eMagin
Annual Report 2022

Plain-text annual report

Everyman Media Group PLC Registered number 08684079 Annual report and financial statements Year ended 29 December 2022 1 Everyman Media Group PLC Annual report and financial statements Contents Company information Chairman's statement Chief Executive’s statement Strategic report Finance Director’s statement Section 172 statement Corporate governance Audit Committee report Remuneration Committee 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 Page 3 4 5 9 11 14 17 21 23 26 32 33 40 42 43 44 45 46 47 2 Everyman Media Group PLC Annual report and financial statements Company information Directors Adam Kaye Alexander Scrimgeour Charles Dorfman Elizabeth Lake (resigned 28 March 2022) Maggie Todd Michael Rosehill FCA Paul Wise (resigned 28 February 2023) Philip Jacobson FCA Ruby McGregor-Smith FCA (appointed 20 September 2022) William Worsdell ACA (appointed 28 June 2022) Function Executive Director Chief Executive Officer Non-Executive Director Chief Financial Officer Non-Executive Director Non-Executive Director Executive Chairman Non-Executive Chairman Non-Executive Director Finance Director Company secretary One Advisory Limited 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 BDO LLP Level 12 Thames Tower Station Road Reading RG1 1LX 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 3 Everyman Media Group PLC Annual report and financial statements Chairman’s statement I am pleased to report that 2022 was a positive year for the business, with financial performance ahead of management’s initial expectations. Audiences returned to Everyman in encouraging numbers, and we delivered solid increases in revenue and adjusted EBITDA. With an improving number of year-on-year releases, continued commitment to the theatrical window from distributors and an exciting pipeline of new venues, we look ahead with cautious optimism. Having served as a Non-Executive Director since 2013, I have come to know Everyman, its culture and what it stands for and I am delighted to have taken up the mantle as Chairman in 2023. Review of the business The Group’s key performance indicators all saw healthy increases on 2021. Admissions saw significant improvement and we successfully delivered increases in average ticket price and spend per head. We were pleased to open two new cinemas in the period, taking us to a total of 130 screens across 38 venues. A further six venues are confirmed to open in the coming months and, with landlords increasingly keen to work with Everyman, an exciting pipeline of opportunities exists for 2024 and 2025. During the year, we continued to innovate and optimise our operations. From a technology perspective, our app has gone from strength to strength and, post year end, we launched a new website. Both will play important roles in helping us to grow admissions and spend per head through taking an increasingly data-driven approach to marketing. The teams in our venues and head office continue to be our greatest asset, again demonstrating an exemplary commitment to customer satisfaction. Without them, this year’s performance would not have been possible, and I would like to extend my thanks to them all. I would also like to express my gratitude to Paul Wise, who retired as Chairman in 2023, for his immense contribution to Everyman during his time with the business. Outlook We look to the future with increasing confidence, bolstered by a robust pipeline of upcoming releases and ongoing admissions momentum. Our focus for 2023 will be to continue to deliver the high standards of service, atmosphere, food and drink and of course film that Everyman is known for, and to continue our expansion plans at a measured pace. Philip Jacobson Non-Executive Chairman 11 April 2023 4 Everyman Media Group PLC Annual report and financial statements Chief Executive’s Statement Business Model Everyman brings together great service, atmosphere, food and drink and of course film to create an exceptional cinema experience for our customers. In addition, Everyman delivers a more premium price point and a greater number of revenue-generating activities than the traditional cinema model. Emerging from the pandemic, our growth strategy has returned to the following: − − − Expanding our geographical footprint by establishing new venues in order to reach new customers. Continually evolving the quality of experience and breadth of choice we offer at our venues. Engaging in effective marketing activity. As an affordable treat, cinema and Everyman specifically has historically remained resilient to economic downturn. Not only is this reflected in Everyman’s year-on-year admissions below, but also by the fact the our customers are spending more with us than they were in 2021. We remain convinced that appetite for film remains undiminished, and that the Everyman offer remains more relevant in a post-pandemic environment. Financial Overview The Group delivered solid full year financial results, demonstrating a return to business as usual. Despite a decreased number of wide releases due to pandemic-related production delays, revenue for the period was £78.8m, a 61% increase on the prior year (2021: £49.0m). The Group achieved an operating profit of £402,000 (2021: £2.2m operating loss). The improvement is particularly pleasing given that the prior year operating loss included £3.8m of Covid-related government support a £2.5m reversal of previously-recognised impairment. As we accelerate our programme of organic expansion, the cash outflow for the year included £18.9m on the acquisition of Property, Plant & Equipment (2021: £7.4m), driven by payments for venues opened during the year and new venues in Durham, Northallerton, Salisbury, Plymouth and Marlow, which are currently under construction and due to be opened in 2023. The Group was able to finance much of this expansion with £11.8m of cash generated from operating activities (2021: £12.2m) as well as capital contributions of £5.0m from landlords (2021: £0.5m), demonstrating the ongoing appetite of landlords to work with Everyman. A further proportion was financed through a £9.5m draw on the Group’s banking facilities (2021: £6.0m). As a result, net banking debt at the balance sheet date was £18.5m (2021: £8.4m). The Company retains £18m headroom on its £40m debt facilities. The Directors believe that the Group balance sheet remains well capitalised, with sufficient working capital to service ongoing requirements and to support our growth going forward. The Group’s financial performance is given in detail in the Finance Director’s statement below. KPIs The Group uses the following key performance indicators, in addition to total revenues, to monitor the progress of the Group’s activities: Admissions Paid for average ticket price* Food and beverage spend per head** Year ended 29 December 2022 (52 weeks) Year ended 30 December 2021 (52 weeks) 3,418,599 2,023,390 £11.29 £9.34 £11.00 £9.07 Admissions were 69% ahead of last year on a non like-for-like basis. However, in 2021, the venues were closed from the beginning of the year to 17th May as a result of pandemic-related trading restrictions. 5 Everyman Media Group PLC Annual report and financial statements Chief Executive’s Statement (cont.) *Paid for average ticket price has been adjusted to remove the benefit of VAT reductions in both 2022 and 2021 in order to provide a like- for-like comparison. The directors believe that this metric, which excludes any complimentary tickets, is more representative of actual customer spend and will be used as a KPI moving forward. **Food and beverage spend per head has been adjusted to remove the benefit of VAT reductions in both 2022 and 2021 in order to provide a like-for-like comparison. The prior year metric has been adjusted to include Deliveroo income, which had previously been excluded. This is consistent with the treatment for the current year. Expansion of our geographical footprint During 2022 we opened two new venues, in Edinburgh in April and in Egham in September, and both venues are trading in line with expectations. We have a pipeline of six new openings in 2023, with new venues planned in Durham, Salisbury, Northallerton, Plymouth, Marlow and Bury St Edmunds. The outlook is promising for 2024 with Cambridge and Stratford (London) under contract, and – with landlords increasingly interested in working with Everyman - many further exciting opportunities to grow the estate. We expect to open a total of six new venues in both 2024 and 2025. The Group currently has venues in the following locations: Location Altrincham Birmingham Bristol Cardiff Chelmsford Clitheroe Edinburgh Egham Esher Gerrards Cross Glasgow Harrogate Horsham Leeds Lincoln Liverpool Number of Screens Number of Seats 4 3 4 5 6 4 5 4 4 3 3 5 3 5 4 4 247 328 476 253 411 255 407 275 336 257 201 410 239 611 291 288 London, 13 venues 37 3,136 Manchester Newcastle Oxted Reigate Stratford-Upon-Avon Walton-On-Thames Winchester Wokingham York 3 4 3 2 4 2 2 3 4 247 215 212 170 384 158 236 289 329 130 10,661 6 Everyman Media Group PLC Annual report and financial statements Chief Executive’s Statement (cont.) Market developments 2022 marked the first full year of trade for cinemas since the pandemic, with total box office revenue across the UK & Ireland at £979m, an increase of 64% against 2021. Whilst last year the market saw a reduction in blockbusters due to production delays, the signs of recovery are clear with audiences coming back to enjoy a broader range of titles. We expect the number of larger releases to return to near pre-pandemic levels in 2023. The diversity of content was bolstered by streamers demonstrating a further commitment to cinema, moving away from day-and-date releases, and increasingly seeing the value in original content for theatrical release. Key examples of this were Netflix’s “Knives Out: A Glass Onion Mystery” and Apple’s “Spirited”. We continue to benefit from working cooperatively and creatively with streaming partners. With film production increasingly back up to full speed, the breadth and quality of the slate in 2023 places the market in a robust position, and the year should continue an upward growth trajectory. Technology In 2022, our website saw 9m users, up from 6.5m in 2021. The Everyman App ended the year with 116k users, up from 76k in 2021, representing increases of 54% and 53% respectively. Post year end we launched a new website with improved user experience and a more flexible content management system. The technology that underpins this will improve our customer segmentation and targeted, personalised marketing. This is a key step in our digital transformation. Food & Beverage During the year we have continued to add exciting new dishes to our menu, including quarterly burger specials, most recent of which were the Halloumi Burger and the Korean Chicken Burger. In sharing plates, our top selling dish is the new Garlic and Parsley Doughballs. Our vegan range continues to grow, with the addition of the Vegan Hotdog, and we have also evolved the menu layout to make it clearer for the customer. Amending the dish placement on the menus has had a demonstrable impact on sales of hot food. Innovation in our food and beverage offering is expected to continue to drive spend per head moving forward. Partnerships and Events During the year, we renewed our signature partnerships with Jaguar and Green & Black’s. We added Land Rover Discovery as a new brand partner, deepening our relationship with the Jaguar group. In conjunction with Waitrose, we launched a nationwide membership activation with Green & Black’s. In addition, we launched a collaboration with The Times, offering Times+ subscribers two-for-one tickets on Wednesdays as well as access to exclusive events, and our partnership with Apple goes from strength to strength. Our open-air venues returned to the canal-side at Kings Cross and the luxurious grounds of The Grove Hotel, introducing the Everyman brand to thousands of people over the summer period. This year, we also began a partnership with This Bright Land, a new festival with a three- year residency at Somerset House. 2022 also saw show-stopping parties and exclusive events with our partners. Christmas came early for a November preview of the AppleTV+ film Spirited, we treated Times+ members to a sneak-peek of Steven Spielberg’s The Fabelmans, and the great and good of the film and music business took to our stages for special events week after week, with every event exclusive to us. People We recognise the commitment our people have shown to Everyman, our guests and to each other. Our teams’ passion is key to delivering our signature brand of hospitality across all our venues, both existing and new. Our unique proposition has meant we have been able to attract and retain talented people, despite well-publicised challenges in hospitality sector recruitment. Our new careers website has also enabled a smoother, brand-focused recruitment process. During the year we opened two new venues, and our existing teams supported our newest managers to deliver hospitality the Everyman way. Our commitment to development saw numerous management roles filled internally. 7 Everyman Media Group PLC Annual report and financial statements Chief Executive’s Statement (cont.) Outlook We are pleased to report solid financial results despite the reduced number of blockbuster releases in 2022. However, with Top Gun: Maverick and Avatar: The Way of Water now the 12th and 3rd highest grossing films of all time respectively, it is clear that the consumer appetite for film remains undiminished. We remain an affordable treat for our customers, and with film production back up at pace and the number of larger releases returning to pre-pandemic levels, we are confident that customers will return to our venues in greater numbers. 2022 has been a year of progress for Everyman, as we continued to focus on evolving the quality of experience and breadth of choice we offer at our venues. We opened with two new cinemas opened in Edinburgh and Egham and – to ensure the conservation of high standards and differentiation – we refurbished our venues in Hampstead, Canary Wharf, Esher, Bristol and Birmingham. We look to 2023 with cautious optimism. We continue with our expansion programme, with new venues due to open in Durham, Salisbury, Northallerton, Plymouth, Marlow and Bury St Edmunds, and several further exciting opportunities in the pipeline. Alex Scrimgeour CEO 11 April 2023 8 Everyman Media Group PLC Annual report and financial statements Strategic Report The Directors present their strategic report for the Group for the year ended 29 December 2022 (comparative period: 52 weeks 30 December 2021). Review of the business The Group made a loss after tax of £3,504,000 (2022: £5,430,000). The Finance Director’s report contains a detailed financial review. Further details are also shown in the CEO’s statement and consolidated statement of profit and loss and other comprehensive income, together with the related notes to the financial statements. Principal risks and uncertainties The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by senior management to forecasts. Project milestones and timelines are reviewed regularly. 1 Film release schedule - The level of the Group’s box office revenues fluctuates throughout the course of any given year and are largely dependent on the timing of film releases, over which the Group has no control. The film release schedule remained adversely impacted by the pandemic in 2022, mainly as a result of production delays during 2020 and 2021. As the impact of this reduces and the volume of releases increases, the Board remains optimistic about the film slate going forward. The Group mitigates this risk by widening the sources for new content to include streaming platforms, TV and theatre, as well as focusing on creating a great overall experience at venues independent from the films themselves. 2 COVID-19 pandemic - Group revenues are entirely dependent on being open and able to show films, and to serve food and beverage. Although there were no Covid-related closures in 2022, the beginning of the period was negatively impacted by the spread of the Omicron variant. Whilst the situation has improved substantially, the Board remains vigilant to new developments and further impacts which may arise. In addition, the Group has processes and policies that can be brought back if needed, and has more flexible employment contracts allowing temporarily reduced working hours, if required. Everyman works closely with the UK Cinema Association and the Department for Culture, Media and Sport to ensure that the interests of the business are represented in all policy discussions. 3 Consumer environment – A reduction in consumer spending because of broader economic factors could impact the Group’s revenues. During 2022, inflation and interest rates have increased due to the pandemic and geopolitical events. Historically, the cinema industry has been resilient to difficult macroeconomic conditions, with it remaining an affordable treat during such times for most consumers. Whilst the Board considers that the impact has been minimal in 2022, the Group continues to monitor long term trends and the broader leisure market. 4 5 Alternative media channels - The proliferation of alternative media channels, including streaming, has introduced new competitive forces for the film-going audience and this has been accelerated by the pandemic. To date this has proven to be a virtuous relationship, both increasing the investment in film production and further fuelling an overall interest in film with customers of all ages. The Board considers that the Everyman business model works well alongside other film channels. It remains an ever-present caution that to maintain this position we must continue to deliver an exceptional experience in order to deliver real added value for our customers who choose to see a film at our venues. Inflation – Given the current economic and geopolitical situation there is a risk to the cost base from inflation. To mitigate this the Group enters into long term contracts and works very closely with suppliers to improve efficiencies and limit costs. The Group has a fixed rate agreement in place with one of the largest energy suppliers until the end of October 2023. Whilst the Board expects energy costs to increase from the current rate, forward prices for Gas and Electricity continue to fall. The Group is confident that any increases can be absorbed without material impact to unit economics. In addition, and thanks to its size, the Group can take advantage of lower price points for higher volumes. Furthermore, payroll costs are closely monitored and managed to the level of admissions. We remain cautious when passing on price increases to our customer base. 6 Climate change – The Group’s business could suffer because of extreme or unseasonal weather conditions. Cinema admissions are affected by periods of abnormal, severe, or unseasonal weather conditions, such as exceptionally hot weather or heavy snowfall. Climate change is also high on the agenda for investors and increasingly institutional investors are looking closely at the actions being taken by business to reduce carbon emissions. The Group is working towards developing a net zero carbon emissions strategy to mitigate this risk. 9 Everyman Media Group PLC Annual report and financial statements Strategic Report (cont.) 7 Data and cyber security – The possibility of data breaches and system attacks would have a material impact on the business through potentially exposing the business to a reduction in service availability for customers, potentially significant levels of fines, and reputational damage. To mitigate this risk the IT infrastructure is upgraded to ensure the latest security patches are in place and that ongoing security processes are regularly updated. This is supported by regular pen testing and back-ups. 8 9 Film piracy - Film piracy, aided by technological advances, continues to be a real threat to the cinema industry generally. Any theft within our venues may result in distributors withholding content to the business. Everyman’s typically smaller, more intimate auditoria, with much higher occupancy levels than the industry average, make our venues less appealing to film thieves. As we see the numbers returning to cinema coming close to pre-pandemic levels, we see this risk reducing to a pre-pandemic level. Reputation - The strong positive reputation of the Everyman brand is a key benefit, helping to ensure the successful future performance and growth which also serves to mitigate many of the risks identified above. The Group consistently focuses on customer experience and monitors feedback from many different sources. A culture of partnership and respect for customers and our suppliers is fostered within the business at all levels. Since re-opening we have seen our market share increase and received positive customer feedback. Financial risks The Group has direct exposure to interest rate movements in relation to interest charges on bank borrowings, with a 1% increase in rates resulting in an increase in interest charges of £0.2m on current forecast borrowings over the next twelve months. The Board manages this risk by minimising bank borrowings and reviewing forecast borrowing positions. The Group takes out suitable insurance against property and operational risks where considered material to the anticipated revenue of the Group. 10 Everyman Media Group PLC Annual report and financial statements Finance Director’s Statement Summary • • • • • Group revenue of £78.8m (2021: £49.0m) Gross profit of £50.5m (2021: £30.9m) Non-GAAP adjusted EBITDA of £14.5m (2021: £8.3m) Operating profit of £0.4m (2021: £2.2m loss) Net banking debt £18.5m (2021: £8.4m), with significant headroom in facilities Revenue and Operating Profit Admissions for the 52 weeks ending 29 December 2022 totalled 3.4m, an increase of 69.0% on the prior year (2021: 2.0m). In 2021, venues were closed for the first 19 trading weeks of the year due to pandemic-related restrictions. 2022 was not impacted by any government- imposed closures and all venues traded through the year, aside from any temporary closures for refurbishments. Whilst the film slate was impacted in 2022 by Covid-related production delays, it was clear from a number of titles that the consumer appetite for film remained undiminished. Chief amongst these were Top Gun: Maverick, released at the end of May, and Avatar: The Way of Water, released in December, which are now the 12th and 3rd highest-grossing films of all time, respectively. As a result, and due also to the new venues opened during the year, admissions were 4.5% ahead of 2019 on a non like-for-like basis. Paid-for Average Ticket Price was £11.29, a 2.6% increase on the prior year (2021: £11.00), and Food & Beverage Spend per Head was £9.34, a 3.0% increase on the prior year (2021: £9.07). In order to enable like-for-like comparison, both of these metrics have been adjusted to remove the benefit from the temporarily reduced rate of VAT during 2021 and the first quarter of 2022. Given the challenging macroenvironment, the Group has remained conservative when passing on price increases to customers. As a result of the above, revenue for the period was £78.8m, a 61% increase on the prior year (2021: £49.0m). Reported Gross Margin was 64.0% (2021: 63.0%). The increase was driven by a greater proportion of Venue Hire, Advertising and Membership Income, which carries a higher margin. Other operating income was £0.6m (2021: £3.8m). £0.2m of this related to the Omicron Hospitality and Leisure Grant, and £0.4m to other landlord compensation. In the prior year, the Group received £2.8m of support in relation to the Job Retention Scheme and a £1.0m Business Support Grant. Administrative Expenses for the period were £50.7m, a 28.6% increase on the prior year (2021: £39.4m). This is commensurate with the increased levels of trading activity and admissions. The Group’s people costs are inherently linked to changes in National Living Wage, which increased by 6.6% in April 2022. Beyond this, and despite the macroeconomic environment, the Directors believe that the impact to the cost base from inflation during the year has been minimal. This is, in part, due to the recruitment of a new Procurement Director and the resultant re-negotiation of a number of key contracts. The Group’s Utilities contracts are fixed until the end of October 2023. The Directors expect costs to rise, but note that forward prices for Gas and Electricity continue to fall and believe that increases can be absorbed without material impact to the Group’s unit economics. The Board carried out a full impairment review at the year end, based on a judgement of future cash flows by venue and concluded that, due to positive ongoing trading performance, no indicators of impairment existed. Within the prior year operating loss was a £2.5m reversal of impairment of right-of-use assets and property, plant and equipment. The Directors are pleased to report an operating profit of £0.4m (2021: £2.2m operating loss), particularly given both the greater levels of government support and the gain from the reversal of impairment in the prior year. Financial Expenses Financial expenses were £3.9m (2021: £3.3m) and relate mainly to interest charges on the Group’s banking facilities and on lease liabilities under IFRS 16. The increase was as a result of an increased draw down the Group’s Revolving Credit Facility, increases to underlying interest rates and new leases entered into during the year. 11 Everyman Media Group PLC Annual report and financial statements Finance Director’s Statement (cont.) Non-GAAP adjusted EBITDA In addition to performance measures directly observable in the financial statements, the following additional performance measures are used internally by management to assess performance: • • • • Non-GAAP Adjusted EBITDA Admissions Paid-for Average Ticket Price Food & Beverage Spend per Head Management believes that these measures provide useful information to evaluate performance of the business as well as individual venues, to analyse trends in cash-based operating expenses, and to establish operational goals and allocate resources. In prior years, Average Ticket Price has been used as an additional performance measure. The directors believe that Paid-for Average Ticket Price, which excludes any complimentary and unpaid tickets, is more representative of actual customer spend and will be used as an additional performance measure moving forward. Non-GAAP adjusted EBITDA was £14.5m, compared with £8.3m in 2021. Non-GAAP adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, profit or loss on disposal of Property, Plant & Equipment, impairment, share based payments, pre-opening expenses and exceptional costs. The reconciliation between operating loss and non-GAAP adjusted loss from operations is shown at the end of the consolidated statement of profit and loss. Cash Flows The Directors believe that the Group balance sheet remains well capitalised, with sufficient working capital to service ongoing requirements. Net cash generated in operating activities was £11.8m (2021: £12.2m) and the net cash outflow for the year was £0.5m (2021: £3.9m inflow). The cash outflow for the year included £18.9m on the acquisition of Property, Plant & Equipment (2021: £7.4m). This was driven by payments for new venues in Edinburgh and Egham, which opened during the year, and for Borough Yards, which opened in December 2021. Additionally, payments were made towards new venues in Durham, Northallerton, Salisbury, Plymouth and Marlow, which are currently under construction and due to be opened in 2023. The Group was able to finance much of its expansion during the year from operating cash flows as well as landlord contributions of £5.0m (2021: £0.5m), demonstrating the ongoing appetite of asset holders to work with Everyman. A further proportion was financed through a £9.5m draw on the Group’s banking facilities (2021: £6.0m). As a result, net banking debt at the balance sheet date was £18.5m (2021: £8.4m). Cash held at the end of the year was £3.7m (2021: £4.2m). The Group has banking facilities totalling £40m in place at the year end. £25m is in a Revolving Credit Facility (RCF) and £15m is in a Government-backed Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) RCF. At the year end the Group had drawn down £22m (2021: £12.5m) of the available funds, and therefore £18m of the facility was undrawn (2021: £27.5m). The Group returned to its original banking covenants, based on Adjusted Leverage and Fixed Cover Charge, in June 2022. Current forecasts demonstrate that the Group will remain within these covenants going forward. The Revolving Credit Facility matures in April 2024, having been extended by 3 months in March 2023. The CLBILS, which cannot be extended, matures in January 2024, as per the previous maturity date. The Group is working with its banking partners to re-finance both facilities and expects to complete this process in due course. 12 Everyman Media Group PLC Annual report and financial statements Finance Director’s Statement (cont.) Pre-opening costs Pre-opening costs, which have been expensed within administrative expenses, were £0.2m (2021: £0.1m). 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. Exceptional costs The Group incurred exceptional costs of £0.2m during the year (2021: £Nil), which related to restructuring costs within the Head Office team. Annual general meeting The annual general meeting of the Company will be held at 09:30am on 15 June 2023 at Everyman Cinema Hampstead, 5 Holly Bush Vale, London NW3 6TX. 13 Everyman Media Group PLC Annual report and financial statements Section 172 Statement Our Board of Directors are bound by their duties under the Companies Act 2006 (the “Act”) to promote the success of the company for the benefit of our members as a whole taking into account the factors listed in section 172 of the Act. In doing so, however, they must have regard for the interests of all of our stakeholders, to ensure the long-term sustainability of the Company. The Board is therefore responsible for ensuring that it fulfils its obligations to those impacted by our business, in its stakeholder consideration and engagement. The ongoing sustainable success of Everyman is dependent on its relationship with a wide range of stakeholders, including consumers, employees, Governments & regulators, customers, suppliers, and investors. We are aware that each stakeholder group requires a tailored engagement approach in order to foster effective and mutually beneficial relationships. Our understanding of stakeholders is then factored into Board discussions, regarding the potential long-term impacts of our strategic decisions on each group, and how we might best address their needs and concerns. The Board understands that it is not always possible to provide positive outcomes for all stakeholders and therefore, sometimes, must make decisions based on the competing priorities of stakeholders. However, the Board acts in the best long- term interests of the Company and its stakeholders generally. Throughout this Annual Report, we provide examples of how we: Take into account the likely consequences of long-term decisions; Consider the interests of the Company’s employees; Consider the interests of the Company’s shareholders; Foster the Company’s business relationships with suppliers, customers and others; Understand our impact on our local community and the environment; and • • • • • • Maintain a reputation for high standards of business conduct; and This section serves as our section 172 statement and should be read in conjunction with the Strategic Report and the Company’s Corporate Governance Statement. Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders in their decision making. The Directors continue to have regard to the interests of the Company’s employees and other stakeholders, including the impact of its activities on the community, the environment and the Company’s reputation, when making decisions. Acting in good faith and fairly between members, the Directors consider what is most likely to promote the success of the Company for its members in the long term. The principles underpinning section 172 are not only considered at Board level, the differing interests of stakeholders are taken into consideration by management when making wider business decisions. The Board regularly reviews our principal stakeholders and how we engage with them. The stakeholder voice is brought into the Boardroom throughout the annual cycle through information provided by management and also by direct engagement with stakeholders themselves. The relevance of each stakeholder group may increase or decrease depending on the matter or issue in question, so the Board seeks to consider the needs and priorities of each stakeholder group during its discussions and as part of its decision making. The table below acts as our s172(1) statement by setting out the key stakeholder groups, their interests and how Everyman has engaged with them over the reporting period. However, given the importance of stakeholder focus, long-term strategy and reputation, these themes are also discussed throughout this Annual Report. Stakeholder Their interests How we engage 2022 highlights Our employees • Training, development and career prospects. Health and Safety • • Working conditions • • Diversity and Inclusion Human Rights and modern slavery Fair pay, employee benefits • • • Workforce posters and communications Ongoing training and development opportunities • Whistleblowing procedures • Publication of Modern Slavery Statement Employee benefits packages Employee questionnaires Staff intranet • • • • • • Implementation of new careers website and applicant tracking system Implementation of new Employee Assistance Programme Implementation of new financial wellbeing platform 14 Everyman Media Group PLC Annual report and financial statements Companies Act s172 Statement (cont.) Their interests How we engage 2022 highlights • • • • • • Comfort and hospitality. Good quality food and drink High quality viewing environment Ease of access Safety Data security • Venue staff welcome every customer Focus on in-theatre service Regular review of menu quality High specification auditoria Customer support service • • • • • Marketing and Stakeholder Our customers Our suppliers & landlords Our Investors Our banking partners Regulatory bodies Community and Environment • • • • • • • • • • • • • • • • • Workers’ rights • Supplier engagement and management to prevent modern slavery Fair trading and payment terms Sustainability and environmental impact Collaboration Long-term partnerships Comprehensive review of financial performance of the business Business sustainability High standard of governance Success of the business Ethical behaviour Awareness of long-term strategy and direction Business performance & forecast accuracy Cash management and financial control Compliance with laws and regulations High standard of governance Ethical behaviour Data security Compliance with regulations • • Worker pay and conditions Gender Pay • Health and Safety • Treatment of Suppliers • Brand reputation • • Waste and environment • Insurance Sustainability Human Rights Energy usage Recycling • • • • • Waste Management • Community outreach and CSR communications Initial meetings and negotiations KPIs and Feedback Board approval on significant changes to suppliers Direct engagement between suppliers and specified company contact Regular reports and analysis on investors and shareholders Investor roadshows Annual Report Company website Shareholder circulars AGM Stock exchange announcements Regular meetings & updates Regular reports and analysis Annual Report Stock exchange announcements Company website Stock exchange announcements Annual Report Direct contact with regulators Compliance updates at Board Meetings Consistent risk review • • • • • • • • • • • • • • • • • • • • • • • Philanthropy Oversight of corporate responsibility plans CSR initiatives • • Workplace recycling policies and processes • • Completed upgrades to kitchens and bars to provide faster, high- quality service Refurbishment of several venues to maintain high standards • Menu development to improve breadth of choice • • • • • • • • • • • Completed implementation of new ERP system to streamline processes from purchase to payment Recruitment of a new Procurement Director Bi-annual investor roadshows Regular ad-hoc communication with shareholders Regular meetings and communication with banking partners Recruitment of a new Finance Director Full review of pay across all roles NOMAD attended Board meeting to update on compliance Supported employees’ fundraising for various charities Special screenings for local communities Energy monitoring and reduction initiative 15 Everyman Media Group PLC Annual report and financial statements Companies Act s172 Statement (cont.) Within the Corporate Governance Report on pages 17 to 20 we describe how the Board operates and the culture of the business including employee engagement. Will Worsdell Finance Director 11 April 2023 16 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 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. 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. Good governance provides a framework that allows the right decisions to be taken by the right people at the right time. QCA principles A description of the Group’s business model and strategy can be found in the Chairman’s report along with key challenges in their execution and information in relation to the Group’s risk management. Board of Directors Philip Jacobson FCA Independent Non-Executive Chairman Philip is a Fellow of the Institute of Chartered Accountants in England & Wales and was previously a partner at BDO LLP, where he was involved in a number of flotations in the leisure sector. Philip was appointed to the Board on 8 October 2013, and as Chairman on 28 February 2023. Since retiring from BDO LLP, Philip has acted as family office to a small number of families. Alex Scrimgeour Executive Director – Group Chief Executive Officer Alex joined Everyman from Côte Brasserie, the UK’s largest French restaurant Group. He joined Côte as a start-up business in 2008 and was appointed as joint Managing Director in 2011 and CEO in 2015. Alex has extensive experience in the hospitality sector, and was appointed to the Board on 18 January 2021. Adam Kaye Executive Director Adam founded ASK Central plc with his brother Sam in 1993. Adam studied catering at Westminster College, London and subsequently worked at City Centre Restaurants, before opening the first ASK restaurant at Haverstock Hill in 1993. ASK Central plc was sold in 2004. Adam was appointed to the Board on 8 October 2013. William (Will) Worsdell ACA Executive Director – Group Finance Director Will is a member of the Institute of Chartered Accountants in England & Wales and has held senior financial roles at several leisure and hospitality businesses, including Head of Commercial Finance at Côte Brasserie. Previously, Will worked in financial and operational planning at Heathrow for 3 years and started his career with Smith & Williamson (now Evelyn Partners), where he qualified as a Chartered Accountant in 2014. Will was appointed to the Board 28 June 2022. Charles Dorfman Non-Executive Director Charles was co-founder of Esselco properties serviced office business (now known as The Office Group). He was involved in the financing of the development phase of the Oscar winning ‘The King’s Speech’ with See Saw films and became the Executive Producer, following this success by producing titles such as ‘Untouchable’ and ‘The Lost Daughter’. He is CEO of Dorfman Media Holdings, Chairman of Media Finance Capital and Chairs the Young Patrons of the National Theatre. Charles was appointed to the Board on 8 October 2013. 17 Everyman Media Group PLC Annual report and financial statements Corporate Governance (cont.) Margaret (Maggie) Todd Independent Non-Executive Director Maggie joined Everyman from the Walt Disney Studios Motion Pictures European marketing leadership team, where she most recently held the role of Vice President of Communications for twelve years. Prior to Disney, Maggie worked at Twentieth Century Fox, in the music industry and has delivered campaigns for BAFTA, AMPAS (Academy of Motion Picture Arts & Sciences) Awards and world-renowned European film festivals. Maggie was appointed to the Board on 14 July 2021. The Directors consider Ms Todd to be independent in line with the Quoted Companies Alliance Corporate Governance Code for small and mid-size quoted companies. Michael Rosehill FCA Non-Executive Director Michael is a Fellow of the Institute of Chartered Accountants in England & Wales and has spent most of his career at the Lewis Trust Group (owners of the River Island group of companies) in both the finance and private equity divisions. Michael is a Director of Blue Coast Private Equity L.P. and therefore also has an interest in the shareholding of Blue Coast Private Equity L.P in the Ordinary Shares of the Company. Baroness Ruby McGregor-Smith CBE Independent Non-Executive Director Ruby brings with her a wealth of business acumen, acquired over a career spanning more than three decades. One of the few women to have held the position of Chief Executive at a FTSE 250 company, she grew revenues at Mitie more than four-fold to £2.2 billion, establishing it as the largest business in its sector. She is highly decorated as an industry leader, winning the 'Leader of the Year' accolade at the 2011 National Business Awards, and in 2013 being recognised by the Financial Times as one of the top 50 female business leaders in the world. Ruby is a Fellow of the Institute of Chartered Accountants in England and Wales, and was appointed a member of the House of Lords in 2015. Ruby was appointed to the Board on 20 September 2022. The Directors consider Ruby to be independent in line with the Quoted Companies Alliance Corporate Governance Code for small and mid-size quoted companies. 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 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 Philip Jacobson Paul Wise* Alex Scrimgeour Adam Kaye Elizabeth Lake** Will Worsdell*** Charles Dorfman Maggie Todd Michael Rosehill Ruby McGregor-Smith**** Total meetings held * Resigned 28 February 2023 ** Resigned 28 April 2022 *** Appointed 28 June 2022 **** Appointed 20 September 2022 Board 10 10 11 10 3 5 9 9 11 4 11 Audit 4 n/a n/a n/a 4 - n/a n/a 4 - 4 Remuneration 6 n/a n/a n/a n/a n/a 6 n/a 6 2 6 Nomination 2 n/a n/a n/a n/a n/a 2 n/a 2 - 2 18 Everyman Media Group PLC Annual report and financial statements Corporate Governance (cont.) The Directors have both a breadth and depth of skills and experience to fulfil their roles. The Company believes that the current balance of skills in the Board as a whole are appropriate and beneficial for all shareholders and stakeholders. Each Director has significant experience in building a successful business and offer key expertise 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. Advisors One Advisory acts as Group Secretary and support to ensure the necessary information is supplied to 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. Neither the Board nor its Committees have sought external advice on a significant matter. Board evaluation The Board accepts that the Group does not fully comply with this aspect of the QCA code and has not implemented a Board evaluation. In the frequent Board meetings, Directors can discuss any areas where they feel a change would benefit the Group, and the independent 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. Similarly, 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. 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. 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 and was transposed into British law following Brexit. 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 19 Everyman Media Group PLC Annual report and financial statements Corporate Governance (cont.) 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. 20 Everyman Media Group PLC Annual report and financial statements Audit Committee Report The Audit Committee is chaired by Ruby McGregor-Smith FCA. Philip Jacobson FCA stepped down as Audit Committee Chairman on 1st January 2023. The Committee also includes Michael Rosehill FCA. Both Ruby and Michael have extensive experience as Chartered Accountants working both within audit practice and industry. The Audit Committee met four times during the year. The external auditors attended two of these meetings at the invitation of the Committee Chairman. The Committee also met with the external auditors without the presence of Executive Directors or management. Objectives and Responsibilities The Committee, operating under its Terms of Reference, discharged its responsibilities by, amongst other things, reviewing and monitoring: • the consistency of, and any changes to, accounting policies both on a year-on-year basis and across the parent Company and the Group. the methods used to account for significant or unusual transactions. • • whether the Company has followed appropriate accounting standards and made appropriate estimates and judgments, taking • • • • into account the views of the external auditors. the effectiveness of the external auditors and considering and making recommendations on the reappointment of the external auditors. the adequacy and effectiveness of the Company’s internal financial controls and internal control and risk management systems. the clarity of disclosure in the Company’s financial reports and the context in which statements are made; and all material information presented with the financial statements, such as the operating and financial review including the audit and risk management statements within the corporate governance report. Financial Reporting The Committee concluded that the Annual Report and financial statements, taken as a whole, were fair, balanced, and understandable and provided the information necessary for shareholders to assess the Company’s and the Group’s financial position, performance, business model and strategy. The Committee reviewed the 2022 full-year and half-year results announcements and considered matters raised by the external auditors identifying certain issues requiring its attention. The Committee has continued its monitoring of the financial reporting process and its integrity, risk management systems and assurance. External Audit The Committee will meet with the auditor at least twice a year, once at the planning stage, where the nature and scope of the audit will be considered, and once post-audit at the reporting stage. The Committee is responsible for reviewing and approving the annual audit plan with the auditor and ensuring that it is consistent with the scope of the audit engagement and the effectiveness of the audit. In addition, the Committee is responsible for reviewing the findings of the audit with the external auditor which shall include but not be limited to discussing any issues which arose during the audit, accounting and audit judgements, levels of errors identified and the effectiveness of the audit. BDO LLP were appointed as external auditors in 2020 following an audit tender process carried out in 2020. The Company will look to rotate auditors through an external audit tender by 2029. The Committee will engage in discussions with the auditor regarding fees, internal controls and such issues as compliance with accounting standards and any proposals which the external auditor has made regarding the Company's internal auditing standards. Risk Management and Internal Controls The Committee shall keep under review the adequacy and effectiveness of the Company’s internal financial controls and risk management systems including monitoring the proper implementation of such controls and will review and approve the statements to be included in the annual report concerning internal controls and risk management. The Committee will also consider annually whether there is a need for an internal audit function and make a recommendation to the Board. At present, the function is not yet considered necessary as day-to-day control is sufficiently exercised by the Company’s Executive Directors. Further details on the Company’s risk management and internal controls can be found on pages 9 and 10. 21 Everyman Media Group PLC Annual report and financial statements Audit Committee Report (cont.) The Committee also has a responsibility to review the adequacy of the Company’s arrangements for its employees and contractors to confidentially raise any concerns about possible wrongdoings regarding financial reporting or other matters. The Audit Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action. In addition, the Committee shall review the Company's procedures for detecting fraud and the Company's systems and controls for the prevention of bribery and receive reports on non-compliance. The Committee will also monitor and ensure the Company's adherence to its AIM Rules compliance policy. Significant issues considered by the Audit Committee during the year During the year the Committee, Management and the external auditor considered and concluded what the significant risks and issues were in relation to the financial statements and how these would be addressed. In relation to the 2022 Group financial statements, significant risks have been identified which are outlined as follows: • Management override of controls Fraud in revenue recognition • Going concern • Impairment of goodwill, property, plant and equipment and right of use assets • In addition to the above significant risks, the Committee, management and the external auditor considered the following elevated risks: • • • • Accounting for new property leases under IFRS 16 Completeness of lease modifications and rent concessions System and data migration from SAGE to Microsoft Dynamics 365 Revenue – Film, Food and Beverage Auditor’s Independence The Committee approves the external auditor’s terms of engagement, scope of work, the process for the interim review and the annual audit. It also reviews and discusses with the auditor the written reports submitted and the findings of their work. It has primary responsibility for making recommendations to the Board, for it to put to the shareholders for their approval at a general meeting, in relation to the appointment, re-appointment, and removal of the external auditor. The Committee is also responsible for reviewing and monitoring external auditor's independence and objectivity as well as their qualifications, expertise and resources and the effectiveness of the audit process, taking into consideration relevant UK and other relevant professional and regulatory requirements. The Group have considered the auditor's independence and continues to believe that BDO 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. Philip Jacobson Chair Audit Committee 11 April 2023 22 Everyman Media Group PLC Annual report and financial statements Remuneration Committee Report The Remuneration Committee is chaired by Michael Rosehill (non-executive Director) and includes Charles Dorfman and Ruby McGregor- Smith. The Committee meets as required during the year and invites recommendations as to remuneration levels, incentive arrangements for senior executives and proposals regarding share option awards from the Chief Executive Officer. 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 and met 6 times during 2022. 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. Responsibilities The Committee’s principal responsibilities include: • • • • • Determining and agreeing with the Board the framework or broad policy for the remuneration of Executive Management; Reviewing and having regard to pay and employment conditions across the Company when setting remuneration policy for Executive Management and especially when determining salary increases; Approving the design of and determining targets for any performance-related pay schemes operated by the Company; Overseeing the design and application of share options and any other such reward plan in conjunction with the Board; and Determining the policy for and scope of pension arrangements for Executive Management. The Non-Executive Directors, whose remuneration is determined by the Board as a whole, receive fees in connection with their services provided to the Group, to the Board and to Board Committees. Certain senior staff and Executive Directors receive basic salaries, annual bonuses according to performance against defined targets, and certain benefits in kind. Basic salary The 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. Annual Bonus In December 2022, the Committee recommended the Board approve a bonus to the Executive Chair, Chief Executive Officer, Finance Director and Executive Director based on performance targets that were met for the 2022 financial year. Share Options The Group’s policy is that in addition to their salaries and bonuses, Executive Directors and senior management should be awarded share options in order that their interests may be more closely aligned with those of shareholders. The company operates a Long-Term Incentive Plan (LTIP) and the Committee recommended to the Board that share options were awarded and set the performance criteria (see note 31). The Group also operates a non-approved share incentive plan, and believes that all the venue managers, head office staff, and the Executive and senior management team should have the opportunity to participate, alongside shareholders, in the long-term growth and success of the Group. During the year awards were recommended by the Committee (see note 31). 23 Everyman Media Group PLC Annual report and financial statements Remuneration Committee Report (cont.) Directors’ remuneration For the year ended 29 December 2022 Director Salary Pension Contributions Alex Scrimgeour William Worsdell ACA Elizabeth Lake FCA Paul Wise Adam Kaye Philip Jacobson FCA Charles Dorfman Michael Rosehill FCA Maggie Todd Ruby McGregor-Smith FCA £’000 294 73 51 157 105 36 18 18 40 15 807 For the year ended 30 December 2021 £’000 10 1 3 - - - - - - - 14 Director Alex Scrimgeour Elizabeth Lake FCA Paul Wise Adam Kaye Philip Jacobson FCA Charles Dorfman Michael Rosehill FCA Maggie Todd Salary £’000 244 177 158 100 30 10 10 19 748 Pension Contributions £’000 9 6 - - - - - - 15 Other benefits £’000 21 - 1 - - - - - - - 22 Other benefits £’000 15 3 - - - - - - 18 Bonus Share-based payments £’000 44 11 - 20 13 - - - - - 88 £’000 598 21 - 125 125 - - - - - 869 Bonus £’000 40 43 19 13 - - - - 115 Share-based payments £’000 750 (142) 56 56 - - - - 720 Total £’000 967 106 55 302 243 36 18 18 40 15 1,800 Total £’000 1,058 87 233 169 30 10 10 19 1,616 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 Alex Scrimgeour. Share based payments are valued using the share price at the original grant date. Remuneration policy for 2023 and future years The Group remuneration policy is designed to support strategy and promote long-term sustainable success. It is committed to complying with the principles of good corporate governance in relation to the design of the Group’s remuneration policy. As such, our policy takes account of the QCA Corporate Governance Code, against which the Company formally reports compliance. The Committee also considers other best practice guidance such as the QCA Remuneration Committee Guide and the Investment Association’s Principles of Remuneration, as far as is appropriate to the Group’s management structure, size and listing. Future salary awards and increases will be set in line with relevant market levels, economic changes and to retain and attract high quality executives. Performance elements of remuneration will have clearly defined and challenging targets that link rewards to business performance in the short and medium-term. All variable elements of remuneration are subject to clawback or repayment in the event of serious financial misstatement or misconduct. 24 Everyman Media Group PLC Annual report and financial statements Remuneration Committee Report (cont.) Consideration of Shareholder Views The Remuneration Committee considers feedback received from Shareholders during any meetings or otherwise from time to time, when undertaking the Group’s annual review of its Policy. In addition, the Chairman of the Remuneration Committee will seek to engage directly with institutional Shareholders and their representative bodies should any material changes be made to the Policy. Consideration of employment conditions elsewhere in the Group The Remuneration Committee considers any general basic salary increase for the broader employee population when determining the annual salary increases for the Executive Directors. The Remuneration Committee did not consult with other employees regarding remuneration of the Executive Directors. Michael Rosehill Chair Remuneration Committee 11 April 2023 25 Everyman Media Group PLC Annual report and financial statements Director’s report The Directors present their annual report and audited financial statements for the Group for the year ended 29 December 2022 (comparative period: year ended 30 December 2021). 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 loss after tax for the year of £3.5m (2021: £5.4m loss). The Directors do not recommend the payment of a dividend (2021: £nil). Principal activity The Group is a leading independent cinema group in the UK. Further information is contained in the strategic report. 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. Energy and carbon Everyman recognises that its operation has an environmental impact globally and is committed to monitoring and reducing its emissions. The Group is also aware of the reporting obligations under The Companies and Limited Liability Partnerships Regulations 2018. The table below summarises emissions and energy usage to increase the transparency with which the business communicates about the environmental impact to stakeholders. The increases on last year are due to venues being closed between 1st January and 17th May 2021. Emissions Source Natural Gas Electricity Fuel for transport (employees only) Total tCO2e Total Energy Usage (kWh) Energy Intensity – CO2t per ft2 2022 904 2,416 12 3,332 17,494,207 0.083 2021 875 1,493 19 2,387 11,888,938 0.062 The EMA methodology has been used to calculate the GhG emissions is in accordance with the relevant requirements of the following standards: • • • GHG Reporting Protocol: Corporate Standard Internal Organisation for Standardisation, ISO (ISO 14064-1:2018) The Global Reporting Initiative Sustainability Reporting Guidelines In the period covered by the report, the Group has undertaken the following emissions and energy reduction initiatives: • • • • • New systems on real-time energy usage, measured at appliance level to help pinpoint where energy is being wasted Air conditioning controls enabling timing, temperature regulation and demand-controlled ventilation for Auditoria based on occupancy levels Installation of heat recovery reclaiming a portion of the energy used in heating, venting and air conditioning Installation of LED lamps and Passive Infrared Sensors in areas of infrequent occupancy to conserve electricity usage Use of energy saving catering electrical kitchen equipment Capital structure The number of Ordinary shares in issue at 29 December 2022 was 91.2m (2021: 91.2m). The Group also issued options over the share capital of the Company to members of the Board and to certain employees which amounted to 7.0m Ordinary shares (2021: 6.9m Ordinary shares) which, if exercised, would comprise 7.1% (2021: 7.1%) of the current issued share capital of the Company (see also Directors’ interests below and the related notes). The shares of the Company are quoted on the London AIM market. 26 Everyman Media Group PLC Annual report and financial statements Director’s report (cont.) Going concern Current trading is in line with management expectations. Given the increased number of wide releases year-on-year, commitment to the theatrical window from distributors and new investment from streamers in content for cinema, management expect admissions to continue to recover towards pre-pandemic levels. Paid for Average Ticket Price and Spend per Head have continued to grow steadily despite well-publicised concerns over consumer spends. Banking The Group’s banking arrangements consist of a £25m Revolving Credit Facility (“RCF”) and a £15m Coronavirus Large Business Interruption Loan Scheme (“CLBILS”). On the 14th March 2023 the RCF was extended by 3 months, to 17th April 2024. The CLBILS, which cannot be extended, will mature on the previous maturity date of 17th January 2024. The Group’s forecasts demonstrate headroom without the CLBILS component of the facility. The Group is actively engaged with its banking partners on a re-finance of both the RCF and the CLBILS and expects to complete this process in the coming months. At the end of the year, the Group had drawn down £22.2m on its facilities and held £3.7m in cash; the undrawn facility was therefore £18m and net banking debt £18.5m. The facility covenants were amended temporarily to provide liquidity through the pandemic, when the facility amendments were made in the first quarter of 2021. From June 2022, the covenants returned to the pre-pandemic tests based on leverage and fixed cover charge. The Group has operated within these covenants all year and expects to continue to do so going forward. Sale of Crystal Palace Freehold On 16 January 2023, the Group completed the sale and leaseback of its freehold property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after associated fees and disbursements, were £3.8m. At the balance sheet date, the property was held for sale in ECPee Limited, with a carrying value of £3.2m. This additional liquidity has reduced the Group’s reliance on debt to finance its expansion programme during 2023. Salisbury Freehold During the year the Group acquired the freehold at Gala Clubs, Endless Street, Salisbury SP1 1DP, which will open as a new four-screen cinema during 2023. The Group’s forecasts do not consider the sale of this freehold and subsequent leaseback within the next 12 months. However, should the need for additional liquidity arise, management are of the view that this could be brought forward, as required. Base case Scenario The period forecast is up to 30 June 2024. The business has now traded for in excess of 18 months without Government-enforced closures due to the pandemic, and the Board approved budget and latest forecasts assume that this will continue indefinitely. The forecast assumes growth in like-for-like admissions vs. 2022, given the fuller film release schedule as the industry recovers from pandemic-related production delays, but remain below pre- pandemic levels. Increases in forecast costs reflect the current inflationary environment. New openings are forecast at 6 for 2023, with corresponding capital investment. In this scenario the Group maintains significant headroom in its banking facilities. Stress testing The Board considers budget assumptions on admissions to be very conservative, given that they do not demonstrate a return to pre- pandemic levels until 2025.. A reduction in budgeted admissions of 8% each month from March 2023 has been modelled. This scenario would cause a breach in the Fixed Cover Charge covenant in May 2023. 27 Everyman Media Group PLC Annual report and financial statements Director’s report (cont.) If such a scenario were to occur, Management would be able to temporarily reduce administrative expenditure to increase EBITDA and avoid a breach, without material impact to the Group’s operations and the quality of customer experience. In this scenario, the Group would remain compliant with the Adjusted Leverage covenant. The Directors believe that the Group is well-placed to manage its financing and other business risks satisfactorily and have a reasonable expectation that the Group will have adequate resources to continue in operation for at least 12 months from the signing date of these consolidated financial statements. The Board considers that an 8% reduction in budgeted admissions is plausible but unlikely, particularly in light of business performance in January and February 2023 and the increase in the number of wide releases expected over the remainder of the year. As a result, the Board does not believe this to represent a material uncertainty, and therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. Substantial shareholdings As at 29 December 2022 the Company was aware of the following interests in 3% or more of the Company’s Ordinary share capital as set out below. Shareholder Blue Coast Private Equity LP BlackRock Tellworth Investments Canaccord Genuity Wealth Management Charles Dorfman* Adam Kaye Samuel Kaye Otus Capital Management Gresham House Asset Management Schroder Investment Management Shore Capital Paul Wise** % of issued share capital 2022 19.58% 9.34% 8.63% 7.99% 6.44% 5.98% 5.51% 5.07% 3.96% 3.80% 3.29% 3.28% % of issued share capital 2021 18.98% 8.40% 9.03% 8.72% 6.44% 5.87% 5.20% 5.02% 3.97% 3.80% 3.29% 3.24% *Of the 5,870,027 Ordinary shares Charles Dorfman is interested in 3,213,876 (2021:3,213,876) Ordinary shares are held by the Lloyd Dorfman Children’s Settlement. Charles Dorfman is one of the potential beneficiaries of the settlement. **Of the 2,986,752 Ordinary shares Paul Wise is interested in, 2,260,052 (2021: 2,260,052) Ordinary shares are held by the Paul Wise Family Trust. Paul Wise is one of the potential beneficiaries of the Trust. Directors Biographical details of continuing Directors are set out on the Company’s website: investors.everymancinema.com. The Directors of the Company during the year were: Directors Adam Kaye Alex Scrimgeour Charles Dorfman (R,N) Elizabeth Lake FCA (resigned 28 March 2022) Maggie Todd Michael Rosehill FCA (R,N,A) Paul Wise (resigned 28 February 2023) Philip Jacobson FCA Ruby McGregor-Smith (R,N,A) (appointed 20 September 2022) William Worsdell ACA (appointed 28 June 2022) Function Executive Director Chief Executive Officer Non-Executive Director Chief Financial Officer Independent Non-Executive Director Non-Executive Director Executive Chairman Non-Executive Chairman Independent Non-Executive Director Finance Director R = Member of the remuneration committee N = Member of the nominations committee A = Member of the audit committee Philip Jacobson resigned from the Remuneration, Nomination and Audit Committees on 1 January 2023. 28 Everyman Media Group PLC Annual report and financial statements Director’s report (cont.) 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 the date of this report): Director Charles Dorfman Adam Kaye Paul Wise Alex Scrimgeour Michael Rosehill FCA* Philip Jacobson FCA Number of Ordinary shares 2022 5,870,027 5,449,956 2,986,752 250,974 218,710 98,336 % of issued share capital 2022 6.44% 5.98% 3.28% 0.28% 0.24% 0.11% Number of Ordinary shares 2021 5,870,027 5,349,956 2,956,752 240,974 218,710 98,336 % of issued share capital 2021 6.44% 5.87% 3.24% 0.26% 0.24% 0.11% *Michael Rosehill is a Director of Blue Coast Private Equity and therefore has an interest in its shareholding. As at the Balance Sheet date, the following options over Ordinary shares were held by the Directors (see also notes to the financial statements): Issued in the year Number Lapsed in the year Number Exercised in the year Number Director Grant Date Exercise Price Pence Alex Scrimgeour 8 April 21 30 July 21 24 Oct 22 Paul Wise 12 Nov 20 Adam Kaye 12 Nov 20 Philip Jacobson 29 Oct 13 Charles Dorfman 29 Oct 13 Michael Rosehill 04 Nov 13 William Worsdell 05 May 22 27 June 22 24 Oct 22 100 10 10 94 94 83 83 83 130 111 10 30 December 2021 Number 1,000,000 120,430 - 800,000 800,000 100,000 50,000 50,000 - 186,667 - (120.430) (186,667) - - - - - - - - - - - - - 100,000 100,000 46,561 - - (46,561) Total 2,920,430 433,228 (353,658) 29 December 2022 Number 1,000,000 - - 800,000 800,000 100,000 50,000 50,000 100,000 100,000 - 3,000,000 - - - - - - - - - - - In addition to the options in the table above, Alex Scrimgeour holds Growth Shares in Everyman Media Holdings Limited which subject to certain performance conditions can be exchanged for new shares in Everyman Media Group PLC. Director Grant Date Vesting Conditions Exercise Price Pence 30 December 2021 Number Issued in the year Number Lapsed in the year Number Exercised in the year Number 29 December 2022 Alex Scrimgeour 10 June 21 10 June 21 19 19 10 10 Total 1,000,000 1,000,000 2,000,000 - - - - - - Number 1,000,000 1,000,000 2,000,000 - - - 29 Everyman Media Group PLC Annual report and financial statements Director’s report (cont.) Details of the option scheme vesting and performance conditions are set out at note 32 of the financial statements. No share options (2021: Nil) were exercised by Directors during the year. 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, unless other arrangements have been agreed. 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 year has again been challenging for all our employees, and the Group has maintained regularly communication throughout the year, particularly during periods of closure and furlough. The Group has continued to seek 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 in the year of £8,833 (2021: £Nil). Post balance sheet events Sale and leaseback of Crystal Palace venue On 16 January 2023, the Group completed the sale and leaseback of its freehold property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after associated fees and disbursements, were £3.8m. At the balance sheet date, the property was held for sale in ECPee Limited, with a carrying value of £3.2m. As a result of the transaction, the Group will recognise a net profit on disposal of £0.6m in 52-week period ended 28 December 2023. The leaseback element of the transaction is accounted for as a finance lease under IFRS 16. This will result in the recognition of a right of use asset and a lease liability in 2023. Under the terms of the lease agreement, the Group has leased back the property for a period of 25 years at annual rent of £240,000. The rent is to be reviewed every five years. The first and second reviews are to be upwards only on an indexed basis by reference to increases in the Retail Prices All Items Indexed with a collar of 1% per annum and a cap of 4% per annum. The third and fourth reviews are on an upwards only basis to be the higher of the indexed rent (increased in accordance with the mechanism agreed for the first two reviews) and the open market rent pursuant to an open market rent review mechanism. Extension of banking facilities On 14th March 2023, the Group extended its £25m revolving credit facility (“RCF”) by a period of 3 months, to 17 April 2024. The Group’s residual £15m facility is a Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) and cannot be extended beyond its original maturity date of 17 January 2024. The Group has begun a process to re-finance both the RCF and the CLBILS and expects to complete this in due course. 30 Everyman Media Group PLC Annual report and financial statements Director’s report (cont.) 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 BDO 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 Alex Scrimgeour CEO Everyman Media Group PLC Studio 4, 2 Downshire Hill London NW3 1NR 11 April 2023 31 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 financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with UK adopted International Accounting Standards and the parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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 the profit or loss of the Group 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 UK adopted international accounting standards subject to any material departures disclosed and explained in the financial statements. 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. Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent Company will continue in business. • • 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. The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein. 32 Everyman Media Group PLC Annual report and financial statements Independent auditor's report to the members of Everyman Media Group PLC Opinion on the financial statements 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 29 December 2022 and of the Group’s loss for the year then ended; the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. • • • We have audited the financial statements of Everyman Media Group PLC (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 29 December 2022 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 and the company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting is set out in the related key audit matter section of this report. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. 33 Everyman Media Group PLC Annual report and financial statements Overview Coverage1 100% (2021: 100%) of Group revenue 100% (2021: 100%) of Loss before tax 100% (2021: 99%) of Group total assets Impairment of goodwill, property, plant and equipment and right- of-use asset Leases – Impact of rent concessions and modifications Key audit matters Going concern assessment and disclosure 2022 2021 ✓ x ✓ ✓ ✓ ✓ The impact of rent concessions and modifications on leases is no longer a key audit matter as few variations to leases arrangements have arisen during the current year. Variation to lease terms was prevalent in the prior period in response to Covid-19. For these reasons, it was not considered to be a significant risk. Group financial statements as a whole Materiality £800,000 (2021: £460,000) based on 1% (2021: 0.9%) of revenue recorded for the year ended 29 December 2022 An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. We analysed the key financial metrics and risk factors of the Group’s components to determine those we consider significant to the Group. We considered Everyman Media Group PLC, Everyman Media Holdings Limited, and Everyman Media Limited to be significant components. As such, these companies were subject to full scope audits to their respective component materiality performed by the Group engagement team. In respect of non-significant components, we performed analytical procedures together with further limited procedures over certain balance sheet and expense items where these were material. We considered each key audit matter identified below in respect of the non- significant components to ensure that these risks were appropriately addressed through our work performed at a Group level. The Group audit team obtained an understanding of the internal control environment related to the financial reporting process and assessed the appropriateness, completeness and accuracy of Group journals and other adjustments performed on consolidation. 1 These are areas which have been subject to a full scope audit by the Group engagement team 34 Everyman Media Group PLC Annual report and financial statements Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, 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. Key audit matter Impairment of goodwill, property, plant and equipment and right-of-use asset See accounting policy in note 2, note 15 Property, plant and equipment, note 17 Leases, note 18 Goodwill, intangible assets and impairment. The Group has goodwill of £7,352,000 (2021: £7,352,000), property, plant and equipment of £90,067,000 (2021: £81,848,000) and right-of- use assets of £58,920,000 (2021: £58,593,000) Goodwill and property, plant and equipment (PPE), including the right-of-use assets (ROU Assets) are significant balances. Cash Generating Units (CGU) are assessed for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. CGU’s containing goodwill are subject to annual impairment reviews. The remaining CGU’s have been subject to an impairment trigger analysis. Impairment reviews require use of assumptions, including discount rates, forecast admissions growth, average ticket price and spend per head. The assessment of any potential impairment of the carrying values are subject to management judgment and estimation uncertainty where there is a requirement to estimate the recoverable amount. Due to the high degree of estimation uncertainty included in impairment models we consider this to be a significant risk and key audit matter. How the scope of our audit addressed the key audit matter We have obtained management’s impairment analysis and: • • • • checked the mathematical accuracy of the cash flow forecasts and impairment models, checking consistency with the requirements of the applicable accounting standard; agreed the budgeted performance data to board approved forecasts and evaluated the process by which management prepared its forecast, including whether it appropriately factored in the potential impacts of cost-of-living crisis, and any expected decline in consumer spending; challenged the appropriateness of key estimates and assumptions used by management within the forecast model including admissions, average ticket price and spend per head, comparing these against prior periods, industry peers and external sources of data including industry outlook reports; reviewed management’s sensitivity analysis and considered whether a reasonable change in assumptions could indicate a potential impairment; and • with the assistance of our internal valuation experts, we assessed the appropriateness of the discount rate and impairment model used. We also critically reviewed completeness and accuracy of disclosures relating to assumptions used in management’s model. Key observations: We are satisfied that the judgements applied by management and disclosures within the financial statements are appropriate. 35 Everyman Media Group PLC Annual report and financial statements Key audit matter Going concern assessment and disclosure (Group and Parent Company) See accounting policy in note 2. The financial statements explain how the Board has formed a judgement that it is appropriate to adopt the going concern basis of preparation for the Group and Parent Company. Trading has improved from the prior period driven by higher admissions, opening of two new venues, and no government-imposed closures for the Covid pandemic. All venues traded through the year, aside from temporary closures for refurbishments. Despite these improvements the macro - economic environment is challenging with high inflation and energy prices representing risk to consumer confidence and availability of discretionary income. The Group has a banking facility that has been partially drawn down, and has covenants to comply with. The risk for our audit is whether or not the above, or related matters, are such that they amount to a material uncertainty that may have cast significant doubt about the ability to continue as a going concern. Had they been such, then that fact would have been required to have been disclosed, and therefore there is also a risk of the going concern disclosures not being sufficient. How the scope of our audit addressed the key audit matter We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the Directors’ sensitivities over the level of available financial resources and covenant thresholds. Our procedures included: • • • • • • obtaining an understanding of how the Directors undertook the going concern assessment process to determine if we considered it to be appropriate for the current economic circumstances. This included checking that it included an assessment of the impact of rising inflation, reduction in consumer disposable income; obtaining the Directors’ base case forecast and stress test scenarios underlying the going concern assessment and considering sensitivities over the level of financial resources indicated by the Group’s financial forecasts. Key estimates and assumptions within the forecasts, included admissions, average ticket prices and spend per head, the reasonableness of which were considered with reference to historical levels achieved both pre- Covid-19 and following re-opening in May 2021; confirming compliance with loan covenants is expected during the forecast period based on the above scenarios to identify the existence of breaches. obtain loan facilities extensions agreements, and checking management have considered, the likelihood of higher interest cost. comparing post year end trading performance against the forecasts to evaluate the achievability of the forecasts prepared; and considering whether the going concern disclosures in note 2 to the financial statements gives a full and accurate description of the Directors’ assessment of going concern. Key observations: As disclosed above in the Conclusions relating to going concern section, we found the going concern disclosure in note 2 without any material uncertainty to be acceptable (2021: acceptable). Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. 36 Everyman Media Group PLC Annual report and financial statements Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Materiality Basis for determining materiality Rationale for the benchmark applied Group financial statements 2021 2022 £460,000 £800,000 0.9% of Group 1% of Group revenue revenue As the Group continues to expand through investment in new venues, advertising and promotion, we consider revenue to be the most stable measure on which to base materiality and provides users of the financial statements with the most appropriate benchmark to assess performance of the Group. Parent company financial statements 2022 £600,000 0.6% of Company net assets 2021 £220,000 0.2% of Company net assets We have selected net assets as the appropriate benchmark as it most accurately reflects the Parent Company’s status as a non- trading holding company. Performance materiality Basis for determining performance materiality £560,000 £322,000 £420,000 £154,000 70% of Group Materiality 70% of Parent company Materiality Rationale for the percentage applied for performance materiality In setting the level of performance materiality, we have considered the level of specific risk associated with the audit, including the potential for aggregation and sampling risk across the Group. Component materiality For the purposes of our Group audit opinion, we set materiality for each significant component of the Group , apart from the Parent Company whose materiality is set out above, based on a percentage of between 25% and 98% (2021: 31% and 98%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £200,000 to £780,000 (2021: £144,000 to £450,000). In the audit of each component, we further applied performance materiality levels of 70% (2021: 70%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £32,000 (2021: £18,400). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the Annual report and financial statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic Directors’ report report and In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and 37 Everyman Media Group PLC Annual report and financial statements • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us 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; or the Parent Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or • • we have not received all the information and explanations we require for our audit. Matters on which we are report by to required exception Responsibilities of Directors As explained more fully in the Statement of Directors' responsibilities in respect of the annual report and financial statements, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the 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 the Directors 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 for the audit of the financial statements 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 an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (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 the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Identifying and assessing potential risks related to irregularities In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following: • • obtaining an understanding of the legal and regulatory frameworks that the Group operates in, focusing on those laws and regulations that had a direct effect on the financial statements or that had a fundamental effect on the operations of the Group. The significant laws and regulations we considered in this context included the UK Companies Act, the accounting frameworks, Alternative Investment Market (AIM) rules and relevant tax legislation. enquiring of management and the audit committee, including obtaining and reviewing supporting documentation, concerning the Group’s policies and procedures relating to: o o o identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; the internal controls established to mitigate risks related to fraud or non-compliance with laws and regulations; and 38 Everyman Media Group PLC Annual report and financial statements • discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud. As part of this discussion, we identified the potential for fraud in the following areas: o management override of controls and revenue recognition, specifically in relation to recording of journal postings, and o where significant estimation uncertainty and judgements are required, such as impairment testing of goodwill, leases and property, plant and equipment as set out in the key audit matters section. Audit response to risks identified Our procedures to respond to risks identified included the following: • • • • • reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with relevant laws and regulations discussed above; enquiring of management and the audit committee concerning actual and potential litigation and claims; performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; reading minutes of meetings of those charged with governance and reviewing correspondence with HMRC; and in addressing the risk of fraud in revenue and through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and assessing if there were any significant transactions that are unusual, and if so, evaluating the business rationale. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www frc org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Daniel Henwood (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor Reading, UK 11 April 2023 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 39 Everyman Media Group PLC Annual report and financial statements Consolidated statement of profit and loss and other comprehensive income for the year ended 29 December 2022 Revenue Cost of sales Gross profit Other Operating Income Impairment reversal Administrative expenses Operating profit /(loss) Financial expenses Loss before tax Tax charge Loss for the year Other comprehensive income for the year Total comprehensive income for the year Basic loss per share (pence) Diluted loss per share (pence) All amounts relate to continuing activities. Year ended Year ended 29 December 30 December 2022 £000 78,817 (28,338) 2021 £000 49,027 (18,129) 50,479 30,898 622 - (50,699) 402 (3,906) 3,800 2,504 (39,363) (2,161) (3,255) (3,504) (5,416) - (14) (3,504) - (5,430) 69 (3,504) (5,361) (3.84) (3.84) (5.96) (5.96) Note 6 11 12 13 14 14 40 Everyman Media Group PLC Annual report and financial statements Non-GAAP measure: adjusted EBITDA Adjusted EBITDA Before: Depreciation and amortisation Disposal of Property, Plant & Equipment Impairment reversal Pre-opening expenses Exceptional Share-based payment expense Operating profit / (loss) Year ended Year ended 29 December 30 December 2022 £000 14,527 (11,725) (434) - (195) (234) (1,537) 402 2021 £000 8,281 (11,727) - 2,504 (147) - (1,072) (2,161) 15/17/18 15 31 41 Everyman Media Group PLC Annual report and financial statements Consolidated balance sheet at 29 December 2022 Registered in England and Wales Company number: 08684079 Note 29 December 2022 £000 30 December 2021 £000 Assets Non-current assets Property, plant and equipment Right-of-use assets Intangible assets Trade and other receivables Asset held for sale Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets Liabilities Current liabilities Loans and borrowings Other provisions Trade and other payables Lease liabilities Non-current liabilities Loans and borrowings Other provisions Lease liabilities Total liabilities Net assets Equity attributable to owners of the Company Share capital Share premium Merger reserve Other reserve Retained earnings Total equity 15 17 18 22 16 20 22 21 24 28 23 17 24 28 17 30 30 30 90,067 58,920 9,312 173 158,472 3,219 161,691 690 5,840 3,701 10,231 171,922 247 - 15,571 3,014 18,832 22,000 1,362 83,459 106,821 125,653 46,269 9,118 57,112 11,152 83 (31,196) 46,269 81,848 58,593 8,906 177 149,524 - 149,524 711 5,649 4,240 10,600 160, 124 119 393 15,994 2,633 19,139 12,500 1,118 79,147 92,765 111,904 48,220 9,117 57,097 11,152 83 (29,229) 48,220 These financial statements were approved by the Board of Directors and authorised for issue on 11 April 2023 and signed on its behalf by: Will Worsdell Finance Director 42 Everyman Media Group PLC Annual report and financial statements Consolidated statement of changes in equity for the year ended 29 December 2022 Share capital £000 Share premium £000 Merger reserve £000 Other reserve £000 Retained earnings £000 Total Equity £000 Note Balance at 31 December 2020 9,110 57,038 11,152 Loss for the year Retranslation of foreign currency denominated subsidiaries Total comprehensive income Shares issued in the period Share-based payments Growth Shares Total transactions with owners of the parent 30 31 - - - 7 - - 7 - - - 59 - - 59 - - - - - - - Balance at 30 December 2021 9,117 57,097 11,152 Loss for the year Total comprehensive income Shares issued in the period Share-based payments Total transactions with owners of the parent 30 31 - - 1 - 1 - - 15 - 15 - - - - - (6) - 69 69 - - 20 20 83 - - - - - (24,871) 52,423 (5,430) (5,430) - 69 (5,430) (5,361) - 1,072 - 1,072 66 1,072 20 1,158 (29,229) 48,220 (3,504) (3,504) (3,504) (3,504) - 1,537 1,537 16 1,537 1,553 Balance at 29 December 2022 9,118 57,112 11,152 83 (31,196) 46,269 43 Everyman Media Group PLC Annual report and financial statements Consolidated cash flow statement for the year ended 29 December 2022 Note 12 13 15,17,18 31 30 25 25 17 17 17 Cash flows from operating activities Loss for the year Adjustments for: Financial expenses Income tax expense Operating profit/(loss) Depreciation and amortisation Impairment reversal Loss on disposal of property, plant and equipment Rent concessions Gain on lease derecognition Share-based payment expense Changes in working capital: Decrease/ (Increase) in inventories Increase in trade and other receivables (Decrease)/Increase in trade and other payables (Decrease)/ Increase in provisions Net cash generated from operating activities Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangible assets Net cash used in investing activities Cash flows from financing activities Proceeds from the issuance of shares Drawdown of bank borrowings Repayment of bank borrowings Lease payments – interest Lease payments – capital Landlord capital contributions received Interest paid Net cash generated from/ (used in) financing activities Net (decrease)/ increase in cash and cash equivalents Exchange loss on cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year The Group had £18,000,000 of undrawn funds available (2021: £27,500,000) of the loan facility at the year end 29 December 2022 £000 30 December 2021 £000 (3,504) 3,906 - 402 11,725 - 434 - (99) 1,537 13,999 21 (187) (1,658) (378) 11,797 (18,884) (1,058) (19,942) 16 9,500 - (2,851) (3,210) 5,005 (854) 7,606 (539) - 4,240 3,701 (5,430) 3,255 14 (2,161) 11,727 (2,504) 488 (701) - 1,072 7,921 (326) (2,844) 7,067 384 12,202 (7,391) (422) (7,813) 86 6,000 (2,500) (2,587) (1,526) 500 (519) (546) 3,843 69 328 4,240 44 Everyman Media Group PLC Annual report and financial statements Company balance sheet as at 29 December 2022 Registered in England and Wales Company number: 08684079 Assets Non-current assets Trade and other receivables Property, plant and equipment Right-of-use assets Investments Deferred tax assets Current assets Trade and other receivables Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Loans and borrowings Non-current liabilities Loans and borrowings Lease liabilities Other provisions Total liabilities Net assets Equity Equity attributable to owners of the Company Ordinary shares Share premium Merger reserve Retained earnings Total equity Note 22 15 17 19 29 23 17 24 24 17 28 30 30 30 29 December 30 December 2022 £000 89,767 - 8,347 31,994 188 2021 £000 76,772 43 8,867 31,994 150 130,296 117,826 - 130,296 176 118,002 524 352 247 1,123 22,000 9,459 84 31,543 32,666 97,630 9,118 57,112 20,336 11,064 97,630 48 679 119 846 12,500 9,926 84 22,510 23,356 94,646 9,117 57,097 20,336 8,096 94,646 The Company profit for the year was £2,029,000 (2021: £2,528,000). These financial statements were approved by the Board of Directors and authorised for issue on 11 April 2023 and signed on its behalf by: Will Worsdell Finance Director 45 Everyman Media Group PLC Annual report and financial statements Company statement of changes in equity for the year ended 29 December 2022 Share capital £000 Share Merger Retained premium Reserve earnings £000 £000 £000 Total equity £000 Note Balance at 31 December 2020 Profit for the year Total comprehensive income Shares issued in the period Share-based payment expense Total transactions with owners of the parent Balance at 30 December 2021 Profit for the year Total comprehensive income Shares issued in the period Share-based payment expense Total transactions with owners of the parent 30 32 30 31 9,110 57,038 20,336 4,943 91,427 - - - 2,528 2,528 - 7 - 7 - 59 - 59 - - - - 2,528 2,528 - 625 625 66 625 691 9,117 57,097 20,336 8,096 94,646 - - 1 - 1 - - 15 - 15 - - - - - 2,029 2,029 2,029 2,029 - 939 939 16 939 955 Balance at 29 December 2022 9,118 57,112 20,336 11,064 97,630 46 Everyman Media Group PLC Annual report and financial statements Notes to the financial statements 1 General information Everyman Media Group PLC and its subsidiaries (together, the Group) are engaged in the ownership and management of cinemas in the United Kingdom. Everyman Media Group PLC (the Company) is a public company limited by shares registered, domiciled and incorporated in England and Wales, in the United Kingdom (registered number 08684079). The address of its registered office is Studio 4, 2 Downshire Hill, London NW3 1NR. All trade takes place in the United Kingdom. 2 Basis of preparation and accounting policies The consolidated financial statements of the Group have been prepared in accordance with UK adopted International Accounting Standards. The Parent Company financial statements have been prepared in accordance with United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework. The financial statements are prepared on the historical cost basis. The preparation of financial statements in compliance with UK adopted International Accounting Standards requires the use of certain critical accounting estimates, it also requires Group management to exercise judgements and estimates in preparing the financial statements. Their effects are disclosed in the notes below. 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 29 December 2022 is a 52-week period as is the comparative year. Amounts are rounded to the nearest thousand, unless otherwise stated. Company basis of preparation The Parent Company financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS101). In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards 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 IFRS13 Fair Value Measurement. Certain disclosures required by IFRS7 Financial Instruments. 47 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Going concern Current trading is in line with management expectations. Given the increased number of wide releases year-on-year, commitment to the theatrical window from distributors and new investment from streamers in content for cinema, management expect admissions to continue to recover towards pre-pandemic levels. Paid for Average Ticket Price and Spend per Head have continued to grow steadily despite well-publicised concerns over consumer spends. Banking The Group’s banking arrangements consist of a £25m Revolving Credit Facility (“RCF”) and a £15m Coronavirus Large Business Interruption Loan Scheme (“CLBILS”). On the 14th March 2023 the RCF was extended by 3 months, to 17th April 2024. The CLBILS, which cannot be extended, will mature on the previous maturity date of 17th January 2024. The Group’s forecasts demonstrate headroom without the CLBILS component of the facility. The Group is actively engaged with its banking partners on a re-finance of both the RCF and the CLBILS and expects to complete this process in the coming months. At the end of the year, the Group had drawn down £22.2m on its facilities and held £3.7m in cash; the undrawn facility was therefore £18m and net banking debt £18.5m. The facility covenants were amended temporarily to provide liquidity through the pandemic, when the facility amendments were made in the first quarter of 2021. From June 2022, the covenants returned to the pre-pandemic tests based on leverage and fixed cover charge. The Group has operated within these covenants all year and expects to continue to do so going forward. Sale of Crystal Palace Freehold On 16 January 2023, the Group completed the sale and leaseback of its freehold property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after associated fees and disbursements, were £3.8m. At the balance sheet date, the property was held for sale in ECPee Limited, with a carrying value of £3.2m. This additional liquidity has reduced the Group’s reliance on debt to finance its expansion programme during 2023. Salisbury Freehold During the year the Group acquired the freehold at Gala Clubs, Endless Street, Salisbury SP1 1DP, which will open as a new four-screen cinema during 2023. The Group’s forecasts do not consider the sale of this freehold and subsequent leaseback within the next 12 months. However, should the need for additional liquidity arise, management are of the view that this could be brought forward, as required. Base case Scenario The period forecast is up to 30 June 2024. The business has now traded for in excess of 18 months without Government-enforced closures due to the pandemic, and the Board approved budget and latest forecasts assume that this will continue indefinitely. The forecast assumes growth in like-for-like admissions vs. 2022, given the fuller film release schedule as the industry recovers from pandemic-related production delays, but remain below pre- pandemic levels. Increases in forecast costs reflect the current inflationary environment. New openings are forecast at 6 for 2023, with corresponding capital investment. In this scenario the Group maintains significant headroom in its banking facilities and complies with covenants. Stress testing The Board considers budget assumptions on admissions to be very conservative, given that they do not demonstrate a return to pre- pandemic levels until 2025. A reduction in budgeted admissions of 8% each month from March 2023 has been modelled. This scenario would cause a breach in the Fixed Cover Charge covenant in May 2023. If such a scenario were to occur, Management would be able to temporarily reduce administrative expenditure to increase EBITDA and avoid a breach, without material impact to the Group’s operations and the quality of customer experience. In this scenario, the Group would remain compliant with the Adjusted Leverage covenant. 48 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) The Directors believe that the Group is well-placed to manage its financing and other business risks satisfactorily and have a reasonable expectation that the Group will have adequate resources to continue in operation for at least 12 months from the approval of the financial statements. The Board considers that an 8% reduction in budgeted admissions is unlikely, particularly in light of business performance in January and February 2023 and the increase in the number of wide releases expected over the remainder of the year. As a result, the Board does not believe this to represent a material uncertainty, and therefore consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements. Use of non-GAAP profit and loss measures The Group believes that along with operating profit, adjusted EBITDA provides additional guidance to the statutory measures of the performance of the business during the financial year. The reconciliation between operating profit and adjusted EBITDA is shown on page 41. Adjusted EBITDA is calculated by adding back depreciation, amortisation, profit or loss on disposal of Property, Plant & Equipment, pre- opening expenses and certain non-recurring or non-cash items. Adjusted EBITDA is an internal measure used by management as they believe it better reflects the underlying performance of the Group beyond generally accepted accounting principles. Exceptional items that have been added back when calculating adjusted EBITDA relate to restructuring costs within the Head Office team. 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 29 December 2022 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. 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. Most of the Group’s revenue is derived from the sale of tickets for film admissions and the sale of food and beverage, and therefore the amount of revenue earned is determined by reference to the prices of those items. 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. Bookings, 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 obligation. All contractual-based revenue from memberships is initially classified as deferred revenue and subsequently recognised on a straight-line basis over the year. Advertising revenue is recognised at the point the advertisement is shown in the cinemas. 49 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Fees charged for advanced bookings of tickets is recognised at the point when the tickets are purchased. 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), this is usually an individual cinema venue. 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. Once goodwill has been impaired, the impairment cannot be reversed in future periods. Intangible assets Software and website 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: Software assets - 3 to 5 years Amortisation on software in development does not commence until it is complete and available for use. 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. 50 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Impairment (excluding inventories) Impairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually at the financial year end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the smallest group of assets to which it belongs for which there are separately identifiable cash flows; its cash generating units ('CGUs'). Goodwill is allocated on initial recognition to each of the Group's CGUs that are expected to benefit from a business combination that gives rise to the goodwill. Impairment losses (including reversals of impairment losses or impairment gains) are included in profit or loss, except to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed. Non-current assets held for sale Non-current assets are classified as held for sale when: - They are available for immediate sale - Management is committed to a plan to sell - It is unlikely that significant changes to the plan will be made or that the plan will be withdrawn - An active programme to locate a buyer has been initiated - The asset or disposal group is being marketed at a reasonable price in relation to its fair value, and - A sale is expected to complete within 12 months from the date of classification. Non-current assets classified as held for sale are measured at the lower of: - Their carrying amount immediately prior to being classified as held for sale in accordance with the group's accounting policy; and - Fair value less costs of disposal. Following their classification as held for sale, non-current assets are not depreciated. 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. Lease dilapidation provisions are recognised when entering into a lease where an obligation is created. This obligation may be to return the leasehold property to its original state at the end of the lease in accordance with the lease terms. Leasehold dilapidations are recognised at the net present value and discounted over the remaining lease period. Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use an identified asset, the Group assesses whether: • • • the contract involves the use of an identified asset (this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset). If the supplier has a substantive substitution right, then the asset is not identified; the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. 51 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Leases (continued) At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. Leases in which the Group is a lessee The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the lessee's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise the following: • • • fixed payments variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable under a residual value guarantee The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero. Short-term leases and leases of low-value assets The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group recognises these lease payments as an expense on a straight-line basis over the lease term. IFRS 16: Leases – Covid-19 Related Rent concessions amendment The Group has adopted the amendment to IFRS 16 that provides an optional practical expedient for lessees from assessing whether a rent concession related to Covid-19 is a lease modification. Where the rent concession is a direct consequence of the Covid-19 pandemic, the revised consideration for the lease is substantially the same or less, the reduction affects only payments originally due on or before 30 June 2021, this was subsequently extended to 30 June 2022, and there were no other substantive changes to the lease then the concessions can be credited to the profit and loss in the period in which the event or condition that triggers the rent concession occurs, rather than as a lease modification. 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: 52 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Taxation (continued) • • • 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 nor 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 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, right-of-use depreciation and financing expenses. 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 equity-settled share-based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions, through the Growth Share Scheme, Approved and Unapproved Options Schemes). The cost of share-based payments is recharged by the Company to subsidiary undertakings in proportion to the services recognised. Equity-settled share based schemes are measured at fair value, excluding the effect of non-market based vesting conditions, 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. 53 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) Employee benefits (continued) 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 Financial Instruments The Group is exposed through its operations to the following financial risks: • • • Credit risk Interest rate risk Liquidity Risk In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. There have been no substantive changes in the Group's exposure to financial instrument risks, it’s objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. The principal financial instruments used by the Group, from which financial instrument risk arises are as follows: • • • • Trade receivables Cash and cash equivalents Trade and other payables Floating rate bank revolving credit facilities and lease liabilities Financial assets All the Group’s financial assets are subsequently accounted for at amortised cost. These assets arise principally from the provision of goods and services to customers (eg trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction 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 impairment. Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised in profit or loss. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision. The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated balance sheet. Cash and cash equivalents comprise cash balances, call deposits and cash amounts in transit due from credit cards which are settled within seven days from the date of the reporting period. 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 Statement of Cash Flows. 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. 54 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 3 Financial Instruments – Risk Management (continued) To the extent that this definition is not met, the proceeds of issue are classified as a financial liability and initially recognised at fair value net of any transaction costs directly attributable. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding. 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. The Group is mainly exposed to credit risk from credit sales. It is Group policy, to assess the credit risk of new customers before entering material contracts. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted. Further disclosures regarding trade and other receivables, which are neither past due nor impaired, are provided in note 27. Interest rate risk The Group is exposed to cash flow interest rate risk from its revolving credit facility at variable rates. During 2022 and 2021, the Group's borrowings at variable rate were denominated in GBP. The Group analyses the interest rate exposure on a monthly basis. A sensitivity analysis is performed by applying various reasonable expectations on rate changes to the expected facility drawdown. Liquidity Risk Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. 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. The Board receives rolling 12-month cash flow projections on a monthly basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances, through utilisation of its revolving credit facility. 4 Changes in accounting policies New standards, interpretations and amendments adopted from 1 January 2022 There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2023: • • • Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); Definition of Accounting Estimates (Amendments to IAS 8); and Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) The following amendments are effective for the period beginning 1 January 2024: • • • IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback); IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-Current) IAS 1 Presentation of Financial Statements (Amendment – Non-Current Liabilities with Covenants) The Group is currently assessing the impact of these new accounting standard and amendments. The Group does not expect any other standards issued, but not yet effective, to have a material impact on the Group. 55 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 5 Critical accounting estimates and judgements The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Impairment of goodwill, right-of-use assets and property, plant and equipment The Group determines whether the above are impaired when impairment indicators exist or based on the annual impairment assessment. The annual assessment requires an estimate of the value in use of the CGUs to which the intangible and tangible fixed assets are allocated, which is predominantly at the individual cinema site level. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from each cinema and discount these to their net present value at an appropriate discount rate. All venues are located in the UK and therefore a single discount rate has been used for all CGUs. The resulting calculation is sensitive to the assumptions in respect of future cash flows and the discount rate applied. The Directors consider that the assumptions made represent their best estimate of the future cash flows generated by the CGUs and that the discount rates used are appropriate given the risks associated with the specific cash flows. A sensitivity analysis has been performed over the estimates (see Note 18). Lease dilapidations Future costs of repair and reinstatement obligations have been estimated by management using quotes or historical costs incurred for similar work and judgement based on experience and technical knowledge of employees with detailed knowledge of the premises and experience managing the estate. The costs are reviewed at least annually and updated based on physical inspections performed periodically. 6 Revenue Film and entertainment Food and beverages Venue Hire, Advertising and Membership Income Year ended Year ended 29 December 30 December 2022 £000 39,764 32,250 6,803 78,817 2021 £000 25,150 20,360 3,517 49,027 All trade takes place in the United Kingdom. The following provides information about opening and closing receivables, contract assets and liabilities from contracts with customers. Contract balances 29 December 30 December Trade and other receivables Deferred income 2022 £000 3,308 4,143 2021 £000 3,847 4,284 Deferred income relates to advanced consideration received from customers in respect of memberships, gift cards and advanced screenings. 56 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 7 Loss before taxation Loss before taxation is stated after charging: Depreciation of tangible assets Amortisation of right-of-use assets Amortisation of intangible assets Impairment reversal on right-of-use asset and property plant and equipment Loss on disposal of property, plant and equipment Operating lease income Share-based payment expense Rent concession gains from practical expedient Year ended Year ended 29 December 30 December 2022 £000 7,721 3,342 662 - 434 (57) 1,537 - 2021 £000 8,030 3,078 619 (2,504) 533 (87) 1,072 (701) 8 Staff numbers and employment costs The average number of employees (including Directors) during the year, analysed by category, was as follows: Management Operations At the year end the number of employees (including Directors) was 1,380 (2021: 1,342) Management staff represent all full-time employees in the Group. 29 December 30 December 2022 Number 2021 Number 222 1,032 1,254 186 731 917 Year ended Year ended 29 December 30 December Wages and salaries Social security costs Pension costs Share-based payment expense Other staff benefits There were pension liabilities outstanding as at 29 December 2022 of £62,000 (30 December 2021: £66,000). 2022 £000 20,374 1,718 306 1,537 31 23,966 2021 £000 14,982 1,211 224 1,072 5 17,494 57 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 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 payment expense Information regarding the highest paid Director is as follows: Salaries/fees Bonuses Other benefits Pension contributions Share-based payment expense Year ended Year ended 29 December 30 December 2022 £000 807 88 22 14 931 869 2021 £000 748 115 18 15 896 720 1,800 1,616 Year ended Year ended 29 December 30 December 2022 £000 2021 £000 294 244 44 21 10 369 598 967 40 15 9 308 750 1,058 Directors remuneration for each Director is disclosed in the Remuneration Committee report. The costs relating to the Directors remuneration are wholly incurred by Everyman Media Limited for the wider Group. No Directors exercised options over shares in the Company during the year (2021: None). 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 services to the Group Year ended Year ended 29 December 30 December 2022 £000 24 159 - 183 2021 £000 12 77 20 109 58 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 11 Other Operating Income Coronavirus Job Retention Scheme Business Grants Landlord compensation 12 Financial expenses Interest on bank loans and overdrafts Bank loan arrangement fees Interest on lease liabilities Interest on dilapidations provision Reassessment of dilapidations NPV 13 Taxation Tax expense Current tax Adjustment in respect of prior years Total current tax credit Deferred tax expense Origination and reversal of temporary differences Adjustment in respect of prior years Effect of tax rate change Total tax (credit)/expense Year ended 29 December 2022 £’000 Year ended 30 December 2021 £’000 - 155 467 622 2,801 999 - 3,800 Year ended Year ended 29 December 30 December 2022 £000 983 60 2,851 12 - 3,906 2021 £000 595 85 2,587 9 (21) 3,255 Year ended 29 December 2022 Year ended 30 December 2021 £000 £000 - - - - - - - - 416 (101) (301) 14 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 (loss)/ profit for the year are as follows: 59 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 13 Taxation (continued) Reconciliation of effective tax rate Loss before tax Tax at the UK corporation tax rate of 19.00% Permanent differences (expenses not deductible for tax purposes) Impact of difference in overseas tax rates De-recognition of losses Effect of change in expected future statutory rates on deferred tax Impact of a drop in share-based payments intrinsic value Adjustment in respect of previous periods Other Total tax (credit)/expense Year ended 29 December 2022 Year ended 30 December 2021 £000 (3,504) (666) 840 - 32 (206) - - - - £000 (5,416) (1,029) 750 1 605 (217) 5 (101) - 14 A reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. In March 2020, it was announced that a rate of 19% would continue to apply with effect from 1 April 2020 and this change was substantively enacted from 17 March 2020. An increase in the UK corporation rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. This will increase the company’s future current tax charge accordingly. 14 Earnings per share Year ended 29 December 2022 Year ended 30 December 2021 2021 £000 2020 £000 Loss used in calculating basic and diluted earnings per share (3,504) (5,430) Number of shares (000's) Weighted average number of shares for the purpose of basic earnings per share 91,178 91,129 Number of shares (000's) Weighted average number of shares for the purpose of diluted earnings per share 91,178 91,129 Basic loss per share (pence) Diluted loss per share (pence) (3.84) (3.84) (5.96) (5.96) 60 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 14 Earnings per share (continued) Issued at beginning of the year Share options exercised 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 29 December 30 December 2022 Weighted average no. 000's 2021 Weighted average no. 000's 91,163 15 91,178 91,178 - 91,178 91,095 34 91,129 91,129 - 91,129 Basic earnings per share values are calculated by dividing net profit/(loss) for the year attributable to Ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year. The shares issued in the year in the above table reflect the weighted number of shares rather than the actual number of shares issued. The Company has 7m potentially issuable Ordinary shares (2021: 7m) all of which relate to the potential dilution from share options issued to the Directors and certain employees and contractors, under the Group’s incentive arrangements. In the current year these options are anti-dilutive as they would reduce the loss per share and so haven’t been included in the diluted earnings per share. The Company made a post-tax profit for the year of £2,028,000 (2021: £2,528,000). 61 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 15 Property, plant and equipment (Group) Cost At 31 December 2020 Acquired in the year Disposals Transfer on completion At 30 December 2021 Acquired in the year Disposals Transfer on completion Re-classified to non-current assets held for sale At 29 December 2022 Depreciation At 31 December 2020 Charge for the year Impairment On Disposals At 30 December 2021 Charge for the year On Disposals Re-classified to non-current assets held for sale At 29 December 2022 Net book value At 29 December 2022 Land & Leasehold Plant & Fixtures & Assets under Buildings improvements machinery £000 £000 £000 Fittings £000 6,529 - - - 75,623 1,648 (1,189) 96 15,998 954 (4,382) - 6,529 76,178 12,570 1,278 - - (3,398) 4,409 977 (648) 7,950 - 830 (284) 3,060 - 84,457 16,176 159 14,415 48 - - 207 42 - (179) 70 4,104 (1,124) (925) 16,470 3,850 (523) - 19,797 9,173 2,574 (75) (4,312) 7,360 2,536 (129) - 9,767 9,940 395 (1,156) - 9,179 406 (425) 4,433 - 13,593 4,402 1,304 (167) (1,105) 4,434 1,293 (271) - 5,456 construction £000 1,624 4,394 (59) (96) 5,863 16,102 - (15,443) - 6,522 - - - - - - - - - Total £000 109,714 7,391 (6,786) - 110,319 19,593 (1,357) - (3,398) 125,157 28,149 8,030 (1,366) (6,342) 28,471 7,721 (923) (179) 35,090 4,339 64,660 6,409 8,137 6,522 90,067 At 30 December 2021 6,322 59,708 5,210 4,745 5,863 81,848 At 31 December 2020 6,433 61,143 6,825 5,538 1,626 81,565 62 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 15 Property, plant and equipment (continued) For impairment considerations of tangible fixed assets this was considered using the value in use basis disclosed in Note 18. (Company only) Cost At 31 December 2020 Acquired in the year At 30 December 2021 Acquired in the year At 29 December 2022 Depreciation At 31 December 2020 Charge for the year At 30 December 2021 Charge for the year At 29 December 2022 Net book value At 29 December 2022 At 30 December 2021 At 31 December 2020 16 Non-current assets held for sale (Group) General description: Plant & Fixtures & machinery £000 Fittings £000 Total £000 485 255 740 - - - 485 255 740 - 485 485 - 485 - 485 - - - - 255 161 51 212 43 255 - 43 94 - 740 646 51 697 43 740 - 43 94 In September 2022, the board announced its intention to sell the Freehold Investment property, 25 Church Road, London SE19 2TE to a suitable buyer. Therefore, as at 1 October 2022, the property was no longer depreciated and was re-classified as held for sale. The property is owned by ECPEE Limited, a subsidiary of the Group. Subject to contract, ECPEE will sell the freehold interest in the property to the buyer, and the buyer will then grant the lease back to ECPEE. The sale was not completed as at 29 December 2022, and therefore the property has been classified as held for sale. Disposal activities after reporting period not recognised: The sale and leaseback of 25 Church Road, London SE19 2TE was concluded through exchange of contracts on 16 January 2023 with a suitable buyer. 63 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 16 Non-current assets held for sale (continued) Assets and liabilities held for sale: Freehold property Assets held for sale 29 December 2022 £’000 30 December 2021 £’000 3,219 3,219 - - The freehold property transferred from Property, plant and equipment to assets held for sale was valued immediately before the transfer, using a fair market value carried out by external qualified valuers. Fair value less cost to sell was higher than net book value and consequently no impairment charge is required. 17 Leases Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental borrowing rate on commencement of the lease is used. On initial recognition, the carrying value of the lease liability also includes: • amounts expected to be payable under any residual value guarantee; Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: • • • lease payments made at or before commencement of the lease; initial direct costs incurred; and the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold dilapidations – see note 28). Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term. If the Group revises its estimate of the term of any lease it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss. 64 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 17 Leases (continued) Nature of leasing activities The Group leases a number of properties in the towns and cities from which it operates. In some locations, depending on the lease contract signed, the lease payments may increase each year by inflation or and in others they are reset periodically to market rental rates. For some property leases the periodic rent is fixed over the lease term. The Group also leases certain vehicles. Leases of vehicles comprise only fixed payments over the lease terms. The percentages in the table below reflect the current proportions of lease payments that are either fixed or variable. The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if there was an uplift of 5% on the balance sheet date to lease payments that are variable. During 2022 the Group entered into two property leases for new venues for a period of 20 and 25 years. The leases had not commenced by the year end and as a result, a lease liability and right-of-use asset has not been recognised at 29 December 2022. The aggregate future cash outflows to which the Group is exposed in respect of these contracts is fixed payments of £222,000 per year for the next 5 years, with upward only rent reviews every 5 years. 29 December 2022 Property leases with payments linked to inflation Property leases with periodic uplifts to market rentals Property leases with fixed payments Vehicle leases Lease contract No. 21 17 2 3 43 Fixed payments % - - 6% 1% 7% Variable payments % 50% 43% - - 93% Sensitivity (+/-) £’000 2,799 1,316 - - 4,115 The percentages in the table below reflect the proportions of lease payments that are either fixed or variable for the comparative period. 30 December 2021 Property leases with payments linked to inflation Property leases with periodic uplifts to market rentals Property leases with fixed payments Vehicle leases Right-of-Use Assets (Group) As at 31 December 2020 Additions Amortisation Impairment reversal Effect of modification to lease terms At 30 December 2021 Additions Amortisation Effect of modification to lease terms At 29 December 2022 Lease contract No. 19 16 2 3 40 Fixed payments % - - 7% 1% 8% Variable payments % 51% 41% - - 92% Sensitivity (+/-) £’000 2,635 1,255 - - 3,890 Land & Buildings £’000 Motor Vehicles £’000 Total £’000 56,723 4,357 (3,055) 1,133 (594) 58,564 2,540 (3,325) 1,086 58,865 22 30 (23) - - 29 43 (17) - 55 56,745 4,387 (3,078) 1,133 (594) 58,593 2,583 (3,342) 1,086 58,920 65 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 17 Leases (continued) Right-of-Use Assets (Company only) At 31 December 2020 Amortisation Effect of modification to lease terms At 30 December 2021 Amortisation At 29 December 2022 Lease Liabilities (Group) At 31 December 2020 Additions Interest expense Effect of modification to lease terms Rent concession gains Lease payments Landlord contributions At 30 December 2021 Additions Interest expense Effect of modification to lease terms Lease payments Landlord contributions At 29 December 2022 Land & Buildings £’000 9,566 (519) (180) 8,867 (520) 8,347 Total £’000 79,068 5,033 2,587 (594) (701) (4,113) 500 81,780 2,508 2,851 845 (6,061) 4,550 86,473 Land & Buildings £’000 79,050 Motor Vehicles £’000 18 5,003 2,586 (594) (701) (4,088) 500 81,756 2,465 2,850 845 (6,045) 4,550 86,421 30 1 - - (25) - 24 43 1 - (16) - 52 Landlord contributions received after lease commencement date are shown in the table above. A further contribution of £455,000 (2021: £nil) was received prior to lease commencement and therefore total cash received from landlords during the year, as presented in the cash flow statement, was £5,005,000 (2021: £500,000). Lease liabilities Current Non-current 29 December 2022 £’000 30 December 2021 £’000 3,014 83,459 86,473 2,633 79,147 81,780 Rent Concessions During 2020 and 2021, the Group received numerous forms of rent concessions from lessors due to the Group being unable to operate for significant periods of time. These concessions included rent forgiveness and deferrals. As discussed in note 2 in the annual financial statements for the year ended 30 December 2021, the Group has elected to apply the practical expedient introduced by the amendments to IFRS 16 to all rent concessions that satisfy the criteria. Substantially all the rent concessions entered into during 2021 satisfied the criteria to apply the practical expedient. For any of the modifications that did not meet the practical expedient requirements; the lease liability was remeasured using the discount rate applicable at the date of modification, with the right of use being adjusted by the same amount. The application of the practical expedient in 2021 resulted in the reduction of total lease liabilities of £701,000. During the year ended 29 December 2022 no new rent concessions were agreed. 66 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 17 Leases (continued) Maturity analysis of lease payments Contractual future cash outflows Land and buildings Less than one year Between one and five years Over five years Motor Vehicles Less than one year Between one and five years Other lease disclosures 29 December 2022 £’000 30 December 2021 £’000 5,998 24,916 90,989 121,903 24 29 53 5,291 22,794 87,239 115,324 13 11 24 29 December 2022 £’000 30 December 2021 £’000 Expenses relating to variable lease payments not included in the measurement of lease liabilities 113 38 Maturity analysis of lease receipts (Receipts arising from the Group being a lessor) Contractual future cash inflows Land and buildings Less than one year Between one and five years 29 December 2022 £’000 30 December 2021 £’000 4 - 4 65 16 81 The reduction in future cash inflows at 29 December 2022 arises from a termination in the leasing arrangement for the property. 67 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 17 Leases (continued) Lease Liabilities (Company only) At 31 December 2020 Effect of modification to lease terms Rent concession gains Interest expense Lease payments At 30 December 2021 Interest expense Lease payments At 29 December 2022 Lease liabilities Current Non-current As a lessee Contractual future cash outflows Land and buildings Less than one year Between one and five years Over five years Land & buildings £’000 10,976 (180) (70) 344 (465) 10,605 329 (1,123) 9,811 29 December 2022 £’000 30 December 2021 £’000 352 9,459 9,811 679 9,926 10,605 29 December 2022 £’000 30 December 2021 £’000 780 3,120 9,281 13,181 1,009 3,120 10,061 14,190 Lease payments for land and buildings are a combination of fixed and variable payments (including any scheduled increases). Remaining lease liabilities are reassessed following annual rent reviews based on an external index (such as the RPI). The weighted average lease length of the remaining lease portfolio is 18 years. 68 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 18 Goodwill, intangible assets and impairment The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows. (Group) Cost At 31 December 2020 Acquired in the year Disposed in the year At 30 December 2021 Acquired in the year At 29 December 2022 Amortisation and impairment At 30 December 2020 Charge for the year Disposed in the year Impairment At 30 December 2021 Charge for the year At 29 December 2022 Net book value At 29 December 2022 At 30 December 2021 At 2 January 2020 Impairment Review Goodwill £’000 Software £’000 8,951 - - 8,951 - 8,951 - 1,599 - - - 1,599 - 1,599 7,352 7,352 7,352 2,991 423 (546) 2,868 1,068 3,936 1,203 619 (503) (5) 1,314 662 1,976 1,960 1,554 1,788 Total £’000 11,942 423 (546) 11,819 1,068 12,887 2,802 619 (503) (5) 2,913 662 3,575 9,312 8,906 9,140 The Group evaluates assets for impairment annually or when indicators of impairment exist. As required by IAS 36, the Group assessed whether there was an indication that a previously recognised impairment no longer exists or may have decreased. A reversal of an impairment is only recognised if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The annual impairment assessment requires an estimate of the value in use of each cash-generating unit (CGU) to which goodwill, property plant and equipment and right-of-use assets are allocated, which is the individual cinema level. The recoverable amount of a CGU is the higher of value in use and fair value less cost of disposal. The Group determines the recoverable amount with reference to its value in use. 69 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 18 Goodwill, Intangible assets and Impairment (continued) Goodwill is allocated to the following CGUs: Baker Street Barnet Esher Gerrards Cross Islington Muswell Hill Oxted Reigate Walton-On-Thames Winchester 29 December 30 December 2022 £000 103 1,309 2,804 1,309 86 1,215 102 113 94 217 7,352 2021 £000 103 1,309 2,804 1,309 86 1,215 102 113 94 217 7,352 Estimating the value in use requires estimate of the expected future cash flows from each CGU and discount these to their net present value at a pre-tax discount rate. Forecast cash flows are derived from adjusted EBITDA generated by each CGU which is based on management’s forecast performance. Cash flow forecasts have been prepared for each CGU by applying growth assumptions to key drivers of cash flows, including admissions, average ticket price, spend per head, direct and overhead costs. The key assumptions of this calculation are shown below: Discount rate Long term growth rate Number of years projected 29 December 30 December 2022 2021 15.3% 2% 5 years 13.1% 2% 5 years Adjusted EBITDA used for 2023 is based on the Board approved budget and represents managements best estimate of future cashflows, it has been used as the base assumption within the forecast. In the remaining five-year forecast the following assumptions have been applied: • Admissions increase by 5.5% in 2024 representing continued recovery from impact of the pandemic. In 2024, forecast admissions remain 10% below pre- Covid19 levels. • • EBITDA growth from 2025 -2027 includes lower admission growth rate than 2024 and expectations about increases in average ticket prices and spend per head. For venues opened since 2019 that are early in their maturity curve, specific assumptions have been applied to the key drivers over the five- year forecast period. Sensitivity analysis Impairment reviews are sensitive to changes in key assumptions. Sensitivity analysis has been performed by considering incremental changes in assumptions of admission levels and discount rates. Goodwill cannot be written back once impaired. As a result, impairment of goodwill brought forward of £1,599,000 was excluded from the calculations. 70 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 18 Goodwill, Intangible assets and Impairment (continued) Scenarios The following sensitivity scenarios have been applied to the cash flow forecasts for stress testing purposes: • Admissions levels were increased by 1% in the upside case and decreased by 1% in the downside case; and • WACC was decreased by 1.5% in the upside case and increased by 1.5% in the downside case. WACC has been included in sensitivity analysis due to the increase in the cost of debt over the past financial year and relative uncertainty over the cost of debt going forward. Upside Case Downside Case Change +1.0% -1.5% Reversal of Previous Impairment £000 360 895 Change -1.0% +1.5% Additional Impairment £000 (699) (1,514) Admissions WACC Reversal of previous impairment relates to two venues impaired in prior periods. Additional impairment relates to two venues impaired in prior periods and three further venues. The impact on the total impairment charge of applying the different scenarios explained above relates to two venues that were impaired in previous years. An impairment charge would not be triggered on any other venues based on the changes in these assumptions. The following cumulative impairment charges have been recognised in previous periods and have not been reversed. Bought forward impairment of right-of-use assets and property, plant and equipment relates to two venues. 29 December 2022 £000 30 December 2021 £000 Goodwill Right-of-use assets Property, plant & equipment Total 19 Investments (Company only) 1,599 724 808 3,131 At 30 December 2021 and 29 December 2022 The Company also has intercompany receivable balances of £89.8m (2021:£76.8m). As part of the Group impairment review, the future cash flows from each of the venues were forecast and an NPV of these flows calculated. The total value of these were £265.8m (2021:£313.6m) which would indicate that sufficient profits and cash will be generated to repay the monies owed to the Company if required. 1,599 724 808 3,131 Total £000 31,994 71 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 19 Investments (continued) The subsidiaries of the Company are as follows (all of which are included on consolidation and all are registered at 2 Downshire Hill, London, NW3 INR): Name Principal Activity Country of Class of Proportion of incorporation share held shares held Everyman Media Holdings Limited Cinema management and ownership UK Everyman Media Limited** Cinema management and ownership CISAC Limited** Foxdon Limited** ECPee Limited*** Dormant Cinema management and ownership Property management Bloom Martin Limited*** Bloom Theatres Limited**** Mainline Pictures Limited**** Dormant Dormant Dormant * 2m A ordinary shares series 4 and 5 are held by Alex Scrimgeour ** Shareholding is held by Everyman Media Holdings Ltd *** Shareholding is held by Everyman Media Ltd **** Shareholding is held by Bloom Martin Ltd UK UK ROI UK UK UK UK Ordinary A ordinary shares Series 1, 2, 3, 4 and 5* Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary 100% 94% 100% 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 A Ordinary shares (£6,557) of Everyman Media Holdings Limited. 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 Holdings Limited acquired 100 Ordinary shares, being the entire issued share capital of Foxdon Limited (a limited company established and resident in the Republic of Ireland and dormant at the date of acquisition) for €100 on 24 June 2019. With respect to the class and proportion of shares held in existing subsidiaries, the amounts remain the same for the year ended 29 December 2022 and the year ended 30 December 2021. 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 29 December 2022 and the year ended 30 December 2021. The registered office address of all investments incorporated in the UK is Studio 4, 2 Downshire Hill, London NW3 1NR. Foxdon Limited’s registered office is 33 Sir John Rogerson’s Quay, Dublin 2, D02 XK09. 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. 20 Inventories Food and beverages Projection Finished goods recognised as cost of sales in the year amounted to £7,848,000 (2021: £5,054,000). The write-down of inventories to net realisable value amounted to £nil (2021: £nil). 29 December 30 December 2022 £000 656 34 690 2021 £000 638 73 711 72 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 21 Cash and cash equivalents Per balance sheet Per cash flow statement 22 Trade and other receivables (Group) Included in current assets Included in non-current assets Trade receivables Social security and other taxation Other receivables Prepayments and accrued income 29 December 30 December 2022 £000 3,701 3,701 2021 £000 4,240 4,240 29 December 30 December 2022 £000 5,840 173 6,013 3,308 - 241 2,464 6,013 2021 £000 5,649 177 5,826 3,847 1 210 1,768 5,826 There were no receivables that were considered to be impaired. 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 long-term leases and have been recognised as non-current assets. Trade and other receivables (Company only) Included in non-current assets Amounts due from company undertakings 29 December 30 December 2022 £000 89,767 89,767 2021 £000 76,772 76,772 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 2024. 73 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 23 Trade and other payables (Group) Trade creditors Social security and other taxation Other creditors Accrued expenses Deferred income Trade and other payables (Company only) Included in current liabilities Amounts included in current liabilities relate to accrued rent. 24 Loans and borrowings (Group and Company) Bank borrowings Current Non-current Total Bank Debt Cash Net Bank Debt 29 December 30 December 2022 £000 2,305 1,819 589 6,344 4,514 15,571 2021 £000 3,640 1,051 10 7,009 4,284 15,994 29 December 30 December 2022 £000 524 2021 £000 48 29 December 30 December 2022 £000 247 22,000 22,247 (3,701) 18,546 2021 £000 119 12,500 12,619 (4,240) 8,379 The Company agreed a £25 million RCF and £15m CLBILS loan facility with Barclays Bank PLC and Santander UK PLC in March 2021. Interest is charged at LIBOR/SONIA on the drawn-down balance on a 365/ACT D-basis (the nominal interest rate ranging between 1.65% and 2.65%). The capital sum of the RCF is repayable in full on or before 17 April 2024. The capital sum of the CLBILS is repayable in full on or before 17 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 £22 million of the £40 million debt facility as at 29 December 2022 (2021: £12.5 million). 74 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 25 Changes in liabilities from financing activities Non- current loans and borrowings £000 Current loans and borrowings £000 12,500 9,500 - - - 22,000 9,000 3,500 - - - - 12,500 119 - 128 - - 247 43 - 76 - - - 119 Lease liabilities £000 81,780 (1,056) 2,851 3,680 (782) 86,473 79,068 (3,613) 2,587 5,033 (701) (594) 81,780 Total £000 94,399 8,444 2,979 3,680 (782) 108,720 88,111 (113) 2,663 5,033 (701) (594) 94,399 At 31 December 2021 Cash flows Non- cash flows: Interest accruing in period Lease additions Effect of modifications to lease terms At 29 December 2022 At 1 January 2021 Cash flows Non- cash flows: Interest accruing in period Lease additions Effect of modifications to lease terms Rent concessions At 30 December 2021 26 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 assets measured at amortised cost Cash and cash equivalents Trade and other receivables Accrued income Financial liabilities measured at amortised cost Bank borrowings Trade Creditors Leases Other Creditors Accrued expenses 29 December 30 December 2022 £000 3,704 3,549 692 7,945 2021 £000 4,240 4,057 221 8,518 29 December 30 December 2022 £000 22,247 2,305 86,473 589 6,344 117,958 2021 £000 12,619 3,640 81,780 8 7,009 105,056 75 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 27 Financial risks 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 29 December 2022 and 30 December 2021. Trade and other receivables are measured at amortised cost. Book values and expected cash flows are reviewed by the Board and there have been no impairment losses recognised on these assets. 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. 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. The Group 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. At 29 December 2022 the Group has trade receivables of £3,308,000 (2021: £4,243,000). Trade receivables arise mainly from advertising and sponsorship revenue. 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 29 December 2022 the Directors have recognised expected credit losses of £Nil (2021: £109,000). 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 29 December 30 December 2022 £000 2,224 914 63 107 3,308 2021 £000 3,927 84 232 - 4,243 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 (2021: £nil). There were no material expected credit losses in the year. 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. The Group’s forecasts show sufficient headroom in banking covenants for the next 12 months. 76 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 27 Financial risks (continued) 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. 29 December 2022 Non-derivative financial liabilities Secured bank facility Trade creditors Leases Other creditors Accrued expenses Carrying amount Less than one year Contractual cash flows Between one and two years Between three and five years Over five years £000 £000 £000 £000 £000 22,247 2,305 86,473 589 6,344 247 2,305 5,998 589 6,344 22,000 - 6,230 - - - - - 18,687 90,988 121,903 - - - - 589 6,344 Total £000 22,247 2,305 117,958 15,483 28,230 18,687 90,988 153,388 30 December 2021 Carrying Less than Between one Between three Over five Contractual cash flows amount one year and two years and five years £000 £000 £000 £000 Secured bank facility Trade creditors Leases Other creditors Accrued expenses 12,619 3,640 81,780 8 7,009 105,056 2 3,640 5,290 8 7,009 15,949 496 - 5,990 - - years £000 - - Total £000 14,490 3,640 13,992 - 16,804 87,239 115,323 - - - - 8 7,009 6,486 30,796 87,239 140,470 Interest rate risk Interest rate risk arose from the Group’s holding of interest-bearing loans linked to LIBOR/SONIA. 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 is set out below. 77 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 27 Financial risks (continued) 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 30 December 2021 Bank borrowings Bank current and deposit balances At 29 December 2022 Bank borrowings Bank current and deposit balances Effective interest rate % 2.72% 0.01% 2.40% 0.01% Maturing Maturing Maturing within 1 year £000 119 4,240 247 3,701 between 1 to between 2 to 2 years £000 - - 22,000 - 5 years £000 12,500 - - - The following table demonstrates the sensitivity to a reasonably plausible 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: Change in 29 December 30 December Bank borrowings Bank current and deposit balances Capital management rate % 0.5% 1.0% 1.5% 0.5% 1.0% 1.5% 2022 £000 111 222 333 18 37 55 2021 £000 63 126 189 19 37 56 The Group’s capital is made up of share capital, share premium, merger reserve and retained earnings totalling £46.3m (2021 £48.2m). 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. 78 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 28 Provisions (Group) As at 30 December 2021 Utilised in the year Additions Other increases Unwinding of discount As at 29 December 2022 Due within one year or less Due within one to five years Due after more than five years Provisions (Company only) As at 30 December 2021 As at 29 December 2022 Due within one to five years Other provisions £,000 393 (393) - - - - - - - - Leasehold Dilapidations £,000 1,118 - 97 135 12 Total £,000 1,511 (393) 97 135 12 1,362 1,362 - 44 1,318 1,362 - 44 1,318 1,362 Leasehold Dilapidations £,000 84 84 84 84 Leasehold dilapidations relate to the estimated cost of returning leasehold property to its original state at the end of the lease in accordance with lease terms. The cost is recognised as depreciation of leasehold improvements over the remaining term of the lease. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease term, the average remaining lease term for leases held at 29 December 2022 was 18 years (2021:18 years). 79 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 29 Deferred tax (Group) Deferred tax gross movements Opening balance deferred tax liability Recognised in profit and loss Arising on loss carried forward Net book value in excess of tax written down value Movement on share option intrinsic value Amortisation of IFRS accumulated restatement Lease acquired Other temporary differences Credit/Charge to profit and loss Deferred tax comprises: Temporary differences on property, plant and equipment Temporary differences on IFRS 16 accumulated restatement Temporary differences on leases acquired Share-option scheme intrinsic value Available losses Other temporary and deductible differences 29 December 30 December 2022 £000 2021 £000 - (14) (1,455) 1,206 245 49 (62) 17 - 5,723 (598) - (28) (426) 784 (257) (144) (29) 86 14 4,627 (646) 62 (273) (5,376) (4,030) 279 - 260 - 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 25% from 1 April 2023. 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. Deferred tax assets have been recognised in respect of tax losses and other temporary differences giving rise to deferred tax assets where the Directors believe it is probable that they will be recovered. The Group has unused tax losses of approximately £30.0m in relation to UK losses and an unprovided deferred tax asset of £2.1m. 80 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 29 Deferred tax (continued) (Company only) Included in non-current assets Opening balance Recognised in profit and loss Net book value in excess of tax written down value Leases acquired Amortisation of IFRS 16 accumulated restatement Credit to profit and loss The deferred tax asset comprises: Temporary differences on property, plant and equipment Temporary differences on IFRS 16 accumulated restatement Temporary differences on leases acquired 29 December 30 December 2022 £000 (188) (150) 16 (62) 8 (38) 2021 £000 (150) (78) (21) (29) (22) (72) 29 December 30 December 2022 £000 (82) (106) - (188) 2021 £000 (99) (114) 63 (150) 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 £nil (2021: £nil) at expected tax rates in future periods. 81 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 30 Share capital and reserves 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 29 December 30 December 2022 £000 9,117 1 9,118 2021 £000 9,110 7 9,117 29 December 30 December 2022 Number 2021 Number 91,162,969 15,000 91,177,969 91,095,469 67,500 91,162,969 The holders of Ordinary shares are entitled to one vote per share. During the year the Company issued 15,000 Ordinary shares at a price of 109.5p (2021 67,500 Ordinary shares at prices ranging from 93.5p to 100p).. 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 (2021: £nil) 31 Share-based payment arrangements EMI, Non-Qualifying and LTIP Schemes The Group 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, non-executive Directors and certain contractors. 82 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 31 Share-based payment arrangements (continued) The terms and conditions of the grants are as follows: Persons entitled Grant date Method of Settlement Instruments outstanding Vesting Contractual life 000's Conditions* of options 29.10.2013 Equity-settled 98 Management employees, Directors and contractors Management employees, Directors and contractors Directors Management employees, Directors and contractors Management employees Management employees Directors Management employees and contractors Management employees and Directors Management employees and Directors Management employees and contractors Management employees Management employees Management employees and Directors Management employees and Directors Management employees Directors Management employees and Directors Directors Management employees Management employees Management employees Management employees and Directors Management employees and Directors Management employees and Directors 29.10.2013 04.11.2013 29.10.2015 15.12.2016 10.01.2017 13.03.2017 11.10.2017 23.11.2017 23.04.2018 02.10.2018 03.10.2018 05.11.2018 24.09.2019 30.04.2020 30.09.2020 12.11.2020 22.12.2020 08.04.2021 22.11.2021 17.03.2022 30.04.2022 05.05.2022 27.06.2022 24.10.2022 Equity-settled 150 Equity-settled 50 Equity-settled 218 Equity-settled 80 Equity-settled 30 Equity-settled 250 Equity-settled 425 Equity-settled Equity-settled 87 30 Equity-settled 205 Equity-settled 15 Equity-settled 1 Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity-settled Equity settled 698 550 250 1,600 150 1,000 8 75 585 5 175 125 123 6,974 4 4 4 4 4 9 1 2 2 3 4 4 4 4 5 6 4 7 7 4 4 4 4 4 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 10 years 10 years 10 years 10 years 10 years 10 years 10 years *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 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. *4 Unapproved options. These vest on the third anniversary of the date of grant. *5 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 based on internal Adjusted EBITDA targets. *6 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 based on internal Adjusted EBITDA targets. 83 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 31 Share-based payment arrangements (continued) *7 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 based on internal Adjusted EBITDA targets. *8 Unapproved options. These vested on the 31st December 2021 and can be exercised subject to continued employment. The exercise price is £1.50. *9 Unapproved options as part of the long-term incentive plan. These vest 3 years and 2 months from the date of grant. Between 40% and 100% of the options are exercisable based on internal Adjusted EBITDA targets. All equity-settled share options are measured at fair value as determined through use of the Binomial technique, at the date of grant, aside from those with market-based performance conditions, which are valued using the Monte Carlo model. During the year, no equity-settled share options were issued with market-based performance conditions. 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 Binomial model for the share options issued in the year were 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) 29 December 29 December 2022 2022 Performance No performance criteria criteria 0.95 0.10 40.0% 4 years 120.0 120.0 40.0% 3 years 10 years 10 years 1.57% 0.0% 0.85 1.57% 0.0% 0.54 Volatility has been calculated based on historical share price movements of the Company as at each grant date. Prospective volatility estimates have been adjusted to remove the impact of high volatility experienced in mid-March 2020, related to Covid-19. 84 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 31 Share-based payment arrangements (continued) Weighted average exercise price per share in the year ended 29 December 30 December 29 December 30 December 2022 Pence 2021 Pence 2022 2021 Number Number Options at the beginning of the year 142.00 109.50 Options issued in the year Options exercised in the year Option forfeited in the year Options at the end of the year 0.75 1.09 0.69 104.28 0.72 0.94 0.89 142.00 6,925,003 1,518,543 (15,000) 6,559,818 1,860,888 (67,500) (1,454,713) (1,428,203) 6,973,833 6,925,003 No options lapsed beyond their contractual life in the year (Year ended 2021: nil). Growth Shares Under the A Growth Share Scheme, Alex Scrimgeour was issued with 2,000,000 A shares in Everyman Media Holdings Limited on 8 April 2021. The rights attaching to the A shares include a put option which, when exercised, enable the shareholder to convert the shares into ordinary shares of the Company. The Growth Shares in Everyman Media Holdings Ltd will vest subject to the achievement of share price targets. 1,000,000 Growth Shares in Everyman Media Holdings Ltd will vest if the Company has an average closing mid-market price of £2.25 or more over any 15 consecutive trading days (“Target 1”). The remaining 1,000,000 Growth Shares in Everyman Media Holdings Ltd will vest if the Company has an average closing mid-market price of £3.00 or more over any 15 consecutive trading days (“Target 2”). To the extent that the performance targets have been met, the Growth Shares in Everyman Media Holdings Limited will entitle Mr Scrimgeour to receive an amount equivalent to the market value of an ordinary share in the Company less £1. The vested Growth Shares shall be exchanged for ordinary shares in the Company on or after 31 December 2022 if Target 1 has been achieved and on or after 31 December 2023 if Target 2 has been achieved, provided that if a change of control of the Company occurs at any time, any vested Growth Shares which have not been exchanged by then, shall be exchanged on the change of control of the Company. Details of the outstanding shares under the A Growth Share Scheme are as follows: Outstanding at beginning of year Granted in year Exercised in year Outstanding at end of year 29 December 30 December 2022 2,000,000 2021 - - 2,000,000 - 2,000,000 - 2,000,000 85 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 31 Share-based payment arrangements (continued) The Monte Carlo model was used for fair valuing the A Growth Share awards at the date of grant. The inputs to the model were as follows: Number of shares Share price target Expected volatility Risk free interest rate Option life (years) Starting share price A Growth Share Scheme Target 1 1,000,000 £2.25 45% 0.10% 5 £1.41 Target 2 1,000,000 £3.00 45% 0.10% 5 £1.41 Share-based payments charged to the profit and loss were as follows: Share options charge Growth shares charge Administrative costs 29 December 30 December 2022 £000 939 598 1,537 2021 £000 625 447 1,072 The charge for the Company was £nil (2021: £nil) after recharging subsidiary undertakings with a charge of £1,537,000 (2021: £1,072,000). The relevant charge is included within administrative costs. There are 3,336,124 options exercisable at 29 December 2022 in respect of the current arrangements (2021: 1,488,103). 15,000 options were exercised in the year (2021: 67,500). Volatility for options issued was determined by reference to movements in the share price over 5 years prior to the grant date. The market value conditions, where applicable, are reflected in the forfeited options following 60 days of the announcement of the annual results since the performance conditions are met/not met prior to the vesting period and as such no estimate of potential achievement of market values is required. 32 Commitments There were capital commitments for tangible assets at 29 December 2022 of £15,878,000 (2021: £9,407,000). This amount is net of landlord contributions of £7,055,000 (2021: £7,820,000). 33 Events after the balance sheet date Sale and Leaseback of Crystal Palace Venue On 16 January 2023, the Group completed the sale and leaseback of its freehold property at 25 Church Road, London SE19 2TE. Proceeds from the sale, after associated fees and disbursements, were £3.8m. At the balance sheet date, the property was held for sale in ECPee Limited, with a carrying value of £3.2m. As a result of the transaction, the Group will recognise a net profit on disposal of £0.6m in 52-week period ended 28 December 2023. The leaseback element of the transaction is accounted for as a finance lease under IFRS 16. This will result in the recognition of a right of use asset and a lease liability in 2023. Under the terms of the lease agreement, the Group has leased back the property for a period of 25 years at annual rent of £240,000. The rent is to be reviewed every five years. The first and second reviews are to be upwards only on an indexed basis by reference to increases in the Retail Prices All Items Indexed with a collar of 1% per annum and a cap of 4% per annum. The third and fourth reviews are on an upwards only basis to be the higher of the indexed rent (increased in accordance with the mechanism agreed for the first two reviews) and the open market rent pursuant to an open market rent review mechanism. 86 Everyman Media Group PLC Annual report and financial statements Notes on the financial statements (continued) 33 Events after the balance sheet date (continued) Extension of Banking Facilities On 14th March 2023, the Group extended its £25m revolving credit facility (“RCF”) by a period of 3 months, to 17 April 2024. The Group’s residual £15m facility is a Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) and cannot be extended beyond its original maturity date of 17 January 2024. The Group has begun a process to re-finance both the RCF and the CLBILS and expects to complete this in due course. 34 Related party transactions In the year to 29 December 2022 the Group engaged services from entities related to the Directors and key management personnel of £617,000 (2021: £566,000) comprising consultancy services of £31,000 (2021: £10,000), office rental of £100,000 (2021: £98,000) and venue rental for Bristol, Harrogate and Maida Vale of £486,000 (2021: £458,000). Due to the pandemic the Group received rent discounts on the related properties amounting to a saving in 2022 of £nil (2021: £123,000). There were no other related party transactions. There are no key management personnel other than the Directors. The Group's commitment to leases is set out in the above notes. Within the total of £122,000,000 (2021:£116,000,000) is an amount of £550,000 (2021:£650,000) relating to office rental, £4,523,000 (2021:£4,800,000) relating to Stratford-Upon-Avon, £3,596,000 (2021:£2,100,000) relating to Bristol and £4,670,000 (2021:£4,900,000) relating to Harrogate. The landlords of the sites are entities related to the Directors of the Company. 35 Ultimate controlling party The Company has a diverse shareholding and is not under the control of any one person or entity. 87 

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