Palace Pier boss Luke Johnson blamed poor weather and the £1.3 million cost of revamping Horatio’s Bar and the Palm Court restaurant for a dip in half-year profits.
The company, the Brighton Pier Group, reported a drop in turnover and pre-tax profit in the six months to Christmas Eve.
Turnover – or revenue – fell to £16 million from £17.7 million in the same period in 2016. This was also partly a result of closing six poorly performing bars around the country.
Pre-tax profit – a widely used measure of a company’s financial health – went down from £2.65 million to £2.34 million.
Executive chairman Luke Johnson said: “During the period the group acquired Paradise Golf and transformed the bars and Palm Court restaurant on Brighton Palace Pier.
“The business is now well positioned to grow across all of its operations.”
The company said: “The results for the 26 weeks to (Sunday) 24 December 2017 are in line with the trading outlook published in the company’s results announcement on (Saturday) 30 September 2017.
“The highlight for the period was the acquisition on (Friday) 8 December 2017 of Lethington Leisure Limited, owner and operator of Paradise Island Adventure Golf, for a total consideration of £10.8m on a cash-free, debt-free basis.”
In a statement to shareholders the Brighton Pier Group said: “The sales shortfall for the period was a result of three key factors.
“Firstly, due to rain and strong winds, trading during the pier’s peak summer period of August and September was mixed and did not match the strong performance of the same period in the previous year.
“Secondly, the group made the decision to utilise the winter months to close and improve the principal catering and hospitality offerings on the pier.”
The third factor meant the loss of £1.2 million in bar sales revenues in the 26-week period to December 2016.
This related to the six marginal bar sites that were closed during the previous financial year. There was no comparative figure in the current period.
The company told investors: “The ambitious investment plan to improve facilities commenced with the redevelopment of Horatio’s Bar, completed in December.
“Benefiting from an enviable position on the pier with views across to the Brighton seafront, this bar has been transformed into a gastro pub offering with the added attraction of a live music platform.
“The upgrade and the extension to the outside terraces have increased overall capacity as well as enhancing the bar’s ability to diversify its offer.
“Following the redevelopment of Horatio’s Bar, significant improvements have also been made to the Palm Court restaurant and Victoria’s Bar.
“These two venues have now been combined into one, with substantial modernisation, as well as modifications enabling the flexibility to provide either one large or two smaller conference and events space(s) throughout the year.
“Palm Court is now one of the largest venues in Brighton and is unique in its location.
“Furthermore, the main restaurant and takeaway kitchens have been merged in order to enhance efficiency and at the same time internal and external seating capacity has been increased by 60 per cent,
“While these closures have had an understandable and short-term impact on sales and (earnings) for the winter period, an immediate benefit is expected to be generated post-Easter and into the next financial year.”
The company also said: “The highlight for the period was the acquisition on (Friday) 8 December 2017 of Lethington Leisure Limited, which owns and operates Paradise Island Adventure Golf, for a total consideration of £10.8 million.”
Debt levels rose as a result of the deal to buy Paradise Golf, with the group borrowing £5.7 million more from Barclays Bank.
The Brighton Pier Group added: “The acquisition represents a profitable and high-quality business, further building on the group’s stated strategy of selectively acquiring leisure and entertainment assets in the UK.
“Mini golf is an accessible activity for the whole family, less seasonal than Brighton Palace Pier, thus providing the potential to improve the distribution of earnings throughout the financial year while also helping to fulfil the growing demand for experiential leisure and ‘competitive socialising’.
“The £1.3 million plan to refit the bars and restaurants began with the closure of Horatio’s at the start of November 2017, prior to which work had been undertaken to move the high-margin and hugely popular Dolphin Derby and relocate various storage facilities in order to make way for the extended outside terraces and improve visibility of the venue to customers.
“Improvements on Horatio’s Bar began with opening up some of the external walls of the building and replacing them with bi-fold doors.
“Extending the bar to the outside is enabling customers to benefit from its enviable position on the pier, with views over Brighton and the seafront.
“As a result of the upgrade work, Horatio’s will now be connected to the new terraces in the summer months, increasing overall seating capacity as well as enhancing the bar’s ability to offer food, live music and other events throughout the year.
“The newly improved Horatio’s bar opened its doors at the end of December.
“Palm Court (part closed in November) and Victoria’s Bar both closed their doors in early January.
“The planned substantial modernisation of these two venues was intended to create flexibility in providing either one large or two smaller conference and events space(s) throughout the year.
“The main restaurant and takeaway kitchens have been merged in order to maximise efficiency and at the same time internal and external seating capacity has been increased by 60 per cent.
“The ceiling area has been opened up to reveal impressive Victorian metal roof beams and the venue has been refitted with modern colours and furnishings.
“While these refits have impacted trading during the last few winter months, (Victoria’s and Palm Court formally reopened mid-March) the transformational benefits will be seen in the years to come.
“Planning permission is currently awaited for the new Brighton Palace Pier sign on the front of the main building.
“It is hoped this will be in place before the summer season, signalling the completion of the name change announced at the time of acquisition of the pier.
“There is substantial local support for the name change and the unveiling of the new sign on the front of the pier will present an ideal PR opportunity.
“Shareholders will be aware that each year we undertake an annual substructure survey and this is now complete.
“We can report that no additional maintenance issues have been identified other than the usual budgeted requirements for the coming financial year.”
As well as the Palace Pier, the company also owns a chain of about a dozen bars. The brands include Embargo Republica, Lola Lo, Sakura, Po Na Na, Fez Club, Lowlander, Smash and Coalition.
