on the appropriateness of the Directors’ conclusions and, had there been a material uncertainty related to going
concern, to make reference to that in this audit report. However, as we cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were reasonable at the time they were made, the absence of reference to a
material uncertainty in this auditor's report is not a guarantee that the Group or the Company will continue in operation.
In our evaluation of the Directors’ conclusions, we considered the inherent risks to the Group’s and Company’s business model and analysed how
those risks might affect the Group’s and Company’s financial resources or ability to continue operations over the going concern period. The risks
that we considered most likely to adversely affect the Group’s and Company’s available financial resources over this period were:
- The impact of there being a poor quality of new film releases over the period;
- The impact of particularly poor or good weather over the period which would reduce demand.
As these were risks that could potentially cast significant doubt on the Group’s and the Company's ability to continue as a going concern, we
considered sensitivities over the level of available financial resources indicated by the Group’s financial forecasts taking account of reasonably
possible (but not unrealistic) adverse effects that could arise from these risks individually and collectively and evaluated the achievability of the
actions the Directors consider they would take to improve the position should the risks materialise. We also considered less predictable but
realistic second order impacts, such as the impact of Brexit and the erosion of customer or supplier confidence, which could result in a rapid
reduction of available financial resources.
Based on this work, we are required to report to you if we have concluded that the use of the going concern basis of accounting is inappropriate or
there is an undisclosed material uncertainty that may cast significant doubt over the use of that basis for a period of at least a year from the date
of approval of the financial statements.
We have nothing to report in these respects, and we did not identify going concern as a key audit matter.
18
Independent auditor's report to the members of Everyman Media Group PLC (continued)
5 We have nothing to report on the other information in the annual report
The Directors are responsible for the other information presented in the annual report together with the financial statements. Our opinion on the
financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated
below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the
information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we
have not identified material misstatements in the other information.
Strategic report and Directors' report
Based solely on our work on the other information:
- We have not identified material misstatements in the strategic report and the Directors’ report.
- In our opinion the information given in those reports for the financial year is consistent with the financial statements.
- In our opinion those reports have been prepared in accordance with the Companies Act 2006.
6 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006 we are required to report to you if, in our opinion:
- Adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches
not visited by us.
- The parent Company financial statements are not in agreement with the accounting records and returns.
- Certain disclosures of Directors’ remuneration specified by law are not made.
- We have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 16, the Directors are responsible for: the preparation of the financial statements
including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless
they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with International Standards on Auditing (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of the financial statements. A fuller description of our responsibilities is provided
on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities.
8
The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company’s members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and
the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.
Kelly Dunn
Senior Statutory Auditor
for and on behalf of KPMG LLP, Statutory Auditor
15 Canada Square
Canary Wharf
E14 5GL
12 March 2019
19
Everyman Media Group PLC
Annual report and financial statements
Consolidated statement of profit and loss and other comprehensive income for the year ended 3 January 2019
Revenue
Cost of sales
Gross profit
Other operating income
Administrative expenses
Operating profit
Financial income
Financial expenses
Net financing (expense)/income
Profit before tax
Tax expense
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Basic earnings per share (pence)
Diluted earnings per share (pence)
All amounts relate to continuing activities.
Non-GAAP measure: adjusted profit from operations
Adjusted profit from operations
Before:
Depreciation and amortisation
Acquisition expenses
Pre-opening expenses
Share-based payment expense
Option-based social security
Operating profit
Note
5
11
6
12
25
13
13
14,15
30
28
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
51,880
(20,248)
31,632
3
(28,759)
2,876
-
(160)
(160)
2,716
(679)
2,037
-
2,037
2.89
2.78
9,150
(4,563)
(9)
(1,099)
(500)
(103)
2,876
40,620
(15,937)
24,683
48
(23,107)
1,624
4
-
4
1,628
(360)
1,268
851
2,119
2.04
1.97
6,619
(3,692)
(86)
(916)
(301)
-
1,624
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
20
Everyman Media Group PLC
Annual report and financial statements
Consolidated balance sheet at 3 January 2019
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Other interest-bearing loans and borrowings
Trade and other payables
Non-current liabilities
Other interest-bearing loans and borrowings
Other payables
Provisions for other liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity attributable to owners of the Company
Share capital
Share premium
Merger reserve
Retained earnings
Total equity
Registered in England & Wales
08684079
3 January
2019
£000
28 December
2017
£000
Note
14
15
19
17
19
18
21
20
21
20
24
25
26
66,150
10,655
173
76,978
406
3,790
3,517
7,713
84,691
56
12,398
12,454
7,000
7,796
1,794
1,210
17,800
30,254
54,437
7,099
39,066
11,152
(2,880)
54,437
48,239
10,066
173
58,478
308
1,044
18,366
19,718
78,196
43
12,479
12,522
7,000
5,168
1,883
284
14,335
26,857
51,339
7,003
38,354
11,152
(5,170)
51,339
These financial statements were approved by the Board of Directors on 12 March 2019 and signed on its behalf by:
C Lilly
CEO
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
21
Everyman Media Group PLC
Annual report and financial statements
Consolidated statement of changes in equity for the year ended 3 January 2019
Share
capital
£000
Share
premium
£000
Note
Balance at 30 December 2016
Profit for the year
Other comprehensive income
Total comprehensive income
Shares issued in the period
Share issue expenses
Share-based payments
Total transactions with owners of the parent
Balance at 28 December 2017
Balance at 29 December 2017
Profit for the year
Shares issued in the period
Share-based payment expense
Deferred tax on share-based payment
Total transactions with owners of the parent
25
26
26
28
26
28
25
5,982
-
-
-
1,021
-
-
1,021
7,003
7,003
-
96
-
-
96
Merger
reserve
£000
11,152
-
-
-
-
-
-
-
Retained
earnings
£000
(7,590)
1,268
851
2,119
-
-
301
301
Total
equity
£000
32,264
1,268
851
2,119
17,176
(521)
301
16,956
22,720
-
-
-
16,155
(521)
-
15,634
38,354
11,152
(5,170)
51,339
38,354
-
11,152
-
712
-
-
712
-
-
-
-
(5,170)
2,037
-
500
(247)
253
51,339
2,037
808
500
(247)
1,061
Balance at 3 January 2019
7,099
39,066
11,152
(2,880)
54,437
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
22
Everyman Media Group PLC
Annual report and financial statements
Consolidated cash flow statement for the year ended 3 January 2019
Cash flows from operating activities
Profit for the year
Adjustments for:
Financial income
Financial expenses
Income tax expense
Operating profit
Depreciation and amortisation
Loss on disposal of property, plant and equipment
Transfer of property, plant and equipment to profit and loss
Bad debts
Lease incentives
Market rent provisions
Equity-settled share-based payments
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Net cash generated from operating activities
Cash flows from investing activities
Acquisition as business combination
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of intangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issuance of Ordinary shares
Share issue expenses
Proceeds from bank borrowings
Repayment of bank borrowings
Interest paid
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Note
10
11
12
14,15
14
24
28
30
10
26
21
22
3 January
2019
£000
28 December
2017
£000
2,037
-
160
679
2,876
4,563
17
41
141
214
(88)
500
8,264
(98)
(2,887)
2,332
7,611
-
(22,235)
9
(895)
-
(23,121)
808
-
6,000
(6,000)
(147)
661
(14,849)
18,366
3,517
1,268
(4)
-
360
1,624
3,686
13
-
8
135
(76)
301
5,691
(63)
570
7,539
13,737
(1,302)
(15,586)
-
(391)
4
(17,275)
17,176
(521)
4,000
-
(317)
20,338
16,800
1,566
18,366
The Group had £13,000,000 of undrawn funds available (2017: £13,000,000) of the Barclays Bank PLC facility at the year end.
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
23
Everyman Media Group PLC
Annual report and financial statements
Company balance sheet as at 3 January 2019
Assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Investments
Intangible assets
Current assets
Trade and other receivables
Total assets
Liabilities
Current liabilities
Loans and borrowings
Non-current liabilities
Interest-bearing borrowings
Provisions for other liabilities
Deferred tax liabilities
Total liabilities
Net assets
Equity
Equity attributable to owners of the Company
Ordinary shares
Share premium
Merger reserve
Retained earnings
Total equity
Registered in England & Wales
08684079
28 December
2017
£000
3 January
2019
£000
Note
19
14
16
15
19
21
21
24
25
26
26
26
44,536
348
30,337
547
75,768
-
75,768
56
56
7,000
1,289
41
8,330
8,386
-
477
30,337
584
31,398
43,231
74,629
43
43
7,000
1,360
43
8,403
8,446
67,382
66,183
7,099
39,066
20,336
881
67,382
7,003
38,354
20,336
490
66,183
These financial statements were approved by the Board of Directors on 12 March 2019 and signed on its behalf by:
C Lilly
CEO
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
24
Everyman Media Group PLC
Annual report and financial statements
Company statement of changes in equity for the year ended 3 January 2019
Balance at 30 December 2016
Loss for the year
Shares issued in the period
Share issue expenses
Share-based payments
Balance at 28 December 2017
Balance at 29 December 2017
Loss for the year
Shares issued in the period
Share-based payment expense
Balance at 3 January 2019
Note
28
28
Share
capital
£000
5,982
-
1,021
-
-
Share
premium
£000
22,719
-
16,156
(521)
-
Merger
reserve
£000
20,336
-
-
-
-
7,003
38,354
20,336
7,003
-
96
-
38,354
-
712
-
20,336
-
-
-
Retained
earnings
£000
247
(58)
-
-
301
490
490
(109)
-
500
Total
equity
£000
49,284
(58)
17,177
(521)
301
66,183
66,183
(109)
808
500
7,099
39,066
20,336
881
67,382
The notes on pages 26 to 48 form an integral part of these consolidated financial statements
25
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements
1
2
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.
Basis of preparation and accounting policies
The Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the
EU. The Company has elected to prepare its parent Company financial statements in accordance with FRS101.
The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: financial liabilities
(including derivatives) measured at fair value, and liabilities for cash-settled share-based payments. Non-current assets are stated at the lower of previous carrying
amount and fair value less costs to sell.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements. The
Group prepares its financial statements on a 52/53 week basis. The year end date is determined by the 52nd Thursday in the year. A 53rd week is reported where
the year end date is no longer aligned with 7 days either side of 31st December. The year ended 3 January 2019 is a 53 week period in comparison to the previous
52 week period ended 28 December 2017.
Company basis of preparation
The Company financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS101). The amendments
to FRS101 (2014/15 cycle) issued in July 2015 have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting
Standards as adopted by the EU but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage
of the FRS101 disclosure exemptions has been taken.
Under s408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
In these financial statements, the Company has applied the exemptions available under FRS101 in respect of the following disclosures:
- A cash flow statement and related notes.
- Disclosures in respect of transactions with wholly-owned subsidiaries.
- Disclosures in respect of capital management.
- Disclosures in respect of the compensation of key management personnel.
- New but not yet effective IFRS.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS101 available in respect of the
following disclosures:
- IFRS2 Share Based Payments in respect of Group-settled share based payments.
- Certain disclosures required by IAS36 Impairment Of Assets in respect of the impairment of goodwill and indefinite-life intangible assets.
- Certain disclosures required by IFRS3 Business Combinations in respect of business combinations undertaken by the Company in the current and prior periods
including the comparative period reconciliation for goodwill.
- Certain disclosures required by IFRS13 Fair Value Measurement.
- Certain disclosures required by IFRS7 Financial Instruments.
Going concern
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for 12 months from the date of signing
these accounts. Thus they continue to adopt a going concern basis in preparing the financial statements. In adopting a going concern basis for preparing the
financial statements, the Directors have considered the business activities, the principal risks and uncertainties, the financial position of the Group, its cash flows,
liquidity position and borrowing facilities, as well as the Groups objectives, policies and processes for managing capital.
At the year end the Group was able to meet its day-to-day working capital requirements and funding of new site purchases through its bank loan facility (including
new bank borrowing arrangements available post year end), existing cash deposits and ongoing trading activities. Letters of support have been given to the Group's
subsidiaries that financial obligations will be met and it will not seek repayment of any amounts currently made available.
The loan facility is subject to three covenants: the ratio of adjusted EBITDAR to net finance charges, adjusted EBITDA (the Group's non-GAAP measure below) to net
debt and minimum net tangible asset requirements. The Group's forecasts and projections show that the Group is able to operate within the level of its current
facility for at least 12 months from the approval date of the financial statements, including meeting requirements for planned refurbishments and openings and
compliance with the bank facility covenants. The Group therefore continues to adopt a going concern basis for the presentation of 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.
Adjusted profit 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.
26
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Basis of consolidation
Where the Group has power, either directly or indirectly so as to have the ability to affect the amount of the investor returns and has exposure or rights to variable
returns from its involvement with the investee, it is classified as a subsidiary. The balance sheet at 3 January 2019 incorporates the results of all subsidiaries of the
Group for all years and periods, as set out in the basis of preparation.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.
Merger reserve
On 29 October 2013 the Company became the new holding company for the Group. This was put into effect through a share-for-share exchange of 1 Ordinary share
of 10 pence in Everyman Media Group PLC for 1 Ordinary share of 10 pence in Everyman Media Holdings Limited (previously, Everyman Media Group Limited), the
previous holding company for the Group. The value of 1 share in the Company was equivalent to the value of 1 share in Everyman Media Holdings Limited.
The accounting treatment for group reorganisations is presented under the scope of IFRS3. The introduction of the new holding company was accounted for as a
capital reorganisation using the principles of reverse acquisition accounting under IFRS3. Therefore, the consolidated financial statements are presented as if
Everyman Media Group PLC has always been the holding company for the Group. The Company was incorporated on 10 September 2013.
The use of merger accounting principles has resulted in a balance in Group capital and reserves which has been classified as a merger reserve and included in the
Group’s shareholders’ funds.
The Company recognised the value of its investment in Everyman Media Holdings Limited at fair value based on the initial share placing price on admission to AIM.
As permitted by s612 of the Companies Act 2006, the amount attributable to share premium was transferred to the merger reserve. The investment in the Company
is recorded at fair value.
Revenue recognition
Revenue for the Group is measured at the fair value of the consideration received or receivable. The Group recognises revenue for services provided when the
amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.
The Group’s revenues from film and entertainment activities are recognised on completion of the showing of the relevant film. The Group’s revenues for food and
beverages are recognised at the point of sale as this is the time the performance obligations have been met. The Group’s other revenues, which include
commissions, are recognised when all performance obligations have been satisfied.
All advanced booking fees, gift cards and similar income which are received in advance of the related performance are classified as deferred revenue and shown as
a liability until completion of the performance.
All contractual-based revenue from memberships is initially classified as deferred revenue. Revenue from memberships that provide a certain number of tickets per
year is recognised over the year as utilised. Revenue from memberships that provide unlimited access is recognised equally over the year.
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for
impairment. Goodwill represents the excess of the costs of a business combination over the total acquisition date fair values of the identifiable assets, liabilities
and contingent liabilities acquired. Goodwill is capitalised as an intangible asset. Costs incurred in a business combination are expensed as incurred with the
exception that for business combinations completed prior to 1 January 2010, cost comprised the fair value of assets given, liabilities assumed and equity
instruments issued, plus any direct costs of acquisition.
The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value-in-use and its fair value less costs to sell. In assessing value-in-use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the CGU). The goodwill
acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs. Subject to an operating segment ceiling test, for the purposes of
goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at
which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to
benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the
profit and loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to
reduce the carrying amounts of the other assets in the unit/group of units on a pro-rata basis.
Business combinations
Acquisitions that are deemed to be the transfer of a 'business' per IFRS3 requirements, are valued at fair value through the use of an external valuation specialist.
As such, any identifiable tangible and intangible assets and liabilities are valued prior to acquisition and any excess consideration is treated as goodwill and
reviewed for impairment annually.
27
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Intangible assets
Interests in property-based leases acquired in a business combination are recognised at fair value at the acquisition date. Amortisation is calculated on a straight-
line basis to allocate the cost of property-based leases across the term of the relevant leasehold interest.
Amortisation on software in development does not commence until it is complete and available for use.
Software assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Amortisation is provided on all software assets so
as to write off their carrying value over the expected useful economic lives. The estimated useful lives are as follows:
Leasehold interest
Software assets
- straight line on cost over the remaining life of the lease
- 3 to 5 years
Property, plant and equipment
Items of property, plant and equipment are recognised at cost less accumulated depreciation and accumulated impairment losses. As well as the purchase price,
cost includes directly attributable costs.
Depreciation on assets under construction does not commence until they are complete and available for use. These assets represent fit-outs. Depreciation is
provided on all other leasehold improvements and all other items of property, plant and equipment so as to write off their carrying value over the expected useful
economic lives. The estimated useful lives are as follows:
Freehold properties
Leasehold improvements
Plant and machinery
Fixtures and fittings
- 50 years
- straight line on cost over the remaining life of the lease
- 5 years
- 8 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Land is not depreciated.
Impairment (excluding inventories)
A financial asset not carried at fair value through the profit and loss is assessed at each reporting date to determine whether there is objective evidence that it is
impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss event
had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of
the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the
unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the
profit and loss.
Inventories
Inventories are valued at the lower of cost and net realisable value. The cost incurred in bringing each product to its present location and condition is accounted for
as follows:
Food and beverages
Projection stock
- purchase cost on a first-in, first-out basis
- purchase cost on a first-in, first-out basis
Net realisable value is the estimated selling price in the ordinary course of business.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably
measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Market rent provisions are determined by discounting the
expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Financial instruments (from 29 December 2017)
Recognition and initial measurement
Trade receivables are initially recognised when originated. All other financial assets and liabilities are initially recognised when the Group becomes party to the
contractual provisions of the instrument.
Financial assets (unless a trade receivable without a significant financing component) or financial liabilities are initially measured at fair value plus, for items not at
fair value through the profit and loss, transaction costs that are directly attributable to their acquisition or issue. Trade receivables without a significant financing
component are initially measured at the transaction price.
28
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Financial instruments (from 29 December 2017) (continued)
Classification and subsequent measurement
Financial assets classification
On initial recognition, financial assets are classified as measured at either amortised cost, fair value through other comprehensive income for debt investments or
equity investments, or fair value through profit and loss. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its
business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the
change in the business model.
Financial assets are measured at amortised cost if they meet both of the following conditions:
- They are held within a business model whose objective is to hold assets to collect contractual cash flows
- The contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt investments are measured at fair value through other comprehensive income if they meet both of the following conditions:
- They are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
- The contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair
value in other comprehensive income. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortised cost or fair value through other comprehensive income, as described above, are measured at fair value
through profit and loss. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate financial assets that otherwise meet
the requirements to be measured at amortised cost or at fair value through other comprehensive income as fair value through profit and loss if doing so eliminates
or significantly reduces an accounting mismatch that would otherwise arise.
Investments in subsidiaries are carried at cost less impairment.
Cash and cash equivalents classification
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash
management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.
Financial assets subsequent measurement, gains and losses
Financial assets classified at fair value through profit and loss, other than derivatives designated as hedging instruments, are subsequently measured at fair value.
Net gains and losses, including any interest or dividend income, are recognised in the profit and loss.
Financial assets classified at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by
impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in the profit and loss. Any gain or loss on derecognition is
recognised in the profit and loss.
Debt investments classified at fair value through other comprehensive income are subsequently measured at fair value. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognised in the profit and loss. Other net gains and losses are recognised in
other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to the profit and loss.
Equity investments classified at fair value through other comprehensive income are subsequently measured at fair value. Dividends are recognised as income in the
profit and loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other
comprehensive income and are never reclassified to the profit and loss.
Financial liabilities and equity
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following conditions:
- They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another
party under conditions that are potentially unfavourable to the Group
- Where the instruments may be settled in the Group’s own equity instruments, they are either a non-derivative that include no obligation to deliver a variable
number of the Group’s own equity instruments or they are a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of
the Group’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to
those shares.
Financial liabilities are classified as measured at amortised cost or fair value through profit and loss. Financial liabilities are classified as fair value through profit
and loss if they are classified as held for trading, they are a derivative or they are designated as such on initial recognition. Financial liabilities classified at fair
value through profit and loss are measured at fair value and net gains and losses, including any interest expense, are recognised in the profit and loss. Other
financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are
recognised in the profit and loss. Any gain or loss on derecognition is also recognised in the profit and loss.
29
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Financial instruments (from 29 December 2017) (continued)
Impairment
The Group recognises loss allowances for expected credit losses on financial assets measured at amortised cost, debt investments measured at fair value through
other comprehensive income and contract assets (as defined in IFRS15).
The Group measures loss allowances at an amount equal to lifetime expected credit losses, except for other debt securities and bank balances for which credit risk
(i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition which are measured as 12
month expected credit losses.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime expected credit losses.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the
Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on the Group’s historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 60 days past due. The Group considers a financial asset to
be in default when the financial asset is more than 120 days past due.
Lifetime expected credit losses are those that result from all possible default events over the expected life of a financial instrument.
12 month expected credit losses are the portion that result from default events that are possible within the 12 months after the reporting date (or a shorter period if
the expected life of the instrument is less than 12 months). The maximum period considered when estimating expected credit losses is the maximum contractual
period over which the Group is exposed to credit risk.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference
between the cash flows due to the entity in accordance with the contract and the cash flows that the company expects to receive). Expected credit losses are
discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities classified at fair value through other
comprehensive income are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Written-off financial assets
The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no realistic prospect of recovery.
Financial instruments (prior to 29 December 2017)
Trade and other receivables
These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise through rental deposits
and the provision of services to customers (e.g. trade receivables) but also incorporate other types of contractual monetary assets. They are initially recognised at
fair value plus transactions costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective
interest rate method, less provision for any impairment.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or
significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest
method.
Financial liabilities
Non-derivative financial liabilities are recognised initially at fair value less attributable transaction costs and subsequently measured at amortised cost using the
effective interest method.
Derivative financial instruments
The Group’s interest-rate swap was classified as a financial liability at fair value through the profit and loss account. Derivative financial instruments within the
scope of IAS39 are classified as financial assets or liabilities at fair-value through the profit and loss. Changes to fair value are made through the profit and loss. All
derivative financial instruments are recognised initially at fair value. The subsequent measurement of derivative financial instruments is also at fair value. Financial
assets at fair value through the profit and loss are carried in the balance sheet at fair value with net changes in fair value recognised in finance costs in the profit
and loss.
30
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Financial instruments (prior to 29 December 2017) (continued)
Fair value hierarchy
All financial instruments measured at fair value must be classified into one of the levels below:
- Level 1: Quoted prices, in active markets.
- Level 2: Level 1 quoted prices are not allowable but fair value is based on observable market data.
- Level 3: Inputs that are not based on observable market data.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group’s Ordinary
shares are classified as equity instruments.
Leased assets
Where substantially all of the risks and rewards incidental to ownership are not transferred to the Group (an operating lease), the total rentals payable under the
lease are charged to the consolidated profit and loss on a straight line basis over the lease term. The aggregate benefit of lease incentives is recognised as a
reduction of the rental expense over the lease term.
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the
lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
reflected in the profit and loss.
Taxation
Tax on the profit and loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the
year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated balance sheet differs from its tax base,
except for differences arising on:
- The initial recognition of goodwill.
- The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or
taxable profit.
- Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the
difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be
utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply
when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets
and liabilities relate to taxes levied by the same tax authority on either:
- The same taxable group company; or
- Different company entities which intend either to settle current tax assets and liabilities on a net basis or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered.
Operating segments
The Board, the chief operating decision maker, considers that the Group’s primary activity constitutes one reporting segment, as defined under IFRS8.
The total profit measures are operating profit and profit for the year, both disclosed on the face of the consolidated profit and loss. No differences exist between the
basis of preparation of the performance measures used by management and the figures used in the Group financial information.
All of the revenues generated relate to cinema tickets, sale of food and beverages and ancillary income, an analysis of which appears in the notes below. All
revenues are wholly generated within the UK. Accordingly there are no additional disclosures provided to the financial information.
Pre-opening expenses
Property rentals and other related overhead expenses incurred prior to a new site opening are expensed to the profit and loss in the year that they are incurred.
Similarly, the costs of training new staff during the pre-opening phase are expensed as incurred. These expenses are included within administrative expenses.
31
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
2
Basis of preparation and accounting policies (continued)
Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and
loss in the periods during which services are rendered by employees.
Share-based payments
Certain employees (including Directors and senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby
employees render services as consideration for equity instruments (equity-settled transactions). The cost of share-based payments is recharged by the Company to
subsidiary undertakings in proportion to the services recognised.
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is
determined by using an appropriate pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service
conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s
best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative
expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as
vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The dilutive
effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.
3
Adoption of new and revised Standards
Amendments to IFRS that are mandatorily effective for the current year
The following new standards and interpretations to existing standards have been published and are mandatory for the Group’s future accounting. The application of
the amendments has had no material impact on the disclosures or the amounts recognised in the Group’s consolidated financial statements.
- IAS16 and IAS38 (amendments): clarification of acceptable methods of depreciation and amortisation
- IAS1 (disclosure initiative): the amendments are on presentation of the financial statements and should not require any significant change to current practice but
should facilitate improved reporting.
- IFRS9: Financial Instruments
- IFRS15: Revenue from contracts with customers.
New and revised IFRS in issue but not yet effective
The following adopted IFRS have been issued but have not yet been applied (by the Group) in these financial statements:
- IFRS16: Leases (effective date 1 January 2019)
- IFRS2 (amendments): Share-based Payments classification and measurement (effective date to be confirmed)
- IAS12 (amendments): Income Taxes recognition of deferred tax assets for unrealised losses (effective date to be confirmed).
IFRS16: Leases (effective January 2019)
The Group is required to adopt IFRS16 for accounting periods beginning on or after 1 January 2019. The Group has assessed the estimated impact that initial
application will have on its financial statements as described below. The actual impacts of adopting the standard may change due to new accounting policies
which are subject to change until the Group presents its first financial statements including the date of initial application.
The standard introduces a single, on balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset and a lease liability representing
its obligation to make lease payments. There are recognition exemptions for short-term and low-value leases. Lessor accounting remains similar to the current
standard such that they continue to classify leases as either finance or operating leases.
IFRS16 replaces existing lease guidance, including IAS17 Leases, IFRIC4 Determining whether an arrangement contains a lease, SIC15 Operating leases - incentives
and SIC27 Evaluating the substance of transactions involving the legal form of a lease.
Leases in which the Group is a lessee
The Group will recognise new assets and liabilities for its operating leases of premises. The nature of expenses relating to those leases will now change such that
the Group will recognise a depreciation charge for right-of-use assets and a finance expense on outstanding lease liabilities.
Previously, the Group recognised operating leases on a straight-line basis over the term of the lease and recognised assets and liabilities only to the extent that
there was a timing difference between actual lease payments and the expense recognised.
In addition, the Group will no longer recognise provisions for operating leases that it assesses to be onerous. Instead, the Group will include the payments due
under the lease in its lease liability.
Based on the information currently available, the Group expects to add £44.9m right-of-use assets and £48.1m finance lease liabilities to its balance sheet in the
next financial year.
32
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
3
Adoption of new and revised Standards (continued)
IFRS16: Leases (effective January 2019) (continued)
Leases in which the Company is a lessor
The Group will reassess the classification of sub-leases in which the Company is a lessor. Based on the information currently available, the Group expects that it
will not reclassify any sub-leases as finance leases given the lack of legal obligation and that its subsidiary undertakings have not taken on the full remainder of
any lease terms.
Transition
The Group plans to apply IFRS16 using the modified retrospective approach on a lease-by-lease basis. Therefore, the cumulative effect of adopting the standard will
be recognised as an adjustment to the opening balance of retained earnings with no restated comparative information.
4
Critical accounting estimates
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other facts
that are considered to be relevant. Actual results may differ from these estimates.
These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
In the current year, there are no estimates or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities.
5
Revenue
Film and entertainment
Food and beverages
Other income
All trade takes place in the United Kingdom.
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
31,465
17,622
2,793
51,880
25,124
13,306
2,190
40,620
The following provides information about opening and closing receivables, contract assets and liabilities from contracts with customers. There was no impact on
the opening balance sheet when the Company first applied IFRS15 on 29 December 2017.
Contract balances
Trade and other receivables
Deferred income
3 January
2019
£000
28 December
2017
£000
963
2,935
230
1,879
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 (£1,879,000) were recognised in the profit and loss during the year. All deferred income at the end of the year (£2,935,000) is due to be
recognised within 12 months.
6
Profit before taxation
Profit before taxation is stated after charging:
Depreciation of tangible assets
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Operating lease rentals
Share-based payments
Acquisition expenses
7
Staff numbers
The average number of employees (including Directors) during the year, analysed by category, was as follows:
Management
Operations
Management staff represent all full-time employees in the Group.
33
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
4,236
327
17
3,301
500
9
3,575
113
13
2,762
301
86
3 January
2019
Number
28 December
2017
Number
136
641
777
105
572
677
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
Employee costs including Directors
8
Wages and salaries
Social security costs
Pension costs
Share-based payments
Other staff benefits
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
11,414
870
126
500
6
12,916
9,138
668
71
301
4
10,182
There were pension liabilities as at 3 January 2019 of £30,000 (28 December 2017: £13,000).
9
Directors' remuneration
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS24
Related Party Disclosures:
Salaries/fees
Bonuses
Other benefits
Pension contributions
Share-based payments
Information regarding the highest paid Director is as follows:
Salaries/fees
Bonuses
Other benefits
Pension contributions
Share-based payments
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
480
70
6
29
585
193
778
172
55
2
17
246
97
343
440
98
4
25
567
180
747
168
59
-
17
244
77
321
Directors remuneration for each Director is disclosed in the Directors' report. The costs relating to the Directors remuneration are wholly incurred by Everyman
Media Limited for the wider Group. The amount attributable to services provided to the Company was £178,000 (2017: £179,000). 2 Directors exercised options over
shares in the Company during the year (2017: 1)
10 Auditor's remuneration
Fees payable to the Company's auditor for:
Audit of the Company’s financial statements
Audit of the subsidiary undertakings of the Company
Taxation and compliance services to the Group
Other services
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
12
73
58
-
143
12
55
12
27
106
The Group's policy on the use of the external auditor for non-audit services is to ensure that any work undertaken does not impair the auditor's independence. We
have considered the auditor's independence and we continue to believe that KPMG LLP is independent within the meaning of all UK regulatory and professional
requirements and the objectivity of the audit engagement partner and audit staff are not impaired.
11
Financial expenses
(Group)
Total interest expense
Less: Interest capitalised within assets under construction
Interest expense recognised in the profit and loss
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
185
(25)
160
336
(336)
-
34
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
12
Taxation
Tax expense
Current tax
Deferred tax expense
Origination and reversal of temporary differences
Deferred tax not previously recognised
Total tax charge
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
-
296
383
679
-
259
101
360
The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to the profit for
the year are as follows:
Reconciliation of effective tax rate
Profit before tax
Tax at the UK corporation tax rate of 19.00%/19.25%
Permanent differences (expenses not deductible for tax purposes)
Deferred tax not previously recognised
Other short term timing differences (potentially exercisable share options)
Effect of change in expected future statutory rates on deferred tax
Total tax expense
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
2,716
1,628
516
19
383
(239)
-
679
313
13
101
(40)
(27)
360
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015 and an additional reduction to 17% (effective 1
April 2020) was substantively enacted on 6 September 2016. This will reduce the Group's future current tax charge accordingly. The deferred tax at 3 January 2019
has been calculated based in these rates.
13
Earnings per share
Profit used in calculating basic and diluted earnings per share
Number of shares (000's)
Weighted average number of shares for the purpose of basic earnings per share
Number of shares (000's)
Weighted average number of shares for the purpose of diluted earnings per share
Basic earnings per share (pence)
Diluted earnings per share (pence)
Weighted average number of shares for the purpose of basic earnings per share
Issued at beginning of the year
Share options exercised
Shares issued in equity raise
Weighted average number of shares at end of the year
Weighted average number of shares for the purpose of diluted earnings per share
Basic weighted average number of shares
Effect of share options in issue
Weighted average number of shares at end of the year
35
Year ended
3 January
2019
£000
Year ended
28 December
2017
£000
2,037
1,268
70,391
62,099
73,366
64,528
2.89
2.78
2.04
1.97
3 January
2019
28 December
2017
Weighted average Weighted average
no. 000's
no. 000's
70,027
364
-
70,391
70,391
2,975
73,366
59,820
81
2,198
62,099
62,099
2,429
64,528
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
13
Earnings per share (continued)
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 Company has 5,575,000 potentially issuable Ordinary shares (2017: 5,818,000) all of which relate to the potential dilution from both the Group’s A Ordinary
shares and share options issued to the Directors and certain employees and contractors, under the Group’s incentive arrangements.
The Company made a post-tax loss for the year of £109,000 (2017: £58,000).
14
Property, plant and equipment
(Group)
Cost
At 30 December 2016
Acquired in the year
Acquired in business combination
Disposals
Transfer on completion
At 28 December 2017
Acquired in the year
Disposals
Transfer to profit and loss
Transfer to intangibles
Transfer on completion
At 3 January 2019
Depreciation
At 30 December 2016
Charge for the year
On disposals
At 28 December 2017
Transfer to intangibles
Charge for the year
On disposals
At 3 January 2019
Net book value
At 3 January 2019
At 28 December 2017
At 29 December 2016
Land &
Buildings
£000
Leasehold
improvements
£000
Plant &
machinery
£000
Fixtures &
fittings
£000
Assets under
construction
£000
-
-
-
-
-
-
6,339
-
-
-
-
6,339
-
-
-
-
-
-
-
-
6,339
-
-
30,402
12,259
-
-
301
42,962
9,101
(120)
-
-
265
52,208
2,919
1,847
-
4,766
-
2,112
(118)
6,760
45,448
38,196
27,483
6,038
1,895
250
-
-
8,183
2,705
(167)
-
(118)
-
10,603
1,930
1,205
-
3,135
(95)
1,506
(163)
4,383
6,220
5,048
4,109
6,313
1,101
50
(13)
-
7,451
1,178
(826)
-
-
-
7,803
2,730
523
-
3,253
(2)
618
(806)
3,063
4,740
4,198
3,582
429
669
-
-
(301)
797
2,912
-
(41)
-
(265)
3,403
-
-
-
-
-
-
-
-
3,403
797
429
Total
£000
43,182
15,924
300
(13)
-
59,393
22,235
(1,113)
(41)
(118)
-
80,356
7,579
3,575
-
11,154
(97)
4,236
(1,087)
14,206
66,150
48,239
35,603
The Group held no assets under finance leases as at 3 January 2019 (2017: £nil).
36
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
14
Property, plant and equipment (continued)
(Company only)
Cost
At 30 December 2016
Acquired in the year
At 28 December 2017
Acquired in the year
At 3 January 2019
Depreciation
At 30 December 2016
Charge for the year
At 28 December 2017
Charge for the year
At 3 January 2019
Net book value
At 3 January 2019
At 28 December 2017
At 29 December 2016
15
Intangible assets
(Group)
Cost
At 30 December 2016
Acquired in the year
Acquired in business combination
At 28 December 2017
Acquired in the year
Transfer from tangibles
At 3 January 2019
Amortisation and impairment
At 30 December 2016
Charge for the year
At 28 December 2017
Transfer from tangibles
Charge for the year
At 3 January 2019
Net book value
At 3 January 2019
At 28 December 2017
At 29 December 2016
Total
£000
740
-
740
-
740
134
129
263
129
392
348
477
606
Total
£000
8,321
391
1,532
10,244
895
118
11,257
65
113
178
97
327
602
10,655
10,066
8,255
Plant &
machinery
£000
Fixtures &
fittings
£000
485
-
485
-
485
100
98
198
97
295
190
287
385
255
-
255
-
255
34
31
65
32
97
158
190
221
Goodwill
£000
Leasehold
Interests
£000
Software
Assets
£000
Software in
Development
£000
674
-
-
674
-
-
674
55
35
90
-
36
126
548
584
619
228
391
-
619
632
118
1,369
10
78
88
97
291
476
893
531
218
-
-
-
-
263
-
263
-
-
-
-
-
-
263
-
-
7,419
-
1,532
8,951
-
-
8,951
-
-
-
-
-
-
8,951
8,951
7,418
37
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
15
Intangible assets (continued)
(Company only)
Cost
At 30 December 2016
Acquired in the year
At 28 December 2017
Acquired in the year
At 3 January 2019
Amortisation and impairment
At 30 December 2016
Charge for the year
At 28 December 2017
Charge for the year
At 3 January 2019
Net book value
At 3 January 2019
At 28 December 2017
At 29 December 2016
Leasehold
Interests
£000
674
-
674
-
674
55
35
90
36
126
547
584
619
Total
£000
674
-
674
-
674
55
35
90
36
126
547
584
619
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. A single rate
has been used for all sites as management believe the risks to be the same for all sites. 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:
Baker Street
Barnet
Belsize Park
Esher
Gerrards Cross
Islington
Muswell Hill
Oxted
Reigate
Walton-On-Thames
Winchester
York
3 January
2019
£000
28 December
2017
£000
103
1,309
67
2,804
1,309
86
1,215
102
113
94
217
1,532
8,951
103
1,309
67
2,804
1,309
86
1,215
102
113
94
217
1,532
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:
Sales and cost growth (over a 5 year period)
Discount rate
Terminal value
Number of years projected
3 January
2019
28 December
2017
0%
9.48%
8 x EBITDA
5 years
0%
9.51%
8 x EBITDA
5 years
There have been no impairments indicated in the year to 3 January 2019 (2017: £nil). The projected sales growth was based on the Group’s latest forecasts at the
time of review and is in line with the average growth rate for the industry within the UK. The key assumptions in the cash flow pertain to revenue growth.
Management have determined that growth based on industry average growth rates and actuals achieved historically are the best indication of growth going
forward. The Group has adjusted its discount rate to 9.48%. The Directors are confident that the Group is largely immune from the effects of Brexit and the impact
on the wider economic environment. Additionally, the Group believes that there has been no significant impact on the structure of the Group that should result in a
changed discount rate. Management has performed sensitivity testing on all inputs to the model and noted no highly sensitive variables.
38
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
16
Investments
(Company only)
At 28 December 2017 and 3 January 2019
The subsidiaries of the Company are as follows (all of which are included on consolidation):
Name
Everyman Media Holdings Limited
Everyman Media Limited*
CISAC Limted*
ECPee Limited**
Bloom Martin Limited**
Bloom Theatres Limited***
Mainline Pictures Limited***
* Shareholding is held by Everyman Media Holdings Ltd
** Shareholding is held by Everyman Media Ltd
*** Shareholding is held by Bloom Martin Ltd
Principal
activity
Cinema management and ownership
Country of
incorporation
UK
Cinema management and ownership
Dormant
Property management
Dormant
Dormant
Dormant
UK
UK
UK
UK
UK
UK
Class of
share held
Ordinary
A Ordinary, Series
1, 2 and 3
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Total
£000
30,337
Proportion of
shares held
100%
28%
100%
100%
100%
100%
100%
100%
The A Ordinary shares have no rights to a dividend. Everyman Media Group PLC directly holds all the Ordinary shares (£27,015) and 535,718 A Ordinary shares
(£1,819) of Everyman Media Holdings Limited. The remainder of the A Ordinary shares (£4,736) are held by Directors Paul Wise and Adam Kaye. The A Ordinary
shares are convertible into Ordinary shares of Everyman Media Group PLC if the share price of Everyman Media Group PLC has remained at or above the
performance criteria set out in note 28. The conversion rights were accounted for as a share-based payment.
Everyman Media Limited has 285,000 Ordinary shares of £1.00 each in issue, all of which are held by Everyman Media Holdings Limited and therefore indirectly
held by Everyman Media Group PLC. All other subsidiaries are also indirectly-held investments. Everyman Media Limited acquired 100 Ordinary shares of 1p each in
ECPee Limited, a property management company, on 18 January 2018 representing 100% of the issued share capital of the company to become a wholly owned
subsidiary. With respect to the class and proportion of shares held in existing subsidiaries, the amounts remain the same for the year ended 3 January 2019 and the
year ended 28 December 2017. Bloom Martin Limited, Bloom Theatres Limited and Mainline Pictures Limited are all dormant companies and exempt from the
requirement for an audit for the year.
The class and proportion of shares held in all other subsidiaries remain the same for the year ended 3 January 2019 and the year ended 28 December 2017.
The registered office address of all investments is Studio 4, 2 Downshire Hill, London NW3 1NR. All companies listed above are included in the consolidated
financial statements. All consolidated companies have the same financial year and apply the same accounting policies.
17
Inventories
Food and beverages
Projection
3 January
2019
£000
28 December
2017
£000
338
68
406
263
45
308
Included within inventories is £nil (2017: £nil) expected to be recovered in more than 12 months. Finished goods recognised as cost of sales in the year amounted to
£4,297,000 (2017: £3,337,000). The write-down of inventories to net realisable value amounted to £nil (2017: £nil).
18
Cash and cash equivalents
Per balance sheet
Per cash flow statement
3 January
2019
£000
28 December
2017
£000
3,517
3,517
18,366
18,366
39
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
19
Trade and other receivables
(Group)
Included in current assets
Included in non-current assets
Trade and other receivables
Other debtors
Prepayments and accrued income
3 January
2019
£000
28 December
2017
£000
3,790
173
3,963
963
1,363
1,637
3,963
1,044
173
1,217
230
211
776
1,217
There were no receivables that were considered to be impaired other than existing provisions. There is no significant difference between the fair value of the other
receivables and the values stated above. Other debtors include deposits paid in respect of a long-term leases.
Trade and other receivables
(Company only)
Included in current assets
Included in non-current assets
Amounts due from company undertakings
3 January
2019
£000
28 December
2017
£000
-
44,536
44,536
44,536
43,231
-
43,231
43,231
All amounts other than those from Company undertakings are due for payment within one year. Interest is charged on inter-company loans at the same rate as that
charged to the Group by its lenders, currently 3.3%. The loans are repayable on 15 January 2021.
20
Trade and other payables
(Group)
Included in current liabilities
Included in non-current liabilities
Trade creditors
Social security and other taxation
Other creditors
Accrued expenses
Lease incentives
Deferred income
Included within lease incentives is £7,795,000 (2017: £5,168,000) expected to be settled in more than 12 months.
21 Other interest-bearing loans and borrowings
Bank borrowings
Current
Non-current
3 January
2019
£000
28 December
2017
£000
12,398
7,796
20,194
2,660
733
2
5,739
8,125
2,935
20,194
12,479
5,168
17,647
1,427
1,115
27
7,808
5,391
1,879
17,647
3 January
2019
£000
28 December
2017
£000
56
7,000
7,056
43
7,000
7,043
The Company agreed a loan facility with Barclays Bank PLC for the sum of £20m on 10 March 2017. The Company replaced the loan facility with a £30m sum
provided by Barclays Bank PLC and Santander UK PLC on 16 January 2019. Interest is charged at LIBOR on the drawn-down balance on a 365/ACT D-basis (the
nominal interest rate ranging between 1.65% and 2.65% in 2019). The capital sum is repayable in full on or before 15 January 2024. Commitment fees are charged
quarterly on any balances not drawn at 35% of the applicable rate of drawn funds. The face value is deemed to be the carrying value. The Group had drawn down
£7m of the £20m debt facility as at 3 January 2019 (2017: £7m).
40
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
Financial assets and financial liabilities
22
Changes in liabilities from financing activities
Opening balance
Changes from financing cash flows:
Proceeds from borrowings
Repayment of borrowings
Interest on borrowings
3 January
2019
£000
28 December
2017
£000
7,043
3,024
6,000
(6,043)
56
7,056
4,000
(24)
43
7,043
In respect of interest-earning financial assets and interest-bearing financial liabilities, the following indicates their effective interest rates at the end of the year
and the periods in which they mature:
At 28 December 2017
Bank borrowings
Bank current and deposit balances
At 3 January 2019
Bank borrowings
Bank current and deposit balances
Effective
interest
rate
%
3.3%
1.0%
3.3%
1.0%
Maturing
within
1 year
£000
(43)
18,366
(56)
3,517
Maturing
between 1 to
2 years
£000
Maturing
between 2 to
5 years
£000
-
-
-
-
(7,000)
-
(7,000)
-
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group's profit and
loss before tax through the impact on floating rate borrowings and bank deposits and cash flows:
Bank borrowings
Bank current and deposit balances
Change in
rate
%
3 January
2019
£000
28 December
2017
£000
(7,056)
(7,043)
71
35
(35)
(71)
(106)
70
35
(35)
(70)
(106)
3,517
18,366
(18)
(35)
18
35
53
(184)
(92)
92
184
275
-1.0%
-0.5%
0.5%
1.0%
1.5%
-1.0%
-0.5%
0.5%
1.0%
1.5%
23
Financial instruments
Investments, financial assets and financial liabilities, cash and cash equivalents and other interest-bearing loans and borrowings are measured at amortised cost
and the Directors believe their present value is a reasonable approximation to their fair value.
Financial liabilities measured at amortised cost
Bank borrowings
3 January
2019
£000
28 December
2017
£000
7,056
7,043
Financial instruments not measured at fair value
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.
41
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
Financial instruments (continued)
23
Non-derivative financial liabilities
Unsecured bank facility
Carrying amount
Contractual cash flows:
Less than one year
Between one and two years
Between three and five years
Over five years
3 January
2019
£000
28 December
2017
£000
7,056
7,043
275
284
852
7,284
8,696
245
267
802
7,267
8,582
Charges have been put in place over the net assets of the Group as collateral against the loan balance.
Risk management
(Group)
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the Board is to set
policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. The Group has not issued or used any
financial instruments of a speculative nature and the Group does not contract derivative financial instruments such as forward currency contracts, interest rate
swaps or similar instruments.
The Group is exposed to the following financial risks:
- Credit risk
- Liquidity risk
- Interest rate risk
To the extent financial instruments are not carried at fair value in the consolidated Balance Sheet, net book value approximates to fair value at 3 January 2019 and
28 December 2017.
Trade and other receivables are measured at amortised cost. Book values and expected cash flows are reviewed by the Board and any impairment charged to the
consolidated statement of profit and loss and other comprehensive income in the relevant period. Cash and cash equivalents are held in sterling and placed on
deposit in UK banks. Trade and other payables are measured at book value and held at amortised cost.
Accounting classification
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include the fair value information for financial
assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Carrying amount
Financial assets not measured at fair value
Trade and other receivables
Cash and cash equivalents
Financial liabilities not measured at fair value
Unsecured bank loans
Trade and other payables
3 January
2019
£000
28 December
2017
£000
3,963
3,517
7,480
7,056
20,194
27,250
1,217
18,366
19,583
7,043
17,647
24,690
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises
principally from the Group’s receivables from customers and investment securities.
At 3 January 2019 the Group has trade receivables of £963,000 (2017: £230,000). The Group is exposed to credit risk in respect of these balances such that, if one or
more of the customers encounters financial difficulties, this could materially and adversely affect the Group’s financial results. The Group attempts to mitigate
credit risk by assessing the credit rating of new customers prior to entering into contracts and by entering into contracts with customers with agreed credit terms.
At 3 January 2019 the Directors have provided for £122,230 against doubtful debts (2017: £10,000).
42
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
Financial instruments (continued)
23
The Company is exposed to credit risk in respect of its receivables from its subsidiary companies. The recoverability of these balances is dependent upon the
performance of these subsidiaries in future periods. The performance of the Company’s subsidiaries is closely monitored by the Company’s Board of Directors. The
maximum exposure to credit risk at the balance sheet date by class of financial instrument was:
Ageing of receivables
<30 days
31-60 days
61-120 days
>120 days
3 January
2019
£000
28 December
2017
£000
370
140
128
325
963
(8)
25
9
204
230
Only receivables aged more than 30 days were outstanding as at 3 January 2019.
In determining the recoverability of trade receivables the Group considers any change in the credit quality of the trade receivable from the date credit was initially
granted up to the reporting date. Credit risk is limited due to the customer base being diverse and unrelated. There has not been any impairment other than existing
provisions in respect of trade receivables during the year (2017: £nil).
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as
they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it
seeks to maintain cash balances to meet its expected cash requirements as determined by regular cash flow forecasts prepared by management.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts shown are gross, not discounted and include
contractual interest payments and exclude the impact of netting agreements.
3 January 2019
Non-derivative financial liabilities
Unsecured bank facility
Trade creditors
Social security and other taxation
Other creditors
Accrued expenses
28 December 2017
Non-derivative financial liabilities
Unsecured bank facility
Trade creditors
Social security and other taxation
Other creditors
Accrued expenses
Carrying
amount
£000
7,056
2,660
733
2
5,737
16,188
Carrying
amount
£000
7,043
1,427
1,115
27
7,807
17,419
Contractual cash flows
Less than
one year
£000
Between one
and two years
£000
Between three
and five years
£000
Over five
years
£000
275
2,660
733
2
5,737
9,407
284
-
-
-
-
284
852
-
-
-
-
852
7,284
-
-
-
-
7,284
Contractual cash flows
Less than
one year
£000
Between one
and two years
£000
Between three
and five years
£000
Over five
years
£000
245
1,427
1,115
27
7,807
10,621
267
-
-
-
-
267
802
-
-
-
-
802
7,267
-
-
-
-
7,267
Total
£000
8,696
2,660
733
2
5,737
17,828
Total
£000
8,582
1,427
1,115
27
7,807
18,958
Interest rate risk
Interest rate risk arose from the Group’s holding of interest-bearing loans linked to LIBOR. The Group is also exposed to interest rate risk in respect of its cash
balances held pending investment in the growth of the Group’s operations. The effect of interest rate changes in the Group’s interest-bearing assets and liabilities
are set out in note 22.
Capital management
The Group’s capital is made up of share capital, share premium, merger reserve and retained earnings totalling £54,437,000 (2017: £51,339,056).
The Group's objectives when maintaining capital are:
- To safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders.
- To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders equity as set out in the consolidated statement of changes in equity. All funding required to set-up new
cinema sites and for working capital purposes are financed from existing cash resources where possible. Management will also consider future fundraising or bank
finance where appropriate.
43
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
24
Provisions
(Group)
Market rent provisions
Opening balance
Additional provisions arising on acquisition
Utilised against rent during the period
Closing balance
Provisions
(Company only)
Market rent provisions
Opening balance
Utilised against rent during the period
Closing balance
3 January
2019
£000
28 December
2017
£000
1,883
-
(89)
1,794
1,430
529
(76)
1,883
3 January
2019
£000
28 December
2017
£000
1,360
(70)
1,290
1,430
(70)
1,360
Market rent provisions relate to the fair value of liabilities on leases acquired in 2015 and 2017. The market rent provisions are being amortised over the term of the
individual leases.
25 Deferred tax
(Group)
Included in non-current liabilities
Deferred tax gross movements
Opening balance
Recognised in the profit and loss
Arising on loss carried forward
Other provisions released
Net book value in excess of tax written down value
Movement on share option intrinsic value
Charge to profit and loss
Recognised in equity
Movement on share option intrinsic value
Closing balance
The deferred tax liability comprises:
Temporary differences on property, plant and equipment
Temporary differences on leases acquired
Share-option scheme intrinsic value
Available losses
Other temporary and deductible differences
3 January
2019
£000
28 December
2017
£000
1,210
284
(438)
(7)
1,188
(64)
679
247
1,210
2,270
105
(790)
(596)
221
1,210
284
775
603
(12)
(164)
(67)
360
(851)
284
1,083
111
(973)
(158)
221
284
Deferred tax is calculated in full on temporary differences under the liability method using the tax rates that have been substantively enacted for future periods,
being 19%. The deferred tax liability has arisen due to the timing difference on property, plant and equipment, the deferral of capital gains tax arising from the sale
of a property and other temporary and deductible differences. The Group has recognised unutilised tax allowances of £596,000 at expected tax rates in future
periods.
In accordance with IAS12 Income taxes, the expense of £247,000 (2017: credit of £851,000) has been recognised outside of profit and loss to the extent that the
deferred tax asset has arisen on expected allowable deductions for tax purposes at future tax rates in excess of the fair value of the share option charge that will be
recognised in the profit and loss. In this instance, the expected gain on the exercise of share options is anticipated to exceed the full share option charge recognised
in the profit and loss at initial fair value.
44
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
25 Deferred tax (continued)
(Company only)
Included in non-current liabilities
Deferred tax gross movements
Opening balance
Recognised in the profit and loss
Net book value in excess of tax written down value
Movement in loss carried forward
Amortisation of acquisition-related deferred tax
Credit to profit and loss
Closing balance
The deferred tax liability comprises:
Temporary differences on property, plant and equipment
Temporary differences on leases acquired
Available losses
3 January
2019
£000
28 December
2017
£000
41
43
-
5
(7)
(2)
41
43
110
(46)
(21)
-
(67)
43
3 January
2019
£000
28 December
2017
£000
(48)
105
(16)
41
(47)
111
(21)
43
The Company has a deferred tax liability due to the timing difference on property, plant and equipment. The Company has recognised unutilised tax allowances of
£16,000 at expected tax rates in future periods.
26
Share capital and reserves
(Group and Company)
Authorised, issued and fully paid Ordinary shares
At the start of the year
Issued in the year
At the end of the year
Number of shares
Authorised, issued and fully paid Ordinary shares
At the start of the year
Issued in the year
At the end of the year
Nominal
value
£0.10
Nominal
value
£0.10
3 January
2019
£000
28 December
2017
£000
7,003
96
7,099
5,982
1,021
7,003
3 January
2019
Number
28 December
2017
Number
70,027,103
962,200
70,989,303
59,820,436
10,206,667
70,027,103
The holders of Ordinary shares are entitled to one vote per share. During the year the Company issued 962,200 Ordinary shares at prices ranging from 83p to 87p
from the exercise of share options.
Merger reserve
In accordance with s612 of the Companies Act, the premium on Ordinary shares issued in relation to acquisitions is recorded as a merger reserve.
Share premium
Share premium is stated net of share issue costs.
Dividends
No dividends were declared or paid during the period (2017: £nil).
45
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
27 Obligations under operating leases
(Group)
Land and buildings
Less than one year
Between one and two years
Between three and five years
Over five years
3 January
2019
£000
28 December
2017
£000
3,431
3,475
10,369
53,884
71,159
3,051
2,976
8,874
45,445
60,346
The Company has conditionally entered into operating leases at Horsham, Newcastle, Manchester, Cardiff, Clitheroe, Tunbridge Wells, Wokingham, Plymouth,
Lincoln, Edinburgh, Northallerton, Durham, Broadgate London and Borough Market London. The total commitment of these leases is £52,688,000. This is not
included within operating lease obligations since they are still conditional. Rentals will commence after the fit-outs have been completed.
Obligations under operating leases
(Company only)
Land and buildings
Less than one year
Between one and two years
Between three and five years
Over five years
3 January
2019
£000
28 December
2017
£000
684
684
2,052
8,439
11,859
719
719
2,156
9,931
13,525
28
Share-based payment arrangements
(Group and Company)
Everyman Media Group PLC operates three equity-settled share based remuneration schemes for employees. The schemes combine a long term incentive scheme,
an EMI scheme and an unapproved scheme for certain senior management, executive Directors and certain contractors. A subsidiary of the Company has also
issued A Ordinary shares to certain Directors which contain terms equating to a share option over the Company, conditional upon future performance.
The terms and conditions of the grants are as follows:
Persons entitled
Management employees, Directors and
contractors
Directors
Directors
Management employees, Directors and
contractors
Management employees
Management employees
Directors
Management employees
Management employees
Management employees, Directors and
contractors
Management employees, Directors and
contractors
Management employees
Management employees, Directors and
contractors
Management employees, Directors and
contractors
Grant date
Method of
settlement
29.10.2013
Equity-settled
04.11.2013
20.04.2015
Equity-settled
Equity-settled
29.10.2015
Equity-settled
15.12.2016
10.01.2017
13.03.2017
11.10.2017
09.11.2017
23.11.2017
Equity-settled
Equity-settled
Equity-settled
Equity-settled
Equity-settled
Equity-settled
23.04.2018
Equity-settled
02.10.2018
03.10.2018
Equity-settled
Equity-settled
05.11.2018
Equity-settled
Instruments
outstanding
000's
Vesting
conditions
Contractual life
of options
145
170
1,393
80
50
105
233
1,480
250
90
250
445
10
143
152
503
73
3
*1
*2
*4
*3
*2
*7
*8
*9
*10
*10
*10
*10
*10
*11
*12
*10
*13
*13
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
10 years
46
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
28
Share-based payment arrangements (continued)
*1 EMI options. These vest in equal tranches on the first, second and third anniversaries of the date of grant.
*2 Unapproved options. These vest in equal tranches on the first, second and third anniversaries of the date of grant.
*3 EMI options. These vest in equal tranches on the first, second and third anniversaries of the date of grant. Each tranche is exercisable if the Company's share
price exceeds £1.20, £1.40 and £1.70 respectively for 15 consecutive trading days.
*4 Series 1, 2 and 3 A Ordinary shares in Everyman Media Holdings Ltd. Holders of these shares have a right to require Everyman Media Group PLC to purchase the
shares at a price essentially equivalent to the market value of an Everyman Media Group PLC Ordinary share less 83p provided that the share price has been, for 15
consecutive trading days after 8 May 2014, £1.20 or more for Series 1 shares, £1.40 or more for Series 2 shares and £1.70 or more for Series 3 shares. The A
Ordinary shares will convert into essentially worthless deferred shares to the extent that these targets are not met by 7 November 2023. As such, the Directors
consider these shares to be largely equivalent to an EMI option. The rights described above were accounted for as share-based payments.
*5 EMI options. These vest in two tranches: 181,455 on the first anniversary of the date of grant and 105,901 on the second anniversary of the date of grant. The
tranches may be exercised if the Company share price is above £1.20 and £1.40 respectively for 15 consecutive trading days.
*6 Unapproved options. These vest in two tranches: 75,554 on the second anniversary of the date of grant and 181,455 on the third anniversary of the date of grant.
The tranches may be exercised if the Company share price is above £1.40 and £1.70 respectively for 15 consecutive trading days.
*7 EMI options. These vest in two tranches: 169,358 on the first anniversary of the date of grant and 105,367 on the second anniversary of the date of grant. The
tranches may be exercised if the Company share price is above £1.20 and £1.40 respectively for 15 consecutive trading days.
*8 Unapproved options. These vest in two tranches: 63,991 on the second anniversary of the date of grant and 169,358 on the third anniversary of the date of grant.
The tranches may be exercised if the Company share price is above £1.40 and £1.70 respectively for 15 consecutive trading days.
*9 Unapproved options. These vest in equal tranches on the first, second and third anniversaries of the date of grant. Each tranche is exercisable if the Company
share price exceeds £1.30, £1.50 and £1.80 respectively for 15 consecutive trading days.
*10 Unapproved options. These vest on the third anniversary of the date of grant.
*11 Unapproved options as part of the long-term incentive plan. These vest on the fifth anniversary of the date of grant. Half of the options are exercisable if the
share price exceeds £2.10 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2017. The other half of the
options are exercisable if the Adjusted Profit measure for 2017 exceeds £6.4m, £6.5m and £6.6m respectively.
*12 Unapproved options as part of the long-term incentive plan. These vest 4 years and 7 months from the date of grant. 45% of the options are exercisable if the
share price exceeds £2.95 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2018. The other 55% of the
options are exercisable if the Adjusted Profit measure for 2018 exceeds £8.8m and incrementally to £9.5m.
*13 Unapproved options as part of the long-term incentive plan. These vest 4 years and 2 months from the date of grant. 45% of the options are exercisable if the
share price exceeds £2.95 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2018. The other 55% of the
options are exercisable if the Adjusted Profit measure for 2018 exceeds £8.8m and incrementally to £9.5m.
Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the
Black-Scholes technique, at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group and Company’s estimate of shares that will eventually vest and adjusted for the effect of non-market-based
vesting conditions.
The inputs into the Black-Scholes model for the share option plans for the share options issued in the year are as follows:
Option scheme conditions for options issued in the year:
Weighted average share price at grant date (pence)
Weighted average option exercise prices (pence)
Expected volatility
Expected option life
Weighted average contractual life of outstanding share options
Risk-free interest rate
Expected dividend yield
Fair value of options granted in the year (pence)
Options at the beginning of the year
Options issued in the year
Options exercised in the year
Option forfeited in the year
Options at the end of the year
47
3 January
2019
Performance
criteria
3 January
2019
No performance
criteria
28 December
2017
Performance
criteria
28 December
2017
No performance
criteria
233.96
10.00
56.49%
4 years
10 years
1.52%
0.0%
281.98
235.00
235.00
58.72%
5 years
10 years
1.54%
0.0%
43.07
Weighted average exercise
price per share in the year ended
28 December
2017
Pence
3 January
2019
Pence
91.3
164.6
83.9
95.5
102.2
84.1
125.6
85.3
92.9
91.3
190.42
10.00
50.94%
5 years
10 years
1.2%
0.0%
250.87
3 January
2019
Number
5,861,152
731,392
(962,200)
(55,000)
5,575,344
145.38
145.38
43.64%
5 years
10 years
1.26%
0.0%
58.57
28 December
2017
Number
5,248,329
997,823
(206,667)
(178,333)
5,861,152
Everyman Media Group PLC
Annual report and financial statements
Notes to the financial statements (continued)
28
Share-based payment arrangements (continued)
No options lapsed beyond their contractual life in the year (2017: nil).
Share-based payments charged to the profit and loss
Administrative costs
3 January
2019
£000
28 December
2017
£000
500
301
The charge for the Company was £nil (2017: £nil) after recharging subsidiary undertakings with a charge of £500,000 (2017: £301,000). The relevant charge is
included within administrative costs.
There are 3,656,129 options exercisable at 3 January 2019 in respect of the current arrangements (2017: 3,871,296). 962,200 options were exercised in the year
(2017: 206,667).
Volatility for options issued was determined by reference to movements in the share prices of comparable listed companies over five years prior to the grant date.
The weighted average exercise price of the options and the option element inherent in the A shares, is £1.02. The market value conditions, where applicable, have
been incorporated into the fair value calculation using an estimate of the potential achievement of the market values for the minimum periods and timescales
required.
29
30
31
Commitments
There were capital commitments for tangible assets at 3 January 2019 of £5,988,000 (2017: £417,000).
Events after the balance sheet date
On 16 January 2019 the Group agreed a new loan facility of £30 million provided by Barclays Bank PLC and Santander UK PLC. This replaced the previous £20
million facility signed in March 2017 with Barclays Bank PLC. This new facility has a term of 5 years.
Related party transactions
In the year to 3 January 2019 the Group engaged services from entities related to the Directors and key management personnel of £628,000 (2017: £601,000)
comprising consultancy services of £75,000 (2017: £50,000), office rental of £56,000 (2017: £66,000) and venue rental for Bristol, Harrogate and Stratford-Upon-
Avon of £497,000 (2017: £485,000). There were no other related party transactions. There are no key management personnel other than the Directors.
The Company charged an amount of £500,000 (2017: £301,000) to Everyman Media Limited in respect of share-based payments, £823,000 (2017: £797,000) in
respect of the rental of four cinema sites acquired in 2016 and £185,000 (2017: £336,000) in respect of interest on bank loan funds provided to the Company.
Everyman Media Holdings Limited, charged an amount of £419,000 (2017: £419,000) to Everyman Media Limited in respect of the rental of two cinema sites.
ECPee Limited charged an amount of £103,000 (2017: £nil) to Everyman Media Limited in respect of the rental of its cinema site during the year.
The Company's commitment to new leases is set out in the above notes. Within the total of £71,159,000 is an amount of £951,000 relating to office rental,
£4,432,000 relating to Stratford-Upon-Avon, £2,512,000 relating to Bristol and £5,647,000 relating to Harrogate. The landlords of the sites are entities related to the
Directors of the Company.
32 Ultimate controlling party
The Company has a diverse shareholding and is not under the control of any one person or entity.
48
Everyman Media Group PLC
Annual General Meeting
Explanatory notes to the notice of annual general meeting
This year, 13 resolutions are to be proposed at the annual general meeting and the purpose of each of the resolutions is as follows:
Ordinary business
Resolution 1: the accounts and reports
The Directors will present their report and the audited financial statements for the 53 weeks ended 3 January 2019, together with the auditors' report
thereon.
Resolutions 2-9: re-election of retiring Directors
The Articles of Association of the Company stipulate that any Director shall only hold office until the conclusion of the next annual general meeting
following the date of their appointment. Furthermore, the Articles of Association of the Company require that one third of the Directors retire at the
annual general meeting. However, corporate governance best practice is for each of the Directors to retire and offer themselves for re-appointment.
Accordingly, each of the Directors will be retiring and offering themselves for re-appointment at the annual general meeting. Biographical details
relating to each of the Directors can be found on the Group’s website: investors.everymancinema.com.
Resolution 10: appointment of auditors
The Company is required to appoint auditors at each annual general meeting at which accounts are laid before shareholders, to hold office until the
next such meeting. This resolution proposes KPMG be re-appointed as auditors for the current year.
Resolution 11: auditors' remuneration
This resolution authorises the Directors to fix the auditors’ remuneration.
Special business
Resolution 12: Directors' power to allot securities
s549 of the Companies Act 2006 stipulates that Directors cannot allot shares or rights to subscribe for shares in the Company (other than the shares
allotted in accordance with an employee share scheme) unless they are authorised to do so by the shareholders in a general meeting. The Directors'
general authority to allot shares was granted on 3 May 2018 and is due to expire at the conclusion of the 2019 annual general meeting. Resolution 12
seeks a new general authority from shareholders (to the exclusion of the previous general authority granted) for the Directors to allot Ordinary Shares
up to an aggregate nominal value of £2,366,310.08, representing one third of the nominal value of the issued share capital of the Company as at the
date of this notice. The Directors consider it desirable that the specified amount of Ordinary Shares be available for issue so that they can more readily
take advantage of possible opportunities. Unless renewed, revoked, varied or extended, this authority will expire at the conclusion of the annual
general meeting of the Company to be held in 2020 or, if earlier, the date which is fifteen months after the passing of the resolution.
Resolution 13: disapplication of pre-emption rights
If the Directors wish to allot any shares for cash, the Companies Act 2006 requires that such shares must be offered first to shareholders in proportion
to their existing holdings. These are the pre-emption rights of shareholders. In certain circumstances, it may be in the interests of the Company for the
Directors to be able to allot shares for cash without having to offer them first to existing shareholders.
Resolution 13 therefore seeks approval to empower the Directors to allot shares for cash other than in accordance with the statutory pre-emption
rights, in connection with a rights issue and other pre-emptive offers up to the level of authority granted pursuant to Resolution 12, and otherwise up
to a maximum nominal amount of £709,893.03, representing approximately 10 per cent of the nominal value of the issued share capital of the
Company. Unless renewed, revoked, varied or extended, this authority will expire on the earlier of 15 months from the date of passing of the resolution
or the conclusion of the annual general meeting of the Company to be held in 2020.
Recommendation
The Directors believe that the proposals in resolutions 1 to 13 are in the best interests of the Group and its shareholders as a whole. Accordingly, the
Directors recommend that shareholders vote in favour of each resolution as they intend to do in respect of their own beneficial shareholdings.
49
Everyman Media Group PLC
Annual General Meeting
Notice of annual general meeting
Notice is hereby given that the annual general meeting of Everyman Media Group PLC will be held at Everyman Cinema Hampstead, 5 Holly Bush Vale,
London NW3 6TX on Thursday, 9 May 2019 at 10:30am for the purpose of considering and, if thought fit, passing the following resolutions of which
resolutions 1 to 12 will be proposed as ordinary resolutions and resolution 13 will be proposed as a special resolution.
Ordinary business
Ordinary resolutions
1
2
3
4
5
6
7
8
9
10 To reappoint KPMG LLP as auditors of the Company to hold office until the conclusion of the next annual general meeting.
11 To authorise the Directors to determine the auditors’ remuneration.
To receive the accounts and the reports of the Directors and the auditors thereon for the 53 weeks ended 3 January 2019.
To re-elect Adam Kaye as a Director.
To re-elect Charles Dorfman as a Director.
To re-elect Crispin Lilly as a Director.
To re-elect Jonathan Peters as a Director.
To re-elect Michael Rosehill as a Director.
To re-elect Paul Wise as a Director.
To re-elect Philip Jacobson as a Director.
To re-elect Streisan Bevan as a Director.
Special business
To consider, and if thought fit, pass resolution 12 as an ordinary resolution and resolution 13 as a special resolution.
As an ordinary resolution
12
That the Directors of the Company be and they are hereby generally and unconditionally authorised in accordance with s551 of the Companies Act
2006, to exercise all the powers of the Company to allot and issue shares in the capital of the Company and to grant rights to subscribe for or to
convert any security into shares in the Company (relevant securities of the Company as defined in s551 of the Companies Act 2006) up to an
aggregate nominal amount of £2,366,310.08 (being a sum equal to one third of the issued share capital at the date of the notice of meeting)
provided that, the authority conferred by this resolution shall expire on the conclusion of the next annual general meeting of the Company or, if
earlier, the date which is 15 months after the passing of this resolution (unless renewed, varied or revoked by the Company in a general meeting)
but so that this authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require
shares to be allotted or rights to be granted after such expiry.
As a special resolution
13
That, subject to the passing of resolution 12, the Directors be authorised to allot equity securities (as defined in section 560 of the Companies Act
2006) for cash under the authority conferred by that resolution and/or to sell Ordinary Shares held by the Company as treasury shares as if section
561 of the Companies Act 2006 did not apply to any such allotment or sale, provided that such authority shall be limited to:
(a)
the allotment of equity securities in connection with an offer of equity securities:
(i) to the holders of Ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and
(ii) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to treasury shares,
fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory
body or stock exchange; and
the allotment of equity securities or sale of treasury shares (otherwise than pursuant to clause (a) of this resolution) to any person up to an
aggregate nominal amount of £709,893.03.
(b)
The authority granted by this resolution will expire at the conclusion of the Company's next annual general meeting after the passing of this
resolution or, if earlier, at 5.00pm (London time) on the date which is fifteen months after the passing of this resolution (unless renewed, varied or
revoked by the Company in a general meeting), save that the Company may, before such expiry make offers or agreements which would or might
require equity securities to be allotted (or treasury shares to be sold) after the authority expires and the Directors may allot equity securities (or
sell treasury shares) in pursuance of any such offer or agreement as if the authority had not expired.
On behalf of the Board
Jonathan Peters FCA
Company Secretary
Everyman Media Group PLC
Studio 4, 2 Downshire Hill
London
NW3 1NR
12 March 2019
50
Everyman Media Group PLC
Annual General Meeting
Notes
1
A member entitled to attend, speak and vote may appoint a proxy or proxies to attend, speak and vote at the annual general meeting instead of
him or her. A proxy need not be a member of the Company. A form of proxy is enclosed which, if used, must be lodged at the Company’s
registrars, Computershare Investor Service PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, not less than 48 hours before the meeting. You
may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. To appoint more than one proxy
you may photocopy the proxy form. You may appoint a person other than the Chairman as your proxy. Please indicate the proxy holder’s name and
the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares
held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be
returned together in the same envelope.
2
3
4
5
6
7
8
9
Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that to be entitled to attend and vote at the
meeting (and for the purpose of the determination by the Company of the number of votes they may cast), members must be entered on the
Company’s register of members at 6.00pm on the day occurring two working days before the date of the meeting. If the Meeting is adjourned
then, to be so entitled, members must be entered on the Company’s register of members at 6:00pm on the day occurring two working days before
the date of the adjourned meeting or, if the Company gives notice of the adjourned meeting, at the time specified in that notice. Changes to
entries on that register after that time (or, in the event that the meeting is adjourned, on the register of members later than 6:00pm on the day
occurring two working days before the date of any adjourned meeting) shall be disregarded in determining the rights of any member to attend and
vote at the meeting referred to above.
Forms of proxy and the power of attorney or other authority, if any, under which they are signed or a notarised certified copy of that power of
attorney or authority, should be sent to the address noted on the form of proxy so as to arrive not less than 48 hours before the time fixed for the
meeting. The return of a completed proxy form or other instrument of proxy will not prevent you attending the meeting and voting in person if you
wish to do so. A member present in person or by proxy shall have one vote on a show of hands and on a poll every member present in person or by
proxy shall have one vote for every Ordinary share of which they are a holder. As a member, you have the right to put questions at the meeting
relating to the business being dealt with at the meeting.
As at 3 January 2019, which is the latest practicable date before publication of this notice, the Company’s issued share capital was 70,989,303
Ordinary shares of 10 pence. There were no shares held in treasury and therefore the total voting rights were 70,989,303.
The vote 'withheld' option is provided to enable you to abstain on any particular resolution. However, it should be noted that a 'withheld' vote is
not a vote in law and will not be counted in the calculation of the proportion of the votes 'for' and 'against' a resolution.
The completion and return of a proxy will not preclude a member from attending the meeting and voting in person.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so by utilising the
procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate
action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message must be transmitted
so as to be received by the Company’s agent, Computershare Investor Services PLC (whose CREST ID is 3RA50) by the specified latest time(s) for
receipt of proxy appointments. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the Company’s agent is able to retrieve the message by enquiry to CREST in the manner
prescribed. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(A) of the Uncertificated
Securities Regulations 2001.
In the case of joint registered holders, the signature of one holder will be accepted and the vote of the senior who tenders a vote, whether in
person or proxy, shall be accepted to the exclusion of the votes of the other joint holders. For this purpose, seniority shall be determined by the
order in which the names stand on the register of members in respect of the relevant joint holding.
Shareholders are advised that, unless otherwise stated, any telephone number, website or email address which may be set out in this notice of
Annual General Meeting or in any related documents (including the proxy form) is not to be used for the purposes of serving information or
documents on, or otherwise communicating with, the Company for any purposes other than those expressly stated.
10
Except as provided above, members who have general queries about the meeting should contact the Company’s registrars Computershare by
using the following means of communication: Tel: 0370 707 1577 (lines are open from 8:30 am to 5:30 pm Monday to Friday). Calls cost 10 pence
per minute plus network charges, or visit their online Investor Centre at investorcentre.co.uk. For overseas shareholders please call: +44 (0)370
707 1577.
11
If you have disposed of your holding in the Company the report should be passed on to the person through whom the sale or transfer was effected
for transmission to the purchaser or transferee.
12 A copy of the notice of meeting can also be found at: investors.everymancinema.com.
51