The Deltic Group saw a 4.7% hit to like-for-likes for the full year to 23 February 2019, in what it described as a “tough year for the company”.

In its latest accounts filed at Companies House, the late-night club and bar operator reported a 4.4% decline in total sales to £101.8m (2008: £106.5m), with admissions for the year totalling 6.9m, compared with 7.5m the previous year.

Underlying profit fell from £8.2m to £4.8m and underlying EBIDTA declined from £14.5m to £11.1m. Operating loss before one-off and non-underlying items – which included £16.9m related to acquisition related fees and a revised estimate of onerous lease provisions and asset impairments – came in at -£12.7m, compared to a profit of £6.7m in 2018.

While the group’s loss after tax amounted to -£16m, compared to a profit of £2.4m the previous year.

In its strategic report, chief executive Peter Marks said 2018 had been a tough year for the company, and the sector as a whole, due to the impact of both the very cold and hot weather, which had hit the late-night sector in particular.

“The long summer had another unforeseen effect on the business in that some sites (due to local market factors), were underperforming but this was masked by the summer weather, and only on the return to normal trading in the autumn were these localised issues apparent,” he added. This resulted in the group focusing its efforts on these sites in the second half of the year.

“Local management changes and new local plans were put in place and good progress was made in many of the sites, which has continued into the following financial year,” said Marks.

He said the directors remained confident in the sector and the business, with performance at the majority of its clubs and bars stable and profitable. He added that while a new venue opening nearby would be a threat to sales, as most of the overcapacity in the nightclub sector has been removed post 2005, “we increasingly see other experiential leisure operators, streaming services and delivery services as our competition”.

Acquisitions and investment

During the year, the group acquired three former Tiger Tiger sites from Novus Leisure – at Manchester Printworks, Portsmouth Gunwharf Quays and Newcastle The Gate – which were rebranded, refurbished and reopened under its new Eden concept. In contrast to its traditional late-night focus, these venues have a core dining and cocktail offer during the day before transforming into a three-room clubbing experience post 10pm.

The group also completed the acquisition of bar, restaurant and nightclub The Terrace in Exeter, and disposed of four venues: the freehold and trading business of Canterbury Steinbeck & Shaw; leasehold businesses Lincoln Moka and Yeovil Chicago’s as going concerns; and surrendered the lease on Basildon Chicago’s.

Deltic said it had also exchanged contracts to sell its freehold Moka site in Crawley, but that it still intended to retain a presence in the town and had agreed heads of terms on a new leasehold site in the area.

Around £4.5m was invested in major refurbishments and relaunches – the majority of which were at Atik venues.

In order to aid its pre-booking service, Deltic implemented a new central sales function for its smaller venues during the 2017/18 financial year at its hub in Milton Keynes, which saw its first full year of operation last year and resulted in net savings of £0.2m.

While total pre-booked sales declined 5.7% during the period, from £8.8m to £8.2m, the business said that now the central team has stabilised bookings for these venues have consistently been in growth.

The development of its AI chatbot, which runs on Facebook Messenger, is also driving pre-booked performance further, it added.

On the people side of the business, it introduced a reward scheme for its staff – the Deltic BARS app – that offers discounts with many retailers. And it is investing in the development of future talent, with three different apprenticeship programmes now up and running; with 51 employees on board as of March 2019.

Deltic operates 53 late-night clubs and bars in the UK.