Stockwatch: this small-cap share is a beguiling special situation

Have I ever seen a small cap with such a wide range of contrasts? After plunging from over 250p pre-Covid to as low as 25p early this year, the AIM-listed shares in cinemas operator Everyman Media Group (LSE:EMAN) have more than doubled – with momentum intensifying this week – up from 47.5p to 58p this week.

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It is curious indeed considering that an announcement is due this month about a de-listing initiated by three founding families owning around 46%. From one cinema in Hampstead in 1933, the modern Everyman was put together around 2000 and floated at 95p in 2013. It seems to be the latest example of disillusionment with an AIM listing, but one where insiders and wider investors are now piling in despite recent years’ operating losses.

After an improved first-half year under a new CEO, might some be judging that Everyman’s turnaround and ultimate takeover prospects will fare better out of the public spotlight? Warren Buffett has often said that you should invest for more like 10 years ignoring price and liquidity.   

Yesterday it was announced that Pageant Investments – which appears to be a family investment office operating out of Ireland – had taken a 7.2% stake in the now £53 million company. 

This follows consistent buying by Charles Dorfman, who used to be a non-executive director from October 2013 but early last February transitioned to an executive role as interim creative director. Dorfman, who is a film producer and screenwriter, is the son of the Travelex founder Sir Lloyd Dorfman. With remarkably good timing, he first bought £24,000 worth at 30.5p, then progressively £581,000 worth in a low-to-mid 30p range, then £40,000 worth at 40p in June, and £100,000 worth at 50p in early July.

Source: TradingView. Past performance is not a guide to future performance.

Another non-executive director, Michael Rosehill, who is also said to back a de-listing, bought nearly £4 million worth over 2022 to 2024 as the shares declined from 110p to 53p, and also caught the low, buying £29,000 worth at 24.5p last February.

These three substantive buyers alone are making a firm vote of confidence in Everyman’s value and also prospects under the new CEO Farah Golant, a respected leader in the global creative, entertainment and media industries. 

Golant was appointed a non-executive director in September 2025, becoming interim CEO last January then permanently from late April. It was interesting that she opted to take the reins at Everyman, then worth only around £25 million, [suggesting] she considered its challenges fixable.

Last February, a new chief financial officer was also appointed with more than two decades’ experience in senior financial and leadership roles.

A market challenged by streaming companies, or actually improving?

Cinema shares anywhere have been a volatile ride due to the disruption of Covid, excess debt in some cases for expansion, and fears that streaming companies are diverting entertainment into homes. Hollywood actors and writers’ strikes, along with patchy box office hits, confounded woes.

Yet UK cinema ticket sales tested £1 billion last year, the highest since 2019 if still down on £1.25 billion that year, and where cinemas offer premium food and drink, the total revenue must be more.

Everyman occupies a niche, offering comfy sofas and meals, which rivals such as Odeon and Vue have attempted to copy. While the notion of whiffing other people’s gourmet burgers is, to me, more obnoxious than popcorn-munching in the old days, I can see how Everyman might end up acquired by one of these operators – or a “luxury” conglomerate.

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Everyman’s 12-year table shows attractive growth from £14.1 million revenue to £65.0 million in 2019, recovering well from Covid lockdowns to resume growth with £135 million revenue in 2025. 

Yet it is a prime example of the adage that “revenue is vanity, profits are sanity”, as the CEO from January 2021 to the end of 2025 expanded the group without due attention to underperforming cinemas. This culminated in a profit warning early last December, swiftly followed by the CEO and CFO departing.

Everyman Media Group - financial summary
year to 1 Jan

Source: historic company REFS and company accounts.

However, the curiosity of a 1 January financial year-end means the “2026” results are not exactly representative.

Since 2019, there have been over £56 million pre-tax losses – potentially an asset going forwards – due to pandemic disruption, rising debt and aggressive competition. Over £6 million impairment charges have arisen over the last three years where cash flow projections did not support carrying values of some cinemas.

In the last financial year, statutory revenues rose 9% but the pre-tax loss remained £10.2 million (reduced 18% to £5.2 million on an adjusted basis). Net debt also jumped 19% to £21.6 million or 81% of net assets, hence £7.2 million finance expenses on top of a £2.9 million reported operating loss. This extra debt reflected venue expansion, purchase of a long leasehold and working capital needs.

Yet Everyman’s membership scheme – charging from £95 to £680 annually with 18.5% growth last year, [taking members to] over 67,000 – offered one growth angle within quite perturbing annual results.

A re-set to drive growth, showing early results in first-half 2026

Golant did not present “growth trajectory pillars” until the (somewhat late) 28 April prelims.

Films are to be better selected using data and consumer insight, and the strategy towards venues will be “optimisation rather than expansion with no new venues opening in 2026”. Meanwhile, planning is under way for a limited number of new venues for 2027 funded through free cash flow... [with] “disciplined venue management to deliver an enhanced guest experience.”

Revenue sources will be further diversified “including partnerships, events and corporate private hire”, while “further innovating high-quality food and drink to support increases in spend per head”, with technology investment “to support a more seamless customer journey”.

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Does this cut the mustard for a financial turnaround? A 27 July update for the six months to 2 July showed revenue up 24% to £70.0 million on admissions up 20.5% as if cinema-going is coming back into favour. 

However, “the directors retain a degree of caution for the full-year outlook due to the challenging economic environment and the significance of fourth-quarter trading to the overall annual performance of the company”.

They also expected financial year performance to be only “marginally ahead” of last year amid “significant investment in IT infrastructure”. Presumably, it is near-term market concern over such versus the long-term benefits that it could herald that partly motivates a possible de-listing.

How might the shares react to announcement of a de-listing?

With only one week left to August, if this is declared to be going ahead then my sense would be a prompt mark-down in anticipation of sellers in a tight market. Yet a key insider was anyway prepared to buy £100,000 worth at 50p on 3 July, as if content with long-term value. This is nearly half of Everyman’s flotation price in 2013 when the group had just 10 cinemas versus its 49 today.

In one sense, it would be ethically wrong for me to conclude “buy” without any assurance on liquidity if the shares de-list. Probably there would be a matched bargain service if unreliable time-wise.

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Yet this kind of situation needs awareness because it is liable to recur where small company shares languish and the benefits of a listing diminish. Equity financing becomes dilutive and share options less useful as a motivator. Should we summon the courage to let shares de-list where there could be decent prospects?

I missed the 27 July update but it already affirms progress under a capable new CEO and CFO and, on a five-year view, I would pencil in a trade sale at least twice Everyman’s current market value. Key shareholders pushing to go private will have a game plan. Possibly near break-even can be achieved this year and the recent 20% rise in cinema admissions hints at upside.

Within a concluding “hold” stance I therefore note Everyman as an intriguing potential turnaround where the shares might also rally from next week, say if the de-listing is abandoned, thereby removing liquidity risk. If you believe in “enlightened buying” that has possibly driven speculation this week.

Edmond Jackson is a freelance contributor and not a direct employee of interactive investor.