The Brighton Pier Group PLC owns and trades Brighton Palace Pier, as well as twelve premium bars nationwide (including two ping-pong concept bars) and eight indoor mini-golf sites.
Following the announcement of the Group’s Interim results on 17 March 2020, the Group today provides a further update on the impact of the coronavirus outbreak on trading, more detailed information on the Government support being utilised and the steps the Group has taken to protect the business for the longer term.
On 20 March 2020, the Prime Minister instructed all hospitality and leisure venues to close from that evening and the Group consequently closed to the public all its bars, golf venues and Brighton Palace Pier. These closures are in support of the national effort to maximise “social distancing” in order to control the coronavirus pandemic and thereby ensure that the Group’s customers, staff and their families are kept safe.
The Group expects that these closures will materially impact its financial results for the period ending 28 June 2020 and potentially also the subsequent period if mandatory closures or social distancing measures continue into the summer and beyond. Given the unprecedented nature of the virus, it is not possible to forecast the precise length of time that the Group’s venues will remain closed and so, whilst its focus first and foremost has been to protect its customers and staff, the Group have also implemented measures that significantly reduce costs and preserve cash until trading resumes.
The Group can now report that all full and part-time staff working in its businesses (and in respect of whom a payroll submission had been made to HMRC on or before 19 March 2020) have been retained. By 1 April 2020, of the 500 staff employed across the Group, 485 were furloughed and 15 remained active; a further five have been furloughed since. Those who remain active include essential maintenance and security teams on the pier, together with senior management across the Group’s three divisions. All management and staff have agreed to take pay cuts for the duration of the closures and the Group is also obtaining grants from the Government’s ‘Coronavirus Job Retention Scheme’ (which the Government have announced will continue to some extent until at very least the end of October); these measures have significantly reduced the net cash cost of the Group’s payroll during the closure period, whilst enabling the Group to retain its workforce.
Other mitigations include:
– 12 months rates free period across all Group venues from the Government’s rates holiday scheme
– deferral of the March 2020 quarterly VAT payment to March 2021 using the Government’s VAT scheme
– support from landlords to reduce the cash impact of the March 2020 quarter rent period
– support from many suppliers with whom standstill arrangements have been agreed, reducing controllable costs during the closure period to minimal amounts
– support from creditors, who have extended credit terms for amounts outstanding at the date the Group’s venues closed
– reduced capex spending to only essential capital repairs during the closure
Claims for losses arising from mandatory closure of the Group’s venues have been lodged with its insurers but the amount of any pay-out is not yet certain.
The Group has obtained two new Coronavirus Business Interruption Loans (of £5 million in aggregate) from their principal bank, Barclays. Both term loans are for a period of 2 years and 9 months and are in addition to Group’s existing term debt and revolving credit facility. Simplified covenants and a loan repayment holiday on the existing facilities have been agreed to the end of June 2021, which accommodates the loss of revenues during the closures. Formal documentation of these variations and new facilities is being completed over the coming days, but the full proceeds from the new term loans have already been received.
As announced in its interim results, the Group’s net debt as at 29 December 2019 was £11.0 million (which equated to 2.0x its EBITDA for the 12 months to that date). The Group continues to adopt a conservative approach to debt and will focus on reducing leverage below 1.5x by the end of FY 2022.
These actions to conserve and raise cash have been possible with the considerable support of the Group’s staff, landlords, suppliers, bankers and the Government.
Looking beyond these mandatory closures towards a return to normal trading, the Group is confident that its pier, bars and golf businesses remain well invested, strongly cash generative and well positioned for future growth.
Commenting, Anne Ackord, Chief Executive Officer, said:
“The United Kingdom and especially the leisure and hospitality industry have had to endure significant challenges over the last three months in its efforts to assist with fighting the coronavirus pandemic.
I am very grateful for the continued support given to us by Barclays, who have been at our side throughout these difficult months and also to our many suppliers and landlords. It’s important for me to say how much we value these partnerships.
Most of all, I want to say a big thank you to all our staff at every level of the business for the way they have responded to these unprecedented events.
We are ready to progress with the safe re-opening of our businesses, which must necessarily follow the steps set out in the Government’s ‘Covid-19 recovery strategy’. Whilst the timing will depend on a number of factors which remain uncertain, getting back to work is now the focus.”