28 March 2022

The Brighton Pier Group PLC

(the "Company" or the "Group")

Interim results for the 26 weeks ended 26 December 2021

Very strong first half trading performance

Brighton Pier Group is pleased to announce results for the 26 weeks ended 26 December 2021 which highlight the strength of the business model, with revenues up by 178% to £22.8 million on the same 2020 period and importantly up 33% on the same pre-covid period in 2019. This has been driven by the sound underlying performance in all divisions as well as the successful integration of Lightwater Valley which is trading above expectations. A consistent gross margin performance, the reduction in VAT and rates relief has enabled the Group to make good progress on maximising earnings and paying down debt. Since the end of the last financial year the Group has reduced net debt by 34%. The outlook for 2022 is robust. Given these excellent results and a current strong trading performance, the Board expects profits for the 52 weeks ending June 2022 to be ahead of market expectations. 

Financial Highlights

•        Reflecting high demand across all divisions revenue increased to £22.8 million (2020: £8.2 million)

•        Group EBITDA was £7.9 million (2020: £1.9 million)

•        Gross margins held at 87%

•        Benefit from temporary reduced rate of VAT and rates relief

•        Profit before tax was £6.6 million (2020: £2.7 million)

•        EPS was 14.3p (2020: 7.1p)

•        Net debt was down 34% to £8.2 million (2020: £12.5 million)

Operational highlights

•        Record summer trading period boosted by pent-up demand and disposable incomes accrued during lockdown

•        Lightwater Valley traded ahead of initial expectations and is now being positioned for a good summer with investment in new food and beverage outlets and rides

•        Brighton Pier delivered another consistent performance - new EPOS technology installed to better capture customer data going forward

•        Bar portfolio has been optimised for growth and traded ahead of expectations

•        Good performance from the Golf portfolio with the two recently integrated sites meeting ROI targets

Outlook for FY 2022

•        Trading ahead of market expectations for the year

•        UK family entertainment market in a growth phase buoyed by an increasing preference for "staycations"

•        Ability to mitigate inflationary cost pressures in the most part through targeted price increases and operational improvements

•        Primary focus on organic growth and on looking at opportunities to add golf sites and exploit the potential of Lightwater Valley

Anne Ackord, Chief Executive Officer, said: 

"These excellent results show the popularity and cash generative nature of our diversified portfolio of entertainment businesses.

The underlying trend for the first half is well above 2019 levels - a more meaningful comparison due to the pandemic. The period has also been boosted further by one off VAT and rates benefits. These factors combined have resulted in the Group trading ahead of market expectations.

Looking forward, we expect the sales trends to continue, benefiting also from the opportunistic Lightwater Valley acquisition. We believe our asset-backed Group is well placed to record an excellent result for the full-year and beyond."

For all investors Anne Ackord (CEO) and John Smith (CFO) will be giving a presentation on the HY results Tuesday 29 March at 2.00p.m. via Investor Meet Company, to register please click on the following link:

https://www.investormeetcompany.com/brighton-pier-group-plc-the/register-investor  

All Company announcements and news are available at www.brightonpiergroup.com

Enquiries:

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

About The Brighton Pier Group PLC

The Brighton Pier Group PLC, is a UK family-led entertainment business spread across four divisions:

·      Brighton Palace Pier offers a wide range of attractions including two arcades (with over 300 machines) and eighteen funfair rides, together with a variety of on-site hospitality and catering facilities. According to Visit Britain, it was the fifth most popular free attraction in the UK prior to the pandemic, with over 4.9 million visitors in 2019, making it the UK's most visited landmark outside of London.

·      The Golf division (which trades as Paradise Island Adventure Golf) operates eight indoor mini-golf sites at high footfall retail and leisure centres.

·      The bars trade under a variety of concepts including Embargo República, Lola Lo, Le Fez, Lowlander and Coalition. The Group's Bars division targets a customer base of sophisticated students' midweek and stylish over-21s and professionals at the weekend.

·      Lightwater Valley theme park, a leading North Yorkshire attraction, which is focused on family days out. Set within 175 acres of landscaped parkland, the theme park operates a variety of attractions including rides, amusements, crazy golf, children's outdoor and indoor play, entertainment shows, together with numerous food, drink and retail outlets. 

Business Review

Introduction

The Group performed better than expected for the 26 weeks ended 26 December 2021 (2020: 26 weeks ended 27 December 2020) with the restrictions from the pandemic being less extensive than in the prior period and, when the businesses were able to trade, they performed well and benefitted from pent-up consumer demand. Consequently, the Group delivered substantial increases in both sales and profitability.

The strategy of the Group remains focused on capitalising on the potential of its diversified portfolio of leisure and family entertainment assets in the UK. The Board believe there is significant organic growth potential across the portfolio in particular from the Golf division and the recently acquired Lightwater Valley theme park. Alongside maximizing the opportunities in the existing business, the Group continues to pursue earnings enhancing strategic acquisitions which are synergistic, scalable, and fit with the Company's expertise.

Operational review

Whilst COVID restrictions prevented the Bars division from reopening until 20 July 2021 and some restrictions were reintroduced in December 2021 due to the emergence of the Omicron variant, the Group has otherwise been fully open throughout the period and able to trade mostly unhindered.

The latter 13-week period of summer trading to the end of September 2021, represents about 73% of the sales for the 26 weeks and is therefore a crucial trading period for the Group. The warmer summer weather, school vacations, a record August bank holiday weekend, and the addition of Lightwater Valley all contributed to the Group's sales during this first half.

This key 13-week trading period was boosted by pent-up consumer demand and higher levels of disposable income that consumers accrued during lockdown, together with a significant increase in people choosing domestic holidays. In addition, the temporarily reduced rate of VAT and rates relief by way of Government support enabled the Group to make good progress repaying debt taken on during the height of the pandemic. Collectively, these factors provided a unique opportunity for the business to maximise revenue and earnings as it re-opened.

The trading results demonstrate the real potential of the Group's four divisions, including Lightwater Valley where trading has significantly exceeded initial expectations.

The Group successfully completed the full integration of Lightwater Valley in the first few months of this period. During the quieter winter months, the Group also completed the installation of a new EPOS system which will improve the ability to manage pricing and provide more detailed reporting on the different activities in the park.

In September 2021, the Bars division concluded its disposal program by disposing of its one remaining marginal site (Smash in Reading). This disposal resulted in a gain of £0.7 million realised upon the extinguishment of lease liabilities. No further contingent liabilities have arisen from the disposal.

Financial review and KPI's

Total Group revenue for the period was up 178% at £22.8 million (2020: £8.2 million) and up 33% on the same pre-COVID period in 2019 (2019: £17.3m).

Revenue split by division:

•       Pier division                                                                                                      £9.2 million      (2020: £5.8 million)

•       Golf division                                                                                                      £3.7 million      (2020: £1.7 million)

•       Bars division                                                                                                      £6.0 million     (2020: £0.7 million)

•       Lightwater Valley                                                                                             £3.9 million                    (2020: £nil)

On a divisional basis and comparing with the pre-COVID like for like period in 2019:

•       Brighton Palace Pier like for like sales were up 15% on 2019

•       Golf division like for like sales were up 33% on 2019

•       Bars division like for like sales (for only 23 weeks  as the division was only able to re-open from the end of July 2021) were up 27% on 2019

Group gross margin for the period continued in line at 87% (2020: 87%) reflecting the high-margin nature of all four divisions - and this despite the numerous ongoing supply and cost challenges that have appeared in the economy over the period.

Highlighted items totalling £0.8 million of gains (2020: £2.4 million of gains) were recognised during the period. These gains arise from;

•       £0.7 million - gain on extinguishment of lease liabilities following the disposal of Smash in Reading, and

•       £0.1 million - gain from the derecognition of other lease liabilities during the period.

Group profit on ordinary activities before tax was up 150% at £6.6 million (2020: £2.7 million).

Group profit on ordinary activities after tax was up 96% at £5.3 million (2020: £2.7 million) - there being no tax payable in the prior period due to utilisation of losses which occurred during lockdown.

In summary, for the 26-week period ended 26 December 2021 (compared to the equivalent 26-week period ended 27 December 2020):

•       Revenue:                                                                                                        £22.8 million      (2020: £8.2 million)

•       Operating profit:                                                                                              £7.2 million      (2020: £3.1 million)

•       Group EBITDA excluding highlighted items *:                                           £7.9 million      (2020: £2.0 million)

•       Group EBITDA:                                                                                                  £7.9 million      (2020: £1.9 million)

•       Operating profit excluding highlighted items:                                            £6.4 million      (2020: £0.8 million)

•       Profit before tax and excluding highlighted items:                                   £5.8 million      (2020: £0.2 million)

•       Profit before tax:                                                                                             £6.6 million      (2020: £2.7 million)

•       Profit after tax:                                                                                                 £5.3 million      (2020: £2.7 million)

•       Net debt at the end of the period:                                                               £8.2 million   (2020: £12.5 million)

•       Basic earnings per share (excluding highlighted items):                                     12.6p                   (2020: 0.6p)

•       Basic earnings per share:                                                                                          14.3p                   (2020: 7.1p)

•       Diluted earnings per share (excluding highlighted items):                                 12.5p                   (2020: 0.6p)

•       Diluted earnings per share:                                                                                      14.3p                   (2020: 7.1p)

* Highlighted items are detailed in note 4 to the financial statements and relate to gains arising on the extinguishment of lease liabilities following site disposals (less costs) in the current and prior periods.

The Group's key performance indicators remain centred on organic growth coupled with continued expansion to drive revenues, EBITDA and earnings growth.

The Board is pleased to report growth in revenue, EBITDA and earnings during this period with profit after tax and earnings per share for the 26-week period - up 96% and 101% respectively and Group EBITDA up 316%.

EBITDA split by division shows all divisions trading strongly:

•       Pier division                                                                                                      £2.4 million      (2020: £0.8 million)

•       Golf division                                                                                                      £2.2 million (2020: £1.6 million**)

•       Bars division                                                                                                      £1.9 million (2020: £0.0 million**)

•       Lightwater Valley                                                                                             £1.8 million                    (2020: £nil)

•       Group overhead costs                                                                                  £(0.5) million   (2020: £(0.4) million)

** 2020 EBITDA includes business interruption insurance receipts of £0.9 million in the Golf division and £0.5 million in the Bars division.

Lightwater Valley Theme Park (the Group's latest acquisition in June 2021) follows on from the acquisitions of Paradise Island Adventure Golf in December 2017 and of Brighton Palace Pier (including freehold) in April 2016. These leisure/entertainment assets capitalise on the core skills of the Group and have all proven to be profitable additions. Paradise Island and Lightwater Valley both offer good growth opportunities in new mini-golf sites as they become available and development and expansion of the offer at Lightwater Valley within its substantial 175 acre park.

Group profit before tax for the period was £6.6 million (2020: £2.7 million).

Cash flow and balance sheet

The Group generated net cash flow of £7.2 million (2020: £2.0 million) from operations (after interest and tax payments), all of which was available for investment or the repayment of debt.

In this period there was minimal capital expenditure totalling only £0.1 million (2020: £nil) across the Group, with focus on successful re-opening of the businesses and capitalising on the opportunities at Lightwater Valley.

In September 2021, the Group paid £1.3 million to settle the deferred consideration and working capital for the purchase of Lightwater Valley Attractions Limited. These payments were as agreed in the sale and purchase contract and were detailed in the June 2021 Group Annual Report.

During the period, the Group made net debt repayments of £4.9 million (2020: £0.1 million), which includes full repayment of the £3.6 million revolving credit facility used to acquire Lightwater Valley together with a total of £1.3 million scheduled repayments on the Group's principal term loan and its Coronavirus Business Interruption Loans.

Total bank debt at the end of the period was £15.5 million (2020: £16.7 million), comprising a £11.4 million term loan and two Coronavirus Business Interruption Loans totalling £4.1 million.

At the period end, cash and cash equivalents were £7.3 million (2020: £4.2 million).

Net debt at the period end stood at £8.2 million (2020: £12.5 million). The Directors continue to take a cautious approach to net debt levels for the Group.

Since the end of the last financial year, the net debt of the business has reduced by £4.9 million from £13.1 million as at 27 June 2021 to £8.2 million as at 26 December 2021.

The Group currently has an undrawn revolving credit facility of £1.75 million, giving total cash availability to the Group of £9.0 million as at the period end.

On 16 March the Group signed a 1 year extension to its term loan and revolving credit facilities, which were due to expire in December 2022. The facilities will now expire on 5 December 2023.

Details of the Group's banking covenants can be found on p88 of the June 2021 Annual Report.

Outlook

These results demonstrate the underlying strength of the Group's diverse portfolio of assets and this positive trend is expected to continue through the seasonally quieter second half.

The success of the vaccination programme and the relaxation of restrictions is expected to benefit the family leisure and entertainment sectors over the coming months as consumer confidence returns.

Accelerating cost inflation across the UK is likely to translate into further cost increases over the coming months. Whilst this is an unwelcome change to the business environment, the Group believes it will be able to mitigate these inflationary cost pressures in the most part through targeted price increases and by operational improvements.

Preparations at the Pier and at Lightwater Valley for Easter and the early summer trading periods are well advanced.

'Staycationing' is expected to continue to benefit our businesses this summer as is the gradual increase of inbound tourism to the Pier as travellers return to the UK.

Lightwater Valley is introducing a raft of new initiatives under a "New for 22" campaign, which includes an updated food and beverage offer (with fish & chips and health food options), a new Lightwater Dragon mascot, new rides, a new hall of mirrors, a new games arcade, a new outdoor play area, school and educational packages, and a new Brown's Wood Discovery Trail.

The Bars division started the second half well with New Year's sales 9% up on 2019 (i.e. pre-pandemic) levels despite the emergence of the Omicron variant in the final weeks of December 2021. We continue to see returning students and young professionals enjoying their nights out in much the same way as they did before the closures. Focus continues to be on quality products, exceptional service and varied entertainment. The Group believes reduced competition in many towns and cities (as a result of permanent business closures following the pandemic) will continue to benefit the business.

The Golf division intends to further capitalise on the success of its new sites at Rushden Lakes and Plymouth Drakes Circus as it actively seeks new sites to add to its current estate.

In light of these strong half year results and robust current trading performance detailed above, the Board expects profits for the 52 weeks ending June 2022 to be ahead of market expectations.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY