THIS ANNOUNCEMENT CONTAINS
INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET
ABUSE REGULATIONS (EU) NO. 596/2014 WHICH FORMS PART OF DOMESTIC UK
LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK
MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH
PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE
INFORMATION.
20 February 2024
Nightcap
plc
("Nightcap", the
"Company" or the
"Group")
Acquisition of certain of the
assets of The Piano Works
£1.0 million share
subscription and variation of convertible loan note
terms
Trading
update
and
Total voting
rights
Introduction
Nightcap (AIM: NGHT), the owner and operator of 46 premium bars, is pleased
to announce the acquisition of The Piano Works, the live
entertainment concept currently operating at Nightcap's Barrio
Covent Garden venue and at a venue in Farringdon,
London.
The Piano Works was launched in 2015
in a large Victorian warehouse site in Farringdon, London, and this
bar and entertainment venue is being acquired under The Piano Works
Acquisition (as defined below). The Piano Works is an interactive
live music entertainment concept, typically involving pianists,
vocalists and other musicians performing an audience curated
playlist, accompanied by a high-quality food, drinks and cocktail
offering. Since November 2023, The Piano Works has had a very
successful residency within Nightcap's Barrio Covent Garden venue.
The residency resulted in a significant uplift in revenues compared
to the Board's forecasts under the Barrio brand for the four week
festive period ended 31 December 2023. This made a positive
contribution to Nightcap's revenue performance in the 13 weeks
ended 31 December 2023, as indicated in Nightcap's announcement of
10 January 2024. Nightcap intends The Piano Works to become a
permanent fixture at the Covent Garden site and for The Piano Works
concept to be the rolled out along with the other successful brands
in the Nightcap portfolio.
STAMP Entertainment Limited
("STAMP"), a recently
incorporated 100% owned subsidiary of Nightcap, has entered into an
asset purchase agreement to acquire certain of the assets (the
"Assets") of TDC Concepts
Limited ("TDCC") (the
"The Piano Works Acquisition"). TDCC is the
operator of 'The Piano Works' live music entertainment
concept. Nightcap is paying a total consideration of £200,000
for the Assets, further details of which are described below. The
Piano Works Acquisition has completed following a pre-pack
administration process by TDCC. It is intended that the
current directors of TDCC will become minority shareholders in
STAMP and a further announcement on this will be made in due course
once the terms are finalised.
In conjunction with The Piano Works
Acquisition and to provide working capital to STAMP, Nightcap has
raised a total of £1.0 million, through a subscription (the
"Subscription") of
16,666,666 of new ordinary shares in the Company (the "Subscription Shares") at 6 pence per
share, being a premium of approximately 22% to Nightcap's last
closing mid-market share price on 19 February 2024, further details
of which are set out below. Nightcap has also agreed to amend and
restate the terms of the convertible loan notes issued by the
Company in June 2023, details of which are also set out
below.
The Company is also providing a
trading update in relation to its 52-week period ending 30 June
2024 ("FY 2024"), details
of which are set out below.
The
Piano Works Acquisition highlights
The Piano Works Acquisition brings a
number of benefits to the Group, including:
· adding
a popular, established interactive live music entertainment concept
with a large and dedicated following to Nightcap's entertainment
offering;
· continuing the very successful residency of The Piano Works in
Nightcap's Barrio Covent Garden venue;
· bringing The Piano Works' existing bar, located in Farringdon,
London, into the Group; and
· providing the opportunity for Nightcap to roll out The Piano
Works concept.
Commenting on The Piano Works Acquisition, Sarah Willingham,
Chief Executive Officer of Nightcap, said:
"The Piano Works is another excellent addition to our Group. I
very much look forward to the future of this concept. It adds
a whole new area of expertise to Nightcap and a different
entertainment offer, bringing live music to our
customers.
"We have known The Piano Works concept for a long
time and look forward to working with the founders and their
dedicated staff. After the very successful
residency in our Barrio bar in Covent Garden at Christmas we are
delighted to be able to partner with them and provide the
opportunities to bring this great entertainment
concept to other cities across the
UK."
Commenting on The Piano Works Acquisition, Alan Lorrimer,
Founder of The Piano Works, said:
"Over the past eight years we have loved creating a communal
and immersive experience for our many guests singing along to their
favourite soundtracks.
"The past four years have been the toughest I have known in my
forty years in hospitality. We survived COVID, but when the sale of
our Leicester Square venue fell through, it was the last financial
straw.
"We transferred into Covent Garden thanks to a great
collaboration with the Nightcap team. We had an excellent Christmas
which proved we could work really well together.
"We now have the potential to expand The Piano Works and prove
that customers across the country will love our immersive audience
requested live music experience."
For
further enquiries:
Background to and reasons for The Piano Works
Acquisition
The Piano Works Acquisition is in
line with Nightcap's strategy of making selective acquisitions
within the drinks-led premium bar segment of the UK hospitality
sector.
The Piano Works is an interactive
live music entertainment concept, typically involving pianists,
vocalists and other musicians performing an audience curated
playlist, accompanied by a high-quality food, drinks and cocktail
offering. The Piano Works currently operates from two sites,
being Nightcap's Barrio Covent Garden venue and a basement site in
a Victorian warehouse in Farringdon, London. The Farringdon site,
which will be operated by the Group going forward, has a 7,250 sq
ft area, an up to 400-person capacity, and a 2:00 a.m. license on
Friday and Saturday and a 1:00 a.m. license from Sunday to
Thursday. As indicated in Nightcap's announcement of 10 January
2024, the Company's recent collaboration with The Piano Works made
a very positive contribution to Nightcap's revenue performance in
the 13 weeks ended 31 December 2023.
The Piano Works historically
operated another site in Soho. This site had substantial rental
obligations, primarily incurred during the Covid period. Following
a failed sale process, the holding company of that site was placed
into liquidation last year. Due to certain cross guarantees between
the holding company of the Soho site and TDCC, and with the
landlord being unwilling to compromise, there was a direct impact
on TDCC's banking facilities. These factors led to TDCC being put
into administration, which has provided Nightcap with the
opportunity to acquire the Assets at an attractive price.
STAMP, the Nightcap subsidiary acquiring the
Assets, has employed all staff members of
TDCC as part of The Piano Works Acquisition.
The Board believes that The Piano
Works brand is well established and a good fit within Nightcap's
existing portfolio of bars and that The Piano Works brand
represents a compelling and complementary acquisition for
Nightcap. The Board also believes that The
Piano Works Acquisition by STAMP represents a way to maintain the
benefits of the increased revenue from hosting The Piano Works
concept in Nightcap's Barrio Covent Garden venue, bring the
existing Farringdon The Piano Works site into the Group at an
attractive valuation and provide the potential to roll out The
Piano Works concept to other cities.
Further information in relation
to The Piano Works can be found at: https://pianoworks.bar/.
The
terms of The Piano Works Acquisition
The Piano Works Acquisition was
undertaken as part of a pre-pack administration process by TDCC.
TDCC entered into administration on 19 February
2024 and Begbies Traynor plc (the
"Administrator") was
appointed as the administrator.
STAMP has entered into an asset
purchase agreement with TDCC (as seller), the Administrator and the
Company (as guarantor) to acquire the Assets for a total cash
consideration of £200,000 (the "Consideration"). £100,000 of the
Consideration has been settled by Nightcap with the Administrator
consisting of a £60,768.50 cash payment on completion along
with a £12,000 wage payment settled directly on
behalf of TDCC. £27,231.50 of trading receipts due to
Nightcap have been deducted from the cash consideration as these
were paid by customers to TDCC after an agreed 16 February 2024
effective transfer date. The balance of the Consideration, being
£100,000, will be paid by STAMP to the Administrator in five
monthly instalments of £7,500 each starting in April 2024 followed
by five monthly instalments of £12,500 each, starting in September
2024. Nightcap is guaranteeing STAMP's obligation to pay the
balance of the Consideration under the terms of the asset purchase
agreement, and any other amounts due under the licence to
occupy.
Pursuant to the terms of The Piano
Works Acquisition, TDCC, acting by the Administrator, has granted
STAMP a licence to occupy TDCC's Farringdon site from today for a
period of up to six calendar months less one week, and Nightcap,
with the assistance of the Administrator, will seek the assignment
of this lease to STAMP during this period. A further
announcement in relation to this lease will be made as
appropriate.
As part of The Piano Works
Acquisition, STAMP has employed 147 staff transferred under TUPE.
The 147 staff are those who work at The Piano Works' site in
Farringdon and who perform as part of The Piano Works residency
within Nightcap's Barrio Covent Garden venue, as well as head
office staff. STAMP will not be assuming any of the TDCC
existing indebtedness and STAMP shall only acquire those
liabilities of TDCC which transfer to it by operation of
law.
The Piano Works Acquisition has been
made by STAMP which is currently a 100% owned subsidiary of
Nightcap. It is intended that the current Directors of TDCC
will become minority shareholders in STAMP and a further announcement on this will be made in due course
following the finalisation of the terms.
Financial information on The Piano Works
Based on unaudited management
accounts for the year ended 30 June 2023, TDCC generated revenue of
approximately £4.6 million, site EBITDA of approximately £0.6
million, EBITDA after head office costs of approximately £0.1
million and profit before tax of nil. The TDCC Farringdon site had
an unaudited total assets value of approximately £0.7 million as at
30 June 2023.
The
Subscription
In order to provide working capital
for STAMP to allow it to fully fund The Piano Works, the Company
has raised funds totalling £1.0 million, from the
issue of the Subscription Shares to existing shareholders (the
"Investors").
Nightcap has entered into
subscription agreements with the Investors, issuing in aggregate
16,666,666 Subscription Shares at a price of 6
pence per share, representing a premium of approximately 22% to the
mid-market closing price of Nightcap's Ordinary Shares on 19
February 2024.
Variation to existing convertible loan notes
On 9 June
2023, Nightcap announced that it had executed a convertible
loan note instrument creating £2.65 million of convertible loan
notes (the "CLNs"). The
CLNs mature on 9 September 2025 (the "Maturity Date") and are
convertible, at the option of the CLN holders, into new ordinary
shares in the Company subject to certain conditions, details of
which were set out in the Company's announcement of 9 June 2023.
The CLNs are only convertible following a period of 12 months from
issue, at the higher of 12 pence per share or a 15% discount to the
volume weighted average share price of the Company's shares for the
five-business day period prior to the CLN holder notifying the
Company of its intention to convert. The CLNs bear a coupon of 10%
per annum which shall be rolled up and is only payable either when
a conversion notice has been served or on an Exit (as defined in
the Company's announcement of 9 June 2023) by the issue of the
relevant number of shares at the conversion price in respect of
such accrued interest amount.
In order to facilitate the
Subscription at a premium to Nightcap's
last closing mid-market share price, the Company has entered into
an amendment and restatement agreement in relation to the CLN
instrument ("ARA"),
following receipt of unanimous CLN holders consent (some of which
are also subscribers in the Subscription). The ARA amends and
restates the conversion price of some of the convertible loan notes
("B Notes") to 10 pence per share and has
provided the loan note holders who have remained on original terms
the option to convert their CLNs to B Notes on the new terms at any
time prior to 15 August 2024. As such those B Notes are now
convertible at the higher of 10 pence per share or a 15% discount
to the volume weighted average share price of the Company's shares
for the five business day period prior to the note holder notifying
the Company of its intention to convert. However, the maturity date
on the B Notes has been extended by a further 12 months to mature
on 9 September 2026. All other terms of the B Notes remain the
same.
Trading update for FY
2024
Following positive Christmas
trading, as announced on 10 January 2024, the Group's trading since
the start of 2024 has been far softer than the Board expected, in
line with reports from across the hospitality sector. The Group
faces headwinds from ongoing rail strikes, the continuation of the
cost of living crisis, above inflation increases to business rates
and other costs, and the impact of the forthcoming increase to the
National Living Wage. In addition, as
announced with the acquisition of the Adventure Bar Group on 4 May
2021, the lease on Bar Elba, held in a
50:50 owned joint venture entity, contained a break clause which
has recently been exercised pending the re-development of the
building. After a period of negotiation to agree a short-term
extension to the lease, the Bar Elba lease will come to an end on
24 February 2024. Finally, whilst the Board is expecting the
integration of both Dirty Martini and The Piano Works to be fully
completed during FY 2024, it is now anticipating greater than
expected integration costs to be incurred before the end of FY
2024.
As a result of the above factors and
their impact on the second half of FY 2024 in particular, the Board
expects that, whilst revenues for FY 2024 will be in line with
expectations, adjusted EBITDA* is expected to be in the range of
£2.0 million to £2.5 million.
*
IAS 17 Earnings before interest, tax, depreciation, amortisation,
share based payments, exceptional items, acquisition related
transaction costs and pre-opening costs.
Notice of results
The Company expects to announce the
Group's interim results for the 26 weeks ended 31 December 2023 in
mid-March 2024.
Future prospects
Since its IPO on AIM at the
beginning of 2021 the Group has grown significantly. The Group,
following The Piano Works Acquisition, will operate 46 bars, a
remarkable increase over the 10 bars the Group operated at the time
of the IPO. Since the beginning of 2023, the Group has been
working on integrating its four previous acquisitions into one
operating entity and will now proceed with the integration of STAMP
and The Piano Works concept. Over the last nine months, the Group
has invested substantially in improving its management team to meet
the needs and aspirations of the much larger Group, as well as
investing in its existing estate. The Board expects to see
the benefit of this investment during the upcoming financial
year. The Board believes that the Group's portfolio of bars
is well positioned to benefit as the cost of living crisis
gradually comes to an end and views the future with
confidence.
Commenting on Nightcap's current trading and prospects, Sarah
Willingham, Chief Executive Officer of Nightcap,
said:
"2023 has been a tough year for the hospitality industry with
numerous head winds which have impacted Nightcap and our entire
industry. Whilst we will still see the impact of these
challenges continuing in the coming months, the outlook for our
next financial year looks very promising. We have assembled an
outstanding management team and a solid foundation for the future
is now in place. For the current year we are on track to
achieve significant growth and hit our revenue growth targets but
will be adversely impacted by the higher costs resulting from the
acquisition and business integration of Dirty Martini and The Piano
Works, train strikes, the cost of living crisis and the National
Living Wage increase.
"I
am very excited about the future prospects for Nightcap and look
forward to next year as our synergies bed in and we start to
benefit from the successful integration of all of our
businesses. Our new systems and processes will be fully
functioning and optimised, and the impact of our exceptional team
and their excellent work will be felt and seen widely across the
business. It's been a very important year in the life cycle
of a very fast growing business; both through acquisition and
through organic growth. Now it is time to move onto the next
stage and enjoy the benefits of the scale we have achieved in
record time."
Admission to AIM
Application will be made to the
London Stock Exchange for the Subscription Shares to be admitted to
trading on AIM ("Admission"). It is anticipated that
Admission will occur, and dealings will commence in the
Subscription Shares at 8:00 a.m. on or around 23 February 2024.
The Subscription Shares rank pari passu in all
respects with the existing Ordinary Shares of the Company and
therefore will rank equally for all dividends or other
distributions declared, made or paid after their
issue.
Total Voting Rights
Following the issue of the
Subscription Shares, the Company's enlarged issued ordinary share
capital comprises 234,550,656
Ordinary Shares with voting rights. The Company
does not hold any Ordinary Shares in treasury. Therefore, the total
number of Ordinary Shares in the Company with voting rights
is 234,550,656.
Interests in the Company
Interests of Directors and persons discharging managerial
responsibilities (PDMRs)
Following the issue of the
Subscription Shares, Nightcap's directors now have the following
percentage interests in the Company's issued ordinary share
capital:
|
Following the issue of the Subscription
Shares
|
|
Number of Ordinary Shares held
|
Percentage of issued ordinary share capital
|
Director
|
|
|
Michael
Willingham-Toxvaerd
|
12,552,501
|
5.35%
|
Sarah Willingham-Toxvaerd
|
21,686,584
|
9.25%
|
Tobias Van der Meer
|
9,050,000
|
3.86%
|
Lance Moir
|
360,000
|
0.15%
|
Thi-Hanh Jelf
|
180,000
|
0.08%
|
In addition, certain of Nightcap's
persons discharging managerial responsibilities ("PDMRs") now have the following
percentage interests in the Company's issued ordinary share
capital:
|
Following the issue of the Subscription
Shares
|
|
Number of Ordinary Shares held
|
Percentage of issued ordinary share capital
|
PDMR
|
|
|
John James Goodman*
|
16,032,157
|
6.84%
|
Jim Robertson
|
111,484
|
0.05%
|
*Includes 901,312 Ordinary Shares held by CGCC Ltd which is
beneficially owned and controlled by John James
Goodman.
Other interests
Following their participation in the
Subscription, the individuals below have the following percentage
interests in the Company's issued ordinary share
capital:
|
Following the issue of the Subscription
Shares
|
|
Number of Ordinary Shares held
|
Percentage of issued ordinary share capital
|
Name
|
|
|
Mark Irwin
|
18,625,000
|
7.94%
|
Michael Wainwright
|
14,991,666
|
6.39%
|
Forward Looking Statements
This announcement includes
statements that are, or may be deemed to be, "forward-looking
statements". These forward-looking statements can be identified by
the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
variations or comparable terminology. These forward-looking
statements include matters that are not facts. They appear in a
number of places throughout this announcement and include
statements regarding the Board's beliefs or current expectations.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Investors should not place undue reliance on forward-looking
statements, which speak only as of the date of this
announcement.
Website hyperlinks
For the avoidance of doubt, the
contents of websites and any websites accessible from hyperlinks in
this announcement are not incorporated into and do not form part of
this announcement.
Alternative Performance Measures
Alternative Performance Measures are
financial measures of historical or future financial performance,
financial position, or cash flows, other than a financial measure
defined or specified in IFRS, being the applicable financial
reporting framework in respect of the Company.
In order to make a full assessment,
investors should read the whole of this announcement and not rely
solely on the Alternative Performance Measure, which should be
considered in addition to, and is not intended to be a substitute
for, or superior to, the other historical financial information
within this announcement. Certain of the components used within the
Alternative Performance Measure relate to past performance.
Past performance is not an indication of future results.