Everyman Media Group plc provides the following trading update for the 26 weeks ended 2 July 2020.
COVID-19 has significantly impacted the entire cinema industry in the first half of 2020. Whilst the Company made a strong start to the year, delivering revenue growth of 47% in the first two months, Everyman along with all other cinema operators closed its doors in the middle of March. All venues remained closed for the rest of H1 with no further revenue from that point until 4 July.
Managing the business through COVID-19
In March, several contingency plans were formulated and implemented swiftly. An equity raise of £17.5m took place, which secured a strong balance sheet position supported by our available credit facilities. Our banking partners have been supportive with appropriate changes to the covenants on the Group credit facility, and the Group will remain within its banking covenants in H2 and beyond.
During the period of closure all but 18 staff were furloughed, and further government support was received in terms of rates relief and the Retail, Hospitality and Leisure Business Grant. In addition, the reduction of VAT from 20% to 5% on admissions and certain food and beverage items will benefit the business in H2.
Property costs are the second largest overhead in the business and Everyman has worked with all of its landlords throughout the period to agree variations to the lease agreements. Concessions have been agreed on over half of the estate, and further discussions are still ongoing.
The Group has also worked with landlords on delaying certain new sites and, in a few cases, exiting existing Agreements for Lease resulting in a pipeline for 2021/22 of 8 new venues compared with the 11 previously expected. These actions have significantly reduced the Group's future capital commitments. The Company will incur exceptional costs from exiting some of these Agreements, but the Directors believe, in the current climate, a prudent approach to new openings is in the Company's best interests.
A phased re-opening
Everyman is pleased to report that since July 4, following the introduction of new COVID-19 operating, social distancing and cleaning protocols, there has been a phased re-opening of venues with 17 currently trading. Customer feedback has been overwhelmingly positive in these venues and admissions are at encouraging levels given the scarcity of new content currently. The remaining venues will be opening in phases with all venues planned to be open by 21 August. In addition, a new venue on the Kings Road in Chelsea opened on 25 July, with a further new venue in Lincoln due to open on 21 August.
Whilst current trading has inevitably been soft with no major releases, encouraging numbers of customers are returning. This validates the strength of the business model, which is well positioned to take advantage as the sector recovers. The Group has a strong balance sheet to support its activities during what is expected to be a restricted trading period in H2.