REG - Nightcap PLC - Interim Results
14/03/2022 07:01
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RNS Number : 5850E Nightcap PLC 14 March 2022
NIGHTCAP
14 March 2022
Nightcap plc
("Nightcap", the "Company" or the "Group")
Interim results for the 26-week period ended 26 December 2021
"Strong trading results and the successful acquisition of Barrio Familia -
Nightcap continues to execute its strategy"
Key Highlights for unaudited results for the 26-week period ended 26 December
2021:
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
Revenue (£m) 15.8 2.0 6.0
Adjusted EBITDA (£m) 2.5 0.6 1.0
Adjusted EBITDA (IAS17) (£m) 1.6 0.5 0.2
Loss from operations (£m) (0.0) (0.0) (4.9)
Loss before tax (£m) (0.5) (0.3) (5.3)
Basic and diluted loss per share (pence) (0.39) (0.46) (5.55)
Cash generated from operations (£m) 1.1 0.2 2.4
· Reported revenues for the period increased by more than
700% and IAS17 Adjusted EBITDA increased by more than 200%, despite Government
"Plan B" guidelines in the final two weeks of the period
· Acquisition of Barrio Familia on 21 November 2021 brought
four Latin American-inspired, Tequila-led, cocktail bars and Disrepute, a
luxurious high-end Soho cocktail bar into the Group
· Bars continue to trade strongly, with like for like*
revenue growth of 24.8% for the nine weeks ended 27 February 2022 when
compared to the same period in 2020 and 24.6% when compared to the same period
in 2019
· 19 bars traded throughout the period, with 27 bars being
operated at the end of the period, reflecting the acquisition of Barrio
Familia and the opening of three TCC venues during November 2021, all of which
traded for only the last five weeks of the period
· Additions to the estate provide a significant increase in
expected run rate revenues for the second half of this financial year and the
subsequent year
· Organic growth progressing well, with three new openings,
four refurbishments and one additional new lease completed in the period
· Excellent opportunities in the property market with over
24 sites in legal negotiations or under offer across several Group brands
· Investment in people to add key operational management to
facilitate roll out plans, plus welcomed key management from Barrio Familia
· As at 26 December 2021, the Group had unaudited cash
resources of approximately £9.4m and had total legacy bank borrowings of
approximately £6.0m giving a net cash position of £3.4m (excluding lease
liabilities)
· Nightcap has £4.7m of legacy bank borrowings from its
acquisitions in previous periods, and in the period assumed a further £1.3m
of debt from the acquisition of Barrio Familia on long-term favourable terms
· Completed additional two leases for TCC in Cardiff and
Exeter in 2022, which together with the three new TCC openings and the Tonight
Josephine Cardiff lease signed during the period, takes the total new sites to
six for the year so far
Sarah Willingham, CEO of Nightcap, commented:
"Nightcap has had a fantastic half year. We have taken the first steps in
significantly growing our family of bars, both by adding the Barrio Familia
Group in November 2021 and by opening three more The Cocktail Clubs in
Bristol, Reading and London. We finished the calendar year with 27 top
quality, late night bars."
"This half year has been spent focusing on getting the team and the Group
ready for the fast and sustainable growth that we have planned for 2022 and
beyond. With the team now in place to execute Nightcap's strategy, we see
continued excellent opportunities in the property market with over 24 sites in
legal negotiations or under offer across several of our brands, in addition to
the three new bars we have already announced for Cardiff and Exeter.
Importantly, out of this portfolio of sites not a single property premium has
been paid or offered to date. We can look forward to the growth of our
brilliant brands across the United Kingdom with confidence during the 2022
calendar year."
"At the same time we have delivered incredible numbers throughout the core
estate with reported revenue increasing by more than 700% compared to last
year (H1 2020) (primarily due to the acquisition of The Adventure Bar Group)
and a 300% increase compared to the same period in 2019. The like for like*
revenue growth of 22.4% (compared to H1 2019) demonstrates that through
excellent management and motivated, happy teams we have been able to respond
to the pent up demand from our wonderful customers, while significantly
growing the underlying businesses."
"It is worth noting that out of our 27 bars only 19 bars (70%) traded for the
whole 26 week period. Five sites were added through the acquisition of the
Barrio Familia Group on 21 November 2021 (19%) and a further three sites (11%)
opened under The Cocktail Club brand also in November 2021."
"All of this was despite the Government's "Plan B" Guidelines introduced in
December 2021 that impacted the final few weeks of the 26 week period. Up
until the two weeks before Christmas, for the 24 weeks ended 12 December 2021,
we achieved a 28.3% increase on a like for like* basis against the same period
in 2019."
"Our amazing team were able to reschedule over 70% of the initially cancelled
Christmas bookings into our Q3 (January 2022 - March 2022), and because of
their flexibility and customer care, we are already seeing bookings and
re-bookings for Christmas 2022!"
"This performance shows that we can trade strongly with or without COVID
restrictions, and our guests and their demographics are resilient and keen to
get out and socialise."
Sarah Willingham, Michael Toxvaerd and Toby Rolph will provide a live
presentation relating to the Interim Results for the 26 weeks ended 26
December 2021 via the Investor Meet Company platform on 16 March 2022 at 3:00
pm GMT.
The presentation is open to all existing and potential shareholders. Investors
can sign up to Investor Meet Company for free and add to meet Nightcap via:
https://www.investormeetcompany.com/nightcap-plc/register-investor
(https://www.investormeetcompany.com/nightcap-plc/register-investor)
Investors who already follow Nightcap on the Investor Meet Company platform
will automatically be invited.
For further enquiries:
Nightcap plc
Sarah Willingham / Toby Rolph / Gareth Edwards email@nightcapplc.com (mailto:email@nightcapplc.com)
Allenby Capital Limited (Nominated Adviser and Broker)
Nick Naylor / Alex Brearley / Piers Shimwell (Corporate Finance) +44 (0) 20 3328 5656
Matt Butlin / Amrit Nahal / Tony Quirke (Sales and Corporate Broking) www.allenbycapital.com (http://www.allenbycapital.com/)
Bright Star Digital (PR) https://www.brightstardigital.co.uk/ (https://www.brightstardigital.co.uk/)
Pam Lyddon +44 (0) 7534 500 829
pamlyddon@brightstardigital.co.uk (mailto:pamlyddon@brightstardigital.co.uk)
* Like for like revenue is a measure of the period over period
change in revenue for the same site base. We define the same site base to
include sites that have been open for a full 52 week period. The Board
believes this measure highlights the performance of existing sites, while
excluding the impact of new site openings and site closures due to
refurbishments. The Board considers this to be a widely used indicator in the
hospitality sector to measure current trading performance.
Within the context of this announcement, the Group's trading over the 26-week
period ended 26 December 2021 has been compared with the 26 week period ended
29 December 2019. The trading over the 24-week period ended 12 December 2021
has been compared with the 24 week period ended 15 December 2019. For the post
half year end trading period, the trading over the nine-week period ended 27
February 2022 has been compared with the nine week period ended 1 March 2020
for the 2020 comparison and has been compared with the nine week period ended
3 March 2019 for the 2019 comparison.
For all periods presented the same site base includes ten TCC sites, seven
Adventure Bar Group sites and five Barrio Familia sites. The Board believes
this gives a more meaningful comparison to highlight trading performance in
the Group following the acquisitions of Adventure Bar Group in May 2021 and
Barrio Familia in November 2021'.
CHIEF EXECUTIVE OFFICER'S STATEMENT
I am pleased to present Nightcap's unaudited interim results for the 26-week
period from 28 June 2021 to 26 December 2021.
TRADING
For the 26 weeks ended 26 December 2021, the Group's reported revenues
increased by more than 700% to £15.8m, with a 22.4% like for like* increase
compared to the same period in 2019. Excluding the 'Plan B' period, Group
revenue increased by 28.3% on a like for like* basis for the 24 weeks ended 12
December 2021 compared to the same period in 2019.
As well as fast, sustainable growth, we continue to focus on our conversion,
and in this respect, we are delighted to report a strong Adjusted EBITDA of
£2.5m (IAS17 Adjusted EBITDA: £1.6m) for the half year. This is an increase
of over 300% and 200% respectively on the comparable period in 2020.
As at 26 December 2021, the Group had unaudited cash resources of
approximately £9.4m and had total legacy bank borrowings assumed from its
acquisitions of approximately £6.0m giving a net cash position of £3.4m
(excluding lease liabilities). With the legacy debt from our acquisitions
having attractive terms (both in tenure and interest rate) Nightcap is well
placed to execute its roll out strategy.
BRANDS
Since the inception of Nightcap in January 2021, we have delivered on our
strategy to acquire strong brands, aimed at the resilient millennial market,
with simple, replicable business models and nationwide appeal.
In November 2021, we welcomed the Barrio Familia group into the Nightcap
family, comprising four Latin American- inspired, Tequila-led, cocktail bars
under the Barrio brand and the famous Disrepute bar in Kingly Court, Soho,
which recently won a well deserved 12th place in William Reed's UK Top 50
Cocktail Bars. The total consideration paid for the Barrio Familia group was
£5.6m, comprising cash and shares. As part of the acquisition, the Group
acquired net cash of £1.4m (comprising cash of £3.2m and bank loans and
borrowings of £1.8m) resulting in a net cash consideration of £3.2m
(excluding the consideration shares issued of £1.1m).
When Nightcap was founded and after the acquisition of The Cocktail Club
(TCC), one of our goals was to acquire a bar group that has the potential to
maximise on the winning combination of margaritas and tacos. Over the past
year, we have closely observed the significant growth of the Tequila market
with great interest, and believe that this acquisition has significant
potential for UK-wide expansion and we have already begun sourcing potential
sites across the country. The entire team at Barrio has hit the ground running
and has integrated well, sharing offices and resources with the other brands
and teams. They have already prepared an ambitious roll-out plan for the brand
and are now fully embedded into the property pipeline as described.
In addition to The Cocktail Club and Barrio brands, during 2022 we will focus
on the roll out of Tonight Josephine and Blame Gloria across the UK.
Tonight Josephine has now grown to four venues, with the most recent venture
being the opening of their new site in Clapham High Street (replacing an
Adventure Bar site). Seeing a significant uplift in sales since its re-brand,
the site has become a go-to hotspot for on-trend 20-somethings in South-West
London. Fuelled by wild themed brunches and late-night party antics, the site
continues to go from strength to strength.
In the pipeline for Tonight Josephine is the imminent launch of a new bar in
Cardiff in early April 2022, which will be the first of their bars to boast a
brand-new look and feel. Noticing a gap in the market, Tonight Josephine is on
a mission to disrupt the Millennial-focused landscape and fulfil the surge in
demand from Generation Z for stand out places to enjoy a night out. Tapping
into popular culture and piggybacking off the 'TikTok' era - this design
refresh is planned to be, as always, right on trend and is set to put Tonight
Josephine on the map as the trailblazers of this new wave of hospitality.
Much like Tonight Josephine, Blame Gloria is also going through exciting
developments. Having successfully opened their second bar in Clapham Junction
(also replacing an original Adventure Bar site), they are set to swing the
doors open to their first regional site in the first half of 2022. Part of
Blame Gloria's ongoing strategy is to bring the same sell-out brunches and
late night socialising from Covent Garden, to all corners of the UK.
Fuelled by their dreamy interiors, outstanding cocktail menus and electric
vibes; Tonight Josephine, Blame Gloria and The Cocktail Club have recently
undertaken a partnership with hot new dating app, Thursday.Selling out in
minutes and surpassing midweek sales targets, this ongoing partnership has
solidified these bars as the place to be for singles across London.
Having successfully opened three new sites in November 2021, The Cocktail Club
is well on its way to its fast national roll out with two more sites announced
in Exeter and Cardiff both opening their doors in April, with many more
planned over the coming months. All three Cocktail Club bars have opened ahead
of budget and are already exceeding management's expectations.
With their Mansion House site in a prime location for after-work partygoers,
it has seen midweek trade build significantly week on week, proving that a
cocktail with your colleagues is no longer a thing of the past. Bristol and
Reading are re‑affirming the Board's views that there is strong demand for
quality cocktails and late night socialising in the regions outside of London.
MARKET OUTLOOK
The challenges facing the economy and hospitality industry cannot go without
mention.
We continue to receive unprecedented demand, in a typically quiet time of
year, across the entire Nightcap portfolio; The Adventure Bar Group, The
Cocktail Club and our newest acquisition, Barrio Familia. This is largely due
to the distinct and immersive concepts that they continue to offer, and the
growing popularity of the premium brands they represent. With Covid cases
being a fraction of what was seen at Christmas, and life drawing ever closer
to normal, we have seen an immediate bounce-back across the estate and
pre-Covid socialising habits resurging, leading to the steep incline in
growth. Effectively entering our delayed "Christmas period", with a wealth of
rearranged Christmas parties, we are seeing a promising uplift in late-night
footfall and the return of late-night partying both in the Capital and the
regions.
Having put all the wheels in motion to ensure that we are well positioned,
should further restrictions be put in place, and equipped to tackle the
everchanging Covid landscape, whilst remaining profitable at a site level -
the Board is confident that the end of the pandemic is near and even more
confident that we are in a fantastic position to continue thriving in this new
and exciting climate.
The staff across all three of our bar groups are proof that we are building
one of the best hospitality businesses in the UK. Faced with unexpected
adversity across the Christmas period, with cancelled Christmas parties,
working from home orders coming into effect and livelihoods put on hold, they
have remained resilient, persistent and most importantly, filled with buckets
of energy. We were pleased that our staff were not disheartened by the
unexpected turn of events at Christmas, and rather were optimistic about what
lay on the other side.
Aside from our in-house teams, we have also seen continued support from
suppliers, stakeholders, landlords and investors, who have all remained
flexible and been willing to adapt with us, going above and beyond to find
solutions in an undeniably difficult time.
Finally, we owe a huge thank you to our guests, who have handled cancelled
plans, missed celebrations and lost time with unrivalled patience and
understanding. When all is said and done, our guests are the people who allow
us to continue to put on great parties and ultimately thrive as a business. We
cannot wait to play host to hundreds of belated Christmas parties and deliver
our biggest year of summer parties to date.
PIPELINE/ROLL OUT
With a business model that seeks an ROI** above 75% per site per year across
the Group we are capitalised and ready to ramp up our fast sustainable growth
in 2022.
Our team have been travelling all over the country making sure that we are
able to take advantage of the significant opportunity that we currently see in
the property landscape. Competition for sites is lower than management has
seen in 20 years as many businesses are forced to focus on balance sheet
challenges, having taken on significant debt over the course of the last two
years. Landlords are looking for strong covenants and long term tenants. The
end of the moratorium for commercial rent in March 2022 will likely see a
further influx of property onto the market.
With a varied portfolio of brands we are able to look at most sites on the
market from 2,000 - 10,000 square feet that have the relevant planning and
licensing. We have already demonstrated that we can have multiple brands
successfully operating alongside each other in both Clapham and Shoreditch and
by the end of the year we will see a number of Nightcap brands in other cities
operating close to each other, helping to revive city centres and enhance
quality late night socialising in key urban areas, where demand is high.
In all of the more than 30 new sites that we have opened, announced as
completed, currently have under offer or in legal negotiations, we have not
offered or paid a single property premium and yet we continue to find top tier
sites in all of our prioritised cities nationwide.
**ROI is a ratio where the mature normalised site EBITDA is divided by the
site's total capital expenditure. This ratio is considered by the Board to be
an important indicator of the group's capital efficiency.
PEOPLE
We have continued to put power behind our hiring strategy to secure only the
most skilled people in the hospitality sector, to ensure that we nurture an
industry-leading management team that trickles down to all levels of staff.
The end goal is to improve company culture, promote growth across all
departments and to act with an 'aces in places' mentality to ensure that
opportunity unites with skill.
With the acquisition of Barrio Familia in November 2021, new additions to the
management team included hospitality entrepreneur and founder of the Barrio
bar group, Ferdie Ahmed, and Jim Robertson, Barrio's Managing Director, who
has over 15 years of experience within the hospitality sector. Together they
have successfully opened multiple sites and along with the existing team
represent the best-in-class of the premium bars world in the UK.
In addition, we have appointed Nick Moule, formerly of Stonegate, as
Operations Director at The Adventure Bar Group, who we consider to be an
exciting hire with a track-record of delivering fantastic guest experiences
across an extensive number of sites, whilst managing a fast growing group.
Also joining The Adventure Bar Group, is newly appointed Head of People,
Chantelle Christy. Chantelle has a wealth of knowledge across both the
restaurant and cocktail bar sector and is well equipped to spearhead the new
HR function within the Adventure Bar Group.
SYSTEMS
Although the changing hospitality landscape has presented us with the
opportunity and reason to expand at a rapid pace, we are dedicated to
retaining our authenticity across all of our brands throughout our expansion.
A huge part of why the bars in our portfolio are viewed as pioneers, is down
to the independence, culture and ultimately, the magic and experiences that
they provide for guests when visiting their much loved venues - this is
something we will never take away. By acting as a group, it allows us to share
our pools of knowledge, align our back of house systems, benefit from group
purchasing and generally elevate our internal processes, offering up the
foundations for fruitful business by utilising the best skill sets across the
individual operating groups.
We expect to continue to invest further in both people and systems to enhance
and improve our online and offline customer journeys, app and web interfaces
and experience, point of sale systems, data management and utilisation, plus
several other areas. The Board considers that this is key to enhancing the
customer experience of our individual brands as well as giving our managers
and leadership across the Group the best possible tools to optimise the
existing estate whilst also continuing our nationwide expansion.
FINANCIAL STATEMENTS / CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKS ENDED 26 DECEMBER 2021
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021 27 December 2020 27 June 2021
Note (Unaudited) (Unaudited) (Audited)
£ £ £
Revenue 15,786,106 1,968,681 5,968,667
Cost of sales (3,294,057) (454,642) (1,414,419)
Gross profit 12,492,049 1,514,039 4,554,248
Administrative expenses (12,521,263) (1,588,163) (10,008,896)
Other income 12,000 25,000 565,748
Adjusted EBITDA 2,526,887 626,995 958,076
Share based payments (198,140) - (3,823,642)
Depreciation (1,654,486) (524,805) (1,258,637)
Amortisation of intangible assets (207,169) (732) (51,099)
Exceptional items 3 (352,984) (150,582) (713,598)
Pre opening costs (131,322) - -
Loss from operations (17,214) (49,124) (4,888,900)
Finance expense (472,644) (206,435) (407,537)
Loss before taxation (489,858) (255,559) (5,296,437)
Tax credit on loss 4 33,104 - 32,098
Loss and total comprehensive loss for the period (456,754) (255,559) (5,264,339)
Loss for the period attributable to:
- Owners of the parent (736,865) (255,559) (5,373,111)
- Non-controlling interest 280,111 - 108,772
(456,754) (255,559) (5,264,339)
Note 26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
pence pence pence
Earnings per share attributable to the ordinary equity holders of the parent
Loss per share 5
- Basic and diluted (0.39) (0.46) (5.55)
FINANCIAL STATEMENTS / CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 26 DECEMBER 2021
Note 26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Non-current assets
Goodwill 9,279,942 - 6,572,920
Intangible assets 4,927,790 6,586 3,084,034
Property, plant and equipment 6,806,280 2,011,225 3,547,573
Right of use assets 21,064,846 4,540,133 13,446,863
Other receivable 417,270 257,620 271,150
Total non-current assets 42,496,128 6,815,564 26,922,540
Current assets
Inventories 611,413 130,312 329,350
Trade and other receivables 1,674,535 322,111 804,411
Cash and cash equivalents 9,448,673 127,943 13,187,479
Total current assets 11,734,621 580,366 14,321,240
Total assets 54,230,749 7,395,930 41,243,780
Current liabilities
Loans and borrowings (1,604,373) (1,076,027) (1,458,652)
Trade and other payables 6 (10,108,618) (1,098,459) (8,628,163)
Lease liabilities due less than one year (1,968,145) (691,117) (1,440,525)
Total current liabilities (13,681,136) (2,865,603) (11,527,340)
Non-current liabilities
Borrowings (4,408,181) (402,287) (3,255,620)
Lease liabilities due more than one year (20,684,179) (4,483,150) (12,462,624)
Provisions (150,054) - (150,054)
Deferred tax provision (1,263,393) (92,240) (666,662)
Total non-current liabilities (26,505,807) (4,977,677) (16,534,960)
Total liabilities (40,186,943) (7,843,280) (28,062,300)
Net assets / (liabilities) 14,043,806 (447,350) 13,181,480
Called up share capital 7 1,911,578 55,379 1,854,752
Share premium 20,318,766 178,017 19,267,483
Share based payment reserve 427,201 92,429 216,230
Reverse acquisition reserve (2,512,590) (45,131) (2,512,590)
Retained earnings (6,490,032) (728,044) (5,753,167)
13,654,923 (447,350) 13,072,708
Non-controlling interest 388,883 - 108,772
Total equity 14,043,806 (447,350) 13,181,480
FINANCIAL STATEMENTS / CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 26 WEEKS ENDED 26 DECEMBER 2021
Called Share Share Reverse Retained Total Non- Total
up share premium based acquisition earnings attributable controlling equity
capital £ payment reserve £ to equity interest £
£ reserve £ holders of £
£ parent
£
At 28 June 2020 55,379 178,017 92,429 (45,131) (472,485) (191,791) - (191,791)
Total comprehensive expense for the 26 week period - - - - (255,559) (255,559) - (255,559)
At 27 December 2020 55,379 178,017 92,429 (45,131) (728,044) (447,350) - (447,350)
Issue of share capital 300 50,700 (92,429) - 92,429 51,000 - 51,000
Transfer to reverse acquisition reserve (55,679) (228,717) - 284,396 - - - -
Recognition of Nightcap plc equity at reverse acquisition 398,800 845,200 - (2,751,855) - (1,507,855) - (1,507,855)
Issue of shares - IPO 400,000 3,600,000 - - - 4,000,000 - 4,000,000
Transaction fees related to issue of shares - (628,588) - - - (628,588) - (628,588)
Issue of shares on acquisition - The Cocktail Club 553,788 4,984,095 - - - 5,537,884 - 5,537,884
Issue of shares on acquisition - Adventure Bar Group 47,619 1,142,857 - - - 1,190,476 - 1,190,476
Issue of shares - placing shares 434,783 9,565,217 - - - 10,000,000 - 10,000,000
Transaction fees related to placing shares - (636,537) - - - (636,537) - (636,537)
Issue of shares - debt conversion 19,762 395,238 - - - 415,000 - 415,000
Share based payments and related deferred tax recognised directly in equity - - 216,230 - - 216,230 - 216,230
Total transactions with owners recognised directly in equity 1,854,752 19,267,483 216,230 (2,512,590) (635,615) 18,190,260 - 18,190,260
Total comprehensive expense for the 26 week period - - - - (5,117,552) (5,117,552) 108,772 (5,008,780)
At 27 June 2021 1,854,752 19,267,483 216,230 (2,512,590) (5,753,167) 13,072,708 108,772 13,181,480
Issue of shares on acquisition - Barrio Bar Group 56,826 1,051,283 - - - 1,108,109 - 1,108,109
Share based payments and related deferred tax recognised directly in equity - - 210,971 - - 210,971 - 210,971
Total transactions with owners recognised directly in equity 1,911,578 20,318,766 427,201 (2,512,590) (5,753,167) 14,391,788 108,772 14,500,560
Total comprehensive expense for the 26 week period - - - - (736,865) (736,865) 280,111 (456,754)
At 26 December 2021 1,911,578 20,318,766 427,201 (2,512,590) (6,490,032) 13,654,923 388,883 14,043,806
FINANCIAL STATEMENTS / CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE 26 WEEKS ENDED 26 DECEMBER 2021
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Cash flows from operating activities
Loss for the period (456,754) (255,559) (5,264,339)
Adjustments for:
Depreciation 1,654,486 524,805 1,258,637
Amortisation 207,169 732 51,099
Lease concessions - (177,448) -
Revaluation of right of use assets - (108,697) -
Share based payments 198,140 - 3,823,642
Interest on lease liabilities 370,754 128,809 297,215
Interest on borrowings 101,890 77,626 110,322
Tax expense (33,104) - (32,098)
(Increase)/decrease in trade and other receivables (256,147) 121,648 19,436
(Decrease)/increase in trade and other payables (518,215) (129,004) 2,112,687
(Increase)/decrease in inventories (170,322) 9,414 42,744
Cash generated from operations 1,097,897 192,326 2,419,345
Corporation taxes (paid)/repaid (59,091) 30,899 30,901
Net cash flows from operating activities 1,038,806 223,225 2,450,246
Investing activities
Acquisition of Adventure Bar Group, net of cash - - 657,088
Acquisition of The Cocktail Club - transaction costs and pre IPO expenses - - (902,401)
Acquisition of Barrio Bar Group, net of cash (461,800) - -
Purchase of property, plant and equipment (2,728,869) (36,977) (508,865)
Purchase of intangible assets (30,025) - (9,275)
Net cash used in investing activities (3,220,694) (36,977) (763,453)
Financing activities
Issue of ordinary shares - - 15,295,000
Share issue costs - - (1,265,125)
Repayment of loans and borrowings (525,996) (10,618) (1,418,023)
Principal paid on lease liabilities (569,853) (4,687) (744,081)
Interest paid on lease liabilities (370,754) - (297,215)
Interest paid on loans and borrowings (90,315) (77,625) (104,495)
Shareholder loan repayments - (229,863) (229,863)
Net cashflow from financing activities (1,556,918) (322,793) 11,236,198
Net (decrease)/increase in cash and cash equivalents (3,738,806) (136,545) 12,922,991
Cash and cash equivalents at beginning of the period 13,187,479 264,488 264,488
Cash and cash equivalents at end of the period 9,448,673 127,943 13,187,479
FINANCIAL STATEMENTS / NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
The Directors of Nightcap plc (the "Company") and its subsidiaries (the
"Group") present their interim report and the unaudited condensed consolidated
financial statements for the 26 weeks ended 26 December 2021 ("Interim
Financial Statements").
The Company is a public limited company whose shares are publicly traded on
the AIM market of the London Stock Exchange and is incorporated and registered
in England and Wales. The registered office address of the Company is c/o
Locke Lord (UK) LLP, 201 Bishopsgate, London, EC2M 3AB.
The Interim Financial Statements were approved by the Board of Directors on 11
March 2022.
2. ACCOUNTING POLICIES
2.1. Basis of preparation
The Interim Financial Statements have been prepared in accordance with IAS34,
'Interim Financial Reporting'. They do not include all of the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance since the last financial statements.
The Interim Financial Statements are presented in Pounds Sterling, except
where otherwise indicated; and under the historical cost convention.
In January 2021 the Company acquired the entire share capital of The Cocktail
Club Limited in a share for share exchange. The introduction of the Company
into the Group has been accounted for as a reverse acquisition. In doing so
the comparatives for the 26 weeks ended 27 December 2021 and 52 weeks ended 27
June 2021 have been presented as if the Group had always existed in its
current form.
The Directors consider that the principal risks and uncertainties faced by the
Group are as set out in the Group's Annual Report and Financial Statements for
the period ended 27 June 2021.
The accounting policies adopted in the preparation of the Interim Financial
Statements are consistent with those applied in the preparation of the Group's
consolidated financial statements for the period ended 27 June 2021. The Group
has not early adopted any other standard, interpretation or amendment that has
been issued but is not yet effective.
2.2. Going concern
In concluding that it is appropriate to prepare these Interim Financial
Statements on the going concern basis, the Directors have considered the
Group's cash flows, liquidity and business activities. Particular attention
has been paid to the impact of Covid-19 on the business, both experienced to
date and potentially foreseeable in the future.
As reported in the Group's Annual Report and Financial Statements for the
period ended 27 June 2021, the Group had cash balances of £13.2m at that
date. As at 26 December 2021, the Group had cash balances of £9.4m with the
reduction primarily driven by the £2.7m the Group has invested in its
existing and new sites during the period, along with net cash outflows of
£0.8m associated with the Barrio Familia acquisition.
Based on these assessments the Group forecasts to be in compliance with its
banking covenant obligations, and accordingly the Directors have concluded
that it is appropriate to prepare the Interim Financial Statements on the
going concern basis. If further lockdowns are mandated there is a risk that a
reduction in trade could potentially cause the Group to breach future EBITDA
based bank covenants. However, given the strong relationship the Group has
with its bankers, the Board anticipates that its bankers would continue to be
supportive.
2.3. Alternative Performance Measures
The Interim Financial Statements include both statutory and alternative
performance measures ("APMs"). Further background to the use of APMs and
reconciliations between statutory measures and APMs are presented in Note 10.
2.4. Accounting estimates and judgements
In preparing these Interim Financial Statements, management has made
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty were the
same as those applied to the Group's consolidated financial statements for the
period ended 27 June 2021 and are set out in the Group's Annual Report and
Financial Statements for that period.
2.5. Seasonality
The Group has a variety of brands and concepts within its business. The demand
across our sites is well spread throughout the financial year. Historically
the lead up to Christmas has always been a busy period for hospitality
businesses but with our well diversified range of brands, the seasonal impact
of Christmas is balanced with strong summer periods due to the outdoor venues
in the Group, particularly Luna Springs and Bar Elba which provide large
outdoor bar and event space.
3. EXCEPTIONAL ITEMS
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Included in administrative expenses:
IPO and acquisition related transaction costs 352,984 150,582 546,068
Corporate finance fees - - 167,530
352,984 150,582 713,598
The IPO and acquisition related transaction costs in the 26 weeks ended 26
December 2021 relate to costs incurred directly in connection with the
acquisition of Barrio Familia Limited. For the 26 weeks ended 27 December 2020
and 52 weeks ended 27 June 2021 these costs relate to the IPO and reverse
acquisition of The Cocktail Club which completed on 13 January 2021, along
with the acquisition of Adventure Bar Group on 14 May 2021. These costs
include employee bonuses and professional fees.
The corporate finance fees in the 52 weeks ended 27 June 2021 represent legal
and advisory costs paid by The Cocktail Club in 2021 in connection with an
aborted sale of The Cocktail Club in 2019. These costs had no cash impact on
the Group, as they were borne by the vendors of The Cocktail Club by virtue of
being withheld by the Company from the sale proceeds paid to them.
4. TAX CREDIT ON LOSS
The income tax credit is applicable on the Group's operations.
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Taxation (credit) / charge to the income statement
Current income taxation - - 18,585
Adjustments for current taxation of prior periods - - -
Research & development claim - - -
Total current income taxation - - 18,585
Deferred Taxation
Origination and reversal of temporary timing differences
Current period 19,122 - (303,947)
Adjustments in respect of prior periods - - (3,168)
Adjustment in respect of change of rate of corporation tax (52,226) - 256,432
Total deferred tax (33,104) - (50,683)
Total taxation credit in the consolidated income statement (33,104) - (32,098)
The taxation credit on loss for the interim period is £33,104 (26 weeks ended
27 December 2020 - £nil). The effective tax rate of 6.8% (26 weeks ended 27
December 2020 - 0%) differs from the UK corporation tax rate (19%) as a result
of permanent disallowable costs (depreciation of non-qualifying fixed assets,
exceptional items, accounting share based payment charge) and the differential
between the rate at which items impact current tax compared with deferred tax,
all reducing the effective tax rate for the year. The rate reduction is
partially offset by the 30% permanent element of the 130% capital allowances
'super deduction' on new qualifying plant and machinery additions and the
impact of certain brought forward deferred tax balances being restated from
19% to 25% (to the extent the temporary differences are expected to unwind
after 1 April 2023 when that rate applies).
The full year effective tax rate is expected to be c.5.7%.
5. EARNINGS PER SHARE
Basic (losses)/earnings per share is calculated by dividing the profit/(loss)
attributable to equity shareholders by the weighted average number of shares
outstanding during the year, excluding unvested share options pursuant to The
Nightcap plc Share Option Plan and contingently issuable shares in connection
with the acquisition of the Adventure Bar Group.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. During the 26 weeks ended 26 December 2021 the
Group had potentially dilutive shares in the form of unvested share options
pursuant to the above long-term incentive plan.
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Loss for the period after tax for the purposes of basic and diluted earnings (736,865) (255,559) (5,373,111)
per share
Non-controlling interest 280,111 - 108,772
Taxation credit (33,104) - (32,098)
Finance cost 472,644 206,435 407,537
Exceptional items 352,984 150,582 713,598
Pre-opening costs 131,322 - -
Share based payment charge 198,140 - 3,823,642
Depreciation and amortisation 1,861,655 525,537 1,309,736
Profit for the period for the purposes of Adjusted EBITDA (IFRS 16) basic and 2,526,887 626,995 958,076
diluted earnings per share
IAS 17 Rent charge (942,727) (136,928) (777,042)
Profit for the period for the purposes of Adjusted EBITDA (IAS 17) basic and 1,584,160 490,067 181,034
diluted earnings per share
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Weighted average number of ordinary shares in issue for the purposes of basic 186,593,082 55,378,837 96,859,609
earnings per share
Effect of dilutive potential ordinary shares from share options 6,665,383 - 3,976,038
Weighted average number of ordinary shares in issue for the purposes of 193,258,465 55,378,837 100,835,647
diluted earnings per share
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
pence
pence
pence
Earnings per share:
Basic and diluted (0.39) (0.46) (5.55)
Adjusted EBITDA (IFRS 16) basic 1.35 1.13 0.99
Adjusted EBITDA (IAS 17) basic 0.85 0.88 0.19
During a period where the Group or Company makes a loss, accounting standards
require that 'dilutive' shares for the Group be excluded in the earnings per
share calculation, because they will reduce the reported loss per share;
consequently, all per-share measures in the current period are based on the
weighted number of ordinary shares in issue.
6. TRADE AND OTHER PAYABLES
26 December 2021 27 December 2020 27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Trade payables 2,776,797 542,625 2,740,849
Social security and other taxes 1,126,970 60,259 300,549
Corporation tax 359,132 221 343,652
Defined contribution pension 16,796 14,860 15,043
Other payables 3,710,409 200,563 2,974,422
Accruals and deferred income 2,118,514 279,931 2,253,648
10,108,618 1,098,459 8,628,163
Included within other payables is £2,343,000 relating to the valuation in
connection with the contingent deferred consideration shares relating to the
Adventure Bar Group acquisition in May 2021. Other payables also includes
£866,822 in respect of deferred consideration arising from a completion
accounts process in relation to the acquisition of Barrio Familia Limited in
November 2021 - see Note 9. This was paid in January 2022.
7. CALLED UP SHARE CAPITAL
26 December 2021 27 December 2020 27 June 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Allotted, called up and fully paid ordinary shares 1,911,578 55,379 1,854,752
26 December 2021 27 December 2020 27 June 2021
Number Number Number
A Ordinary shares of £0.001 each - 55,378,838 -
Ordinary shares of £0.01 each 191,157,801 - 185,475,192
On 21 November 2021 the Company issued 5,682,609 ordinary shares in connection
with the acquisition of Barrio Familia Limited accounted for at 19.5 pence -
see Note 9.
8. RELATED PARTY TRANSACTIONS
Related parties are considered to be the directors of Nightcap plc, The
Cocktail Club, Adventure Bar Group and Barrio Familia. Transactions with them
are detailed below:
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Consultancy Fees - 12,000 12,000
- 12,000 12,000
These transactions are split by related party as follows:
PAF Ventures Limited - 12,000 12,000
- 12,000 12,000
9. BUSINESS COMBINATIONS
On 21 November 2021, Nightcap plc acquired 100% of the shares of Barrio
Familia Limited, for the total consideration of £5,602,931 comprising cash of
£3,628,000, 5,682,609 shares issued and accounted for at a price of 19.5p
(£1,108,109) and deferred consideration in relation to the completion
accounts process of £866,822. Through the acquisition, Nightcap has become
the operator of an additional five bars, which comprise: i) four Latin
American inspired, Tequila-led, cocktail bars in popular areas of London which
trade under the 'Barrio' brand; and ii) a high end '60s themed members'
cocktail bar which trades under the 'Disrepute' brand in London's Soho area
(collectively the "Barrio Bar Group").
The acquired business contributed revenues of £831,000 and profit before tax
of £31,000 (in accordance with IFRS) to the consolidated Group for the period
from 21 November 2021 to 26 December 2021.
The values identified in relation to the acquisition are provisional as at 26
December 2021.
Book Value Fair Value Fair Value
Adjustments
£ £ £
Property, plant and equipment 1,345,503 - 1,345,503
Intangible assets 84,900 1,936,000 2,020,900
Right-of-use assets 5,265,431 - 5,265,431
Inventories 111,741 - 111,741
Receivables 760,097 - 760,097
Cash 3,166,200 - 3,166,200
Payables (2,041,588) - (2,041,588)
Bank loans and borrowings (1,824,278) - (1,824,278)
Lease liabilities (5,265,431) - (5,265,431)
Deferred tax liability (73,874) (568,792) (642,666)
Total net assets acquired 1,528,701 1,367,208 2,895,909
Fair value of consideration paid £
- Cash paid to vendor 3,628,000
- Consideration shares issued 1,108,109
- Deferred consideration 866,822
Acquisition date fair value of the total consideration transferred 5,602,931
Goodwill 2,707,022
The Group has made certain estimates and judgements in arriving at the
valuation of intangible assets and goodwill.
In accordance with IFRS 3, the identifiable assets acquired and liabilities
and contingent liabilities assumed should be measured at fair value at the
acquisition date in order to determine the difference between the cost of
acquisition and the fair value of the Group's share of net assets acquired,
which should then be recognised as goodwill on the balance sheet or recognised
in the income statement. In determining the fair value, management has
recognised brand values totalling £1.9m in respect of the brands acquired.
Key estimates used in arriving at the brand valuation include growth rates,
discount rate, cashflow assumptions including working capital estimates,
appropriate royalty rates and useful economic lives.
In addition, the Group has made certain estimates in determining the deferred
consideration payable as part of the completion accounts process.
10. Reconciliation of Statutory Results to Alternative Performance Measures
26 weeks ended 26 weeks ended 52 weeks ended
26 December 2021
27 December 2020
27 June 2021
(Unaudited)
(Unaudited)
(Audited)
£
£
£
Loss from operations (17,214) (49,124) (4,888,900)
Exceptional items (Note 3) 352,984 150,582 713,598
Pre-opening costs 131,322 - -
Share based payment charge 198,140 - 3,823,642
Adjusted profit / (loss) from operations 665,232 101,458 (351,660)
Depreciation and amortisation (pre IFRS 16 Right of use asset depreciation) 865,633 245,743 618,544
IFRS 16 Right of use asset depreciation 996,022 279,794 691,192
Adjusted EBITDA (IFRS 16) 2,526,887 626,995 958,076
IAS 17 Rent charge (942,727) (136,928) (777,042)
Adjusted EBITDA (IAS 17) 1,584,160 490,067 181,034
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