20th Oct 2023 11:58
(Alliance News) - Despite a bumper summer, Everyman Media Group PLC runs the risk of disappearing from the stock market if its share price continues to decline, analysts warned on Friday.
The London-based independent cinema chain has faced difficulties of late, most recently posting an interim decline amid a tough trading environment for cinemas in the UK.
For the six months ended June 29, Everyman reported revenue of GBP38.3 million, down 6.1% from GBP40.7 million a year prior. Pretax loss widened to GBP4.3 million from GBP798,000, as administrative expenses rose to GBP27.0 million from GBP24.8 million.
It also announced a new three-year loan facility, worth GBP35 million.
Signed with Barclays Bank PLC and National Westminster Bank PLC, the loan is extendable by a further two-years, subject to lender consent. In September, Everyman said it was a way to make sure the group remains "soundly financially structured", and "well-positioned to take advantage of opportunities moving forwards".
However, not everything was as bleak as it seemed.
Though trading fell flat of the previous year's performance, the "resounding" success of Barbie and Oppenheimer sales drove an "exceptional performance" throughout July and August, said the firm last month.
Barbenheimer, the popularly-adopted portmanteau for the Hollywood blockbuster hits, delivered "record" admissions in the final week of July. Arriving post-period end, neither contributed to first half sales, instead marking a strong start to the second half of the year.
According to Chief Executive Officer Alex Scrimgeour, the success of both highlighted "the value of high-quality original content" at Everyman. It also set a promising precedent for a "strong pipeline" of further titles, including Dune: Part Two, Wonka, The Hunger Games: The Ballad of Songbirds & Snakes, Napoleon, and Killers of the Flower Moon.
"We remain confident in our prospects as we continue to be supported by a slate of high-quality second half releases, a carefully expanded estate and new banking facilities which ensure we are well configured to take advantage of future opportunities," Scrimgeour told investors.
Yet while Barbenheimer helped to put "more bums on seats" over summer, this hasn't reversed the declining share price at Everyman, warned AJ Bell's Russ Mould.
The investment director pointed to recent dealings by private equity group Blue Coast Private Equity LP, which has upped its stake in the cinema firm twice over the past month.
On October 3, Blue Coast bought 500,000 shares at 53.5 pence each, worth GBP267,500, in London. Everyman Non-Executive Director Michael Rosehill is also a director of Blue Coast.
The transaction raised Blue Coast's holding to 18.4 million Everyman shares, a 20.2% stake.
This Friday, Blue Coast raised its stake again. The firm bought 2.5 million shares at 55 pence each, worth GBP1.4 million. It now holds 20.9 million Everyman shares, a 22.9% stake.
According to Russ Mould, Blue Coast "clearly sees value in the business". He went on to note that if the market won't accurately value shares in a company, "the trend is for someone to take that business private".
While Everyman remained optimistic of meeting market expectations, investors might do well to keep Mould's warning in mind. As per his suggestions, the stakebuilding in the cinema chain "implies it could be one of the next candidates to disappear from the stock market".
Everyman shares were trading 3.6% higher at 57.00 pence each in London on Friday at noon.
By Holly Beveridge, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Everyman Media