REG - Brighton Pier Group - Final Results
08/05/2024 07:00
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RNS Number : 5111N Brighton Pier Group PLC (The) 08 May 2024
8 May 2024
The Brighton Pier Group PLC
(the "Company" or the "Group")
Final results
(for the 12 months to 24 December 2023)
The Brighton Pier Group PLC (the 'Group') owns and trades Brighton Palace
Pier, as well as five premium bars nationwide, eight indoor mini-golf sites
and Lightwater Valley Family Adventure Park.
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 prior period
financial results are presented on an 18 month basis to 25 December 2022, and
will not be directly comparable to current year financial information, which
is presented on a 12 month basis to 24 December 2023. Going forwards, the
change of year end date will enable more meaningful comparison of the Group's
financial performance, as it ensures that the typically busy summer trading
months are aggregated within a single reporting period.
Overall, trading conditions were challenging for the business, with cost of
living pressures softening consumer demand, most notably in the Bars division,
as well as poor weather, train strikes and a fire at the Royal Albion Hotel
impacting footfall to the Pier during key trading periods.
The Group recorded £8.2 million of non-cash highlighted items during the
year, of which £8.3 million related to impairment charges to its goodwill,
property, plant and equipment and right-of-use assets. Of these impairment
charges, £4.9 million related to the disposal of three sites in the Bars
division in Manchester, Cambridge and Brighton. The decision to dispose of
these sites was taken at the end of 2023 and as of 7 May 2024, Cambridge and
Brighton have been sold. The disposal of Manchester is also expected to
complete in 2024. This will result in a £4.6 million non-cash gain from the
release of the lease liabilities associated with these sites, broadly
offsetting the impairment charges recognised during 2023. This will positively
impact 2024 reported earnings.
Trading in 2024 is anticipated to be in line with market expectations and we
have taken a number of positive steps across the four divisions to enhance the
Group's proposition going forwards.
Financial results 12 months ended 24 December 2023 18 months ended
25 December 2022
£m £m
(unless otherwise stated) (unless otherwise stated)
Revenue 34.8 58.9
Group EBITDA 4.2 13.9
(Loss)/profit before taxation (8.8) 7.6
(Loss)/profit after taxation (7.5) 6.4
Basic (losses)/earnings per share (20.2)p 17.1p
Diluted (losses)/earnings per share (20.2)p 16.9p
Highlighted items (8.2) 0.5
Group adjusted EBITDA 4.3 13.8
(Loss)/profit before taxation - excluding highlighted items (0.6) 7.2
Adjusted basic (losses)/earnings per share (1.7)p 16.4p
Adjusted diluted (losses)/earnings per share (1.7)p 16.2p
Commenting on the results, Anne Ackord, Chief Executive Officer, said:
"In spite of a number of operational challenges experienced during 2023, the
Group delivered a resilient underlying trading performance.
While the outlook must continue to be one of caution until economic conditions
improve, the plan to trial charging for admissions to the Pier during peak
trading periods, the rationalisation of the loss-making sites in the Bars
division and the ongoing lodges project at Lightwater Valley are all important
developments that should enhance the Group's ability to successfully navigate
the challenges faced."
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
Cavendish Capital Markets Ltd (Nominated Adviser and Broker)
Stephen Keys (Corporate Finance) Tel: 020 7397 8926
Callum Davidson (Corporate Finance) Tel: 020 7397 8923
Michael Johnson (Sales) Tel: 020 7397 1933
Novella (Financial PR) Tel: 020 3151 7008
Tim Robertson
Claire de Groot
Safia Colebrook
This announcement contains inside information
Chairman's statement
This report covers the 12 months ended 24 December 2023, with comparisons to
2022 financial performance being for the 18 months ended 25 December 2022,
following the change to the Company's accounting reference date on 20 June
2022. Throughout this document, references to like-for-like trading compare
the 12 months ended 24 December 2023 with the 12 months ended 25 December
2022. In future periods, comparison of the Group's performance will be on a 12
month basis.
Group revenue for the 12 month period was at £34.8 million (2022: 18 month
period at £58.9 million), EBITDA for the 12 month period was £4.2 million
(2022: 18 month period at £13.9 million) and losses per share, excluding
highlighted items for the 12 months were (1.7) pence (2022: 18 month period
earnings per share of 16.4 pence).
Inflationary pressures persisted throughout the trading period, restricting
the disposable incomes of the Group's target markets and affecting footfall
and revenue across the majority of the estate. These pressures have also led
to significant cost increases, which, despite best efforts, could not be fully
recovered from our customers. The most significant cost increases were related
to food & beverage, wages and insurance. Despite these challenges, all
four divisions have remained resilient and continue to generate positive
EBITDA.
The general fragility in the consumer discretionary market was exacerbated
further by exceptionally poor weather across the key summer trading months,
and the disruption caused by unpredictable weather patterns continues to be a
challenge for us all.
In addition, rolling train strikes and a fire at the Royal Albion Hotel (which
restricted access to the Pier during peak season) combined to reduce footfall
onto the Pier by 18% during the key summer months. In spite of this, the Pier
held like-for-like sales to just 3% lower versus 2022, a positive reflection
of the enduring appeal of this historic attraction. As these strikes continue
into 2024, I am surely not alone in urging a swift resolution to the disputes
between union members and the respective rail operators.
Despite the shift in customer preferences away from larger shopping centres,
trading in the Golf has remained robust. Like-for-like sales are broadly in
line with 2022 (1% down), and the combination of competitive pricing and wide
demographic appeal should ensure that this division continues to hold up well
in the future.
I was also pleased to see like-for-like sales at Lightwater Valley up by 7% on
comparable months in 2022, as the Group experimented with a more dynamic
pricing structure to target its customer base more effectively. Overall
trading remained challenging during 2023, and the impairment charges
recognised during the period reflect a more cautious outlook going forward. A
number of operational efficiencies were implemented during the Park's closure
in the winter months of 2023 and early trading during 2024 has been promising.
The Bars division has been the most significantly disrupted by economic and
social pressures experienced during 2023, with weak trading across the
majority of the eight sites. In late 2023, the Group took the decision to
dispose of three sites, all of which were loss-making. The disposal of these
three sites is expected to deliver a more consistent trading result for the
remainder of the division. The impairment charges recognised during the period
reflect the write-down of property, plant and equipment and right-of-use
assets associated with these three sites. It should be noted that in the next
reporting period, these charges will be broadly offset by a corresponding
non-cash gain from the reversal of the lease liabilities for these sites,
improving earnings in 2024. The disposal of the three sites is expected to
deliver a more consistent trading result for the remainder of the division,
although the outlook remains one of caution in the late-night sector.
On 20 December 2023, the Group completed the second stage refinancing of its
borrowing facilities, replacing its £10.9 million term loan and £1.0 million
revolving credit facility with a larger £5.0 million revolving credit
facility and a reduced term loan of £6.9 million. These new facilities
provide the Group with additional operational flexibility and will provide the
opportunity to reduce its interest costs going forward. The new facilities
expire on 31 December 2027. The Group also made a final repayment on its
Coronavirus Business Interruption Loans during 2023, with £5.0 million of
loans received having now been repaid in full. As at 24 December 2023, the
Group had total cash and cash equivalents of £4.0 million (2022: £4.2
million).
Trading has been subdued for the first 18 weeks of 2024 at 5% below the
comparable period in 2023, as household disposable incomes remain under
pressure. Unhelpful weather conditions have also persisted in the early months
of the year. However, there is scope over the summer to recover this position,
especially when coupled with the savings from the disposed bars, the proposed
introduction of a £1 admission charge for the Pier for all non-residents of
Brighton and the encouraging early trading from Lightwater Valley in 2024. We
therefore believe that we will be able to manage the challenges of this
current market, with the Group in a stronger position than at the start of
2022. However, we need the economic headwinds from high inflation and interest
rates to abate, in order to move from a conservative to a more positive
outlook for the Group.
The Board does not propose to pay any dividend in respect of the 2023
reporting period (2022: nil).
Luke Johnson
Non-Executive Chairman
7 May 2024
Chief Executive Officer's report
This business review covers the trading results for the 12 months ended 24
December 2023 (2022: 18 months ended 25 December 2022), following the change
to the Company's accounting reference date on 20 June 2022.
Full-year results for the 12 months to 24 December 2023
Unless otherwise stated, comparisons to 2022 financial performance below are
for the 18 months ended 25 December 2022.
Revenue for the period was £34.8 million (2022: £58.9 million). This
primarily reflects the shorter period of account. On a like-for-like basis
(comparing with the 12 months ending 25 December 2022), Group revenue was down
4%, primarily due to softer trading in the Bars division, but also as a result
of weekend train strikes, poor weather and the hotel fire impacting footfall
to the Pier over the key summer months.
Revenue split by division:
· Pier
division £15.6
million (2022: £25.3 million)
· Golf
division £6.2 million
(2022: £10.0 million)
· Bars
division £8.4
million (2022: £15.5 million)
· Lightwater
Valley £4.6
million (2022: £8.1 million)
On a divisional basis and comparing with the like-for-like period in 2022:
· Brighton Palace Pier like-for-like sales were down
3% on 2022;
· Golf division like-for-like sales were down 1% on
2022;
· Lightwater Valley like-for-like sales were up 7% on
2022; and
· Bars division like-for-like sales were down 12% on
2022.
Group gross margin for the period was 86 % (2022: 87%), with inflationary
pressures primarily in relation to food & beverage continuing to affect
the Group.
Group adjusted EBITDA (see Notes 2 and 6) for the period was £4.3 million
(2022: £13.8 million).
Adjusted EBITDA split by division:
· Pier
division £1.7
million (2022: £4.7 million)
· Golf
division £2.8 million
(2022: £5.5 million)
· Bars
division £0.7
million (2022: £3.5 million)
· Lightwater
Valley £0.4
million (2022: £1.9 million)
· Group
overhead £(1.3)
million (2022: £(1.8) million)
Group EBITDA (see Notes 2 and 6) for the period was £4.2 million (2022:
£13.9 million).
Highlighted items consist of non-cash charges of £8.2 million (2022: £0.5
million of net gains) which were recognised during the period - see Note 3 for
further details. These arose from:
· £(3.0) million - impairment charges to
right-of-use assets;
· £(3.0) million - impairment charges to assets held
for sale;
· £(1.3) million - impairment charges to goodwill;
· £(1.0) million - impairment charges to property,
plant and equipment; and
· £0.1 million - release of provision in relation to
an ongoing legal claim.
Net finance costs of £1.7 million (2022: £1.8 million), made up of:
· Interest on borrowings £0.8
million (2022: £0.7 million)
· Interest on
leases £0.7 million
(2022: £1.1 million)
· Loan fee amortisation £0.2
million (2022: £nil)
Operating loss was £(7.1) million (2022: £9.4 million profit).
Loss before tax (excluding highlighted items) was £(0.6) million (2022: £7.2
million profit).
Loss before tax was £(8.8) million (2022: £7.6 million profit), primarily
due to £(8.3) million of impairment charges recognised within highlighted
items in the current period.
Taxation on ordinary activities totalling credits of £(1.3) million (2022:
tax charges of £1.3 million).
Loss after tax was £(7.5) million (2022: £6.4 million profit).
Basic losses per share (excluding highlighted items) were (1.7) pence (2022:
16.4 pence earnings per share) - see Note 4 for further details.
Basic losses per share were (20.2) pence (2022: 17.1 pence earnings per share)
- see Note 4 for further details.
Divisional Review
Pier division
· Revenue - for the 12 month period was £15.6
million (2022: 18 month period at £25.3 million)
· Like-for-like sales - down 3% on the 12 month
period ending 25 December 2022
· Gross margin - down 2% at 83% (2022: 85%), from a
combination of sales mix (with lower footfall impacting the high margin rides
business) and significant inflationary pressures (in particular in relation to
food & beverage operations).
· EBITDA - for the 12 month period was £1.7
million (2022: 18 month period at £4.7 million)
The trading performance of the Pier was negatively impacted by exceptionally
poor weather during the key summer months, with periods of high winds and
sustained heavy rain. This was further worsened by significant disruption
caused by both ongoing train strikes and a major fire at the hotel opposite
the Pier's entrance in July 2023. These factors combined negatively impacted
the number of visitors to the Pier, with summer footfall down 18% on the
equivalent like-for-like period in 2022, although like-for-like sales were
down only 3% for the full year.
Despite disappointing weather over the summer months the Pier continues to
diversify its offering. The Easter promotional activity and themed events for
the King Charles III Coronation weekend brought high footfall to the Pier. The
fifth annual 'PierFest' - a music, theatre and film festival hosted entirely
on the Pier - was the best attended yet, assisted by an unusually warm
September 2023. We have made significant inroads in building our local
residents database and, mainly through word-of-mouth recommendations, have
increased our events and functions business which we believe will continue to
grow. We are actively focusing on additional opportunities in this field over
the coming months.
The Pier added a 'Rockin' Tug' children's ride to the fairground to complement
its existing offering. The Rides continue to provide a unique offering to
visitors and, when weather conditions permit, they significantly bolster the
trading performance for the division as a whole.
Shareholders will be aware that each year we undertake a substructure survey
which forms the basis for the annual maintenance plan by grading all the
steelwork supporting the deck. This is also complemented every five to six
years by a dive survey, which inspects the structure of the Pier below the
water line. The dive survey was last completed during 2023 and we can report
that no additional maintenance requirements in excess of those normally
budgeted have arisen from either survey. The next dive survey is scheduled to
take place in 2028.
Golf division
· Revenue - for the 12 month period at £6.2
million (2022: 18 month period at £10.0 million)
· Like-for-like sales - down 1% on the 12 month
period ending 25 December 2022
· Gross margin - down 1% at 98% (2022: 99%)
· EBITDA - for the 12 month period at £2.8 million
(2022: 18 month period at £5.5 million)
The Golf division delivered another robust performance during 2023, with sales
broadly in line with 2022 on a like-for-like basis. As in all of the Group's
divisions, inflationary increases have applied pressure to operating margins,
with increased food offerings in the Plymouth site being the main driver
behind the 1% reduction in gross margin to 98% (2022: 99%).
Bars division
· Revenue - for the 12 month period at £8.4
million (2022: 18 month period at £15.5 million)
· Like-for-like sales - down 12% on the 12 month
period ending 25 December 2022
· Gross margin - in line with last year at 82%
(2022: 82%)
· EBITDA - for the 12 month period at £0.6 million
(2022: 18 month period at £3.5 million)
Trading conditions in the Bars division continue to be challenging, with the
contraction in disposable consumer income having a severe impact on the
younger target demographic, particularly in the late-night-focused sites. The
12% decline versus 2022 on a like-for-like basis was driven in part by a
challenging comparative, with early 2022 still experiencing exceptional
post-pandemic demand.
Lowlander Grand Café experienced stronger trading, particularly in the second
half of the year, with the venue's unique offering of Belgian craft beers and
a regularly evolving brasserie menu driving a 9% like-for-like sales increase.
Trading is continuing well in the early months of 2024.
In December 2023, the Group took the decision to dispose of three loss-making
sites: Manchester, Cambridge and Brighton , with a view to delivering a more
consistent and profitable trading result for the remainder of the division.
Lightwater Valley
· Revenue - for the 12 month period at £4.6
million (2022: 18 month period at £8.1 million)
· Like-for-like sales - up 7% on the 12 month
period ending 25 December 2022
· Gross margin - down 1% at 86% (2022: 87%)
· EBITDA - for the 12 month period at £0.4 million
(2022: 18 month period at £1.9 million)
Whilst trading was impacted by wet weather during July and August 2023, the
Park's peak trading period, it was nevertheless encouraging to see sales,
EBITDA and visitor numbers ahead of 2022 on a like-for-like basis. We have
introduced a number of improvements to the catering operation during the
Park's winter closure, with the intention of driving additional spend per head
in the summer of 2024. This has been coupled with a comprehensive review of
staff allocations during peak times, which is expected to lead to more
efficient rota planning.
The Park continued to host themed calendar events, with special seasonal
offerings at Easter and Halloween being well-received by customers. This year
saw the introduction of a number of dinosaur-themed attractions, with Rex the
Valleysaurus joining Ebor the Dragon as the second Park mascot. Lightwater
Valley also broke a record for weekend visitors during the Coronation of King
Charles III in May 2023 with over 6,000 visitors on one day.
The development of 20 pod-type units for rental has continued during the year,
with planning variations approved in the second half of the year.
Financial review
Unless otherwise stated, comparisons to 2022 financial performance are for the
18 months ended 25 December 2022.
Cash flow
Cash flow generated from operations (after interest and tax payments)
available for investment was £1.8 million (2022: £10.7 million). This
decrease was principally driven by the lower profit before tax in the current
period.
Property, plant and equipment and software
The Group invested £0.8 million in capital expenditure during the period
(2022: £1.3 million):
· £0.4 million was spent on the Pier division, £0.3 million of
which related to various IT infrastructure upgrades, with the balance relating
to minor expenditure;
· £0.2 million was spent in the Bars division on ERP software
upgrades alongside other minor refurbishments across the trading sites;
· £0.1 million was spent at Lightwater Valley in relation to ride
upgrades and the lodges development plan;
· £0.03 million was spent in the Golf division on minor course
improvements across the estate; and
· £0.1 million was spent on Group IT infrastructure.
Current bank debt and cash
On 20 December 2023, the Group completed the second stage refinancing of its
borrowing facilities, replacing its £10.9 million term loan and £1.0 million
revolving credit facility with a larger £5.0 million revolving credit
facility and a reduced term loan of £6.9 million. These new facilities will
provide the Group with additional operational flexibility and reduce its
interest costs going forwards. The new facilities expire on 31 December 2027.
At the period end the Group had total bank debt of £11.4 million (2022:
£11.3 million net of loan amortisation fees), and net debt (total bank debt
less cash and cash equivalents) of £7.4 million (2022: £7.1 million), broken
down as follows:
· An outstanding principal term facility of £6.9 million (2022:
£10.9 million):
o £3.9 million debt repayment was made in the period (2022: £0.9 million),
using the new £5.0 million RCF facility available to the Group (see below)
o £0.7 million is due within the next twelve months to the end of December
2024
· RCF facility drawdowns of £4.5 million (2022: £nil):
o Current facility is £5.0 million (2022: £1.0 million)
o Facility was initially drawn down at £4.5 million to facilitate repayment
of the term loan.
· CBILS 2 facility of £nil (2022: £0.5 million):
o Final repayment of £0.5 million made at the end of March 2023.
· Cash balances of £4.0 million (2022: £4.2 million).
During the 12 month period, the Group made net drawdowns of £0.1 million
(2022: net repayments of £9.1 million), made up of:
· £4.5 million drawdown of the RCF (2022: £3.6 million
repayment);
· £(3.9) million repayment of the principal term facility (2022:
£0.9 million repayment);
· £(0.5) million repayment of the CBILS 2 facility (2022: £2.7
million repayment); and
· £nil repayment of the CBILS 1 facility (2022: £1.8 million
repayment).
Key performance indicators ('KPI's)
The Group's KPIs remain focused on the continued growth of the Group to drive
revenues, EBITDA (see Notes 2 and 6) and earnings growth.
The like-for-like period is defined as the 12 month period ending 25 December
2022. Total Group revenue for the period was £34.8 million (2022: £58.9
million), down 4% on the like-for-like period in 2022 (2022: £36.1 million).
Revenue split by division:
· Pier
division
£15.6 million (2022: £25.3 million)
· Golf
division
£6.2 million (2022: £10.0 million)
· Bars
division
£8.4 million (2022: £15.5 million)
· Lightwater
Valley
£4.6 million (2022: £8.1 million)
On a divisional basis and comparing with the like-for-like period in 2022:
· Brighton Palace Pier like-for-like sales were down
3% on 2022;
· Golf division like-for-like sales were down 1% on
2022;
· Lightwater Valley like-for-like sales were up 7% on
2022; and
· Bars division like-for-like sales were down 12% on
2022.
EBITDA split by division:
· Pier
division
£1.7 million (2022: £4.7 million)
· Golf
division
£2.8 million (2022: £5.5 million)
· Bars
division
£0.6 million (2022: £3.5 million)
· Lightwater
Valley
£0.4 million (2022: £1.9 million)
· Group
overhead
£(1.3) million (2022: £(1.7) million)
Group loss on ordinary activities before taxation, excluding highlighted
items, was at £(0.6) million (2022: £7.2 million profit).
Group loss on ordinary activities after taxation was at £(7.5) million (2022:
£6.4 million profit).
Significant events that have taken place since the year end
In December 2023, the Group took the decision to dispose of three loss-making
sites in the Bars division: Manchester, Cambridge and Brighton. The assets
relating to these sites were fully impaired during the 12 month period ended
24 December 2023, resulting in total charges recognised within highlighted
items of £4.9 million. The associated lease liabilities, which will be
derecognised upon the completion of the disposal of the sites, were recognised
as held for sale as at 24 December 2023. The resulting gains are expected to
be approximately £4.6 million, broadly offsetting the impairment charges
recognised during the 12 months ending 24 December 2023 and improving expected
earnings for 2024. As of the date of this report, the disposal of Cambridge
and Brighton has been completed.
On 22 April 2024, the Group signed an amendment to its loan facility. This
amendment altered the quarterly covenants that the Group tests on a quarterly
basis. The other principal terms of the loan facility were unchanged from that
agreed on 20 December 2023.
Strategy of the Group, current trading and outlook for the coming period
Short-to-medium term strategy and outlook
Whilst the rate of inflation has eased over the previous year, high interest
rates and living costs continue to weigh on consumer discretionary spend.
Coupled with disappointing weather in the early months of 2024, footfall was
affected across the Group's trading estate.
Despite these challenges, all four divisions have remained resilient and
continue to generate positive EBITDA.
Furthermore, the Group continues to execute a number of actions that will
impact positively on earnings for the current year.
In the Bars, the disposal of three loss-making sites at the beginning of the
year (namely Brighton, Cambridge and Manchester), together with savings in
overhead, will improve the profitability of the division going forward.
On the Pier, the Group intends to charge for admission during peak trading
periods in the summer. This fee, which will not apply to local residents, will
allow us to continue to invest in the structure of the Pier and additionally
to contribute to its ever-increasing operating costs. Brighton Palace Pier is
an iconic landmark in Brighton which attracts tourists from all over the world
and these visitors also contribute significant revenue to the city as a whole.
Lightwater Valley has undergone a number of improvements over the closed
winter period, and early trading in 2024 has been promising. Planning
variations have recently been approved for a mixed-use development for lodges,
pods and camping areas in the grounds of the Park. The Group looks forward to
realising this exciting additional revenue stream in the years ahead.
Finally, the Golf division continues to trade well and we believe there is
further potential to expand this division with new sites when suitable
opportunities arise.
Current trading
Current Group like-for-like sales for the first 18 weeks of 2024 were down
£(0.5) million or 5% below the equivalent period in 2023.
The notable highlight so far has been Lightwater Valley, which at total sales
of £0.8 million is £0.3m ahead of last year. The division benefited from the
sunny weather across the Easter holiday period.
The Bars division continues to experience challenging trading conditions, with
total sales of £1.8m, down £(0.2) million against 2023.
The Golf division has benefited from the poor weather with sales for the 18
week period in line with last year at £2.4 million.
By contrast, the Pier was hampered by poor weather in the early months of
2024, with Brighton experiencing record levels of rainfall in February. Total
sales of £3.4m were £(0.6) million lower than the equivalent weeks in 2023.
Whilst trading was slightly below the prior year equivalent in the first 18
weeks of 2024, there remain opportunities from the busy summer trading period
ahead. Furthermore, when coupled with savings from the disposed bars,
admission charging on the Pier and encouraging early sales in Lightwater
Valley, we believe the shortfall from the first 18 weeks can be recovered.
Longer term developments
The Group will continue exploring further opportunities for organic revenue
growth that, combined with ongoing optimisation of operations across all four
divisions, will yield a resilient trading performance. There are early signs
that macroeconomic headwinds are easing and, while the Group remains cautious
in the immediate term, it is also keen to identify further growth
opportunities as conditions improve.
Consolidated statement of comprehensive income
For the 12 month period ended 24 December 2023
12 months ended 18 months ended 25 December 2022
24 December 2023
Notes £'000 £'000
Revenue 34,761 58,905
Cost of sales (4,907) (7,748)
Gross profit 29,854 51,157
Operating expenses - excluding highlighted items (28,822) (42,373)
Highlighted items 3 (8,222) 451
Total operating expenses (37,044) (41,922)
Other income 44 197
Operating profit - excluding highlighted items 1,076 8,981
Highlighted items 3 (8,222) 451
Operating (loss)/profit (7,146) 9,432
Finance income 80 24
Finance cost (1,752) (1,817)
(Loss)/profit before tax - excluding highlighted items (596) 7,188
Highlighted items 3 (8,222) 451
(Loss)/profit on ordinary activities before taxation (8,818) 7,639
Taxation on ordinary activities 1,282 (1,266)
(Loss)/profit and total comprehensive (expense)/income for the period (7,536) 6,373
(Losses)/earnings per share - basic* (pence) 4 (20.2) 17.1
Adjusted (losses)/earnings per share - basic* (pence) 4 (1.7) 16.4
* 2023 basic weighted average number of shares in issue is 37.29 million
(2022: 37.29 million).
No other comprehensive income was earned during the period (2022: nil).
Consolidated balance sheet
As at 24 December 2023
As at As at
24 December 2023
25 December 2022
£'000 £'000
Non-current assets
Intangible assets 8,222 9,545
Property, plant and equipment 26,083 28,139
Right-of-use assets 18,761 25,223
Deferred tax asset 1,016 -
54,082 62,907
Current assets
Inventories 868 815
Trade and other receivables 1,783 1,835
Income tax receivable 42 -
Cash and cash equivalents 3,952 4,208
6,645 6,858
TOTAL ASSETS 60,727 69,765
EQUITY
Issued share capital 9,322 9,322
Share premium 15,993 15,993
Merger reserve (1,111) (1,111)
Other reserve 452 452
Retained (deficit)/earnings (6,639) 897
Equity attributable to equity shareholders of the Parent 18,017 25,553
TOTAL EQUITY 18,017 25,553
LIABILITIES
Current liabilities
Trade and other payables 4,419 3,833
Other financial liabilities 690 11,327
Lease liabilities 1,793 1,808
Income tax payable - 987
Provisions - 119
Liabilities held for sale 4,600 -
11,502 18,074
Non-current liabilities
Other financial liabilities 10,710 -
Lease liabilities 20,288 25,365
Deferred tax liability - 512
Other payables due in more than one year 210 261
31,208 26,138
TOTAL LIABILITIES 42,710 44,212
TOTAL EQUITY AND LIABILITIES 60,727 69,765
Consolidated statement of cash flows
For the 12 month period ended 24 December 2023
12 months to 18 months to
24 December 2023 25 December 2022
Notes £'000 £'000
Operating activities
(Loss)/profit before tax (8,818) 7,639
Net finance costs 1,672 1,793
Amortisation of intangible assets 83 126
Impairment of goodwill 5 1,326 985
Impairment/(reversal of impairment) of property, plant and equipment 5 957 (424)
Impairment/(reversal of impairment) of right of use assets 5 3,044 (489)
Impairment of assets held for sale 5 3,014 -
Depreciation of property, plant and equipment 1,380 2,372
Depreciation of right-of-use assets 1,674 2,453
Gain on disposal of property, plant and equipment (107) -
Gain on derecognition of lease liabilities due to disposal - (688)
Gain on derecognition of lease liabilities due to waivers & concessions (6) (402)
Charge on recognition of in-substance fixed rent - 268
Increase in provisions and deferred tax (119) 119
Increase in inventories (53) (84)
(Increase)/decrease in trade and other receivables 52 2,381
Increase/(decrease) in trade and other payables 462 (3,539)
Interest paid on borrowings (816) (712)
Interest paid on lease liabilities (735) (1,105)
Interest received 80 24
Income tax paid (1,275) (32)
Net cash flow generated from operating activities 1,815 10,685
Investing activities
Purchase of property, plant and equipment and intangible assets (829) (1,296)
Proceeds from disposal of property, plant and equipment 107 18
Payment of deferred and contingent consideration to former Lightwater Valley - (1,000)
Attractions Limited shareholders
Net cash flows used in investing activities (722) (2,278)
Financing activities
Proceeds from borrowings 4,500 -
Repayment of borrowings (4,467) (9,063)
Amortisation of arrangement fees (116) -
Principal paid on lease liabilities (1,266) (2,216)
Net cash flows used in financing activities (1,349) (11,279)
Net decrease in cash and cash equivalents (256) (2,872)
Cash and cash equivalents at beginning of period 4,208 7,080
Cash and cash equivalents at end of period 3,952 4,208
Consolidated statement of changes in equity
For the 12 month period ended 24 December 2023
Issued share capital Share premium Merger reserve Other reserves Retained (deficit)/ Total shareholders' equity
earnings
£'000 £'000 £'000 £'000 £'000 £'000
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
Loss and total comprehensive expense for the period - - - - (7,536) (7,536)
At 24 December 2023 9,322 15,993 (1,111) 452 (6,639) 18,017
Notes to the consolidated financial statements
For the 12 month period ended 24 December 2023
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 24 December 2023, the Group also operated
eight premium bars (2022: eight) and eight (2022: 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 7 May 2024. The
preliminary results for the period ended 24 December 2023 are based on the
audited financial statements for the same period. The financial information
for the period ended 24 December 2023 and the period ended 25 December 2022
does not constitute the company's statutory accounts for those periods. The
auditors' reports on the accounts for 24 December 2023 and 25 December 2022
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
UK-adopted International Accounting Standards ('IASs') in conformity with the
requirements of the Companies Act 2006. The consolidated financial statements
also comply fully with International Financial Reporting Standards ('IFRSs')
as issued by the International Accounting Standards Board ('IASB'). The
accounting policies which follow set out those policies which apply in
preparing the financial statements for the period ended 24 December 2023.
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 prior period
financial results are presented on an 18 month basis to 25 December 2022, and
will not be directly comparable to current year financial information, which
is presented on a 12 month basis to 24 December 2023.
Going concern
As at 24 December 2023, the Group had net current liabilities of £4,857,000
(2022: £11,216,000). The Group also had cash and cash equivalents of
£3,952,000 (2022: £4,208,000) 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 term loan of £6,900,000, which was initially entered into in
April 2016. The term loan was extended for a period of 4 years on 20 December
2023 and is now due for final repayment on 31 December 2027. As a consequence,
loan repayments of £690,000 are payable over the next 12 months;
· a revolving credit facility of £5,000,000, which was initially
entered into in April 2016. This facility was increased from £1,000,000 on 20
December 2023 and was also extended for a period of 4 years, with a final
repayment date of 31 December 2027. As at 24 December 2023, this facility was
£4,500,000 drawn (2022: undrawn); and
· the Group also made a final repayment of £457,000 at the end of
March 2023 in relation to its Coronavirus Business Interruption Loans (CBILs).
No further amounts are due.
Quarterly covenant tests are in place over the bank facilities. These tests
were revised on 22 April 2024, and the Group is now subject to a Minimum
EBITDA (on a pre-IFRS 16 basis) and Minimum Liquidity test in June 2024, with
Net Leverage, Interest Cover and Debt Service Cover tests commencing in
September 2024. The loan to value test was unchanged. The Group was compliant
with all applicable covenant tests as of both 24 December 2023 and 24 March
2024.
The Directors and management of the business have used Board-approved forecast
cash flows covering the period through to December 2025 as a base case. In
this scenario, no covenant breaches are forecast.
These forecasts have been subjected to scenario modelling and sensitivity
analysis which the Directors consider to be sufficiently robust. Based on this
information, the Directors expect the following:
· that in a reasonably possible downturn in expected trading
performance, no covenant breaches will occur;
· that in the event that trading performance were to fall below
current expectations, the Group would have the ability to take mitigating
actions to respond as necessary, for example by reducing discretionary spend
for larger capex projects;
· that in a reverse stress test scenario, which measures the point
at which covenant breaches occur, the Group's EBITDA for the 12 months ending
31 December 2024 would need to be 46% lower than the Board-approved budget,
updated for actual trading through to the end of February 2024;
· that the Group will 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 existing cash resources available to
it; and
· that the Group will have sufficient cash resources available to
meet all of its liabilities as they fall due.
Accordingly, management do not consider that there is a material uncertainty
in relation to going concern and consequently, these financial statements have
been prepared on a going concern basis.
2. Segmental information
12 month period ended Brighton Palace Pier Golf Bars Lightwater Valley Total segments Head office costs 2023 consolidated total
24 December 2023
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue from contracts with customers:
Food & beverage 6,602 163 7,201 977 14,943 - 14,943
Admissions - 5,991 885 2,973 9,849 - 9,849
Rides and other attractions 8,822 68 - 97 8,987 8,987
Other 177 4 261 540 982 - 982
Total revenue 15,601 6,226 8,347 4,587 34,761 - 34,761
Cost of sales (2,630) (100) (1,518) (659) (4,907) - (4,907)
Gross profit 12,971 6,126 6,829 3,928 29,854 - 29,854
Gross profit % 83% 98% 82% 86% 86% 86%
Administrative expenses:
Other administrative expenses (excluding depreciation and amortisation) (11,212) (3,334) (6,300) (3,543) (24,389) (1,296) (25,685)
Other income:
Insurance income - 17 - - 17 - 17
Other income - - 27 - 27 - 27
EBITDA 1,759 2,809 556 385 5,509 (1,296) 4,213
Depreciation and amortisation (excluding depreciation of right-of-use assets) (403) (384) (353) (323) (1,463) - (1,463)
Depreciation of right-of-use assets (4) (861) (705) (104) (1,674) - (1,674)
Operating profit/(loss) (excluding highlighted items) 1,352 1,564 (502) (42) 2,372 (1,296) 1,076
Highlighted items - (256) (5,205) (2,761) (8,222) - (8,222)
Net finance cost (excluding interest on lease liabilities) - - - - - (937) (937)
Net finance costs arising on lease liabilities (1) (271) (282) (181) (735) - (735)
Profit/(loss) before tax 1,351 1,037 (5,989) (2,984) (6,585) (2,233) (8,818)
Income tax - - - - - 1,282 1,282
Profit/(loss) after tax 1,351 1,037 (5,989) (2,984) (6,585) (951) (7,536)
EBITDA 1,759 2,809 556 385 5,509 (1,296) 4,213
Adjusted EBITDA 1,759 2,809 675 385 5,628 (1,296) 4,332
2. Segmental information (continued)
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 from contracts with customers:
Food & beverage 9,897 263 13,429 1,483 25,072 - 25,072
Admissions - 9,713 1,738 5,266 16,717 - 16,717
Rides and other attractions 14,916 31 - 721 15,668 15,668
Other 436 7 350 655 1,448 - 1,448
Total 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
EBITDA 4,744 5,456 3,484 1,903 15,587 (1,655) 13,932
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)
Operating profit/(loss) (excluding highlighted items) 3,980 3,589 1,841 1,226 10,636 (1,655) 8,981
Highlighted items - (307) 758 - 451 - 451
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 4,744 5,456 3,484 1,903 15,587 (1,655) 13,932
Adjusted EBITDA 4,744 5,456 3,484 1,903 15,587 (1,774) 13,813
3. Highlighted items
12 month period ended 18 month period ended
24 December 2023
25 December 2022
£'000 £'000
Impairment of goodwill 1,326 985
Impairment/(reversal of impairment) of property, plant and equipment 957 (424)
Impairment/(reversal of impairment) of right-of-use assets 3,044 (489)
Impairment of assets held for sale 3,014 -
Charge on recognition of in-substance fixed rent - 430
Gain on derecognition of lease liabilities for continuing sites using: - (337)
- IFRS 9 derecognition criteria
- IFRS 16 practical expedient - (65)
Gain on derecognition of lease liabilities for disposed sites - (670)
Other closure costs & legal costs (119) 119
Total 8,222 (451)
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 28
for a reconciliation of non-GAAP measures.
12 month period ended 24 December 2023
The Group performed two impairment tests in the current period, in December
2023 and in June 2023. The Group considers the relationship between the
trading performance of each CGU and their carrying value when reviewing for
indicators of impairment. Based on management's review of the expected
performance of the core estate, impairments totalling £8,341,000 were
identified, split between goodwill (£1,326,000), property, plant and
equipment (£957,000), right-of-use assets (£3,044,000) and assets held for
sale (£3,014,000). The Group expects to complete the disposal of three
trading sites in the Bars division during 2024. The completion of this process
will result in a gain in the Consolidated statement of comprehensive income of
£4,600,000, broadly offsetting impairment charges of £4,901,000 recognised
in the current reporting period in relation to these three sites.
During the current period, the Group released provisions totalling £119,000
in relation to an ongoing legal claim from a former trading site in the Bars
division.
18 month period ended 25 December 2022
The Group performed two impairment tests in the prior period, in December 2022
and in June 2022. Impairments to goodwill of £985,000 were 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 was more
favourable than in prior reviews, resulting in a reversal of impairments
applied to property, plant and equipment of £424,000 and right-of-use assets
of £489,000. These reversed impairments that were applied as part of
management's 2020 impairment review.
During the COVID-19 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 prior 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. Prior to the assessment having been made, turnover rent payments
totalling £162,000 were recognised directly in the Consolidated statement of
Comprehensive Income. Total turnover rent payments of £430,000 were therefore
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-19 pandemic prompted the IASB to issue a practical
expedient to provide relief for lessees from lease modification accounting for
rent concessions related to COVID-19. The practical expedient allowed entities
to recognise the value of any agreed rent concessions in the Consolidated
statement of comprehensive income rather than adjusting the underlying
right-of-use asset and lease liability. The Group recognised total credits of
£65,000 within highlighted items in the Consolidated statement of
comprehensive income for the period ended 25 December 2022.
The practical expedient could only be used for rent concessions covering the
period to 30 June 2022. In some instances, the Group agreed temporary lease
variations that extend beyond this date. These variations amounted, 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 derecognised the appropriate portion of its total
liability in accordance with the provisions of IFRS 9 'Financial Instruments'.
The Group recognised total credits of £337,000 within highlighted items in
the Consolidated statement of comprehensive income during the period ended 25
December 2022.
Lease liabilities of £688,000 were extinguished during the period as a result
of the disposal of the Reading Smash site. 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 arose as a result of an ongoing claim made in
relation to a former trading site in the Bars division.
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 12 month period ended 18 month period ended
24 December 2023 25 December 2022
(Loss)/profit for the period (£'000) (7,536) 6,373
Basic weighted number of shares (number) 37,286,284 37,286,284
(Losses)/earnings per share - basic (pence) (20.2) 17.1
Adjusted basic earnings per share 12 month period ended 18 month period ended
24 December 2023 25 December 2022
(Loss)/profit for the period excluding highlighted items (£'000) (626) 6,126
Basic weighted number of shares (number) 37,286,284 37,286,284
Adjusted (losses)/earnings per share - basic (pence) (1.7) 16.4
Diluted basic earnings per share 12 month period ended 18 month period ended
24 December 2023 25 December 2022
(Loss)/profit for the period (£'000) (7,536) 6,373
Diluted weighted number of shares (number) 37,286,284 37,802,824
(Losses)/earnings per share - diluted (pence) (20.2) 16.9
Adjusted diluted earnings per share 12 month period ended 18 month period ended
24 December 2023 25 December 2022
(Loss)/profit for the period excluding highlighted items (£'000) (626) 6,126
Diluted weighted number of shares (number) 37,286,284 37,802,824
Adjusted (losses)/earnings per share - diluted (pence) (1.7) 16.2
Reconciliation of adjusted (loss)/profit for the period
Adjusted (loss)/profit is calculated as follows:
12 month period ended 18 month period ended
24 December 2023 25 December 2022
£'000 £'000
(Loss)/profit for the period (£'000) (7,536) 6,373
Highlighted items (£'000) 8,222 (451)
Tax (charge)/credit arising on highlighted items (£'000) (1,312) 204
Adjusted (loss)/profit for the period (626) 6,126
The tax charge arising on highlighted items of £1,312,000 (2022: credit of
£204,000) reflects the amount of current tax at the enacted rate of 23.42%
(2022: 19.00%) that arises on those highlighted items that are disallowable
for tax purposes.
Dilutive shares
The impact of dilutive shares on the weighted average number of shares is
summarised below:
24 December 2023 25 December 2022
Number Number
Weighted average number of shares for Basic (LPS)/EPS 37,286,284 37,286,284
Dilutive effect of share options and warrants - 516,540
Weighted average number of shares for Diluted (LPS)/EPS 37,286,284 37,802,824
Share options with exercise prices of 55p, 63.5p and 111p as noted in Note 18
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 (2022: share options with exercise prices of 111p).
5. Impairment review
The Group performed two impairment tests in the current period, in December
2023 and in June 2023 (2022: two tests, one in December 2022 and one in June
2022). The Group considers the relationship between the trading performance of
each cash generating unit ('CGU') and their carrying 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.
Impairment indicators in the form of continuing inflationary pressures and
declining consumer confidence, and the resulting downturn in trading
performance, prompted management to perform a full impairment review in June
2023. Impairment to goodwill of £1,070,000 was identified in Lightwater
Valley, resulting from a more subdued trading outlook than expected at the
time of acquisition in June 2021.
Further impairments to property, plant and equipment of £303,000 and
right-of-use assets of £1,584,000 were identified in the Bars division in
June 2023, in relation to three sites: Brighton, Manchester and Cambridge.
The contraction in consumers' disposable incomes resulting from the
challenging macroeconomic environment has affected the whole of the Bars
division, however the effect was the most pronounced in these three sites. By
24 December 2023, management had committed to a plan to either sell or dispose
of these three sites. Consequently, the fixed assets in relation to these
sites were fully impaired, resulting in further impairment charges to assets
held for sale of £3,014,000.
Continued caution in the short-to-medium term outlook has led management to
forecast a more conservative trading performance. The resulting impact on the
December 2023 led to additional impairments totalling £2,370,000. These were
split between goodwill of £256,000, property, plant and equipment of
£654,000 and right-of-use assets of £1,460,000, and primarily relates to
those sites where the headroom was previously identified as being most limited
- in particular, Lightwater Valley, and the Glasgow and Rushden sites in the
Golf division.
The combined impairment charge for the year is shown in the table below:
Goodwill Property, plant and equipment Assets held for sale Right of use assets Total carrying value of CGUs
£'000 £'000 £'000 £'000 £'000
Carrying value brought forward as at 26 December 2022 9,272 28,139 - 25,223 62,634
Additions - 743 52 795
Depreciation - (1,380) - (1,674) (3,054)
Transfer to held for sale (462) 3,014 (2,552) -
Remeasurement adjustments - - - 756 756
June 2023 impairment charges (1,070) (303) - (1,584) (2,957)
December 2023 impairment charges (256) (654) (3,014) (1,460) (5,384)
Carrying value carried forward as at 24 December 2023 7,946 26,083 - 18,761 52,790
Total 2023 impairment charges 1,326 957 3,014 3,044 8,341
An analysis of goodwill by CGU is as follows:
Carrying value prior to impairment review Impairment Carrying value post impairment review
£'000 £'000 £'000
Bars
Putney 888 - 888
Golf
Glasgow 1,763 (30) 1,733
Manchester 2,997 - 2,997
Livingston 147 - 147
Sheffield 1,012 - 1,012
Cheshire Oaks 814 - 814
Rushden 581 (226) 355
Lightwater Valley 1,070 (1,070) -
Total goodwill 9,272 (1,326) 7,946
Methodology
The recoverable amount of each CGU has been determined based on a value in use
calculation performed as at 24 December 2023 using cash flow projections from
financial budgets as at 24 December 2023, approved by the Board of Directors
covering the period to December 2028. Cash flows for each CGU beyond December
2025 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% 14.0%
Bars 2% 12.7% - 14.8%
Golf 2% 13.2% - 14.5%
Lightwater Valley 2% 13.4%
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 are initially
applied to the goodwill attributed to the relevant CGU. Where further
impairments are required, these are then applied to property, plant and
equipment and right-of-use assets and 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:
• revenue growth over the forecast period;
• profit growth over the forecast period;
• discount rates; and
• growth rates used to extrapolate cash flows beyond the forecast
period.
Revenue growth - the value in use calculations are sensitive to estimated
future revenue growth, including customer footfall across the Group estate and
expected spend per head.
Profit growth - the value in use calculations are also sensitive to the
Group's ability to achieve its forecast profit growth, taking into account
both the revenue growth referred to above and sufficient cost control measures
to maintain expected future profit margins.
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 customers 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.
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 ('the
Act'); therefore it can be reasonably assumed that an extension will occur.
For leases outside 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:
Golf site: Extension required to existing lease to avoid impairment Impairment required should lease not be extended or alternative trading
premises found
£'000
Glasgow 5 years 1,463
Manchester Nil -
Livingston 1 year 63
1,526
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 20% in EBITDA in 2024 and 2025.
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
CGUs:
Additional Impairment
Carrying value at 25 December 2022 Base case impairment WACC sensitivity Long term growth rate sensitivity EBITDA sensitivity
£'000 £'000 £'000 £'000
Bars
Cambridge Lola Lo 1,229 (1,171) - - -
Brighton Coalition 1,324 (1,272) - - -
Manchester Lola Lo 2,547 (2,458) - - -
Lowlander 316 (291) - - -
Embargo 2,159 (131) (182) (111) (100)
Putney Le Fez 2,515 - (350) (290) (308)
Golf
Rushden 3,424 (226) (401) (198) (244)
Glasgow 2,437 (30) (311) (281) (354)
Pier 19,417 - (2,593) (1,675) (3,196)
Lightwater Valley 12,582 (2,762) (1,686) (1,218) (1,466)
Other sites 14,684 - - - -
Total 62,634 (8,341) (5,523) (3,773) (5,668)
The headroom on other sites in the Bars and Golf divisions were not considered
sensitive to reasonably possible changes in key assumptions.
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
alternative performance measures may not be comparable with similarly titled
performance measures or disclosures by other entities.
EBITDA
EBITDA is defined as operating profit/(loss) before interest, tax,
depreciation, amortisation, impairments and highlighted items, and is a key
metric used by management in order to assess the performance of each division
and the Group as a whole.
Adjusted EBITDA is defined as EBITDA, adjusted for income and expenditure
included within highlighted items, with the exception of those that relate to
interest, tax, depreciation, amortisation and impairments.
Group profit before tax can be reconciled to Group EBITDA as follows:
EBITDA Reconciliation 12 month period ended 18 month period ended
24 December 2023
25 December 2022
£'000 £'000
(Loss)/profit before tax for the year (8,818) 7,639
Add back depreciation of property, plant and equipment 1,380 2,372
Add back depreciation of right-of-use assets 1,674 2,453
Add back amortisation 83 126
Add back finance costs 1,672 1,793
Add back highlighted items 8,222 (451)
Group EBITDA 4,213 13,932
A reconciliation between EBITDA and adjusted EBITDA is shown below:
12 month period ended 18 month period ended
25 December 2022
24 December 2023
£'000 £'000
EBITDA 4,213 13,932
Other closure costs & legal costs 119 (119)
Adjusted EBITDA 4,332 13,813
Like-for-like sales growth
Like-for-like sales growth is a measure of growth in sales, adjusted for new
or divested sites or in order to compare similar reporting periods. This 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 on a consistent basis. In the Strategic Report, references to a
like-for-like basis are as follows:
• comparisons of 2024 with 2023 trading are the equivalent weeks
in each reporting period, adjusted to remove the trading of the three disposed
sites in the Bars division; and
• comparisons of 2023 with 2022 trading are the equivalent weeks
in each reporting period, being the 12 months ended 24 December 2023 versus
the 12 months ended 25 December 2022.
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 on a consistent 12 month
basis. The 12 month period ended 24 December 2023 is compared with the 12
month period ended 25 December 2022 below:
Audited Unaudited
12 months ended 12 months ended
24 December 2023 25 December 2022
£'000 £'000
Revenue 34,761 36,121
Cost of sales (4,907) (4,760)
Gross profit 29,854 31,361
Operating expenses - excluding highlighted items (28,822) (28,946)
Highlighted items (8,222) (353)
Total operating expenses (37,044) (29,299)
Other income 44 197
Operating profit - excluding highlighted items 1,076 2,612
Highlighted items (8,222) (353)
Operating (loss)/profit (7,146) 2,259
Finance income 80 -
Finance cost (1,752) (1,266)
(Loss)/profit before tax - excluding highlighted items (596) 1,346
Highlighted items (8,222) (353)
(Loss)/profit on ordinary activities before taxation (8,818) 993
Taxation on ordinary activities 1,282 43
(Loss)/profit and total comprehensive (expense)/income for the period (7,536) 1,036
(Losses)/earnings per share - basic* (pence) (20.2) 2.8
(Losses)/earnings per share - diluted (pence) (20.2) 2.6
* 2023 basic weighted average number of shares in issue is 37.29 million
(2022: 37.29 million).
No other comprehensive income was earned during the period (2022: nil).
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