Showtime for Everyman

Showtime for Everyman

Everyman Media Group (96p), the premium cinema group, is currently in the process of reopening. On 24 June the company noted that it would start to reopen venues from 4 July following a Government announcement allowing it to do so. The intention at the time was for all 33 venues to be open by 24 July. The company’s new flagship cinema on King’s Road, Chelsea, is also due to open on 24 July. Covid-19 had forced the closure of all venues and this meant that in April the company decided to raise gross proceeds of £17.5m through an oversubscribed placing priced at 100p per share. The new shares represented 19.2% of the enlarged share capital following the fundraising, which in our view was an acceptable level of dilution for existing shareholders given the highly unusual circumstances in which fresh capital was required.

Results for the 52 weeks ended 2 January 2020 were released on 19 March, around the time the stock market hit a bottom. Revenue for the year was up just over a quarter at £65.0m (2018: £51.9m). Admissions were up 17% on the previous financial period to 3.3 million (2018: 2.8 million). The average ticket price increased to £11.37 (2018: £11.26) and Spend Per Head increased 13% to £7.13 (2018: £6.30). Pre IFRS 16 EBITDA was up 31.3% to £12.0m (2018: £9.2m) and operating profit increased by 67.1% to £4.8m (2018: £2.9m). A further seven new Everyman venues were opened in the period, growing the estate to 33 sites and 110 screens as at 18 March 2020. Everyman is the fifth largest cinema business in the UK by gross box office revenue.

Assuming that people are willing and able to return to cinemas, there is an impressive list of films due for release in the near future including Mulan, Tenet, The French Dispatch, Black Widow, No Time To Die, West Side Story and Top Gun Maverick. There is a considerable degree of uncertainty both with regards to cinemas being allowed to remain open and also whether people will feel comfortable visiting them. The degree to which this is priced in is another question. Nevertheless, the opportunity to buy in now at a slight discount to the recent placing price, with the benefit of three months of hindsight, looks tempting. SPECULATIVE BUY.

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