25 September 2023

The Brighton Pier Group PLC

(the "Company" or the "Group")

Unaudited interim results for the 6 months ended 25 June 2023

The Brighton Pier Group today announces its unaudited results for the 6 months ended 25 June 2023. Total revenues for the Group were £16.2 million (2022: £17.3 million), following a challenging second quarter as previously announced by the Group. The majority of this sales decline was from the Bars division which faced tough comparable numbers, following exceptionally strong trading from a post-pandemic surge in demand in the first half of 2022. Ongoing inflationary pressures, in particular to food, beverage and staff costs have had a significant impact on the Group's operating margins in the first half of 2023, resulting in lower earnings than in the previous year.

Financial highlights

•        Total revenue in the period was £16.2 million (2022: £17.3 million).

•        Group EBITDA* was £1.4 million (2022: £3.0 million).

•        Group gross margin was 86% (2022: 87%).

•        Loss before tax (excluding highlighted items) was £(1.0) million (2022: profit of £0.7 million).

•        Adjusted EPS was (1.7)p (2022: 0.9p).

•        Net cash flow from operations was £3.2 million (2022: £4.4 million).

•        Net debt was £4.7 million (25 December 2022: £7.1 million).

* EBITDA is detailed in Note 7 to the financial statements.

Principal developments

•        Brighton Palace Pier sales performance was up 2% versus 2022, but down £(0.2) million on EBITDA at £0.5 million (2022: £0.7 million).

•        The Bars division suffered from a contraction in consumers' disposable incomes resulting from the challenging macroeconomic environment, with sales down across the estate.

•        The Golf division saw lower footfall across the estate in June and higher costs but with the exception of June, trading has been consistent, with the division generating £1.4 million of EBITDA (2022: £1.9 million).

•        Lightwater Valley added new dinosaur-themed attractions for 2023. Admissions were down versus the prior year primarily due to wet weather, but the park achieved a new weekend record number of visitors during the Coronation of King Charles III in May.

Outlook

•        As reported in the 25 July 2023 trading update, the weekend train strikes, exacerbated by exceptionally poor weather in July and August, and the temporary restriction of access following a fire at a major hotel opposite the entrance to the Pier towards the end of July, resulted in sales and earnings being lower than expected.

•        These factors continued to affect trading in the 12-week period ending 17 September 2023 resulting in total sales of £12.3 million, down £(0.3) million versus the previous year (2022: £12.6 million).

•        Whilst the board has been encouraged to see improved trading in the first 3 weeks of September, macroeconomic challenges continue to impact the business. This, together with the weaker than expected summer trading period, has led the Board to conclude that operating profit for the current financial year is likely to be below current expectations.

•        The Group's outlook in the short-to-medium term remains cautious.

Anne Ackord, Chief Executive Officer, said:

"As highlighted in our last trading update, the Group is navigating a challenging environment, with persistent high inflation and cautious spending by consumers negatively impacting trading. When combined with the ongoing cost pressures, this has resulted in the Group recording lower than expected sales and earnings in the first half of 2023.

Trading in the 12 weeks to 17 September 2023 has been further impacted by events outside of our control. The regular weekend train strikes in particular have reduced visitor numbers on the Pier by 18% versus comparable weeks in 2022. Combined with the unseasonably wet weather and the hotel fire that disrupted sales on the Pier for the final two weeks of July (two of the top ten trading weeks of the year), trading has been unusually difficult.

The Group continues to be cash generative and has a robust balance sheet, making it well placed to weather the macroeconomic challenges and execute its longer-term growth strategy.

I believe as a result there is significant upside opportunity for the Group in a more typical year".

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 outdoor attraction in England with over 4.6 million visitors in 2022.

·      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 Family 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's strategy remains focused on capitalising on the potential of its diversified portfolio of leisure and family entertainment assets in the UK. However, the Group is navigating a uniquely challenging trading environment, with persistently high inflation leading to a decline in consumer confidence and discretionary spend. This, combined with significant ongoing cost increases, has led to lower sales and earnings in the 6 months ended 25 June 2023 (2022: 6 months ended 26 June 2022).

Operational review

The first 13-week period to the end of March 2023 saw the Group trading in line with expectations. A comparatively mild winter resulted in strong initial demand at the Pier, but this was offset by the wettest March in over 40 years. The high-margin Golf division continued to perform well during this period. The Bars division saw some softness in trading but was behind 2022 primarily due to exceptional trading following the surge in demand seen post-pandemic. Lightwater Valley was closed during this time.

In the latter 13-week period, which typically represents approximately 60% of sales in the 6 month period, trading suffered across the Group as previously announced, with continued wet weather in April leading to lower admissions on the Pier and at Lightwater Valley across the key Easter period. Rail disruption also affected footfall to the Pier and some Bars sites.

Cost increases during this period were particularly severe, with significant increases to food prices contributing to lower gross margins at the Pier and Lightwater Valley, which were both down 3% versus 2022. Wage increases, meanwhile, resulted in lower operating margins across the Group.

Financial review and KPIs

Total Group revenue for the period was £16.2 million (2022: £17.3 million).

Revenue split by division:

•        Pier division                                                                                                   £7.5 million      (2022: £7.3 million)

•        Golf division                                                                                                   £3.2 million      (2022: £3.4 million)

•        Bars division                                                                                                  £4.1 million     (2022: £5.1 million)

•        Lightwater Valley                                                                                          £1.4 million     (2022: £1.5 million)

Total Group EBITDA for the period was £1.4 million (2022: £3.0 million).

EBITDA split by division:

•        Pier division                                                                                                   £0.5 million      (2022: £0.7 million)

•        Golf division                                                                                                   £1.4 million      (2022: £1.9 million)

•        Bars division                                                                                                  £0.4 million      (2022: £1.1 million)

•        Lightwater Valley                                                                                       £(0.3) million   (2022: £(0.1) million)

•        Group overhead costs                                                                              £(0.6) million   (2022: £(0.6) million)

Group gross margin for the period was 86% (2022: 87%).

Highlighted items totalling £3.0 million of charges (2022: £nil) were recognised during the period. These charges reflect:

•        £1.1 million - impairment of goodwill in Lightwater Valley; and

•        £1.9 million - impairment charges to property, plant and equipment and right-of-use assets in the Bars division.

Group loss on ordinary activities before tax (excluding highlighted items) was £(1.0) million (2022: profit of £0.7 million).

Group loss on ordinary activities after tax was £(3.6) million (2022: profit of £0.4 million).

In summary, for the 6 month period ended 25 June 2023:

•        Revenue:                                                                                                     £16.2 million   (2022: £17.3 million)

•        Operating (loss)/profit:                                                                             £(3.2) million     (2022:  £1.3 million)

•        Group EBITDA:                                                                                              £1.4 million     (2022:  £3.0 million)

•        Operating (loss)/profit excluding highlighted items*:                        £(0.3) million     (2022:  £1.3 million)

•        (Loss)/profit before tax excluding highlighted items*:                       £(1.0) million     (2022:  £0.7 million)

•        (Loss)/profit before tax:                                                                           £(3.9) million     (2022:  £0.7 million)

•        (Loss)/profit for the period:                                                                    £(3.6) million     (2022:  £0.4 million)

•        Net debt at the end of the period:                                                  £4.7 million (25 Dec 2022:  £7.1 million)

•        Basic (losses)/earnings per share excluding highlighted items*:                   (1.7)p                   (2022: 0.9p)

•        Basic (losses)/earnings per share:                                                                       (9.6)p                   (2022: 1.1p)

•        Diluted (losses)/earnings per share excluding highlighted items*:               (1.7)p                   (2022: 0.9p)

•        Diluted (losses)/earnings per share:                                                                   (9.6)p                   (2022: 1.1p)

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

Cash flow and balance sheet

The Group generated net cash flow from operations of £3.2 million (2022: £4.4 million), after interest and tax payments, all of which was available for investment or the repayment of debt.

Capital expenditure in the period totalled £0.4 million (2022: £0.6 million) across the Group.

During the period, the Group made net debt repayments of £0.4 million (2022: £2.8 million), which includes the final repayment of the Group's Coronavirus Business Interruption Loans (totalling £5.0 million).

Total bank debt at the end of the period was £10.9 million (25 December 2022: £11.3 million). With the Group's Coronavirus Business Interruption Loans now fully repaid, remaining debt relates to the term loan.

At the period end, cash and cash equivalents were £6.2 million (25 December 2022: £4.2 million).

Consequently, net debt at the period end stood at £4.7 million (25 December 2022: £7.1 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 £7.2 million as at the period end.

Details of the Group's banking covenants can be found on page 90 of the December 2022 Annual Report.

Trading for the 12 weeks to the 17 September 2023

Total sales for the 12-week period to 17 September 2023 were £12.3 million, down £(0.3) million versus the previous year (2022: £12.6 million). This shortfall was primarily due to a significant reduction in footfall to the Pier, which saw visitor numbers decrease by 18% compared to 2022.

Total sales for the Pier were £6.0 million, down £(0.5) million versus 2022 (2022: £6.5 million), due to a combination of one-off factors previously noted.

Conversely, the poor weather resulted in stronger trading in the Golf division, where sites are located inside larger shopping centres. Total sales of £1.7 million were £0.2 million higher than the previous year (2022: £1.5 million).

Lightwater Valley traded ahead of 2022, with total sales of £2.7 million, up £0.3 million (2022: £2.4 million). This was due to increased visitor numbers to the park, which were 24% up on last year principally due to warm weather in September and several different promotional offers that were made available to guests. As a result of these offers, overall spend per head was lower than in 2022.

The Bars division continues to be impacted by the headwinds in the UK economy. Its younger demographic has been more severely affected by price inflation, resulting in lower spends and reduction in numbers of visits. Total sales were £1.9 million, down £(0.3) million versus last year (2022: £2.2million).

Outlook and strategy

While current economic conditions continue to create an uncertain trading environment, the disappointing trading seen over the key summer months has largely been the result of circumstances beyond the Group's control, and while the outlook for the short-to-medium term must remain one of caution, there are nonetheless encouraging signs.

Trading in the Golf division remains robust and, going forwards, is expected to continue to hold up well.

Lightwater Valley is still trading below the exceptional summer seen following acquisition of the park by the Group in June 2021. However, visitor numbers in summer 2023 were above the prior year equivalent. The Group will begin to implement improvement processes to further increase revenues per visitor, particularly in relation to food, beverage and retail. This will be combined with structural changes that will enable the cost base to be optimised in advance of the next peak trading period in summer 2024. The project to install circa twenty pod-type units for rental is still in the early stages but is expected to start once the planning variations are approved.

Similarly, spend per head at the Pier was ahead of last year and prior to the issues experienced across the summer months, sales were tracking ahead of 2022. The Pier retains its iconic status, attracting millions of visitors every year, and the Group urges those involved in the rail strikes to agree a resolution so that the ongoing disruption does not continue into 2024.

In the Bars division, the combination of decline in consumer discretionary income, coupled with ongoing train strikes targeted at Friday and Saturday trading sessions, is likely to continue to bear down on sales and profits over the remainder of the current financial year and potentially into 2024.

Inflationary cost pressures are expected to continue to present challenges across the Group. Where price rises cannot be fully passed on, the Group will instead implement cost-saving initiatives in order to preserve future cash flows and earnings.

Poor weather over the summer disproportionately impacts the Group's trading performance. The diverse experiences offered by the Group's four operating divisions continue to prove attractive to our customers, and the Board believes that the strength of these different offerings will drive the business forwards over the longer term.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the 6 month period ended 25 June 2023

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET