REG - Nightcap PLC - Interim results
18/03/2024 07:00
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RNS Number : 1301H Nightcap PLC 18 March 2024
This announcement contains Inside Information for the purposes of Article 7 of
EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018). Upon the publication of this
announcement this Inside Information is now considered to be within the public
domain.
18 March 2024
Nightcap plc
("Nightcap", the "Company" or the "Group")
Interim results for the 26-week period ended 31 December 2023
"Positive Christmas trading rounds off a challenging first half"
Key highlights for unaudited results for the 26-week period ended 31 December
2023:
26 weeks ended 31 December 2023 26 weeks ended 1 January 2023 52 weeks ended
(Unaudited) (Unaudited) 2 July 2023
(Audited)
Revenue (£m) 33.4 23.5 46.4
Adjusted EBITDA (IFRS 16)* (£m) 4.9 4.1 6.6
Adjusted EBITDA (IAS17)** (£m) 2.1 2.0 2.6
(Loss)/profit from operations (£m) (0.1) (0.1) (2.8)
(Loss)/profit before tax (£m) (1.8) (0.9) (4.9)
Cash and cash equivalents (£m) 3.0 4.9 5.4
Cash generated from operations (£m) 3.1 4.1 6.8
Net debt (£m) (excluding IFRS 16 lease liabilities and convertible loan 5.6 4.2 6.7
notes)
· Revenue growth of 42.1% to £33.4 million driven by the
acquisition of Dirty Martini, the successful collaboration with The Piano
Works over the Christmas period and the maturing of sites opened in the
previous year.
· IAS17 Adjusted EBITDA increased 5% to £2.1 million
despite the train strikes and higher than expected Dirty Martini integration
costs.
· The Piano Works acquisition completed on 19 February
2024, securing the Piano Works presence at our Covent Garden site, adding a
new site at Farringdon and providing the opportunity for Nightcap to roll out
The Piano Works concept further.
· Like-for-like*** sales decrease of 10.0% for H1 FY2024
largely due to the ongoing train strikes and the impact of the cost of living
crisis.
· 46 bars traded throughout the period following the
acquisition of Dirty Martini at the end of the last financial year.
· As at 31 December 2023, the Group had cash of £3.1
million (excluding cash in transit) and total bank debt of £8.6 million
resulting in net debt of £5.6 million (excluding IFRS 16 lease liabilities
and convertible loan notes). Since the half year end, the Group has extended
the maturity date on the B convertible loan notes by a further 12 months to
mature on 9 September 2026 (as announced on 20 February 2024) and has recently
reset its banking covenants to more favorable terms.
Sarah Willingham, CEO of Nightcap, commented:
"I am pleased that we continue to show great progress in building the UK's
leading bar group. Five acquisitions and 13 openings in just over three
years is an incredible achievement. To deliver an increase in revenue of
42.1% and an increase in IAS 17 Adjusted EBITDA of 5% for the half year during
such a tough period for the hospitality industry is down to the dedication of
our incredible team. We set out to build a great business at the back end of
COVID and the economy has moved through several additional challenges from the
energy crisis and rail strikes to interest rates, inflation and cost of living
crisis - throwing just about everything at us. I believe this environment is
where some of the best businesses are built. With a rapidly changing landscape
away from nightclubs and sticky dancefloors to late night party bars which are
safer, more flexible and more inclusive environments, I believe that no other
bar group is as well positioned to take advantage than Nightcap with the
brands and estate that we have acquired and built over the last three years.
"Whilst we have entered the next stage of our development where we will start
to enjoy the benefits of the scale we have built in a short time, I continue
to see great opportunities for growth in the market. Our ambition to double
the size of our estate in the medium term is achievable.
"We expect the second half of FY2024 to continue to be uncertain and
challenging, but I believe hospitality has gone through the worst of this
downturn with many economic indicators showing a likely recovery later on this
year. In the meantime, we continue our focus on leading our sector in terms of
quality, innovation and training. Our ambition to become a leading company
from a digital perspective is gathering pace, with several new systems and
integrations launching this quarter. These are all initiatives that will
position Nightcap well for further acquisitions and organic roll-out of our
leading brands when the market allows. I remain very excited about the future
prospects for Nightcap and look forward to the next year of fun and hard work,
surrounded by the most brilliant people, as our synergies bed in, the economy
settles and we start to benefit from the successful integration of all of our
businesses."
Investor presentation
Sarah Willingham, Michael Toxvaerd and Richard Haley will provide a live
presentation relating to the Interim Results via the Investor Meet Company
platform on 2 April 2024 at 11:00 am/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 / Richard Haley / 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
Jos Pinnington / 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)
* IFRS 16 Earnings before interest, tax, depreciation, amortisation,
share-based payments, exceptional items, acquisition related transaction costs
and pre-opening costs.
** IAS 17 Earnings before interest, tax, depreciation, amortisation,
share-based payments, exceptional items, acquisition related transaction costs
and pre-opening costs.
*** Like-for-like revenue is same site revenue defined as revenue at only
those venues that traded in the same week in both the current period and
comparative reporting periods.
CHIEF EXECUTIVE OFFICER'S STATEMENT
I am pleased to present Nightcap's unaudited interim results for the 26-week
period from 3 July 2023 to 31 December 2023 (the "Half Year" or "H1 FY2024").
TRADING
During the Half Year, the Group's reported revenues increased by 42.1% to
£33.4 million compared to Group revenue of £23.5 million for the
equivalent period in FY2023. This represents a like-for-like sales decrease
of 5.9% for Q2 FY2024 against Q2 FY2023 and a 10.0% decrease for H1 FY2024
against H1 FY2023, largely due to the ongoing train strikes and the impact of
the cost of living crisis.
I was delighted that customers returned to our bars over the Christmas and New
Year period giving us a really positive end to a challenging first half of the
financial year. Group revenue for the four-week period ended 31 December
2023 was £7.4 million, a 65.7% increase compared to Group revenue of £4.5
million for the equivalent period in 2022 and a like-for-like increase of
11.9%.
As well as rapid growth, we have focussed on the integration of our
businesses, in particular Dirty Martini (which was acquired just prior to the
beginning of this financial year) and, more recently, the integration of The
Piano Works. Our profit conversion remained a focus and we report an
increase in IFRS 16 Adjusted EBITDA of 20% to £4.9 million compared to £4.1
million for H1 FY2023. IAS17 Adjusted EBITDA increased by 5% to £2.1
million for the Half Year compared to £2.0 million for H1 FY2023. This
increase was achieved despite the challenging trading conditions. We estimate
that the rail strikes had an adverse impact of approximately £0.8 million on
the business at the IAS17 Adjusted EBITDA level during the Half Year.
The H1 FY2024 revenue growth of 42.1% followed 48.7% growth in the equivalent
period for H1 FY2023 and, as a result, we continue to deliver on our strategy
to become the leading bar group in the UK. The accumulated growth since IPO is
a result of five acquisitions, made at appealing valuations, as well as the
opening of 13 new bars due to the attractive terms offered by landlords since
Covid and prolonged by the cost of living crisis. We founded Nightcap to
consolidate the sector and whilst we have experienced two years with
like-for-like decline, across our sector, mainly due to rail strikes and the
cost of living crisis, it is the same tough trading environment that has
enabled us to grow at a much faster pace than initially anticipated. This
leaves us well placed to take advantage of a well-positioned and operationally
strong estate across the country when the economy returns to optimism and
growth.
We now operate a multi-brand cluster model with 46 bars in London and across
the country and we believe our current brands have the potential to grow to
more than 100 bars in the medium term.
FINANCIAL POSITION
As at 31 December 2023, the Group had cash resources of £3.1 million
(excluding cash in transit of £0.9 million). As at 31 December 2023, the
Group had total bank debt of £8.6 million (including £0.3 million of
capitalised fees) resulting in net debt of £5.6 million (excluding IFRS 16
lease liabilities and convertible loan notes). £1.25 million of the Group's
total bank debt is scheduled for repayment over the coming 12 months. The
Group has an interest rate cap on the reference base rate (SONIA) fixed at 3%
on £7.1 million of the remaining £8.9 million gross bank facility. Since
the Half Year end the Group has reset its banking covenants to more favorable
terms, giving increased stability to the business.
The Group generated £3.1 million cash from operations during the Half Year
(H1 FY2023: £4.1 million).
In conjunction with the acquisition of The Piano Works in February 2024, the
Group raised £1.0 million through a subscription of 16,666,666 new ordinary
shares to fund the acquisition, integration and development of The Piano
Works.
BAR BRANDS
As a result of the important ongoing integration work with the acquired
businesses and organically opened sites, which began last year and has
continued with the acquisitions of Dirty Martini and The Piano Works, we have
incurred significant one-off costs in the Half Year. These costs represent a
material investment in the Group's future and include several new system
integrations to optimise and manage a multi-site, multi-brand infrastructure
with significant additional growth potential.
We recently finalised the implementation of our cluster model, where several
brands can exist side by side in city centres across the country without risk
of dilution due to the differentiated curated events and experiences offered
by the different brands. This has been a proven success in a number of cities
across the UK from Bristol to Birmingham and parts of London like Clapham,
Shoreditch and the West End, where multiple Nightcap brands flourish next to
each other.
To ensure each brand retains its edge and uniqueness, a systems and processes
overhaul is underway to allow a complete customer view when marketing to
Nightcap's database of more than one million customers. This overhaul also
includes a completely new web presence, optimisation and insight tools, as
well as differentiated events and social media to ensure we capture the
special attributes at every brand, voice and conversion touchpoint both online
and offline. We believe that these changes will enable us to drive business
growth and to gain market share.
Whilst these changes are important, we consider that they will be the first of
many as we strive to move to become a digital first company in every aspect of
our engagement with customers, employees and shareholders.
PROPERTY
The focus of H1 FY2024 has been on the consolidation and integration of
previous acquisitions, especially Dirty Martini. Therefore, as stated
previously, the Group has not opened any new sites organically during the
first half of the financial year.
The Group successfully secured the assignment of nine leases of the Dirty
Martini brand in November 2023, including all of our target leases.
In November, we entered into a collaboration with The Piano Works in our
Barrio Covent Garden site. This collaboration resulted in a significant
uplift in revenues compared to the Board's forecasts for the Barrio brand for
the four week Christmas period ended 31 December 2023.
The recent acquisition of The Piano Works brand and assets includes their
Farringdon site which adds further to the Group's property portfolio and helps
offsets the loss of the Bar Elba lease, which we announced earlier this year.
With the existing brands and the recent acquisition of The Piano Works, the
Group will consider the opportunity for further roll outs of our brands should
compelling opportunities arise. However, the short-term focus remains on
optimising existing brands and sites.
As announced on 20 February the lease on Bar Elba, held in a 50:50 owned joint
venture, came to an end on 24 February 2024 following the landlord's (and the
Company's joint venture partner) decision to commence the re-development of
the building. Given that Tonight Josephine's Waterloo site is in the same
building as Bar Elba that is being redeveloped, we consider that it is likely
that the landlord will exercise the six month break clause for Tonight
Josephine Waterloo on or around 3 April 2024. This site has historically had a
high level of rent and a search is underway to replace this bar with another
basement site in the area for Tonight Josephine to move to, where anticipated
lease costs could be substantially lower than the existing location.
PEOPLE
Over the past year significant changes were made to the Group's leadership
structure in a deliberate move away from small business/start up generalists
to experienced subject matter specialists from larger organisations, with
significant experience working with higher levels of complexity. This has
been done whilst retaining a focus on creativity, innovation and flair in our
bars. As part of this programme to operate with a single Group management
structure rather than individual subsidiary structures, we made a series of
senior hires over the past 12 months in addition to the appointment of a Group
Managing Director. These appointments included a new Group People Director, a
new Group Sales and Marketing Director and a new Interim Chief Financial
Officer. This management upgrading process is nearing completion and the
systems overhaul, as described earlier, is as a direct result of integrating
new tools to drive business growth and to gain market share.
I remain deeply thankful for all the passion shown by our brilliant people
across all our brands who continue to deliver unique events and great nights
out for our customers throughout the year. We are investing more than ever
before in attracting, training, developing and retaining our colleagues at all
levels. We are committed to quality and to allowing our colleagues at all
levels the opportunity to make hospitality a career journey filled with
opportunity and achievement in a fun, challenging and rewarding environment.
We continue to give our customers more and better reasons to visit through our
commitment to providing unique experiences and memorable nights out.
CURRENT TRADING AND OUTLOOK
As announced on 20 February 2024, trading since the start of 2024 has been
challenging, in line with reports from across the hospitality sector; we
expect this to continue until the end of FY2024. We then expect the start of a
gradual recovery later on this year as lower inflation, lower energy costs,
lower interest rates and higher disposable income begin to embed in the
economy and improve the financial outlook for our customer base. The Group is
trading in line with market expectations.
The Nightcap estate is of a higher quality, better operated and with better
trained and more engaged teams than ever before. We therefore remain
optimistic about the future of the Group and remain excited about building
the UK's leading bar group.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 26 WEEKS ENDED 31 DECEMBER 2023
26 weeks ended 26 weeks ended 52 weeks ended
Note 31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Revenue 33,369 23,513 46,414
Cost of sales (7,044) (4,736) (9,029)
Gross profit 26,325 18,777 37,386
Administrative expenses (26,472) (19,102) (40,643)
Other income 60 231 446
Adjusted EBITDA 4,926 4,094 6,625
Share based payments 6 (102) (181)
Profit / (loss) on disposal of right of use asset 24 1 220
Depreciation (3,694) (2,541) (5,745)
Amortisation of intangible assets (515) (313) (627)
Exceptional items 3 (614) (314) (792)
Acquisition related transaction costs - - (734)
Pre-opening costs (52) (920) (1,013)
Impairment 4 (168) - (565)
(Loss) from operations (87) (94) (2,812)
Finance income - - -
Net finance expense 5 (1,757) (835) (2,052)
(Loss) before taxation (1,844) (930) (4,863)
Tax credit on loss 6 245 169 931
(Loss) and total comprehensive loss for the period (1,599) (761) (3,392)
(Loss) / profit for the period attributable to:
- Owners of the parent (1,794) (991) (4,169)
- Non-controlling interest 195 230 237
(1,599) (761) (3,392)
Earnings per share attributable to the 26 weeks ended 26 weeks ended 52 weeks ended
ordinary equity holders of the parent Note 31 December 2023 01 January 2023 02 July 2023
(Loss) / earnings per share pence pence pence
- Basic 7 (0.82) (0.50) (2.09)
- Diluted 7 n/a n/a (2.09)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
31 December 2023 01 January 2023 02 July 2023
Note (Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Non-current assets
Goodwill 12,144 9,751 12,144
Intangible assets 6,506 4,318 6,971
Property, plant and equipment 8 11,770 13,755 12,723
Deferred tax asset 1,801 - 1,489
Right of use assets 42,335 37,684 35,905
Derivative financial asset 136 249 361
Other receivables 1,095 876 914
Total non-current assets 75,787 66,633 70,507
Current assets
Inventories 1,537 1,019 1,154
Trade and other receivables 2,404 2,433 3,266
Cash and cash equivalents 3,053 4,930 5,017
Total current assets 6,994 8,381 9,438
Total assets 82,781 75,015 79,945
Current liabilities
Loans and borrowings 10 (1,250) (750) (1,000)
Trade and other payables 9 (11,381) (9,765) (12,980)
Lease liabilities due less than one year (3,601) (3,396) (3,281)
Derivative financial instruments - - -
Total current liabilities (16,232) (13,910) (17,261)
Non-current liabilities
Borrowings 10 (10,006) (8,358) (10,687)
Lease liabilities due more than one year (40,678) (36,076) (34,594)
Provisions (684) (366) (683)
Deferred tax provisions (2,266) (803) (2,200)
Total non-current liabilities (53,634) (45,603) (48,164)
Total liabilities (69,866) (59,513) (65,425)
Net assets 12,915 15,501 14,520
Called up share capital 11 2,179 1,983 2,179
Share premium 23,527 21,372 23,527
Share based payment reserve 655 564 661
Reverse acquisition reserve (2,513) (2,513) (2,513)
Retained earnings (11,860) (6,630) (10,066)
11,988 14,777 13,788
Non-controlling interest 927 725 732
Total equity 12,915 15,501 14,520
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 26 WEEKS ENDED 31 DECEMBER 2023
Total attributable to equity holders of parent
Share based payment reserve
Called up share capital Reverse acquisition reserve Non-controlling interest
Share premium Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 3 July 2022 1,983 21,372 543 (2,513) (5,639) 15,746 495 16,241
Shared based payments and related deferred tax - - 21 - - 21 - 21
recognised directly in equity
1,983 21,372 564 (2,513) (5,639) 15,768 495 16,262
Total transactions with owners recognised directly in equity
- - - - (991) (991) 230 (761)
Total comprehensive expense for the 26 week period
1,983 21,372 564 (2,513) (6,630) 14,777 725 15,501
At 1 January 2023
Shares issued for cash subscription - 8 June 2023 196 2,154 - - - 2,350 - 2,350
Share based payments and related deferred tax recognised directly in equity - - 97 - - 97 - 97
Dividends paid - non controlling interest portion - - - - (257) (257) - (257)
2,179 23,527 661 (2,513) (6,887) 16,966 725 17,691
Total transactions with owners recognised directly in equity
- - - - (3,178) (3,178) 7 (3,171)
Total comprehensive income for the 26 week period
2,179 23,527 661 (2,513) (10,066) 13,788 732 14,520
At 2 July 2023
Share based payments and related deferred tax recognised directly in equity - - (6) - - (6) - (6)
Total transactions with owners recognised directly in equity 2,179 23,527 655 (2,513) (10,666) 13,782 732 14,514
- - - - (1,794) (1,794) 195 (1,599)
Total comprehensive expense for the 26 week period
At 31 December 2023 2,179 23,527 655 (2,513) (11,860) 11,988 927 12,915
CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE 26 WEEKS ENDED 31 DECEMBER 2023
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flows from operating activities
(Loss) for the period (1,599) (761) (3,932)
Adjustments for:
Depreciation 3,695 2,541 5,745
Amortisation 515 313 627
Profit / loss on disposal of right of use asset (24) (1) (220)
Share based payments (6) 102 181
Interest on lease liabilities 976 829 1,699
Interest on borrowings 557 256 714
Net change in fair value of hedging instrument in a 225 (249) (361)
fair value hedge
Impairment 168 - 565
Tax credit (245) (169) (931)
Decrease / (increase) in trade and other receivables 681 (605) (1,377)
(Decrease) / increase in trade and other payables (1,509) 2,308 4,387
(Increase) / decrease in inventories (382) (465) (255)
Cash generated from operations 3,052 4,097 6,840
Corporation taxes (paid) / repaid (253) (130) (184)
Net cash flows from operating activities 2,799 3,967 6,656
Investing activities
Acquisition of Dirty Martini - - (4,150)
Purchase of property, plant and equipment (697) (6,067) (6,658)
Purchase of intangible assets (49) (27) (45)
Net cash used in investing activities (746) (6,093) (10,583)
Financing activities
Issue of ordinary shares - - 2,350
Proceeds from borrowings - 9,847 12,030
Issue costs in connection with borrowings - (479) (479)
Repayment of loans and borrowings (502) (5,847) (5,597)
Principal paid on lease liabilities (2,216) (829) (2,255)
Interest paid on lease liabilities (976) (829) (1,699)
Interest paid on loans and borrowings (323) (159) (489)
Net cash (outflow) / inflow from financing activities (4,017) 1,703 3,861
Net (decrease) / increase in cash and cash equivalents (1,964) (423) (336)
Cash and cash equivalents at beginning of the period 5,017 5,353 5,353
Cash and cash equivalents at end of the period 3,053 4,930 5,017
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 31 December 2023 ("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 18
March 2024.
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 (£'000),
except where otherwise indicated, and under the historical cost convention.
Due to rounding, numbers presented in the Interim Financial Statements may not
add up precisely to the totals provided and percentages may not precisely
reflect the presented figures as the underlying calculations are referenced
from absolute values, whereas numbers presented have been rounded to
thousands.
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 2 July 2023.
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 2 July 2023. 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
The Board has assessed the Group's ability to continue to operate as a going
concern in the current challenging economic conditions. In making the going
concern assessment, the Board has made a current consideration of the impact
of economic conditions on the cash flows and liquidity of the Group over the
next 12-month period and has sensitised these forecasts accordingly.
As at 31 December 2023 the Group had cash balances of £3.1m (excluding cash
in transit of £0.9 m) and Net Debt (excluding IFRS 16 lease liabilities and
convertible loan notes) of £5.6m. The Group has access to a £10.0m bank
facility comprising a £3m term loan (of which £2.0m was drawn at 31 December
2023) repayable over the period to June 2025 and a £7m Revolving Credit
Facility (of which £6.7m was drawn at 31 December 2023) available to August
2025. The facility is subject to certain covenants. Since the half year
end the Group has reset its banking covenants to more favorable terms, giving
increased stability to the business.
Management has prepared forecasts covering the period of 12 months from the
date of signing this half year report. Taking into account reasonably
possible changes in trading performance, the Group's forecasts show that the
Group should be able to operate within its current and available borrowing
facility throughout the going concern assessment period of 12 months from the
date of signing this half year report.
In making the going concern assessment Management has also prepared a severe
but plausible downside scenario taking into account the principal risks of the
business. This scenario assumes a reduction in sales resulting, for example,
from the impact of further rail strikes and continuing costs of living
pressure for our customers. In this severe but plausible downside scenario,
Management has modelled mitigating actions including implementing cost saving
actions. Under this scenario, the Group maintains sufficient liquidity and
is projected to meet the requirements of the bank facility over the period of
the going concern assessment without taking other mitigating actions such as
reducing CAPEX or taking short-term working capital actions, although headroom
is tight.
The Board recognises that the forecasts rely on important factors such as
ongoing trading performance, which is currently volatile and impacted by the
challenging macroeconomic environment, as well as the delivery of conversion
into site and Group EBITDA along with implementing cost saving actions where
necessary. The Board continually monitors its forecasts and the potential
impacts the above factors may have.
Based on the Group's forecasts, the Board is satisfied that the Group will be
able to operate for a period of at least 12 months from the date of issuing
this half year report. For this reason, the Board has adopted the going
concern basis in preparing the Interim Financial Statements.
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 16.
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 2 July 2023 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 and will become more so for the Group with the acquisition of The
Piano Works. The seasonal impact of Christmas is partially balanced by our
diversified range of brands, some of which offer large outdoor bar and event
space in the summer periods, although the termination of the Bar Elba lease
subsequent to the half year reduces this balance somewhat.
3. EXCEPTIONAL ITEMS
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Included in administrative expenses:
Legal costs - - 300
Site closure costs 290 43 81
Reorganisation costs 324 271 411
614 314 792
4. IMPAIRMENT
As a result of the Group's Barrio Watford site remaining vacant and not
trading during the half year, the right of use asset for that site has been
impaired by £0.2 million. The Group previously impaired the property, plant
and equipment for the that site by £0.6 million at 2 July 2023.
5. NET FINANCE EXPENSE
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Interest on bank overdrafts and loans 486 256 503
Interest on lease liabilities 976 829 1,699
Net change in fair value of hedging instrument 224 (249) (361)
Amortisation of debt issue costs - HSBC 71 - 136
Amortisation of debt issue costs - legacy debt - - 74
1,757 835 2,052
6. TAX (CREDIT) / CHARGE ON LOSS
The following income tax (credit)/charge is applicable on the Group's
operations.
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Taxation charged / (credited) to the income statement
Current income taxation - - 61
Adjustments for current taxation of prior periods - - (12)
Total current income taxation - - 49
Deferred Taxation
Origination and reversal of temporary timing differences
Current period (184) (169) (988)
Adjustments in respect of prior periods (61) - 37
Adjustment in respect of change of rate of corporation tax - - (29)
Total deferred tax (245) (169) (980)
Total taxation credit in the consolidated income statement (245) (169) (931)
The above is disclosed as:
Income tax (credit) - current period (184) (169) (956)
Income tax (credit) / charge - prior period (61) - 25
(245) (169) (931)
The taxation credit on loss for the interim period is £245,000 (26 weeks
ended 1 January 2023 - credit £169,000). The effective tax rate of 10.9% (26
weeks ended 1 January 2023 - 18.1%) differs from the UK corporation tax rate
of 25% (26 weeks ended 1 January 2023 19%) as a result of permanent
disallowable costs (depreciation of non-qualifying fixed assets, exceptional
items, accounting share based payment charges) 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 23% permanent element of the 130% capital allowances
'super deduction' on new qualifying plant and machinery additions.
The full year effective tax rate is expected to be c.10.9%.
7. EARNINGS PER SHARE
Basic earnings / (loss) 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 granted
pursuant to The Nightcap plc Share Option Plan.
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 31 December 2023 the
Group had no potentially dilutive shares as all options and convertible loan
notes have exercise or conversion prices that are below the Company's current
share price and are therefore not currently considered dilutive.
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.
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
(Loss) / profit for the period after tax for the purposes of basic and diluted (1,794) (991) (4,169)
earnings per share
Non-controlling interest 195 230 237
Taxation credit (245) (169) (931)
Finance cost 1,757 835 2,052
Exceptional items 614 314 792
Acquisition related costs - - 734
Pre-opening costs 52 920 1,013
Share based payment charge (6) 102 181
Impairment 168 - 565
Depreciation and amortisation 4,209 2,854 6,372
Profit / loss on disposal of right of use asset (24) (1) (220)
Profit for the period for the purposes of Adjusted EBITDA (IFRS 16) basic and 4,926 4,094 6,625
diluted earnings per share
IAS 17 Rent charge (2,787) (2,051) (3,997)
Profit for the period for the purposes of Adjusted EBITDA (IAS 17) basic and 2,139 2,043 2,627
diluted earnings per share
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
Number Number Number
Weighted average number of ordinary shares in issue for the purposes of basic 217,883,990 198,300,657 199,591,866
earnings per share
Effect of dilutive potential ordinary shares from share options - 1,888,689 950,758
Weighted average number of ordinary shares in issue for the purposes of 217,883,990 200,189,346 200,542,623
diluted earnings per share
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
Pence Pence Pence
Earnings per share:
Basic (0.82) (0.50) (2.09)
Diluted (0.82) n/a (2.09)
Adjusted EBITDA (IFRS 16) basic 2.26 2.06 3.32
Adjusted EBITDA (IFRS 16) diluted 2.26 n/a 3.30
Adjusted EBITDA (IAS 17) basic 0.98 1.03 1.32
Adjusted EBITDA (IAS 17) diluted 0.98 n/a 1.31
8. PROPERTY, PLANT AND EQUIPMENT
Leassehold improvements Plant and computer equipment Furniture, fixtures and fittings
Total
£'000 £'000 £'000 £'000
Cost of valuation
At 4 July 2022 9,680 4,411 2,778 16,869
Additions 2,685 2,392 607 5,684
Reclassification - 274 (274) 0
At 1 January 2023 12,365 7,077 3,111 22,553
At 2 January 2023 12,365 7,077 3,111 22,553
Additions 24 (550) 1,045 519
On acquistion - Dirty Martini 306 136 - 442
Reclassification - (274) 274 -
Disposals (40) (1,102) (1,063) (2,205)
At 2 July 2023 12,655 5,288 3,367 21,309
At 3 July 2023 12,655 5,288 3,367 21,309
Additions 177 75 444 697
Reclassifications 750 (4,297) 3,547 -
Disposals (306) (22) (312) (640)
At 31 December 2023 13,279 1,044 7,046 21,366
Depreciation
At 4 July 2022 3,329 2,788 1,643 7,760
Provided for the period 456 362 221 1,038
Reclassification - 194 (194) -
At 1 January 2023 3,785 3,344 1,670 8,798
At 2 January 2023 3,785 3,344 1,670 8,798
Provided for the period 568 400 460 1,428
Disposal (40) (1,102) (1,063) (2,205)
Impairment 294 17 254 565
Reclassification - (194) 194 -
At 2 July 2023 4,608 2,465 1,514 8,587
At 3 July 2023 4,608 2,465 1,514 8,587
Charge for the period 836 104 708 1,648
Disposals (305) (22) (312) (639)
Reclassification 110 (1,881) 1,771 1
At 31 December 2023 5,249 666 3,681 9,596
Net book value
At 1 January 2023 8,580 3,733 1,441 13,755
At 2 July 2023 8,047 2,822 1,853 12,723
At 31 December 2023 8,028 378 3,364 11,770
9. TRADE AND OTHER PAYABLES
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Trade payables 4,961 4,283 4,628
Social security and other taxes 2,744 2,013 2,458
Corporation tax 35 293 288
Other payables 1,330 781 2,048
Accruals and deferred income 2,311 2,395 3,559
11,381 9,765 12,980
10. BORROWINGS
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Short-term borrowing
Secured bank loans 1,250 750 1,000
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Long-term borrowing
Secured bank loans 7,356 8,358 8,037
Convertible loan notes 2,650 - 2,650
10,006 8,358 10,687
The Group has a £10.0m bank facility comprising a £3m term loan (of which
£2.0m was drawn at 31 December 2023) and £7m Revolving Credit Facility (of
which £6.8m was drawn at 31 December 2023). The facility bears a margin of
3% above SONIA on the £3m term loan and 3.25% above SONIA on the £7m
Revolving Credit Facility. The Group has taken out an interest rate cap on its
reference base rate at 3% on £8m out of £10m of the facility. Since the half
year end the Group has reset its banking covenants to more favorable terms.
11. CALLED UP SHARE CAPITAL
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Allotted, called up and fully paid ordinary shares 2,179 1,983 2,179
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
Number Number Number
Ordinary shares at £0.01 each 217,883,990 198,300,657 217,883,990
12. ANALYSIS OF CHANGES IN NET DEBT
At 4 July 2022 Cash flows Reclass long term to Non-cash movement At
short term 1 January 2023
£'000 £'000 £'000 £'000 £'000
Cash at bank 5,353 (423) - - 4,930
Bank loans falling due within 1 year (793) 794 (750) (1) (750)
Bank loans falling due greater than 1 year (4,723) (4,322) 750 (64) (8,358)
Other loans falling due within 1 year (7) 7 - - -
Lease liabilities falling due within 1 year (2,374) 829 (1,851) - (3,396)
Lease liabilities falling due greater than 1 year (25,254) - 1,851 (12,674) (36,076)
Total debt (33,150) (2,691) - (12,739) (48,580)
Net debt (27,797) (3,114) - (12,739) (43,650)
Net (debt) / cash - pre IFRS 16 leases (170) (3,944) - (65) (4,179)
At Cash flows Reclass long term to Non-cash movement At 2 July 2023
1 January 2023 short term
£'000 £'000 £'000 £'000 £'000
Cash at bank 4,930 87 - - 5,017
Bank loans falling due within 1 year (750) - (250) - (1,000)
Bank loans falling due greater than 1 year (8,358) 467 250 (146) (8,037)
Other loans falling due within 1 year - (2,650) - - (2,650)
Lease liabilities falling due within 1 year (3,396) 1,425 (1,310) - (3,281)
Lease liabilities falling due greater than 1 year (36,076) - 1,310 172 (34,594)
Total debt (48,580) (758) - 26 (49,562)
Net debt (43,650) (671) - 26 (44,545)
Net (debt) / cash - pre IFRS 16 leases (4,179) (2,095) - (146) (6,670)
At 2 July 2023 Cash flows Reclass long term to Non-cash movement At 31 December 2023
short term
£'000 £'000 £'000 £'000 £'000
Cash at bank 5,017 (1,964) - - 3,053
Bank loans falling due within 1 year (1,000) 502 (750) (2) (1,250)
Bank loans falling due greater than 1 year (8,037) - 750 (69) (7,356)
Other loans falling due within 1 year (2,650) - - - (2,650)
Lease liabilities falling due within 1 year (3,281) 2,216 (1,843) (693) (3,601)
Lease liabilities falling due greater than 1 year (34,594) - 1,843 (7,927) (40,678)
Total debt (49,562) 2,718 - (8,691) (55,535)
Net debt (44,545) 754 - (8,691) (52,482)
Net (debt) / cash - pre IFRS 16 leases (6,670) (1,462) - (71) (8,203)
13. 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
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Purchase of inventories - D&H Spirits Limited - 12 33
Purchase of inventories - CGCC Limited 13 31 11
Consultancy fees - CGCC Limited - - 30
Consultancy fees - Ferdose Ahmed - 30 44
Consultancy fees - James Hopkins - 41 16
13 114 133
The companies listed below are deemed to be related parties due to having
common shareholders with the Company. The people listed below are
shareholders of the Company and therefore deemed to be related parties.
These transactions are split by related party as follows:
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
D&H Spirits Limited - a company co-controlled by James Hopkins - 12 33
CGCC Limited - a company controlled by JJ Goodman 13 31 41
Ferdose Ahmed - 30 44
James Hopkins - 41 16
13 114 133
Amounts owed to related parties were as follows:
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
CGCC Limited - a company controlled by JJ Goodman - - -
Ferdose Ahmed - 24 -
James Hopkins - - -
D&H Spirits Limited - a company co-controlled by James Hopkins - - -
- 24 -
14. CONTINGENT LIABILITY
Nightcap plc and DMN Bars Limited, a subsidiary company of Nightcap, have
received notification that 18 individuals wish to bring proceedings to an
employment tribunal where Nightcap and DMN Bars Limited have been listed as
second and third respondents. The nature of their claim is in relation to the
acquisition of certain assets of Dirty Martini out of administration where
they were not included in the acquisition of those assets. The claimants are
alleging to have been employed by DC Bars Limited and that they should have
transferred to DMN Bars Limited or Nightcap under the Transfer of Undertakings
Protection of Employment rights ("TUPE") regulations. The total amount claimed
is £338,000 together with further unquantified amounts. Management has sought
legal advice on the matter and management believes that there are no grounds
for such claims. Given the uncertainty involved and the strength of legal
opinion, no provision has been made in these financial statements as
management believes that the most likely outcome is no liability. We have no
indication of the likely timescales involved.
15. EVENTS AFTER THE REPORTING PERIOD
On 19 February 2024 the Group entered into an asset purchase agreement to
acquire certain of the assets (the "Assets") of TDC Concepts Limited ("TDCC")
(the "The Piano Works Acquisition") for a total consideration of £200,000.
On the same date the Group raised a total of £1.0 million, through a
subscription (the "Subscription") of 16,666,666 of new ordinary shares in the
Company (the "Subscription Shares") at 6 pence per share.
On the same date the Group entered into an amendment and restatement agreement
("ARA") for some of its convertible loan notes. The ARA amends and restates
the conversion price of some of the convertible loan notes ("B Notes") to 10
pence per share and has provided the loan note holders who have remained on
original terms the option to convert their convertible loan notes to B Notes
on the new terms at any time prior to 15 August 2024. As such those B Notes
are now convertible at the higher of 10 pence per share or a 15% discount to
the volume weighted average share price of the Company's shares for the five
business day period prior to the note holder notifying the Company of its
intention to convert. Additionally, the maturity date on the B Notes has been
extended by a further 12 months to mature on 9 September 2026. All other terms
of the B Notes remain the same.
16. RECONCILIATION OF STATUTORY RESULTS TO ALTERNATIVE PERFORMANCE MEASURES
26 weeks ended 26 weeks ended 52 weeks ended
31 December 2023 01 January 2023 02 July 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
(Loss) / profit from operations (87) (94) (2,812)
Exceptional items 614 314 792
Acquisition related transaction costs - - 734
Pre-opening costs 52 920 1,013
Share based payment charge (6) 102 181
Impairment 168 - 565
Adjusted profit from operations 741 1,242 473
Depreciation and amortisation (pre IFRS 16 Right of use 2,164 1,351 3,094
asset depreciation)
IFRS 16 Right of use asset depreciation 2,045 1,503 3,278
IFRS 16 Right of use asset / liability disposal (24) (1) (220)
Adjusted EBITDA (IFRS 16) 4,926 4,094 6,625
IAS 17 Rent charge (2,787) (2,051) (3,997)
Adjusted EBITDA (IAS 17) 2,139 2,043 2,627
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. END IR GPURUWUPCGRARecent news on Nightcap
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AnnouncementREG - AIM - AIM Notice - 23/02/2024
AnnouncementREG - Nightcap PLC - Acquisition of The Piano Works and other matters
Announcement