REG - Brighton Pier Group - Final Results
24/04/2023 07:15
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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 £9.1
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 18 months ended 25 December 2022 12 months ended
27 June 2021 restated
£m £m
(unless otherwise stated) (unless otherwise 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 £58.9 million (2021: £13.5
million), EBITDA of £13.8 million (2021: £4.7 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 £15.9 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 £8.1 million and EBITDA of £1.9 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 £9.1 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 £0.5
million repayment against its Coronavirus Business Interruption Loans
(totalling £5.0 million), which were taken out during the pandemic. On 19
April 2023, the Group extended the term on its £10.9 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 £10.9 million
term loan and £1.0 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 £670,000
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 £58.9 million (2021: £13.5 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 £25.3
million (2021: £9.6 million)
· Golf
division £10.0 million
(2021: £2.4 million)
· Bars
division £15.5
million (2021: £1.3 million)
· Lightwater
Valley £8.1 million
(2021*: £0.2 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 £13.8 million (2021:
£4.7 million).
EBITDA split by division:
· Pier
division £4.7
million (2021: £1.0 million)
· Golf
division £5.5 million
(2021: £3.1 million)
· Bars
division £3.5
million (2021: £1.8 million)
· Lightwater
Valley £1.9 million
(2021*: £0.1 million)
· Group
overhead £(1.8)
million (2021: £(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
£13.9 million (2021: £5.1 million).
Profit before tax was £7.6 million (2021: £4.2 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 £5.0 million of income from business interruption
insurance claims.
Profit after tax was £6.4 million (2021: £4.2 million).
Divisional trading commentary
Pier division
· Revenue - up 161% on the prior period at £25.3
million (2021: £9.6 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 - £4.7 million (2021: £1.0 million)
Golf division
· Revenue - up 320% on last year at £10.0 million
(2021: £2.4 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 - £5.5 million (2021: £3.1 million); in
2021 this included £2.5 million of business interruption insurance income
Bars division
· Revenue - total sales of £15.5 million (2021:
£1.3 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 - £3.5 million (2021: £1.8 million); in
2021 this included £2.5 million of business interruption insurance income
Lightwater Valley
· Revenue - total sales of £8.1 million (2021*:
£0.2 million)
· Gross margin - 87% (2021*: 91%)
· EBITDA - total EBITDA of £1.9 million (2021*:
£0.1 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 £0.5 million (2021: £2.7 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 £1.8 million (2021: £1.0 million), made up of:
· Interest on borrowings £0.7
million (2021: £0.3 million)
· Interest on
leases £1.1 million
(2021: £0.7 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 £9.4 million (2021: £5.1 million).
Taxation on ordinary activities of £1.3 million (2021: tax credit of £0.1
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
£58.9 million (2021: £13.5 million)
· Operating
profit
£9.4 million (2021: £5.1 million)
· Group EBITDA excluding highlighted items**
£13.9 million (2021: £5.1
million)
· Group
EBITDA
£13.8 million (2021: £4.7 million)
· Profit before
tax
£7.6 million (2021: £4.2 million)
· Profit after
tax
£6.4 million (2021: £4.2 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 £10.7 million (2021: £4.9 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 £1.3 million in capital expenditure during the period
(2021: £0.3 million):
· £0.5 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;
· £0.4 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;
· £0.3 million was spent in the Bars division on ERP software
upgrades alongside other minor refurbishments across the trading sites; and
· £0.1 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 £11.3 million (2021:
£20.4 million) and net debt (total bank debt less cash and cash equivalents)
of £7.1 million (2021: £13.3 million), broken down as follows:
· An outstanding principal term facility of £10.9 million (2021:
£11.8 million)
o £0.9 million debt repayment was made in the period (2021: £0.1 million),
offset by the amortisation of loan fees
o £0.5 million is due within the next twelve months to the end of the term
in December 2023
· CBILS 1 facility of £nil (2021: £1.8 million)
o Repaid in full during the current period
· CBILS 2 facility of £0.5 million (2021: £3.2 million)
o Final repayment of £0.5 million made at the end of March 2023
· RCF facility drawdowns of £nil (2021: £3.6 million)
o Facility was increased to £3.75 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 £1.0 million (2021: £3.75 million)
· Cash balances of £4.2 million (2021: £7.1 million)
During the 18 month period, the Group made net repayments of £9.1 million
(2021: net drawdowns of £3.5 million), made up of:
· £3.6 million repayment of the RCF (2021: £3.6 million
drawdown);
· £0.9 million repayment of the principal term facility (2021:
£0.1 million);
· £1.8 million repayment of the CBILS 1 facility (2021: £nil);
and
· £2.7 million repayment of the CBILS 2 facility (2021: £nil).
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 £58.9 million (2021: £13.5 million), up 19%
on the same pre-COVID period in 2019 (2019: £49.4 million) primarily due to
the acquisition of Lightwater Valley on 17 June 2021.
Revenue split by division:
· Pier
division
£25.3 million (2021: £9.6 million)
· Golf
division
£10.0 million (2021: £2.4 million)
· Bars
division
£15.5 million (2021: £1.3 million)
· Lightwater
Valley*
£8.1 million (2021: £0.2 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 £0.5 million of gains (2021: £2.7 million of
gains) were recognised during the period (see Note 3 for further details).
These gains arose from:
· £(1.0) million - impairment of goodwill in the
Glasgow and Rushden golf sites;
· £0.9 million - reversal of impairment charges to
property, plant and equipment and right-of-use assets;
· £(0.4) million - recognition of in-substance fixed
lease payments;
· £0.4 million - gain from the derecognition of
other lease liabilities during the period;
· £0.7 million - gain on extinguishment of lease
liabilities following the disposal of Smash in Reading; and
· £(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 £7.6
million (2021: £4.2 million).
Group profit on ordinary activities after taxation was up 51% at £6.4 million
(2021: £4.2 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
£58.9 million (2021: £13.5 million)
· Operating
profit
£9.4 million (2021: £5.1 million)
· Group EBITDA excluding highlighted items*
£13.9
million (2021: £5.1 million)
· Group
EBITDA
£13.8 million (2021: £4.7 million)
· Operating profit excluding highlighted
items £9.0
million (2021: £2.4 million)
· Profit before tax excluding highlighted
items £7.2
million (2021: £1.4 million)
· Profit before
tax
£7.6 million (2021: £4.2 million)
· Profit after
tax
£6.4 million (2021: £4.2 million)
· Net debt at the end of the
period
£7.1 million (2021: £13.3 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
£4.7 million (2021: £1.0 million)
· Golf
division
£5.5 million (2021: £3.1 million)
· Bars
division
£3.5 million (2021: £1.8 million)
· Lightwater
Valley*
£1.9 million (2021: £0.1 million)
· Group
overhead
£(1.8) million (2021: £(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
£11.3 million would be shown as £0.9 million of current debt and £10.4
million of non-current debt. The presentation in the Consolidated Balance
Sheet (see page 43) shows a current liability of £11.3 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 £9.1 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 ended 12 months ended 27 June 2021
25 December 2022 restated
Notes £'000 £'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 2022
27 June 2021
28 June 2020
restated restated
£'000 £'000 £'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 £11,327,000 would be replaced by a £942,000 current
liability and a £10,385,000 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 to 12 months to
25 December 2022 27 June 2021
restated
Notes £'000 £'000
Operating activities
Profit before tax 7,639 4,150
Net finance costs 1,793 963
Amortisation of intangible assets 126 80
Impairment of goodwill 3, 5 985 -
Reversal of impairment of property, plant and equipment 3, 5 (424) -
Reversal of impairment of right of use assets 3, 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 due to waivers & concessions 3, 5 (402) (1,334)
Charge on recognition of in-substance fixed rent 268 -
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 consideration to former Lightwater Valley (1,000) -
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 capital Share premium Merger reserve Other reserves Retained (deficit)/ Total shareholders' equity
earnings
£'000 £'000 £'000 £'000 £'000 £'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 (£'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 £11,216,000
(2021: £4,475,000). The Group also had cash and cash equivalents of
£4,208,000 (2021: £7,080,000) 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 £10,870,000, 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 £485,000 are payable over the next 12
months; and
· a one year revolving credit facility of £1,000,000, 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 £457,000 of Coronavirus Business Interruption
Loans (CBILs) outstanding as of 25 December 2022 (2021: £5,000,000), 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 £10,870,000 term loan and
£1,000,000 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 Palace Pier Golf Bars Lightwater Valley Total segments Head office costs 2022 consolidated total
25 December 2022
£'000 £'000 £'000 £'000 £'000 £'000 £'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 Palace Pier Golf Bars Lightwater Valley* Total segments Head office costs 2021 consolidated total
27 June 2021
restated
£'000 £'000 £'000 £'000 £'000 £'000 £'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 period ended 12 month period ended
25 December 2022
27 June 2021
£'000 £'000
Acquisition costs - 254
Restructuring costs - 66
Impairment of goodwill 985 -
Reversal of impairment of property, plant and equipment (424) -
Reversal of impairment of right-of-use assets (489) -
Charge on recognition of in-substance fixed rent 430 -
Gain on derecognition of lease liabilities for continuing sites using: (337) (590)
- IFRS 9 derecognition criteria
- 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 £985,000 (2021:
nil) was identified, split between the Rushden (£693,000) and Glasgow
(£292,000) 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 £424,000 (2021: nil)
and right-of-use assets of £489,000 (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 £268,000 were recognised as additional lease
liabilities (see Note 12). Prior to the assessment having been made, turnover
rent payments totalling £162,000 were recognised directly in the Statement of
Comprehensive Income. Total turnover rent payments of £430,000 (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 £65,000 (2021:
£744,000) 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 £337,000
(2021: £590,000) within highlighted items in the Statement of Comprehensive
Income during the period ended 25 December 2022.
Lease liabilities of £670,000 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 £18,000
were incurred in relation to the disposal, which were offset against the
corresponding gain within highlighted items.
Legal costs of £119,000 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 £254,000 relate to the Group's acquisition of Lightwater
Valley on 17 June 2021.
Restructuring costs of £66,000 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, £744,000 was derecognised using
the IFRS 16 COVID-19 practical expedient, with a further £590,000
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 £1,838,000
and other closure and legal costs of £106,000 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
£nil 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 ended 12 month period ended
25 December 2022 27 June 2021
restated
Profit for the period (£'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 earnings per share 18 month period ended 12 month period ended
25 December 2022 27 June 2021
restated
Profit for the period before highlighted items (£'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 earnings per share 18 month period ended 12 month period ended
25 December 2022 27 June 2021
restated
Profit for the period (£'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 earnings per share 18 month period ended 12 month period ended
25 December 2022 27 June 2021
restated
Profit for the period before highlighted items (£'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 ended 12 month period ended
25 December 2022 27 June 2021
restated
£'000 £'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 £204,000 (2021: £603,000)
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 2022 27 June 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 £985,000 were identified in the Golf division: £693,000
(2021: £nil) in the Rushden site, and £292,000 (2021: £nil) 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 £424,000 (2021: £nil) and
right-of-use assets of £489,000 (2021: £nil). 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 prior to impairment review (Impairment)/ reversal of impairment Carrying value carried forward after impairment review
£'000 £'000 £'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 prior to impairment review Impairment Carrying value carried forward after impairment review
£'000 £'000 £'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:
Site Extension required to existing lease to avoid impairment Impairment required should lease not be extended or alternative trading
premises found
£'000
Glasgow N/A* 1,446
Manchester Nil -
Livingston 2 years 104
1,550
*Glasgow recorded an impairment charge of £292,000 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
£'000 £'000 £'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:
EBITDA Reconciliation Period ended Period ended
25 December 2022
27 June 2021
restated
£'000 £'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 ended 27 June 2021
25 December 2022
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 ended 12 months ended
25 December 2022 26 December 2021
£'000 £'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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