The Victorians appreciated the health and well-being benefits of a brisk walk in the sea air. However, as the Victorians were wont, they took a working platform used by fishermen, applied industrial revolution technology and developed mega-structures all around the British coast, that would allow top-hatted and bonneted gentlefolk to take a ‘promenade’ out into the ocean.
Brighton Pier Group LON:PIER, the AIM-listed, London-based, leisure and entertainment company, has become the modern incarnation of this odd Victorian pursuit.
The diversified entertainment group today runs Brighton Palace Pier, as well as eight premium bars, eight indoor mini golf sites and the Lightwater Valley theme park in North Yorkshire. The jewel in its crown, and where it gets its name from, Brighton Palace Pier is the most visited free attraction in England, with over 4.3 million visitors in 2021, according to Visit Britain.
Diversified entertainment
Originally founded in 2006 and listing on AIM in 2013, the group operates in three divisions, Brighton Marine & Pier, which runs the Sussex-based arcades, funfairs, catering and hospitality businesses; Eclectic Bars, which operates eight themed bars aiming at students and over-21 professional clients; Paradise Island Adventure Golf, which has eight indoor mini-golf establishments across the UK; and Lightwater Valley, a popular theme park in North Yorkshire.
The group published its results this morning (24th April). Although Coronavirus impacted the business, forcing it to close its venues and putting the group into more than GBP7.7m of debt; in some ways the rediscovery of Britain by the British people, who were prevented from taking cheap, package tours to Europe and made to stay-cation, has helped the company. BPG reported over 6,000 visitors on its first day back in business in April 2021 and it has not looked back since, unlike other leisure sector operators like Cineworld LON:CINE, which collapsed spectacularly since the first sniffles of the pandemic.
Brighton Pier Group has, just like Brighton Pier itself which has endured storms, fire, an IRA bombing attempt and worst of all, the ire of the Health and Safety Executive, risen from the ashes like a phoenix.
The entertainment company reported record revenue in its results for the 18 months to 25th December 2022. The company changed its year-end from June to December, meaning that the current results cover an 18-month period. Revenue was GBP58.9m for the 18-months, compared to GBP13.5m for the 12-months to end-June 2021. Profit-before-tax also grew to GBP7.6m for the 18-months, up from GBP4.2 for the 12-mionths to end June 2021 and EBITDA was GBP13.9m with Adjusted basic earnings per share at 16.4p.
Debt restructuring
The company resorted to the debt market during the Coronavirus lockdown, but in October 2021 received GBP5m back from insurers as part of a Covid-19 business interruption claim.
Record revenues allowed the group to start to cut its debt mountain to size, paying back GBP9.1m of its outstanding debt in the 18-month period, reducing gearing by 44%. The company cleared its Coronavirus Business Interruption Loans of GBP5m and extended the term of its GBP10.9m loan by one-year to mature at the beginning of December 2024. The company is also undertaking a debt restructuring exercise to convert its GBP10.9m loan and GBP1m revolver with a larger RCF, thereby reducing interest charges.
The company opened trading at 62p this morning and was up to 65p by lunchtime. Brighton Pier Group has offered a 1.6% year-to-date return and a -42.2% one-year return, with its shares ranging between 54p and 113p over a 52-week period.
The company did sound a note of caution, having noticed a slowdown in footfall in the last few months as families react to a cost of living crisis. Chairman, Luke Johnson said in a statement this morning: “The economic backdrop experienced throughout much of 2022 has painted a different picture for the group, with rising inflation leading to steep cost increases in all areas of the business. The group has sought to pass these on wherever possible, however many of the indirect input increases were necessarily absorbed by the group, constraining earnings in the latter six months of the period.”
Bridgewise has BPG as a ‘Buy’. The analyst said: “The Brighton Pier Group PLC reported good financial results, with a focus on growth in Total Revenues and EBITDA, Lease Adjusted, which were relatively high compared to its peers in the Consumer Discretionary sector. However, the company operates in the Hotels, Restaurants and Leisure industry, and therefore may be affected by additional risks such as economic slowdown, recession, high morbidity, as well as a sharper than expected increase in inflation, which will make it difficult for the company to raise prices accordingly. Analysis of past performance in the Consumer Discretionary sector shows that there is a correlation of 45% and 38% to the results of income statement and balance sheet in generating excess returns, thus increasing the likelihood that the company’s stock will outperform its peers.”
With summer approaching and a glut of Bank Holidays on the way, if the summer months prove as warm and ‘Mediterranean’ (or even Saharan) as 2022, Brighton Pier Group might see a surge of millennial promenades heading to the iconic boardwalk to take selfies replete with a 99 Flakes which will make the next results interesting reading.
