26 September 2022

The Brighton Pier Group PLC

(the "Company" or the "Group")

Unaudited interim results for the 52 weeks ended 26 June 2022

Strong year but uncertain economic outlook

The Brighton Pier Group is pleased to announce its unaudited results for the 52 weeks ended 26 June 2022. The Group demonstrated the continuing strength of the business model, with record revenues at £40.1 million (2021: £13.5 million), up 25% on the same pre-COVID period in 2019. This has been driven by strong trading across all the Group's divisions. A consistent gross margin performance, combined with Government support from temporary reductions in VAT and business rates, has enabled the Group to make good progress on maximising earnings and paying down debt. Since the end of the previous financial year the Group has reduced its net debt by 62% to £5.0 million.

These results are published in accordance with the change of the Company's accounting reference date from the end of June to the end of December, further details of which were set out in its RNS announcement dated 20 June 2022.

Financial highlights - 52 weeks ended 26 June 2022

•        Revenue increased to £40.1 million (2021: £13.5 million), a record result for the Group.

•        Group revenues are up 25% on the same pre-COVID period in 2019.

•        Group EBITDA was £10.8 million (2021: £5.1 million).

•        Gross margins held at 87%.

•        The Group benefitted from Government support by way of a temporarily reduced rate of VAT and rates relief.

•        Profit before tax was £7.3 million (2021: £4.1 million).

•        EPS was 15.4p (2021: 11.3p).

•        Repayment of £7.7 million of debt (38% of borrowings); net debt reduced to £5.0 million (2021: £13.3 million).

Operational highlights

•      Year opened with a record summer trading period in 2021 boosted by Government support packages, pent-up consumer demand and disposable incomes accrued during lockdown.

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

•        The Bars division completed its rationalisation programme with the disposal of its last marginal site in September 2021.

•        The Golf division's high margin business continued to deliver strong cash contribution during the period.

•      Lightwater Valley performed well in its first full year of ownership, benefitting from investment in new food and beverage outlets, rides and EPOS technology.

Outlook

•        The outlook for the UK economy for the remainder of 2022 and into next year remains uncertain.

•       Current total Group sales for the important period of the first 9 weeks to 28 August 2022 were up 1% on a like-for-like basis versus the same pre-COVID period in 2019 benefitting from strong trading at the Pier. This comparative excludes Lightwater Valley which was acquired in June 2021. Going forward, management recognise that the Group is entering a period where economic pressures, both consumer discretionary spend allied with increased costs will present significant trading challenges.

•      The Group will however benefit from the cash-generative nature of its diverse businesses, with cash at the end of August 2022 of £11.9 million (including a £1.0 million undrawn revolving credit facility) resulting in net debt of less than £2.0 million. This will ensure resilience in the face of increasing economic uncertainty.

•        Importantly, the Group has been able to mitigate some inflationary energy and wage cost pressures through targeted price increases, operational improvements and by fixing energy costs where possible early in 2022. As inflationary pressures head into double digits these will become harder to mitigate over the short to medium term, which has increased uncertainty in budgeting and forecasting.

Anne Ackord, Chief Executive Officer, said:

"The Group's strong recovery following the COVID pandemic has resulted in sales of more than £40 million for the first time in the Group's history. This reflects the hard work of all the Group's employees, for which we are very grateful.

This exceptional period has benefitted both from pent-up customer demand and from hospitality-targeted Government recovery packages. The ongoing cash-generative nature of the Group's diverse businesses and strong balance sheet add resilience to The Brighton Pier Group.

Nevertheless, as we enter into unchartered waters, economic headwinds make it difficult to predict both costs and consumer demand, so our outlook for the future must be one of caution."

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 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 most popular free attraction in England with over 4.2 million visitors in 2021.

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

·     Lightwater Valley Adventure Park, a leading North Yorkshire attraction, is focused on family days out. Set within 175 acres of landscaped parkland, the 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 has performed strongly for the 52 weeks ended 26 June 2022 (2021: 52 weeks ended 27 June 2021). As the restrictions from the pandemic were gradually lifted all divisions performed well, benefitting from pent-up consumer demand and Government support packages and as a result delivered substantial increases in both sales and profitability.

The Group's strategy remains focused on capitalising on the potential of its diversified portfolio of leisure and family entertainment assets in the UK.

These results include the impact of a prior year restatement, further details of which are set out in Note 9. All references to '2021', being the 52 weeks ended 27 June 2021, are restated figures. The restatement primarily affects the balance sheet, with a £51k reduction on the 2021 Statement of Comprehensive Income.

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 13-week period of summer trading to the end of September 2021 represented 40% of Group sales for the 52 weeks and was therefore a crucial trading period for the Group. The warmer summer weather, school holidays, a record August bank holiday week on Brighton Palace Pier that achieved gross sales of over £1m, together with the addition of Lightwater Valley, all contributed to the Group's sales during this first quarter. This key 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 Group successfully completed the full integration of Lightwater Valley (which was acquired on 17 June 2021) in the first few months of this period. During the quieter winter months, the Group also completed the installation of a new EPOS system. The park opened briefly across the Easter period followed by its full re-opening for the summer months.

In September 2021, the Bars division concluded its disposal programme 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.

Financial review and KPIs

Total Group revenue for the period was £40.1 million (2021: £13.5 million), up 25% on the same pre-COVID period in 2019 (2019: £32.0m).

Revenue split by division:

•        Pier division                                                                                                    £16.5 million      (2021: £9.7 million)

•        Golf division                                                                                                      £7.1 million      (2021: £2.4 million)

•        Bars division                                                                                                   £11.2 million     (2021: £1.3 million)

•        Lightwater Valley*                                                                                           £5.3 million     (2021: £0.2 million)

         * 2021 results for Lightwater Valley reflect the period from acquisition on 17 June 2021 to 27 June 2021.

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 12% on 2019.

•       Golf division like-for-like sales were up 23% on 2019.

•      Bars division like-for-like sales (for only 49 weeks as the division was only able to re-open from the end of July 2021) were up 21% on 2019.

Group gross margin for the period continued in line at 87% (2021: 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 (2021: £2.7 million of gains) were recognised during the period. These gains arose from:

•       £(0.6) million - impairment of goodwill in the Rushden site;

•       £0.9 million - reversal of impairment charges to property, plant and equipment and right-of-use assets;

•       £(0.4) million - recognition of in-substance fixed lease payments;

•       £0.3 million - gain from the derecognition of other lease liabilities during the period; and

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

Group profit on ordinary activities before tax was up 77% at £7.3 million (2021: £4.1 million).

Group profit on ordinary activities after tax was up 36% at £5.8 million (2021: £4.2 million) - there being no tax payable in the prior period due to utilisation of losses which occurred during lockdown.

In summary, for the 52-week period ended 26 June 2022 (compared to the equivalent 52-week period ended 27 June 2021):

•       Revenue:                                                                                                        £40.1 million   (2021: £13.5 million)

•       Operating profit:                                                                                              £8.5 million      (2021: £5.1 million)

•       Group EBITDA excluding highlighted items **:                                       £10.8 million      (2021: £5.1 million)

•       Group EBITDA:                                                                                               £10.8 million      (2021: £4.7 million)

•       Operating profit excluding highlighted items:                                            £7.6 million      (2021: £2.4 million)

•       Profit before tax excluding highlighted items:                                           £6.5 million      (2021: £1.4 million)

•       Profit before tax:                                                                                             £7.3 million      (2021: £4.1 million)

•       Profit after tax:                                                                                                 £5.8 million      (2021: £4.2 million)

•       Net debt at the end of the period:                                                               £5.0 million   (2021: £13.3 million)

•       Basic earnings per share (excluding highlighted items):                                     15.4p                (2021: 11.3p)

•       Basic earnings per share:                                                                                          13.6p                   (2021: 5.6p)

•       Diluted earnings per share (excluding highlighted items):                                 15.2p                (2021: 11.3p)

•       Diluted earnings per share:                                                                                      13.4p                   (2021: 5.6p)

                            ** Highlighted items are detailed in Note 4 to the financial statements.

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 year-on-year growth in revenue, EBITDA and earnings during this period with profit after tax and earnings per share for the 52-week period both up 36%, and Group EBITDA (excluding highlighted items) up 112%.

EBITDA split by division shows all divisions trading strongly:

•       Pier division                                                                                                      £3.1 million      (2021: £1.0 million)

•       Golf division                                                                                                      £4.2 million    (2021: £3.1 million^Δ)

•       Bars division                                                                                                      £3.0 million    (2021: £1.8 million^Δ)

•       Lightwater Valley*                                                                                           £1.6 million      (2021: £0.1 million)

•       Group overhead costs                                                                                  £(1.1) million   (2021: £(0.9) million)

* 2021 results for Lightwater Valley reflect the period from acquisition on 17 June 2021 to 27 June 2021.

^Δ 2021 EBITDA includes business interruption insurance receipts of £2.5 million in the Golf division and £2.5 million in the Bars division.

Cash flow and balance sheet

The Group generated net cash flow from operations of £11.6 million (2021: £4.9 million), after interest and tax payments, all of which was available for investment or the repayment of debt.

Capital expenditure in the period totalled £0.7 million (2021: £0.3 million) across the Group.

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 £7.7 million (2021: £1.3 million), which includes full repayment of the £3.6 million revolving credit facility used to acquire Lightwater Valley together with a total of £4.0 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 £12.7 million (2021: £20.4 million), comprising a £11.3 million term loan and remaining Coronavirus Business Interruption Loans of £1.4 million.

At the period end, cash and cash equivalents were £7.7 million (2021: £7.1 million).

The decrease in trade and other receivables of £2.0 million in the current period primarily relates to the receipt of £2.0 million of COVID business interruption insurance claims, £1.1 million in August 2021 and a further £0.9 million in October 2021.

Net debt at the period end stood at £5.0 million (2021: £13.3 million). The Directors continue to take a cautious approach to net debt levels for the Group.

The Group currently has an undrawn revolving credit facility of £1.0 million, giving total cash availability to the Group of £8.7 million as at the period end.

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

Details of the Group's banking covenants can be found on page 88 of the June 2021 Annual Report.

Trading for the 9 weeks to the 28 August 2022

Like for like sale sales for the 9-week period to the 28 August 2022 have seen softer trading across some divisions with cost pressures building across the Group. Total like-for-like sales for the 9 weeks were £8.3m, 1% up on pre-pandemic levels (2019: £8.2 million). This comparative excludes Lightwater Valley which was acquired in June 2021.

The Pier enjoyed another strong trading performance in summer 2022, with unusually warm weather in England, was up 7% on pre-COVID levels at £5.6 million (2019: £5.2 million). Brighton Palace Pier's iconic status in Brighton continues to draw millions of visitors, both locally and internationally as it has done for the last 120 years. The Pier typically starts to wind down following this summer trading period, as it goes into the traditionally quieter winter months.

Conversely, trading in the Bars division has been impacted by the hot weather, with like-for-like sales down 11% on pre-COVID levels at £1.7 million (2019: £1.9 million). Price increases have seen gross margin improve which has helped to offset cost increases. The division is now gearing up for the return of students, Halloween, and Christmas.

The hot weather, in combination with a general decline in footfall in larger shopping centres saw like-for-like sales down 8% in the Golf division at £1.0 million compared to pre-pandemic levels (2019: £1.1 million).

Lightwater Valley has seen significantly lower admissions compared to the exceptional 2021 year (impacting revenues, despite improved spend-per-head from retail investment in the new food and beverage operations). Together with increased costs, this has reduced profitability compared to management expectations based on the previous season, when pent-up demand from COVID lockdowns saw an unprecedented surge in visitors. The Group has invested £0.4 million in the redevelopment of the park, with new rides, improved catering offerings, and other outdoor attractions. Planning permission had previously been granted for the development of 106 timber-style holiday lodges on the southern edge of the Lightwater Valley Park. A minor variation to this existing planning consent is being sought, so that the first stage of holiday accommodation development can commence. This first stage will see the installation of circa twenty pod-type units for rental. The unique forest environment will make these an attractive proposition and will add a further revenue stream to the business. Whilst this project is at an early stage, it demonstrates the potential to create significant growth in the medium term.

Outlook

Following the easing of pandemic restrictions, the first half of calendar 2022 has been characterised by new economic uncertainty, with global instability causing significant increases in food and energy prices, which in turn have led to rapid inflation, a widely predicted cost-of-living crisis, strike actions and an impending recession.

The current high inflation rate in the UK has translated into further cost increases that are expected to continue.. The Group has implemented targeted price uplifts to mitigate some of these pressures where possible, resulting in gross margin unchanged at 87% over the last 24 months. The Group renegotiated some of its energy supply contracts at the beginning of 2022, fixing the cost of energy below the higher prices seen in recent months; other energy supply contracts were agreed after 1 April 2022 and will therefore benefit from the Government's recently announced Energy Bill Relief Scheme. While wage inflation has remained relatively stable in most areas of the business over the period, the Group expects wage inflation to build in the latter half of 2022 and beyond. In addition, other cost increases have in part been offset by operational improvement and other efficiencies. As inflation potentially heads into double digits, it will become harder to mitigate over the short to medium term.

Furthermore, it is important to note that the Group no longer benefits from the reduced rate of VAT and rates relief that contributed to the record-breaking trading performance for the period ended June 2022.

Whilst the Board notes the continued strength demonstrated by the Company's business model over the past 52 weeks, it acknowledges that trading for the next 26-week period to 25 December 2022 is likely to present further challenges, given the many headwinds currently facing the world economy and possible contractions in consumer discretionary spend. The Board looks towards the second half of 2022 with caution.

That said, management believe the diversity of the Group's different offerings and the low levels of net debt following on from the summer trading to the end of August 2022 will enable the Group to remain resilient. For the longer term, the Group remains optimistic that economic events will bring opportunities.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 52-week period ended 26 June 2022

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY