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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Everyman Media Group Plc | LSE:EMAN | London | Ordinary Share | GB00BFH55S51 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 57.50 | 57.00 | 58.00 | 57.50 | 57.50 | 57.50 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 78.82M | -3.5M | -0.0384 | -14.97 | 52.43M |
From Apr 2019 to Apr 2024
TIDMEMAN
RNS Number : 7162G
Everyman Media Group PLC
19 March 2020
19 March 2020
Everyman Media Group PLC
("Everyman", "Company" or the "Group")
Audited results for the 52 weeks ended 2 January 2020
Everyman Media Group PLC (AIM: EMAN) announces its audited final results for the year ended 2 January 2020.
Financial Highlights
-- Revenue for the year up 25.1% to GBP65.0 million (2018: GBP51.9 million); -- Admissions up 17% on previous financial period to 3.3 million (2018: 2.8 million);
-- Average ticket price increased to GBP11.37 (2018: GBP11.26) and Spend Per Head increased 13% to GBP7.13 (2018: GBP6.30) driven by menu development and operational improvements;
-- Pre IFRS 16 EBITDA* grew 31.3% to GBP12.0 million (2018: GBP9.2 million), exceeding revenue growth as the Group continues to benefit from its growing estate. This equates to a post-IFRS 16 EBITDA of GBP15.6 million;
-- Operating profit increased 67.1% to GBP4.8 million (2018: GBP2.9 million);
-- A further seven new Everyman venues opened in the last 12 months, growing the estate to 33 sites and 110 screens as at 18 March 2020;
-- Box office market share rose to 3.1% (2018: 2.5%) and Everyman remains the fifth largest cinema business in the UK by gross box office revenue.
Outlook
Since our financial year end the outlook for the UK and Global economy has become increasingly uncertain due to the spread of the COVID-19 virus. Following guidance provided by the UK government on 16 March 2020, the Board of Everyman took the decision to close its venues to guests from 17 March 2020 until further notice. The health of our staff and our customers is the Board's highest priority.
We therefore expect to see a significant pause in business and are taking all appropriate measures to reduce the financial impact of this on the Group . Whilst the exact longer term impact of the situation is difficult to predict the Board believes that shareholders should take comfort from the following:
-- The Group has in excess of GBP14m headroom in its loan facility currently
-- Action has been taken to postpone all non-committed capital expenditure, which will affect our planned rollout but maintains the strong financial position of the group
-- Actions to reduce operating expenses have been taken and further actions are in place to reduce expenses to a minimum during this period of closure
We will see a significant interruption in business and new openings, but will remain well placed to deliver again in 2021. Cinema has been a part of the social experience for over 80 years and we are confident we will be well placed to deliver again for our customers, continuing to provide them with a great night out, once we have overcome the Coronavirus crisis.
*Adjusted for pre-opening costs, acquisition expenses, depreciation, amortisation and share based payments. IFRS 16 has been applied. Pre IFRS 16 EBITDA would have been GBP12.0m, an increase of 30.4%.
Crispin Lilly, Chief Executive Officer of Everyman Media Group PLC said:
"We are facing an unprecedented global situation, and are now concentrating all our resources on tackling the challenge at hand. We will be focussed on preparing the business to be in the best possible position in the future. Everyman has proven itself to be a strong business with good growth fundamentals, which the Board is confident will stand the Company in a good position once the current market challenges have been overcome."
The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. For further information, please contact: Everyman Media Group PLC Tel: +44 (0)20 3145 Crispin Lilly 0500 Canaccord Genuity Limited - Nominated Adviser Tel: +44 (0)20 7523 and Broker 8000 Bobbie Hilliam Richard Andrews Georgina McCooke Alma PR (Financial PR Advisor) Tel: + 44 (0) 20 Rebecca Sanders-Hewett 3405 0205 Susie Hudson Harriet Jackson
Chairman's statement
Facing the challenges ahead
At the time of writing we are all facing unprecedented uncertainty, both personally and commercially. Whilst at Everyman we are confident in our position, results and the fundamentals of our business, we along with everyone else, are subject to the ongoing risk of COVID-19 and all the challenges it presents.
In line with the latest Government advice, and with the health of our customers in mind, we made the decision earlier this week to close our cinemas for a period of time. This is one of the various scenarios we have been planning for, with all its implications. Our ambition is to ensure the business is in the best possible position for the future and we are taking whatever steps we can in the short term, to best prepare for the long term.
Outlined below is a review of activity in 2019.
Overview
Reflecting on 2019, the Everyman experience continued to be embraced and enjoyed by our customers across our ever-growing variety of locations throughout the UK. Whether our venues are located as part of urban communities in larger cities, or smaller, more rural towns, the business model continued to deliver in the period. With seven new openings in the year, 2019 marked another year of strong growth as the business performed in line with the Board's expectations across all key areas.
We now operate 33 venues with 110 screens, as at 18 March 2020, up from 26 venues and 84 screens at the beginning of 2019. We continue to be proud of the positive impact that our venues can have on high streets and communities, breathing new life into public spaces either through regeneration, or new developments.
Our financial performance was again strong, in line with expectations, delivering revenue for the period up 25%, and pre-IFRS 16 EBITDA up 31.3% to GBP12.0m. Pleasingly, EBITDA grew ahead of revenue, demonstrating the benefits of our roll-out strategy.
Review of the business
By the end of 2019, Everyman had grown market share by box office to 3.1% up from 2.6%. We remained the fifth largest UK cinema business for the second year in a row, as defined by gross box office revenue (source: ComScore) and continue to be seen as a trusted and highly regarded national brand.
This is set against a background of the UK cinema industry which delivered close to the modern-day record last year of 177.0 million, with 176.1 million admissions in 2019 (source: UK Cinema Association). This continues to demonstrate the power of cinema, with people's appetite for entertainment continuing to be an important trend.
Openings
We opened new sites during the year in Horsham (3 screens, April 2019), Newcastle (4 screens, May 2019), London Broadgate (3 screens, October 2019), Clitheroe (4 screens, October 2019), Manchester (3 screens, November 2019), Wokingham (3 screens, December 2019) and Cardiff (5 screens, December 2019). The opening of five sites in the last quarter of 2019 was especially pleasing as it demonstrates our ability to manage numerous openings successfully in a short time period.
In addition to the refurbishment of our Walton On Thames venue, we invested GBP1.0 million into building a new third screen at Gerrards Cross along with an expanded bar and new kitchen now capable of serving our full Spielburger menu.
Staff
In the period, Elizabeth Lake joined us as Chief Financial Officer on 16 September 2019.
We would like to recognise the hard work that all our team put into the business throughout 2019, and thank them for their support and understanding during the challenging time we now find ourselves in.
Future of the Group
As outlined above, we face significant challenges in the short to medium term, as a result of dealing with the COVID-19 pandemic. We believe in, and are confident about, the fundamentals of our business and are working hard to ensure the business is positioned to continue to deliver once we emerge from this crisis.
Paul Wise
Executive Chairman
18 March 2020
Chief Executive's Statement
We find ourselves in an unparalleled environment, where what was business as usual last month, is now a distant past. We are focused on tackling the challenge at hand and ensuring the business is in the best possible position for the future.
Development of the Group's business in 2019
2019 was a strong year for the Group, as we delivered in line with our proven growth plan, and the 25% growth in revenue delivered in the period reflects the effect of an increase in the number of venues and admissions, an increase in box office pricing and an improved spend per head on food and beverage. The growth of all our KPIs reflects the work the team has put in throughout the period enhancing the Everyman experience.
Progress against strategy
KPIs
The Group uses the following key performance indicators, in addition to total revenues, to monitor the progress of the Group's activities:
Hot Features
Premium
Year ended Year ended
2 January 3 January
2020 2019
(52 weeks) (53 weeks)
Admissions +17% 3,271,166 2,795,359
Box office average ticket
price +1% GBP11.37 GBP11.26
Food and beverage spend
per head +13% GBP7.13 GBP6.30
The average ticket price grew by 1%, diluted by the disproportionate increase in admissions being generated by the Group at new venues outside London. Like for like, the Group continued to realise annual increases in ticket prices in line with inflation.
In contrast, the food and beverage spend per head continued to grow off the back of enhanced menu development, further roll out of Spielburger and operational improvements. Actual price increases were in line with inflation. The average spends in our new venues remained disproportionately strong as we continued to improve the design and operational support that we put into new openings.
Enhancing the Everyman Experience
Over the period we saw an increased focus on digital engagement, membership and advanced our understanding of our existing customers, which helped to increase frequency whilst the ongoing development of our food and beverage offering increased dwell time and associated spends. The continued development of all categories, further Spielburger roll out to venues, and a focus on improving operational speed were particularly successful in driving the F&B revenues in 2019.
Further investment in partnerships and sponsorship saw Everyman working with Green & Blacks and American Airlines.
Investment in the underlying business also continued in the period, with additional new training programmes for our teams, including the successful roll out of online training models across venues and head office, and continuing improvement to our IT infrastructure.
In addition, a full refurbishment of our Walton and Gerrards Cross venues took place during the year, including the addition of a third screen at the latter.
These investments were financed from current resources including the new extended bank facility and retained earnings.
Expansion of our geographic footprint
In the period, we continued to focus both on the growth of our footprint, adding seven new Everyman venues across 2019, as well as increasing our customer base, frequency and ancillary spends from our existing venues.
The Group currently has venues in the following locations:
Number of Number of
Screens Seats
Location
Altrincham 4 247
Birmingham 3 328
Bristol 3 439
Cardiff* 5 253
Chelmsford 5 379
Clitheroe* 4 255
Esher 4 336
Gerrards Cross** 3 257
Glasgow 3 201
Harrogate 5 410
Horsham* 3 239
Leeds 5 611
Liverpool 4 288
London, Baker Street 2 118
London, Barnet 5 429
London, Belsize Park 1 129
London, Broadgate* 3 264
London, Canary Wharf 3 266
London, Crystal Palace 4 313
London, Hampstead 2 194
London, Islington 1 125
London, Kings Cross 4 276
London, Maida Vale 2 149
London, Muswell Hill 5 478
Manchester* 3 247
Newcastle* 4 215
Oxted 3 212
Reigate 2 170
Stratford-Upon-Avon 4 384
Walton-On-Thames 2 158
Winchester 2 236
Wokingham* 3 289
York 4 329
110 9,224
--------------------- --------------------
* New venues in 2019, ** extended by one screen in 2019.
Building the Everyman brand
In the period, we continued to materially invest in marketing within the business, including investment in digital technology. We launched our new App in October 2019 which has been well received and achieved 50,000 downloads in the first three months, which is above market performance. The app allows our customers to make bookings faster and easier, and increases brand engagement through features such as 'Everyman Playlists' where Everyman's own curated playlists are available. We have also invested in social media, resulting in strong engagement across key social channels.
Typically, we avoid more traditional advertising, preferring to focus on delivering in-venue events and experiences that surprise and exceed our customers' expectations. This in turn builds loyalty and goodwill whilst fostering tremendous word of mouth, increasingly shared on social media. Such events in 2019 included the world premiere of Busby in our new Manchester venue, several exclusive Q&A screenings, and the 5th annual Everyman Music & Film Festival and an outdoor cinema season at The Grove Hotel, Hertfordshire.
UK cinema m arket performance in 2019
The UK cinema industry delivered close to the modern-day record last year of 177.0 million, with 176.1 million admissions in 2019 (source: UK Cinema Association). Gross box office for the UK was flat at GBP1.26bn (source: UK Cinema Association) reflecting the continued growth in family and subscription audiences.
Our share of UK & Ireland box office revenue in 2019 rose from 2.5% in 2018 to 3.1% (source: ComScore).
Outlook
Currently the Group's focus is on addressing the short to medium term challenges we face associated with the global COVID-19 pandemic. This does not change the Board's confidence in Everyman and its proposition over the long term.
Crispin Lilly
CEO
18 March 2020
Chief Financial Officer's Statement
Results
Revenue for the year was up 25.2% on last year to GBP64,955,000 (2018: GBP51,880,000).
The Group's adjusted operating profit (before depreciation, amortisation, pre-opening expenses, acquisition costs and share-based payments) was up 70.4% to GBP15,590,000 (2018: GBP9,150,000). On a like for like accounting basis pre-IFRS 16 growth was 31.2% at GBP12,010,000. This is an adjusted IFRS measure which has been further explained in note 2 and on the face of the statement of profit and loss and other comprehensive income. The Group generated an operating profit for the year of GBP4,807,000 (pre-IFRS 16 equivalent GBP3,868,000, 2018: GBP2,876,000) and generated a profit after tax for the year of GBP1,800,000 (pre-IFRS 16 equivalent GBP3,191,000, 2018: GBP2,037,000).
The increase in net liabilities is due to the Group's adoption of IFRS 16. The Directors take a prudent approach to the Group's leverage ratio and regularly review its balance sheet with this in mind. The Board does not recommend the payment of a dividend at this stage of the Group's development (2018: GBPnil).
Cash flows
Net cash generated from operating activities was GBP15,924,000 (2018: GBP7,640,000). Net cash outflows for the year, before financing, were GBP8,207,000 (2018: GBP15,485,000 million). This is largely represented by capital expenditure on the expansion of the business through build and fit-out costs of new sites and refurbishment of existing sites during the year.
Cash held at the end of the year was GBP4,271,000 (2018: GBP3,517,000).
On 16 January 2019 the Group agreed a new 5 year loan facility of GBP30.0 million with Barclays Bank PLC and Santander UK PLC. This replaced the GBP20.0 million loan facility signed in March 2017 with Barclays Bank PLC. At the year end the Group had drawn down GBP14.0 million (2018: GBP7.0 million) of the available funds. Charges have been put in place over the net assets of the Group as collateral against the loan balance.
Pre-opening costs
Pre-opening costs, which have been expensed within administrative expenses, were GBP1,044,000 (2018: GBP1,099,000). Included within depreciation and financial expense is GBP0.3m also relating to pre-opening operating lease expenditure in the prior year. These costs include expenses which are necessarily incurred in the period prior to a new venue being opened but which are specific to the opening of that venue.
Elizabeth Lake
CFO
18 March 2020
Strategic Report
The Directors present their strategic report for the Group for the year ended 2 January 2020 (comparative period: 53 weeks 3 January 2019). Comprising the Chief Executive's statement and the Chief Financial Officer's statement.
Principal activity
The Group is a leading independent cinema group in the UK. The principal activity of the Company is that of a holding company.
Review of the business
The Group made a profit after tax of GBP1,771,000 (2018: GBP2,037,000). The profit in 2019 is after charging GBP2,115,000 interest on lease liabilities and depreciation of right of use assets in excess of operating lease equivalents under IFRS 16 (2018: GBPnil).
Further details are shown in the Chairman's statement and consolidated statement of profit and loss and other comprehensive income, together with the related notes to the financial statements.
Principal risks and uncertainties
Risks relating to the Group's business
The Board considers risk assessment to be important in achieving its strategic objectives. There is a process of evaluation of performance targets through regular reviews by senior management to forecasts. Project milestones and timelines are reviewed regularly. A risk register is in place which the Board reviews and updates on an ad-hoc basis during meetings.
The identified risks remain largely unchanged from our last annual report:
1 Admissions - The Group's revenues are dependent on admissions. Nearly all revenues (box office, food & beverage, screen advertising) are linked to this. As a result, the Group's financial position is largely reliant on the continued popularity and the overall quantity and quality of the films (and other content) which it shows. The Board believes that the Group's strategy of focusing on customer experience, the venue environment and hospitality mitigates this risk somewhat as customers are more willing to try smaller, more diverse films that may not get the same exposure either in above-the-line advertising spend or through wider platform releases by the industry.
2 Film licensing - The Group's ability to license films on acceptable terms is also largely dependent on its relationships with film distributors and remains a core risk to the costs of the business. This risk is managed through healthy partnership-based relations with distributors of all sizes as well as careful weekly negotiation on specific titles.
3 Alternative media channels - The proliferation of alternative media channels, including streaming, has introduced new competitive forces for the film-going audience. To date this has proven to be a more virtuous relationship, both increasing the investment in film production and further fuelling an overall interest in film with customers of all ages. It remains an ever-present caution however, that we must continue to deliver an exceptional experience in order to deliver real added value for our customers who choose to see a film at our venues.
4 Piracy - Film piracy, aided by technological advances, continues to be a real threat to the cinema industry generally. Any theft within our venues may result in distributors withholding content to the business. Everyman's typically smaller, more intimate auditoria, with much higher occupancy levels than the industry average, make our venues less appealing to film thieves. In addition, higher levels of staffing further mitigate this risk.
5 Seasonality - Release schedules affect the Group's box office revenues as they fluctuate throughout the course of any given year and are largely dependent on the timing of release of films, over which the Group has no control. As a result, the Group's revenues may vary significantly from month to month and within any given financial year. The Board mitigates this risk by reviewing changes in the release schedule and through the development and promotion of special events at certain times of the year.
6 Extreme weather - The Group's business may suffer as a result of periods of abnormal, severe or unseasonal weather conditions. Cinema admissions are affected by periods such as exceptionally hot weather or heavy snowfall. This is mitigated somewhat by becoming a national player, ensuring that localised extreme weather has a decreasing impact on the overall business.
7 Extraordinary events and consumer environment - Specific large events can temporarily reduce cinema admissions, for example royal weddings, elections or large sporting events. In addition, a reduction in consumer spending because of broader economic factors could impact the Group's revenues. Film release schedules tend to work around large, known events such as a World Cup or the Olympics, so that admissions are typically lower at these times anyway. Historically, cinema has been incredibly resilient to recession with it remaining an affordable treat during such times for most consumers. However, the Group constantly monitors long term trends as well as the broader leisure market.
8 Food & Beverage - Retail sales of food & beverage form an important part of the revenues of the Group. Our cinemas sell freshly prepared food and drink which also presents food hygiene risks. Stringent operational procedures exist to ensure compliance with all necessary regulations and the Group retains the services of an external health, safety and food hygiene audit company to check standards regularly.
9 Advertising revenue - The Group earns revenue from advertising which may fluctuate due to broader macro-economic factors. Revenue earned from advertising is influenced by the level of admissions and the size of the Group's portfolio of properties and as such, may decrease in line with any reduction of admissions. The Group over-indexes on this revenue stream due to its reputation for partnership-driven sponsorship activity and this, combined with the growth of other revenue streams, helps mitigate any decline in traditional advertising revenues.
10 Property - The Group's operating costs include rent and energy costs. These costs may be volatile due to increased market fluctuations in the price of property rental, business rates, gas and electricity. The Board mitigates this risk by regularly assessing alternative energy suppliers, rating and rental costs when open market rent reviews are due on each property. In addition the Group will be able to benefit from new rate reliefs at a number of venues.
11 Competition - Where the Group has an existing cinema, it may be subject to competition from the introduction of a new and/or upgraded cinema operated by other chains. The Board continuously monitors competing operators and significant capital budget is set aside for refurbishments. We believe the Everyman offer represents great value to our customers and is more resilient to competition than more traditional cinema offers.
12 Key suppliers - The Group is reliant on certain key contracts and arrangements with partners and suppliers, mainly in the UK. The loss of some of these arrangements may cause temporary disruption to the operations and financial performance of the Group. The Board mitigates this risk by maintaining relationships with a number of alternative suppliers as well as appropriate reviews of these contracts.
13 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.
14 Brexit - Risks linked to Brexit include consumer confidence, foreign exchange rate risk, a lack of availability of certain food items and staff. Whilst the full business implications of Brexit remain uncertain, and will do for some time, the Board believes the Group is well positioned to react to the potential challenges and opportunities ahead. The Group has no exchange rate exposure and is only directly impacted by the fall in sterling due to cost pressure on a small number of imported food and beverage purchases. These are, for the most part, offset by increased buying power due to our rapid expansion. The cinema industry is historically resilient to recessionary pressures however, the Board is continuing to monitor the situation closely. The Group has secured financing to allow it to fully fund its next phase of expansion.
15 Public Health - Risks linked to an infectious pandemic which could close public places i.e. cinemas, cause significant absenteeism from work and disruption to supply chains. The Board mitigate this risk by closely monitoring the latest information and advice from the Government. All staff are trained in Health & Safety and how to minimise the spread of disease.
Financial risks
The Group does not have a direct exposure to foreign currency movements and does not contract any hedging arrangements in respect of currency positions.
The Group takes out suitable insurance against property and operational risks where considered material to the anticipated revenue of the Group.
Companies Act s172 Statement
This section serves as our s172 statement and should be read in conjunction with the whole Strategic Report. s172 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 long term.
Within the Corporate Governance Report on pages 8 to 11 we describe how the Board operates and the culture of the business including employee engagement.
Our principle stakeholders are engaged with on a regular basis. With regards to our shareholders this includes face to face meetings at least twice a year, and we engage in constant dialogue with our workforce and our suppliers.
Directors' report
The Directors present their annual report and the audited financial statements for the Group for the 52 weeks ended 2 January 2020 (comparative period: 53 weeks to 3 January 2019).
Results and dividends
The results of the Group are included in the strategic report. Further details are shown in the consolidated statement of profit and loss and other comprehensive income and the related notes to the financial statements. The Group generated a profit after tax for the year of GBP1,770,000 (pre-IFRS 16 equivalent GBP3,191,000, 2018: GBP2,037,000). As mentioned in the Chairman's statement, the Directors do not recommend the payment of a dividend (2018: GBPnil).
Principal activity
The Group is a leading independent cinema group in the UK. Further information is contained in the strategic report. The principal activity of the Company is that of a holding company. The subsidiaries of the Group are set out in the related notes to the financial statements.
Financial risk management: objectives and policies
The financial and other risks to which the Group is exposed, together with the Group's objectives and policies in respect of these risks, are set out in the strategic report.
Capital structure
2,528,666 new shares were issued in 2019. The number of Ordinary shares in issue at 2 January 2020 was 73,517,969 (2018: 70,989,303). The Group has also issued options over the share capital of the Company to members of the Board and to certain employees which amounted to 4,277,864 Ordinary shares (2018: 5,575,344 Ordinary shares) which, if exercised, would comprise 5.8% (2018: 7.9%) of the current issued share capital of the Company (see also Directors' interests below and the related notes). Of these, nil (2018: 1,392,864) are represented by 'A' Ordinary shares issued by Everyman Media Holdings Limited which were converted into Ordinary shares of the Company during the year. The shares of the Company are quoted on the London AIM market.
Going concern
Uncertainty due to the recent COVID-19 outbreak has been considered as part of the Group's adoption of the going concern basis. Trading over recent days has been impacted by COVID-19 and the delay of major movie releases. Following guidance provided by the UK government, the Board of Everyman has taken the decision to close its venues to guests until further notice. The health of our staff and our customers is the boards highest priority.
All appropriate measures have been put in place to reduce the impact on the Group, including cost reduction and the postponement of new sites, refurbishments and other capital expenditure projects. Whilst the Group has significant headroom in its loan facility there is a risk of breaching the Group's financial covenants. The Board is in discussions with its lenders and is in the process of re-negotiating its loan covenants to maintain liquidity through this period of uncertainty. The Board is hopeful of lenders continued support in this period of uncertainty which is underpinned by the Government announcement to provide guaranteed loans to business.
The Board's latest forecasts are based on a scenario where the business is closed for a period of three months with reduced admissions for the following two months at 50% and 65% of normal trade respectively. The Board has factored in a delay in all non-committed capital expenditure, reduction in variable costs including staffing and moving to monthly rent payments. In addition the Government has recently announced a twelve month business rates holiday for the hospitality sector. Under this scenario there is a risk of breaching the Group's financial covenants as stated above.
The Group also has a very supportive shareholder base who are committed to the long term success of the Group, and currently there is GBP14m headroom in the loan facility at the date of these financial statements. Subject to the waiver or agreement of new loan covenants which match the expected trading position of the business, the Group is able to operate within the level of its current facility for at least 12 months from the approval date of the financial statements.
The events arising as a result of the COVID-19 outbreak has meant that there is a material uncertainty. Based on these indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis.
Statement of Directors' responsibilities in respect of the annual report and financial statements
The Directors are responsible for preparing the annual report and the Group and parent Company financial statements in accordance with applicable laws and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. As required by the AIM rules of the London Stock Exchange they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and applicable law and have elected to prepare the parent Company financial statements in accordance with UK accounting standards and applicable law (UK Generally Accepted Accounting Practice), including FRS101 Reduced Disclosure Framework.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and Parent company financial statements, the Directors are required to:
- Select suitable accounting policies and then apply them consistently.
- Make judgements and estimates that are reasonable, relevant, reliable and prudent.
- For the Group financial statements, state whether they have been prepared in accordance with IFRS as adopted by the EU.
- For the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements.
- Assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern.
- Use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a strategic report and a Directors' report that complies with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Independent auditor's report to the members of Everyman Media Group PLC
1 Our opinion is unmodified
We have audited the financial statements of Everyman Media Group PLC ("the Company") for the year ended 2 January 2020 which comprise the consolidated statement of profit and loss and other comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement, the company balance sheet, the company statement of changes in equity and the related notes, including the accounting policies in note 2.
In our opinion:
-- the financial statements give a true and fair view of the state of the Group's and of the parent
Company's affairs as at 2 January 2020 and of the Group's profit for the year then ended;
-- the group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union;
-- the parent Company financial statements have been properly prepared in accordance with UK accounting standards, including FRS 101 Reduced Disclosure Framework and
-- the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfilled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities . We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion.
2 Material uncertainty related to going concern
We draw attention to note 2 to the financial statements which indicates that the group has profit for the year of GBP1.7 million (2018: GBP2.0 million) and net current liabilities of GBP7.9 million (2018: GBP4.7 million). Due to the recent COVID-19 outbreak trading over recent days has been impacted. Following guidance provided by the UK government, the group has taken the decision to close its venues until further notice. These events and conditions, along with the other matters explained in note 2, constitute a material uncertainty that may cast significant doubt on the group's and the parent company's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
The risk
Disclosure quality
There is little judgement involved in the directors' conclusion that risks and circumstances described in note 2 to the financial statements represent a material uncertainty over the ability of the group and company to continue as a going concern for a period of at least a year from the date of approval of the financial statements.
However, clear and full disclosure of the facts and the directors' rationale for the use of the going concern basis of preparation, including that there is a related material uncertainty, is a key financial statement disclosure and so was the focus of our audit in this area. Auditing standards require that to be reported as a key audit matter.
Our response
-- Our procedures included:
-- Assessing transparency :
-- Assessing the completeness and accuracy of the matters covered in the going concern disclosure by evaluating management's cashflow projections for the next 12 months and the underlying assumptions.
3 Other Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Going concern is a significant key audit matter and is described in section 2 of our report. In arriving at our audit opinion above, the other key audit matters, in decreasing order of audit significance, were as follow (unchanged from 2018):
Recoverability of property, plant and equipment, Right-of-use assets and goodwill (Risk vs 2018 )
Group: goodwill - GBP9.0 million (2018: GBP9.0 million), plant, property and equipment - GBP83.5 million (2018: GBP66.2 million), Right- of- use assets - GBP58.4 million (2018: GBPnil).
Refer to page 8 and 9 the in Audit Committee Report, page 28 in accounting policy Note 2, and page 38 and 39 of financial disclosures.
The risk
Forecast-based valuation
Plant, property and equipment, Right-of-use assets and the carrying value of goodwill in the Group, are significant and at risk of potential impairment due to the Group operating in a competitive industry where box office revenues along with beverage revenues are dependent on admissions. The estimated recoverable amount of these balances is subjective due to the inherent uncertainty involved in forecasting and discounting the related future cash flows.
The effect of these matters is that, as part of our risk assessment, we determined that the recoverable amount of property, plant and equipment, right-of-use assets and the recoverable amount of goodwill has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole.
Our response
-- Our procedures included:
-- Our sector experience:
-- We challenged the cash flow forecasts, and the assumptions behind them, based on our knowledge of the business and market for all cinema sites with goodwill, and those others where there was an indicator of impairment such as potential loss-making sites, identified by inspecting the group's records of performance by site.
-- Historical comparisons:
-- We compared the EBITDA of each site against budget and prior year results for any changes that could have a potential impairment impact.
-- We assessed the historical accuracy of the forecasts used in the Group's impairment model by considering actual prior year performance to budget.
-- Benchmarking assumptions:
-- We compared the Group's assumptions to externally derived data in relation to key inputs such as projected growth and the discount rate using Discount Rate tool provided by valuations specialists.
-- Sensitivity analysis:
-- For all cinemas with goodwill, and those with impairment indicators over plant, property and equipment, we calculated the degree to which the key inputs and assumptions would need to fluctuate before an impairment was triggered and considered the likelihood of this occurring.
-- Assessing transparency
-- We assessed whether the Group's disclosures about the sensitivity of the outcome of the impairment assessment to changes in key assumptions reflected the risks inherent in the valuation of property, plant, and equipment and goodwill.
-- We have assessed the Group's compliance with the requirements of IFRS 16: Leases including Identification of leases and the completeness of the leases schedule, accuracy of information recorded; and discount rate.
Recoverability of parent company investment in subsidiary (Risk vs 2018 )
Parent: GBP32.0 million (2018: GBP30.3 million)
Low risk, high value
The carrying amount of the parent company's investments in subsidiaries represents 33.2% (2018: 40%) of the company's total assets. Their recoverability is not at a high risk of significant misstatement or subject to significant judgement. However, due to their materiality in the context of the parent company financial statements, this is considered to be the area that had the greatest effect on our overall parent company audit.
Our response
-- Our procedures included:
-- Comparing valuations
-- We compared the carrying amount of the parent company's investment in its trading subsidiary with the expected value of the business based on the Group's year end market capitalisation.
4 Our application of materiality and an overview of the scope of our audit
Materiality for the group financial statements as a whole was set at GBP580,000 (2018: GBP450,000), determined with reference to a benchmark of group revenue, of which it represents 0.9% (2018: 0.9%). We consider revenue to be an appropriate benchmark as the group continues to expand through capital expenditure, and therefore is a more stable measure than profit or loss before tax.
Materiality for the parent company financial statements as a whole was set at GBP520,000 (2018: GBP400,000), determined with reference to a benchmark of Company total assets, of which it represents 0.5% (2018: 0.5%).
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding GBP30,000 (2018: GBP22,600), in addition to other identified misstatements that warranted reporting on qualitative grounds.
The Group audit team subjected all (2018: all) of the Group's three reporting components to full scope audits for group purposes and performed the audit of the parent company. The Group team approved the component materiality's, which ranged from GBP85,000 to GBP505,000 (2018: GBP50,000 to GBP440,000), having regard to the mix of size and risk profile of the Group across the components.
5 We have nothing to report on the other information in the Annual Report
The directors are responsible for the other information presented in the Annual Report together with the financial statements. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified material misstatements in the other information.
Strategic report and directors' report
Based solely on our work on the other information:
-- we have not identified material misstatements in the strategic report and the directors' report;
-- in our opinion the information given in those reports for the financial year is consistent with the financial statements; and
-- in our opinion those reports have been prepared in accordance with the Companies Act 2006.
6 We have nothing to report on the other matters on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; 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.
We have nothing to report in these respects.
7 Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 12, the directors are responsible for: the preparation of the financial statements including being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error; assessing the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities .
8 The purpose of our audit work and to whom we owe our responsibilities
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
Kelly Dunn (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
Botanic House
100 Hills Road
Cambridge
CB2 1AR
19 March 2020
Consolidated statement of profit and loss and other comprehensive income for the year ended 2 January 2020
Year ended Year ended
2 January 3 January
2020 2019
Note GBP000 GBP000
Revenue 5 64,955 51,880
Cost of sales (24,937) (20,248)
------------------------- ------------------------
Gross profit 40,018 31,632
Other operating income - 3
Administrative expenses (35,213) (28,759)
------------------------- ------------------------
Operating profit 4,805 2,876
------------------------- ------------------------
Financial income 11 1 -
Financial expenses 1 2 (2,510) (160)
------------------------- ------------------------
Net financing expense (2,509) (160)
------------------------- ------------------------
Profit before tax 6 2,296 2,716
Tax expense 1 3 (526) (679)
------------------------- ------------------------
Profit for the year 1,770 2,037
Other comprehensive income for the
year 1 -
------------------------- ------------------------
Total comprehensive income for the
year 1,771 2,037
------------------------- ------------------------
Basic earnings per share (pence) 14 2.45 2.89
------------------------- ------------------------
Diluted earnings per share (pence) 14 2.42 2.78
------------------------- ------------------------
All amounts relate to continuing
activities.
Non-GAAP measure: adjusted profit
from operations
Adjusted profit from operations 15,588 9,150
Before:
Depreciation and amortisation* 15/17 (8,763) (4,563)
Disposal of property, plant and
equipment (52) -
Acquisition expenses (25) (9)
Pre-opening expenses (1,044) (1,099)
Share-based payment expense 31 (688) (500)
Option-based social security (211) (103)
------------------------- ------------------------
Operating profit 4,805 2,876
------------------------- ------------------------
Equivalent operating lease expense
included within administrative expenses
pre IFRS 16 (3,580)
------------------------- ------------------------
Adjusted profit from operations
comparable with prior year 12,008 9,150
------------------------- ------------------------
*included within depreciation and financial expenses is GBP298k relating to pre-opening expenditure. This was accounted for as pre-opening operating expenditure in the year.
Consolidated balance sheet at 2 January 2020
Registered
in England
& Wales
08684079
2 January 3 January
2020 2019
Note GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 15 83,499 66,150
1
Right-of-use assets 6 58,415 -
Intangible assets 17 10,694 10,655
Trade and other receivables 21 173 173
152,781 76,978
------------------- ---------------------------
Current assets
Inventories 19 507 406
Trade and other receivables 21 4,463 3,790
Cash and cash equivalents 20 4,271 3,517
------------------- ---------------------------
9,241 7,713
------------------- ---------------------------
Total assets 162,022 84,691
------------------- ---------------------------
Liabilities
Current liabilities
Other interest-bearing loans and
borrowings 24 122 56
Trade and other payables 22 14,408 12,398
Lease liabilities 25 2,386 -
Corporation tax liabilities 23 186 -
17,102 12,454
------------------- ---------------------------
Non-current liabilities
Other interest-bearing loans and
borrowings 24 14,000 7,000
Other payables 22 - 7,796
Lease liabilities 25 74,005 -
Provisions for other liabilities 28 - 1,794
Deferred tax liabilities 29 1,362 1,210
------------------- ---------------------------
89,367 17,800
------------------- ---------------------------
Total liabilities 106,469 30,254
------------------- ---------------------------
Net assets 55,553 54,437
------------------- ---------------------------
Equity attributable to owners of
the Company
Share capital 30 7,352 7,099
Share premium 30 41,920 39,066
Merger reserve 30 11,152 11,152
Forex reserve 1 -
Retained earnings (4,872) (2,880)
------------------- ---------------------------
Total equity 55,553 54,437
------------------- ---------------------------
These financial statements were approved by the Board of Directors on 18 March 2020 and signed on its behalf by:
Crispin Lilly
CEO
Consolidated statement of changes in equity for the year ended 2 January 2020
Share Share Merger Forex Retained Total
capital premium reserve reserve earnings Equity
Note GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 29 December 2017 7,003 38,354 11,152 - (5,170) 51,339
--------- --------- --------- --------- ---------- --------
Profit for the year - - - - 2,037 2,037
--------- --------- --------- --------- ---------- --------
Total comprehensive income - - - - 2,037 2,037
--------- --------- --------- --------- ---------- --------
Shares issued in the period 30 96 712 - - - 808
Share issue expenses 30 - - - - - -
Share-based payments 31 - - - - 500 500
Deferred tax on share-based
payments 29 - - - - (247) (247)
--------- --------- --------- --------- ---------- --------
Total transactions with
owners of parent 96 712 - - 253 1,061
--------- --------- --------- --------- ---------- --------
Balance at 3 January 2019 7,099 39,066 11,152 - (2,880) 54,437
--------- --------- --------- --------- ---------- --------
Balance at 4 January 2019 7,099 39,066 11,152 - (2,880) 54,437
--------- --------- --------- --------- ---------- --------
Profit for the year 1,770 1,770
Retranslation of foreign
currency denominated subsidiaries - - - 1 - 1
--------- --------- --------- --------- ---------- --------
Total comprehensive income - - - 1 1,770 1,771
--------- --------- --------- --------- ---------- --------
Shares issued in the period 30 253 2,854 - - - 3,107
Acquisition without change
in control 30 - - - - (1,510) (1,510)
IFRS 16 accumulated restatement 25 - - - - (3,129) (3,129)
Deferred tax on IFRS 16
accumulated restatement 29 - - - - 535 535
Share-based payments 31 - - - - 688 688
Deferred tax on share-based
payments 23/29 - - - - (346) (346)
--------- --------- --------- --------- ---------- --------
Total transactions with
owners of the parent 253 2,854 - - (3,762) (655)
--------- --------- --------- --------- ---------- --------
Balance at 2 January 2020 7,352 41,920 11,152 1 (4,872) 55,553
--------- --------- --------- --------- ---------- --------
Consolidated cash flow statement for the year ended 2 January 2020
2 January 3 January
2020 2019
Note GBP000 GBP000
Cash flows from operating activities
Profit for the year 1,770 2,037
Adjustments for:
Financial income 11 (1) -
Financial expenses 12 2,510 160
Income tax expense 13 526 679
-------------------------- -------------------------
Operating profit 4,805 2,876
Changes in working capital
Depreciation and amortisation 15,17 8,764 4,563
Loss on disposal of property, plant and
equipment 15 52 17
Transfer of property, plant and equipment
to profit and loss 15 5 41
Capitalised finance expenses 68 25
Loan arrangement fees (58) -
Bad debts (79) 141
Acquisition and incorporation expenses 25 4
Lease incentives amortised - 214
Market rent provisions 28 - (88)
Equity-settled share-based payments 31 688 500
-------------------------- -------------------------
14,270 8,293
Increase in inventories (101) (98)
Increase in trade and other receivables (1,333) (2,887)
Increase in trade and other payables 3,089 2,332
-------------------------- -------------------------
Cash generated from operating activities 15,924 7,640
-------------------------- -------------------------
Cash flows from investing activities
Acquisition and incorporation expenses 34 (25) (4)
Acquisition of property, plant and equipment 15 (23,154) (22,235)
Proceeds from sale of property, plant
and equipment - 9
Acquisition of intangible assets 17 (953) (895)
Interest received 11 1 -
-------------------------- -------------------------
Net cash used in investing activities (24,131) (23,125)
-------------------------- -------------------------
Cash flows from financing activities
Proceeds from the issuance of Ordinary
shares 1,450 808
Proceeds from bank borrowings 24 13,000 9,000
Repayment of bank borrowings 26 (6,000) (9,000)
Lease incentives net of reductions in
lease liabilities 850 -
Interest paid (339) (172)
-------------------------- -------------------------
Net cash generated from financing activities 8,961 636
-------------------------- -------------------------
Net increase/(decrease) in cash and cash
equivalents 754 (14,849)
-------------------------- -------------------------
Cash and cash equivalents at the beginning
of the year 3,517 18,366
-------------------------- -------------------------
Cash and cash equivalents at the end
of the year 4,271 3,517
-------------------------- -------------------------
The Group had GBP16,000,000 of undrawn funds available (2018: GBP13,000,000) of the loan facility at the year end.
Company balance sheet as at 2 January 2020
Registered
in England
& Wales
08684079
2 January 3 January
2020 2019
Note GBP000 GBP000
Assets
Non-current assets
Trade and other receivables 21 55,278 44,536
Property, plant and equipment 15 219 348
Right-of-use assets 16 8,756 -
Investments 18 31,994 30,337
Deferred tax assets 48 -
Intangible assets 17 - 547
-------------------
Total assets 96,295 75,768
------------------- ----------------------
Liabilities
Current liabilities
Lease liabilities 25/26 467 -
Loans and borrowings 24 122 56
Corporation tax liabilities 23 60 -
------------------- ----------------------
649 56
------------------- ----------------------
Non-current liabilities
Interest-bearing borrowings 24 14,000 7,000
Lease liabilities 25/26 9,453 -
Provisions for other liabilities 28 - 1,289
Deferred tax liabilities 29 - 41
-------------------
23,453 8,330
------------------- ----------------------
Total liabilities 24,102 8,386
------------------- ----------------------
Net assets 72,193 67,382
------------------- ----------------------
Equity
Equity attributable to owners of
the Company
Ordinary shares 30 7,352 7,099
Share premium 30 41,920 39,066
Merger reserve 30 20,336 20,336
Retained earnings 2,585 881
----------------------
Total equity 72,193 67,382
------------------- ----------------------
These financial statements were approved by the Board of Directors on 18 March 2020 and signed on its behalf by:
Crispin Lilly
CEO
Company statement of changes in equity for the year ended 2 January 2020
Share Share Merger Retained Total
capital premium reserve earnings equity
Note GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 28
December
2017 7,003 38,354 20,336 490 66,183
Loss for the year - - - (109) (109)
Shares issued in the
period 30 96 712 - - 808
Share-based payments 31 - - - 500 500
---------------- ---------------- ---------------- ---------------- --------------
Balance at 3 January
2019 7,099 39,066 20,336 881 67,382
---------------- ---------------- ---------------- ---------------- --------------
Balance at 4 January
2019 7,099 39,066 20,336 881 67,382
Profit for the year - - - 1,470 1,470
Shares issued in the
period 30 253 2,854 - - 3,107
Share-based payment
expense 31 - - - 688 688
IFRS 16 accumulated
restatement 25/26 - - - (548) (548)
Deferred tax on IFRS
16 accumulated
restatement 29 - - - 94 94
Balance at 2 January
2020 7,352 41,920 20,336 2,585 72,193
---------------- ---------------- ---------------- ---------------- --------------
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 Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU. The Company has elected to prepare its parent Company financial statements in accordance with FRS101.
The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: financial liabilities (including derivatives) measured at fair value, and liabilities for cash-settled share-based payments. Non-current assets are stated at the lower of previous carrying amount and fair value less costs to sell.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements. The Group prepares its financial statements on a 52/53 week basis. The year end date is determined by the 52nd Thursday in the year. A 53rd week is reported where the year end date is no longer aligned with 7 days either side of 31st December. The year ended 2 January 2020 is a 52 week period in comparison to the previous 53 week period ended 3 January 2019.
Company basis of preparation
The Company financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS101). The amendments to FRS101 (2014/15 cycle) issued in July 2015 have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by the EU but makes amendments where necessary in order to comply with the Companies Act 2006 and has set out below where advantage of the FRS101 disclosure exemptions has been taken.
Under s408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.
In these financial statements, the Company has applied the exemptions available under FRS101 in respect of the following disclosures:
- A cash flow statement and related notes.
- Disclosures in respect of transactions with wholly-owned subsidiaries.
- Disclosures in respect of capital management.
- Disclosures in respect of the compensation of key management personnel.
- New but not yet effective IFRS.
As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS101 available in respect of the following disclosures:
- IFRS2 Share Based Payments in respect of Group-settled share based payments.
- Certain disclosures required by IAS36 Impairment Of Assets in respect of the impairment of goodwill and indefinite-life intangible assets.
- Certain disclosures required by IFRS3 Business Combinations in respect of business combinations undertaken by the Company in the current and prior periods including the comparative period reconciliation for goodwill.
- Certain disclosures required by IFRS13 Fair Value Measurement.
- Certain disclosures required by IFRS7 Financial Instruments.
Going concern
Uncertainty due to the recent COVID-19 outbreak has been considered as part of the Group's adoption of the going concern basis. Trading over recent days has been impacted by COVID-19 and the delay of major movie releases. Following guidance provided by the UK government, the Board of Everyman has taken the decision to close its venues to guests until further notice. The health of our staff and our customers is the boards highest priority.
All appropriate measures have been put in place to reduce the impact on the Group, including cost reduction and the postponement of new sites, refurbishments and other capital expenditure projects. Whilst the Group has significant headroom in its loan facility there is a risk of breaching the Group's financial covenants. The Board is in discussions with its lenders and is in the process of re-negotiating its loan covenants to maintain liquidity through this period of uncertainty. The Board is hopeful of lenders continued support in this period of uncertainty which is underpinned by the Government announcement to provide guaranteed loans to business.
The Board's latest forecasts are based on a scenario where the business is closed for a period of three months with reduced admissions for the following two months at 50% and 65% of normal trade respectively. The Board has factored in a delay in all non-committed capital expenditure, reduction in variable costs including staffing and moving to monthly rent payments. In addition the Government has recently announced a twelve month business rates holiday for the hospitality sector. Under this scenario there is a risk of breaching the Group's financial covenants as stated above.
The Board has also considered the severe but plausible downside scenario of complete closure and delayed re-opening. This continues to be under review given current market conditions associated with COVID-19. The business, subject to the renegotiation of its loan covenants, has the ability to remain trading for a period of at least 12 months from the date of signing of these financial statements.
The Group also has a very supportive shareholder base who are committed to the long term success of the Group, and currently there is GBP14m headroom in the loan facility at the date of these financial statements. Subject to the waiver or agreement of new loan covenants which match the expected trading position of the business, the Group is able to operate within the level of its current facility for at least 12 months from the approval date of the financial statements.
The events arising as a result of the COVID-19 outbreak has meant that there is a material uncertainty. Based on these indications the directors believe that it remains appropriate to prepare the financial statements on a going concern basis. However, these circumstances represent a material uncertainty that may cast significant doubt on the Group and Company's ability to continue as a going concern and, therefore, to continue realising their assets and discharging their liabilities in the normal course of business. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.
Use of non-GAAP profit and loss measures
The Group believes that along with operating profit, the 'adjusted profit from operations' provides additional guidance to the statutory measures of the performance of the business during the financial year.
Adjusted profit from operations is calculated by adding back depreciation, amortisation, pre-opening expenses and certain non-recurring or non-cash items. Adjusted profit is an internal measure used by management as they believe it better reflects the underlying performance of the Group beyond generally accepted accounting principles. A pre IFRS16 adjusted profit from operations is also reported to show EBITDA as would have been reported if operating leases were reported on a straight line basis as rent.
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 2 January 2020 incorporates the results of all subsidiaries of the Group for all years and periods, as set out in the basis of preparation.
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
The consolidated financial statements include the results of the Company and all its subsidiary undertakings made up to the same accounting date.
Merger reserve
On 29 October 2013 the Company became the new holding company for the Group. This was put into effect through a share-for-share exchange of 1 Ordinary share of 10 pence in Everyman Media Group PLC for 1 Ordinary share of 10 pence in Everyman Media Holdings Limited (previously, Everyman Media Group Limited), the previous holding company for the Group. The value of 1 share in the Company was equivalent to the value of 1 share in Everyman Media Holdings Limited.
The accounting treatment for group reorganisations is presented under the scope of IFRS3. The introduction of the new holding company was accounted for as a capital reorganisation using the principles of reverse acquisition accounting under IFRS3. Therefore, the consolidated financial statements are presented as if Everyman Media Group PLC has always been the holding company for the Group. The Company was incorporated on 10 September 2013.
The use of merger accounting principles has resulted in a balance in Group capital and reserves which has been classified as a merger reserve and included in the Group's shareholders' funds.
The Company recognised the value of its investment in Everyman Media Holdings Limited at fair value based on the initial share placing price on admission to AIM. As permitted by s612 of the Companies Act 2006, the amount attributable to share premium was transferred to the merger reserve. The investment in the Company is recorded at fair value.
Revenue recognition
Revenue for the Group is measured at the fair value of the consideration received or receivable. The Group recognises revenue for services provided when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow to the entity.
The Group's revenues from film and entertainment activities are recognised on completion of the showing of the relevant film. The Group's revenues for food and beverages are recognised at the point of sale as this is the time the performance obligations have been met. The Group's other revenues, which include commissions, are recognised when all performance obligations have been satisfied.
All advanced booking fees, gift cards and similar income which are received in advance of the related performance are classified as deferred revenue and shown as a liability until completion of the performance.
All contractual-based revenue from memberships is initially classified as deferred revenue. Revenue from memberships that provide a certain number of tickets per year is recognised over the year as utilised. Revenue from memberships, sponsorships and advertising revenues that provide unlimited access is recognised equally over the year.
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but is tested annually for impairment. Goodwill represents the excess of the costs of a business combination over the total acquisition date fair values of the identifiable assets, liabilities and contingent liabilities acquired. Goodwill is capitalised as an intangible asset. Costs incurred in a business combination are expensed as incurred with the exception that for business combinations completed prior to 1 January 2010, cost comprised the fair value of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.
The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value-in-use and its fair value less costs to sell. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the CGU). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in the profit and loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit/group of units on a pro-rata basis.
Business combinations
Acquisitions that are deemed to be the transfer of a 'business' per IFRS3 requirements, are valued at fair value through the use of an external valuation specialist. As such, any identifiable tangible and intangible assets and liabilities are valued prior to acquisition and any excess consideration is treated as goodwill and reviewed for impairment annually.
Intangible assets
Interests in property-based leases acquired in a business combination are recognised at fair value at the acquisition date. Amortisation is calculated on a straight-line basis to allocate the cost of property-based leases across the term of the relevant leasehold interest.
Amortisation on software in development does not commence until it is complete and available for use.
Software assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses. Amortisation is provided on all software assets so as to write off their carrying value over the expected useful economic lives. The estimated useful lives are as follows:
Leasehold interest - straight line on cost over the remaining life of the lease
Software assets - 3 to 5 years
Property, plant and equipment
Items of property, plant and equipment are recognised at cost less accumulated depreciation and accumulated impairment losses. As well as the purchase price, cost includes directly attributable costs.
Depreciation on assets under construction does not commence until they are complete and available for use. These assets represent fit-outs. Depreciation is provided on all other leasehold improvements and all other items of property, plant and equipment so as to write off their carrying value over the expected useful economic lives. The estimated useful lives are as follows:
Freehold properties - 50 years Leasehold improvements - straight line on cost over the remaining life of the lease Plant and machinery - 5 years Fixtures and fittings - 8 years
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. Land is not depreciated.
Impairment (excluding inventories)
A financial asset not carried at fair value through the profit and loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the profit and loss.
Inventories
Inventories are valued at the lower of cost and net realisable value. The cost incurred in bringing each product to its present location and condition is accounted for as follows:
Food and beverages - purchase cost on a first-in, first-out basis Projection stock - purchase cost on a first-in, first-out basis
Net realisable value is the estimated selling price in the ordinary course of business.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Market rent provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability.
Financial instruments
Recognition and initial measurement
Trade receivables are initially recognised when originated. All other financial assets and liabilities are initially recognised when the Group becomes party to the contractual provisions of the instrument.
Financial assets (unless a trade receivable without a significant financing component) or financial liabilities are initially measured at fair value plus, for items not at fair value through the profit and loss, transaction costs that are directly attributable to their acquisition or issue. Trade receivables without a significant financing component are initially measured at the transaction price.
Classification and subsequent measurement
Financial assets classification
On initial recognition, financial assets are classified as measured at either amortised cost, fair value through other comprehensive income for debt investments or equity investments, or fair value through profit and loss. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
Financial assets are measured at amortised cost if they meet both of the following conditions:
- They are held within a business model whose objective is to hold assets to collect contractual cash flows
- The contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Debt investments are measured at fair value through other comprehensive income if they meet both of the following conditions:
- They are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets
- The contractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Investments in subsidiaries are carried at cost less impairment.
Cash and cash equivalents classification
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.
Financial assets subsequent measurement, gains and losses
Financial assets classified at fair value through profit and loss, other than derivatives designated as hedging instruments, are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in the profit and loss.
Financial assets classified at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in the profit and loss. Any gain or loss on derecognition is recognised in the profit and loss.
Debt investments classified at fair value through other comprehensive income are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in the profit and loss. Other net gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to the profit and loss.
Equity investments classified at fair value through other comprehensive income are subsequently measured at fair value. Dividends are recognised as income in the profit and loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in other comprehensive income and are never reclassified to the profit and loss.
Financial liabilities and equity
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following conditions:
- They include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the Group
- Where the instruments may be settled in the Group's own equity instruments, they are either a non-derivative that include no obligation to deliver a variable number of the Group's own equity instruments or they are a derivative that will be settled by the Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Group's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Financial liabilities are classified as measured at amortised cost or fair value through profit and loss. Financial liabilities are classified as fair value through profit and loss if they are classified as held for trading, they are a derivative or they are designated as such on initial recognition. Financial liabilities classified at fair value through profit and loss are measured at fair value and net gains and losses, including any interest expense, are recognised in the profit and loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in the profit and loss. Any gain or loss on derecognition is also recognised in the profit and loss.
Impairment
The Group recognises loss allowances for expected credit losses on financial assets measured at amortised cost, debt investments measured at fair value through other comprehensive income and contract assets (as defined in IFRS15).
The Group measures loss allowances at an amount equal to lifetime expected credit losses, except for other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition which are measured as 12 month expected credit losses.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime expected credit losses.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group's historical experience and informed credit assessment and including forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 60 days past due. The Group considers a financial asset to be in default when the financial asset is more than 120 days past due.
Lifetime expected credit losses are those that result from all possible default events over the expected life of a financial instrument.
12 month expected credit losses are the portion that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating expected credit losses is the maximum contractual period over which the Group is exposed to credit risk.
Measurement of expected credit losses
Expected credit losses are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the company expects to receive). Expected credit losses are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities classified at fair value through other comprehensive income are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Written-off financial assets
The gross carrying amount of a financial asset is written-off (either partially or in full) to the extent that there is no realistic prospect of recovery.
Taxation
Tax on the profit and loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated balance sheet differs from its tax base, except for differences arising on:
- The initial recognition of goodwill.
- The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit.
- Investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
- The same taxable group company; or
- Different company entities which intend either to settle current tax assets and liabilities on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered.
Operating segments
The Board, the chief operating decision maker, considers that the Group's primary activity constitutes one reporting segment, as defined under IFRS8.
The total profit measures are operating profit and profit for the year, both disclosed on the face of the consolidated profit and loss. No differences exist between the basis of preparation of the performance measures used by management and the figures used in the Group financial information.
All of the revenues generated relate to cinema tickets, sale of food and beverages and ancillary income, an analysis of which appears in the notes below. All revenues are wholly generated within the UK. Accordingly there are no additional disclosures provided to the financial information.
Pre-opening expenses
Property rentals and other related overhead expenses incurred prior to a new site opening are expensed to the profit and loss in the year that they are incurred. Similarly, the costs of training new staff during the pre-opening phase are expensed as incurred. These expenses are included within administrative expenses, 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 share-based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). The cost of share-based payments is recharged by the Company to subsidiary undertakings in proportion to the services recognised.
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by using an appropriate pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share.
Research and development
Expenditure on development activities is capitalised if the product or process is technically and commercially feasible and the Group intends to and has the technical ability and sufficient resources to complete development, future economic benefits are probable and if the Group can measure reliably the expenditure attributable to the intangible asset during its development. Development activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure capitalised includes the cost of materials and direct labour. Capitalised development expenditure is stated at cost less accumulated amortisation and less accumulated impairment losses.
3 Changes in significant accounting policies
IFRS 16: Leases (effective 1 January 2019)
The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS17 and IFRIC4.
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.
This policy is applied to contracts entered into, or changed, on or after 1 January 2019. 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. However, for the leases of land and buildings in which it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.
Previously, the Group recognised operating leases on a straight-line basis over the term of the lease and recognised assets and liabilities only to the extent that there was a timing difference between actual lease payments and the expense recognised.
In addition, the Group will no longer recognise provisions for operating leases that it assesses to be onerous. Instead, the Company will include the payments due under the lease in its lease liability.
Leases in which the Group is a lessee
The Company 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 Group'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.
The Group presents right-of-use assets that do not meet the definition of investment property, in property, plant and equipment. Lease liabilities are presented in loans and borrowings in the balance sheet.
In the comparative period under IAS17, as a lessee the Group classified leases that transferred substantially all of the risks and rewards of ownership as finance leases. When this was the case, the leased assets were measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments were the payments over the lease term that the lessee was required to make, excluding any contingent rent.
Assets held under other leases were classified as operating leases and were not recognised in the Group's balance sheet. Payments made under operating leases were recognised in the profit and loss on a straight-line basis over the term of the lease.
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.
4 Critical accounting estimates
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other facts that are considered to be relevant. Actual results may differ from these estimates.
These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. In the current year, there are no estimates or assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities.
Impairment of intangible assets
Determining whether intangible assets are impaired requires an estimate of the fair value of the cash-generating units less costs to sell. The determination of a fair value and of suitable selling costs require a level of estimation. In situations where this is lower than the book value of the net assets of the cash generating unit, a value-in-use calculation will need to be performed. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Details of the impairment accounting policies are set out in the above notes.
Impairment of tangible assets
Determining whether tangible assets are impaired requires an assessment at each reporting date to determine whether there is objective evidence that it is impaired. A tangible asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset which has a negative impact on the estimated future cash flows of that asset. In situations where there are impairment indicators, an impairment loss will be recognised as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.
5 Revenue
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Film and entertainment 37,195 31,465
Food and beverages 23,310 17,622
Other income 4,450 2,793
------------------- -------------------
64,955 51,880
------------------- -------------------
All trade takes place in the United Kingdom. Other income includes items such as advertising and sponsorship.
The following provides information about opening and closing receivables, contract assets and liabilities from contracts with customers. There was no impact on the opening balance sheet when the Company first applied IFRS15 on 29 December 2017.
Contract balances 2 January 3 January
2020 2019
GBP000 GBP000
Trade and other receivables 1,428 963
Deferred income 3,813 2,935
--------------------- --------------------
Deferred income relates to advanced consideration received from customers in respect of memberships, gift cards and advanced screenings. All deferred balances at the beginning of the year (GBP2,935,000) were recognised in the profit and loss during the year. All deferred income at the end of the year (GBP3,788,000) is due to be recognised within 12 months.
6 Profit before taxation
Profit before taxation is stated after charging:
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Depreciation of tangible assets 5,748 4,236
Depreciation of right-of-use
assets 2,650 -
Amortisation of intangible assets 366 328
Loss on disposal of property,
plant and equipment 52 17
Operating lease (income)/expense (98) 3,301
Share-based payments 688 500
Acquisition and incorporation
expenses 25 9
----------------------- ---------------------
7 Staff numbers
The average number of employees (including Directors) during the year, analysed by category, was as follows:
2 January 3 January
2020 2019
Number Number
Management 178 136
Operations 787 641
965 777
-------------------- --------------------
Management staff represent all full-time employees in the Group.
8 Employee costs including Directors
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Wages and salaries 14,126 11,414
Social security
costs 1,071 870
Pension costs 207 126
Share-based payments 688 500
Other staff benefits 9 6
16,101 12,916
---------------------- ----------------------
There were pension liabilities as at 2 January 2020 of GBP49,000 (3 January 2019: GBP30,000).
9 Directors' remuneration
The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS24 Related Party Disclosures:
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Salaries/fees 548 480
Bonuses 90 70
Other benefits 9 6
Pension contributions 18 29
---------------------- ----------------------
665 585
Share-based payments 223 193
888 778
---------------------- ----------------------
Share-based payment credits in relation to option lapses for Directors during the year were GBP35,000 (2018: GBPnil).
Information regarding the highest paid Director is as follows:
Salaries/fees 194 172
Bonuses 40 55
Other benefits 4 2
Pension contributions 11 17
---------------------- -----------------------
249 246
Share-based payments 237 97
486 343
---------------------- -----------------------
Directors remuneration for each Director is disclosed in the Directors' report. The costs relating to the Directors remuneration are wholly incurred by Everyman Media Limited for the wider Group. The amount attributable to services provided to the Company was GBP178,000 (2018: GBP186,000). 3 Directors exercised options over shares in the Company during the year (2018: 2).
10 Auditor's remuneration
Year ended Year ended
2 January 3 January
2020 2019
Fees payable to the Company's auditor
for: GBP000 GBP000
Audit of the Company's financial statements 12 12
Audit of the subsidiary undertakings
of the Company 77 73
Taxation and compliance services to
the Group 57 58
146 143
--------------------- ---------------------
The Group's policy on the use of the external auditor for non-audit services is to ensure that any work undertaken does not impair the auditor's independence. We have considered the auditor's independence and we continue to believe that KPMG LLP is independent within the meaning of all UK regulatory and professional requirements and the objectivity of the audit engagement partner and audit staff are not impaired.
11 Financial income
Year ended Year ended
2 January 3 January
2020 2019
GBP'000 GBP'000
Interest receivable 1 -
----------- -----------
12 Financial expenses
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Interest on bank loans and overdrafts 405 185
Less: Interest capitalised within assets
under construction (68) (25)
Bank loan arrangement fees 58 -
Interest on lease liabilities 2,115 -
Interest expense recognised in the
profit and loss 2,510 160
--------------------- -----------------------
13 Taxation
Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Tax expense
Current tax 428 -
--------------------- -----------------------
Deferred tax expense
Origination and reversal of temporary
differences (19) 277
Deferred tax not previously recognised 111 402
Total tax charge 526 679
--------------------- -----------------------
The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the United Kingdom applied to the profit for the year are as follows:
Reconciliation of effective tax rate Year ended Year ended
2 January 3 January
2020 2019
GBP000 GBP000
Profit before tax 2,296 2,716
--------------------------- ----------------------
Tax at the UK corporation tax rate of 19.00% 436 516
Permanent differences (expenses not deductible
for tax purposes) 49 18
Previously unrecognised corporation tax 6 -
Deferred tax not previously recognised 111 384
Other short term timing differences (potentially
exercisable share options) 32 (239)
Effect of change in expected future statutory
rates on deferred tax (108) -
--------------------------- ----------------------
Total tax expense 526 679
--------------------------- ----------------------
A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015 and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Group's future current tax charge accordingly. The deferred tax at 2 January 2020 has been calculated based on these rates.
14 Earnings per share
Year ended Year ended
2 January 3 December
2020 2019
GBP000 GBP000
Profit used in calculating basic and
diluted earnings per share 1,770 2,037
-------------------- --------------------
Number of shares (000's)
Weighted average number of shares for
the purpose of basic earnings per share 72,245 70,391
-------------------- --------------------
Number of shares (000's)
Weighted average number of shares for
the purpose of diluted earnings per share 73,179 73,366
-------------------- --------------------
Basic earnings per share (pence) 2.45 2.89
-------------------- --------------------
Diluted earnings per share (pence) 2.42 2.78
-------------------- --------------------
Weighted average number of shares for
the purpose of basic earnings per share 2 January 3 January
2020 2019
Weighted Weighted
average average
no. 000's no. 000's
Issued at beginning of the year 70,989 70,027
Share options exercised 623 364
Shares issued as consideration for
acquisition with no change of control 633 -
-------------------- ----------------------
Weighted average number of shares at
end of the year 72,245 70,391
-------------------- ----------------------
Weighted average number of shares for
the purpose of diluted earnings per
share
Basic weighted average number of shares 72,245 70,391
Effect of share options in issue 934 2,975
------------------ -------------------
Weighted average number of shares at
end of the year 73,179 73,366
------------------ -------------------
Basic earnings per share values are calculated by dividing net profit/(loss) for the year attributable to Ordinary equity holders of the parent by the weighted average number of Ordinary shares outstanding during the year.
The Company has 4,278,000 potentially issuable Ordinary shares (2018: 6,744,000) all of which relate to the potential dilution from share options issued to the Directors and certain employees and contractors, under the Group's incentive arrangements.
The Company made a post-tax loss for the year of GBP1,470,000 (2018: GBP109,000).
15 Property, plant and equipment
(Group)
Plant Fixtures
Land & Leasehold & & Assets under
Buildings improvements machinery fittings construction Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 29
December
2017 - 42,962 8,183 7,451 797 59,393
Acquired in
the
year 6,339 9,101 2,705 1,178 2,912 22,235
Disposals - (120) (167) (826) - (1,113)
Transfer to
profit
and loss - - - - (41) (41)
Transfer to
intangibles - - (118) - - (118)
Transfer on
completion - 265 - - (265) -
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
At 3 January
2019 6,339 52,208 10,603 7,803 3,403 80,356
Acquired in
the
year 190 15,329 4,130 1,694 1,811 23,154
Disposals - (150) (261) (592) - (1,003)
Transfer to
profit
and loss - - - - (5) (5)
Transfer on
completion - 2,138 174 457 (2,769) -
At 2 January
2020 6,529 69,525 14,646 9,362 2,440 102,502
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
Depreciation
At 29
December
2017 - 4,766 3,135 3,253 - 11,154
Charge for
the
year - 2,112 1,506 618 - 4,236
On disposals - (118) (163) (806) - (1,087)
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
At 3 January
2019 - 6,760 4,383 3,063 - 14,206
Charge for
the
year 109 2,615 2,197 827 - 5,748
On disposals - (99) (260) (592) - (951)
At 2 January
2020 109 9,276 6,320 3,298 - 19,003
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
Net book
value
At 2 January
2020 6,420 60,249 8,326 6,064 2,440 83,499
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
At 3 January
2019 6,339 45,448 6,220 4,740 3,403 66,150
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
At 28
December
2017 - 38,196 5,048 4,198 797 48,239
----------------------- ---------------------- ----------------------- ---------------------- ----------------------- --------------------
The Group held no assets under finance leases at the balance sheet date (2018: GBPnil).
For impairment considerations of tangible fixed assets this was considered using the value in use basis disclosed in Note 17.
Property, plant and equipment
(Company only)
Fixtures
Plant & &
machinery fittings Total
GBP000 GBP000 GBP000
Cost
At 29 December
2017 485 255 740
Acquired in the
year - - -
At 3 January 2019 485 255 740
Acquired in the
year - - -
At 2 January 2020 485 255 740
---------------------- ----------------------- -----------------------
Depreciation
At 29 December
2017 198 65 263
Charge for the
year 97 32 129
---------------------- ----------------------- -----------------------
At 3 January 2019 295 97 392
Charge for the
year 97 32 129
At 2 January 2020 392 129 521
---------------------- ----------------------- -----------------------
Net book value
At 2 January 2020 93 126 219
---------------------- ----------------------- -----------------------
At 3 January 2019 190 158 348
---------------------- ----------------------- -----------------------
At 29 December
2017 287 190 477
---------------------- ----------------------- -----------------------
16 Right-of-use assets
(Group)
Land & Buildings Motor Vehicles
GBP'000 GBP'000 Total
GBP'000
Cost
Recognition on adoption of IFRS 16 57,756 - 57,756
Transfer of existing lease-related
assets (8,621) - (8,621)
Additions/reassessments 11,880 50 11,930
----------------- --------------- ----------
At 2 January 2020 61,015 50 61,065
----------------- --------------- ----------
Amortisation and impairment
Charge for the year 2,639 11 2,650
----------------- --------------- ----------
At 2 January 2020 2,639 11 2,650
----------------- --------------- ----------
Net book value
At 2 January 2020 58,376 39 58,415
----------------- --------------- ----------
16 Right-of-use assets
(Company only)
Land
&
Buildings
GBP'000
Cost
Recognition on adoption of IFRS 16 9,711
Transfer of existing lease-related
assets (741)
Additions/reassessments 301
-----------
At 2 January 2020 9,271
-----------
Amortisation and impairment
Charge for the year 515
-----------
At 2 January 2020 515
-----------
Net book value
At 2 January 2020 8,756
-----------
17 Intangible assets
(Group)
Goodwill Leasehold Software Software Total
GBP'000 interests Assets in Development GBP'000
GBP'000 GBP'000 GBP'000
Cost
At 29 December 2017 8,951 674 619 - 10,244
Acquired in the year - - 632 263 895
Transfer from tangibles - - 118 - 118
--------- ----------- --------- ---------------- ---------
At 3 January 2019 8,951 674 1,369 263 11,257
Acquired in the year - - 938 15 953
Disposals - (674) (63) - (737)
Transfer on completion - - 263 (263) -
--------- ----------- --------- ---------------- ---------
At 2 January 2020 8,951 - 2,507 15 11,473
--------- ----------- --------- ---------------- ---------
Amortisation and impairment
At 29 December 2017 - 90 88 - 178
Transfer from tangibles - - 97 - 97
Charge for the year - 36 291 - 327
--------- ----------- --------- ---------------- ---------
At 3 January 2019 - 126 476 - 602
Charge for the year - - 366 - 366
On disposals - (126) (63) - (189)
--------- ----------- --------- ---------------- ---------
At 2 January 2020 - - 779 - 779
--------- ----------- --------- ---------------- ---------
Net book value
At 2 January 2020 8,951 - 1,728 15 10,694
--------- ----------- --------- ---------------- ---------
At 3 January 2019 8,951 548 893 263 10,655
--------- ----------- --------- ---------------- ---------
At 29 December 2017 8,951 584 531 - 10,066
--------- ----------- --------- ---------------- ---------
17 Intangible assets (continued)
(Company only)
Leasehold
Interests Total
GBP000 GBP000
Cost
At 29 December 2017 674 674
Acquired in the year - -
At 3 January 2019 674 674
Acquired in the year - -
Disposals (674) (674)
At 2 January 2020 - -
----------------------- -----------------------
Amortisation and impairment
At 29 December 2017 90 90
Charge for the year 36 36
At 3 January 2019 126 126
Charge for the year - -
On disposals (126) (126)
----------------------- -----------------------
At 2 January 2020 - -
----------------------- -----------------------
Net book value
At 2 January 2020 - -
----------------------- -----------------------
At 3 January 2019 547 547
----------------------- -----------------------
At 28 December 2017 584 584
----------------------- -----------------------
Value-in-use calculations are performed annually and at each reporting date for each cash-generating unit (CGU) which represents each site acquired. Value-in-use was calculated as the net present value of the projected risk-adjusted post-tax cash flows plus a terminal value of the CGU. A pre-tax discount rate was applied to calculate the net present value of pre-tax cash flows. The discount rate was calculated using a market participant weighted average cost of capital. A single rate has been used for all sites as management believe the risks to be the same for all sites. Whilst there is some sensitivity to the inputs, the methodology is not significantly impacted by reasonable fluctuations in inputs such as increasing the WACC used to 10%. Goodwill and indefinite life intangible assets considered significant in comparison to the Group's total carrying amount of such assets have been allocated to CGUs or groups of CGUs as follows:
2 January 3 January
2020 2019
GBP000 GBP000
Baker Street 103 103
Barnet 1,309 1,309
Belsize Park 67 67
Esher 2,804 2,804
Gerrards Cross 1,309 1,309
Islington 86 86
Muswell Hill 1,215 1,215
Oxted 102 102
Reigate 113 113
Walton-On-Thames 94 94
Winchester 217 217
York 1,532 1,532
8,951 8,951
--------------------- ---------------------
The recoverable amount of each CGU has been calculated with reference to its value-in-use. The key assumptions of this calculation are shown below:
2 January 3 January
2020 2019
Sales and cost growth (over
a 5 year period) 3% 0%
Discount rate 8.83% 9.51%
Terminal value 10 x EBITDA 8 x EBITDA
Number of years projected 5 years 5 years
There have been no impairments indicated in the year to 2 January 2020 (2018: GBPnil). The projected sales growth was based on the Group's latest forecasts at the time of review and is in line with the average growth rate for the industry within the UK. The key assumptions in the cash flow pertain to revenue growth. Management have determined that growth based on industry average growth rates and actuals achieved historically are the best indication of growth going forward. The Group has adjusted its discount rate to 8.83%. The Directors are confident that the Group is largely immune from the effects of Brexit and the impact on the wider economic environment. Additionally, the Group believes that there has been no significant impact on the structure of the Group that should result in a significant impact on the discount rate. Management has performed sensitivity testing on all inputs to the model and noted no material sensitivities in the model.
18 Investments
(Company only)
Total
GBP000
At 29 December 2017 and 3 January
2019 30,337
Acquisition of Group companies 1,657
------------------
At 2 January 2020 31,994
------------------
The subsidiaries of the Company are as follows (all of which are included on consolidation):
Country Proportion
Principal of Class of of
Name activity incorporation share held shares held
Everyman Media Holdings Cinema management and
Limited ownership UK Ordinary 100%
Series
1, 2 and
3 100%
Cinema management and
Everyman Media Limited* ownership UK Ordinary 100%
CISAC Limted* Dormant UK Ordinary 100%
Cinema management and
Foxdon Limited* ownership ROI Ordinary 100%
ECPee Limited** Property management UK Ordinary 100%
Bloom Martin Limited** Dormant UK Ordinary 100%
Bloom Theatres Limited*** Dormant UK Ordinary 100%
Mainline Pictures Limited*** Dormant UK Ordinary 100%
* Shareholding is held by Everyman Media Holdings Ltd
** Shareholding is held by Everyman Media Ltd
*** Shareholding is held by Bloom Martin Ltd
The A Ordinary shares have no rights to a dividend. Everyman Media Group PLC directly holds all the Ordinary shares (GBP27,015) and A Ordinary shares (GBP6,557) of Everyman Media Holdings Limited. During the year the Company acquired the remaining A Ordinary shares in Everyman Media Holdings Limited for GBP1.7 million having previously been held by Adam Kaye and Paul Wise. Consideration was paid in a share-for-share exchange of newly-issued shares in the Company. The change in the interest in Everyman Media Holdings Limited has not resulted in a change of control and has been accounted for as an equity transaction.
Everyman Media Limited has 285,000 Ordinary shares of GBP1.00 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 EUR100 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 2 January 2020 and the year ended 3 January 2019. 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 2 January 2020 and the year ended 3 January 2019.
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.
19 Inventories
2 January 3 January
2020 2019
GBP000 GBP000
Food and beverages 443 338
Projection 64 68
------------------------ ---------------------
507 406
------------------------ ---------------------
Included within inventories is GBPnil (2018: GBPnil) expected to be recovered in more than 12 months. Finished goods recognised as cost of sales in the year amounted to GBP5,607,000 (2018: GBP4,297,000). The write-down of inventories to net realisable value amounted to GBPnil (2018: GBPnil).
20 Cash and cash equivalents
2 January 3 January
2020 2019
GBP000 GBP000
Per balance sheet 4,271 3,517
---------------------- -----------------
Per cash flow statement 4,271 3,517
---------------------- -----------------
21 Trade and other receivables
(Group)
2 January 3 January
2020 2019
GBP000 GBP000
Included in current assets 4,463 3,790
Included in non-current
assets 173 173
------------------------- --------------------
4,626 3,963
------------------------- --------------------
Trade and other receivables 1,428 963
Social security and other
taxation 13 -
Other debtors 1,527 1,363
Prepayments and accrued
income 1,668 1,637
------------------------- --------------------
4,636 3,963
------------------------- --------------------
There were no receivables that were considered to be impaired other than existing provisions. There is no significant difference between the fair value of the other receivables and the values stated above. Other debtors include deposits paid in respect of long-term leases and contributions from landlords towards fit-outs.
Trade and other receivables
(Company only)
2 January 3 January
2020 2019
GBP000 GBP000
Included in non-current assets 55,278 44,536
--------------------- ------------------
Amounts due from company undertakings 55,278 44,536
--------------------- ------------------
All amounts other than those from Company undertakings are due for payment within one year. Interest is charged on inter-company loans at the same rate as that charged to the Group by its lenders, currently 3.3%. The loans are repayable on 15 January 2022.
22 Trade and other payables
2 January 3 January
2020 2019
GBP000 GBP000
Included in current liabilities 14,408 12,398
Included in non-current liabilities - 7,796
-------------------------- --------------------
14,408 20,194
-------------------------- --------------------
Trade creditors 4,495 2,660
Social security and other taxation 1,464 733
Other creditors 56 2
Accrued expenses 4,580 5,739
Lease incentives - 8,125
Deferred income 3,813 2,935
-------------------------- --------------------
14,408 20,194
-------------------------- --------------------
23 Corporation tax liabilities
2 January 3 January
2020 2019
GBP'000 GBP'000
Included in current liabilities 186 -
---------- ----------
Corporation tax gross movements
Opening balance - -
Recognised in profit and loss
Current tax 428 -
Adjustments in respect of prior periods 6 -
---------- ----------
Charge to profit and loss 434 -
Recognised in equity
Movement on share option intrinsic value (248) -
Closing balance 186 -
---------- ----------
24 Other interest-bearing loans and borrowings
2 January 3 January
2020 2019
GBP000 GBP000
Bank borrowings
Current 122 56
Non-current 14,000 7,000
------------------------- ---------------------
14,122 7,056
------------------------- ---------------------
The Company agreed a GBP30 million loan facility with Barclays Bank PLC and Santander UK PLC on 16 January 2019. Interest is charged at LIBOR on the drawn-down balance on a 365/ACT D-basis (the nominal interest rate ranging between 1.65% and 2.65%). The capital sum is repayable in full on or before 15 January 2024. Commitment fees are charged quarterly on any balances not drawn at 35% of the applicable rate of drawn funds. The face value is deemed to be the carrying value. The Group had drawn down GBP14 million of the GBP30 million debt facility as at 2 January 2020 (2018: GBP7 million).
25 Leases
(Group)
On transition to IFRS16, the Group recognised GBP57.8 million right-of-use assets and GBP60.9 million lease liabilities, recognising the difference in retained earnings. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at 1 January 2019. The weighted average rate applied is 3.2%.
IFRS 16 impact on financial statements from change in accounting policy
Land & Motor
Buildings Vehicles Total
GBP000 GBP000 GBP000
At 4 January 2019
Obligations under operating leases as
disclosed in prior year 71,159 - 71,159
----------- ---------- ---------
Lease liabilities
Recognition on adoption of IFRS 16 discounted
using incremental borrowing rate 60,886 - 60,886
Existing lease-related provisions 615 - 615
Additions/reassessments 16,556 50 16,606
Interest 2,113 1 2,114
Lease payments (3,810) (20) (3,830)
----------- ---------- ---------
At 2 January 2020 76,360 31 76,391
----------- ---------- ---------
There were no differences between the operating lease commitments at the date of initial application discounted at the incremental borrowing rate and the lease liability recognised on adoption of IFRS16. The Group used the following practical expedients when applying IFRS16 to leases previously classified as operating leases under IAS17:
- Adjusted the right-of-use assets by the amount of IAS37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
- Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
- Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
As a lessee
2 January 3 January
2020 GBP'000 2019
GBP'000
Lease liabilities
Current 2,386 -
Non-current 74,005 -
-------------- ----------
76,391 -
-------------- ----------
Maturity analysis of lease payments
2 January 3 January
2020 GBP'000 2019
GBP'000
Contractual future cash outflows
Land and buildings
Less than one year 4,787 -
Between one and five years 20,487 -
Over five years 82,197 -
-------------- ----------
107,471 -
-------------- ----------
Motor Vehicles
Less than one year 14 -
Between one and five years 18 -
-------------- ----------
32 -
-------------- ----------
All lease payments for land and buildings are fixed 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 land and buildings is 17 years.
Recognised in profit and loss
3 January
2 January 2019
2020 GBP'000 GBP'000
Interest on lease liabilities 2,114 -
Expenses relating to short-term and low-value
leases 32 -
-------------- ----------
Lease expenses 2,146 -
-------------- ----------
As a lessor
Lease income from lease contracts in which the Group acts as a lessor is as below.
3 January
2 January 2019
2020 GBP'000 GBP'000
Operating leases
Lease income net of expenses 645 519
The Group leases out some leasehold property as operating leases because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets.
Maturity analysis of lease receipts
3 January
2 January 2019
2020 GBP'000 GBP'000
Contractual future cash inflows
Land and buildings
Less than one year 100 100
Between one and five years 400 400
Over five years 650 750
-------------- ----------
1,050 1,150
-------------- ----------
Leases
(Company only)
On transition to IFRS16, the Company recognised GBP9.7 million right-of-use assets and GBP9.9 million lease liabilities, recognising the difference in retained earnings. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at 1 January 2019. The weighted average rate applied is 3.2%.
IFRS 16 impact on financial statements from change Land &
in accounting policy buildings
GBP'000
At 4 January 2019
Obligations under operating leases as disclosed in
prior year 11,859
-----------
Lease liabilities
Recognition on adoption of IFRS 16 discounted using
incremental borrowing rate 10,260
Existing lease related (assets)/provisions (189)
Additions/reassessments 301
Interest 318
Lease payments (770)
-----------
At 2 January 2020 9,920
-----------
As a lessee
3 January
2 January 2019
2020 GBP'000 GBP'000
Contractual future cash inflows
Land and buildings
Less than one year 778 771
Between one and five years 3,113 3,113
Over five years 8,959 9,738
-------------- ----------
12,850 13,621
-------------- ----------
All lease payments for land and buildings are fixed 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 land and buildings is 18 years.
Recognised in profit and loss
3 January
2 January 2019
2020 GBP'000 GBP'000
Interest on lease liabilities 318 -
26 Financial assets and financial liabilities
Changes in liabilities from financing activities
2 January 3 January
2020 2019
GBP000 GBP000
Opening balance 7,056 7,043
Changes from financing cash
flows:
Proceeds from borrowings 13,000 9,000
Repayment of borrowings (6,339) (9,172)
Interest on borrowings 405 185
------------------------- ------------------------
14,122 7,056
----------------------------- ------------------------- ------------------------
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:
Effective Maturing Maturing Maturing
between 1 between
interest within to 2 to
rate 1 year 2 years 5 years
% GBP000 GBP000 GBP000
At 3 January 2019
Bank borrowings 3.3% 56 - 7,000
Bank current and deposit
balances 0.01% 3,517 - -
---------- ------------------------ ------------------------- -----------------------
At 2 January 2020
Bank borrowings 2.9% 122 - 14,000
Bank current and deposit
balances 0.01% 4,271 - -
---------- ------------------------ ------------------------- -----------------------
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group's profit and loss before tax through the impact on floating rate borrowings and bank deposits and cash flows:
Change in 2 January 3 January
rate 2020 2019
% GBP000 GBP000
Bank borrowings 14,122 7,056
------------------------- ---------------------
-1.0% 141 71
-0.5% 71 35
0.5% (71) (35)
1.0% (141) (71)
1.5% (212) (106)
------------------------- ---------------------
Bank current and deposit
balances 4,271 3,517
------------------------- ---------------------
-1.0% (43) (35)
-0.5% (21) (18)
0.5% 21 18
1.0% 43 35
1.5% 64 53
------------------------- ---------------------
27 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.
2 January 3 January
2020 2019
GBP000 GBP000
Financial liabilities measured at
amortised cost
Bank borrowings 14,122 7,056
----------------------- -------------------
Financial instruments not measured at fair value
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date.
Non-derivative financial liabilities 2 January 3 January
2020 2019
GBP000 GBP000
Unsecured bank facility
Carrying amount 14,122 7,056
-------------------------- --------------------
Contractual cash flows:
Less than one year 535 275
Between one and two years 519 284
Between three and five years 15,038 852
Over five years - 7,284
-------------------------- --------------------
16,092 8,696
-------------------------------------- -------------------------- --------------------
Charges have been put in place over the net assets of the Group as collateral against the loan balance.
Risk management
(Group)
The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. The Group has not issued or used any financial instruments of a speculative nature and the Group does not contract derivative financial instruments such as forward currency contracts, interest rate swaps or similar instruments.
The Group is exposed to the following financial risks:
- Credit risk
- Liquidity risk
- Interest rate risk
To the extent financial instruments are not carried at fair value in the consolidated Balance Sheet, net book value approximates to fair value at 2 January 2020 and 3 January 2019.
Trade and other receivables are measured at amortised cost. Book values and expected cash flows are reviewed by the Board and any impairment charged to the consolidated statement of profit and loss and other comprehensive income in the relevant period. Cash and cash equivalents are held in sterling and placed on deposit in UK banks. Trade and other payables are measured at book value and held at amortised cost. There have been no impairment losses recognised on these assets.
Accounting classification
The following table shows the carrying amounts and fair values of financial assets and financial liabilities. It does not include the fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
2 January 3 January
Carrying amount 2020 2019
GBP000 GBP000
Financial assets not measured at
fair value
Trade and other receivables 4,636 3,963
Cash and cash equivalents 4,271 3,517
----------------------- -------------------
8,907 7,480
----------------------- -------------------
Financial liabilities not measured
at fair value
Unsecured bank loans 14,122 7,056
Trade and other payables 14,408 20,194
----------------------- -------------------
28,530 27,250
----------------------- -------------------
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 Company is exposed to credit risk in respect of its receivables from its subsidiary companies. The recoverability of these balances is dependent upon the performance of these subsidiaries in future periods. The performance of the Company's subsidiaries is closely monitored by the Company's Board of Directors.
At 2 January 2020 the Group has trade receivables of GBP1,380,000 (2019: GBP963,000). The Group is exposed to credit risk in respect of these balances such that, if one or more of the customers encounters financial difficulties, this could materially and adversely affect the Group's financial results. The Group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering into contracts and by entering into contracts with customers with agreed credit terms. At 2 January 2020 the Directors have provided for GBPnil against doubtful debts (2018: GBP122,230). The maximum exposure to credit risk at the balance sheet date by class of financial instrument was:
2 January 3 January
2020 2019
GBP000 GBP000
Ageing of receivables
<30 days 1,092 672
31-60 days 276 39
61-120 days - 11
>120 days 12 241
------------------------- -----------------------
1,380 963
------------------------- -----------------------
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 (2018: GBPnil). 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.
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.
Contractual cash flows
------------------------------------------------------
Less Between Over
2 January 2020 Carrying than one Between three five
and two and five
amount one year years years years Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative
financial liabilities
Unsecured bank
facility 14,122 535 519 15,038 7,284 16,092
Trade creditors 4,481 4,481 - - - 4,481
Leases 76,391 4,801 5,074 15,431 82,198 107,504
Social security
and other taxation 1,464 1,464 - - - 1,464
Other creditors 56 56 - - - 56
Accrued expenses 4,577 4,577 - - - 4,577
--------- --------- -------- -------------- ------- --------
101,091 15,914 5,593 30,469 82,198 134,174
--------- --------- -------- -------------- ------- --------
Contractual cash flows
--------------------------------------------------------------
Over
3 January 2019 Carrying Less than Between one Between three five
and five
amount one year and two years years years Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Non-derivative
financial liabilities
Unsecured bank
facility 7,056 275 284 852 7,284 8,696
Trade creditors 2,660 2,660 - - - 2,660
Social security
and other taxation 733 733 - - - 733
Other creditors 2 2 - - - 2
Accrued expenses 5,737 5,737 - - - 5,737
--------- ---------- -------------- -------------- ------- -------
16,188 9,407 284 852 7,284 17,828
--------- ---------- -------------- -------------- ------- -------
Interest rate risk
Interest rate risk arose from the Group's holding of interest-bearing loans linked to LIBOR. The Group is also exposed to interest rate risk in respect of its cash balances held pending investment in the growth of the Group's operations. The effect of interest rate changes in the Group's interest-bearing assets and liabilities are set out in note 26.
Capital management
The Group's capital is made up of share capital, share premium, merger reserve and retained earnings totalling GBP55,552,000 (2018: GBP54,437,000).
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.
28 Provisions
(Group)
2 January 3 January
2020 2019
GBP000 GBP000
Market rent provisions
Opening balance 1,794 1,883
Additional provisions arising
on acquisition (1,794) -
Utilised against rent during
the period - (89)
------------------------------- ---------------------
Closing balance - 1,794
------------------------------- ---------------------
Provisions 2 January 3 January
(Company only) 2020 2019
GBP000 GBP000
Market rent provisions
Opening balance 1,290 1,360
On derecognition (1,290) -
------------------------------- ---------------------
Utilised against rent during
the period - (70)
------------------------------- ---------------------
Closing balance - 1,290
------------------------------- ---------------------
Market rent provisions relate to the fair value of liabilities on leases acquired in 2015 and 2017. The market rent provisions are being amortised over the term of the individual leases.
29 Deferred tax
(Group)
2 January 3 January
2020 2019
GBP000 GBP000
Included in non-current liabilities 1,362 1,210
-------------------------- ----------------------
Deferred tax gross movements
Opening balance 1,210 284
-------------------------- ----------------------
Recognised in the profit and loss
Arising on loss carried forward 17 (438)
Other provisions released (39) (7)
Net book value in excess of tax written
down value (82) 1,188
Movement on share option intrinsic value (26) (64)
Amortisation of IFRS accumulated restatement 31 -
Movement on share option intrinsic value 191 -
-------------------------- ----------------------
Charge to profit and loss 92 679
-------------------------- ----------------------
Recognised in equity
Movement on share option intrinsic value 594 247
Recognition of temporary differences
on IFRS 16 accumulated restatement (535) -
Amortisation of IFRS 16 accumulated restatement 59 -
-------------------------- ----------------------
92 247
-------------------------- ----------------------
Differences in foreign exchange 1 -
Closing balance 1,362 1,210
-------------------------- ----------------------
The deferred tax liability comprises:
Temporary differences on property, plant
and equipment 2,190 2,270
Temporary differences on IFRS 16 accumulated
restatement (502) -
Temporary differences on leases acquired 87 105
Share-option scheme intrinsic value (223) (790)
Available losses (578) (596)
Unrealisable deferred tax assets 190 -
Other temporary and deductible differences 198 221
-------------------------- ----------------------
1,362 1,210
-------------------------- ----------------------
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 17%. The deferred tax liability has arisen due to the timing difference on property, plant and equipment, the deferral of capital gains tax arising from the sale of a property and other temporary and deductible differences. The Group has recognised unutilised tax allowances in relation to losses of GBP578,000 as well as unutilised tax allowances in relation to the accumulated IFRS16 restatement of GBP502,000 at expected tax rates in future periods.
In accordance with IAS12 Income taxes, the expense of GBP594,000 (2018: GBP247,000) has been recognised outside of profit and loss to the extent that the deferred tax asset has arisen on expected allowable deductions for tax purposes at future tax rates in excess of the fair value of the share option charge that will be recognised in the profit and loss. In this instance, the expected gain on the exercise of share options is anticipated to exceed the full share option charge recognised in the profit and loss at initial fair value. A further GBP535,000 has been recognised as a credit in equity due to the IFRS16 accumulated restatement expense not being charged to profit and loss.
Deferred tax
(Company only)
2 January 3 January
2020 2019
GBP000 GBP000
Included in non-current (assets)/liabilities (48) 41
-------------------------- -------------------------
Deferred tax gross movements
Opening balance 41 43
Recognised in the profit and loss
Movement in loss carried forward 16 5
Amortisation of IFRS 16 accumulated restatement 5 -
Amortisation of acquisition-related deferred
tax (16) (7)
-------------------------- -------------------------
Credit to profit and loss 5 (2)
Recognised in equity
Recognition of temporary differences
on IFRS 16 accumulated restatement (94) -
Closing balance (48) 41
-------------------------- -------------------------
2 January 3 January
2020 2019
GBP000 GBP000
The deferred tax liability/(asset) comprises:
Temporary differences on property, plant
and equipment (46) (48)
Temporary differences on IFRS 16 accumulated
restatement (89) -
Temporary differences on leases acquired 87 105
Available losses - (16)
-------------------------- -------------------------
(48) 41
-------------------------- -------------------------
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 GBPnil (2018: GBP16,000) at expected tax rates in future periods.
30 Share capital and reserves
2 January 3 January
Nominal 2020 2019
value GBP000 GBP000
Authorised, issued and fully paid
Ordinary shares GBP0.10
At the start of the year 7,099 7,003
Issued in the year 253 96
------------------------- -------------------
At the end of the year 7,352 7,099
------------------------- -------------------
Number of shares 2 January 3 January
Nominal 2020 2019
value Number Number
Authorised, issued and fully paid
Ordinary shares GBP0.10
At the start of the year 70,989,303 70,027,103
Issued in the year 2,528,666 962,200
------------------------- -------------------
At the end of the year 73,517,969 70,989,303
------------------------- -------------------
The holders of Ordinary shares are entitled to one vote per share. During the year the Company issued 2,528,666 Ordinary shares at prices ranging from 83p to 85p from the exercise of share options including 820,548 as consideration for the acquisition of A shares in Everyman Media Holdings Limited.
During the year, the Group acquired the remaining A Ordinary shares in Everyman Media Holdings Limited for GBP1.7 million. Consideration was paid in a share-for-share exchange of newly issued shares in Everyman Media Group PLC. The change in the interest in Everyman Media Holdings Limited has not resulted in a change of control and has been accounted for as an equity transaction.
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 (2018: GBPnil).
31 Share-based payment arrangements
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 and certain contractors.
The terms and conditions of the grants are as follows:
Instruments
Contractual
Method of outstanding Vesting life
Persons entitled Grant date settlement 000's Conditions* of options
Management employees,
Directors and contractors 29.10.2013 Equity-settled 118 1 10 years
Management employees,
Directors and contractors 29.10.2013 Equity-settled 170 2 10 years
Management employees,
Directors and contractors 29.10.2013 Equity-settled - 4 10 years
Management employees,
Directors and contractors 29.10.2013 Equity-settled - 3 10 years
Directors 04.11.2013 Equity-settled 50 2 10 years
Directors 20.04.2015 Equity-settled - 7 10 years
Directors 20.04.2015 Equity-settled - 8 10 years
Management employees,
Directors and contractors 29.10.2015 Equity-settled 218 9 10 years
Management employees 15.12.2016 Equity-settled 220 10 10 years
Management employees 10.01.2017 Equity-settled 75 10 10 years
Directors 13.03.2017 Equity-settled 250 10 10 years
Management employees
and contractors 11.10.2017 Equity-settled 445 10 10 years
Management employees 09.11.2017 Equity-settled 10 10 10 years
Management employees
and Directors 23.11.2017 Equity-settled 107 11 10 years
Management employees
and Directors 23.04.2018 Equity-settled 38 12 10 years
Management employees
and contractors 02.10.2018 Equity-settled 413 10 10 years
Management employees 03.10.2018 Equity-settled 18 13 10 years
Management employees 05.11.2018 Equity-settled 1 13 10 years
Directors 13.03.2019 Equity-settled 500 10 10 years
Management employees
and Directors 28.05.2019 Equity-settled 269 14 10 years
Management employees
and Directors 24.09.2019 Equity-settled 1,378 10 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 EMI options. These vest in equal tranches on the first, second and third anniversaries of the date of grant. Each tranche is exercisable if the Company's share price exceeds GBP1.20, GBP1.40 and GBP1.70 respectively for 15 consecutive trading days.
*4 Series 1, 2 and 3 A Ordinary shares in Everyman Media Holdings Ltd. Holders of these shares have a right to require Everyman Media Group PLC to purchase the shares at a price essentially equivalent to the market value of an Everyman Media Group PLC Ordinary share less 83p provided that the share price has been, for 15 consecutive trading days after 8 May 2014, GBP1.20 or more for Series 1 shares, GBP1.40 or more for Series 2 shares and GBP1.70 or more for Series 3 shares. The A Ordinary shares will convert into essentially worthless deferred shares to the extent that these targets are not met by 7 November 2023. As such, the Directors consider these shares to be largely equivalent to an EMI option. The rights described above were accounted for as share-based payments.
*5 EMI options. These vest in two tranches: 181,455 on the first anniversary of the date of grant and 105,901 on the second anniversary of the date of grant. The tranches may be exercised if the Company share price is above GBP1.20 and GBP1.40 respectively for 15 consecutive trading days.
*6 Unapproved options. These vest in two tranches: 75,554 on the second anniversary of the date of grant and 181,455 on the third anniversary of the date of grant. The tranches may be exercised if the Company share price is above GBP1.40 and GBP1.70 respectively for 15 consecutive trading days.
*7 EMI options. These vest in two tranches: 169,358 on the first anniversary of the date of grant and 105,367 on the second anniversary of the date of grant. The tranches may be exercised if the Company share price is above GBP1.20 and GBP1.40 respectively for 15 consecutive trading days.
*8 Unapproved options. These vest in two tranches: 63,991 on the second anniversary of the date of grant and 169,358 on the third anniversary of the date of grant. The tranches may be exercised if the Company share price is above GBP1.40 and GBP1.70 respectively for 15 consecutive trading days.
*9 Unapproved options. These vest in equal tranches on the first, second and third anniversaries of the date of grant. Each tranche is exercisable if the Company share price exceeds GBP1.30, GBP1.50 and GBP1.80 respectively for 15 consecutive trading days.
*10 Unapproved options. These vest on the third anniversary of the date of grant.
*11 Unapproved options as part of the long-term incentive plan. These vest on the fifth anniversary of the date of grant. Half of the options are exercisable if the share price exceeds GBP2.10 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2017. The other half of the options are exercisable if the Adjusted Profit measure for 2017 exceeds GBP6.4m, GBP6.5m and GBP6.6m respectively.
*12 Unapproved options as part of the long-term incentive plan. These vest 4 years and 7 months from the date of grant. 45% of the options are exercisable if the share price exceeds GBP2.95 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2018. The other 55% of the options are exercisable if the Adjusted Profit measure for 2018 exceeds GBP8.8m and incrementally to GBP9.5m.
*13 Unapproved options as part of the long-term incentive plan. These vest 4 years and 2 months from the date of grant. 45% of the options are exercisable if the share price exceeds GBP2.95 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2018. The other 55% of the options are exercisable if the Adjusted Profit measure for 2018 exceeds GBP8.8m and incrementally to GBP9.5m.
*14 Unapproved options as part of the long-term incentive plan. These vest 3 years and 6 months from the date of grant. 45% of the options are exercisable if the share price exceeds GBP2.25 for 2 consecutive trading days within 60 days following the announcement of the preliminary results for 2019. The other 55% of the options are exercisable if the Adjusted Profit measure for 2019 exceeds GBP12.1m and incrementally to GBP12.5m.
Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) as determined through use of the Black-Scholes technique, at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group and Company's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.
The inputs into the Black-Scholes model for the share option plans for the share options issued in the year are as follows:
Option scheme conditions for
options issued in the year: 2 January 2 January 3 January 3 January
2020 2020 2019 2019
Performance No performance Performance No performance
criteria criteria criteria criteria
Weighted average share price
at grant date (pence) 190.00 183.21 233.96 235.00
Weighted average option exercise
prices (pence) 10.00 183.21 10.00 235.00
Expected volatility 60.82% 65.89% 56.49% 58.72%
Expected option life 5 years 4 years 4 years 5 years
Weighted average contractual
life of outstanding share options 10 years 10 years 10 years 10 years
Risk-free interest rate 0.81% 0.64% 1.5% 1.54%
Expected dividend yield 0.0% 0.0% 0.0% 0.0%
Fair value of options granted
in the year (pence) 2.78 0.94 281.98 1.01
Weighted average
exercise
price per share in
the year ended
2 January 3 January 2 January 3 January
2020 2019 2020 2019
Pence Pence Number Number
Options at the beginning
of the year 102.2 91.3 5,575,344 5,861,152
Options issued in the
year 159.9 164.6 2,186,820 731,392
Options exercised in the
year 84.0 83.9 (3,100,982) (962,200)
Option forfeited in the
year 79.7 95.5 (383,322) (55,000)
------------------- -----------------
Options at the end of
the year 146.9 102.2 4,277,861 5,575,344
------------------- -----------------
No options lapsed beyond their contractual life in the year (2018: nil).
Share-based payments charged to the profit
and loss 2 January 3 January
2020 2019
GBP000 GBP000
Administrative costs 688 500
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The charge for the Company was GBPnil (2018: GBPnil) after recharging subsidiary undertakings with a charge of GBP688,000 (2018: GBP500,000). The relevant charge is included within administrative costs.
There are 775,147 options exercisable at 2 January 2020 in respect of the current arrangements (2018: 3,656,129). 3,100,982 options were exercised in the year (2018: 962,200).
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 2 January 2020 of GBP2,951,000 (2018: GBP5,899,000).
33 Events after the balance sheet date
There has been a significant event after the balance sheet date associated with the COVID-19 outbreak. See Chairman's report and Basis of Preparation of accounts note.
34 Acquisitions
Acquisitions in the period
The Group acquired 100 Ordinary shares, being the entire issued share capital of Foxdon Limited (a limited company established and resident in the Republic of Ireland) for EUR100 on 24 June 2019.
35 Related party transactions
In the year to 2 January 2020 the Group engaged services from entities related to the Directors and key management personnel of GBP680,000 (2018: GBP603,000) comprising consultancy services of GBP85,000 (2018: GBP50,000), office rental of GBP97,000 (2018: GBP56,000) and venue rental for Bristol, Harrogate and Stratford-Upon-Avon of GBP497,000 (2018: GBP497,000). There were no other related party transactions. There are no key management personnel other than the Directors.
The Company charged an amount of GBP688,000 (2018: GBP500,000) to Everyman Media Limited in respect of share-based payments, GBP917,000 (2018: GBP823,000) in respect of the rental of four cinema sites acquired in 2016 and GBP2,071,000 (2018: GBP185,000) in respect of interest on bank loan funds provided to the Company.
Everyman Media Holdings Limited, charged an amount of GBP547,000 (2018: GBP419,000) to Everyman Media Limited in respect of the rental of two cinema sites.
ECPee Limited charged an amount of GBP160,000 (2018: GBP103,000) to Everyman Media Limited in respect of the rental of its cinema site during the year.
The Group's commitment to new leases is set out in the above notes. Within the total of GBP107.5m is an amount of GBP850,000 relating to office rental, GBP5.1m relating to Stratford-Upon-Avon, GBP2.4m relating to Bristol and GBP5.4m relating to Harrogate. The landlords of the sites are entities related to the Directors of the Company.
36 Ultimate controlling party
The Company has a diverse shareholding and is not under the control of any one person or entity.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR UWRURRRUOAUR
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March 19, 2020 03:00 ET (07:00 GMT)
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