Final Results

RNS Number : 2782L

Brighton Pier Group PLC (The)

30 September 2016

 

The Brighton Pier Group PLC

 (the "Group")

 Final results for the 52 weeks to 26 June 2016

30 September 2016

The Brighton Pier Group PLC consists of two divisions: The Brighton Marine Palace and Pier Company, which owns and operates Brighton Pier, an iconic landmark and leisure attraction in Brighton; and Eclectic Bars Limited, which is a leading operator of premium bars in the UK.

Financial Highlights		52 weeks ended 26 June 2016	52 weeks ended 28 June 2015
		£m	£m
Revenue		22.6	22.3
Group EBITDA before highlighted items		2.3	1.8
Group EBITDA after highlighted items		1.4	0.7
Profit/(loss) before taxation and highlighted items		0.9	(0.5)
Profit/(loss) before taxation after highlighted items		0.05	(6.2)
Adjusted earnings/(loss) per share - Basic		4.2p	(0.3)p
Adjusted earnings/(loss) per share - Diluted		4.1p	(0.3)p
Loss after tax and highlighted items		(0.1)	(5.8)
Loss per share - Basic & Diluted		(0.5)p	(44.7)p

Group Highlights

The Brighton Marine Palace and Pier Company:

•       Acquisition, by way of reverse takeover, of  The Brighton Marine Palace and Pier Company, the landmark visitor attraction and entertainment venue,  on 27 April 2016

•       Placing raised £8.5 million to part-fund the Acquisition

•       A significant opportunity to broaden the Group's business base by expanding into a differentiated offering within the leisure sector

•       The Board considers that the cash flow expected to be generated by the Pier business will be transformative to the Group

•       Brighton is one of the UK's most popular visitor destinations with over 10 million visitors per year, making it the most visited place in the South East. The pier itself is Britain's most popular attraction outside London.

Eclectic Bars Limited:

•       Good progress with the Group's existing bars business

•       Division remains cash generative, contributing £2.3 million to EBITDA during the period

•       Midweek student numbers up; increased number of student nights; and improved midweek sales versus the prior year

•       Full year benefit from single drinks supply contract renegotiated in prior year

Luke Johnson, Chairman of The Brighton Pier Group PLC, commented:

"This has been a transformational year for the Group. The acquisition of The Brighton Marine Palace and Pier Company, and the operational and financial improvement made within our bars division, mean the Group is well positioned to drive the growth of our business. Our ambition is to become a leading, experience-led attractions business in the UK. I believe we now have the right group structure and experienced management team to deliver that ambition."

All Group announcements and news can be found on www.brightonpiergroup.com.

Enquiries:
The Brighton Pier Group Plc       (www. brightonpiergroup.com)	Tel: [phone]
Luke Johnson, Executive Chairman	Tel: [phone]
John Smith, Chief Financial Officer	Tel: [phone]
Nominated Adviser and Joint Broker
Panmure Gordon ( UK Limited)	Tel: [phone]
Corporate Finance
Andrew Godber / Atholl Tweedie / Duncan Monteith
Corporate Broking
Charles Leigh-Pemberton
Arden Partner  plc ( Joint Broker)	Tel: [phone]
Corporate Finance
James Felix / Benjamin Cryer
Corporate Broking
Ed Walsh / Jonathan Keeling
Maitland ( Financial Communications Advisers)	Tel: [phone]
James Devas
Robbie Hynes

Chairman's Statement

The clear highlight of the year was the acquisition of The Brighton Marine Palace and Pier Company on 27 April 2016.

Brighton Palace Pier is an iconic landmark and leisure attraction in Brighton, spanning 1,722 feet and offering a wide variety of seaside entertainment including amusement rides, arcades, bars, a restaurant and other food and retail kiosks. Free of charge to enter, the pier provides a nostalgic, recreational environment, with spectacular views of Brighton and the English Channel. According to Visit Britain, it is the fifth most popular visitor destination in the UK, drawing over 4.6 million visitors in 2015, making it the UK's most visited attraction outside of London.

I believe this acquisition represented a significant opportunity for the Group to acquire the freehold of a valuable asset, while at the same time broadening our business base. The enlarged Group will benefit from the extensive experience of the Pier's management team, led by Anne Martin. Revenue generated by the Pier will be transformative to the existing business during the current financial year, providing substantial free cash flow for use within the enlarged Group and enabling the possibility of funding further acquisitions across the leisure and entertainment sector, as and when opportunities arise.

During our first full summer of ownership, the Pier business has traded in line with our expectations. Good weather has continued to attract visitors to Brighton seafront, despite the significant disruption to rail services over recent months.

Since my appointment at the start of this financial year, I am pleased to report that the Group has also made good progress with the existing bars business.

The campaign for returning students in September 2015 was a notable success, halting the slow-down witnessed during the previous year. The introduction of the 'Loyal' card scheme, the installation of free public wi-fi, improved offers and better communication with customers, have all contributed towards new student nights, boosting overall student numbers and increasing mid-week sales for the Group.

The significant savings made on head office costs, as well as the rebasing of costs across the estate, were, in my view, essential to the future profitability of the existing business. The 2.25% margin improvement arising from the re-negotiation of the Bars principal supply contracts has brought welcome additional profit, together with a logistics benefit through having a single drinks supplier.

Meanwhile, Derby Lola Lo's return to profitability, the successful launch of Smash, our new 'ping pong' bar in Reading, and the disposal of Sheffield and half of the Liverpool site, demonstrate the positive progress.

Most importantly, at the end of this financial period, the new combined Group returned to profitability with basic adjusted earnings per share of 4.2 pence versus a loss of 0.3 pence per share for the same period last year. This is a key milestone for the business and demonstrates what the Group can accomplish through effort and application.

Board

There have been a number of changes to the composition of the Board during the year. Following the acquisition of the Pier, Reuben Harley resigned from the Board and I would like to thank him for his contribution during his period in office. Leigh Nicolson, formerly Operations Director, was appointed Managing Director and takes over leadership of the Bars division. I am also pleased to welcome Anne Martin, who joins the Group as the new Managing Director of the Pier division and, Joe Tager as a Non-Executive Director.

I believe these appointments bring a wide range of additional expertise to the Board.

Luke Johnson

Chairman

30 September 2016

Strategic review

Business Review

The Brighton Pier Group PLC (the Group), owns and trades Brighton Palace Pier together with 19 (2015: 19) premium bars in major towns and cities across the UK.

The Group operates these businesses in two separate divisions: Leigh Nicolson leads the Bars division and Anne Martin leads the Pier division.

Brighton Palace Pier was acquired on 27 April 2016 for a total cash consideration of £18 million on a cash-free, debt-free basis. The acquisition constituted a reverse takeover under the AIM Rules and was approved by shareholders at a general meeting held on 26 April 2016. The Company funded the purchase from the proceeds of an £8.5 million placing of new ordinary shares in the Company (at a price of 55 pence), together with new £13 million debt financing from Barclays Bank plc (made up of a £12 million term loan facility and a new revolving credit facility of £1 million).

The trading results for the period include 52 weeks from the Bars division and two days short of 9 weeks for the Pier division.

The Group is pleased to report the return to profitability with profit before tax and highlighted items at £0.9 million (2015: loss £0.5 million).

Adjusted earnings per share (basic) on all operations was 4.2 pence (2015: loss per share of 0.3 pence).

Adjusted earnings per share (diluted) on all operations was 4.1 pence (2015: loss per share of 0.3 pence).

Profit before tax and after highlighted items was £47,000 (2015: loss £6.2 million).

Loss per share (basic and diluted) on all operations was a loss of 0.5 pence (2015: loss per share of 44.7 pence).

Review of the Group's activities during the year

Bars Division

The Bars division trades under a variety of concepts including Embargo Republica, Lola Lo, Sakura, Po Na Na, Fez Club, Lowlander, Dirty Blonde, Smash and Coalition. The Group predominantly targets a customer base of sophisticated students midweek and stylish over 21s and professionals at the weekend. The division focuses on delivering added value to its customers through premium product ranges, high quality music and entertainment, and a commitment to exceptional service standards. The Bars estate is nationwide, incorporating key university cities and towns that provide a vibrant night time economy and the demographics to support premium bars.

The Group undertook a number of actions to mitigate the downturn in trading it observed in the 2015 financial year that had resulted from lower student numbers, increased competition and the underperformance of two sites (Lola Lo in Derby and Dirty Blonde in Brighton) including:

•           using the intelligence and findings from student focus group sessions to formulate plans for those returning in September 2015;

•           reducing the head office cost base;

•           focusing activity on profitable trading nights and ensuring cost savings by closing non-profitable sessions;

•           reviewing the estate in order to establish the on-going viability of some of the smaller, albeit profitable, sites and to improve trading in the two underperforming sites;

•           re-negotiating the principal supply contracts at the end of February 2015, bringing revenue and margin benefits as well as the logistical simplicity of a single drinks supplier.

The management team is pleased to report that good progress has continued in all of the above areas throughout the year:

•           Students

At the start of the new academic year in September 2015, the Group introduced its new 'Loyal' card, offering special deals for cardholders on student nights.  The initiative has proved to be a significant success, with over 664,000 drinks sold under the 'Loyal' card scheme during the student year.

We have now completed the installation of free public wi-fi into all of our venues, enabling students to stay connected with friends online. This provides the Group with the opportunity to acquire new customer data via the sign-on process, communicate offers to students when they sign onto wi-fi and ultimately drive sales through longer visit times in our venues.

In comparison with the prior year, the student academic year has witnessed increases in the total number of student sessions offered by Group, more students through our doors and increased sales from student nights.

Review of the Group's activities during the year (continued)

•           Improvements in liquor margin arising from new contracts started February 2015

The liquor margin is up 1% on the same period last year, reflecting continued purchasing benefits for the first seven months of the period.

•           Savings on operating expenses

Total operating expenses for the Bars division were £13,595k for the period (2015: £16,158k) before highlighted items. Total costs have fallen by £2,563k (15.9%), which reflects the savings both in the head office and across all the units.

•           Outlook for the estate

The Group expects to continue to benefit from the cost savings already delivered, both at head office and at site level, and will continue to dispose of marginal sites where the opportunities arise.

Key developments in the Bars division over the period

Derby Lola Lo

Derby has had considerable success this year in breaking into the student market, which forms a crucial part of trade in this city.  The management team has significantly improved the operation of this business and the Board has pleasure to report that this venue is now profitable.

Brighton Dirty Blonde 

The work to make the bar more visible from the street, to simplify the food offering and to reduce the cost base has been completed. However, the challenge to deliver mid-week sales together with the high cost base, means that this venue continues to be unprofitable. We are reviewing all options for this site over the coming months.

Reading Smash

The street level bar of Reading Sakura was redeveloped and reopened at the end of May 2016 as Smash. The bar trades during post-work hours and in the evening with a menu including fresh dough pizzas and craft beer. In addition, the venue provides activity areas for customers to enjoy games of ping pong with friends and to watch major sporting events on large screens. We are delighted with the success of this format, which is currently trading ahead of management expectations.

Manchester Sakura

This venue was forced to close just before Christmas due to water flooding from the railway lines above. Transport for Greater Manchester has been undertaking significant works to the track, which have affected a number of tenants on the locks.  An insurance claim for loss of trade and damage is already underway. The Landlord is working hard to resolve these issues but it is not yet possible to give any dates as to when this venue is likely to reopen.

Liverpool

The Landlord has carried out work to separate this venue into two halves, which is now complete.  As announced in September, half of the venue has already been disposed of to a new tenant, whilst the remaining half is being actively marketed for sale, and interest has been received from a number of parties.

Sheffield

Contracts for the disposal of this venue were agreed and signed in June 2016 and completed in July 2016. All costs associated with this disposal were provided for in the 2015 financial year.

Review of the Group's activities during the year (continued)

Pier Division

The Pier division manages all trading by Brighton Palace Pier, an iconic landmark and leisure attraction in Brighton, acquired on 27 April 2016.

Brighton Palace Pier offers a wide range of attractions including two arcades and over twelve amusement rides, together with a variety of on-site hospitality and catering facilities. The attractions, product offering and layout of the Pier are focussed on creating a family-friendly atmosphere that aims to draw a wide demographic of visitors. The Pier is free to enter, with revenue generated from the pay-as-you-go purchase of products on the amusement rides, in the arcades, in the hospitality facilities and at the retail kiosks.

Additionally, the Pier has recently introduced a pre-paid wristband offer to allow customers unlimited use of the amusement rides for a flat fee during their day visit, with secondary spend then generated in the arcades, catering and hospitality facilities and retail kiosks. Brighton Palace Pier's pricing structure enables its attractions and facilities to be accessible to visitors of all budgets.

The Pier is open every day of the year other than Christmas Day, typically from 9.30am until midnight (Easter to September) and 11.00am until 5.00pm (October to Easter). Average visit times range from one hour to around half a day, allowing the Pier to accommodate a high turnover of visitors each day. Whilst the Pier itself is outdoors, a number of the its attractions and hospitality facilities are under cover, including the Palm Court restaurant, making it possible to remain open for trade during periods of inclement weather.

Arcades

The Pier currently operates two indoor arcade locations with 347 machines in total - the Palace of Fun, which is located in what was formerly known as the Winter Garden near the entrance of the Pier and is the larger of the two, and the Dome, which is located at the Pier head amongst the amusement rides. Palace of Fun contains 234 arcade machines, including arcade games, simulators, penny pushers, and other participation games. Palace of Fun generates the majority of arcade revenue, and is a key revenue-generating attraction during the quieter winter period due to its location at the front of the Pier and being kept open all year round. The Dome holds 113 arcade machines, including arcade games, penny pushers, simulators, table games and competitive participation games. Side stalls are located throughout the Pier, offering classic fairground participation games such as 'hook a duck' and coconut shies.

Amusement rides

The amusement rides cater for a wide range of visitors of all ages, including thrill rides and traditional fairground rides. Entry to the amusement rides can be through pre-paid tickets or via the pre-paid unlimited entry wristband offer. Pricing is flexibly managed in respect of the time of season, the time of day and the prevailing weather. Other than when they are being serviced, which takes place in late winter, the rides remain open all year round, weather permitting.

The amusement rides are all based at the Pier head, and contain seven thrill rides.  These are major attractions to visiting customers and include: Turbo Coaster - the Pier's largest rollercoaster and the fastest of Brighton Palace Pier's rides, featuring two drops and a loop-the-loop; Air Race - a thrill ride replicating the experiences of an acrobatic aeroplane flight; The Booster - a 130 feet tall maximum thrill ride which rotates the customer 360 degrees while hurtling through the air; Twister - which rotates at 12 revolutions per minute; Galaxia - a high speed carousel; Wild River -  a wooden log flume, and Crazy Mouse - a rollercoaster with spinning cars.

Brighton Palace Pier also hosts a number of traditional fairground rides including: a carousel - a traditional family seaside ride; the Horror Hotel - a haunted house rollercoaster ride; dodgems - a popular bumper car ride; waltzers - a classic spinning fairground ride; trampolines, and a helter skelter.

Catering and hospitality

Brighton Palace Pier has a large mix of catering and hospitality options throughout the Pier, including restaurants, bars, fast food and snack kiosks as well as a range of concession kiosks.

Palm Court is a family-friendly fish and chip restaurant located midway along the Pier. Visitors can order meals either to eat in or take away. The restaurant is fully licensed to sell alcohol, serving a large selection of cold and hot drinks.

Victoria's Bar is a public house located next to Palm Court, offering cold and hot drinks, a shortened menu of Palm Court food to eat-in, and afternoon tea.

Horatio's Bar is a public house on the Pier head covering approximately 5,000 square feet, with a large beer garden adjoined to it and sea views out to the east of the Pier.

Review of the Group's activities during the year (continued)

Both Victoria's Bar and Horatio's Bar shows live sports, and Horatio's Bar can also host live music, entertainment in addition and private parties, extending the offering into late night hours.

Currently, 25 fast food and snack kiosks operate on the Pier by way of either concession or 'in-house'. These include fast food kiosks (Wokstar noodles & rice, burgers, hot dogs, savoury crêpes), snack kiosks (ice creams, doughnuts, sweet crêpes, and smoothies) and retail outlets. These are placed throughout the Pier, with a number specifically repeated to allow visitors to have multiple opportunities to purchase on their customer journey.

These spaces offer several private and function hire options for a range of events. An individual restaurant or bar may be hired, and it is possible for customers to hire the entire Pier for exclusive use, including all of its attractions. Parts of the Pier are also licensed to conduct marriages.

Key developments in the Pier division over the period

The Group took over Brighton Palace Pier at the start of the busy summer trading period and focus for the following 9 weeks was on maximising revenues from all of the current attractions. There have, however, been some small but useful developments during the period:

Glitter Bar

The Glitter Bar has historically had limited success, trading historically as a karaoke bar connected to the back of Horatio's. Management felt there was an opportunity to convert this space into an indoor children's soft play area and improve revenues. The additional attraction has enabled the Pier to increase the purchase price of a child's wristband by £2 thus driving additional spend across all of the children's rides. The Company believes a bigger opportunity exists to develop a larger play area and café space for parents in The Dome during the coming year.

New takeaway fish and chip shop

During very busy days on the Pier, queues can develop at the Palm Court restaurant. A new takeaway fish and chip shop has therefore been created, located at the Pier head in close proximity to the rides in order to provide another opportunity to purchase. The shop has driven good incremental revenue and is expected to pay back its investment in one year.

New website

A completely new website was launched in July (just after the period end). This new site improves mobile functionality and provides a significant enhancement to the online shop, offering sales in advance of products such as electronic wristbands.  It also connects the Pier with other social media, broadening its reach into a wider audience and creating a much-improved marketing tool to encourage new visitors to the Pier.

Five yearly dive report and annual structural report

As at the time of the production of the Group financial statements both surveys have been completed and no significant issues have emerged to indicate anything other than normal levels of annual maintenance are required.

Strategy of the combined Group and outlook for the coming year

In the short to medium term, the Group sees development opportunities for the Pier business including the potential to improve its catering and hospitality offering. In addition, we continue to review possible capital enhancement opportunities that have previously delivered strong EBITDA uplifts for the Pier, including the development of more family-friendly attractions such as a soft play area in the Dome and the bringing in-house of certain food kiosk concessions from vendors. 

In terms of the Bars division, the Group will continue to focus on providing quality service and delivery in respect of the Group's existing sites whilst also continuing to rationalise the estate, dispose of underperforming sites, and target developments and acquisitions when opportunities arise.

In the coming year, the combined Group's EBITDA will reflect the full 12 month impact of the acquisition of Brighton Palace Pier and synergies arising from the combined business including staffing and purchasing benefits. Trading for the summer period has been in line with management expectations.

The long-term strategy of the enlarged Group is to capitalise on the skills of both the Bars and the Pier divisions to create a growth company operating across a diverse portfolio of experiential leisure and entertainment assets in the UK. The Group will achieve this objective by way of organic revenue growth across the whole estate, together with the active pursuit of future potential strategic acquisitions of experiential leisure and entertainment destinations, enhancing the Group's portfolio to realise synergies by leveraging scale. It is the Board's longer-term strategy to position the Company as a consolidator within this sector.

Review of The Group's activities during the year (continued)

Significant events that have taken place since the year end

There have been no significant events arising between the end of the financial year and the date of signing of the financial statements to report.

Financial highlights

The Group remains strongly cash generative and profitable:  The key financial highlights are:

·      revenue for the period was £22.6 million (2015: £22.3 million)

·      Group EBITDA before highlighted items was £2.3 million (2015: £1.8 million)

·      Group EBITDA after highlighted items was £1.4 million (2015: £0.7 million)

·      profit before tax and highlighted items was £0.9 million (2015: loss £0.5 million)

·      profit before tax and after highlighted items was £47,000 (2015: loss of £6.2 million)

·      adjusted earnings per share (basic) was 4.2 pence (2015: loss per share of 0.3 pence)

·      adjusted earnings per share (diluted) was 4.1 pence (2015: loss per share of 0.3 pence)

·      loss after tax and highlighted items was £0.1 million (2015: loss of £5.8 million)

·      loss per share (basic and diluted) was 0.5 pence (2015: loss of 44.7p)

Balance Sheet

Fixed assets

During the period ended 26 June 2016, through the acquisition of 100% of the issued share capital of Brighton Marine and Palace Pier Company, the Group acquired tangible assets with a net book value of £18.4 million. These assets represent the Pier and associated assets. A gain of £0.3 million arose from the acquisition of the Pier and this has been recognised in the statement of comprehensive income as a highlighted item (see Note 3).

Assets with a net book value of £0.3 million were written down during the period, being the loss on fixed assets disposed as part of the refurbishment of the ground floor of the Reading Sakura site to the new Smash concept. This cost appears in highlighted items (see Note 5).

Bank debt

On 27 April 2016, the Group agreed new banking facilities with Barclays Bank to fund the acquisition of Brighton Marine and Palace Pier Company:

·      a new 5 year £12 million term loan facility, with a 10 year repayment profile of £1.2 million per annum. The first repayment of £0.6 million was paid in September 2016, with the second payment due in July 2017 and then annually thereafter in September and June;

·      a new 3 year revolving credit facility (RCF) of £1million, available for new acquisitions, refit projects and general working capital requirements.  At the end of June 2016, £0.5 million was outstanding on the RCF - this was fully repaid in July 2016;

·      the cancellation of the overdraft facility of £0.6 million.

At the period end, the Group had:

·      an outstanding term facility of £12 million (2015: £0.2 million), with repayments of £1.2 million due to be repaid within the next 12 months (2015: £0.2million). This  previous term loan facility was fully repaid by the end of September 2015;

·      an RCF facility of £1.0 million with £0.5 million drawn at the year-end (2015: £3.5 million). This balance was repaid in July 2016; and

·      cash balances of £3.1 million (2015: £1.0 million).

Review of the Group's activities during the year (continued

Key performance indicators

The Group's key performance indicators are focused on the continued expansion of the Group to drive revenues and EBITDA growth.

New acquisitions and developments

The long-term strategy of the enlarged Group continues to capitalise on the skills of the Group to create a growth company operating across a diverse portfolio of experiential leisure and entertainment assets in the UK. The Group will achieve this objective by way of organic revenue growth across the whole estate, together with the active pursuit of future potential strategic acquisitions of experiential leisure and entertainment destinations that could enhance the Group's portfolio to realise synergies by leveraging scale. It is the Board's longer-term strategy to position the Group as a consolidator within this sector.

·      The successful acquisition during the period of Brighton Marine and Palace Pier Company is the first example of this strategy. The Board considers that the cash flow expected to be generated by the Pier will be transformative to the existing Group, bringing substantial additional revenues and free cash flow for potential utilisation by the enlarged Group. This could nclude the possible funding of further acquisitions across the leisure and entertainment sector.

·      We continue to focus on the long-term quality of acquisitions.

Group revenue performance versus the prior period

The Group will continue to drive sales through acquisition and development, together with a strong focus over the coming year to increase revenues from a broader mix of activities.  The Group will continue to review its operations and, where appropriate, dispose of less profitable businesses. This will impact sales in the short term but improve profitability in the longer term.

·      Revenue on continuing operations was up 1.4% at £22.6 million (2015: £22.3million)

Growth in Group EBITDA on continuing operations before highlighted items

EBITDA is a key valuation metric for the valuation of the Group's business.

We continue to focus on driving EBITDA growth through new acquisitions, developments and organic growth.

·      Group EBITDA before highlighted items was up 28% at  £2.3 million (2015: £1.8 million)

·      Group EBITDA after highlighted items was up 114% at £1.4 million (2015: £0.7 million)

Consolidated statement of comprehensive income

For the 52 week period ended 26 June 2016

		52 weeks ended 26 June 2016	52 weeks ended 28 June 2015
		£'000	£'000
Revenue		22,592	22,282
Cost of sales		(4,365)	(4,589)
Gross profit		18,227	17,693
Operating expenses - excluding highlighted items		(17,151)	(18,026)
Operating expenses - highlighted items		(873)	(5,732)
Total operating expenses		(18,024)	(23,758)
Operating profit/(loss) - before highlighted items		1,076	(333)
Highlighted items - operating expenses		(873)	(5,732)
Operating profit/(loss)		203	(6,065)
Finance cost		(156)	(178)
Profit/(loss) before tax and highlighted items		920	(511)
Highlighted items		(873)	(5,732)
Profit/(loss) on ordinary activities before taxation		47	(6,243)
Taxation on ordinary activities		(143)	470
Loss and total comprehensive income for the year		(96)	(5,773)
Loss per share - basic**		(0.5)	(44.7)
Adjusted* earnings/(loss) per share - basic**		4.2	(0.3)
Loss per share - diluted		(0.5)	(44.7)
Adjusted earnings/(loss) per share - diluted		4.1	(0.3)

*   Adjusted basic and diluted earnings per share are calculated based on the profit for the period adjusted for highlighted items.

** 2016 basic weighted average number of shares in issue is 18.50 million (2015: 12.92 million).

No other comprehensive income was earned during the year (2015: NIL).

Consolidated balance sheet

As at 26 June 2016

	As at 26 June  2016		As at 28 June 2015
	£'000		£'000
Non-current assets
Intangible assets	4,375		4,308
Property, plant & equipment	22,796		4,537
	27,171		8,845
Current assets
Inventories	666		395
Trade and other receivables	1,879		1,204
Cash and cash equivalents	3,064		976
	5,609		2,575
TOTAL ASSETS	32,780		11,420
EQUITY
Issued share capital	7,920		3,231
Share premium	13,187		8,093
Merger reserve	(1,575)		(1,575)
Other reserve	180		130
Retained deficit	(6,046)		(5,950)
Equity attributable to equity shareholders of the Parent	13,666		3,929
TOTAL EQUITY	13,666		3,929
LIABILITIES
Current liabilities
Trade and other payables	6,129		3,101
Other financial liabilities	1,200		163
Income tax payable	143		-
Provisions	448		374
	7,920		3,638
Non-current liabilities
Other financial liabilities	11,184		3,468
Other payables	10		21
Provisions	-		364
	11,194		3,853
TOTAL LIABILITIES	19,114		7,491
TOTAL EQUITY AND LIABILITIES	32,780		11,420

Deferred tax balances as at 26 June 2016 have been presented on a net basis.

Consolidated statement of cash flows

For the period ended 26 June 2016

	52 weeks to		52 weeks to
	26th June  2016		28th June 2015
	£'000		£'000
Operating activities
Profit/(loss) before tax	47		(6,243)
Finance costs	156		178
Depreciation of property, plant and equipment	1,178		1,868
Impairment of intangible assets	-		1,156
Impairment of tangible fixed assets	-		2,854
Write-down of tangible fixed assets	-		221
Loss on disposal of property, plant and equipment	259		566
Gain on bargain purchase	(312)		-
Share-based payment expense	50		54
Movements in provisions	(290)		-
Decrease in inventories	26		60
Decrease in trade and other receivables	394		446
Increase in trade and other payables	456		508
Interest received	-		-
Interest paid	(87)		(192)
Income tax paid	-		-
Net cash flow from operating activities	1,877		1,476
Investing activities
Purchase of property, plant & equipment and intangible assets	(1,237)		(1,935)
Acquisition of business	(17,038)		-
Proceeds from disposal of property, plant & equipment	-		174
Net cash flows used in investing activities	(18,275)		(1,761)
Financing activities
Proceeds from borrowings	11,880		1,800
Repayment of borrowings	(3,163)		(650)
Proceeds from issue of ordinary shares	10,150		-
Share issue costs recognised directly in equity	(367)		-
Dividends paid	-		(323)
Capital element on finance lease rental payments	(14)		(27)
Net cash flows from financing activities	18,486		800
Net increase in cash and cash equivalents	2,088		515
Cash and cash equivalents at beginning of period	976		461
Cash and cash equivalents at year end date	3,064		976

Consolidated statement of changes in equity For the period ended 26 June 2016
	Issued share capital	Share premium	Other reserves	Merger reserve		Retained earnings/ (deficit)		Total shareholders' equity
	£'000	£'000	£'000	£'000	£'000		£'000
At 29 June 2014	3,231	8,093	76	(1,575)	146		9,971
Loss for the period	-	-	-	-	(5,773)		(5,773)
Transactions with owners:
Share-based payments charge	-	-	54	-	-		54
Dividends paid	-	-	-	-	(323)		(323)
At 29 June 2015	3,231	8,093	130	(1,575)	(5,950)		3,929
Loss for the period	-	-	-	-	(96)		(96)
Transactions with owners:
Issue of shares	4,689	5,461	-	-	-		10,150
Share issue costs taken to equity	-	(367)	-	-	-		(367)
Share-based payments charge	-	-	50	-	-		50
At 26 June 2016	7,920	13,187	180	(1,575)	(6,046)		13,666

 

Notes to the consolidated financial statements

For the period ended 26 June 2016

1. Accounting policies

The Brighton Pier Group PLC (formerly Eclectic Bar Group Plc) is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market. 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. The Group is also a leading operator of 18 premium bars trading in major towns and cities across the UK.

Announcement

This announcement was approved by the Board of Directors on 30 September 2016. The preliminary results for the year ended 26 June 2016 are based on the audited financial statements for the same period. The financial information set out in this announcement does not constitute the Company's statutory accounts for the years ended 26 June 2016 or 28 June 2015. The financial information set out in the announcement has been prepared on the basis of the accounting policies set out in the statutory accounts of Brighton Pier Group PLC (formerly Eclectic Bar Group Plc) for the year ended 28 June 2016. This condensed consolidated financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The auditor's reports on the financial statements for the years ended 26 June 2016 and 28 June 2015 were unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The financial statements for the year ended 28 June 2015 have been delivered to the Registrar of Companies.

Basis of preparation

The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union as they apply to financial statements of the Group for the period ended 26 June 2016 and in accordance with the Companies Act 2006. The accounting policies which follow set out those policies which apply in preparing the financial statements for the period ended 26 June 2016. These accounting policies were consistently applied for all the periods presented.

The Group financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The Group financial statements have been prepared under the historical cost convention.

The financial statements are prepared on a 52 or 53 week basis up to the last Sunday in June each year (2016: 52 week year ended 26 June 2016; 2015: 52 week year ended 28 June 2015).  The notes to the consolidated financial statements are on this basis.

2.  Significant accounting estimates, judgements and assumptions

Estimates

The preparation of the Group's financial statements requires management to make estimates, judgements and assumptions that affect the reported amount of assets and liabilities at the balance sheet date, amounts reported for revenues and expenses during the year, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities affected in the future.

In the process of applying the Group's accounting policies, management has made the following judgments and estimates which have the most significant effect on the amounts recognised in the financial statements:

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on similar assets or observable market prices less incremental costs for disposing of the assets. The value in use calculation is based on a discounted cash flow model. The recoverable amount is most sensitive to changes in expected future cash flows. The cash flows are derived from the budget and projections for the next three years. These projections are influenced by factors which are inherently uncertain such as footfall and non-controllable costs such as rent, rates and license costs. They do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset's performance of the cash generating unit being tested. The recoverable amount is also sensitive to the discount rate used for the discounted cash flow model and the growth rate used for extrapolation purposes.

The key assumptions used to determine the recoverable amount for the different cash generating units, including a sensitivity analysis, are disclosed further in Note 12 of the Group's annual report.

 Fair value of Brighton Palace Pier

IFRS 3: Business Combinations requires all assets and liabilities purchased as part of a business combination to be recorded at fair value. As part of the acquisition, an independent assessment of the market value of the Pier was carried out by GVA Bilfinger on behalf of Barclays. This assessment concluded that the value of the pier, landing deck, stage and assets was greater than the net book value attributed to it immediately prior to the acquisition. Management has used the market value calculated in this report, which is deemed consistent with the determination of fair value under IFRS 13 and IFRS 3, to be materially equal to the fair value of the business.

Judgements

Operating lease commitments

The Group has entered into commercial property leases as a lessee. In doing so, it obtains the use of property, plant and equipment. The classification of such leases as operating or finance lease requires the Group to evaluate the terms and conditions of the arrangements. In particular, whether it retains or acquires the significant risk and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the balance sheet.

Deferred tax assets

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except in certain circumstances. Significant management judgement is required to determine the amount of deferred tax that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Useful economic life and residual value of Brighton Palace Pier (the structure, including the landing deck and stage)

Management judge that the residual value of the pier is equal to the fair value at acquisition. This is because the value of Brighton Palace Pier as a viable business is entirely dependent on the pier structure being maintained in good order, at least equivalent to that at the date of acquisition. This judgment means that the pier structure is not subject to depreciation, as such amounts would be insignificant. Management reassess this judgement on an annual basis.

Deferred tax on revalued asset

IAS 12 'Income Taxes' requires that deferred tax is recognised where a difference between the tax base of an asset and its carrying value arises after initial recognition. The measurement of the deferred tax liability should reflect the tax consequences of the expected manner of recovering the carrying amount of the Pier. As the residual value of the pier has been judged to be equivalent to the book value, the expected method of recovery will principally be through sale and no deferred tax liability arises when calculated on this basis.

3.  Business combinations

On 27 April the Group acquired 100% of the issued share capital of Brighton Marine and Palace Pier Company (The) (BMPPC), an unlisted Company based in the UK. The acquired Company owns Brighton Palace Pier one of the most iconic and instantly recognisable attractions in the UK. The Group acquired this Company in order to expand and diversify its business.

Fair value of assets acquired and liabilities assumed		Fair value recognised at 27 April 2016
		£000s
Assets
Tangible assets		18,394
Inventories		297
Cash		473
Trade and other receivables		772
Liabilities
Trade and other payables		(3,086)
Total identifiable net assets at fair value		16,850
Gain arising on acquisition		(312)
Purchase consideration
Cash		16,538
Total purchase consideration		16,538

The gain on acquisition of £312,000 has been recognised as a highlighted item in the statement of comprehensive income. The gain arose as a result of an independent assessment of the market value of the Pier by GVA Bilfinger on behalf of Barclays. This assessment concluded that the value of the pier landing deck, stage and assets was greater than the net book value attributed to it immediately prior to the acquisition.

Brighton Marine Palace Pier Company contributed £2,841,000 to revenue and £537,000 to net profit during the period from acquisition (27 April 2016) to 26 June 2016. If the combination had taken place at the start of the year, the consolidated income statement for the period ended 26 June 2016 would show pro-forma Group revenue of £33,435,000 and the profit for period would have been £772,000.

Also on 27 April 2016 the group also acquired assets situated on Brighton Palace Pier with a net book value of £705,000 from Repset Limited. The fair value of these assets was deemed equal to their net book value.

The combined cash consideration of the above business combinations was £17,243,000.

4.  Segmental information

The following table presents revenue, profit and loss and certain asset and liability information regarding the Group's business segments for the period ended 26 June 2016.

		Owned Bars	Brighton Palace Pier	Total segments	Overhead	2016 consolidated total	2015 consolidated total
		(52 weeks)	(9 weeks)
		£'000	£'000	£'000	£'000	£'000	£'000
Revenue		19,751	2,841	22,592	-	22,592	22,282
Cost of sales		(3,927)	(438)	(4,365)	-	(4,365)	(4,589)
Gross profit		15,824	2,403	18,227	-	18,227	17,693
Gross profit %		80%	85%	81%	-	81%	79%
Administrative expenses (excluding depreciation)		(13,595)	(1,723)	(15,318)	(655)	(15,973)	(16,158)
Highlighted items		-	-	-	(873)	(873)	(5,732)
Depreciation		-	-	-	(1,178)	(1,178)	(1,868)
Net finance cost		-	-	-	(156)	(156)	(178)
Profit/(loss) before tax		2,229	680	2,909	(2,862)	47	(6,243)
Income tax		-	(143)	(143)	-	(143)	470
Profit/(loss) after tax		2,229	537	2,766	(2,862)	(96)	(5,773)
EBITDA (before highlighted items)		2,277	680	2,957	(653)	2,304	1,810
EBITDA (after highlighted items)		2,277	680	2,957	(1,526)	1,431	(657)

All segment assets and liabilities are located within the United Kingdom and all revenues arose in the United Kingdom.

Segment revenues are generated from external customers. There were no inter-segment sales in the years presented. No single customer contributed more than 10% of the Group's revenues.

The accounting policies of the reportable segments have been consistently applied. During the period ended 28 June 2015 the Group consisted of just one reportable operating segment. For the period ended 26 June 2016, overheads have been separated out in order to better reflect how management reviews the discrete financial information and uses it to allocate resources.

5.  Highlighted items

	Period ended 26 June 2016		Period ended 28 June 2015
	£'000		£'000
Acquisition and pre-opening costs
Acquisition costs	900		-
Gain on bargain purchase	(312)		-
Site pre-opening costs	285		166
	873		166
Impairments, write-downs and onerous lease provisions
Impairment of intangible non-current assets*	-		1,156
Impairment of tangible non-current assets*	-		2,854
Loss on disposal of non-current assets*	-		569
Onerous lease provisions	-		710
	-		5,289
Restructuring, closure and legal costs
Restructuring costs	-		208
Other closure costs & legal costs	-		69
	-		277
Total	873		5,732

The above items have been highlighted to give a better understanding of non-comparable costs included in the consolidated statement of comprehensive income for this period.

Acquisition costs of £900,000 and the gain on bargain purchase of £312,000 relate to the Group's purchase of Brighton Palace Pier (for further details see Note 3).

Site pre-opening costs of £285,000 relate to the one-off opening costs of the new Smash site in Reading. This includes an amount of £259,000 being the loss on fixed assets disposed of as part of the refurbishment of the site to the new Smash concept.

*These are non-cash items that are excluded from Group EBITDA.

6.  Income tax

(a) Tax on profit on ordinary activities

The tax is made up as follows:

	Period	Period
	ended	ended
	26 June	28 June
	2016	2015
	£'000	£'000
Current tax:
UK corporation tax payable on the profit/(loss) for the period	143	-
Adjustment in respect of prior periods	-	6
Total current tax	143	6
Deferred tax:
Origination and reversal of temporary differences	-	(476)
Total tax payable/(repayable) for the year	143	(470)

(b) Factors affecting tax charge for the period

The tax charge/(credit) for the period is different from the standard rate of corporation tax in the UK of 20% (2015: 20.75%). The differences are explained below:

	Period ended 26 June 2016	Period ended 28 June 2015
	£'000	£'000
Profit/(loss) on ordinary activities before tax	47	(6,243)
Profit/(loss) on ordinary activities multiplied by standard rate
of corporation tax in the UK of 20% (2015 - 20.75%)	9	(1,295)
Effects of:
Expenses not deductible for tax purposes	214	498
Tax losses not recognised as deferred tax asset	-	289
Non qualifying depreciation	(80)	-
Chargeable gains	-	19
Impact of tax rate change	-	13
Adjustment in respect of prior periods	-	6
Total tax payable/(repayable) for the period	143	(470)

c). Deferred tax

On 8 July 2015, the Chancellor announced that the UK main rate of corporation tax will fall to 19% from     1 April 2017 and to 18% from 1 April 2020.  These rate changes had not been substantively enacted at the balance sheet date and consequently in these accounts deferred tax continues to be recorded at the 20% rate.  The deferred taxation liability, using a tax rate of 20% (2015: 20%), comprises the following:

	Period ended  26 June 2016	Period ended 28 June 2015
	£'000	£'000
Assets
Capital allowances in arrears of depreciation	549	469
Taxable losses carried forward	28	66
Other temporary differences	-	42
	577	577
Recognised in the balance sheet:
Included in (payables)/receivables
Liabilities
Goodwill	(577)	(577)
Total deferred tax balance	-	-

Deferred tax balances as at 26 June 2016 have been presented on a net basis.

An explanation of the deferred tax treatment of Brighton Palace Pier can be found in Note 2: Significant judgements and estimates - deferred tax on revalued assets.

In 2016, deferred tax assets totalling £328,000 in relation to trading losses carried forward in Barclub Trading Limited were not recognised due to insufficient certainty that the Group will have future taxable profits against which the tax asset will be realised.

7.  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 year.

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.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

Basic loss per share	Period ended	Period ended
	26 June 2016	28 June 2015
Loss for the period (£'000)	(96)	(5,773)
Basic weighted number of shares (number)	18,495,393	12,922,741
Loss per share (pence) - Basic (pence)	(0.5)	(44.7)

Basic adjusted earnings per share	Period ended	Period ended
	26 June 2016	28 June 2015
Profit/(loss) for the period before highlighted items (£'000)	777	(41)
Basic adjusted weighted number of shares (number)	18,495,393	12,922,741
Adjusted earnings/(loss) per share - Basic (pence)	4.2	(0.3)

Diluted basic earnings per share	Period ended	Period ended
	26 June 2016	28 June 2015
Loss for the period (£'000)	(96)	(5,773)
Diluted weighted number of shares (number)	18,754,990	12,922,741
Loss per share (pence) - Diluted (pence)	(0.5)	(44.7)

Adjusted diluted earnings per share	Period ended	Period ended
	26 June 2016	28 June 2015
Profit/(loss) for the period (£'000)	777	(41)
Diluted weighted number of shares (number)	18,754,990	12,922,741
Adjusted earnings/(loss) per share (pence) - Diluted (pence)	4.1	(0.3)

8. Movement in cash and cash equivalents reconciled in debt

The movement in cash and cash equivalents is reconciled to movements in debt as follows:

	2016	2015
	£'000	£'000
Increase in cash and cash equivalents	2,088	515
Increase in other borrowings	(8,717)	(1,150)
Increase in debt resulting from cash flows	(6,629)	(635)
Other non-cash movements	(21)	(44)
Decrease in net debt in the period	(6,650)	(679)
Net debt at start of period	(2,690)	(2,011)
Net debt at end of period	(9,340)	(2,690)

Composition of net debt Net debt is made up as follows: 2016 2015 £'000 £'000 Cash and cash equivalents 3,064 976 Short term borrowings (1,200) (163) Long term borrowings (11,184) (3,469) Finance lease payables (20) (34) Total net debt (9,340) (2,690)

9. Reconciliation to EBITDA

Group profit before tax can be reconciled to Group EBITDA as follows:

2016 EBITDA Reconciliation	2016	2015
Profit/(loss) before tax for the year	47	(6,243)
Add back depreciation	1,178	1,868
Add back net interest paid	156	178
Add back fixed asset write-downs not in highlighted items	-	221
Add back share-based payment charge	50	54
Add back highlighted items	873	5,732
Group EBITDA before highlighted items	2,304	1,810

 

END

 

 

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