Brighton Pier : Half-year Report

21 March 2017

The Brighton Pier Group PLC

(the 'Company' or the 'Group')

Interim results for the half year to 25 December 2016

Commenting on the results, Luke Johnson, Executive Chairman said:

'This has been a transformational period for the Group.

The acquisition of Brighton Palace Pier has delivered a strong financial performance forthe Group with its first summer trading period in this half year set of results. I believe there are exciting opportunities to further develop the Pier business over the coming years. We continue to make good progress rationalising the Bars division together with driving operational and financial improvements across the estate.

We expect trading to continue to be in-line with market expectations through the seasonally quietersecond half as management executes the Group's strategy.

Our ambition is to become a leading experiential attractions business in the UK. I believe we now have the correct group structure and appropriate management team to deliver that ambition.'

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

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

About Brighton Pier Group

The Brighton Pier Group PLC (the Group) owns and trades Brighton Palace Pier together with 14 (2015: 19) premium bars in major towns and cities across the UK.

Brighton Palace Pier offers a wide range of attractions including two arcades and over twelve amusement rides, together with a variety of on-site hospitality and catering facilities. The attractions, product offering and layout of the Pier are focused on creating a family-friendly atmosphere that aims to draw a wide demographic of visitors. The Pier is free to enter, with revenue generated from the pay-as-you-go purchase of products on the amusement rides, in the arcades, in the hospitality facilities and at the retail kiosks.

The bars trade under a variety of concepts including Embargo Republica, Lola Lo, Sakura, Po Na Na, Fez Club, Lowlander, Smash and Coalition. The Group predominantly targets a customer base of sophisticated students midweek and stylish over 21s and professionals at the weekend. The division focuses on delivering added value to its customers through premium product ranges, high quality music and entertainment, and a commitment to exceptional service standards. The Bars estate is nationwide, incorporating key university cities and towns that provide a vibrant night-time economy and the demographics to support premium bars.

Business review

The Group operates as two separate divisions, with Anne Martin leading the Pier division and Leigh Nicolson leading the Bars division.

The business review covers the trading results for the 26 weeks ending 25 December 2016. While the Bars division has a full comparative in the same period last year, the Pier division was only acquired on 27 April 2016 and, as a result, has no comparatives.

Half year results

We are pleased to announce a strong set of results for the 26 weeks to 25 December 2016, which is in line with the trading outlook published in the Company's results announcement on 30 September 2016.

Sales revenue for the period was up 65% at £17.74m (2015: £10.72m), which included, for the first time the benefit of the busy summer period on the Pier.

Group gross margin during the period has increased by 350 basis points; which reflects the additional benefit of the new combined business, in particular the higher margins from the Pier's arcades and rides, together with further improvements in the Bars division margin, which was up 80 basis points versus the same period last year.

Group EBITDA before highlighted items was up 266% at £3.51 million (2015: £0.96 million). The seasonality of the Pier and the Bars business means that the Group's EBITDA for the reported period is first half weighted, representing approximately 69% of current market expectations for annual EBITDA. This reflects the key trading months of July, August and September for the Pier, the new influx of students in September and the Christmas period for the Bars division.

Profits before tax and highlighted items were up 783% at £2.65m (2015: £0.30m).

Basic earnings per share (with highlighted items added back) were 8.2p, up 6.3p on the previous period (2015: 1.9p).

In summary, for the 26 week period ended 25 December 2016: (compared to the equivalent 26 week period ended 27 December 2015)

• Sales: £17.74m (2015: £10.72m)

• Company EBITDA before highlighted items: £3.51m (2015: £0.96m)

• Company EBITDA after highlighted items: £3.22m(2015: £0.94m)

• Operating profit before highlighted items: £2.81m (2015: £0.37m)

• Operating profit after highlighted items: £2.11m (2015: £0.34m)

• Profit before tax and highlighted items: £2.65m (2015: £0.30m)

• Profit before tax and after highlighted items: £1.94m (2015: loss of £0.28m)

• Net debt at the end of the period of £7.96m (2015: £0.2m)

• Basic earnings per share (with highlighted items added back): 8.2p (2015: 1.9p)

• Basic earnings per share: 6.0p (2015: 1.8p)

• Diluted earnings per share (with highlighted items added back): 7.9p (2015: 1.9p)

• Diluted earnings per share: 5.8p (2015: loss of 1.8p)

Developments on the Pier

The Pier has now completed its first full summer under new ownership. We are pleased to report that trading has been in line with expectations announced at the time of the acquisition and that integration into the Group was completed much quicker than expected.

In September 2016, we reported on the new soft play trial in the Glitter Bar, the new take away fish and chip shop on the Pier head, and the launch of the new website.

The success of the soft play trial has given us confidence to launch the largest soft play area in Brighton, with the creation of a new 'Palace Play' in the Dome, totalling 231m with a capacity for 140 children. There will also be a new café in the Dome, providing an area for parents and friends to relax whilst the children play. The soft play and café opened in March 2017, both will provide a leisure space to enjoy all year round.

The new take away fish and chip shop opened in June 2016 and has been a great success, repaying its investment by the end of the first summer of trading.

The new website has been a strong tool in driving online sales of wristbands and has helped to offset some of the negative effects caused by the disruption of train services over much of the summer. The quick and easy train service into Brighton from London is a major benefit to all businesses in Brighton, as well as the wider population, a resolution to this dispute is urgently needed.

In December, we launched our first Christmas market on the Pier. Incorporating 20 stalls, it provided a reason to visit during the Pier's winter season. The additional footfall created by the market benefited the restaurants, arcades and rides during what would be otherwise a quiet period. Our plan next year is to develop the market further and consider whether there may be other similar events we could add to the Pier's calendar during the quieter months.

As always, the months between September and March are an opportunity to catch up on general maintenance and embark on new projects ready for the busy period from Easter onwards. This year has been no exception; the dive survey and annual survey were both completed, resulting in no additional maintenance needs other than the budgeted requirements, so allowing us to commence a number of new projects. The first of these involved the move and replacement of the 'Dolphin Derby', a game that is a big favourite on the Pier but is now 25 years old. At the end of February, the brand new 'Dolphin Derby was installed in its new location next to the 'Wild River Ride'. This move makes way for the new 'i-220' children's ride, (which opened in March) and for the improvements planned for Horatio's Bar. The 'i-220' will elevate visitors skywards, offering scenic views of the seafront, however unlike its namesake (the 'i360'), the new 'i-220' ride will take visitors to a less-dizzying height of eight metres.

Looking further ahead, ambitious plans are now underway to create more capacity within the Palm Court restaurant and in Victoria's Bar, both inside and outside. These changes are intended to improve the surroundings and provide more flexible space for conferences, functions, and weddings on the Pier, as well as extra seating during the busy summer months. At the same time, we are also developing plans for Horatio's Bar, utilising the broader Group's expertise of bar management. These exciting developments will start in October and November of this calendar year, and impact trading from 2018.

Finally, on 1 July 2016 we reported the plan to bring back the Palace to the Brighton Pier name, restoring it back to its original name - 'Brighton Palace Pier'. A competition was held to design the new sign for the Pier, and our chosen winner was Lucy Williams, a local Brighton resident. Her design creates an archway of the word Brighton to reflect the Pier dome, with the remaining words 'Palace Pier' on the facade of the building. Work is underway to construct the first of these three new signs.

Developments in the Bars division

In September 2016, we reported on the division's continued focus on reducing operating costs, improving gross margins, reviewing the potential disposal of marginal and unprofitable sites (where the opportunity arises), and the launch of 'Smash', a new venue within the Group's Reading Sakura venue. Progress continues to be made in these areas during the period.

Gross margin has improved by 80 basis points against the same period last year. These improvements have occurred despite cost increases, which have been filtering through from the weak pound. Focus has been on regular reviews of competitor pricing, targeting customers into more profitable products, and supplier support. Labour and controllable costs continue to be tightly managed, with unprofitable nights being closed and underperforming or marginal venues being disposed. Six sites have been disposed of since June 2016.

The street level bar of Reading Sakura was redeveloped and reopened at the end of May 2016 as Smash. The bar trades during post-work hours and in the evening with a menu that includes fresh-dough pizza and craft beer. In addition, the venue provides activity areas for customers to enjoy games of ping pong with friends and to watch major sporting events on large screens. Smash continues to trade ahead of management expectations and we are actively looking at other potential rebrands of locations within our estate.

In December 2016, we started a programme to install new EPOS, all sites have now been fully installed. This upgrade provides integrated chip and pin, which massively reduces the risk of defalcation, as well as improved end of day routines that allow the General Manager to spend less time on back office duties and more time driving sales and improving the customer experience. The new software and hardware simplify the connectivity of new apps, improve speed of service and reduce annual maintenance costs.

During the period, the Bars division undertook a rebuild of the Eclectic websites. This was completed at the end of February, improving online bookings, mobile functionality and creating a single content management system for all the brands.

At the end of January 2017, Manchester Lola Lo underwent an upgrade to develop and modernise its offering, with the addition of media screens, a dedicated 'Master Class' bar and changed seating areas. The new media screens enable the venue to display major sporting and other events throughout the venue. A similar upgrade is planned for Cambridge Lola Lo in the coming months.

Bars disposals

The Group has continued to rationalise its estate, disposing of some of the smaller marginal sites together with any underperforming sites.

Sheffield

This unit was assigned on 8 July 2016. All costs associated with this venue were provided for in prior periods.

Brighton Dirty Blonde

A surrender of the lease was agreed on 23 November 2016 at no cost to the Group. No residual risk remains on this site.

Lincoln Lola Lo

The lease for this business was held in a separate company. This company was sold on 23 November 2016 for a nominal sum. No residual risk remains to the Group from the disposal of this company.

Edinburgh Lola Lo

After the period end, this venue was sub-let to an existing Scottish operator on 31 January 2017. This lease expires on 6 June 2021.

Brighton Lola Lo

The lease for this business was held in a separate company. This company was sold on 13 March 2017 for a nominal sum. No residual risk remains to the Group from the disposal of this company.

Oxford Lola Lo

After the period end, this venue was assigned to another operator on 17 March 2017. This lease expires on 9 February 2021.

Manchester Sakura

This site remains closed. The landlord is in the process of making repairs to fix the water ingress from the railway track above the venue. No rent or rates are currently being paid on this closed site. We will seek to dispose of this site once the repairs are complete.

These sites together make up £834k of the sales shortfall versus the same period last year. The trading loss from all of the above disposed sites in the period was £135k. The write-offs associated with the disposals - include goodwill and fixed asset impairments, legal and other costs - less any proceeds - totalled £706k. These costs are included in highlighted items (see note 5).

Cash flow and balance sheet

Cash flow generated from operations (after interest and tax payments) available for investment was £1.7m (2015: £0.9m).

We invested £0.4m in capital expenditure (2015: £0.2m), which has been spent on the new takeaway fish and chip unit, the trial soft play area and new arcade machines on the Pier, with the balance spent on venue improvement in the Bars estate.

During the period, debt repayments were made of £1.1m (2015: £1.9m). The Group had £11.6m (2015: nil) drawn on a 5 year term facility and a £1m revolving credit facility which was undrawn at the period end (2015: £1.3m). The Group continues to trade comfortably within its covenants.

At the period end, the cash and cash equivalents were £3.4m (2015: £1.4m). Net cash inflow in the period was £0.3m (2015: £0.4m). Net debt at the period end stood at £.8.0m (2015: £0.2m) due to the new debt facilities secured for the transformative acquisition of the Pier.

Outlook

Trading for the first half is in line with market expectations and we expect this trend to continue through the seasonally quieter second half as management executes the Group's strategy.

1. General Information

The Brighton Pier Group PLC (formerly Eclectic Bar Group Plc) is a public limited company incorporated and domiciled in England and Wales. The Company's ordinary shares are traded on the Alternative Investment Market. Its registered address is 36 Drury Lane, London, WC2B 5RR. Both the immediate and ultimate Parent of the Group is The Brighton Pier Group PLC.

The Brighton Pier Group PLC owns and operates Brighton Pier, one of the leading tourist attractions in the UK. The Group is also a leading operator of 14 premium bars trading in major towns and cities across the UK.

The principal accounting policies adopted by the Group are set out in Note 2.

2. accounting policies

The financial information for the six months ended 25 December 2016 and 27 December 2015 does not constitute statutory accounts for the purposes of S435 of the Companies Act 2006 and has not been audited. The Group's latest statutory financial statements were for the year ended 26 June 2016 and these have been filed with the Registrar of Companies.

Information that has been extracted from the June 2016 accounts is from the audited accounts included in the annual report, published in November 2016,on which auditors gave an unmodified opinion and did not include a statement under section 498 (2) or (3) of the Companies Act 2006. A copy of these accounts can be found on the Group's website,www.brightonpiergroup.com.

The interim condensed consolidated financial statements for the six months ended 25 December 2016 have been prepared in accordance with the AIM Rules issued by the London Stock Exchange.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual financial statements as at 26 June 2016, which were prepared in accordance with IFRS as adopted by the European Union.

The accounting policies used in preparation of financial information for the six months ended 26 December 2016 are the same accounting policies applied to the Group's financial statements for the year ended 26 June 2016. These policies were disclosed in the 2016 annual report, and are in accordance with International Financial Reporting Standards as adopted by the European Union.

3. GOING CONCERN

After reviewing the Group's performance, future forecasted performance and cash flows, as well as its ability to draw down on its facilities and the covenant requirements of those facilities, and after considering the key risks and uncertainties set out on pages 10-11 of the annual report, the Directors consider that the Group has sufficient resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group's financial statements.

4. SEGMENTAL INFORMATION

Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision Maker ('CODM') comprising the Board of Directors. During the 26 week period to 25 December 2016, there have been no changes from prior periods in the measurement methods used to determine operating segments and reported segment profit or loss.

The segmental information is split on the basis of those same profit centres - however, management report only the contents of the consolidated statement of comprehensive income and therefore no balance sheet information is provided on a segmental basis in the following tables. During the 26 week period ended 27 December 2015 the Group consisted of only the Owned Bars operating segment, meaning that comparative information for this period has not been included below.

26 week period ended 25 December 2016		Owned Bars	Brighton Pier	Total segments	Overhead	December 2016 consolidated total
		(26 weeks)	(26 weeks)
		£'000	£'000	£'000	£'000	£'000
Revenue		9,319	8,420	17,739	-	17,739
Cost of sales		(1,918)	(1,263)	(3,181)	-	(3,181)
Gross profit		7,401	7,157	14,558	-	14,558
Gross profit %		79%	85%	82%		82%
Administrative expenses (excluding depreciation)		(6,294)	(4,408)	(10,702)	(377)	(11,079)
Highlighted items					(706)	(706)
Depreciation					(665)	(665)
Net finance cost					(166)	(166)
Profit/(loss) before tax		1,107	2,749	3,856	(1,914)	1,942
Income tax		-	(34)	(34)	-	(34)
Profit/(loss) after tax		1,107	2,715	3,822	(1,914)	1,908
EBITDA (before highlighted items)		1,107	2,749	3,856	(347)	3,509
EBITDA (after highlighted items)		1,107	2,749	3,856	(632)	3,224

4. SEGMENTAL INFORMATION (continued)

52 week period ended 26 June 2016		Owned Bars	Brighton Pier	Total segments	Overhead	June 2016 consolidated total
		(26 weeks)	(9 weeks)
		£'000	£'000	£'000	£'000	£'000
Revenue		19,751	2,841	22,592	-	22,592
Cost of sales		(3,927)	(438)	(4,365)	-	(4,365)
Gross profit		15,824	2,403	18,227	-	18,227
Gross profit %		80%	85%	81%		81%
Administrative expenses (excluding depreciation)		(13,595)	(1,723)	(15,318)	(655)	(15,973)
Highlighted items					(873)	(873)
Depreciation					(1,178)	(1,178)
Net finance cost					(156)	(156)
Profit/(loss) before tax		2,229	680	2,909	(2,862)	47
Income tax		-	(143)	(143)	-	(143)
Profit/(loss) after tax		2,229	537	2,766	(2,862)	(96)
EBITDA (before highlighted items)		2,277	680	2,957	(653)	2,304
EBITDA (after highlighted items)		2,277	680	2,957	(1,526)	1,431

5. HIGHLIGHTED ITEMS

	26 weeks		26 weeks		52 weeks
	ended		ended		ended
	25 December		27 December		26 June
	2016		2015		2016
	£'000		£'000		£'000
Acquisition, pre-opening and restructuring costs
Acquisition costs	-		-		900
Gain on bargain purchase	-		-		(312)
Site pre-opening costs	-		-		285
	-		-		873
Restructuring, closure and legal costs
Restructuring costs	-		7		-
Other closure costs and legal costs	706		18		-
	706		25		-
Total	706		25		873

The above items have been highlighted to give a better understanding of non-comparable costs included in the consolidated income statement for this period.

Other closure costs and legal costs include £421,000 of goodwill and fixed asset write-offs as a result of the closure of various sites during the period. These non-cash items are excluded from EBITDA.

6. TAX

The tax charge has been calculated by reference to the expected effective current and deferred tax rates for the full financial year to 25 June 2017 applied against the profit before tax for the period ended 25 December 2016. The full year effective tax charge on the underlying trading profit is estimated to be 6.4%.

7. EARNINGS PER SHARE

The weighted average number of shares in the period was:

	26 weeks to		26 weeks to		52 weeks to
	25 December 2016		27 December 2015		26 June 2016
	Thousands of shares		Thousands of shares		Thousands of shares
Ordinary shares	31,762		16,223		31,677
Basic shares	31,703		15,715		18,495
Dilutive effect on ordinary shares from share options	1,319		49		260
Diluted shares	33,022		15,764		18,755

Basic and diluted earnings per share are calculated by dividing the profit for the period into the weighted average number of shares for the year. In order to provide a measure of underlying performance, management have chosen to present an adjusted profit for the period, which excludes items that may distort comparability. Such items arise from events or transactions that fall within the ordinary activities of the Group but which management believes should be separately identified to help explain underlying performance.

During the 26 week period ended 25 December 2016 the Group issued 85,170 ordinary shares following the exercise of vested share options by employees.

	26 weeks to		26 weeks to		52 weeks to
	25 December 2016		27 December 2015		26 June 2016
Earnings/(loss) per share from profit/(loss) for the period
Basic (pence)	6.0		1.8		(0.5)
Diluted (pence)	5.8		1.8		(0.5)
Adjusted earnings per share from profit for the period
Basic (pence)	8.2		1.9		4.2
Diluted (pence)	7.9		1.9		4.1

8. RECONCILIATION TO EBITDA

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

	26 weeks to		26 weeks to		52 weeks to
	25 December 2016		27 December 2015		28 June 2016
	£'000		£'000		£'000
Profit before tax for the year	1,942		276		47
Add back depreciation	665		570		1,178
Add back net interest paid	166		65		156
Add back share-based payment charge	30		25		50
Add back highlighted items	706		25		873
Group EBITDA before highlighted items	3,509		961		2,304