03.01.2025
It has been stated that the core objective of the cinema industry has remained unchanged for almost a century – which is basically to provide audiences with a consistently excellent ‘big screen’ experience.
The cinema business has had to constantly reinvent itself to ensure it has continued to offer the best possible experience to customers at an affordable price.
In addition to bringing a diverse range of content to screens, cinemas have to consider their food and drink, and other hospitality offers, as well as the comfort of their cinemas, ticket prices and promotions and providing for a range of customer needs.
All this falls within the overall aim of making a trip to the cinema as enjoyable an experience as possible, one that will make audience members want to return again and again.
A few weeks ago, The Global Cinema Federation, representing the interests of cinema operators around the world, published its first-ever global survey of cinema-goers.
It noted that the cinema industry had faced a dearth of supply following COVID and industry strikes, creating a supply issue for the global exhibition industry.
“However, the film slate is now showing positive signs of recovery and demand for the cinema experience across all demographics remains strong.”
Several box office records were broken in 2024 including Inside Out 2, which has become the highest-grossing animated film in history, and Deadpool & Wolverine, which has earned the title of the highest-grossing R-rated movie in global cinema history.
The frequency of cinema visits is directly correlated with the volume of films released that appeal to each cinema-goer demographic.
The recent releases of Moana 2, Wicked and Gladiator II – and Paddington in Peru in the UK – all with broad and varying appeal to differing demographics, is recreating an unmissable cinema event, and individually Wicked and Moana 2 are already breaking records.
This is all good news for Everyman Media Group (LON:EMAN), whose trading year ended yesterday.
In three weeks, the group should be announcing its Trading Update for that period.
The Business
Everyman claims that it is ‘redefining cinema’ by bringing an innovative lifestyle approach to its venues, where one swaps a soft drink for a nice glass of red wine and a slice of freshly made pizza being served to your seat.
With an emphasis on providing cinema and hospitality, it aims to create a warm and friendly atmosphere, with an excellent food and drink selection and fantastic customer service.
There is something for everyone, with a wide array of mainstream, independent and classic films, special events, launches and a diverse calendar of live satellite broadcasts.
The group is the fourth largest cinema business in the UK by number of venues, and is a premium, high growth leisure brand.
It operates a growing estate of venues across the UK, with an emphasis on providing first class cinema and hospitality.
By late September last year, it was operating 45 cinemas, with 155 screens, however since then new venues have opened further boosting the screen numbers.
The company’s business model is to further build its portfolio of venues whilst successfully growing its existing estate by bringing together great food, drink, atmosphere, service and film, to create exceptional experiences for its customers.
The Everyman brand is positioned at the premium end of the UK leisure/cinema market.
The company’s proposition is based on high quality and unique venues in central high street locations.
The group seeks to differentiate itself by focusing on delivering a high-quality offering through its venues, content, staff and food and beverage.
The Directors believe that the opportunities to develop new Everyman venues both across the UK and more widely are significant.
New venues can be part of a large new developer-led complex, the refurbishment of an old existing traditional cinema or conversion of small existing spaces.
Management Comment
Towards the end of last September, along with the Interim Results for the 26 weeks to 27th June, Everyman Media CEO Alec Scrimgeour stated that:
"Despite weathering the full impact of last year's actor and writer strikes, we are pleased to report another period of financial and operational progress.
We achieved strong growth in revenue, increased EBIDTA and record market share, driven by rising demand for Everyman's unique brand of hospitality.
The expansion of our footprint continues, with one new venue opened in the period and two more openings to look forward to in the year, further consolidating our position as the market leader in premium cinema.
We move into the second half with confidence and look forward to an exciting slate of high-profile releases to come through the remainder of the year."
Summary of the Interim financial performance showed:
· | Admissions of 1.9m (H1 2023: 1.6m) |
· | Revenue of £46.9m (H1 2023: £38.3m) |
· | Adjusted EBITDA of £6.2m (H1 2023: £5.8m) |
· | Gross Profit Margin of 66.5% (H1 2023: 65.6%) |
· | Food & Beverage Spend per Head £10.47 (H1 2023: £10.25) |
It also noted a significant growth in market share to 5.6% (H1 2023: 4.2%), as well as a record growth in membership to 45,684 (H1 2023: 26,024), a 76% increase.
The company reported an excellent pipeline of content for the remainder of the year, including Joker: Folie à Deux, Gladiator II, Paddington in Peru, Wicked, Moana 2 and Mufasa: The Lion King.
The group remained confident that the full-year financial performance will be in line with market expectations, with forecasts of revenue of £108.0m and adjusted EBITDA of £19.3m.
The Equity
There are some 91.18m shares in issue.
The largest holder is Blue Coast Capital with 29.20% of the equity.
The origins of Blue Coast Capital lie in post-war retailing, as the founders of the iconic 60s retailer Chelsea Girl, and later River Island, diversified their portfolio of businesses to include real estate, private equity, hotels & leisure and other consumer driven businesses.
Today Blue Coast Capital stands separate from River Island.
With a track-record spanning 50 years, it remains a privately-owned business with the financial strength to make decisions based on unique opportunities as well as long term trends.
The Blue Coast team sources, owns and operates a diverse portfolio of private and public assets from its headquarters in London with offices in Europe and the US.
Michael Rosehill, a non-executive director of Everyman, is also a director of Blue Coast.
On 30th July, the company was notified that Blue Coast Private Equity L.P. had purchased 750,000 shares at 53p each taking the holding up to 26,603,639 shares, equating to 29.20% of the equity.
Other large holders include Gresham House Asset Management (9.60%), Samuel Kaye (6.90%), Charles Dorfman, Dir (6.44%), Otus Capital Management (6.30%), Adam Kaye, Dir (5.98%), Tellworth Investments (5.80%), Killik & Co (3.50%) and Shore Capital Management (3.30%).
Analyst’s View
Analyst Mark Photiades, at Canaccord Genuity Capital Markets, has a Buy rating on the group’s shares, aiming at 180p.
In late September he adjusted downwards his profit estimates, now looking for the year to end December 2025 to show sales of £127.0m (£108m est 2024), with an adjusted pre-tax loss of £0.8m (-£0.8m), which compares to the 2023 year showing of £90.9m sales and a £3.4m loss.
For the 2026 year the analyst goes for £141.5m of sales and a break-even result.
“We believe Everyman remains a strong consumer brand with a unique premium offering, and we believe it is well positioned for further growth.”
Come the Trading Update in three weeks’ time it is possible that the broker will amend his figures.
In My View
Four years ago, pre-Covid, the group’s shares were trading at 232p.
Just a year ago they were at 68p.
I wonder whether Blue Coast Capital will increase their stake to 29.99%, before possibly bidding for the whole group.
With the shares now at just 52.50p, the loss-making business is valued at only £48m – but what a great little business to tuck away into the Blue Coast Capital empire.
So, will 2025 be the year Everyman Media Group receives a takeover bid?
If so, such a bid would need to be above the 80p level, if not even higher.
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