TIDMPIER
RNS Number : 1369X
Brighton Pier Group PLC (The)
24 April 2023
24 April 2023
The Brighton Pier Group PLC
(the "Company" or the "Group")
Final results
( for the 18 months to 25 December 2022 )
The Brighton Pier Group PLC (the 'Group') owns and trades
Brighton Palace Pier, as well as eight premium bars nationwide,
eight indoor mini-golf sites and Lightwater Valley Family Adventure
Park.
The change of year end from June to December means these results
cover an 18 month period and reflect the first uninterrupted
trading period post pandemic. The change of year end date will
enable more meaningful comparison of the Group's financial
performance going forwards, as it ensures that the typically busy
summer trading months are aggregated within a single reporting
period.
Overall, the business rebounded strongly, benefitting from
pent-up consumer demand and government assistance, this enabled the
Group to repay GBP9.1 million of debt (44% of borrowings) and enter
the current more challenging market in a good financial
position.
Trading in 2023 is in line with market expectations and we are
well placed to take advantage of any upturn.
Financial results 12 months
18 months ended ended
25 December 27 June 2021
2022 restated
GBPm GBPm
(unless otherwise (unless otherwise
stated) stated)
Revenue 58.9 13.5
Profit before taxation 7.6 4.2
Profit after taxation 6.4 4.2
Basic earnings per share 17.1p 11.3p
Diluted earnings per share 16.9p 11.3p
Group EBITDA excluding highlighted
items 13.9 5.1
Group EBITDA including highlighted
items 13.8 4.7
Adjusted basic earnings per
share 16.4p 5.6p
Adjusted diluted earnings per
share 16.2p 5.6p
Commenting on the results, Anne Ackord, Chief Executive Officer,
said:
"Like many in our industry, we have had to absorb higher costs
relating to wages, energy prices and other inputs. Nevertheless,
our businesses remain profitable, well managed and backed by a
strong balance sheet and asset base.
We are confident in the ability of our management teams to
operate successfully in our markets, but we remain mindful of the
continuing pressures from the wider economic environment in which
we trade."
Enquiries:
The Brighton Pier Group PLC
Luke Johnson, Chairman Tel: 020 7016 0700
Anne Ackord, Chief Executive Officer Tel: 01273 609361
John Smith, Chief Financial Officer Tel: 020 7376 6300
Cenkos Securities plc (Nominated Adviser and
Broker)
Stephen Keys (Corporate Finance) Tel: 0207 397 8926
Callum Davidson (Corporate Finance) Tel: 0207 397 8923
Michael Johnson (Sales) Tel: 0207 397 1933
Novella (Financial PR) Tel: 0203 151 7008
Tim Robertson
Claire de Groot
Safia Colebrook
Chairman's statement
This report covers the 18 months ending 25 December 2022, this
being the first financial reporting period following the Group's
change from a June to a December year-end (unless otherwise stated,
comparisons to 2021 financial performance are for the 12 months
ended 27 June 2021). The change of year end date will enable more
meaningful comparison of the Group's financial performance going
forwards, as it ensures that the typically busy summer trading
months are aggregated within a single reporting period. The current
period was the first in which the Group was able to operate largely
unhindered by the trading restrictions introduced as a response to
the COVID-19 pandemic. I am pleased to report total Group revenue
of GBP58.9 million (2021: GBP13.5 million), EBITDA of GBP13.8
million (2021: GBP4.7 million) and earnings per share of 17.1 pence
(2021: 11.3 pence).
The Group's diverse offering enabled it to capitalise on the
surge in demand for leisure experiences following the final removal
of the COVID-19 restrictions. In 2021, Brighton Palace Pier was the
most visited free to enter attraction in the UK with over 4.2
million visitors, demonstrating the continued appeal and resilience
of this iconic structure. The strong demand enjoyed by all four of
the Group's divisions, coupled with targeted Government support
through business and VAT relief, saw Group revenue of GBP15.9
million in the 13-week period to the end of September 2021, an
all-time high.
The economic backdrop experienced throughout much of 2022 has
painted a different picture for the Group, with rising inflation
leading to steep cost increases in all areas of the business. The
Group has sought to pass these on wherever possible, however many
of the indirect input increases were necessarily absorbed by the
Group, constraining earnings in the latter 6 months of the
period.
The Group successfully completed the full integration of
Lightwater Valley Family Adventure Park (which was acquired on 17
June 2021) in the first few months of this period. Ahead of the
Park's re-opening in Easter 2022, the Group enhanced its offering
through the introduction of new attractions and catering options,
as well as the installation of a new EPOS system across the Park.
For the 18 months ending 25 December 2022, Lightwater Valley
delivered revenue of GBP8.1 million and EBITDA of GBP1.9 million.
The economic downturn has been felt most acutely in Lightwater
Valley, with admissions in summer 2022 down on the previous year.
This resulted in lower revenues, despite the improved
spend-per-head derived from the investment in the new catering
operations.
The Group utilised the strong earnings in the period to lower
its gearing, repaying GBP9.1 million of debt in the 18 months to 25
December 2022 and reducing debt by 44%. At the end of March 2023,
the Group made a final GBP0.5 million repayment against its
Coronavirus Business Interruption Loans (totalling GBP5.0 million),
which were taken out during the pandemic. On 19 April 2023, the
Group extended the term on its GBP10.9 million loan facility by 12
months to 5 December 2024, and over the coming months it is looking
to re-structure this debt. The intention will be to replace the
GBP10.9 million term loan and GBP1.0 million revolving credit
facility with a larger revolving credit facility and a reduced term
loan. These new facilities will enable the Group to reduce its
interest costs.
Looking forward, challenges to trading are expected to continue,
with the economic downturn set to persist in 2023 and inflation
still at elevated levels. The resulting cost increases will impact
margins across all four of the Group's divisions. However, in spite
of these difficulties, the businesses remain profitable, tightly
managed and are backed by a strong balance sheet and asset
base.
Directorate
The death of Senior Independent Non-Executive Director James
(Jim) Fallon was a great sadness to all of the Board. Jim was
instrumental in leading the IPO of the Company to AIM in 2013 and
he continued to make an outstanding contribution throughout his
tenure. Our thoughts are with his family and friends.
The Group is currently in the process of recruiting for the
position of Senior Independent Non-Executive Director; further
details will be shared in due course.
Dividend
The Board does not propose to pay any dividend in respect of the
2022 reporting period (2021: nil).
Luke Johnson
Non-Executive Chairman 21 April 2023
Our business model
The Brighton Pier Group PLC (the 'Group') owns and trades
Brighton Palace Pier, as well as eight premium bars nationwide,
eight indoor mini-golf sites and Lightwater Valley Adventure
Park.
The Group operates as four separate divisions under the
leadership of Anne Ackord, the Group's Chief Executive Officer.
Brighton Palace Pier offers a wide range of attractions
including two arcades (with over 300 machines) and eighteen funfair
rides, together with a variety of on-site hospitality and catering
facilities. The attractions, product offering and layout of the
Pier are focused on creating a family-friendly atmosphere that aims
to draw a wide demographic of visitors. The Pier is free to enter,
with revenue generated from the pay-as-you-go purchase of products
from the fairground rides, arcades, hospitality facilities and
retail catering kiosks. According to Visit Britain, it was the most
popular free attraction in the UK in 2021, with over 4.2 million
visitors.
The Golf division (which trades as Paradise Island Adventure
Golf) operates eight indoor mini-golf sites at high footfall retail
and leisure centres. The business capitalises on the increasing
convergence between retail and leisure, offering an accessible and
traditional activity for the whole family. The sites are located in
various towns and cities across the UK, each one offering two
unique 18-hole mini-golf courses.
The bars trade under a variety of popular concepts including
Embargo República, Lola Lo, Le Fez, Lowlander and Coalition. The
Group's Bars division targets a customer base of sophisticated
students midweek and stylish over-21s and professionals at the
weekend. The Bars focuses on delivering added value to its
customers through premium product ranges, high quality music and
entertainment, as well as a commitment to exceptional service
standards. The sites are based in key university cities and towns
that provide a vibrant night-time economy and the demographics to
support premium bars.
Lightwater Valley Attractions Limited owns and operates the
Lightwater Valley Family Adventure Park, a leading North Yorkshire
attraction, which is focused on family days out and is set in 175
acres of landscaped parkland. The Park offers a variety of
attractions including rides, amusements, crazy golf, children's
outdoor and indoor play, and entertainment shows, alongside
numerous food, drink and retail outlets. Popular seasonal events
such as at Halloween (Frightwater Valley) are also organised by the
Park.
The strategy of the Group is to capitalise on the skills of the
four existing divisions, creating a growth company that operates
across a diverse portfolio of leisure and entertainment assets in
the UK. The Group will achieve this objective by way of organic
revenue growth throughout the whole estate, together with the
active pursuit of future potential strategic acquisitions of
entertainment destinations, thus enhancing the Group's portfolio
and realising synergies by leveraging scale. It is the Board's
longer-term strategy to position the Company as a consolidator
within this sector.
Chief Executive Officer's report
This business review covers the trading results for the 18
months ended 25 December 2022 (2021: 12 months ended 27 June
2021).
Operational Review
This trading period began with three of the Group's four
divisions (The Pier, Golf and Lightwater Valley) having recently
been fully re-opened, following a period of closures and
restrictions resulting from Government-imposed lockdowns during the
COVID-19 pandemic. The final lockdown restrictions, impacting the
Group's late-night bars, were relaxed on 19 July 2021.
All four divisions saw exceptional trading over the summer 2021
period. A combination of warm weather, pent-up consumer demand,
accumulated lockdown savings and Government-backed schemes (VAT and
business rates relief, 'Eat Out to Help Out') enabled the Group to
maximise revenue and earnings as divisions resumed trading.
The Group continued to reposition its portfolio to its more
profitable sites with the surrender of the lease of its Reading
Coalition site at the end of September 2021, the last of the four
marginal sites to be disposed of in the Bars division. This
disposal resulted in net gains of approximately GBP670,000 arising
from the derecognition of lease liabilities.
Some minor restrictions were reintroduced in December 2021 due
to the emergence of the Omicron variant, although the effect on
Group trading was minimal.
Over the winter months, Lightwater Valley was closed to
visitors. The Group took advantage of the Park's closure to upgrade
a variety of facilities, including the installation of a new EPOS
system, a new fish & chip shop, and the construction of a new
woodland trail. The Group has also started work on the development
of circa twenty pod-type units for rental on the southern edge of
the Lightwater Valley Park. The unique forest environment will make
these an attractive proposition and will add a further revenue
stream to the business. Whilst this project is at an early stage
and has required some variation to the original planning consent
for 106 lodges, it demonstrates the potential to create significant
growth in the medium term.
In contrast to the period following the final removal of
pandemic restrictions in July 2021, the first half of 2022 saw the
onset of a sharp downturn in economic activity. Global instability
and ongoing supply chain disruption driving UK inflation to the
highest rate seen in over 40 years. The resulting impact on
consumer discretionary spend, coupled with significant operating
cost increases across all of the Group's divisions, resulted in a
much more challenging trading environment during summer 2022. The
period saw prolonged and severe heatwaves across the UK, which
impacted footfall at the indoor venues in the Bars and Golf
division but benefited the activities on the Pier and at Lightwater
Valley.
While the Group worked hard to pass on price increases to
customers wherever possible, and was able to maintain gross
margins, inflation persisted throughout the remainder of 2022,
resulting in the Group having to absorb many of the higher costs.
Combined with a general dip in consumer confidence, this led to
softer trading and profitability in the second half of 2022.
Full-year results for the 18 months to 25 December 2022
Unless otherwise stated, comparisons to 2021 financial
performance are for the 12 months ended 27 June 2021.
Revenue for the period was GBP58.9 million (2021: GBP13.5
million). This reflects the longer period of account, the strong
trading enjoyed by the business in the first 12 months following
the easing of COVID-19 restrictions, as well as prior period
revenue also being heavily impacted by the restriction of trading
during the pandemic.
Revenue split by division:
-- Pier division GBP25.3 million (2021: GBP9.6 million)
-- Golf division GBP10.0 million (2021: GBP2.4 million)
-- Bars division GBP15.5 million (2021: GBP1.3 million)
-- Lightwater Valley GBP8.1 million (2021*: GBP0.2 million)
* This represents only 10 days of ownership from 17 June 2021
when the business was acquired to 27 June 2021.
Group gross margin for the period was maintained at 87 % (2021:
87%), despite significant cost pressures across the Group.
Group EBITDA (see Notes 2 and 6) for the period was GBP13.8
million (2021: GBP4.7 million).
EBITDA split by division:
-- Pier division GBP4.7 million (2021: GBP1.0 million)
-- Golf division GBP5.5 million (2021: GBP3.1 million)
-- Bars division GBP3.5 million (2021: GBP1.8 million)
-- Lightwater Valley GBP1.9 million (2021*: GBP0.1 million)
-- Group overhead GBP(1.8) million (2021: GBP(1.4) million)
* This represents only 10 days of ownership from 17 June 2021
when the business was acquired to 27 June 2021.
Group EBITDA excluding highlighted items (see Note 6) for the
period was GBP13.9 million (2021: GBP5.1 million).
Profit before tax was GBP7.6 million (2021: GBP4.2 million),
benefitting from pent-up consumer demand and government support
schemes. The prior period was heavily impacted by the COVID-19
pandemic and resulting closures across the business and included
GBP5.0 million of income from business interruption insurance
claims.
Profit after tax was GBP6.4 million (2021: GBP4.2 million).
Divisional trading commentary
Pier division
-- Revenue - up 161% on the prior period at GBP25.3 million (2021: GBP9.6 million)
-- Like-for-like sales - up 11% on the same pre-COVID period in 2019
-- Gross margin - down 1% at 85% (2021: 86%), with government
support schemes boosting prior period margin
-- EBITDA - GBP4.7 million (2021: GBP1.0 million)
Golf division
-- Revenue - up 320% on last year at GBP10.0 million (2021: GBP2.4 million)
-- Gross margin - in line with last year at 99% (2021: 99%)
-- Like-for-like sales - up 12% on the same pre-COVID period in 2019
-- EBITDA - GBP5.5 million (2021: GBP3.1 million); in 2021 this
included GBP2.5 million of business interruption insurance
income
Bars division
-- Revenue - total sales of GBP15.5 million (2021: GBP1.3
million); with the Bars estate the most heavily impacted of the
Group's four divisions by lockdown closures in the prior period
-- Like-for-like sales - up 2% on the same pre-COVID period in
2019 (for only 75 weeks as the division was only able to re-open
from the end of July 2021)
-- Gross margin - up 10% at 82% (2021: 72%), with the absence of
the wet-led late-night bars during the prior period resulting in a
lower than ordinary margin for the division
-- EBITDA - GBP3.5 million (2021: GBP1.8 million); in 2021 this
included GBP2.5 million of business interruption insurance
income
Lightwater Valley
-- Revenue - total sales of GBP8.1 million (2021*: GBP0.2 million)
-- Gross margin - 87% (2021*: 91%)
-- EBITDA - total EBITDA of GBP1.9 million (2021*: GBP0.1 million)
* This represents only 10 days of ownership from 17 June 2021
when the business was acquired to 27 June 2021.
Highlighted items consist of net gains of GBP0.5 million (2021:
GBP2.7 million of gains) which were recognised during the period -
see Note 3 for further details. Highlighted items are treated as
such if the matters are material and fall within one of the
categories below:
a) acquisition costs and pre-opening costs relating to new and
refit sites; and
b) impairment charges and reversals, lease liability
adjustments, site closure and other related legal costs.
Finance costs of GBP1.8 million (2021: GBP1.0 million), made up
of:
-- Interest on borrowings GBP0.7 million (2021: GBP0.3
million)
-- Interest on leases GBP1.1 million (2021: GBP0.7 million)
The interest on leases relates predominantly to property leases
in the Bars and Golf divisions and arises from the application of
IFRS 16.
Operating profit was GBP9.4 million (2021: GBP5.1 million).
Taxation on ordinary activities of GBP1.3 million (2021: tax
credit of GBP0.1 million), with the Group utilising prior period
losses to offset taxable profits in 2021.
In summary , for the 18 month period ended 25 December 2022:
-- Revenue GBP58.9 million (2021: GBP13.5 million)
-- Operating profit GBP9.4 million (2021: GBP5.1 million)
-- Group EBITDA excluding highlighted items** GBP13.9 million
(2021: GBP5.1 million)
-- Group EBITDA GBP13.8 million (2021: GBP4.7 million)
-- Profit before tax GBP7.6 million (2021: GBP4.2 million)
-- Profit after tax GBP6.4 million (2021: GBP4.2 million)
-- Basic earnings per share (excluding highlighted items)^ 17.1p
(2021: 11.3p)
-- Basic earnings per share^ 16.4p (2021: 5.6p)
-- Diluted earnings per share (excluding highlighted items) ^
16.9p (2021: 11.3p)
-- Diluted earnings per share^ 16.2p (2021: 5.6p)
** Highlighted items are detailed in Note 3 to the financial
statements.
(^) See Note 4.
Financial review
Unless otherwise stated, comparisons to 2021 financial
performance are for the 12 months ended 27 June 2021.
Cash flow
Cash flow generated from operations (after interest and tax
payments) available for investment was GBP10.7 million (2021:
GBP4.9 million). This increase was principally driven by the higher
profit before tax recognised during the current period.
Property, plant and equipment and software
The Group invested GBP1.3 million in capital expenditure during
the period (2021: GBP0.3 million):
-- GBP0.5 million was spent on the Pier division, which related to upgrading the till systems, refurbishment of various food & drink outlets and new machines for the amusement arcades, as well as other minor capital maintenance;
-- GBP0.4 million was spent at Lightwater Valley on upgrading
EPOS across the Park, creation of a new fish and chip shop to
enhance the food & beverage offering, and the building of a new
woodland trail as a new feature for 2022;
-- GBP0.3 million was spent in the Bars division on ERP software
upgrades alongside other minor refurbishments across the trading
sites; and
-- GBP0.1 million was spent in the Golf division on course
improvements in the Glasgow and Manchester sites.
Shareholders will be aware that each year we undertake an annual
substructure survey on the Pier. A further survey, typically
performed every five to six years and using divers to inspect the
areas below the water line, will be completed in 2023. We can
report that no additional maintenance issues were identified other
than the usual budgeted maintenance requirements for the coming
financial year from either survey. Costs associated with the
ongoing maintenance of the Pier are recorded through the Statement
of Comprehensive Income in the period in which they are
incurred.
Current bank debt and cash
At the period end the Group had total bank debt of GBP11.3
million (2021: GBP20.4 million) and net debt (total bank debt less
cash and cash equivalents) of GBP7.1 million (2021: GBP13.3
million), broken down as follows:
-- An outstanding principal term facility of GBP10.9 million (2021: GBP11.8 million)
o GBP0.9 million debt repayment was made in the period (2021:
GBP0.1 million), offset by the amortisation of loan fees
o GBP0.5 million is due within the next twelve months to the end
of the term in December 2023
-- CBILS 1 facility of GBPnil (2021: GBP1.8 million)
o Repaid in full during the current period
-- CBILS 2 facility of GBP0.5 million (2021: GBP3.2 million)
o Final repayment of GBP0.5 million made at the end of March
2023
-- RCF facility drawdowns of GBPnil (2021: GBP3.6 million)
o Facility was increased to GBP3.75 million in the prior period
to fund the acquisition of Lightwater Valley
o Fully repaid by the end of October 2021
o Current facility is GBP1.0 million (2021: GBP3.75 million)
-- Cash balances of GBP4.2 million (2021: GBP7.1 million)
During the 18 month period, the Group made net repayments of
GBP9.1 million (2021: net drawdowns of GBP3.5 million), made up
of:
-- GBP3.6 million repayment of the RCF (2021: GBP3.6 million drawdown);
-- GBP0.9 million repayment of the principal term facility (2021: GBP0.1 million);
-- GBP1.8 million repayment of the CBILS 1 facility (2021: GBPnil); and
-- GBP2.7 million repayment of the CBILS 2 facility (2021: GBPnil).
Key performance indicators ('KPI's)
The Group's KPIs remain focused on the continued growth of the
Group to drive revenues, EBITDA (see Note 6) and earnings
growth.
The same pre-COVID period in 2019 as referenced below is defined
as the 18 month period ending 29 December 2019, being the last
comparable period. Total Group revenue for the period was GBP58.9
million (2021: GBP13.5 million), up 19% on the same pre-COVID
period in 2019 (2019: GBP49.4 million) primarily due to the
acquisition of Lightwater Valley on 17 June 2021.
Revenue split by division:
-- Pier division GBP25.3 million (2021: GBP9.6 million)
-- Golf division GBP10.0 million (2021: GBP2.4 million)
-- Bars division GBP15.5 million (2021: GBP1.3 million)
-- Lightwater Valley* GBP8.1 million (2021: GBP0.2 million)
* 2021 results for Lightwater Valley reflect the period from
acquisition on 17 June 2021 to 27 June 2021.
On a divisional basis and comparing with the pre-COVID
like-for-like period in 2019:
-- Brighton Palace Pier like-for-like sales were up 11% on 2019;
-- Golf division like-for-like sales were up 12% on 2019; and
-- Bars division like-for-like sales (for only 75 weeks as the
division was only able to re-open from the end of July 2021) were
up 2% on 2019.
Group gross margin for the period continued in line at 87%
(2021: 87%), reflecting the high-margin nature of all four
divisions - and this despite the numerous ongoing supply and cost
challenges that have appeared in the economy in the period.
Highlighted items totalling GBP0.5 million of gains (2021:
GBP2.7 million of gains) were recognised during the period (see
Note 3 for further details). These gains arose from:
-- GBP(1.0) million - impairment of goodwill in the Glasgow and Rushden golf sites;
-- GBP0.9 million - reversal of impairment charges to property,
plant and equipment and right-of-use assets;
-- GBP(0.4) million - recognition of in-substance fixed lease payments;
-- GBP0.4 million - gain from the derecognition of other lease
liabilities during the period;
-- GBP0.7 million - gain on extinguishment of lease liabilities
following the disposal of Smash in Reading; and
-- GBP(0.1) million - in relation to a potential claim in
relation to an assigned lease.
Group profit on ordinary activities before taxation was up 84%
at GBP7.6 million (2021: GBP4.2 million).
Group profit on ordinary activities after taxation was up 51% at
GBP6.4 million (2021: GBP4.2 million), with no tax payable in the
prior period due to utilisation of losses which occurred during
lockdown.
In summary, for the 18 month period ended 25 December 2022:
-- Revenue GBP58.9 million (2021: GBP13.5 million)
-- Operating profit GBP9.4 million (2021: GBP5.1 million)
-- Group EBITDA excluding highlighted items* GBP13.9 million (2021: GBP5.1 million)
-- Group EBITDA GBP13.8 million (2021: GBP4.7 million)
-- Operating profit excluding highlighted items GBP9.0 million (2021: GBP2.4 million)
-- Profit before tax excluding highlighted items GBP7.2 million (2021: GBP1.4 million)
-- Profit before tax GBP7.6 million (2021: GBP4.2 million)
-- Profit after tax GBP6.4 million (2021: GBP4.2 million)
-- Net debt at the end of the period GBP7.1 million
(2021: GBP13.3 million)
-- Basic earnings per share (excluding highlighted items) ^
17.1p (2021: 11.3p)
-- Basic earnings per share^ 16.4p (2021: 5.6p)
-- Diluted earnings per share (excluding highlighted items) ^ 16.9p (2021: 11.3p)
-- Diluted earnings per share^ 16.2p (2021: 5.6p)
* Highlighted items are detailed in Note 3 to the financial
statements.
^ See Note 4.
EBITDA split by division:
-- Pier division GBP4.7 million (2021: GBP1.0 million)
-- Golf division GBP5.5 million (2021: GBP3.1 million)
-- Bars division GBP3.5 million (2021: GBP1.8 million)
-- Lightwater Valley* GBP1.9 million (2021: GBP0.1 million)
-- Group overhead GBP(1.8) million (2021: GBP(1.4) million)
* 2021 results for Lightwater Valley reflect the period from
acquisition on 17 June 2021 to 27 June 2021.
Significant events that have taken place since the year end
On 19 April 2023 the Group extended its current bank facilities
that were due to expire in December 2023 for a further period of 12
months to the end of December 2024. The Group is currently in the
final stages of negotiations to replace its existing bank
facilities with a new longer-term facility made up of a larger
revolving credit facility and a reduced term loan.
These new bank facilities will provide the Group with additional
flexibility in meeting its day-to-day working capital requirements
and reduce its interest costs by repaying further debt back to the
revolving credit facility. Had this extension been agreed at 25
December 2022, the Group's total bank debt of GBP11.3 million would
be shown as GBP0.9 million of current debt and GBP10.4 million of
non-current debt. The presentation in the Consolidated Balance
Sheet (see page 43) shows a current liability of GBP11.3
million.
Strategy of the combined Group, current trading and outlook for
the coming period
Short to medium-term strategy and outlook
While trading has now returned to pre-COVID levels, with
like-for-like revenues ahead of 2019 equivalents, inflation
continues to provide a challenging environment for the Group, with
wide-ranging cost increases across all four divisions. The
resulting economic uncertainty and decline in consumer confidence
is expected to continue in the short to medium-term and the Group
looks ahead with caution.
However, despite the continuing cost pressures, all four
divisions remain profitable. The Group will continue to seek
further operational efficiencies in order to mitigate cost
pressures to the greatest extent possible. The repayment of GBP9.1
million of debt in the current financial period, will enable the
Group to remain resilient, further bolstered by a strong balance
sheet and asset base.
Current trading
Current total Group sales for the first three months to the end
of March 2023 were down 11% on a like-for-like basis versus the
equivalent period in 2022, with 76% of this shortfall coming from
the Bars division. This was predominantly the result of a
challenging prior year comparative for the Bars, which continued to
benefit from the post-pandemic surge in demand in the early months
of 2022. Notwithstanding, trading in 2023 has seen a general
decline in consumer confidence in response to the difficult
economic environment currently being faced. These economic
pressures, and the resulting impact on both consumer discretionary
spend and increased costs, will continue to present significant
trading challenges going forwards.
Longer-term: new acquisitions and developments
The longer-term strategy continues to be to capitalise on the
skills of the Group to create a growth company operating across a
diverse portfolio of leisure and entertainment assets in the UK.
The Group will achieve this objective by way of organic revenue
growth across the whole estate, together with the active pursuit of
future potential strategic acquisitions of leisure and
entertainment destinations that could enhance the Group's
portfolio, realising synergies by leveraging scale. It is the
Board's longer-term strategy to position the Group as a
consolidator within this sector.
Consolidated statement of comprehensive income
For the 18 month period ended 25 December 2022
18 months 12 months
ended ended 27
25 December June 2021
2022 restated
Notes GBP'000 GBP'000
Revenue 58,905 13,541
Cost of sales (7,748) (1,781)
Gross profit 51,157 11,760
Operating expenses - excluding
highlighted items (42,373) (15,086)
Highlighted items 3 451 2,746
--------------------------------------- ------- -------------- ------------
Total operating expenses (41,922) (12,340)
Other income 197 5,693
Operating profit - excluding
highlighted items 8,981 2,367
Highlighted items 3 451 2,746
--------------------------------------- ------- -------------- ------------
Operating profit 9,432 5,113
Finance income 24 24
Finance cost (1,817) (987)
Profit before tax and excluding
highlighted items 7,188 1,404
Highlighted items 3 451 2,746
--------------------------------------- ------- -------------- ------------
Profit on ordinary activities
before taxation 7,639 4,150
Taxation on ordinary activities (1,266) 81
Profit and total comprehensive
income for the period 6,373 4,231
Earnings per share - basic* (pence) 4 17.1 11.3
Earnings per share - diluted
(pence) 4 16.9 11.3
* 2022 basic weighted average number of shares in issue is 37.29
million (2021: 37.29 million).
No other comprehensive income was earned during the period
(2021: nil ).
Consolidated balance sheet
As at 25 December 2022
As at As at As at
25 December 27 June 28 June
2022 2021 2020
restated restated
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 9,545 10,457 9,467
Property, plant and equipment 28,139 29,008 25,763
Right-of-use assets 25,223 23,916 18,030
Net investment in finance
leases - 635 689
Other receivables due in
more than one year - 209 367
-------------- ----------- -----------
62,907 64,225 54,316
-------------- ----------- -----------
Current assets
Inventories 815 731 562
Trade and other receivables 1,835 4,002 1,926
Income tax receivable - 5 -
Cash and cash equivalents 4,208 7,080 2,649
6,858 11,818 5,137
-------------- ----------- -----------
TOTAL ASSETS 69,765 76,043 59,453
============== =========== ===========
EQUITY
Issued share capital 9,322 9,322 9,322
Share premium 15,993 15,993 15,993
Merger reserve (1,111) (1,111) (1,111)
Other reserve 452 452 452
Retained earnings/(deficit) 897 (5,476) (9,707)
Equity attributable to
equity shareholders of
the Parent 25,553 19,180 14,949
-------------- ----------- -----------
TOTAL EQUITY 25,553 19,180 14,949
-------------- ----------- -----------
LIABILITIES
Current liabilities
Trade and other payables 3,833 8,321 3,945
Other financial liabilities* 11,327 5,913 -
Lease liabilities 1,808 2,059 2,179
Income tax payable 987 - 35
Provisions 119 - -
18,074 16,293 6,159
-------------- ----------- -----------
Non-current liabilities
Other financial liabilities* - 14,456 16,797
Lease liabilities 25,365 25,534 21,548
Deferred tax liability 512 265 -
Other payables due in more
than one year 261 315 -
26,138 40,570 38,345
-------------- ----------- -----------
TOTAL LIABILITIES 44,212 56,863 44,504
-------------- ----------- -----------
TOTAL EQUITY AND LIABILITIES 69,765 76,043 59,453
============== =========== ===========
*On 19 April 2023, the Group's term loan was extended for a
period of 12 months and is now due for final repayment on 5
December 2024. Had this extension been agreed at the reporting
date, the Group's current other financial liabilities of
GBP11,327,000 would be replaced by a GBP942,000 current liability
and a GBP10,385,000 non-current liability.
These consolidated financial statements have been approved by
the Board of Directors and signed on its behalf by: J.A.Smith,
Director
21 April 2023 Registered Company number: 08687172
Consolidated statement of cash flows
For the 18 month period ended 25 December 2022
18 months 12 months
to to
25 December 27 June
2022 2021
restated
Notes GBP'000 GBP'000
Operating activities
Profit before tax 7,639 4,150
Net finance costs 1,793 963
Amortisation of intangible assets 126 80
3,
Impairment of goodwill 5 985 -
Reversal of impairment of property, 3,
plant and equipment 5 (424) -
Reversal of impairment of right of 3,
use assets 5 (489) -
Depreciation of property, plant and
equipment 2,372 1,218
Depreciation of right-of-use assets 2,453 1,436
Impairment of net investment in finance
lease - 47
Gain on derecognition of lease liabilities
due to disposal (688) (1,838)
Gain on derecognition of lease liabilities 3,
due to waivers & concessions 5 (402) (1,334)
Charge on recognition of in-substance 268 -
fixed rent
Increase/(decrease) in provisions
and deferred tax 119 (21)
Increase in inventories (84) (59)
Decrease/(increase) in trade and
other receivables 2,381 (1,738)
(Decrease)/increase in trade and
other payables (3,539) 2,985
Interest paid on borrowings (712) (320)
Interest paid on lease liabilities (1,105) (667)
Interest received 24 6
Income tax paid (32) (52)
Net cash flow generated from operating
activities 10,685 4,856
------------- -----------
Investing activities
Purchase of property, plant and equipment
and intangible assets (1,296) (258)
Acquisition of business, net of cash
acquired - (2,251)
Proceeds from disposal of property,
plant and equipment 18 11
Payment of deferred and contingent (1,000) -
consideration to former Lightwater
Valley Attractions Limited Shareholders
Net cash flows used in investing
activities (2,278) (2,498)
------------- -----------
Financing activities
Proceeds from borrowings - 3,634
Repayment of borrowings (9,063) (1,291)
Principal paid on lease liabilities (2,216) (270)
Net cash flows (used in)/generated
from financing activities (11,279) 2,073
------------- -----------
Net (decrease)/increase in cash and
cash equivalents (2,872) 4,431
Cash and cash equivalents at beginning
of period 7,080 2,649
Cash and cash equivalents end of
period 4,208 7,080
============= ===========
Consolidated statement of changes in equity
For the 18 month period ended 25 December 2022
Issued Share premium Merger Other Retained Total shareholders'
share reserve reserves (deficit)/ equity
capital earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 28 June 2020 9,322 15,993 (1,111) 452 (9,660) 14,996
Correction to
opening reserves - - - - (47) (47)
---------------------- ---------- --------------- ---------- ----------- ------------- -----------------------
At 28 June 2020
restated 9,322 15,993 (1,111) 452 (9,707) 14,949
Restated profit and
total
comprehensive
income for
the period - - - - 4,231 4,231
---------------------- ---------- --------------- ---------- ----------- ------------- -----------------------
At 27 June 2021 9,322 15,993 (1,111) 452 (5,476) 19,180
Profit and total
comprehensive
income for the
period - - - - 6,373 6,373
At 25 December 2022 9,322 15,993 (1,111) 452 897 25,553
---------------------- ---------- --------------- ---------- ----------- ------------- -----------------------
Notes to the consolidated financial statements
For the period ended 25 December 2022
1. Accounting policies
The Brighton Pier Group PLC is a public limited company
incorporated and domiciled in England and Wales. The Company's
ordinary shares are traded on AIM. Its registered address is 36
Drury Lane, London, WC2B 5RR. Both the immediate and ultimate
Parent of the Group is The Brighton Pier Group PLC. The Brighton
Pier Group PLC owns and operates Brighton Pier, one of the leading
tourist attractions in the UK. As at 25 December 2022, the Group
also operated eight premium bars (2021: eight) and eight (2021:
eight) indoor adventure golf facilities trading in major towns and
cities across the UK, as well as operating Lightwater Valley Family
Adventure Park, situated in North Yorkshire.
Announcement
This announcement was approved by the Board of Directors on 21
April 2023. The preliminary results for the period ended 25
December 2022 are based on the audited financial statements for the
same period. The financial information for the period ended 25
December 2022 and the period ended 27 June 2021 does not constitute
the company's statutory accounts for those periods. The auditors'
reports on the accounts for 25 December 2022 and 27 June 2021 were
unqualified, did not draw attention to any matters by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
Basis of preparation
The Group financial statements have been prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006. The UK's departure from the
European Union at 11pm on 31 December 2020 requires the Group to
apply frozen IFRS standards as at the balance sheet date, in
accordance with The International Accounting Standards and European
Public Limited-Liability Company (Amendment etc.) (EU Exit)
Regulations 2019. The accounting policies which follow set out
those policies which apply in preparing the financial statements
for the period ended 25 December 2022. These accounting policies
were consistently applied for all the periods presented.
The financial statements are presented in sterling under the
historical cost convention except where explicitly noted. All
values are rounded to the nearest thousand pounds (GBP'000) except
when otherwise indicated.
On 20 June 2022, the Group changed its accounting reference date
(and financial year end) from 30 June to 31 December. As a result,
the current period financial results are presented on an 18 month
basis to 25 December 2022, with a comparison to the latest audited
accounts for the 12 months ended 27 June 2021. As such, prior
period comparatives will not be directly comparable to current year
financial information. The notes to the consolidated financial
statements are on this basis.
Going concern
As at 25 December 2022, the Group had net current liabilities of
GBP11,216,000 (2021: GBP4,475,000). The Group also had cash and
cash equivalents of GBP4,208,000 (2021: GBP7,080,000) available to
meet short-term needs.
The Group meets its day-to-day working capital requirements
through its bank facilities. The Group's principal sources of
funding are:
-- a one year term loan of GBP10,870,000, which was initially
entered into in April 2016. As of 25 December 2022, the term loan
was due for final repayment on 5 December 2023, and is therefore
shown as a current liability in the Consolidated Balance Sheet. The
term loan was extended for a period of 12 months on 18 April 2023
and is now due for final repayment on 5 December 2024. As a
consequence, loan repayments of GBP485,000 are payable over the
next 12 months; and
-- a one year revolving credit facility of GBP1,000,000, which
was initially entered into in April 2016. This was due to expire on
5 December 2023 as of 25 December 2022, but was also extended for a
period of 12 months on 18 April 2023. As at 25 December 2022, this
facility was undrawn.
-- The Group also had GBP457,000 of Coronavirus Business
Interruption Loans (CBILs) outstanding as of 25 December 2022
(2021: GBP5,000,000), which were repaid in full at the end of March
2023.
Quarterly covenant tests are in place over the bank facilities
and the Group was fully compliant as at 25 December 2022.
The Group's current intention is to replace the GBP10,870,000
term loan and GBP1,000,000 revolving credit facility with a larger
revolving credit facility and a reduced term loan. This will
provide the Group with additional flexibility in meeting its
day-to-day working capital requirements and reduce its interest
costs by repaying further debt back to the revolving credit
facility. The covenant tests will be modified to account for the
changes in circumstances as part of the revised refinancing
arrangement.
Based on current forecast performance, the Directors consider
that the Group will be both profitable and cash generative and will
continue to comply with covenant testing for the foreseeable
future.
The Directors therefore expect the Group to continue to meet its
day-to-day working capital requirements from the cash flows
generated by its trading activities, loan facilities with its bank
as well as cash resources available to it throughout the four
divisions, should this be required. The Group will also have
sufficient cash resources available to meet its liabilities as they
fall due Accordingly, these financial statements have been prepared
on a going concern basis.
2. Segmental information
18 month period ended Brighton Golf Bars Lightwater Total Head 2022 consolidated
25 December 2022 Palace Valley segments office total
Pier costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Revenue 25,249 10,014 15,517 8,125 58,905 - 58,905
Cost of sales (3,782) (140) (2,750) (1,076) (7,748) - (7,748)
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Gross profit 21,467 9,874 12,767 7,049 51,157 - 51,157
Gross profit % 85% 99% 82% 87% 87% 87%
Administrative
expenses:
Other administrative
expenses (excluding
depreciation and
amortisation) (16,823) (4,463) (9,335) (5,146) (35,767) (1,655) (37,422)
Other income:
Insurance income 100 10 - - 110 - 110
Local authority
grant income - 35 46 - 81 - 81
Other income - - 6 - 6 - 6
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Divisional
earnings/(loss) 4,744 5,456 3,484 1,903 15,587 (1,655) 13,932
Highlighted items - (307) 758 - 451 - 451
Depreciation and
amortisation
(excluding
depreciation of
right-of-use assets) (751) (604) (604) (539) (2,498) - (2,498)
Depreciation of
right-of-use assets (13) (1,263) (1,039) (138) (2,453) - (2,453)
Net finance cost
(excluding interest on
lease liabilities) - - - - - (688) (688)
Net finance costs
arising on lease
liabilities (3) (446) (413) (243) (1,105) - (1,105)
Profit/(loss) before
tax 3,977 2,836 2,186 983 9,982 (2,343) 7,639
Income tax (1,266) (1,266)
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Profit/(loss) after tax 3,977 2,836 2,186 983 9,982 (3,609) 6,373
EBITDA (excluding
highlighted items) 4,744 5,456 3,484 1,903 15,587 (1,655) 13,932
EBITDA (including
highlighted items) 4,744 5,456 3,484 1,903 15,587 (1,774) 13,813
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
2. Segmental information (continued)
12 month period ended Brighton Golf Bars Lightwater Total Head 2021 consolidated
27 June 2021 Palace Valley* segments office total
restated Pier costs
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Revenue 9,673 2,385 1,277 206 13,541 - 13,541
Cost of sales (1,381) (28) (353) (19) (1,781) - (1,781)
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Gross profit 8,292 2,357 924 187 11,760 - 11,760
Gross profit % 86% 99% 72% 91% 87% - 87%
Administrative
expenses:
Other administrative
expenses (excluding
depreciation and
amortisation) (7,313) (2,003) (2,023) (79) (11,418) (934) (12,352)
Other income:
Insurance income - 2,500 2,500 - 5,000 - 5,000
Local authority
grant income 44 275 374 - 693 - 693
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Divisional
earnings/(loss) 1,023 3,129 1,775 108 6,035 (934) 5,101
Highlighted items - 573 2,493 - 3,066 (320) 2,746
Depreciation and
amortisation
(excluding
depreciation of
right-of-use assets) (518) (430) (350) - (1,298) - (1,298)
Depreciation of
right-of-use assets (12) (797) (620) (7) (1,436) - (1,436)
Net finance cost
(excluding interest on
lease liabilities) - - - - - (296) (296)
Net finance costs
arising on lease
liabilities (4) (319) (332) (12) (667) - (667)
Profit/(loss) before
tax 489 2,156 2,966 89 5,700 (1,550) 4,150
Income tax - - - - - 81 81
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
Profit/(loss) after tax 489 2,156 2,966 89 5,700 (1,469) 4,231
EBITDA (excluding
highlighted items) 1,023 3,129 1,775 108 6,035 (934) 5,101
EBITDA (including
highlighted items) 1,023 3,129 1,775 108 6,035 (1,360) 4,675
------------------------- ---------- --------- --------- ------------ ----------- --------- -------------------
*Results for Lightwater Valley reflect the period from
acquisition on 17 June 2021 to 27 June 2021.
All segment assets and liabilities are located within the United
Kingdom and all revenues arose in the United Kingdom. Segment
revenues are generated from the sale of goods to external customers
on a point in time basis, with the exception of concession income
on the Pier, and annual passes at Lightwater Valley, as detailed
above. There were no inter-segment sales in the years presented. No
single customer contributed more than 10% of the Group's
revenues.
The accounting policies of the reportable segments have been
consistently applied. Overheads have been separated out to reflect
how management reviews the discrete financial information and uses
it to allocate resources.
3. Highlighted items
18 month 12 month
period ended period ended
25 December 27 June
2022 2021
GBP'000 GBP'000
----------------------------------------------- --------------- ---------------
Acquisition costs - 254
Restructuring costs - 66
Impairment of goodwill 985 -
Reversal of impairment of property, plant (424) -
and equipment
Reversal of impairment of right-of-use (489) -
assets
Charge on recognition of in-substance 430 -
fixed rent
Gain on derecognition of lease liabilities
for continuing sites using:
- IFRS 9 derecognition criteria (337) (590)
- IFRS 16 practical expedient (65) (744)
Gain on derecognition of lease liabilities
for disposed sites (670) (1,838)
Other closure costs & legal costs 119 106
Total (451) (2,746)
The above items have been highlighted in order to provide users
of the financial statements visibility of non-comparable costs
included in the Consolidated Statement of Comprehensive Income for
this period. See Note 5 for further details.
18 month period ended 25 December 2022
The Group performed two impairment tests in the current period,
in December 2022 and in June 2022 (2021: one test in June 2021).
The Group considers the relationship between the trading
performance of each CGU and their book value when reviewing for
indicators of impairment. Based on management's review of the
expected performance of the core estate, an impairment of
GBP985,000 (2021: nil) was identified, split between the Rushden
(GBP693,000) and Glasgow (GBP292,000) sites in the Golf division.
Conversely, with the removal of the final remaining COVID
restrictions in the period, the trading outlook in other sites is
more favourable than in prior reviews, resulting in a reversal of
impairments applied to property, plant and equipment of GBP424,000
(2021: nil) and right-of-use assets of GBP489,000 (2021: nil).
These reverse impairments that were applied as part of management's
2020 impairment review.
During the pandemic, the Group reached agreements with many of
its landlords to temporarily replace fixed rents repayable with a
combination of fixed rents and variable turnover rents, with the
turnover element benchmarked to pre-pandemic trading. At the time
the agreements were made, there was considerable uncertainty about
whether the sites, particularly in the Bars division, would be able
to reopen and recover to pre-pandemic trading levels. In line with
accounting standards, lease liabilities were adjusted to reflect
only the fixed rent element of the lease agreements. Amounts
derecognised were included within highlighted items.
During the period, management regularly reviewed the lease
arrangements in place across the Group in conjunction with the
forecast performance at each leased site. With most sites once
again trading at or above pre-pandemic levels, in June 2022
management assessed that the payment of turnover rent at some sites
in the Bars division was sufficiently certain as to make them
in-substance fixed lease payments in accordance with IFRS 16.B42.
At this point, future payments totalling GBP268,000 were recognised
as additional lease liabilities (see Note 12). Prior to the
assessment having been made, turnover rent payments totalling
GBP162,000 were recognised directly in the Statement of
Comprehensive Income. Total turnover rent payments of GBP430,000
(2021: nil) were recognised within highlighted items in the period
ended 25 December 2022, ensuring consistency with the treatment of
previously derecognised liabilities in prior periods.
The onset of the COVID pandemic prompted the IASB to issue a
practical expedient to provide relief for lessees from lease
modification accounting for rent concessions related to COVID. The
practical expedient allows entities to recognise the value of any
agreed rent concessions in the Statement of Comprehensive Income
rather than adjusting the underlying right-of-use asset and lease
liability. The Group has recognised total credits of GBP65,000
(2021: GBP744,000) within highlighted items in the Statement of
Comprehensive Income for the period ended 25 December 2022.
The practical expedient can only be used for rent concessions
covering the period to 30 June 2022. In some instances, the Group
has agreed temporary lease variations that extend beyond this date.
These variations amount, in substance, to forgiveness of rent
payable without materially changing the present value of total cash
outflows over the life of the lease. In such circumstances, the
Group de-recognises the appropriate portion of its total liability
in accordance with the provisions of IFRS 9: Financial Instruments.
The value of these extended waivers is recognised in the Statement
of Comprehensive Income. The Group has recognised total credits of
GBP337,000 (2021: GBP590,000) within highlighted items in the
Statement of Comprehensive Income during the period ended 25
December 2022.
Lease liabilities of GBP670,000 were extinguished during the
period as a result of the disposal of the Reading Smash site. The
right-of-use asset relating to this site was impaired to nil during
the period ended 28 June 2020 and was included in highlighted items
for that period. Additional costs of GBP18,000 were incurred in
relation to the disposal, which were offset against the
corresponding gain within highlighted items.
Legal costs of GBP119,000 arise as a result of an ongoing claim
made in relation to a former trading site in the Bars division.
12 month period ended 27 June 2021
Acquisition costs of GBP254,000 relate to the Group's
acquisition of Lightwater Valley on 17 June 2021.
Restructuring costs of GBP66,000 incurred during the period
ended 27 June 2021 relate to expenses incurred during a corporate
simplification project regarding entities in the Group's Bars
division.
Gains on derecognition of lease liabilities occurred in relation
to continuing sites as result of renegotiated lease terms with
landlords in the Bars and Golf divisions. Of the amounts
derecognised, GBP744,000 was derecognised using the IFRS 16
COVID-19 practical expedient, with a further GBP590,000
derecognised as a result of applying the derecognition criteria
laid out in IFRS 9: Financial instruments .
Gains on derecognition of lease liabilities for disposed sites
of GBP1,838,000 and other closure and legal costs of GBP106,000
arise as a result of the disposal of leasehold sites in Bath,
Wimbledon and Cambridge. The corresponding right-of-use assets for
these leasehold sites were impaired to GBPnil during the prior
year.
4. Earnings per share
Basic earnings per share amounts are calculated by dividing net
income for the period attributable to ordinary shareholders of The
Brighton Pier Group PLC by the weighted average number of ordinary
shares outstanding during the period.
Diluted earnings per share amounts are calculated by dividing
the net profit attributable to ordinary equity holders of the
Parent by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of
ordinary shares that would be issued on conversion of all the
dilutive potential ordinary shares into ordinary shares.
Adjusted basic and diluted earnings per share are calculated
based on the profit for the period adjusted for highlighted items
and their related tax effects.
The following reflects the income and share data used in the
basic and diluted earnings per share computations:
Basic earnings per share 18 month period 12 month period
ended ended
25 December 27 June 2021
2022 restated
Profit for the period (GBP'000) 6,373 4,231
Basic weighted number of shares (number) 37,286,284 37,286,284
Earnings per share - Basic (pence) 17.1 11.3
Basic adjusted e arnings per share 18 month period 12 month period
ended ended
25 December 27 June 2021
2022 restated
Profit for the period before highlighted
items (GBP'000) 6,126 2,088
Basic adjusted weighted number of shares
(number) 37,286,284 37,286,284
Adjusted earnings per share - Basic
(pence) 16.4 5.6
Diluted basic e arnings per share 18 month period 12 month period
ended ended
25 December 27 June 2021
2022 restated
Profit for the period (GBP'000) 6,373 4,231
Diluted weighted number of shares (number) 37,802,824 37,286,284
Earnings per share - Diluted (pence) 16.9 11.3
Adjusted diluted e arnings per share 18 month period 12 month period
ended ended
25 December 27 June 2021
2022 restated
Profit for the period before highlighted
items (GBP'000) 6,126 2,088
Diluted weighted number of shares (number) 37,802,824 37,286,284
Adjusted earnings per share - Diluted
(pence) 16.2 5.6
Reconciliation of adjusted profit for the period
Adjusted profit is calculated as follows:
18 month period 12 month period
ended ended
25 December 27 June 2021
2022 restated
GBP'000 GBP'000
Profit for the period 6,373 4,231
Highlighted items (451) (2,746)
Tax charge arising on highlighted items 204 603
------------------------------------------ ----------------- -----------------
Adjusted profit for the period 6,126 2,088
The tax charge arising on highlighted items of GBP204,000 (2021:
GBP603,000) reflects the amount of current tax at the enacted rate
of 19% (2021: 19%) that arises on those highlighted items that are
allowable for tax purposes.
Diluted basic earnings per share
The impact of dilutive shares on the weighted average number of
shares is summarised below:
25 December 27 June
2022 2021
Number Number
Weighted average number of shares for Basic
EPS 37,286,284 37,286,284
Dilutive effect of share options and warrants 516,540 -
Weighted average number of shares for Diluted
EPS 37,802,824 37,286,284
Share options with exercise prices of 111p were not included in
the calculation of weighted average number of shares for diluted
earnings per share as these options were anti-dilutive in the
current period (2021: share options with exercise prices of 55p,
63.5p and 111p).
5. Impairment review
The Group performed two impairment tests in the current period,
in December 2022 and in June 2022 (2021: one in June 2021). The
Group considers the relationship between the trading performance of
each CGU and their book value when reviewing for indicators of
impairment. Each of the Group's sites represents a separate CGU,
which were assessed individually for impairment. The carrying value
of each CGU consists of the net book value of goodwill (where
applicable), property plant and equipment and right-of-use assets.
Goodwill is allocated to the site on which it arose.
Following the easing of the effects of the COVID-19 pandemic,
the first half of 2022 created new economic uncertainty, with
multiple factors leading to significant increases in global food
and energy prices, which in turn have led to rapid inflation and a
cost-of-living crisis. Management believes the diversity of the
Group's offerings and strong balance sheet will offer some
resilience in the short and medium-term as these factors are
tackled. Longer-term, the Board remains optimistic about the
outlook for the Group.
The multiple factors have however been treated by management as
an indicator for impairment, prompting a full review of the
recoverable amount of all CGUs within the Group.
Based on management's review of the expected performance of the
core estate, impairments of GBP985,000 were identified in the Golf
division: GBP693,000 (2021: GBPnil) in the Rushden site, and
GBP292,000 (2021: GBPnil) in the Glasgow site.
Conversely, with the removal of the final remaining
government-imposed COVID-19 restrictions in the period, the trading
outlook in other sites is more favourable than in prior reviews,
resulting in a reversal of impairments applied to property, plant
and equipment of GBP424,000 (2021: GBPnil) and right-of-use assets
of GBP489,000 (2021: GBPnil). The original impairments were applied
as part of the June 2020 impairment review, when the uncertainty
caused by the COVID-19 pandemic resulted in a highly cautious
trading outlook for the Group. The impairments and reversals of
impairment that were recognised, along with their impact on the
carrying value of the Group's CGUs, are detailed in the table
below:
Carrying value
Carrying value (Impairment)/ carried forward
prior to impairment reversal of after impairment
review impairment review
GBP'000 GBP'000 GBP'000
Goodwill 10,257 (985) 9,272
Property, plant and equipment 27,715 424 28,139
Right-of-use assets 24,734 489 25,223
Total carrying value of CGUs 62,706 (72) 62,634
-------------------------------- ---------------------- --------------- -------------------
An analysis of goodwill by CGU is as follows:
Carrying value
Carrying value carried forward
prior to impairment after impairment
review Impairment review
GBP'000 GBP'000 GBP'000
Bars
Putney 888 - 888
Golf
Glasgow 2,055 (292) 1,763
Manchester 2,997 - 2,997
Livingston 147 - 147
Sheffield 1,012 - 1,012
Cheshire Oaks 814 - 814
Rushden 1,274 (693) 581
Lightwater Valley 1,070 - 1,070
Total goodwill 10,257 (985) 9,272
-------------------- ---------------------- ------------ -------------------
Methodology
The recoverable amount of each CGU has been determined based on
a value in use calculation performed as at 25 December 2022 using
cash flow projections from financial budgets as at 25 December 2022
approved by senior management covering the period to December 2024.
Cash flows for each CGU beyond December 2024 are extrapolated,
using assumed terminal growth and pre-tax discount rates for each
operating segment as follows:
Division Terminal growth rate Pre-tax discount
rate
-------------------- ---------------------- ------------------
Pier 2% 13.0%
Bars 2% 10.4% - 13.1%
Golf 2% 11.8% - 12.8%
Lightwater Valley 2% 13.0%
-------------------- ---------------------- ------------------
To assess for impairment, the value in use of the CGU is
compared to the carrying value of the assets of that CGU including
any attributed goodwill. If the resultant net present value of the
discounted cash flows is less than the carrying value of the CGU
including goodwill, the difference is written off through the
statement of comprehensive income. Impairments to property, plant
and equipment and right-of-use assets are allocated on a
proportional basis based on the carrying value of each category of
asset and the impairment required.
The calculation of value in use for all CGUs is most sensitive
to the following assumptions:
-- discount rates;
-- growth rates used to extrapolate cash flows beyond the forecast period; and
-- growth in expenses, including rent based on rent reviews.
Discount rates - The discount rate calculation is based on the
specific circumstances of each division and is derived from its
weighted average cost of capital (WACC) adjusted for various inputs
from comparable market participants. The discount rate takes into
account both debt and equity. The cost of equity is derived from
the expected return on investment by the Group's investors. The
cost of debt is based on the interest-bearing borrowings the Group
is obliged to service.
Long term growth rates - Rates are based on market conditions
and economic factors such as the changing habits of students in the
towns and cities the Group operates in as well as competition faced
from other businesses in these areas. Management has also
considered general consumer confidence, including factors like job
prospects, inflation and household disposable income. When
determining the appropriate growth rates, management has also
considered the regulatory environment.
Growth in expenses including rent - the Group's main costs are
labour and rent. Labour increases have been estimated in relation
to the National Minimum Wage. Rent reviews are typically every five
years and budgets assume increases of between 2% to 5% annually
compounded. The rate reflects the specific market locations for the
related venue.
Period of cash flows - the Group considers the period of cash
flows over which it expects the future cash generating units to be
operational. This can be longer than the current period upon which
the sites hold rental agreements and therefore require an element
of judgement by the Group. The majority of leasing arrangements are
inside the Landlords and Tenants Act 1954, therefore it can be
reasonably assumed that an extension will occur. For leases outside
the Landlords and Tenants Act 1954 ('the Act') the Group considers
the best available information to determine whether a lease
extension is likely, and whether the period of cash flows should be
reviewed on a period longer than the current lease agreement. The
impairment testing model assumes cash flows for the sites continue
in perpetuity beyond the contractual lease terms because the
Directors consider that the Group will be able to either extend the
existing lease or locate alternative comparable leased premises to
enable the CGUs to continue trading. The sites operate in locations
where alternative leased premises can be obtained. For those leases
outside of the Act, the extension required to the existing lease
terms to result in no impairment would be as follows:
Impairment required should
lease not be extended or
Extension required to existing alternative trading premises
Site lease to avoid impairment found
GBP'000
------------- -------------------------------- -------------------------------
Glasgow N/A* 1,446
Manchester Nil -
Livingston 2 years 104
------------- -------------------------------- -------------------------------
1,550
* Glasgow recorded an impairment charge of GBP292,000 in the
December 2022 impairment review.
Sensitivity
The Group has carried out sensitivity analyses on the reasonably
possible changes to key assumptions in the impairment test. The
Group has assessed the effect on headroom of the following
sensitivities:
-- a reduction of 2.0% in the estimated long-term growth rate;
-- an increase of 2.0% in the estimated WACC underlying the discount rate; and
-- a reduction of 5% in all cashflows in 2023 and 2024.
For each analysis, all inputs other than the relevant
sensitivity being tested were unchanged from the base case
scenario.
The table below summarises the resulting additional impairment
to the Group's goodwill:
Impairment
------------------------------------------------------------------------------------------
Base case WACC sensitivity Long term growth rate sensitivity EBITDA sensitivity
GBP'000 GBP'000 GBP'000
Golf
Glasgow 292 613 563 400
Rushden 693 1,150 930 788
Lightwater Valley - 436 - -
Total impairment 985 2,199 1,493 1,188
-------------------- ----------- ------------------ ----------------------------------- --------------------
6. Non-GAAP measures
The Group uses certain alternative performance measures as a
means of evaluating the trading performance and cash generation of
the underlying business. As these are not defined performance
measures in IFRS and are not intended as a substitute for those
measures, the Group's definition of adjusted items may not be
comparable with similarly titled performance measures or
disclosures by other entities.
EBITDA
EBITDA (earnings before interest, tax, depreciation and
amortisation) is a key metric used by management in order to assess
the performance of each division and the Group as a whole. EBITDA
including highlighted items broadly reflects the cash generated
within the Group from its trading activities. This allows
management to make decisions about how best to allocate resources.
EBITDA excluding highlighted items removes the impact of
non-comparable costs included in the Consolidated Statement of
Comprehensive Income for each period . This allows users of the
Annual Report and financial statements to assess the current period
trading performance of the Group and compare it to the prior period
on a like-for-like basis.
Group profit before tax can be reconciled to Group EBITDA as
follows:
Period ended Period ended
25 December 27 June
2022 2021
EBITDA Reconciliation restated
GBP'000 GBP'000
----------------------------------------------- -------------- --------------
Profit before tax for the year 7,639 4,150
Add back depreciation of property, plant
and equipment 2,372 1,218
Add back depreciation of right-of-use assets 2,453 1,436
Add back amortisation 126 80
Add back finance costs 1,793 963
Add back highlighted items (451) (2,746)
----------------------------------------------- -------------- --------------
Group EBITDA excluding highlighted items 13,932 5,101
----------------------------------------------- -------------- --------------
Group EBITDA after highlighted items excludes those highlighted
items that do not impact EBITDA as follows:
Period ended Period
25 December ended 27
2022 June 2021
------------------------------------------------ -------------- ------------
EBITDA excluding highlighted items 13,932 5,101
Highlighted items 451 2,746
Remove gains arising on lease liability
derecognition (1,072) (3,172)
Remove goodwill impairment 985 -
Remove reversal of impairment of property,
plant and equipment (424) -
Remove reversal of impairment of right-of-use
assets (489) -
Remove charge on recognition of in-substance
fixed rent 430 -
------------------------------------------------ -------------- ------------
Group EBITDA including highlighted items 13,813 4,675
------------------------------------------------ -------------- ------------
Like-for-like sales growth
Like-for-like sales growth is a measure of growth in sales,
adjusted for new or divested sites. This is used as an indicator of
the Group's trading performance at a given point in time. It is
presented in the Strategic report in order to allow users of the
financial statements to compare the current and prior period
trading performance of each division over a given period excluding
the impact of new or divested sites.
Gross margin
Gross margin is calculated by dividing gross profit by revenue.
It is presented in this report as a percentage value. This measure
is included in this report to allow users of the financial
statements to understand the amount of revenue that is retained
after the direct costs of trading (i.e. cost of sales) is taken
into account.
Proforma consolidated statement of comprehensive income
(unaudited)
The table below shows Group trading performance for the 12 month
period ended 25 December 2022 (2021: 12 month period ended 26
December 2021) on a like-for-like basis:
Unaudited Unaudited
12 months 12 months
ended ended
25 December 26 December
2022 2021
GBP'000 GBP'000
Revenue 36,121 28,126
Cost of sales (4,760) (3,677)
Gross profit 31,361 24,449
Operating expenses - excluding
highlighted items (28,946) (20,694)
Highlighted items (353) 1,129
---------------------------------------- -------------- --------------
Total operating expenses (29,299) (19,565)
Other income 197 4,293
Operating profit - excluding
highlighted items 2,612 8,048
Highlighted items (353) 1,129
---------------------------------------- -------------- --------------
Operating profit 2,259 9,177
Finance income - 32
Finance cost (1,266) (1,044)
Profit before tax and excluding
highlighted items 1,346 7,036
Highlighted items (353) 1,129
---------------------------------------- -------------- --------------
Profit on ordinary activities
before taxation 993 8,165
Taxation on ordinary activities 43 (1,228)
Profit and total comprehensive
income for the period 1,036 6,937
Earnings per share - basic* (pence) 2.8 18.5
Earnings per share - diluted
(pence) 2.6 18.5
* 2022 basic weighted average number of shares in issue is 37.29
million (2021: 37.29 million).
No other comprehensive income was earned during the period
(2021: nil ).
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END
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April 24, 2023 02:00 ET (06:00 GMT)
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