Final Results

RNS Number : 7855B

Brighton Pier Group PLC (The)

25 September 2018

 

The Brighton Pier Group PLC

 (the "Company" or the "Group")

 Final results for the 53 weeks to 1 July 2018

25 September 2018

The Brighton Pier Group PLC  owns and trades Brighton Palace Pier, as well as twelve premium bars nationwide including two ping-pong concept bars and six indoor mini golf sites.

The Group successfully acquired Paradise Island Adventure Golf during the period - this business provides opportunities for growth with one site planned for opening during the coming year.  

Financial Highlights		53 weeks ended 1 July 2018	52 weeks ended 25 June 2017
		£m	£m
Revenue		31.7	31.3
Group EBITDA before highlighted items		5.2	5.2
Group EBITDA after highlighted items		4.4	4.6
Profit before taxation and highlighted items		3.2	3.5
Profit before taxation after highlighted items		2.3	1.9
Adjusted earnings per share - basic		7.8p	10.9p
Adjusted earnings per share - diluted		7.6p	10.4p
Profit after tax and highlighted items		1.8	1.9
Earnings per share - basic		5.2	5.9p
Earnings per share - diluted		5.0	5.7p

Pier division highlights

·      We completed an ambitious £1.3m upgrade of the restaurant and bars.

·      Increased seating capacity from these refits is benefiting peak trading and provides future opportunities to grow the conference and events business all year round.

·      Recent structural surveys do not indicate any requirement for exceptional repairs.

Bars division highlights

·      Operating profit was in line with the prior year.

·      Second Smash opened in Wimbledon and is trading in line with expectations. Voted 'Bar of the Year' in Wimbledon/Putney area.

·      Successful disposal of the leasehold interest in Manchester Sakura and the site in Liverpool.

·      Letting of the ground and first floor at Derby on a 20- year lease at £90,000 per annum.

Commenting on the results, Luke Johnson, Executive Chairman said

 "The successful acquisition of Paradise Island Adventure Golf during the financial period has added a new income and profit stream with further growth potential for the Group. We are looking forward to opening our first new golf site at Rushden Lakes in the spring of 2019.

Works have also started on the redevelopment of the Fez Club in Putney - this popular venue is due to reopen towards the end of November in time for the busy Christmas period.

I am immensely proud of the work that has been done by the team at the Pier to completely refurbish the restaurant and bars on time and on budget. The result has been a truly transformed Horatio's Bar and Palm Court restaurant. The improved capacity and additional outside space, together with the improved conference and events capability, will improve earnings for the future."

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

The information contained within this announcement is deemed by the Group to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.

Enquiries:
The Brighton Pier Group	Tel: [phone]
Luke Johnson, Executive Chairman	Tel: [phone]
Anne Ackord, Chief Executive Officer	Tel: [phone]
John Smith, Chief Financial Officer	Tel: [phone]
Panmure Gordon (UK) Limited (Nominated Adviser and Joint Broker)	Tel: [phone]
Corporate Finance
Atholl Tweedie / Edward Phillips
Corporate Broking
Charles Leigh-Pemberton
Arden Partners plc (Joint Broker)	Tel: [phone]
Corporate Finance
John Llewellyn-Lloyd / Benjamin Cryer
Investor Relations
Sarah-Jane Woodcock / Charlotte Ridler

Chairman's statement

This has been an active year for The Brighton Pier Group.  We acquired a new operation, Paradise Island Adventure Golf, which owns six mini golf sites, we invested heavily in the food and drink offerings on the pier and we rationalised the bar portfolio, so we can focus our resources on the most successful venues.

We have also achieved further efficiencies in our administration of the group, looking for synergies between the various divisions wherever possible. 

The profitability of the pier is highly dependent on the weather. Overall the pier's results were reasonable in the circumstances.  The £1.3 million refurbishment of Palm Court restaurant, Horatio's bar and Victoria's bar caused some disruption in trading, but following the renovations the catering operations showed material improvements against the comparable periods in the prior year. The pier is now better placed to win more function business in its venues with its much improved offer.

We exited two unprofitable bars in Manchester and Liverpool and let two floors in our Derby freehold.  The portfolio has been streamlined, which enables management to focus on the outlets with more potential. We also converted our Wimbledon site into a Smash bar, which combines ping pong, artisan pizza, craft beer and sports on TV.  The new format achieved a substantial uplift in revenue and profitability. 

Our new mini golf business has been successfully integrated into the Group. It is meeting our profit expectations, and we are undertaking various initiatives to boost revenues, including introducing amusement machines where appropriate.

In the current financial period we plan to open the first new Paradise Island Adventure Golf location, since we took ownership.  We are also carrying out a full refit of our Putney Fez bar, which we forecast will lead to an improved profit contribution. There are no other major capital expenditure plans for the pier in the forthcoming year, save the usual repairs and maintenance to the infrastructure.

These are relatively testing times for the leisure and hospitality industries, mainly owing to cost inflation, additional taxes and intense competition.  However, your board believes The Brighton Pier Group remains well placed to take advantage of opportunities.  We have a well invested and diversified portfolio of experiential attractions in good locations.  Overall the Group will continue to generate cash and repay its borrowings. 

I remain confident of our prospects, and as a sign of my faith in the business I intend at the earliest practical opportunity to exercise my warrant in full at a cost of almost £1million, which would increase my shareholding to 27% of the enlarged share capital.

Dividend

The Board does not propose to pay any dividend during the period.

Luke Johnson

Executive Chairman

Review of the Group's activities for the period

The Group operates as three separate divisions under the leadership of Anne Ackord, the Group's Chief Executive Officer, who was appointed at the start of the financial period (26 June 2017).

The business review covers the trading results for the 53 weeks ended 1 July 2018 (2017: 52 weeks ended 25 June 2017).

The Group is pleased to report continuing profitability with profit before tax and highlighted items of £3.2 million (2017: £3.5 million).

Total Group sales for the period were up £0.4 million at £31.7 million (2017: £31.3 million).

The Group has benefitted this year from the acquisition of Paradise Island Adventure Golf, which has contributed £2.2 million of sales in the 30 weeks of trading since it was acquired. We are pleased to report that trading from the Golf business has been in line with expectations at the time of purchase.

As reported in the 2017 annual report and in the half-year statement published at the end of March 2018, sales across the rest of the Group for the period have been affected as a result of three key factors: firstly, due to rain and strong winds, trading during the pier's peak summer period of August and September 2017 did not match the strong performance of the same period in the previous year; secondly, the decision to utilise the winter months to close and improve the principal catering and hospitality offerings on the pier; and lastly, the loss of £1.4 million of sales in the current period relating to the seven marginal bar sites that were sold or closed during FY 2017 as the Group focuses on its larger and profitable sites.

Group gross margin for the period has increased by 70 basis points on last year, reflecting the benefits of the high margin nature of the acquired Golf division and continued focus on pricing to mitigate the pressures of rising input prices.

The Group continues to be highly cash generative with EBITDA before highlighted items at £5.2 million (2017: £5.2 million) (see Note 3 for the divisional split).

The Pier division

Brighton Palace Pier, which has once again been recognised as the fourth most visited tourist attraction in the country, offers a wide range of attractions including two arcades and eighteen funfair rides, together with a variety of on-site hospitality and catering facilities.

The £1.3 million plan to refit the bars and restaurants began with the closure of Horatio's at the start of November 2017, prior to which work had been undertaken to move the high margin and hugely popular Dolphin Derby, as well as to relocate various storage facilities in order to make way for the extended outside terraces and to improve visibility of the venue to customers.

Improvements on Horatio's Bar began with opening up some of the external walls of the building and replacing them with bi-fold doors. Extending the bar to the outside enables customers to benefit from its enviable position on the pier, with views over Brighton and the seafront. As a result of the upgrade work, Horatio's will now be connected to the new terraces in the summer months, increasing overall seating capacity as well as enhancing the bar's ability to offer food, live music and other events throughout the year. The newly-improved Horatio's bar opened its doors at the end of December 2017.

Palm Court (part closed in November 2017) and Victoria's Bar both closed their doors in early January 2018. The substantial modernisation of these two venues has created flexibility to provide either one large or two smaller conference and events space(s) throughout the year. The main restaurant's kitchen and the takeaway kitchen have been merged in order to maximise efficiency, and at the same time internal and external seating capacity has been increased by 60%.

The ceiling area has been opened up to reveal impressive Victorian metal roof beams and the venue has been refitted with modern colours and furnishings. Local television channel 'Latest TV' has been filming every step of the transformation as part of its collaboration with Brighton Palace Pier, which was announced in February. Whilst these refits have impacted trading during the winter months (Victoria's and Palm Court formally reopened mid-March), the transformational benefits will be seen in the years to come. Since reopening we have seen like-for-like sales growth of over 10% against the comparative period last year.

Planning permission was finally granted to install the new Brighton Palace Pier sign on the front of the main building. Work began in early June and the sign was formally switched on by our Chairman on 29 June, to the great pleasure of many fans of the pier. The new sign signals the completion of the name change announced at the time of acquisition of the pier.

Whilst retaining the traditions of the pier, we have also added more current activities including a new virtual reality experience, 'Paradrop', the first of its kind in the UK. Other virtual reality games have been incorporated into our arcade.

One of our most successful new additions has been the outdoor large screen situated in Horatio's beer garden, attracting large audiences, particularly for the World Cup games this summer. This was in place until September and will return in the new year.

Our aim to engage as much as possible with the local Brighton community was demonstrated with the opening of the 'Brighton Music Walk of Fame' on the pier this year.  Celebrating musicians and bands with Brighton connections, the 'Walk' is created by a series of interactive plaques situated at strategic points around the pier, and there is a range of associated merchandise for sale in the gift shop. Our sponsorship of the local TV station, 'Latest TV', has also proved beneficial in engaging with the local community.

Shareholders will be aware that each year we undertake an annual substructure survey and this is now complete. We can report that no additional maintenance issues have been identified other than the usual budgeted maintenance requirements for the coming financial year.

During the period, the pier completed a successful migration of its accounts to the new Group accounting software.  We now have the systems in place, along with an experienced finance team who are able to manage the existing divisions and incorporate any future business acquisitions. Lethington Leisure Limited migrated to the new accounts system at the start of the new financial period.

The Bars division

The bars trade under a variety of concepts including Embargo Republica, Lola Lo, Po Na Na, Fez Club, Lowlander, Smash and Coalition. The Bars division predominantly targets a customer base of sophisticated students midweek and stylish over 21s and professionals at the weekend.

Despite the volatile trading backdrop, progress continues to be made in this division. While we continue to face strong competition across a number of sites, the division continues to perform well on weekends and key calendar dates such as Halloween and Christmas, both of which traded ahead of last year on a like-for-like basis during the period.

Wimbledon

This venue closed its doors for redevelopment, at the end of August 2017, opening again at the end of September 2017 as the Group's second Smash bar. The bar trades during post-work hours and in the later evening with a menu that includes fresh dough pizza and craft beer. In addition, the venue provides activity areas for customers to enjoy games of ping-pong with friends and to watch major sports events on large screens. The refit has transformed the customer profile and resulted in successful trading to date. Smash was awarded the best bar in the Wimbledon and Putney area in the 2018 'DesignMyNight' awards.

Derby

The Group made the decision to close the Derby site during the period and has since granted a 20-year lease over the two lower floors of this venue to a new tenant, at an annual passing rent of £90,000. The freehold of this site is currently being marketed for sale.

Manchester Sakura

This venue has been closed for two years following water ingress from the railway above the club. Towards the end of December 2017, the landlord completed extensive repairs to make the venue waterproof. The lease on this site was assigned on 11 January 2018. A 12-month rent-free period has been agreed with the new tenant and is payable quarterly by the Group as the rent falls due. The cost of this incentive was fully provided for in prior periods.

Liverpool

The subsidiary company owning this site was sold on 23 May 2018 for a nominal sum. A 12-month rent incentive was given to the acquirer. The Group has been released of all guarantees on this lease and no residual risk remains to the Group from the disposal of this company.

Reading Coalition

This venue was closed at the end of June 2018 after a difficult year of trading. Heads of terms have been agreed for a sub-let to another operator, which is expected to conclude by the end of October.

Once the sub-let for Reading Coalition has been signed it will mark the conclusion of the work started two years ago to dispose of the loss-making or marginal sites, enabling the division to focus on the larger profitable venues.

Finally, it is a pleasure to report that the Eclectic marketing team were shortlisted for the October 2017 AMLR 'Dusk till Dawn' awards in the 'Best Marketing and Promotions' category and 'Best New Venue' category for Reading Smash.

The Golf division

The Golf division operates six indoor mini golf sites at high footfall retail and leisure centres. The business capitalises on the increasing trend of the convergence of retail and leisure, offering an accessible and traditional activity for the whole family without age or health and safety restrictions. The first unit was opened in Glasgow in 2006, after which followed Manchester (2008), Sheffield (2012), Livingston (2012), Cheshire Oaks (2015) and Derby (2017). Each site offers two unique 18-hole mini golf courses. The trading results for the Golf division represent the 30-week period from the date of acquisition, with no comparatives in the prior year.

The Group acquired 100% of the share capital of Lethington Leisure Limited, owner of Paradise Island Adventure Golf, for a headline consideration of £10.5 million and a further £0.3 million completion payment for working capital.

The consideration was funded through a placing of new ordinary shares (raising gross proceeds of £3.0 million), an extension to the Group's existing facilities with Barclays Bank Plc of £5.7 million, the issue of £0.6 million of consideration shares to management, a payment of £0.9 million in cash deferred by one year to the remaining selling shareholders and the balance from existing cash resources of £0.5 million.

The acquisition also represents an opportunity to broaden and grow the Group's business base, with one additional site already contracted and a broader pipeline of new site opportunities and potential site acquisitions.

The counter seasonal nature of the Golf division to Brighton Palace Pier provides the potential to improve the distribution of earnings throughout the financial year, whilst also helping to fulfil the growing demand for experiential leisure and 'competitive socialising'.

The acquisition emphasises the Group's confidence in its ability to be a long-term consolidator within the sector and is expected to further enhance the Group's free cash flow and earnings in the coming year, being the first full year of ownership by the Group.  The Golf division has delivered results in line with our estimates presented at the time of the acquisition.

Our initial months of ownership were focussed on integrating the golf accounting systems into the Group and introducing our HR and health & safety systems. This Golf Division is now fully integrated into the Group.

Since the acquisition, we have significantly upgraded the Manchester golf site with additional theming and interactive effects that further enhance the customer experience. This refurbishment was completed in time for the marketing of the site's tenth anniversary in July 2018.

The Group has also utilised the pier's strong existing relationships within the arcade and gaming industry to introduce a number of amusement machines to the Glasgow location, taking advantage of a vacant mezzanine space to provide a supplementary income stream for the site. During the financial year, work began on an augmented reality app, which will be rolled out across all sites, bringing an additional technological dimension to the golf courses.

Outlook for the coming period and strategy of the combined Group

We are confident of another year of progress.

The pier continues to attract visitors to Brighton seafront in substantial numbers. The 2018 summer weather arrived with the pier basking in a heatwave for much of July and part of August. Sadly, the miserable weather over the August bank holiday, the busiest weekend in the calendar, meant much of the earlier gains were lost. This has led us to take a cautious approach to the trading outlook for the coming year.

In the short to medium term, the pier management are concentrating their energies on developing and bedding in the new catering and hospitality offering. The team have been taking advantage of the additional capacity within the Palm Court restaurant and Victoria's Bar, together with the newly refitted Horatio's Bar, to drive the food and drink offerings over the summer. For the coming winter months the focus will be on marketing the new spaces for conferences, functions and weddings. So far these spaces have created an array of fresh opportunities and significant interest in larger events, which historically the pier was unable to cater for.

In terms of the Bars division, the Group will continue to promote quality service and delivery in relation to the Group's existing sites, whilst also pursuing opportunities for selective investment to improve the estate. Plans are well under way to carry out a full refit of Putney Fez, with the venue planned to reopen towards the end of November. The development of Putney and expected sub-let of Reading Coalition is expected to benefit trading in the coming financial year.

With regard to the Golf division, the coming year will see a full-year's trading result versus only 30 weeks during the current period. Work will also commence on the opening of our new site at Rushden Lakes, which is expected to open towards the end of the next financial year in April 2019. Negotiations also continue on a number of potential new sites for the future.

The strategy of the enlarged Group is to capitalise on the skills of the three existing divisions, creating a growth company that operates across a diverse portfolio of leisure and entertainment assets in the UK. The Group will achieve this objective by way of organic revenue growth throughout the whole estate, together with the active pursuit of future potential strategic acquisitions of entertainment destinations, thus enhancing the Group's portfolio in realising synergies by leveraging scale. It is the Board's longer-term strategy to position the Company as a consolidator within this sector.

Significant events that have taken place since the period 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.

Cash flow

Cash flow generated from operations (after interest and tax payments) available for investment was £2.5 million (2017: £3.7 million).

Balance sheet

Fixed assets

The Group invested £3.3 million in capital expenditure during the period (2017: £1.7 million):

·      £1.7 million (2017: £0.7 million) was spent on the Pier division - which primarily included the refits of Horatio's Bar, Victoria's Bar and the Palm Court restaurant;

·      £1.3 million (2017: £0.9 million) was spent on the Bars division - which primarily included the refits of Wimbledon and Lowlander, together with contributions to the fit-out of Derby and other minor capital maintenance;

·      £0.1 million (2017: £nil) was spent on the Golf division, covering the upgrades to the venue in Manchester Trafford Centre and the development of the augmented reality app.

During the period, the Group disposed of a number of sites, resulting in fixed assets with a net book value of £0.2 million being written down. This cost appears in highlighted items (see Note 4).

Bank debt

At the period end, the Group had:

·      an outstanding term facility of £14.7 million (2017: £11.3 million), with repayments of £1.5 million due to be repaid within the next 12 months (2017: £1.2 million);

·      an RCF facility of £2.5 million with £2.0 million drawn at the year end (2017: £nil); and

·      cash balances of £2.8 million (2017: £4.1 million

Consolidated statement of comprehensive income

For the 53 week period ended 1 July 2018

			53 weeks ended 1 July 2018	52 weeks ended 25 June 2017
		Notes	£'000	£'000
Revenue			31,682	31,304
Cost of sales			(5,424)	(5,540)
Gross profit			26,258	25,764
Operating expenses - excluding highlighted items			(22,656)	(21,971)
Highlighted items		4	(947)	(1,584)
Total operating expenses			(23,603)	(23,555)
Operating profit - before highlighted items			3,602	3,793
Highlighted items		4	(947)	(1,584)
Operating profit			2,655	2,209
Finance cost			(387)	(315)
Profit before tax and highlighted items			3,215	3,478
Highlighted items		4	(947)	(1,584)
Profit on ordinary activities before taxation			2,268	1,894
Taxation on ordinary activities			(507)	(19)
Profit and total comprehensive income for the period			1,761	1,875
Earnings per share - basic*		5	5.2	5.9
Earnings per share - diluted		5	5.0	5.7

* 2018 basic weighted average number of shares in issue is 33.91 million (2017: 31.73 million).

No other comprehensive income was earned during the period (2017: £nil).

Consolidated balance sheet

As at 1 July 2018

		As at 1 July 2018		As at 25 June 2017
		£'000		£'000
Non-current assets
Intangible assets		12,669		3,729
Property, plant and equipment		26,634		22,543
		39,303		26,272
Current assets
Assets held for sale		293		293
Inventories		599		547
Trade and other receivables		1,791		1,134
Cash and cash equivalents		2,812		4,073
		5,495		6,047
TOTAL ASSETS		44,798		32,319
EQUITY
Issued share capital		8,916		7,941
Share premium		15,890		13,229
Merger reserve		(1,575)		(1,575)
Other reserve		362		321
Retained deficit		(2,410)		(4,171)
Equity attributable to equity shareholders of the Parent		21,183		15,745
TOTAL EQUITY		21,183		15,745
LIABILITIES
Current liabilities
Trade and other payables		5,732		4,619
Other financial liabilities		1,696		1,200
Income tax payable		840		162
Provisions		59		491
		8,327		6,472
Non-current liabilities
Other financial liabilities		14,988		10,102
Deferred tax liability		300		-
		15,288		10,102
TOTAL LIABILITIES		23,615		16,574
TOTAL EQUITY AND LIABILITIES		44,798		32,319

Deferred tax balances as at 1 July 2018 have been presented on a net basis.

Consolidated statement of cash flows

For the period ended 1 July 2018

		53 weeks to		52 weeks to
		1 July 2018		25 June 2017
	Notes	£'000		£'000
Operating activities
Profit before tax		2,268		1,894
Finance costs		387		315
Amortisation of intangible assets		39		7
Depreciation of property, plant and equipment		1,432		1,265
Write off of goodwill on closed sites		-		273
Impairment of goodwill on other sites		-		469
Write off of property, plant and equipment at closed or redeveloped sites		176		270
Loss on disposal of property, plant and equipment		2		-
Share-based payment expense		102		141
(Decrease)/increase in provisions		(432)		43
(Increase)/decrease in inventories		(47)		119
(Increase)/decrease in trade and other receivables		(221)		745
Decrease in trade and other payables		(817)		(1,509)
Interest paid		(358)		(339)
Income tax paid		(65)		-
Net cash flow from operating activities		2,466		3,693
Investing activities
Purchase of property, plant and equipment and intangible assets		(3,336)		(1,687)
Acquisition of business, net of cash acquired	2	(8,688)		-
Proceeds from disposal of property, plant and equipment		13		25
Net cash flows used in investing activities		(12,011)		(1,662)
Financing activities
Proceeds from borrowings		6,800		-
Repayment of borrowings		(1,450)		(1,076)
Proceeds from issue of ordinary shares		3,051		63
Share issue costs recognised directly in equity		(106)		-
Capital element on finance lease rental payments		(11)		(9)
Net cash flows from/(used in) financing activities		8,284		(1,022)
Net (decrease)/increase in cash and cash equivalents		(1,261)		1,009
Cash and cash equivalents at beginning of period		4,073		3,064
Cash and cash equivalents end of period		2,812		4,073

 

Consolidated statement of changes in equity

For the period ended 1 July 2018

		Issued share capital	Share premium	Merger reserve	Other reserves	Retained earnings/ (deficit)	Total shareholders' equity
		£'000	£'000	£'000	£'000	£'000	£'000
At 26 June 2016		7,920	13,187	(1,575)	180	(6,046)	13,666
Profit and total comprehensive income for the period		-	-	-	-	1,875	1,875
Transactions with owners:
Issue of shares		21	42	-	-	-	63
Share-based payments charge		-	-	-	141	-	141
At 25 June 2017		7,941	13,229	(1,575)	321	(4,171)	15,745
Profit and total comprehensive income for the period		-	-	-	-	1,761	1,761
Transactions with owners:
Issue of shares		975	2,767	-	(61)	-	3,681
Share issue costs taken directly to equity		-	(106)	-	-	-	(106)
Share-based payments charge		-	-	-	102	-	102
At 1 July 2018		8,916	15,890	(1,575)	362	(2,410)	21,183

Notes to the consolidated financial statements

For the period ended 1 July 2018

1.  Accounting policies

The Brighton Pier Group PLC is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on AIM. Its registered address is 36 Drury Lane, London, WC2B 5RR. Both the immediate and ultimate Parent of the Group is The Brighton Pier Group PLC. The Brighton Pier Group PLC owns and operates Brighton Pier, one of the leading tourist attractions in the UK. The Group also operates 12 premium bars (2017: 14) and 6 indoor adventure golf facilities trading in major towns and cities across the UK.

Announcement

This announcement was approved by the Board of Directors on 25 September 2018. The preliminary results for the period ended 1 July 2018 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 periods ended 1 July 2018 or 25 June 2017. 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 for the period ended 1 July 2018. 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 periods ended 1 July 2018 and 25 June 2017 were unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The financial statements for the period ended 25 June 2017 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 1 July 2018 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 1 July 2018. These accounting policies were consistently applied for all the periods presented.

The financial statements are presented in sterling under the historical cost convention. All values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

The financial statements are prepared on a 52 or 53 week basis up to the last Sunday in June or the first Sunday in July each year (2018: 53 week period ended 1 July 2018; 2017: 52 week period ended 25 June 2017).  The notes to the consolidated financial statements are on this basis.

2. Business combination

On 8 December 2017 the Group acquired 100% of the issued share capital of Lethington Leisure Limited (trading as Paradise Island Adventure Golf), an unlisted company based in the UK. The Group acquired this company in order to expand and diversify its business.

The amounts in the table overleaf are presented on a provisional basis. If new information obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date identifies adjustments to the below amounts, or any additional provisions that existed at the acquisition date, then the acquisition accounting will be revised.

The fair value of assets and liabilities assumed has been deemed to be equal to their book value. Management also concluded that there were no separately identifiable intangible assets to be recognised as part of the acquisition.

Provisional fair value of assets acquired and liabilities assumed		Provisional fair value recognised at 8 December 2017
		£000s
Assets
Property, plant and equipment		2,561
Inventory		5
Cash and cash equivalents		571
Trade and other receivables		436
Liabilities
Trade and other payables		(999)
Income tax payable		(236)
Deferred tax liability		(300)
Total provisional identifiable net assets at fair value		2,038
Provisional goodwill		8,796
Purchase consideration transferred		10,834
Purchase consideration
Amount settled in cash		9,259
Deferred cash consideration at fair value		945
Equity instruments (663,158 ordinary shares at 95p each)		630
Total purchase consideration		10,834
Consideration transferred settled in cash		9,259
Cash and cash equivalents acquired		(571)
Net cash outflow on acquisition		8,688

Acquisition-related costs amounting to £312,000 are not included as part of consideration transferred and have been recognised as an expense in the consolidated statement of comprehensive income, as part of highlighted items (see note 4).

The deferred cash consideration of £945,000 is due to be paid one year from the date of acquisition and as such the effect of discounting was deemed immaterial. This additional consideration is not contingent.

Lethington Leisure Limited contributed £2,186,000 to revenue and £628,000 to net profit during the period from acquisition (8 December 2017). If the combination had taken place at the start of the year, the consolidated statement of comprehensive income for the period ended 1 July 2018 would show pro-forma Group revenue of £35,002,000 and the profit after tax for the period would have been £2,182,000.

3.  Segmental information

The following tables present revenue, profit and loss and certain asset and liability information regarding the Group's business segments for the period ended 1 July 2018.

53 week period ended 1 July 2018		Owned Bars	Brighton Palace Pier	Golf	Total segments	Overhead	2018 consolidated total
		(53 weeks)	(53 weeks)	(30 weeks)
		£'000	£'000	£'000	£'000	£'000	£'000
Revenue		14,991	14,505	2,186	31,682	-	31,682
Cost of sales		(3,171)	(2,238)	(15)	(5,424)	-	(5,424)
Gross profit		11,820	12,267	2,171	26,258	-	26,258
Gross profit %		79%	85%	99%	83%		83%
Administrative expenses (excluding depreciation)		(10,056)	(8,828)	(1,543)	(20,427)	(758)	(21,185)
Highlighted items						(947)	(947)
Depreciation and amortisation						(1,471)	(1,471)
Finance cost						(387)	(387)
Profit before tax		1,764	3,439	628	5,831	(3,563)	2,268
Income tax						(507)	(507)
Profit after tax		1,764	3,439	628	5,831	(4,070)	1,761
EBITDA (before highlighted items)		1,764	3,439	628	5,831	(656)	5,175
EBITDA (after highlighted items)		1,764	3,439	628	5,831	(1,427)	4,404

52 week period ended 25 June 2017		Owned Bars	Brighton Palace Pier	Total segments	Overhead	2017 consolidated total
		£'000	£'000	£'000	£'000	£'000
Revenue		16,388	14,916	31,304	-	31,304
Cost of sales		(3,204)	(2,336)	(5,540)	-	(5,540)
Gross profit		13,184	12,580	25,764	-	25,764
Gross profit %		80%	84%	82%		82%
Administrative expenses (excluding depreciation)		(11,397)	(8,478)	(19,875)	(824)	(20,699)
Highlighted items					(1,584)	(1,584)
Depreciation and amortisation					(1,272)	(1,272)
Finance cost					(315)	(315)
Profit before tax		1,787	4,102	5,889	(3,995)	1,894
Income tax					(19)	(19)
Profit after tax		1,787	4,102	5,889	(4,014)	1,875
EBITDA (before highlighted items)		1,787	4,102	5,889	(683)	5,206
EBITDA (after highlighted items)		1,215	4,102	5,317	(683)	4,634

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

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

4.  Highlighted items

	Period ended 1 July 2018		Period ended 25 June 2017
	£'000		£'000
Acquisition and pre-opening costs
Acquisition costs	312		-
Site pre-opening costs	338		48
	650		48
Impairment, closure and legal costs
Impairment of intangible non-current assets	-		469
Other closure costs & legal costs	297		1,067
	297		1,536
Total	947		1,584

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 £312,000 relate to costs incurred as part of the acquisition on 8 December 2017 of Lethington Leisure Limited by The Brighton Pier Group PLC.

Site pre-opening costs of £338,000 relate to the one-off pre-opening costs of the redevelopment of the Palm Court restaurant, Victoria's Bar and Horatio's Bar on Brighton Pier, as well as the redevelopment of the Wimbledon Po Na Na bar into a Smash table tennis bar.

Other closure and legal costs of £297,000 relate to the one-off costs incurred as a result of the closure of the Coalition bar in Reading and the exiting of a lease on an unused site in Liverpool.

5.  Earnings per share

Basic earnings per share amounts are calculated by dividing net income for the period attributable to ordinary shareholders of The Brighton Pier Group PLC by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the Parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

Adjusted basic and diluted earnings per share are calculated based on the profit for the period adjusted for highlighted items and their related tax effects.

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

Basic earnings per share	Period ended	Period ended
	1 July 2018	25 June 2017
Profit for the period (£'000)	1,761	1,875
Basic weighted number of shares (number)	33,914,684	31,732,894
Earnings per share - Basic (pence)	5.2	5.9

Basic adjusted earnings per share	Period ended	Period ended
	1 July 2018	25 June 2017
Profit for the period before highlighted items (£'000)	2,652	3,459
Basic adjusted weighted number of shares (number)	33,914,684	31,732,894
Adjusted earnings per share - Basic (pence)	7.8	10.9

Diluted basic earnings per share	Period ended	Period ended
	1 July 2018	25 June 2017
Profit for the period (£'000)	1,761	1,875
Diluted weighted number of shares (number)	34,914,600	33,148,390
Earnings per share - Diluted (pence)	5.0	5.7

Adjusted diluted earnings per share	Period ended	Period ended
	1 July 2018	25 June 2017
Profit for the period before highlighted items (£'000)	2,652	3,459
Diluted weighted number of shares (number)	34,914,600	33,148,390
Adjusted earnings per share - Diluted (pence)	7.6	10.4

Reconciliation of adjusted profit for the period

Adjusted profit is calculated as follows:

	Period ended	Period ended
	1 July 2018	25 June 2017
	£'000	£'000
Profit for the period	1,761	1,875
Highlighted items	947	1,584
Tax on highlighted items	(56)	-
Adjusted profit for the period (£'000)	2,652	3,459

Diluted basic earnings per share

The impact of dilutive shares on the weighted average number of shares is summarised below:

	2018	2017
	Number	Number
Weighted average number of shares for Basic EPS	33,914,684	31,732,894
Dilutive effect of share options	999,916	1,415,496
Weighted average number of shares for Diluted EPS	34,914,600	33,148,390

6.  Reconciliation to EBITDA

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

EBITDA Reconciliation	2018	2017
Profit before tax for the year	2,268	1,894
Add back depreciation	1,432	1,265
Add back amortisation	39	7
Add back finance costs	387	315
Add back share-based payment charge	102	141
Add back highlighted items	947	1,584
Group EBITDA before highlighted items	5,175	5,206

Group EBITDA after highlighted items was £4,404,000 (2017: £4,634,000), which excludes those highlighted items that do not impact EBITDA, namely the write-off of property, plant and equipment at closed and refurbished sites of £176,000 (2017: £270,000). In the prior year, Group EBITDA after highlighted items also excluded goodwill write-offs and impairments of £742,000.

 

END

 

 

FR FKQDPDBKBACB