Final Results

RNS Number : 3110S

Nightcap PLC

15 November 2021

 

15 November 2021

Nightcap plc

("Nightcap" or the "Company" or the "Group")

Results for the 52 week financial year ended 27 June 2021

Nightcap (AIM: NGHT) is pleased to announce its audited full year results for the 52 weeks ended 27 June 2021. The Company's Annual Report and Accounts for the 52 weeks ended 27 June 2021 ("Annual Report") and the Notice of Annual General Meeting ("AGM") will be posted to shareholders today.

The Company's Annual Report and the Notice of AGM will be available shortly on the Company's website at www.nightcapplc.com  

The AGM will be held at 10 a.m. at the offices of Allenby Capital Limited, 5 St. Helen's Place, London, EC3A 6AB on 9 December 2021.

Sarah Willingham, Chief Executive Officer of Nightcap, commented:

"I am delighted to present Nightcap's first Annual Report and Accounts. Nightcap's winning strategy is well under way.

Nightcap was built during the Covid-19 global pandemic to acquire and expand leading brands in the drinks-led bar sector. We are acquiring fundamentally strong businesses that have been weakened by the impact of the pandemic.

The rapid roll out of these brands has been aided by a unique opportunity within the property market and we have made excellent progress so far, as we continue to build the property pipelines in key strategic locations across the country.

We are really pleased with the performance of The Cocktail Club and the Adventure Bar Group since reopening. Most of our sites have posted record sales weeks and our teams have worked tirelessly to meet the demand from customers.

I would like to thank all of our stakeholders for their continued support, and especially our wonderful customers."

For further enquiries:

Nightcap plc Sarah Willingham / Toby Rolph / Gareth Edwards	c/o We Are The Romans
Allenby Capital Limited (Nominated Adviser and Broker) Nick Naylor / Alex Brearley / Piers Shimwell (Corporate Finance) Matt Butlin / Amrit Nahal / Tony Quirke (Sales and Corporate Broking)	[phone] www.allenbycapital.com
We Are The Romans (Financial PR) Courtney Hamilton-Foad (Account Manager)	https://www.wearetheromans.com/ [phone] [e-mail]

CHAIRMAN'S STATEMENT

The COVID-19 pandemic has been an extraordinary time for all of us and unprecedented in terms of its severe and often unpredictable impact on the hospitality sector and the wider economy. Sarah and Nightcap's executive team have dealt with the uncertainties arising from the constantly changing health requirements affecting the hospitality sector in a very professional and commercial fashion. I believe that the Group's businesses have significantly benefitted from the Board and management team's extensive experience in the hospitality and public markets sectors, and agile and entrepreneurial approach. We are grateful for Government support during the times when our bars have been forced to close.

A silver lining of the pandemic's exacerbation of the longstanding structural difficulties in the UK hospitality sector is the increasing availability of prime sites usually seen only infrequently on the market. It has also had the effect of introducing a degree of reality to the rents being sought by landlords, resulting in sites with lower rents being offered. New sites will mean the creation of more jobs and we will be focused on maintaining the same high quality of staff employed in our existing bars. We are conscious of the competition for staff in the market but expect the pressure to ease following the closure of other hospitality sites. This provides an undeniable opportunity for an operator like Nightcap, which is undertaking a "buy-and-build" strategy and is well-funded following its initial public offering in January 2021 and the May/June 2021 secondary placing. We are proud of the way in which Nightcap is playing its part in the recovery of the UK's hospitality sector

The acquisitions of The Cocktail Club and the Adventure Bar Group are in line with our strategy and both offer exciting expansion opportunities as we look to grow the number of sites. Over August 2021 to September 2021, The Cocktail Club has entered into leases for new sites in Reading, Bristol and the City of London, with all these new sites expected to be open before the end of the calendar year. Nightcap currently has a further 23 sites in legal negotiations or under offer across several of the Group's brands

For the foreseeable future, the COVID restrictions have been lifted and COVID vaccination boosters are being offered, so we can approach the end of the year with optimism. However, the last 18 months have shown us that nothing can be taken for granted and the executive team has honed its ability to respond to new challenges quickly and effectively

I would like to thank all of my colleagues at Nightcap for their loyalty and perseverance in the face of this pandemic and their enthusiasm to get back to their roles of welcoming and entertaining our customers.

Gareth Edwards

Chairman

CHIEF EXECUTIVE'S STATEMENT

INTRODUCTION

I am delighted to present Nightcap's audited results for the 52 week period to 27 June 2021. The Group results include the results of The Cocktail Club for the full 52 week period, together with Nightcap plc from 13 January 2021 to 27 June 2021 and the Adventure Bar Group from 14 May 2021 to 27 June 2021. The opportunity to create significant value through the creation and AIM listing of the Nightcap business was a direct result of the COVID-19 pandemic. Its devastating impact on the hospitality and leisure industry gave rise to an opportunity to acquire well-run drinks-led bar and late night businesses, with compelling roll-out propositions and to support leading hospitality entrepreneurs. Nightcap's winning strategy is well under way. We are acquiring fundamentally strong businesses that have been weakened by the impact of the pandemic, working with the existing management teams to stabilise them and recapitalise their balance sheets. With the support of a very experienced executive team within Nightcap, these businesses will be able to achieve their full potential, not just within their existing estates but as they roll out nationally, whilst giving heavily incentivised and invested founders a chance to realise additional value as we grow.

The rapid roll out of these brands has been aided by a unique opportunity within the property market. Sites in top locations are available on more compelling terms than they have been over the past many years; landlords are favouring stronger covenants and there is far less competition for sites and therefore lower premiums to pay, if any. Nightcap is well placed to make the most of this opportunity and we have made excellent progress so far, as we continue to build the property pipelines in key strategic locations across the country.

ACQUISITIONS

Over the last few years the millennial customers that we target have moved away from generic mid-market chains and sticky floored nightclubs and instead are favouring late night bars where they can have a great time, drink good quality drinks and enjoy an experience-led, memorable and fun night out in unique venues. In addition we have seen huge growth in the demand for events from this target market - sometimes ticketed and always pre-booked. The growth in the popularity of the bottomless brunch has given rise to an opportunity to pre sell periods of the day which otherwise would have been empty.

 In the first six months of 2021, Nightcap acquired two outstanding businesses, both of which we believe are best in class, to meet the demands of the millennial market. Firstly, The Cocktail Club, the purchase of which coincided with our IPO on AIM in January 2021, which was followed by the acquisition of the Adventure Bar Group, in May 2021. Both businesses are built on providing fantastic guest experiences, centred on premium cocktails, high-energy and fun environments, curated by exceptional teams, including talented and highly trained bar tenders.

The Cocktail Club is a premium bar business built on the skill of the hosts and their ability to create a high quality and fun experience for guests as well as of course serving exceptional quality drinks. Testament to this is the very strong consumer demand we have experienced since reopening, which gives us confidence as we continue to seek and secure more bar locations for this business. We believe there is potential to roll out The Cocktail Club from the current 10 locations to 40 sites across the UK over approximately the next four years.

The Cocktail Club chain of bars was formerly known as 'The London Cocktail Club', although following a recent re-branding decision it is now known as The Cocktail Club London in London and The Cocktail Club nationally.

The Adventure Bar Group, founded in 2005, has built a reputation for creating fun and highly-differentiated bar environments, via a group of leading and individually themed unique brand concepts with a focus on 'late night cocktail parties in striking venues', including Tonight Josephine, Blame Gloria, Bar Elba and Luna Springs. They are famous for their brunches and pre-sold events. Like The Cocktail Club, the Adventure Bar Group venues are mainly located in London and, similarly to The Cocktail Club, we strongly believe there is significant scope to expand the number of locations it operates in key cities and towns across the UK.

The Adventure Bar Group acquisition brought nine bars into Nightcap, one being a 50:50 joint venture. Two of the acquired bars are located in Covent Garden, two are in Waterloo, with other sites being located in Shoreditch, Clapham Junction and Clapham High Street. Additionally, two new bars were opened in Birmingham in April and May 2021, including a Tonight Josephine site based over an area of almost 4,000 square feet and the substantial outdoor bar, food and entertainment venue, Luna Springs with a capacity of 3,000 people.

The performance of the Tonight Josephine and Blame Gloria brands, has led to us narrowing our focus on finding sites for these two brands. We think both brands have a large untapped demand for female-led socialising in welcoming, safe environments around the country. These large indoor venues are complemented by Bar Elba and Luna Springs, which fit our strategy to add additional large outdoor bar and event spaces to the Group. The business has a number of sites in legal negotiations or under offer across the country and I am excited to see the roll out of these iconic brands into more and more cities across the UK. Whilst we are pleased with our acquisitions to date we continue to seek additional high-quality businesses in the bar and latenight space to add to the portfolio . We are looking for well run businesses and brands, who with additional investment can realise their national roll-out potential.

COVID-19 LOCKDOWN

The Cocktail Club was forced to stop trading as a result of the UK Government's hospitality closures in response to the pandemic.

Management, who had experience from the previous COVID-19 closures, were able to use this time constructively to assess the impact of COVID-19 on the changing marketplace, engage with their teams, adapt and make improvements to the business and prepare for the re-opening. I am very pleased with the progress that was made within the Group during this period of closure.

In addition, The Cocktail Club and the Adventure Bar Group have benefited from certain UK Government support schemes including, amongst others, the Coronavirus Job Retention Scheme, the Coronavirus Business Interruption Loan Scheme, VAT deferral and hospitality business rates relief at applicable locations. We are, of course, extremely thankful to the Government for the various forms of support to the sector and firmly maintain that the hospitality sector will not only play a vital role in the UK's economic recovery, but also in providing places for people to be able to socialise again and have fun.

TRADING PERFORMANCE POST LOCKDOWN

We are really pleased with the performance of the businesses since reopening. Most of our sites have posted record sales weeks and our teams have worked tirelessly to meet the demand from customers.

Some of our sites with outdoor space were able to open on 12 April 2021, when outdoor trading was permitted. The full relaunch began in earnest when all of our businesses were fully reopened, when indoor trading recommenced on 17 May 2021, albeit with some significant capacity and other restrictions remaining in place.

The success of the UK vaccination programme means that our consumers are now more confident about going out for a drink and enjoying themselves. Since the start of September 2021, we are also benefitting from the significant increase in the number of people returning to their offices, given that many of our bars are located in city centres. In particular our sites in and near to the City of London are trading better than ever.

In recent months the media has highlighted a number of challenges with the potential to impact the hospitality sector. I am pleased to note that The Cocktail Club and the Adventure Bar Group have been substantially unaffected by most of these. Potential shortages of carbon dioxide are not an issue for the Group, as our bars mostly serve non-carbonated drinks.

Thus far, the Group has not experienced issues from the disruption of freight logistics, and I am especially pleased by the way that the Adventure Bar Group and The Cocktail Club have worked with our key supplier partners to ensure that we have already secured the necessary stocks of key cocktail ingredients and bottled beer ahead of the important busy Christmas trading period.

The biggest challenge has been recruitment of staff. Our experience so far means that we are confident in our ability to attract and retain the best staff. We are resolutely determined to maintain our position as an employer of choice, off the back of the excellent training and progression opportunities that our team members are offered within the Group's businesses. However, we know that the lack of staff availability is affecting peer group companies and is a material challenge for our industry. This pressure is likely to feed through in wage inflation and into a squeeze on labour costs. That being said, I consider that we have some of the most loyal and talented people in the industry working across the Group, who are motivated and happy to be part of our journey. I am very proud of the effort that everyone has made over the past few months in allowing the businesses to trade again and in meeting unprecedented demand.

FINANCIAL POSITION

The Group has a strong liquidity position with a cash position as of the latest quarter ended 26 September 2021, of over £12.2m, principally as a result of the equity fundraisings, excellent performance across the Group and tight cash control. This is sufficient liquidity to execute our expansion strategy and to support potential future acquisitions.

Since the start of the COVID-19 pandemic, The Cocktail Club and the Adventure Bar Group have re-negotiated the majority of their property leases, securing rent-free periods and rent reductions for other periods when the estate has been closed. In some cases we have also managed to reduce the rent liability going forward. I would like to express our thanks to the landlords that participated in this process and their support for us and the hospitality sector. By far the majority have chosen to support us in a significant way and I am grateful to be working with people and businesses who are committed to our long-term success.

Post period end, The Cocktail Club received a waiver in relation to the financial covenants attached to certain of its bank loans for the 52 week period ended 27 June 2021. These covenants were put in place prior to the COVID-19 pandemic. Based on the strong initial and forecasted trading, the Board believes that the Group will comply with all of its covenants for the financial period ending 3 July 2022. We are grateful to our banks for their support.

Nightcap also took other important steps to mitigate the effects of the UK Government's hospitality closures and national lockdowns, which has included salary sacrifices by the Directors and senior executive team and cost reductions where necessary.

NEW SITE PIPELINE

We have made extremely good progress on building a pipeline of new bar sites for both businesses. Our management teams have been travelling around the UK looking for new properties. I remain extremely positive and excited about our future and our ability for rapid and sustainable growth.

We are starting to see some of these new site openings for The Cocktail Club, with sites in Bristol, Reading and in the City of London all opening their doors to customers during November 2021.

In addition, post year-end, the business launched its second Blame Gloria site in London, replacing the Group's original Adventure Bar site in Clapham Junction and bringing one of Covent Garden's most unique cocktail bars to the heart of South-West London. The rebrand has resulted in a significant uplift in sales, re-enforcing our commitment to the roll out of this brand. We are currently rebranding the other Adventure Bar in Clapham to a Tonight Josephine which will not only soak up some excess demand from the Waterloo sister site, but we also anticipate another additional uplift in sales from this site as a direct result of the rebrand.

In addition to the three new sites we have a further 23 sites in legal negotiations or under offer across the Group's brands. I am very happy with the rate at which we are progressing our organic growth.

PEOPLE

Having backed some of the industry-leading entrepreneurs behind two exceptional businesses, we have taken the opportunity to strengthen the wider senior team ahead of a period of substantial growth and expansion, to ensure that we have the right team in place to deliver on our strategy. I am very proud of the team that we have put together and the strong collaboration between the two businesses. This collaboration means that we are able to easily identify best practices, find synergies in each business and roll these out across the Group.

At The Cocktail Club, we have appointed a highly experienced Managing Director in Dawn Donahue. She brings more than 20 years' hospitality experience with a strong track record in the late-night sector running premium bars and nightclubs as well as pub and restaurant brands, private members clubs and international franchises. Dawn continues to a team of talented people around her with years of experience and success in the sector.

At the same time, the Adventure Bar Group's founders Thomas Kidd and Tobias Jackson, two of the most talented operators in the bar and late-night sector, continue to be at the heart of the business and extremely passionate about continuing to drive it forward. Since acquisition, the business has strengthened the senior team around Thomas and Tobias, appointing a new senior Finance Director in Robb Harris, and promoting Amanda Ebbs to Sales Director.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

As we emerge from the pandemic, the Environmental, Social and Governance (ESG) agenda has become increasingly important for all businesses and their stakeholders. In response, we have taken a number of actions to ensure that we are a responsible business and play a positive role in the industry's recovery. We are taking our responsibilities seriously and understand the importance of these themes, and believe that those that succeed in this area will have a long-term competitive advantage. Please see the Board's ESG report within the Strategic Report of the Annual Report for further details.

INNOVATIONS

COVID-19 has impacted all businesses in different ways. One of the innovations that we have seen across our businesses is the proliferation of events. We have in some ways become a capacity-management business, seeking to optimise trading levels through every trading part of the day and evening, through bookings and advance sales.

Many of our venues now offer day-time events such as brunches and some of our locations, notably Luna Springs in Birmingham, offer a huge variety of different events throughout the week, including music shows, food and drink festivals, comedy nights, film screenings and live sport broadcasts.

MARKET OUTLOOK

The significant demand we continue to experience gives us great confidence in the widespread and enduring appeal of the premium late night bar concepts operated by both The Cocktail Club and the Adventure Bar Group. We have seen record sales in recent weeks and expect this to continue as we move into the winter and as we seek new locations for these businesses across the UK.

There are evidently still some challenges facing both the UK economy and the hospitality industry and it is difficult to predict the exact timing and profile of the recovery and whether any setbacks will occur. That said, whilst there are no guarantees that our bars will not be subject to further interruptions from COVID-19 related restrictions from future waves of infection, the business is trading strongly and is well positioned for growth. In addition, we have proven our ability to react swiftly to any restrictions imposed on us, with the knowledge that our bars are able to remain profitable with restricted trading.

2020 and 2021 to date has been an extraordinary period and the Board particularly acknowledges the contribution of our staff, suppliers, shareholders, landlords, advisers and bankers. I cannot emphasise enough how grateful we are to these key stakeholders who, as well as assisting us through unparalleled times, will also help us achieve our ambitions over the course of the next few years.

Above all I feel we must mention our customers. Our customers have continued to support us from the minute we were allowed to reopen our doors, turn the music up and serve great drinks. They have remained loyal, introduced their friends and continue to come back time and time again. Thank you! We look forward to continuing to do what we do best - looking after our customers, showing them a great time, throwing the best parties, opening new sites and giving great people meaningful careers whilst being part of a team to be proud of.

Sarah Willingham

Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		52weeksended 27June2021	52weeks ended 28 June2020
		£	£
Revenue		5,968,667	5,196,710
Costofsales		(1,414,419)	(1,074,931)
Grossprofit		4,554,248	4,121,779
Administrativeexpenses		(10,008,896)	(4,525,817)
Otherincome		565,748	125,000
Adjusted EBITDA		958,076	763,945
Sharebasedpayments		(3,823,642)	-
Depreciation		(1,258,637)	(1,037,417)
Amortisationofintangibleassets		(51,099)	(1,577)
Exceptionalcosts:
-IPOandacquisitionrelatedtransactioncosts		(546,068)	-
-Corporatefinancefees		(167,530)	(3,989)
Lossfromoperations		(4,888,900)	(279,038)
Financeexpense		(407,537)	(337,263)
Lossbeforetaxation		(5,296,437)	(616,301)
Taxcredit/(charge)onloss		32,098	(15,888)
Lossandtotalcomprehensivelossfortheperiod		(5,264,339)	(632,189)
Lossfortheperiodattributableto:
-Ownersoftheparent		(5,373,111)	(632,189)
-Non-controllinginterest		108,772	-
		(5,264,339)	(632,189)
		52weeksended	52weeks ended
		27June2021	28 June2020
		pence	pence
Earningspershareattributabletotheordinaryequityholdersoftheparent
Losspershare
-Basicanddiluted		(5.55)	(1.14)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		27June2021 £	28 June2020 £
Non-currentassets
Goodwill		6,572,920	-
Intangibleassets		3,084,034	7,318
Property,plantandequipment		3,547,573	2,219,508
Rightofuseassets		13,446,863	4,711,230
Otherreceivable		271,150	257,620
Totalnon-currentassets		26,922,540	7,195,676
Currentassets
Inventories		329,350	139,726
Tradeand other receivables		804,411	474,437
Cashandcashequivalents		13,187,479	264,488
Totalcurrentassets		14,321,240	878,651
Total assets		41,243,780	8,074,327
Currentliabilities
Loansandborrowings		(1,458,652)	(1,230,725)
Tradeandotherpayables		(8,628,163)	(1,227,491)
Leaseliabilitiesduelessthanoneyear		(1,440,525)	(524,408)
Total currentliabilities		(11,527,340)	(2,982,624)
Non-currentliabilities
Borrowings		(3,255,620)	(488,070)
Leaseliabilitiesduemorethanoneyear		(12,462,624)	(4,703,184)
Provisions		(150,054)	-
Deferredtaxprovision		(666,662)	(92,240)
Totalnon-currentliabilities		(16,534,960)	(5,283,494)
Total liabilities		(28,062,300)	(8,266,118)
Netassets/(liabilities)		13,181,480	(191,791)
Called upsharecapital		1,854,752	55,379
Sharepremium		19,267,483	178,017
Sharebasedpaymentreserve		216,230	92,429
Reverseacquisitionreserve		(2,512,590)	(45,131)
Retainedearnings		(5,753,167)	(472,485)
		13,072,708	(191,791)
Non-controllinginterest		108,772	-
Totalequity		13,181,480	(191,791)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
			Share based payment reserve	Reverse acquisition reserve	Retained earnings	Total attributable to equity holders of parent
	Called upshare capital	Share premium					Non- controlling interest	Total equity
	£	£	£	£	£	£	£	£
At29June2019	55,379	178,017	92,429	(45,131)	159,704	440,398	-	440,398
Totalcomprehensiveexpenseforthe 52weekperiod	-	-	-	-	(632,189)	(632,189)	-	(632,189)
At28June2020	55,379	178,017	92,429	(45,131)	(472,485)	(191,791)	-	(191,791)
Issue ofsharecapital	300	50,700	(92,429)	-	92,429	51,000	-	51,000
Transfer to reverse acquisition reserve	(55,679)	(228,717)	-	284,396	-	-	-	-
Recognition of Nightcap plc equity at reverse acquisition	398,800	845,200	-	(2,751,855)	-	(1,507,855)	-	(1,507,855)
Issueofshares-IPO	400,000	3,600,000	-	-	-	4,000,000	-	4,000,000
Transactionfeesrelatedtoissueofshares	-	(628,588)	-	-	-	(628,588)	-	(628,588)
Issueofsharesonacquisition- TheCocktail Club	553,788	4,984,096	-	-	-	5,537,884	-	5,537,884
Issueofsharesonacquisition-Adventure BarGroup	47,619	1,142,857	-	-	-	1,190,476	-	1,190,476
Issueofshares-placingshares	434,783	9,565,217	-	-	-	10,000,000	-	10,000,000
Transactionfeesrelatedtoplacingshares	-	(636,537)	-	-	-	(636,537)	-	(636,537)
Issueofshares-debtconversion	19,762	395,238	-	-	-	415,000	-	415,000
Sharebased paymentsand related deferred taxrecogniseddirectlyinequity	-	-	216,230	-	-	216,230	-	216,230
Totaltransactionswithownersrecognised directlyinequity	1,854,752	19,267,483	216,230	(2,512,590)	(380,056)	18,445,819	-	18,445,819
Totalcomprehensiveexpenseforthe 52weekperiod	-	-	-	-	(5,373,111)	(5,373,111)	108,772	(5,264,339)
At27June2021	1,854,752	19,267,483	216,230	(2,512,590)	(5,753,167)	13,072,708	108,772	13,181,480

CONSOLIDATED STATEMENT OF CASH FLOW

	52weeksended 27June2021 £	52weeksended 28June2020 £
Cashflowsfromoperatingactivities
Loss for theperiod	(5,264,339)	(632,189)
Adjustmentsfor:
Depreciation	1,258,637	1,037,417
Amortisation	51,099	1,577
Lossesondisposalofpropertyplantandequipment	-	8,761
Sharebasedpayments	3,823,642	-
Interestonleaseliabilities	297,215	278,729
Interestonborrowings	110,322	58,534
Taxexpense	(32,098)	15,888
(Increase)/decrease in tradeand other receivables	19,436	166,092
Increaseintradeandotherpayables	2,112,687	176,057
Decrease/(increase)ininventories	42,744	(18,494)
Cash generated fromoperations	2,419,345	1,092,372
Corporationtaxesrepaid/(paid)	30,901	(62,770)
Netcashflowsfromoperatingactivities	2,450,246	1,029,602
Investingactivities
AcquisitionofAdventure BarGroup, netofcash	657,088	-
Acquisition ofTheCocktailClub-transactioncostsandpreIPOexpenses	(902,401)	-
Purchase of property,plant andequipment	(508,865)	(297,175)
Netproceedsfromsaleofproperty,plantandequipment	-	1,550
Purchaseofintangibleassets	(9,275)	(1,100)
Netcashusedininvestingactivities	(763,453)	(296,725)
Financingactivities
Issueofordinaryshares	15,295,000	-
Shareissuecosts	(1,265,125)	-
Loansgranted	-	500,000
Repaymentofloansandborrowings	(1,418,023)	(217,706)
Principalpaidonleaseliabilities	(744,081)	(759,629)
Interestpaidonleaseliabilities	(297,215)	-
Interestpaidonloansandborrowings	(104,495)	(58,535)
Shareholderloanrepayments	(229,863)	(170,821)
Netcashflowinfinancingactivities	11,236,198	(706,691)
Netincreaseincashandcashequivalents	12,922,991	26,186
Cashandcashequivalentsatbeginningoftheperiod	264,488	238,302
Cashandcashequivalentsatendoftheperiod	13,187,479	264,488

Basis of Preparation

The financial information included in this announcement does not constitute statutory accounts of the Group for the 52 weeks ended 27 June 2021 and 28 June 2020 but is derived from those accounts. Statutory accounts for the 52 weeks ended 27 June 2021 will be delivered to the Registrar of Companies following the Group's Annual General Meeting. The auditors have reported on those accounts: their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Notes to the Consolidated Financial Statements

1.  GENERAL INFORMATION

Nightcap plc ("the Company") and its subsidiaries ("the Group") is an award winning independent operator of ten individually themed cocktail bars through The Cocktail Club brand and nine other cocktail-led drinks offerings through the Adventure Bar Group brands.

On 13 January 2021, the Company acquired 100% of the issued share capital of The London Cocktail Club Limited and its subsidiaries ("The Cocktail Club").

Further information on this transaction is provided in Note 4 of the Annual report. On 14 May 2021, the Company acquired 100% of the issued share capital of +Venture Battersea Limited, Adventure Bars Mid Limited and Adventure Bars Luna Digbeth Limited (together referred to as the "Adventure Bar Group"). Further information on this acquisition is provided in Note 31 of the Annual Report.

The Company is a public limited company whose shares are publicly traded on AIM of the London Stock Exchange and is incorporated and registered in England and Wales. The registered office address of the Company is c/o Locke Lord (UK) LLP, 201 Bishopsgate, London, EC2M 3AB.

2.  ACCOUNTING POLICIES

2.1.  Basis of preparation of financial statements

The consolidated financial statements of the Nightcap plc have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union applicable to companies reporting under IFRS.

The Company was incorporated on 23 September 2020 as the vehicle for the purposes of achieving admission to trading on the AIM market of the London Stock Exchange ("Admission") and the Company had no significant transactions prior to Admission on 13 January 2021. The Company acquired the entire share capital of The London Cocktail Club Limited in a share for share exchange. The introduction of the Company into the Group has been accounted for as a reverse acquisition - see Note 4 of the Annual Report. In doing so the comparatives for the 52 weeks ended 28 June 2020 have been presented as if the Group had always existed in its current form.

The accounting policies adopted in the preparation of the Financial Statements have been consistently applied to all years presented, unless otherwise stated. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

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

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. The policies have been consistently applied to all periods presented, unless otherwise stated.

Judgements made by the Directors in the application of the accounting policies that have a significant effect on the consolidated financial statements and estimates with significant risk of material adjustment in the next year are discussed in Note 3 of the Annual Report.

2.2.  Going concern

In concluding that it is appropriate to prepare the 2021 financial statements on the going concern basis, the Directors have considered the Group's cash flows, liquidity and business activities. Particular attention has been paid to the impact of Covid-19 on the business, both experienced to date and potentially foreseeable in the future.

As at 27 June 2021 the Group had cash balances of £13.2m. While some of the Group's sites with outdoor space were able to open on 12 April 2021, when outdoor trading was permitted, the full relaunch began in earnest when all businesses were reopened, when indoor trading recommenced on 17 May 2021, albeit with some significant capacity and other restrictions remaining in place.

The performance of our businesses has been particularly strong compared to the equivalent period in 2019, since further restrictions fell away post year-end, on 19 July 2021, since when many of the venues have posted record sales weeks against the same weeks in 2019.

Further detail is provided in the Chief Executive's Statement under "Trading performance post lockdown".

Based on the Group's forecasts, the Directors have adopted the going concern basis in preparing the Financial Statements. The Directors have made this assessment after consideration of the Group's cash flows and related assumptions and in accordance with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting 2014 published by the UK Financial Reporting Council.

In making this assessment the Directors have made a current consideration of any future potential impact of the Covid-19 pandemic on the cash flows and liquidity of the Group over the next 12 month period. This assessment has considered:

• the impact of historic measures put in place during previous lockdowns to preserve and to increase liquidity, and the Group's ability to put similar actions in place again

• The continued availability of Government measures to support industry, and in particular the hospitality industry. These measures have previously included the Coronavirus Job Retention Scheme, the business rates holiday, the temporary VAT reduction to 5% on food and non-alcoholic drinks

• Initial trading during the period post the resumption of trading on 17 May 2021

•    New sites where the Group has confirmed agreements for lease in place and the potential for opening further sites

• Banking covenant waivers received from the bank subsequent to the year in respect of certain loans - see Note 21 of the Annual Report

Based on these assessments the Group forecasts to be in compliance with its banking covenant obligations, and accordingly the Directors have concluded that it is appropriate to prepare the financial statements on the going concern basis. If further lockdowns are mandated there is a risk that a reduction in trade could cause the group to breach future EBITDA based bank covenants. However, given the strong relationship the group has with its bankers, the Board anticipates that its bankers would continue to be supportive.

2.3.  Basis of consolidation

A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of an entity to obtain benefits from its activities. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

All intra-Group transactions, balances, income and expenses are eliminated on consolidation.

2.4.  Alternative performance measures

The Group has identified certain measures that it believes will assist the understanding of the performance of the business. These APMs are not defined or specified under the requirements of IFRS.

The Group believes that these APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional useful information on the underlying trends, performance and position of the Group and are consistent with how business performance is measured internally. Adjusted EBITDA is also one of the measures used by the Group's banks for the purposes of assessing covenant compliance. The APMs are not defined by IFRS and therefore may not be directly comparable with other companies' alternative performance measures.

The key APM that the Group uses is Adjusted EBITDA. This APM is set out on page 81 of the Annual Report including an explanation of how it is calculated and it reconciles to a statutory measure where relevant.

These measures exclude exceptional items, as defined below, and non-cash share-based payment charges.

Exceptional items

The Group classifies certain one-off charges or credits that have a material impact on the Group's financial results as 'exceptional items'. These are disclosed separately to provide further understanding of the financial performance of the Group. Management splits out these costs for internal purposes when reviewing the business.

Non-cash share based payment charges

Charges/credits relating to share-based payments arising from the Group's long-term incentive schemes are not considered to be exceptional but are separately identified due to the scope for significant variation in charges/credits due to this being the Group's first period operating the share option plan, appointment of senior management during the year and the probability of share options vesting amongst other factors.

2.5.  Revenue

The Group has recognised revenue in accordance with IFRS 15. The standard requires revenue to be recognised when goods or services are transferred to customers and the entity has satisfied its performance obligations under the contract, and at an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Revenue predominantly arises from the sale of food and drink to customers in the Group's sites for which payment in cash or cash equivalents is received immediately and as such revenue is recognised at point of sale.

The Group operates in a single geographical region (the UK) and hence all revenues are impacted by the same economic factors.

Retro payments and listing fees are spread over the life of the contract. The income is recognised as a credit within cost of sales. Revenue is shown net of value added tax, returns and discounts.

Customer deposits received in advance of events and bookings are recorded as deferred revenue on the balance sheet. They are recognised as revenue along with any balancing payment from the customer when the associated event / booking occurs.

2.6.  Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants that are receivable as compensation for losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. This income is recognised within Other income. Where the income relates to a distinct identifiable expense, the income is offset against the relevant expense for example, income received under the Coronavirus Job Retention Scheme has been offset against staff costs.

2.7.  Finance costs

Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest rate method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

2.8.  Intangible assets goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer's interest in the fair value of the identifiable assets and liabilities of the acquiree at the date of acquisition.

Goodwill is not subject to amortisation and is tested annually for impairment, or more frequently if events or changes in circumstances indicated that they may be impaired.

2.9.  Intangible assets - trademarks, licenses and brands

Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses.

Intangible assets acquired as part of a business combination are only recognised separately from goodwill when they arise from contractual or other legal rights, are separable, the expected future economic benefits are probable and the cost or value can be measured reliably.

Asset class  Amortisation method and rate

Trademarks  10%- straight-line

Licenses  Straight line over the life of the lease

Brand  Straight-line over the expected useful economic life of the brand being 7.5 years

2.10.  Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight- line method.

Depreciation is provided on the following basis:

Leasehold building improvements  - straight-line over the life of the lease 

Plant and machinery  - 25% straight-line

Fixtures and fittings  - 25% straight-line

Computer equipment  - 33% straight-line

The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.

2.11.  Inventories

Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.

At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price. The impairment loss is recognised immediately in profit or loss.

2.12.  Trade and other receivables

Trade and other receivables are recognised initially at the amount of consideration that is unconditional, unless they contain significant financing components, when they are recognised at fair value. The Group holds the trade and other receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade and other receivables.

To measure the expected credit losses, trade receivables and other assets are grouped based on shared credit risk characteristics and the days past due.

2.13.  Impairment

Goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicated that it might be impaired. Goodwill is not allocated to individual CGUs but to a group of CGUs. As the business has a single operating segment as disclosed in Note 5 of the Annual Report, and goodwill is not disaggregated for internal management purposes, goodwill impairment testing is performed for the business as a whole, in accordance with IAS 36.

The recoverable amount is the higher of an asset's fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).

Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

2.14.  Cash and cash equivalents

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. Payments taken from customers on debit and credit cards are recognised as cash.

2.15.  Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Initial recognition

The Group initially recognises trade receivables, trade payables, deposits, loans and borrowings on the date on which they are originated. All other instruments are recognised on the trade date, which is the date on which the Group becomes party to the contractual provisions of the instrument.

All financial assets are recognised initially at fair value plus or minus, in the case of assets not at fair value through the Statement of comprehensive income, transaction costs that are attributable to the acquisition of the financial asset or liability.

Financial assets

The Group financial assets are measured at amortised cost.

A financial asset is measured at amortised cost when assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on de-recognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses.

Impairment losses are presented as separate line item in the statement of profit or loss.

The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade and other receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Loss allowances for expected credit loss ("ECL's") are presented in the statement of financial position as a deduction from the gross carrying amount of the assets. In the profit or loss, the amount of ECL is recognised as an Impairment gain or loss.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial liabilities

Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities measured at amortised cost, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

The Group's financial liabilities include trade and other payables, loans and borrowing and other financial liabilities and accrued liabilities that are classified as measured at amortised cost.

Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses arising on the repurchase, settlement or cancellation of liabilities are recognised respectively in interest and other revenues and finance costs. For substantial and non-substantial modifications the Group derecognises a financial liability from the statement of financial position when the obligation specified in the contract or arrangement is discharged, cancelled or expires.

2.16.  Trade and other payables

Short-term creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest rate method.

2.17.  Leased assets

The Group has adopted IFRS 16 for the first time using the fully retrospective method with the date of initial application being 3 July 2017. In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

· the use of a single discount rate to a portfolio of leases with reasonably similar characteristics

· relying on previous assessment of whether a lease is onerous

·   measurement of a right-of-use asset at the date of transition to IFRS Standards by choosing on a lease-by-lease basis, to measure that right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of transition to IFRS Standards

· the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

·   the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

Under IFRS 16, the Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Unless the Group is reasonably certain to obtain ownership of the leased assets at the end of the lease term, the recognised right-of-use assets are depreciated over the shorter of its estimated useful life and lease term. Right-of-use assets are subject to impairment testing. At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification or a change in the lease term. The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e. those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognised as an expense in the Statement of Comprehensive Income.

At the reporting date the Group has applied the practical relief available during the Covid-19 pandemic, which provides lessees with relief from applying lease modification accounting to Covid-19 related rent concessions.

2.18.  Pensions

The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.

The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.

2.19.  Provisions

Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.

Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the period that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.

2.20.  Share based payments

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity- settled share-based transactions are set out in Note 25 of the Annual Report.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting year, based on the Group's estimate of equity instruments that will eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity reserve.

2.21.  Current and deferred taxation

The tax expense for each reporting period comprises current and deferred tax. Tax is recognised in the Consolidated Statement of Comprehensive Income, except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.

The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:

· The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits;

· Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met; and

· Where they relate to timing differences in respect of interests in subsidiaries, associates, branches and joint ventures and the Group can control the reversal of the timing differences and such reversal is not considered probable in the foreseeable future.

Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same tax authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.22.  Related party transactions

The Group discloses transactions with related parties which are not wholly owned within the Group. Where appropriate, transactions of a similar nature are aggregated unless, in the opinion of the Directors, separate disclosure is necessary to understand the effect of the transactions on the Group Financial Statements.

2.23.  New standards, amendments and interpretations adopted

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

· Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

· Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

· References to Conceptual Framework (Amendments to IFRS 3).

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments were originally effective for annual reporting periods beginning on or after 1 January 2022.

However, in May 2020, the effective date was deferred to annual reporting periods beginning on or after 1 January 2023.

Nightcap plc is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities.

Other

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.

The following is a list of other new and amended standards which, at the time of writing, had been issued by the IASB but which are effective in future periods. The amount of quantitative and qualitative detail to be given about each of the standards will depend on each entity's own circumstances.

· IFRS 17 Insurance Contracts (effective 1 January 2023) - In June 2020, the IASB issued amendments to IFRS 17, including a deferral of its effective date to 1 January 2023.

3.  CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATION UNCERTAINTY

The preparation of consolidated financial information in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.

Estimates and underlying assumptions are reviewed on an on-going basis and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Although these judgements, estimates and associated assumptions are based on management's best knowledge of current events and circumstances, the actual results may differ. Revisions to accounting estimates are recognised in the period in which the revision takes place and in any future periods affected.

The key assumptions concerning the future and other key sources of estimation and uncertainty at the date of the statement of financial position that have a significant risk of causing material adjustments to the carrying amounts of assets and liabilities within the next financial period are set out below.

The Directors consider the principal judgements made in the Financial Statements to be:

KEY JUDGEMENTS

Operating Segments

The Directors have taken a judgement that individual sites meet the aggregation criteria in IFRS 8 and hence have concluded that the Group only has a single reporting segment, as discussed in Note 5 of the Annual Report.

Determining the rate used to discount lease payments

At the commencement date of property leases the lease liability is calculated by discounting the lease payments. The discount rate used should be the interest rate implicit in the lease. However, if that rate cannot be readily determined, which is generally the case for property leases, the lessee's incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. As the Group has external borrowings, judgement is required to compute an appropriate discount rate which was calculated based on UK bank borrowings and adjusted by an indicative credit premium that reflects the credit risk of the Group. The weighted average discount rate applied to those leases that pre-dated the Group's IPO was 4.75%. Leases entered into post IPO have been discounted with a weighted average discount rate of 4.25%. For the lease liabilities at 27 June 2021 a 0.1% increase in the discount rate used would have reduced the total liabilities by £196,736.

Reverse acquisition accounting

On 13 January 2021, the Company acquired the entire issued share capital of London Cocktail Club Limited through a share for share exchange resulting in a transaction that has been accounted for as reverse acquisition. In arriving at its conclusion for treating the acquisition as a reverse acquisition, the Company has considered various factors in determining which party was the accounting acquirer. The key determining factor was that the former shareholders of the entity whose shares were acquired owned the majority of shares, and controlled the majority of votes, in the combined entity immediately following the acquisition.

The second key judgement the Company applied relates to determining whether the accounting acquiree, in this case, Nightcap plc constituted a business (and hence applying IFRS 3 "Business Combinations" or did not constitute a business (and hence applying IFRS 2 "Share based payments"). The Company concluded that the main purpose of the IPO for Nightcap was to raise funds and acquire The Cocktail Club, and as a result, the Directors' view is that the Company was purely a cash shell with its only asset being the cash it raised on IPO. In addition, the acquisition of The Cocktail Club was conditional on Nightcap plc shares being admitted to trading on AIM.

The transaction has been described in full in Note 4 of the Annual Report.

Consolidation of joint venture

Waterloo Sunset Limited ("Waterloo Sunset") is a joint venture that runs and operates a bar in Waterloo, London. The Group has a 50% economic interest in Waterloo Sunset with each partner holding 50% of the voting rights. The Group maintains an agreement to operate Waterloo Sunset and charges a management fee of 10% to Waterloo Sunset.

The Directors have determined that the Company exerts significant influence and control because it has the power to direct all significant activities of Waterloo Sunset and has a higher economic interest in it as compared to its unrelated venture partner, and as a result consolidates Waterloo Sunset in these financial statements with a 50% non-controlling interest represent the 50% of the equity the Group does not own.

Exceptional items

Exceptional items are those where, in management's opinion, their separate reporting provides a better understanding of the Group's underlying business performance; and which are significant by virtue of their size and nature. In considering the nature of an item, management's assessment includes, both individually and collectively, whether the item is outside the principal activities of the business; the specific circumstances which have led to the item arising; the likelihood of recurrence; and if the item is likely to recur, whether it is unusual by virtue of its size.

No single criteria classifies an item as exceptional, and therefore management must exercise judgement when determining whether, on balance, presenting an item as exceptional will help users of the financial statements understand the Group's underlying business performance.

Valuation of intangible assets and goodwill

The amount of goodwill initially recognised as a result of a business combination is dependent on the allocation of the purchase price to the fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities is based, to a considerable extent, on management's judgement.

KEY ESTIMATES

Impairment of property plant and equipment

Annually, the Group considers whether tangible assets are impaired. Where an indication of impairment is identified the estimation of recoverable value requires estimation of the recoverable value of the cash generating units (CGUs). This requires estimation of the future cash flows from the CGUs and also selection of appropriate discount rates in order to calculate the net present value of those cash flows. Individual sites are viewed as separate CGUs in respect of the impairment of property, plant and equipment. Details of the sensitivity of the estimates used in the impairment exercise are provided in Note 14 of the Annual Report.

Useful economic lives of property, plant and equipment

The depreciation charge in each period is sensitive to the assumptions used regarding the economic lives of assets and their respective depreciation rates.

Share-based payments

The charge for share based payments in respect of the Nightcap plc Share Option Plan is calculated in accordance with the methodology described in Note 25 of the Annual Report. The model requires subjective assumptions to be made including the future volatility of the Company's share price, expected dividend yield, risk-free interest rates, expected time of exercise and employee attrition rates. Changes in such estimates may have a significant impact on the original fair value calculation at the date of grant and therefore the share based payments charge.

Valuation of intangible assets and goodwill

Allocation of the purchase price affects the results of the Group as finite lived intangible assets are amortized, whereas indefinite lived intangible assets, including goodwill, are not amortized and could result in differing amortisation charges based on the allocation to indefinite lived and finite lived intangible assets.

During the period, the Group acquired the businesses collectively known as the Adventure Bar Group for total consideration of £3.5m (including contingent deferred consideration). Details of the acquisitions are set out in Note 31 of the Annual Report. In accordance with IFRS 3, the identifiable assets acquired and liabilities and contingent liabilities assumed should be measured at fair value at the acquisition date in order to determine the difference between the cost of acquisition and the fair value of the Group's share of net assets acquired, which should then be recognised as goodwill on the balance sheet or recognised in the income statement.

In determining the fair value, management has recognised brand values totaling £3.0m in respect of the various brands acquired. Key estimates used in arriving at the brand valuation include growth rates, discount rate, cashflow assumptions including working capital estimates, appropriate royalty rates and useful economic lives. Further information is provided in Notes 13 and 31 of the Annual Report.

Valuation of contingent deferred consideration

As described above the acquisition of Adventure Bar Group included contingent deferred consideration to be settled with the issue of shares. Certain estimates have been used in valuing the consideration including share price volatility, enterprise value/EBITDA multiples, risk free rates and estimates on probabilities and timing for the satisfaction of the shares to be issued. Further information is provided in Note 31 of the Annual Report.

Amortisation

Amortisation is recorded to write down intangible assets to a residual value of nil over their useful economic lives (UELs). Management must therefore estimate the appropriate UELs to apply to each class of intangible asset. Changes in the estimated UELs would alter the amount of amortisation charged each year, which could materially impact the carrying value of the assets in question over the long term. UELs are therefore reviewed on an annual basis to ensure that they are in line with policy and that those policies remain appropriate.

Impairment

As part of their impairment reviews, management must assess whether intangible assets will continue to deliver economic benefits in the future. Where a significant reduction in estimated future economic benefits occurs, it could result in a material impairment charge. Although the risk of a material impairment is reduced by capping intangible UELs at a maximum of 10 years and not applying residual values, intangibles are assessed at least annually for indications of impairment, which requires a degree of subjectivity on the part of management.

4. REVERSE ACQUISITION AND AIM ADMISSION

On 13 January 2021, the Company acquired the entire issued share capital of The London Cocktail Club Limited and its subsidiaries ("The Cocktail Club"), a private company incorporated in England and Wales, by way of a share-for-share exchange. Although the transaction resulted in The Cocktail Club becoming a wholly owned subsidiary of the Company, the transaction constitutes a reverse acquisition in as much as the shareholders of The Cocktail Club owned, post transaction, a majority of the issued ordinary shares of the Company.

In substance, the shareholders of The Cocktail Club acquired a controlling interest in the Company and the transaction has therefore been accounted for as a reverse acquisition.

Accordingly, this reverse acquisition does not constitute a business combination and was accounted for in accordance with IFRS 2 Share-based payment and IFRIC guidance, with the difference between the equity value given up by The Cocktail Club's shareholders and the share of the fair value of net assets gained by The Cocktail Club's shareholders charged to the statement of comprehensive income as the cost of acquiring an AIM quoted listing in the form of a share based payment expense.

In accordance with reverse acquisition accounting principles, these consolidated financial statements represent a continuation of the consolidated financial statements of The Cocktail Club and include:

a.  the assets and liabilities of The Cocktail Club at their preacquisition carrying amounts and the results for both periods; and

b.  the assets and liabilities of the Company as at 27 June 2021 and its results from 13 January 2021 to 27 June 2021.

On 13 January 2021, the Company issued 55,378,838 shares for the 10,247,990 shares of The Cocktail Club. In addition the Company paid cash consideration of £162,116 for an additional 300,000 shares in The Cocktail Club arising on exercise of share options and £421,943 contingent deferred consideration.

On 13 January 2021, the quoted share price of Nightcap plc was £0.10 and therefore this valued the investment in The Cocktail Club at £6,121,943, including cash and contingent consideration.

Because the legal subsidiary, The London Cocktail Club Limited, was treated as the accounting acquirer and the legal Parent Company, Nightcap plc, was treated as the accounting subsidiary, the fair value of the shares deemed to have been issued by The Cocktail Club was calculated at £7,988,000 based on an assessment of the purchase consideration for a 100% holding in Nightcap plc.

The fair value of net assets of Nightcap plc at the date of acquisition was as follows:

	£
Cashandcashequivalents	4,584,456
Otherassets	128,985
Liabilities	(413,871)
Net assets	4,299,570

The difference between the deemed cost and the fair value of the net assets acquired of £3,688,430 has been expensed in accordance with IFRS 2, Share based payments, reflecting the economic cost to The Cocktail Club shareholders of acquiring a quoted entity.

The reverse acquisition reserve that arose from the reverse takeover is made up as follows:

	52 weeks ended 27 June 2021 £
As at start of year	-
Pre-acquisition losses of Nightcap plc (1)	(318,342)
The Cocktail Club issued capital at acquisition (2)	239,265
Investment in The Cocktail Club (3)	(6,121,943)
Reverse acquisition expense (4)	3,688,430
As at end of year	(2,512,590)

The movements on the Reverse acquisition reserve are as follows:

(1)  These consolidated financial statements present the legal capital structure of the Company. However, under reverse acquisition accounting rules, the Company was not acquired until 13 January 2021 and therefore the entry above is required to eliminate the initial retained losses of the Company.

(2)  The Cocktail Club had issued share capital of equivalent to £239,265 as at 13 January 2021. As these financial statements present the capital structure of the parent entity, the issue of equity by The Cocktail Club has been recorded in this reserve.

(3)  The Company issued 55,378,838 shares at £0.10 each, totaling £5,537,884 for the entire issued capital of The Cocktail Club plus £584,059 of cash and contingent cash consideration. The above entry is required to eliminate the balance sheet impact of this transaction.

(4)  The reverse acquisition accounting is described in detail above. The entry above represents the difference between fair value of net assets of Nightcap plc at the date of acquisition, and the deemed consideration given by The Cocktail Club to acquire the Company.

5.  SEGMENTAL REPORTING

 

The Group's continuing operating businesses are organized and managed as reportable business segments according to the information used by the Group's Chief Operating Decision maker ("CODM") in its decision making and reporting structure. The CODM is regarded as the Chief Executive together with other Board Members who receive financial information at a site-by-site level.

The Group's internal management reporting is focused predominantly on revenue and adjusted EBITDA, as these are the principal performance measures and drives the allocation of resources. The CODM receives information by trading venue, each of which is considered to be an operating segment. All operating segments have similar characteristics and, in accordance with paragraph 8 of IFRS 8, are aggregated to form an 'Ongoing business' reportable segment. Economic indicators assessed in determining that the aggregated operating segments share similar economic characteristics include expected future financial performance, operating and competitive risks and return on investment. These common risks include, but are not limited to, Covid-19, cost inflation, recruitment and retention, Brexit and supply chain disruption, consumer confidence, availability of new sites, health and safety and food and drink safety, These risks are discussed in more detail in the "Principal Risks and Uncertainties" section on pages 15 and 16 of the Annual Report. The risks are managed, discussed and monitored at a Board level across the Group. Within the ongoing business, assets and liabilities cannot be allocated to individual operating segments and are not used by the CODM for making operating and resource allocation decisions.

The Group performs all its activities in the United Kingdom. All the Group's non-current assets are located in the United Kingdom.

Revenue is earned from the sale of drink and food with a small amount of admission income.

Revenue

Revenue arises from the sale of food and drink to customers in the Group's sites for which payment in cash or cash equivalents is received immediately. The Group operates in a single geographical region (the UK) and hence all revenues are impacted by the same economic factors. Accordingly, revenue is presented as a single category and further disaggregation is not appropriate or necessary to gain an understanding of the risks facing the business.

6.OTHERINCOME
		52weeksended 27June2021 £	52weeksended 28June2020 £
Businessinterruptioninsuranceproceeds-COVIDrelated		250,000	-
Governmentgrants- COVID related		315,748	125,000
		565,748	125,000

7. OPERATING LOSS
The operating profit is stated after charging/(crediting):
		52weeksended 27June2021 £	52weeksended 28June2020 £
Lossfromoperationsisstatedaftercharging:
Craft manufacturingoperations(now ceased)		-	11,479
Craftheadofficecosts		-	29,767
Sharebasedpayments		135,212	-
Shared basedpaymentsrelatingtoTheCocktailClub		3,688,430	-
Depreciation oftangible fixedassets		567,445	478,078
Depreciation of rightof useassets		691,192	559,339
Amortisationofintangibleassets:
-Trademarks		2,080	1,577
-Brands		49,019	-
Losson disposal of fixed assets		-	8,761
Inventories-amountschargedasanexpense		1,414,419	1,093,423
Auditors'remuneration
-forstatutoryauditservices		70,000	-
-forotherassuranceservices		190,500	10,795
-fortaxcomplianceservices		1,477	1,460
-fortaxadvisoryservices		9,845	-
Pre-openingcosts		-	30,251
Exceptionalcosts		713,598	3,989

 

8. EMPLOYEES AND DIRECTORS

The average monthly number of employees, including the Directors, during the period was as follows:

		52weeksended 27June2021	52weeksended 28June2020
Management		65	4
Operations		283	85
Administration		5	8
		353	97
		52weeksended 27June2021 £	52weeksended 28June2020 £
Wagesandsalaries		3,077,128	2,280,330
Socialsecuritycosts		313,073	228,191
Definedcontribution pension costs		35,292	28,941
Otheremploymentcosts		65,975	17,898
		3,491,468	2,555,360
CoronavirusJobRetentionSchemegrants		(729,159)	(518,591)
		2,762,309	2,036,769
Sharebasedpayments		135,212	-
SharedbasedpaymentsrelatingtoAdventureBarGroupacquisition		3,688,430	-
Totalshare based paymentexpense		3,823,642	-
		6,585,981	2,036,769

All of the Group's employees were based in the United Kingdom in the current and prior periods.

The following table shows a breakdown of the remuneration of individual Directors who served in all or part of the period.

Name	SalaryandFees £	AnnualBonus £	Transaction RelatedBonus £	PensionContribution £	Total £
SarahWillingham-Toxvaerd	103,786[1]	105,375	-	5,625	214,786
MichaelWillingham-Toxvaerd	129,206[2]	-	200,000[3]	2,500	331,706
TobiasVanderMeer	-	-	-	-	-
LanceMoir	45,819[4]	-	15,000[5]	-	60,819
Thi-HanhJelf	10,198	-	-	-	10,198
GarethEdwards	20,397	-	-	-	20,397
TobyRolph	58,532	58,532	25,000[5]	3,125	145,189
Total	367,938	163,907	240,000	11,250	783,095

[1]  Includes consultancy fees to The Cocktail Club prior to its acquisition by Nightcap.

[2]  Salary includes fees relating to the share placing for the IPO and The Adventure Bar Group acquisition, in line with his service agreement described within the AIM admission document.

[3] Relates to the acquisition of The Cocktail Club on 13 January 2021 and the acquisition of the Adventure Bar Group on 14 May 2021, in line with his service agreement described within the AIM admission document.

[4]  Includes salary as Chairman of The London Cocktail Club prior to its acquisition by Nightcap.

[5]  Relates to the successful IPO on 13 January 2021

Further information in respect of Directors' remuneration is provided in the Remuneration Committee Report on pages 27 and 28 of the Annual Report.

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the company listed above.

		52weeksended 27June2021	52weeksended 28June2020
Keymanagementemoluments		967,240	180,122
Pensioncontribution		13,880	2,630
		981,120	182,752

9.FINANCECOSTS
		52weeksended 27June2021 £	52weeksended 28June2020 £
Interestonbankoverdraftsandloans		110,322	58,534
Interestonleaseliabilities		297,215	278,729
		407,537	337,263

10. TAX (CREDIT)/CHARGE ON LOSS
Theincometax(credit)/chargeisapplicableontheGroup'soperationsinthe UK.
		52weeksended 27June2021 £	52weeksended 28June2020 £
Taxation(credited)/chargedtotheincomestatement
Currentincometaxation		18,585	24,552
Adjustments forcurrenttaxationofprior periods		-	38,047
Research&developmentclaim		-	(30,825)
Totalcurrentincometaxation		18,585	31,774
Deferred Taxation
Originationandreversaloftemporarytimingdifferences
Currentperiod		(303,947)	(15,886)
Adjustmentsin respectof priorperiods		(3,168)	-
Adjustmentin respectof changeof rateof corporationtax		256,432	-
Total deferred tax		(50,683)	(15,886)
Totaltaxation(credit)/expenseintheconsolidatedincomestatement		(32,098)	15,888
Theaboveisdisclosedas:
Income tax(credit)/expense- currentperiod		(28,930)	8,666
Income tax (credit)/expense- priorperiod		(3,168)	7,222
		(32,098)	15,888

		52weeksended 27June2021 £	52weeksended 28June2020 £
Factorsaffectingthetaxchargefortheperiod
Lossbeforetax		(5,296,437)	(616,301)
AtUKstandardrateofcorporationtaxationof19%(2020:19%)		(1,006,323)	(117,097)
Incomenotassessablefortaxpurposes		(12,537)	-
Expenses notdeductible fortaxpurposes		-	-
-Sharebasedpayments		700,802	-
-Other		245,132	12,822
Fixedassetdifferences		42,349	98,341
Researchand development claims		-	(30,825)
Timingdifferencesonleases		(114,071)	9,143
Deferredtax (charged)/crediteddirectly toequity		81,018	-
Temporarydifferencesinrespectofshareoptions		(104,847)	-
Other temporarydifferences		(19,476)	-
Unusedlossescarriedforward		-	43,561
Movementinunrecogniseddeferredtax		(97,409)
Adjustments to tax charge inrespect of prior periods		(3,168)	(57)
Adjustmentin respectof changeof rateof corporationtax		256,432	-
Totaltax(credit)/chargefortheperiod		(32,098)	15,888

11. EXCEPTIONAL ITEMS
	52weeksended 27June2021 £	52weeksended 28June2020 £
Includedinadministrativeexpenses:
IPOandacquisitionrelatedtransactioncosts	546,068	-
Abortedcorporatefinancefees	167,530	3,989
	713,598	3,989

The IPO and acquisition related transaction costs in the 52 weeks ended 27 June 2021 relate to costs incurred in the IPO and reverse acquisition of The Cocktail Club which completed on 13 January 2021, along with the acquisition of Adventure Bar Group on 14 May 2021. The costs include employee bonuses and professional fees. The costs incurred in the 52 weeks ended 28 June 2020 relate to costs incurred in the preparation for the IPO of the business.

The aborted corporate finance fees in both periods relate to costs incurred in relation to the aborted sale of The Cocktail Club in 2019, which was settled by the Group in 2021.

12. EARNINGS PER SHARE

Basic (losses)/earnings per share is calculated by dividing the profit/(loss) attributable to equity shareholders by the weighted average number of shares outstanding during the year, excluding unvested shares held pursuant to The Nightcap plc Share Option Plan and contingently issuable shares in connection with the acquisition of the Adventure Bar Group. Further details of the share options that could potentially dilute basic earnings per share in the future are provided in Note 25 of the Annual Report.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. During the 52 weeks ended 27 June 2021 the Group had potentially dilutive shares in the form of unvested shares options pursuant to the above long-term incentive plan.

	52weeks ended 27 June2021 £	52weeks ended 28 June2020 £
Loss for the period after tax for the purposes of basic and diluted earnings pershare	(5,373,111)	(632,189)
Non-controllinginterest	108,772	-
Taxation(credit)/charge	(32,098)	15,888
Interest(income)/expense	407,537	337,263
Exceptionalitems	713,598	3,989
Sharebasedpaymentcharge	3,823,642	-
Depreciationandamortisation	1,309,736	1,038,994
ProfitfortheperiodforthepurposesofAdjustedEBITDA(IFRS16)basicand dilutedearningspershare	958,076	763,945
IAS 17Rentcharge	(777,042)	(692,193)
ProfitfortheperiodforthepurposesofAdjustedEBITDA(IAS17)basicanddiluted earningspershare	181,034	71,752

	52 weeks ended 27 June 2021 Number	52weeks ended 28 June2020 Number
Weighted averagenumber ofordinary sharesin issuefor thepurposes ofbasic	96,859,609	55,378,837
Effectof dilutive potential ordinary shares from shareoptions	3,746,721	-
Weighted averagenumber ofordinary sharesinissue forthe purposesofdiluted	100,606,330	55,378,837

	52weeks ended 27 June2021 pence	52weeks ended 28 June2020 pence
Earningspershare:
Basicanddiluted	(5.55)	(1.14)
Adjusted EBITDA (IFRS 16) basic and diluted	0.99	1.38
Adjusted EBITDA (IAS 17) basic and diluted	0.19	0.13

During a period where the Group or Company makes a loss, accounting standards require that 'dilutive' shares for the Group be excluded in the earnings per share calculation, because they will reduce the reported loss per share; consequently, all per-share measures in the current period are based on the weighted number of ordinary shares in issue.

13. INTANGIBLE ASSETS
	Trademarksand licenses	Brand	Total	Goodwill
	£	£	£	£
(i)Costorvaluation				-
At29 June 2019	8,278	-	8,278	-
Additions	1,100	-	1,100	-
At28 June 2020	9,378	-	9,378	-
At29 June 2020	9,378	-	9,378	-
Additions	9,275	-	9,275
Onacquisition(Note31 of the Annual Report)	136,540	2,982,000	3,118,540	6,572,920
At27June2021	155,193	2,982,000	3,137,193	6,572,920
(ii)Amortisation
At29 June 2019	483	-	483	-
Provided for the period	1,577	-	1,577	-
At28 June 2020	2,060	-	2,060	-
At29 June 2020	2,060	-	2,060	-
Provided for the period	2,080	49,019	51,099
At27June2021	4,140	49,019	53,159	-
(iii) Net bookvalue
At 29June2019	7,795	-	7,795	-
At28 June 2020	7,318	-	7,318	-
At27June2021	151,053	2,932,981	3,084,034	6,572,920

Goodwill of £6,572,920 arose on the acquisition by the Group of the Adventure Bar Group on 14 May 2021 - see Note 31 of the Annual Report.

Goodwill is not amortised, but an impairment test is performed annually by comparing the carrying amount of the goodwill to its recoverable amount. The recoverable amount is represented by the greater of the business's fair value less costs of disposal and its value in use.

The value in use is calculated based upon the Group's latest five-year forecast to June 2026, incorporating the impact of the Covid-19 lockdown and assumptions concerning the rate at which business unit level cash flows will recover and ongoing capital expenditure. The value in use calculations use an annual growth rate of 2% in the initial period. The discount rate used to determine the present value of projected future cash flows is based on the Group's Weighted Average Cost of Capital ("WACC") and the Group's current view of achievable long-term growth. The pre-tax discount rate and terminal growth rate used in the discounted cash flow model were 13% and 2% respectively.

The estimation of value in use involves significant judgement in the determination of inputs to the discounted cash flow model and is most sensitive to changes in future cash flows, discount rates and terminal growth rates applied to cash flows beyond the forecast year. The sensitivity of key inputs and assumptions used was tested by recalculating the recoverable amount using reasonably possible variances to those assumptions. The discount rate was increased by 1%, the terminal growth rate was decreased by 1%, and future cash flows were reduced by 20%. As at 27 June 2021, no reasonably possible change in an individual key input or assumption, as described, would result in the carrying amount exceeding its recoverable amount based on value in use.

14. LEASES

This note provides information for leases where the Group is the lessee.

The Group leases the entire The Cocktail Club and Adventure Bar Group estates as well as its Head Office. The leases are non- cancellable operating leases with varying terms, escalation clauses and renewal rights and in some cases include variable payments that are not fixed in amount but based upon a percentage of sales. Lease agreements are typically made for fixed years of between 5 and 25 years. At year end the weighted average lease term remaining is 12 years.

In accordance with IFRS 16, leases of property, plant and equipment are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

· fixed payments (including in-substance fixed payments), less any lease incentives receivable, and

· variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

	Leaseliability £
At29 June 2019	5,483,723
Additions	224,769
Interest expense	278,729
Leasepayments	(759,629)
At28 June 2020	5,227,592
At29 June 2020	5,227,592
Onacquisition(Note31 of the Annual Report )	9,430,804
Interest expense	297,215
Leasepayments	(1,041,296)
Revaluations	(11,166)
At27 June 2021	13,903,149

In accordance with Covid-19-Related Rent Concessions - Amendment to IFRS 16 Leases (the 2020 amendment), where leases have been renegotiated as a result of Covid-19 the gain has been taken to the income statement. In applying this amendment, the company has taken into consideration the conditions described in IFRS 16 paragraph 46B.

Revaluations in the period to 27 June 2021 are as a result of rent reviews and lease extensions.

	27 June2021 £	28 June2020 £
Leaseliability:
Current	1,440,525	524,408
Non-current	12,462,624	4,703,184
	13,903,149	5,227,592

Amountsrecognisedintheconsolidatedstatementofcomprehensiveincome
	27 June2021 £	28 June2020 £
Depreciation charge ofright of useassets	691,192	559,339
Interestexpense(includedinfinancecost)	297,215	278,729

15. SHARE   BASED   PAYMENTS

The Group currently uses one equity settled share plan to incentivise its Executive Directors and employees - The Nightcap plc Share Option Plan (the "Plan").

In accordance with IFRS 2 Share Based Payments, the value of the awards is measured at fair value at the date of the grant. The fair value is expensed on a straight-line basis over the vesting period, based on management's estimate of the number of shares that will eventually vest. The vesting period on the Plan is between 1 and 3 years with an expiration date of 10 years from the date of grant.

Furthermore, share options are forfeited if the employee leaves the Group before the options vest unless forfeiture is waived at the discretion of the Board of Directors.

The Group recognised a total charge of £135,212 in respect of the Group's share based payment plans and related employer's national insurance of £27,615.

	Grantedduring the period   Number	Lapsedduring theperiodNumber	Outstandingat 27June2021 Number
TheNightcapplcShareOptionPlan	20,079,988	-	20,079,988

Nightcap Share Option Plan

The Nightcap plc Share Option Plan (the "Plan") is a discretionary executive and management share option plan. One-off Plan awards were granted at the time of the IPO, and subsequently post IPO. The vesting conditions of the Plan are set out in the Remuneration Committee report.

16.  BUSINESS COMBINATIONS

On 14 May 2021, Nightcap plc acquired 100% of the shares of +Venture Battersea Limited, Adventure Bars Mid Limited and Adventure Bars Luna Digbeth Ltd (together referred to as "Adventure Bar Group"), for the total consideration of £3,533,476. Upon completion of the acquisition, Nightcap became the operator of an additional nine bars. The bars acquired were seven established themed bars located in popular London locations, a large outdoor bar, food and entertainment venue in Birmingham, a bar site which opened in Birmingham on 17 May 2021.

The acquired business contributed revenues of £2,381,381 and profit after tax of £216,043 (in accordance with IFRS) to the consolidated Group for the period from 14 May 2021 to 27 June 2021.

The values identified in relation to the acquisition are provisional as at 27 June 2021.

	Book Value £	Fair Value Adjustments £	Fair Value £
Property,plantandequipment	1,384,960	-	1,384,960
Intangibleassets	136,540	2,982,000	3,118,540
Right-of-useassets	9,430,804	-	9,430,804
Inventories	232,369	-	232,369
Receivables	393,618	-	393,618
Cash	657,088	-	657,088
Payables	(2,911,479)	-	(2,911,479)
Bankloansandborrowings	(5,058,363)	-	(5,058,363)
Leaseliabilities	(9,430,804)	-	(9,430,804)
Provisions	(150,054)	-	(150,054)
Deferredtaxliability	(139,543)	(566,580)	(706,123)
Totalnetassetsacquired	(5,454,864)	2,415,420	(3,039,444)
Fair valueof considerationpaid			£
-Cashpaidtovendor			-
-InitialConsiderationSharesissued			1,190,476
-Contingentlyissuableordinaryshares			2,343,000
Acquisitiondatefairvalueofthetotalconsiderationtransferred			3,533,476
Goodwill			6,572,920

The Company settled the initial consideration by the issue of 4,761,905 new Ordinary Shares as initial consideration with a fair value of £1,190,476.

Further deferred consideration (the "Earn Out Consideration") may be paid to the Vendors.

The contingent consideration to be settled in new ordinary shares is dependent on the level of growth in certain of Adventure Bar Group's bars' adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) over an up to two-year period commencing on 1 July 2021. In the event of the target being achieved, the Company is obliged to issue up to a maximum 7,142,856 million new ordinary shares to the vendors. The fair value of the contingent consideration has been estimated based on a Monte-Carlo option pricing model which derives a future share price using assumptions including the Group's future profitability, the Company's share price and probabilities on achieving the likely target and the timing of the issue of the shares.

The main factors leading to the recognition of goodwill are:

· The expected future benefit the Group expects from the roll out and growth of the existing sites

·   The presence of certain intangible assets, such as the assembled workforce of the acquired entity, which do not qualify for separate recognition

· cost savings and synergies through better buying and enhancing the customer offering, which result in the Group being prepared to pay a premium, and

· The fact that a lower cost of capital is ascribed to the expected future cash flows of the entire operation acquired than might be to individual assets.

The goodwill recognised will not be deductible for tax purposes.

Acquisition costs of £311,021 arose as a result of the transaction. These have been recognised included as exceptional items as part of administrative expenses in the statement of comprehensive income.

RECONCILIATION OF STATUTORY RESULTS TO ALTERNATIVE PERFORMANCE MEASURES ("APMS")

		52weeks ended 27 June2021 £	52weeks ended 28 June2020 £
Lossfromoperations		(4,888,900)	(279,038)
Exceptionalitems		713,598	3,989
Sharebasedpaymentcharge		3,823,642	-
Adjustedlossfromoperations		(351,660)	(275,049)
Depreciationandamortisation(preIFRS16rightofuse assetcharge)	618,544		479,655
IFRS16Rightofuseassetdepreciation	691,192		559,339
AdjustedEBITDA(IFRS16)	958,076		763,945
IAS 17Rentcharge	(777,042)		(692,193)
AdjustedEBITDA(IAS17)	181,034		71,752

 

END

 

 

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