TIDMBOWL
RNS Number : 8168A
Hollywood Bowl Group plc
30 May 2023
Hollywood Bowl Group plc
("Hollywood Bowl", the "Company" or the "Group")
Interim Results for the Six Months Ended 31 March 2023
CONTINUED STRONG CUSTOMER DEMAND REFLECTING ATTRACTIVENESS OF
OFFER AND GREAT VALUE FOR MONEY PROPOSITION
Hollywood Bowl, the UK and Canada's largest ten-pin bowling
operator, is pleased to announce its Interim Results for the
six-month period ended 31 March 2023 ("H1 FY2023").
Financial highlights
H1 FY2022
(excluding
VAT Movement
H1 FY2023 vs H1 FY2022
benefit on (excluding VAT benefit
H1 FY2023 H1 FY2022 bowling) on bowling))
------------------------ ------------ ------------ ------------ ------------------------
Revenue GBP110.2m(4) GBP100.2m(4) GBP91.3m +20.7%
Gross profit GBP91.3m GBP86.5m GBP77.7m +17.5%
Gross profit margin 82.8% 86.4% 85.1% -230bps
Administrative expenses GBP60.0m GBP48.9m GBP48.7m +23.2%
Group adjusted EBITDA1 GBP43.9m GBP42.2m GBP39.2m +12.0%
Group adjusted EBITDA1
pre-IFRS 16 GBP35.1m GBP34.0m GBP31.0m +13.2%
Group profit before
tax GBP26.7m GBP33.4m GBP24.8m +7.7%
Group profit after tax GBP20.9m GBP27.0m GBP20.4m +2.5%
Group adjusted profit
after tax2 GBP21.9m GBP27.0m GBP20.4m +7.5%
Free cash flow3 GBP15.3m GBP19.6m GBP19.6m -21.9%
Interim dividend per
share 3.27p 3.00p 3.00p +9.0%
------------------------ ------------ ------------ ------------ ------------------------
Operational highlights
-- Continued strong performance driven by demand for high-quality, great value for money offer
o LFL revenue growth(5) of 3.5% with a record first half Group
revenue of GBP110.2m, up 9.7 per cent vs H1 FY2022(4) . Excluding
the effect of the reduced rate (TRR) of VAT in H1 FY2022, group
revenues were up 20.7 per cent vs H1 FY2022
o Group adjusted EBITDA(1) pre-IFRS 16 increased 13.2 per cent
vs H1 FY2022 (excluding the TRR of VAT in H1 FY2022) to
GBP35.1m
o Interim dividend of 3.27 pence per share
o Strong net cash position at 31 March 2023 of GBP44.1m; undrawn
GBP25m revolving credit facility
-- Active improvement of the quality of the estate through new
centre openings and successful execution of our refurbishment
strategy
o Hollywood Bowl Speke and Puttstars Peterborough opened during
the period and are trading ahead of management's expectations
o Currently on site in Hollywood Bowl Merry Hill which is due to
open in Q4 FY2023 and expect to be on site on a combined Hollywood
Bowl/Puttstars offering during H2 FY2023
o Eight refurbishments (including three rebrands) completed in
the half, with all trading in line with or above our return on
investment expectations, with a further two underway
o Four further centres had solar panels installed, bringing the
total to 26 centres (38 per cent of UK estate)
-- Relentless focus on innovation resulting in high customer
satisfaction and strong LFL growth
o Food LFL revenue up 9.0 per cent and drinks LFL revenue up 1.7
per cent following the introduction of a simplified food menu new
'snacks and sharers' lane offering and a new drinks range, all of
which are increasing dwell time and spend
o Pins on Strings installed in seven centres during the period,
bringing the total sites using the new technology to 48 (75 per
cent of the Group's UK bowling centres), with a further five
planned before year end
o Increased technology investment in CRM, website and core
booking systems to enhance the digital customer journey
-- Canada performing ahead of our expectations
o Canadian business generated EBITDA of CAD: 5.0m (GBP3.1m)(6)
in the period
o Three further entertainment centres in Calgary acquired in
February which are trading in line with expectations.
o Integration with Splitsville is progressing well
o Exchanged on a new build bowling centre in Ontario due to open
in H1 FY2024
o Strong momentum and significant expansion potential supported
by strong Group balance sheet
-- Outlook - the Group remains well-placed to continue executing its growth strategy
o Trading in line with the Board's expectations for FY2023
o On track to meet target of 15-20 new centre openings by the
end of FY2025 with strong new centre pipeline for Hollywood Bowl
and Puttstars brands, as well as Canadian Splitsville brand
o Continued balance sheet strength and disciplined capital
allocation policy supports ability to grow and further invest and
innovate for customers
o Confident in resilient demand as customers look for value for
money leisure experiences
o Well-insulated from inflationary pressures with electricity
costs hedged to the end of FY2024
o Training and development programmes for team members
progressing well; continued investment in people to retain and
attract the best talent
1 Group adjusted EBITDA (earnings before interest, tax,
depreciation and amortisation) reflects the underlying trade of the
overall business. It is calculated as statutory operating profit
plus depreciation, amortisation, loss on disposal of property,
right-of-use assets, plant and equipment and software and any
exceptional costs or income, and is also shown pre-IFRS 16 as well
as adjusted for IFRS 16.
2 Group adjusted profit after tax is calculated as group profit
after tax, adding back the acquisition fees of GBP0.5m (H1 FY2022:
nil), the non-cash expense of GBP0.7m (H1 FY2022: nil) related to
the fair value of the earn out consideration on the Teaquinn
acquisition in May 2022 and removing the TRR of VAT benefit on
bowling of GBP0.2m (H1 FY2022: GBP6.6m)
3 Free cash flow is defined as net cash flow pre-exceptional
items, cost of acquisitions, debt facility repayment, RCF
drawdowns, dividends and equity placing.
4 G roup revenue in H1 FY2022 included a total of GBP8.8m
relating to the reduced rate (TRR) of VAT on bowling. GBP5.8m of
this was in respect of prior years and GBP3.0m for H1 FY2022. H1
FY2023 includes GBP0.2m in respect of TRR of VAT on bowling
parties.
5 Like-for-like (LFL) revenue growth is total revenue excluding
any new centres and Canada. New centres are included in the LFL
growth calculation for the period, after they complete the calendar
anniversary of their opening date. LFL revenues in H1 FY2023 and H1
FY2022 exclude the impact of TRR of VAT on bowling.
6 Revenues in GBP based on an average foreign exchange rate over
the relevant period of 1.62 CAD: 1 GBP.
Stephen Burns, Chief Executive, commented:
"I am delighted with our record performance in the first half,
and I would like to thank our fantastic team members for all the
hard work that goes into delivering excellent value for money, high
quality experiences. It is clear from our high customer
satisfaction scores that our continually evolving proposition
appeals to all generations looking to enjoy affordable leisure
activities together.
"We are looking forward to driving further growth in the UK and
Canada, capturing the significant market opportunity ahead. Our
resilience to inflationary pressures, strong balance sheet and
cash-generative model gives us confidence in the future as we
continue to invest so that our customers have the best experience
possible in our centres."
Enquiries: Via Teneo
Hollywood Bowl Group PLC
Stephen Burns, Chief Executive
Officer
Laurence Keen, Chief Financial
Officer
Mat Hart, Chief Marketing and
Technology Officer
Teneo
Will Palfreyman hollywoodbowl@teneo.com
James Macey White +44 (0)20 7353 4200
Laura Marshall
CHIEF EXECUTIVE REVIEW
I am delighted with the Group's financial performance in the
first six months of the year. We continue to deliver sustainable,
profitable growth, with total revenue of GBP110.2m, a 20.7 per cent
growth to H1 FY2022 (excluding the reduced rate (TRR) of VAT
benefit in H1 FY2022). Like-for-like (LFL) revenues grew by 3.5 per
cent, underpinned by enhancements in margin and volume of games
sold, in conjunction with the successful execution of our customer
led operating model.
We remain focused on enhancing the customer experience and the
overall quality of the estate, through new centre openings and
acquisitions, both in the UK and in Canada, through our programme
of refurbishments and rebrands as well as through product and
service innovation and investments in technology.
During the half, we retired the AMF brand from the portfolio,
after rebranding the final two centres to the Hollywood Bowl brand,
we refurbished six existing Hollywood Bowl centres and opened two
new centres in high quality locations in Speke and Peterborough. We
are encouraged by the returns from the investments made and our
programme remains on track with further refurbishments of our
centres in the UK and Canada planned in the second half.
Adjusted profit after tax was GBP21.9m, which is up 7.5 per cent
on prior period (H1 FY2022 (excluding TRR of VAT benefit):
GBP20.4m). Statutory profit after tax was GBP20.9m in H1
FY2023.
Payment of the FY2022 final ordinary dividend, the special
dividend and capital investments in the first half of this
financial year, offset by the cash generation of the Group in the
period, resulted in net cash of GBP44.1m at the end of the period,
a reduction of GBP12.0m from 30 September 2022. In line with our
progressive dividend policy, the Board has declared an interim
dividend of 3.27 pence per share, representing 9 per cent growth on
the comparable period last year.
We remain mindful of the wider economic environment and the
resulting consumer headwinds but are confident that we will
continue to deliver attractive returns for our shareholders by
pursuing our proven strategy of delivering a sector leading leisure
experience, at a great value for money price point, through our
motivated and well rewarded teams.
Like-for-like growth
Against the exceptionally successful comparative period, LFL
sales (which exclude TRR of VAT on bowling activities) grew by 3.5
per cent during the first half of the financial year, with the four
main revenue lines all showing LFL sales growth on the comparative
period in FY2022.
On a LFL basis game volumes grew by 0.6 per cent. LFL spend per
game (excluding TRR of VAT on bowling activities), grew by 2.8 per
cent.to GBP10.82 in the period, up from GBP10.53 in H1 FY2022. Our
dynamic pricing technology has helped drive incremental volume and
carefully controlled yield enhancement. Our wider pricing strategy
has remained unchanged, and we still offer the best value for money
product of all the branded UK bowling operators, with a family of
four able to bowl at peak times for less than GBP25.
Food spend was also up in the year showing a 8.1 per cent LFL
improvement in the first half. Our focus on speed, quality,
consistency and value for money with our food offer has been well
received by our customers. New menu items have been added in line
with customer feedback and sales data, and although we have made
some changes to price to mitigate the inflationary increases, the
most popular menu items were still below their 2019 price point.
Our drinks range has the same value for money proposition, for
example a pint of Carling lager is still available for less than
GBP4. Spend on drink grew on a per game LFL basis by 1.0 per cent,
underpinned by further enhancements to the at lane ordering systems
and the national roll out of a new drinks range.
Refurbishments and space optimisation projects, coupled with the
expansion of contactless payment technology and new game formats,
helped drive LFL sales growth of 6.3% in Amusements. The Amusement
offer is an important part of the customer experience. In the main,
we have kept the price to play at GBP1 despite the significant
improvement in the gaming experience but are utilising new payment
technology to enhance the yield on certain games where
appropriate.
Growth strategy - investing in our UK estate and new centre
openings
Our growth strategy remains unchanged, and we are pleased with
the progress we have made growing our business during the period.
Our new centre opening programme is on track in both the UK and
Canada, and we continue to grow LFL revenue through the improvement
of the existing estate and our refurbishment programme which
continues to deliver above our returns hurdle rate.
FY2023 will be a record year of investment in the estate, and a
very busy year for our property teams. In the first half, we have
invested a total of GBP11.3m (excluding acquisitions costs), with
two new centre openings, three rebrands and five full centre
refurbishments completed in the UK. We will continue this
investment led strategy in the second half with our new Hollywood
Bowl in Merry Hill already on site, at least four more
refurbishments and two space optimisation projects scheduled.
We remain confident in our ability to continue to deliver on our
plan of an average of at least three new openings a year. As set
out above, two new centres were opened in the first half, with
Merry Hill, our new 24 lane 36,500 square foot centre, scheduled to
open during the second half of the financial year.
Our two new centre openings in the first half took the total
number of centres in the UK estate to 69. We opened our second
Hollywood Bowl in Liverpool at the popular leisure and retail park
in Speke, on 4 November 2022 for a net capital spend of GBP2.7m.
The centre is a key anchor tenant complementing the leisure
offering of the scheme, alongside a well-established cinema, Ninja
Warrior, and a good selection of restaurants. The 16-lane centre
occupying just under 20,000 square feet has been very well received
and is trading ahead of expectations.
We also opened Puttstars Peterborough on 11th November 2022 for
a net capital spend of GBP1.8m. The state of the art 27-hole golf
venue occupies 19,500 square feet, over two floors and boasts a
large amusement offer, cloud-based scoring and a combined bar
diner. This new-look Puttstars is located in the Queensgate
shopping centre in the heart of the city, and part of a
multimillion leisure development by the landlord.
Transformational refurbishments have continued, including
bringing the very latest design innovations and technological
improvements to our centres in Finchley, Milton Keynes (including
the addition of one extra bowling lane), Poole Tower Park and Leeds
City, with one amusement enlargement project at Watford Atria. All
the refurbishments are delivering returns in line with expectation,
with the last 12 projects averaging more than a 55 per cent return
on investment.
The Pins on Strings roll out has continued, with a further seven
centres benefiting from the cost saving and customer experience
enhancing technology. 48 centres now have the machines (75% of the
Group's UK's bowling centres), delivering a minimum 30 per cent
return on invested capital, and we plan to install into a further
eight centres during the second half of the financial year.
International expansion
In May 2022, we were delighted to announce the acquisition of
our Canadian business (Teaquinn), comprising Splitsville, an
operator of five ten-pin bowling centres, and Striker Bowling
Solutions (Striker), a B2B supplier and installer of bowling
equipment, for an initial consideration of CAD 17m (approximately
GBP10.6m).
Since the acquisition, Teaquinn has traded ahead of our
expectations. During the first half of this financial year it
contributed CAD 18.4m (GBP11.3m) in revenue and just over CAD 5m
(GBP3.1m) of EBITDA (on a pre-IFRS 16 basis). Our growth strategy
in Canada is focused on four areas; (i) investing in the existing
estate, (ii) acquiring existing businesses that complement the
current estate, (iii) opening new centres and (iv) supporting the
Canadian bowling market with Striker's products and services.
In February, the Group acquired three entertainment centres in
Calgary (Project Owl), a strategically important location between
British Columbia and Ontario. These sites are trading in line with
our expectations and integration with Splitsville is going well,
helped in part by the UK management expertise that has been
seconded to the largest of the centres in Calgary. The pipeline for
acquisitions continues to build with several centres in the
diligence process and we will continue to update on any
acquisitions once appropriate to do so.
The group recently exchanged contracts on a new build bowling
centre in Ontario. The 43,000 square feet centre scheduled to open
in FY2024, will feature 24 lanes and will be our first new build
bowling centre in Canada.
The Canadian refurbishment programme continues to progress well,
with one refurbishment completed during the half, while one rebrand
and two refurbishments are scheduled on site for the second half of
the financial year.
Our Striker business continues to grow as a result of increased
investment into bowling centres across the country after re-opening
following the COVID-19 lockdowns. Revenues in the first half were
CAD 2.9m (GBP1.8m) and the order book is strong with several large
installation and maintenance projects already agreed.
Growing sustainably
Running our business in a sustainable manner is a key focus for
the Group and we have continued to make good progress delivering
against our ESG strategy and the FY2023 and longer-term targets
aligned to this. Highlights in the first half included improvements
in our Scope 1 and 2 emissions intensity ratio and waste recycling
percentages, more than 50 per cent of management appointments
coming from internal candidates, and the establishment of a Board
Corporate Responsibility Committee.
Outlook
As we navigate the current economic landscape, we understand
that many of our customers are facing challenges such as rising
living costs and higher interest rates. This is why we continue to
focus on providing a high-quality leisure experience that offers
great value for money. We are proud that families and friends are
continuing to choose our inclusive and affordable offerings for
their leisure spending, and we are committed to maintaining this
trend through the second half of the year.
To further enhance our business for the benefit of all of our
stakeholders, we are fully committed to our ongoing investment
programme across all areas. This, combined with our sustainable
profitable growth strategy, gives the Board a strong sense of
confidence in our future prospects. We are pleased to report that
we are on track to meet our key strategic priorities for the year,
and trading is in line with the Board's financial expectations. We
are encouraged by the progress we have made so far and will
continue to strive for excellence in all aspects of our
business.
Stephen Burns
Chief Executive Officer
30 May 2022
CHIEF FINANCIAL OFFICER'S REVIEW
Group financial results
H1 FY2022
(excluding
VAT Movement
H1 FY2023 vs H1
FY2022 (excluding
benefit on VAT benefit on
H1 FY2023 H1 FY2022 bowling) bowling))
-------------------------------- ------------ ---------- ------------ -------------------
Revenue GBP110.2m(4) GBP100.2m4 GBP91.3m +20.7%
Gross profit GBP91.3m GBP86.5m GBP77.7m +17.5%
Gross profit margin 82.8% 86.4% 85.1% -230bps
Administrative expenses GBP60.0m GBP48.9m GBP48.7m +23.2%
Group adjusted EBITDA1 GBP43.9m GBP42.2m GBP39.2m +12.0%
Group adjusted EBITDA1 pre-IFRS
16 GBP35.1m GBP34.0m GBP31.0m +13.2%
Group profit before tax GBP26.7m GBP33.4m GBP24.8m +7.7%
Group profit after tax GBP20.9m GBP27.0m GBP20.4m +2.5%
Group adjusted profit after
tax2 GBP21.9m GBP27.0m GBP20.4m +7.5%
Free cash flow3 GBP15.3m GBP19.6m GBP19.6m -21.9%
Interim dividend per share 3.27p 3.00p 3.00p +9.0%
-------------------------------- ------------ ---------- ------------ -------------------
1 Group adjusted EBITDA (earnings before interest, tax,
depreciation and amortisation) reflects the underlying trade of the
overall business. It is calculated as statutory operating profit
plus depreciation, amortisation, loss on disposal of property,
right-of-use assets, plant and equipment and software and any
exceptional costs or income, and is also shown pre-IFRS 16 as well
as adjusted for IFRS 16.
2 Group adjusted profit after tax is calculated as group profit
after tax, adding back the acquisition fees of GBP0.5m (H1 FY2022:
nil), the non-cash expense of GBP0.7m (H1 FY2022: nil) related to
the fair value of the earn out consideration on the Teaquinn
acquisition in May 2022 and removing the TRR of VAT benefit on
bowling of GBP0.2m (H1 FY2022: GBP6.6m)
3 Free cash flow is defined as net cash flow pre-exceptional
items, cost of acquisitions, debt facility repayment, RCF
drawdowns, dividends and equity placing.
4 During FY2020 the Chancellor announced the reduced rate (TRR)
of VAT on hospitality activities from which bowling activities were
initially excluded. The Tenpin Bowling Proprietors Association has
been lobbying on the industry's behalf, since that date, for the
sector to be treated in line with the hospitality industry. We
received confirmation on 12 April 2022 (FY2022) that HMRC agreed
that there is indeed a clear distinction between the sport of
competitive bowling and the leisure activity of bowling - with the
latter being able to benefit from TRR of VAT retrospectively (H1
FY2022: GBP8.8m). H1 FY2023 includes GBP0.2m in respect of TRR of
VAT on bowling parties.
Following the introduction of the lease accounting standard IFRS
16, the Group continues to maintain the reporting of Group adjusted
EBITDA on a pre-IFRS 16 basis, as well as on an IFRS 16 basis. This
is because the pre-IFRS 16 measure is consistent with the basis
used for business decisions, as well as a measure that investors
use to consider the underlying business performance. For the
purposes of this review, the commentary will clearly state when it
is referring to figures on an IFRS 16 or pre-IFRS 16 basis.
All LFL revenue commentary is compared to the same period in
FY2022, excludes the impact of TRR of VAT on bowling as well as
revenue relating to the Group's Canadian business, which was
acquired in May 2022. New centres are included in the LFL revenue
after they complete the calendar anniversary of their opening
date.
Further details on the Alternative Performance Measures used is
at the end of this report.
Revenue
On the back of an exceptionally strong FY2022, it was pleasing
to see LFL growth of 3.5 per cent in H1 FY2023.
LFL revenue growth was a combination of a spend per game growth
of 2.8 per cent, taking LFL average spend per game to GBP10.82, as
well as LFL game volume growth of 0.6 per cent. The LFL growth,
alongside the performance of the new UK centres, resulted in record
UK revenues of GBP98.9m and growth of 8.3 per cent compared to the
underlying revenues in H1 FY2022 (excluding the impact of TRR of
VAT GBP8.8m in H1 FY2022).
Our Canadian business continues to trade ahead of our
expectations. Total revenues in Canada were CAD 18.4m (GBP11.3m),
with bowling centres accounting for CAD 15.5m (GBP9.5m).
Total Group revenue for H1 FY2023 was GBP110.2m a 20.7 per cent
growth to H1 FY2022 (excluding VAT benefit in H1 FY2022).
Gross profit margin
Gross profit was GBP91.3m, 17.5 per cent growth on H1 FY2022
(excluding VAT benefit in H1 FY2022), with gross profit margin at
82.8 per cent.
Gross profit for the UK business was GBP83.0m with a margin of
83.8 per cent. The trend of amusements growing at a higher rate
than bowling continued and given amusements' lower margin rate,
this has reduced gross profit margin but produced a higher gross
profit overall.
Gross profit for Teaquinn was in line with expectations, at CAD
13.5m (GBP8.3m), with a margin of 73.6 per cent. The lower margin
rate when compared to the UK business is as forecasted due to the
effect of the lower gross profit margin of the Striker bowling
equipment and installations business, the higher food and drink mix
in the Canadian bowling centres and the lower contractual amusement
gross profit margin. Splitsville centres contributed CAD 12.9m
(GBP7.9m) of gross profit.
Administrative expenses
Total administrative expenses on a statutory basis were
GBP60.0m, of which the UK accounted for GBP54.1m.
On a pre-IFRS 16 basis, total administrative expenses were
GBP63.6m and the UK accounted for GBP57.6m in H1 FY2023, compared
to GBP52.4m during the corresponding period in FY2022.
Employee costs in centres increased to GBP19.9m, an increase of
GBP4.3m when compared to H1 FY2022, due to a combination of salary
increases over the period, the impact of higher LFL revenues, new
UK centres (GBP0.8m) as well as the added employee costs in
Canadian centres which were CAD 4.5m (GBP2.8m).
Property-related costs in centres, accounted for under pre-IFRS
16, were GBP19.1m, with GBP18.0m for the UK centres (H1 FY2022:
GBP15.5m). Property costs in the UK increased by GBP2.5m with new
centre costs of GBP0.9m, whilst business rates were higher by
GBP1.5m due to the government implemented COVID-19 concession in
the first half of FY2022. Canadian property centre costs were CAD
1.9m (GBP1.1m).
Total property costs, under IFRS 16, were GBP20.3m, including
GBP5.2m accounted for as property lease assets depreciation and
GBP4.7m in implied interest relating to the lease liability.
Corporate costs include all central costs and the
out-performance bonus for centre management teams. Total corporate
costs decreased by GBP0.2m, to GBP11.7m, when compared to the
corresponding period in FY2022. UK corporate costs decreased by
GBP1.0m, to GBP11.0m with the main driver of this being lower bonus
amounts in H1 FY2023, whilst corporate costs for Canada were CAD
1.1m (GBP0.7m).
The statutory depreciation and amortisation charge for H1 FY2023
was GBP11.7m compared to GBP10.2m in H1 FY2022, with Canada
accounting for GBP0.8m of the increase.
Exceptional costs
Exceptional costs relate in the main to two areas. The first is
the acquisition costs in relation to Project Owl, which totalled
GBP0.5m. The second is the earn out consideration for Pat Haggerty
that is an exceptional cost of GBP0.7m in H1 FY2023 (of which
GBP0.6m is in administrative expenses and GBP0.1m in interest
expenses). As noted in the FY2022 full year results, the earn out
consideration is considered a post-acquisition employment expense
and not in the scope of IFRS 3, but instead is accounted for under
IAS 19. The earn out has a cost impact in the following financial
years up to and including at least FY2025.
More detail on these exceptional costs are shown in note 4 to
the Financial Statements.
Group adjusted EBITDA and operating profit
Group adjusted EBITDA pre-IFRS 16 increased to a record GBP35.1m
and includes a contribution of GBP3.1m (CAD 5.0m) from the Canadian
business.
Compared to H1 FY2022 EBITDA pre-IFRS 16, this was an increase
of 3.3 per cent. When excluding the impact of TRR of VAT (GBP3.0m)
in the H1 FY 2022 comparable, the increase is 13.3 per cent. The
increase is primarily due to the increased revenue performance and
the addition of the Canadian business.
The reconciliation between statutory operating profit and Group
adjusted EBITDA on both a pre-IFRS 16 and under-IFRS 16 basis is
shown in the table below.
Group adjusted EBITDA and operating profit
H1 FY2023 H1 FY2022
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Operating profit 31,248 37,616
Depreciation 11,303 9,949
Amortisation 395 236
Loss / (profit) on property, right-of-use assets,
plant and equipment and software disposal 42 (20)
Exceptional items 899 (5,641)
-------------------------------------------------- --------- ---------
Group adjusted EBITDA under IFRS 16 43,886 42,158
In-year impact on FY2022 of TRR of VAT on bowling
activities - (2,970)
IFRS 16 adjustment1 (8,775) (8,156)
-------------------------------------------------- --------- ---------
Group adjusted EBITDA pre-IFRS 16 35,112 31,033
-------------------------------------------------- --------- ---------
1 IFRS 16 adoption has an impact on EBITDA, with the removal of
rent from the calculation. For Group adjusted EBITDA pre-IFRS 16,
it is deducted for comparative purposes and is used by investors as
a key measure of the business.
Share-based payments
During the first half of the year, the Group granted Long-Term
Incentive Plan (LTIP) shares to the senior leadership team. These
awards vest in three years providing continuous employment during
this period and attainment of performance conditions as outlined on
page 113 of the Annual Report. H1 FY2023 share-based costs were
GBP541,430 (H1 FY2022: GBP403,043). Share-based costs are not
classified as exceptional costs.
Financing
Finance costs increased to GBP4.5m in H1 FY2023 (H1 FY2022:
GBP4.2m) comprising mainly of implied interest relating to the
lease liability under IFRS 16 of GBP4.7m. Bank interest costs in
relation to the Groups undrawn revolving credit facility of GBP0.3m
were offset by the interest received (GBP0.5m) on the Groups' bank
balances.
The Group's bank borrowing facilities are a revolving credit
facility (RCF) of GBP25m at a margin rate of 1.75 per cent above
SONIA and an agreed accordion of GBP5m. The loan term runs to the
end of December 2024; and the RCF remains fully undrawn.
Capital expenditure
During the financial year, the Group invested GBP18.6m of net
capital expenditure, including GBP7.3m on the acquisition of three
centres in Calgary.
A total of GBP3.9m was invested into the refurbishment
programme. The refurbishment of eight UK centres was completed
including the final two rebrands of AMF to Hollywood Bowl, in
Torquay and Worthing, as well as interim spends of GBP1.7m on two
Canadian centres. Despite inflationary pressures, returns on these
UK refurbishments continue to exceed the Group's hurdle rate of 33
per cent.
New UK centre capital expenditure was a net GBP3.0m. This
relates to the two centres opened in the year - Hollywood Bowl
Speke and Puttstars Peterborough.
The Group spent GBP4.4m on maintenance capital in the UK,
including continued spend on the rollout of Pins on Strings
technology, now in 48 centres, and solar panel installations, with
26 centres now benefitting from this technology.
Capital investment in Canada
Three centres were acquired in Calgary during February 2023 for
a consideration of CAD 12m (GBP7.6m), with GBP0.3m of cash acquired
in the deal. On a proforma basis for the 12 months to 30 September
2022, these centres generated CAD 2.8m EBITDA on a pre-IFRS 16
basis, equating to a purchase price of 4.3x pre-IFRS 16 EBITDA.
We were pleased to complete the refurbishment and rebrand of
Splitsville Richmond Hill in H1 FY2023 and will be on site in H2
FY2023 with refurbishments in both Kingston and Hamilton.
Completion is expected before the end of the current financial
year. We also plan to be on site in a refurbishment and rebrand in
Calgary in late calendar year 2023.
The liquidity position of the Group remains strong, with a net
cash position of GBP44.1m as at 31 March 2023, compared to GBP56.1m
as at 30 September 2022. Detail on the cash movement in the year is
shown in the table below.
Cash flow and net debt
H1 FY2023 H1 FY2022
GBP'000 GBP'000
----------------------------------------- --------- ---------
Group adjusted EBITDA under IFRS 16 43,886 42,158
Movement in working capital (2,997) 1,972
Maintenance capital expenditure (4,362) (4,106)
Taxation (4,269) (1,530)
Payment of capital elements of leases (5,540) (7,773)
Adjusted operating cash flow (OCF) 1 26,719 30,721
Adjusted OCF conversion 60.9% 72.9%
Expansionary capital expenditure2 (6,934) (6,997)
Net bank loan interest received / (paid) 287 (41)
Lease interest paid (4,741) (4,054)
Free cash flow (FCF) 3 15,331 19,634
Exceptional items (278) -
Acquisition of Project Owl (7,574) -
Cash acquired in Project Owl 320 -
Dividends paid (19,724) -
Net cash flow (11,918) 19,634
----------------------------------------- --------- ---------
1 Adjusted operating cash flow is calculated as Group adjusted
EBITDA less working capital, maintenance capital expenditure,
taxation and payment of the capital element of leases. This
represents a good measure for the cash generated by the business
after taking into account all necessary maintenance capital
expenditure to ensure the routine running of the business. This
excludes exceptional items, net interest paid, debt drawdowns and
any debt repayments.
2 Expansionary capital expenditure includes refurbishment and new centre capital expenditure.
3 Free cash flow is defined as net cash flow pre-exceptional
items, cost of acquisitions, debt facility repayment, debt
drawdowns, dividends and equity placing.
Taxation
The Group's tax charge for the first half is GBP5.8m, including
a deferred tax amount of GBP1.3m.
Earnings
Statutory profit before tax for the half was GBP26.7m. The Group
delivered profit after tax of GBP20.9m and basic earnings per share
was 12.21 pence.
Adjusted profit after tax was GBP21.9m (EPS of 12.80 pence).
This is calculated to take account of the impact of the costs
associated with the Teaquinn earn out consideration as well as
acquisition costs.
It is calculated as statutory profit after tax, adding back
Canadian acquisition fees of GBP0.5m, the non-cash expense of
GBP0.7m related to the earn out consideration on the Teaquinn
acquisition in May 2022 and removing the TRR of VAT benefit on
bowling parties of GBP0.2m.
Dividend
In line with its capital allocation policy, the Board has
declared an interim dividend of 3.27 pence per share. The
ex-dividend date is 8 June 2023, with a record date of 9 June 2023
and a payment date of 5 July 2023. Detail on the Group's capital
allocation policy can be found on page 44 of the FY2022 Annual
report and accounts.
Going concern
As detailed in note 2 to the Financial Statements, the Directors
are satisfied that the Group has adequate resources to continue in
operation for the foreseeable future, a period of at least 12
months from the date of this report.
Laurence Keen
Chief Financial Officer
30 May 2023
Note on alternative performance measures (APMs)
The Group uses APMs to enable management and users of the
financial statements to better understand elements of the financial
performance in the period. APMs referenced earlier in the report
are explained as follows.
Like-for-like (LFL) revenue for H1 FY2023 is calculated as:
-- Total revenues GBP110.2m, less
-- New UK centre revenues from FY2022 and FY2023 that have not annualised GBP4.3m, less
-- Canada revenues GBP11.3m
New centres are included in the LFL revenue after they complete
the calendar anniversary of their opening date.
LFL comparatives for H1 FY2022 are GBP91.3m.
Group adjusted EBITDA (earnings before interest, tax,
depreciation and amortisation) reflects the underlying trade of the
overall business. It is calculated as statutory operating profit
plus depreciation, amortisation, impairment, loss on disposal of
property, plant and equipment, right of use assets, and software
and any exceptional costs or income and is also shown pre-IFRS 16
as well as adjusted for IFRS 16. The reconciliation to operating
profit is set out in this report.
Free cash flow is defined as net cash flow pre-dividends,
exceptional items and acquisition costs.
LFL spend per game is defined as UK LFL revenue in the year
divided by the number of LFL bowling games and golf rounds played
in the UK.
Adjusted operating cash flow is calculated as Group adjusted
EBITDA less working capital, maintenance capital expenditure,
taxation and payment of the capital element of leases. This
represents a good measure for the cash generated by the business
after taking into account all necessary maintenance capital
expenditure to ensure the routine running of the business. This
excludes exceptional items, net interest paid, debt drawdowns and
any debt repayments.
Expansionary capital expenditure includes all capital on new
centres, refurbishments and rebrands only.
Adjusted profit after tax for H1 FY2023 is calculated as
statutory profit after tax, adding back Canadian acquisition fees
of GBP0.5m, the non-cash expense of GBP0.7m related to the fair
value of the earn out consideration on the Teaquinn acquisition in
May 2022 and removing the TRR of VAT benefit on bowling parties of
GBP0.2m. This adjusted profit after tax is also used to calculated
adjusted earnings per share.
Condensed Consolidated Income Statement and Statement of
Comprehensive Income
For the six months ended 31 March 2023
Six months ended 31 Six months ended 31 March
March 2023 2022
Exceptional Exceptional
Before items Before Items
exceptional (note exceptional (note 4)
items 4) Total items Unaudited Total
Note Unaudited Unaudited Unaudited Unaudited GBP'000 Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Revenue 110,052 192 110,244 94,381 5,792 100,173
Cost of sales (18,972) - (18,972) (13,641) - (13,641)
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Gross profit 91,080 192 91,272 80,740 5,792 86,532
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Administrative
expenses (58,934) (1,091) (60,025) (48,765) (151) (48,916)
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Operating
profit/(loss) 32,146 (899) 31,247 31,975 5,641 37,616
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Finance income 5 497 - 497 - - -
Finance expenses 5 (4,954) (79) (5,033) (4,179) - (4,179)
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Profit/(loss)
before
tax 27,689 (978) 26,711 27,796 5,641 33,437
Tax charge 6 (5,769) (42) (5,811) (5,354) (1,058) (6,412)
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Profit/(loss)
for
the period
attributable
to equity
shareholders 21,920 (1,020) 20,900 22,442 4,583 27,025
Other
comprehensive
income
Retranslation
(loss)
of foreign
currency
denominated
operations (724) - (724) - - -
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Total
comprehensive
income/(loss)
for the
period
attributable
to equity
shareholders 21,196 (1,020) 20,176 22,442 4,583 27,025
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Earnings per
share
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Basic earnings
per
share (pence) 12.21 15.82
Diluted earnings
per
share (pence) 12.16 15.76
---------------- ------- --------------- ------------ ------------ ------------ ----------- -----------
Weighted average number of shares
- Basic 171,222,369 170,828,776
Dilutive potential
ordinary
shares 649,078 603,170
------------------------- --------------- ------------ ------------ ------------ ----------- -----------
Weighted average number of shares
- Diluted 171,871,447 171,431,946
------------------------------------------ ------------ ------------ ------------ ----------- -----------
Reconciliation of operating profit to Group
adjusted EBITDA
Six months Six months
ended 31 ended 31
Note March 2023 March 2022
Unaudited Unaudited
GBP'000 GBP'000
------------------------- ----------------------------- ------------ -------------------------
Operating profit 31,247 37,616
Exceptional items 4 899 (5,641)
Depreciation of
property,
plant and equipment 9 4,932 4,144
Depreciation of
right-of-use
assets 10 6,370 5,805
Amortisation of
intangible
assets 11 395 236
Loss/(profit) on
disposal
of property, plant and
equipment,
right-of-use assets and
software 9, 10, 11 43 (2)
------------------------- ----------------------------- ------------ -------------------------
Group adjusted EBITDA 43,886 42,158
------------------------- ----------------------------- ------------ -------------------------
Group adjusted EBITDA (earnings before interest, tax,
depreciation and amortisation) reflects the underlying trade of the
overall business. It is calculated as operating profit plus
depreciation, amortisation, impairment losses, loss on disposal of
property, plant and equipment, right-of-use assets and software and
exceptional items.
Management use Group adjusted EBITDA as a key performance
measure of the business and it is considered by management to be a
measure investors look at to reflect the underlying business.
Reconciliation of net debt Six months
Six months ended Year ended
ended 31 March 30 September
31 March 2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------ --------------- ----------- --------------
Cash and cash equivalents (44,149) (49,577) (56,066)
------------------------------- --------------- ----------- --------------
Net (cash) excluding finance
leases (44,149) (49,577) (56,066)
Finance leases 192,279 172,531 188,369
------------------------------- --------------- ----------- --------------
Net debt 148,130 122,954 132,303
------------------------------- --------------- ----------- --------------
Net debt is defined as borrowings from bank facilities excluding
issue costs, plus finance leases less cash and cash equivalents.
Condensed Consolidated Statement of Financial Position
As at 31 March 2023
31 March 31 March 30 September
2023 2022 2022
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------- ------------------- ---------- ------------ ------------
Assets
Non-current assets
Property, plant and equipment 9 74,734 55,977 68,641
Right-of-use assets 10 150,563 133,077 147,455
Goodwill and intangible assets 11 88,628 77,807 81,794
Deferred tax asset 298 4,130 1,647
------------------------------- ------------------- ---------- ------------ ------------
314,223 270,991 299,537
------------------------------- ------------------- ---------- ------------ ------------
Current assets
Cash and cash equivalents 44,149 49,577 56,066
Trade and other receivables 7 5,898 10,474 5,130
Corporation tax receivable - - 271
Inventories 2,639 1,739 2,148
------------------------------- ------------------- ---------- ------------ ------------
52,686 61,790 63,615
------------------------------- ------------------- ---------- ------------ ------------
Total assets 366,909 332,781 363,152
------------------------------- ------------------- ---------- ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables 8 25,984 21,773 28,681
Lease liabilities 10 11,910 11,615 11,557
Corporation tax payable 96 2,067 -
------------------------------- ------------------- ---------- ------------ ------------
37,990 35,455 40,238
------------------------------- ------------------- ---------- ------------ ------------
Non-current liabilities
Other payables 8 3,866 516 3,000
Lease liabilities 10 180,369 160,916 176,812
Provisions 5,297 3,769 4,682
------------------------------- ------------------- ---------- ------------ ------------
189,532 165,201 184,494
------------------------------- ------------------- ---------- ------------ ------------
Total liabilities 227,522 200,656 224,732
------------------------------- ------------------- ---------- ------------ ------------
NET ASSETS 139,387 132,125 138,420
------------------------------- ------------------- ---------- ------------ ------------
Equity attributable to
shareholders
Share capital 12 1,717 1,711 1,711
Share premium 39,716 39,691 39,716
Merger reserve (49,897) (49,897) (49,897)
Foreign currency translation
reserve (313) - 411
Retained earnings 148,164 140,620 146,479
------------------------------- ------------------- ---------- ------------ ------------
TOTAL EQUITY 139,387 132,125 138,420
------------------------------- ------------------- ---------- ------------ ------------
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 March 2023
Foreign
currency
Share Share Merger translation Retained
capital Premium reserve reserve earnings Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--- ----------------- ------ -------- --------- ---------- ------------ ------------ ---------
Equity at 30
September 2021
(audited) 1,706 39,691 (49,897) - 113,187 104,687
Shares issued during
the period 12 5 - - - - 5
Share-based payments 14 - - - - 403 403
Deferred tax on
share-based
payments - - - - 5 5
Profit for the period - - - - 27,025 27,025
--------------------- ------ -------- --------- ---------- ------------ ------------ ---------
Equity at 31 March
2022 (unaudited) 1,711 39,691 (49,897) - 140,620 132,125
Shares issued during
the period - 25 - - - 25
Dividends paid - - - - (5,132) (5,132)
Share-based payments 14 - - - - 541 541
Deferred tax on
share-based
payments - - - - 24 24
Retranslation of
foreign currency
denominated
operations - - - 411 - 411
Profit for the period - - - - 10,426 10,426
--------------------- ------ -------- --------- ---------- ------------ ------------ ---------
Equity at 30
September 2022
(audited) 1,711 39,716 (49,897) 411 146,479 138,420
Shares issued during
the period 12 6 - - - - 6
Dividends paid - - - - (19,723) (19,723)
Share-based payments 14 - - - - 541 541
Deferred tax on
share-based
payments - - - - (33) (33)
Retranslation of
foreign currency
denominated
operations - - - (724) - (724)
Profit for the period - - - - 20,900 20,900
--------------------- ------ -------- --------- ---------- ------------ ------------ ---------
Equity at 31 March
2023 (unaudited) 1,717 39,716 (49,897) (313) 148,164 139,387
--------------------- ------ -------- --------- ---------- ------------ ------------ ---------
Condensed Consolidated Statement of Cash Flows
For the six months ended 31 March 2023
Six months Six months
ended ended
31 March 31 March
2023 2022
Unaudited Unaudited
Note GBP'000 GBP'000
-------------------------------------------- ---- ---------- ----------
Cash flows from operating activities
Profit before tax 26,711 33,437
Adjusted by:
Depreciation of property, plant and
equipment (PPE) 9 4,932 4,144
Depreciation of right-of-use (ROU)
assets 10 6,370 5,805
Amortisation of intangible assets 11 395 236
Net interest expense 5 4,536 4,179
Loss/(profit) on disposal of property,
plant
and equipment, software and ROU Assets 43 (2)
Share-based payments 541 403
-------------------------------------------- ---- ---------- ----------
Operating profit before working capital
changes 43,528 48,202
(Increase) in inventories (426) (278)
(Increase) in trade and other receivables (584) (7,194)
(Decrease)/increase in payables and
provisions (1,905) 3,400
-------------------------------------------- ---- ---------- ----------
Cash inflow generated from operations 40,613 44,130
Interest received 411 -
Corporation tax paid (4,270) (1,530)
Bank interest paid (124) (41)
Lease interest paid (4,741) (4,054)
-------------------------------------------- ---- ---------- ----------
Net cash inflow from operating activities 31,889 38,505
-------------------------------------------- ---- ---------- ----------
Cash flows from investing activities
Acquisition of subsidiaries 17 (7,574) -
Subsidiary cash acquired 17 320 -
Purchase of property, plant and equipment (11,230) (11,007)
Purchase of intangible assets (65) (95)
Net cash used in investing activities (18,549) (11,102)
-------------------------------------------- ---- ---------- ----------
Cash flows from financing activities
Payment of capital elements of leases (5,540) (7,773)
Issue of shares 6 5
Dividends paid (19,723) -
-------------------------------------------- ---- ---------- ----------
Net cash used in financing activities (25,257) (7,768)
-------------------------------------------- ---- ---------- ----------
Net change in cash and cash equivalents
for the period (11,917) 19,635
Cash and cash equivalents at the beginning
of the period 56,066 29,942
-------------------------------------------- ---- ---------- ----------
Cash and cash equivalents at the end
of the period 44,149 49,577
-------------------------------------------- ---- ---------- ----------
Notes to the condensed consolidated interim financial
statements
1. General information
The Directors of Hollywood Bowl Group plc (together with its
subsidiaries, the "Group" or "HWB Group") present their interim
report and the unaudited financial statements for the six months
ended 31 March 2023 ('Interim Financial Statements').
HWB Group is incorporated and domiciled in England and Wales,
under company registration number 10229630. The registered office
of the company is Focus 31, West Wing, Cleveland Road, Hemel
Hempstead, HP2 7BW, United Kingdom.
On 15 February 2023, the Group acquired HLD Investments Inc.
(operating as YYC Bowling & Entertainment), Mountain View Bowl
Inc and Wong and Lewis Investments Inc. (operating as Let's Bowl),
three Canadian-based ten-pin bowling businesses. These three
companies are consolidated in Hollywood Bowl Group plc's Financial
Statements with effect from 15 February 2023.
The interim Financial Statements were approved by the Board of
Directors on 30 May 2023.
The Group's last annual audited financial statements for the
year ended 30 September 2022 have been prepared in accordance with
UK-adopted International Accounting Standards and the requirements
of the Companies Act 2006, and these Interim Financial statements
should be read in conjunction with them.
The comparative figures for the year ended 30 September 2022 are
an abridged version of the Group's last annual financial statements
and, together with other financial information contained in these
interim results, do not constitute statutory financial statements
of the Group as defined in section 434 of the Companies Act 2006. A
copy of the statutory accounts for the year ended 30 September 2022
have been delivered to the Registrar of Companies. The external
auditor has reported on those accounts: their report was
unqualified and did not contain a statement under s498 (2) or (3)
of the Companies Act 2006.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34, 'Interim Financial Reporting' and the
Disclosures and Transparency Rules of the United Kingdom's
Financial Conduct Authority. They do not include all of the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last financial statements.
The Interim Financial Statements are presented in Pounds
Sterling, rounded to the nearest thousand pounds, except where
otherwise indicated; and under the historical cost convention,
except for fair value items on acquisition.
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those applied in
the presentation of the Group's consolidated financial statements
for the year ended 30 September 2022. At the date of authorisation
of this financial information, certain new standards, amendments
and interpretations to existing standards applicable to the Group
have been published but are not yet effective and have not been
adopted early by the Group. The impact of these standards is not
expected to be material.
Basis of consolidation
The consolidated financial information incorporates the
Financial Statements of the Company and all of its subsidiary
undertakings. The Financial Statements of all Group companies are
adjusted, where necessary, to ensure the use of consistent
accounting policies. Acquisitions are accounted for under the
acquisition method from the date control passes to the Group. On
acquisition, the assets, liabilities and contingent liabilities of
a subsidiary are measured at their fair values at the date of
acquisition. Any excess of the cost of acquisition over the fair
values of the identifiable net assets acquired is recognised as
goodwill, or a gain on bargain purchase if the fair values of the
identifiable net assets are greater than the cost of acquisition.
Intragroup balances and any unrealised gains and losses or income
and expenses arising from intragroup transactions are eliminated in
preparing the consolidated financial statements.
The results of HLD Investments Inc. (operating as YYC Bowling
& Entertainment), Mountain View Bowl Inc and Wong and Lewis
Investments Inc. (operating as Let's Bowl), are included from the
date of acquisition on 15 February 2023.
Going concern
The financial position of the Group, its cash flows, performance
and position are described in the financial review section. Details
of the Group's available and drawn facilities are included in note
13. At 31 March 2023, the Group had a cash balance of GBP44.1m with
an undrawn RCF of GBP25m with Barclays Bank plc, and no outstanding
loan balances, giving an overall liquidity of GBP69.1m.
In their consideration of going concern, the Directors have
reviewed the Group's future cash forecasts and profit projections
using a base case and a severe but plausible downside scenario. The
Directors are of the opinion that the Group's forecasts and
projections show that the Group is able to operate within its
current facilities and comfortably comply with the covenants
outlined in its RCF.
Taking the above, and the principal risks faced by the Group as
outlined in note 15 to these interim financial statements, into
consideration, the Directors are satisfied that the Group has
adequate resources to continue in operation for the foreseeable
future, a period of at least twelve months from the date of this
report. Accordingly, the Group continues to adopt the going concern
basis in preparing these interim financial statements.
Exceptional items and other adjustments
Exceptional items and other adjustments are those that in
management's judgement need to be disclosed by virtue of their
size, nature and incidence, in order to draw the attention of the
reader and to show the underlying business performance of the Group
more accurately. Such items are included within the income
statement caption to which they relate and are separately disclosed
on the face of the condensed consolidated income statement and in
the notes to these interim Financial Statements.
Accounting estimates and judgements
The preparation of the Group financial statements requires
management to make judgements, estimates and assumptions in
applying the Group's accounting policies to determine the reported
amounts of assets, liabilities, income and expenditure. Actual
results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis, with
revisions applied prospectively.
Judgements made by the Directors in the application of these
accounting policies that have a significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next financial year are set out below.
Critical accounting judgements
-- Dilapidation provision
A provision is made for future expected dilapidation costs on
the opening of leasehold properties not covered by the LTA and is
expected to be utilised on lease expiry. This also includes
properties covered by the LTA where we may not extend the lease,
after consideration of the long-term trading and viability of the
centre. Properties covered by the LTA provide security of tenure
and we intend to occupy these premises indefinitely until the
landlord serves notice that the centre is to be redeveloped. As
such, no charge for dilapidations can be imposed and no
dilapidation provision is considered necessary as the outflow of
economic benefit is not considered to be probable.
Key sources of estimation uncertainty
The key estimates are discussed below:
-- Property, plant and equipment and right-of-use asset impairment reviews
Plant and equipment and right-of-use assets are reviewed for
impairment when there is an indication that the assets might be
impaired by comparing the carrying value of the assets with their
recoverable amounts. The recoverable amount of an asset or a CGU is
typically determined based on value-in-use calculations prepared on
the basis of management's assumptions and estimates.
The key assumptions in the value-in-use calculations include
growth rates of revenue and expenses, and discount rates. The
carrying value of property, plant and equipment and right-of-use
assets have been assessed to reasonable possible changes in key
assumptions and these would not lead to a material impairment.
Further information in respect of the Group's property, plant
and equipment and right-of-use assets is included in notes 9 and 10
respectively.
Other estimates
The acquisition of HLD Investments Inc. (operating as YYC
Bowling & Entertainment), Mountain View Bowl Inc and Wong and
Lewis Investments Inc. (operating as Let's Bowl) has been accounted
for using the acquisition method under IFRS 3. The identifiable
assets, liabilities and contingent liabilities are recognised at
their fair value at date of acquisition (note 17). The fair value
of the net assets identified were determined with assistance from
independent experts using professional valuation techniques
appropriate to the individual category of asset or liability.
Calculating the fair values of net assets, notably the fair values
of intangible assets identified as part of the purchase price
allocation, involves estimation and consequently the fair value
exercise is recorded as another accounting estimate. The
amortisation charge is sensitive to the value of the intangible
asset values, so a higher or lower fair value calculation would
lead to a change in the amortisation charge in the period following
acquisition. These estimates are not considered key sources of
estimation uncertainty as a material adjustment to the carrying
value is not expected in the following financial year.
Adjusted measures
The Group uses a number of non-Generally Accepted Accounting
Principles (non-GAAP) financial measures in addition to those
reported in accordance with IFRS. The Directors believe that these
non-GAAP measures, listed below, are important when assessing the
underlying financial and operating performance of the Group by
investors and shareholders. These non-GAAP measures comprise of
like-for-like revenue growth, adjusted profit after tax, net debt,
Group operating cash flow, Group adjusted EBITDA and Group adjusted
EBITDA margin.
Further explanation on alternative performance measures is
provided in the Chief Financial Officer's review.
3. Segmental reporting
Management consider that the Group consists of two operating
segments, as it operates within the UK and Canada (31 March 2022:
UK only). The UK operating segment includes the Hollywood Bowl and
Puttstars brands. The Canada operating segment includes the
Splitsville and Striker Bowling Solutions brands (acquired May
2022), and from 15 February 2023, YYC Bowling & Entertainment,
Mountain View Bowl Inc and Let's Bowl. Within these two operating
segments there are multiple revenue streams which consist of the
following:
Six months ended 31 March
2023
Before Exceptional
exceptional income
income UK (note Total Canada Total
UK 4) UK Unaudited Unaudited
Unaudited Unaudited Unaudited GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
------------- ------------ ------------ ------------ ------------
Bowling 44,972 192 45,164 5,042 50,206
Food and drink 26,743 - 26,743 2,805 29,548
Amusements 25,612 - 25,612 1,515 27,127
Mini-golf 1,307 - 1,307 - 1,307
Installation of bowling
equipment - - - 1,757 1,757
Other 120 - 120 179 299
----------------------------- ------------- ------------ ------------ ------------ ------------
98,754 192 98,945 11,298 110,244
--------------------------- ------------- ------------ ------------ ------------ ------------
Six months ended 31 March
2022
Before Exceptional
exceptional income
income UK (note Total Canada Total
UK 4) UK Unaudited Unaudited
Unaudited Unaudited Unaudited GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
--------------------------- ------------- ------------ ------------ ------------ --------------
Bowling 45,833 5,792 51,625 - 51,625
Food and drink 24,529 - 24,529 - 24,529
Amusements 22,909 - 22,909 - 22,909
Mini-golf 1,049 - 1,049 - 1,049
Installation of bowling - - - - -
equipment
Other 61 - 61 - 61
----------------------------- ------------- ------------ ------------ ------------ --------------
94,381 5,792 100,173 - 100,173
--------------------------- ------------- ------------ ------------ ------------ --------------
No single customer provides more than ten per cent of the
Group's revenue.
Six months ended 31 March Six months ended 31 March
2023 2022
UK Canada Total UK Canada Total
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Revenue 98,945 11,298 110,244 100,173 - 100,173
Group adjusted
EBITDA(1) 40,207 3,679 43,886 42,158 - 42,158
Operating profit 28,656 2,591 31,247 37,616 - 37,616
Finance income 444 53 497 - - -
Finance expense 4,621 412 5,033 4,179 - 4,179
Depreciation and
amortisation 11,063 634 11,697 10,185 - 10,185
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Profit before tax 24,479 2,232 26,711 33,437 - 33,437
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
PPE asset additions 9,946 1,799 11,745 11,119 - 11,119
Intangible asset
additions 65 - 65 95 - 95
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Total assets 328,011 38,898 367,788 332,781 - 332,781
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
Total liabilities 207,014 20,508 227,522 200,656 - 200,656
--------------------- ------------ ------------ ------------ ------------ ------------ ------------------
(1) Group adjusted EBITDA (earnings before interest, tax,
depreciation and amortisation) is calculated as operating profit
plus depreciation, amortisation, impairment losses, loss on
disposal of property, plant and equipment, right-of-use assets and
software and exceptional items.
4. Exceptional items
Exceptional items are disclosed separately in the financial
statements where the Directors consider it necessary to do so to
provide further understanding of the financial performance of the
Group. They are material items or expenses that have been shown
separately due to, in the Directors judgement, their significance,
one-off nature or amount:
Six months Six months
ended ended
31 March 31 March
2023 2022
Unaudited Unaudited
GBP'000 GBP'000
------------------------------- ----------- -----------
Bowling revenue VAT rebate(1) 192 5,792
Administrative expenses(2) (2) (151)
Acquisition fees(3) (469) -
Contingent consideration(4) (699) -
------------------------------- ----------- -----------
Exceptional items before tax (978) 5,641
Tax charge (42) (1,079)
Exceptional items after tax (1,020) 4,562
-------------------------------- ----------- -----------
(1) During the prior year, HMRC conducted a review of its policy
position on the reduced rate of VAT for leisure and hospitality and
the extent to which it applies to bowling. Following its review,
HMRC now accepts that leisure bowling should fall within the scope
of the temporary reduced rate of VAT for leisure and hospitality,
as a similar activity to those listed in Group 16 of schedule 7A of
the VAT Act 1994. As a result, the Group made a retrospective claim
for overpaid output VAT for the period 15 July 2020 to 30 September
2021 relating to package sales totalling GBP192,000 (31 March 2022
and 30 September 2022: GBP5,792,000 relating to leisure bowling),
included within bowling revenue.
(2) Expenses associated with the VAT rebate, relating to
additional turnover rent, profit share due to landlords and also
professional fees, which are included within administrative
expenses.
(3) Legal and professional fees relating to the acquisition of
HLD Investments Inc. (operating as YYC Bowling &
Entertainment), Mountain View Bowl Inc and Wong and Lewis
Investments Inc. (operating as Let's Bowl).
(4) Contingent consideration of GBP620,000 in administrative
expenses and GBP79,000 of interest expense in relation to the
acquisition of Teaquinn in May 2022.
5. Finance income and expenses
Six months
Six months ended
ended 31 March
31 March 2023 2022
Unaudited Unaudited
GBP'000 GBP'000
-------------------------------------------------- -------------- ----------
Interest on bank deposits 497 -
--------------------------------------------------- -------------- ----------
Finance income 497 -
--------------------------------------------------- -------------- ----------
Interest on bank borrowings 113 102
Unwinding of discount on provisions 100 23
Unwinding of discount on contingent consideration
(note 4) 79 -
Finance costs on lease liabilities 4,741 4,054
--------------------------------------------------- -------------- ----------
Finance expense 5,033 4,179
--------------------------------------------------- -------------- ----------
6. Taxation
Six months
ended Six months
31 March ended
2023 31 March 2022
Unaudited Unaudited
GBP'000 GBP'000
--------------------------------------- ------------ ----------------
The tax expense is as follows:
- UK Corporation tax 3,901 4,311
- Foreign tax suffered 622 -
Total current tax 4,523 4,311
Deferred tax:
Origination and reversal of
temporary differences 1,238 2,101
Effects of changes in tax rates 50 -
---------------------------------------- ------------ ----------------
Total deferred tax 1,288 2,101
---------------------------------------- ------------ ----------------
Total tax expense 5,811 6,412
---------------------------------------- ------------ ----------------
Factors affecting tax charge:
The income tax expense was recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year applied to the profit before tax
for the half year ended 31 March 2023.
Deferred tax
At Budget March 2021, the government confirmed that the
corporation tax main rate would remain at 19 per cent and increase
to 25 per cent from 1 April 2023. As such, the rate used to
calculate the deferred tax balances as at 31 March 2023 and 30
September 2022 has increased from 19 per cent to a blended rate up
to 25 per cent depending on when the deferred tax balance will be
released.
7. Trade and other receivables
Six months
Six months ended Year ended
ended 31 March 30 September
31 March 2023 2022 2022
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------ -------------- ---------- -------------
Trade receivables 1,498 577 836
Other receivables 140 7,399 245
Prepayments 4,260 2,498 4,049
------------------ -------------- ---------- -------------
5,898 10,474 5,130
------------------ -------------- ---------- -------------
Trade receivables have an ECL against them that is immaterial.
There were no overdue receivables at the end of any period.
As at 31 March 2022, other receivables included GBP7,292,000 (31
March 2023 and 30 September 2022: GBPnil) of previously overpaid
VAT due from HMRC following its review of its policy position on
the reduced rate of VAT for hospitality and tourism. (See note
4).
8. Trade and other payables
Six months
Six months ended Year ended
ended 31 March 30 September
31 March 2023 2022 2022
Current Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------- -------------- ---------- -------------
Trade payables 4,593 3,364 5,306
Other payables 2,509 1,977 1,310
Accruals and deferred income 12,768 13,458 17,000
Taxation and social security 6,114 2,974 5,065
----------------------------- -------------- ---------- -------------
25,984 21,773 28,681
----------------------------- -------------- ---------- -------------
Six months
Six months ended Year ended
ended 31 March 30 September
31 March 2023 2022 2022
Non-current Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------- -------------- ---------- -------------
Other payables 3,866 516 3,000
--------------- -------------- ---------- -------------
Accruals and deferred income includes a staff bonus accrual of
GBP2,485,000 (31 March 2022: GBP5,703,000, 30 September 2022:
GBP7,758,000). Deferred income includes GBP1,129,000 (31 March
2022: GBP893,000, 30 September 2022: GBP983,000) of customer
deposits received in advance and GBP1,096,000 (31 March 2022:
GBPnil, 30 September 2022: GBP160,000) relating to bowling
equipment installations.
Non-current other payables includes GBP1,129,000 (31 March 2022:
GBPnil, 30 September 2022: GBP464,000) of contingent consideration
and GBP1,803,000 (31 March 2022: GBPnil, 30 September 2022:
GBP1,841,000) of deferred consideration in respect of the
acquisition of Teaquinn Holdings Inc.
9. Property, plant and equipment
Plant &
Long machinery,
Freehold leasehold Short leasehold Lanes and fixtures
property property property pinspotters and fittings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- ----------- --------------- ------------ ------------- --------
Cost
At 1 October 2021 - 1,240 29,663 13,310 42,157 86,370
Additions - - 8,127 5,238 8,707 22,072
Acquisition of Teaquinn
Holdings Inc. 7,061 - 872 284 237 8,454
Disposals - - (24) (796) (595) (1,415)
Effects of movement in
foreign exchange 345 - 48 14 12 419
------------------------------- --------- ----------- --------------- ------------ ------------- --------
At 30 September 2022
(audited) 7,406 1,240 38,686 18,050 50,518 115,900
Additions - - 6,543 2,616 2,586 11,745
Acquisitions (note 17) - - 77 73 30 180
Disposals - - (897) (3) (747) (1,647)
Effects of movement in
foreign exchange (612) - (136) (33) (52) (833)
------------------------------- --------- ----------- --------------- ------------ ------------- --------
At 31 March 2023 (unaudited) 6,794 1,240 44,273 20,703 52,335 125,345
------------------------------- --------- ----------- --------------- ------------ ------------- --------
Accumulated depreciation
At 1 October 2021 - 340 13,746 4,613 18,635 37,334
Depreciation charge 24 48 3,047 706 4,896 8,721
Impairment charge - - 2,088 - 447 2,535
Disposals - - (24) (785) (522) (1,331)
------------------------------- --------- ----------- --------------- ------------ ------------- --------
At 30 September 2022
(audited) 24 388 18,857 4,534 23,456 47,259
Depreciation charge 32 24 1,478 354 3,044 4,932
Disposals - - (884) (3) (680) (1,567)
Effects of movement in
foreign exchange (3) - (5) (2) (3) (13)
------------------------------- --------- ----------- --------------- ------------ ------------- --------
At 31 March 2023 (unaudited) 53 412 19,446 4,883 25,817 50,611
------------------------------- --------- ----------- --------------- ------------ ------------- --------
Net book value
At 31 March 2023 (unaudited) 6,741 828 24,827 15,820 26,518 74,734
------------------------------- --------- ----------- --------------- ------------ ------------- --------
At 30 September 2022 (audited) 7,382 852 19,829 13,516 27,062 68,641
------------------------------- --------- ----------- --------------- ------------ ------------- --------
Plant & machinery, fixtures and fittings includes GBP2,039,000 (31
March 2022: GBP3,343,000; 30 September 2022: GBP2,916,000) of assets
in the course of construction, relating to the development of new
centres.
As at 31 March 2023, outstanding capital commitments to fit out new
and refurbish existing sites and to complete the installation of
solar panels totalled GBP673,000 (31 March 2022: GBP2,351,000; 30
September 2022: GBP4,728,000).
10. Leases
Group as a lessee
The Group has lease contracts for property and amusement
machines used in its operations. The Group's obligations under its
leases are secured by the lessor's title to the leased assets. The
Group is restricted from assigning and subleasing the leased
assets. There are ten lease contracts that include variable lease
payments in the form of revenue-based rent top-ups.
The Group also has certain leases of equipment with lease terms
of 12 months or less and leases of office equipment with low value.
The Group applies the 'short-term lease' and 'lease of low-value
assets' recognition exemptions for these leases.
Set out below are the carrying amounts of right-of-use assets
recognised and the movements during the period:
Amusement
Property machines Total
GBP'000 GBP'000 GBP'000
---------------------------------------- -------- --------- --------
Cost
At 1 October 2021 148,722 8,109 156,831
Lease additions 7,805 3,462 11,267
Acquisition of Teaquinn
Holdings Inc. 11,510 - 11,510
Lease surrenders - (332) (332)
Lease modifications 5,640 - 5,640
Effects of movement in foreign exchange 583 - 583
----------------------------------------- -------- --------- --------
At 30 September 2022
(audited) 174,260 11,239 185,499
Lease additions - 2,805 2,805
Acquisitions (note 17) 3,982 - 3,982
Lease surrenders - (606) (606)
Lease modifications 3,982 - 3,982
Effects of movement in foreign exchange (1,257) - (1,257)
------------------------------------------ -------- --------- --------
At 31 March 2023 (unaudited) 180,967 13,438 194,405
------------------------------------------ -------- --------- --------
Accumulated depreciation
At 1 October 2021 19,632 4,857 24,489
Depreciation charge 9,846 2,164 12,010
Impairment charge 1,786 - 1,786
Lease surrenders - (241) (241)
------------------------------------------ -------- --------- --------
At 30 September 2022
(audited) 31,264 6,780 38,044
Depreciation charge 5,198 1,172 6,370
Lease surrenders - (572) (572)
------------------------------------------ -------- --------- --------
At 31 March 2023 (unaudited) 36,462 7,380 43,842
------------------------------------------ -------- --------- --------
Net book value
At 31 March 2023 (unaudited) 144,505 6,058 150,563
------------------------------------------ -------- --------- --------
At 30 September 2022
(audited) 142,996 4,459 147,455
------------------------------------------ -------- --------- --------
Set out below are the carrying amounts of lease liabilities and
the movements during the period:
Amusement
Property machines Total
GBP'000 GBP'000 GBP'000
------------------------------- -------- --------- --------
Lease liabilities
At 1 October 2021 168,530 5,410 173,940
Lease additions 7,805 3,462 11,267
Acquisition of Teaquinn
Holdings Inc. 11,510 - 11,510
Accretion of interest 8,354 98 8,452
Lease modifications 5,640 (157) 5,483
Payments(1) (19,873) (2,994) (22,687)
Effects of movement in foreign
exchange 584 - 584
-------------------------------- -------- --------- --------
At 30 September 2022
(audited) 182,550 5,819 188,369
Lease additions - 2,805 2,805
Acquisitions (note 17) 3,982 - 3,982
Accretion of interest 4,652 89 4,741
Lease modifications 3,982 (72) 3,910
Payments(1) (8,736) (1,510) (10,246)
Effects of movement in foreign
exchange (1,282) - (1,282)
-------------------------------- -------- --------- --------
At 31 March 2023 (unaudited) 185,148 7,131 192,279
--------------------------------- -------- --------- --------
Current 9,025 2,885 11,910
Non-current 176,123 4,246 180,369
--------------------------------- -------- --------- --------
At 31 March 2023 185,148 7,131 192,279
--------------------------------- -------- --------- --------
Current 9,027 2,530 11,557
Non-current 173,523 3,289 176,812
--------------------------------- -------- --------- --------
At 30 September 2022 182,550 5,819 188,369
--------------------------------- -------- --------- --------
(1) In FY2023, GBP34,000 (FY2022: GBP35,000) of rent payments
were part of the working capital movements in the year.
11. Goodwill and intangible assets
Customer
Goodwill Brand Trademark relationships Software Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 October 2021 75,034 3,360 798 - 2,112 81,304
Additions 70 - - - 108 178
Acquisition of Teaquinn
Holdings Inc. 90 3,888 - 314 - 4,292
------------------------------- -------- -------- --------- -------------- -------- --------
At 30 September 2022 (audited) 75,194 7,248 798 314 2,220 85,774
Additions - - - - 65 65
Acquisitions (note 17) 6,697 - - 503 - 7,200
Effects of movement in
foreign exchange (13) - - (23) - (36)
------------------------------- -------- -------- --------- -------------- -------- --------
At 31 March 2023 (unaudited) 81,878 7,248 798 794 2,285 93,003
------------------------------- -------- -------- --------- -------------- -------- --------
Accumulated amortisation
At 1 October 2021 - 1,188 366 - 1,802 3,356
Amortisation charge - 335 50 8 231 624
------------------------------- -------- -------- --------- -------------- -------- --------
At 30 September 2022 (audited) - 1,523 416 8 2,033 3,980
Amortisation charge - 284 25 12 74 395
------------------------------- -------- -------- --------- -------------- -------- --------
At 31 March 2023 (unaudited) - 1,807 441 20 2,107 4,375
------------------------------- -------- -------- --------- -------------- -------- --------
Net book value
At 31 March 2023 (unaudited) 81,878 5,441 357 774 178 88,628
------------------------------- -------- -------- --------- -------------- -------- --------
At 30 September 2022 (audited) 75,194 5,725 382 306 187 81,794
------------------------------- -------- -------- --------- -------------- -------- --------
12. Share capital
The share capital of the Group is represented by the share
capital of the Parent Company, Hollywood Bowl Group plc.
During the period, 641,567 ordinary shares of GBP0.01 each were
issued under the Group's Long Term Incentive Plan (LTIP).
31 March 2023 31 March 2022 30 September 2022
No of shares GBP'000 No of Shares GBP'000 No of shares GBP'000
------------------- ------------ ------- ------------ ------- ----------------- -------
Ordinary shares of
GBP0.01 each 171,712,357 1,717 171,059,454 1,711 171,070,790 1,711
------------------- ------------ ------- ------------ ------- ----------------- -------
During the periods ended 31 March 2022 and 30 September 2022,
428,113 ordinary shares of GBP0.01 each were issued under the
Group's LTIP scheme. In addition, during the period ended 31 March
2023, nil (31 March 2022: 158, 30 September 2022: 11,494) ordinary
shares of GBP0.01 each were issued under the Group's SAYE
scheme.
The ordinary shares are entitled to dividends.
13. Loans and borrowings
On 29 September 2021, the Group entered into a GBP25m revolving
credit facility (RCF) with Barclays Bank plc. The RCF has a
termination date of 31 December 2024.
Interest is charged on any drawn balance based on the reference
rate (SONIA), plus a margin of 1.75 per cent.
A commitment fee equal to 35 per cent of the drawn margin is
payable on the undrawn facility balance. The commitment fee rate as
at 31 March 2023 was therefore 0.6125 per cent (31 March 2022 and
30 September 2022: 0.6125 per cent).
Issue costs of GBP135,000 were paid to Barclays Bank plc on
commencement of the RCF. These costs are being amortised over the
term of the facility and are included within prepayments.
The terms of the Barclays Bank plc facility include the
following Group financial covenants:
(i) For the 7-month period ended 31 December 2021, the ratio of
total net debt to adjusted EBITDA shall not exceed
1.75:1.
(ii) For the 12-month period ending on each reference date,
commencing 31 March 2022 and each quarter thereafter, the ratio of
total net debt to adjusted EBITDA pre-IFRS 16 shall not exceed
1.75:1.
The Group operated within the covenants during the period and
the previous period.
14. Performance share-based payments - Long term employee incentive costs
The Group had the following performance share based payment
arrangements in operation during the period:
a) The Hollywood Bowl Group plc Long Term Incentive Plan
2020
b) The Hollywood Bowl Group plc Long Term Incentive Plan
2021
c) The Hollywood Bowl Group plc Long Term Incentive Plan
2022
c) The Hollywood Bowl Group plc Long Term Incentive Plan
2023
Long Term Incentive Plans
HWB Group plc operates Long Term Incentive Plans (LTIPs) for
certain key management. In accordance with IFRS 2 Share-based
payment, the values of the awards are measured at fair value at the
date of grant. The exercise price of the LTIPs is equal to the
market price of the underlying shares on the date of grant. The
fair value is determined based on the exercise price and number of
shares granted, and is written off on a straight-line basis over
the vesting period, based on management's estimate of the number of
shares that will eventually vest.
In accordance with the LTIP schemes outlined in the Group's
Remuneration Policy (Annual Report FY2022), the vesting of these
awards is conditional upon the achievement of an EPS target set at
the time of grant and measured at the end of a 3-year period ending
30 September 2022, 2023, 2024 and 2025 and the Executive Directors'
continued employment at the date of vesting. The LTIP 2022 and LTIP
2023 also have performance targets based on return on centre
invested capital, emissions ratio for Scope 1 and Scope 2 and team
member development.
During the six months ended 31 March 2023, 486,515 (31 March
2022:463,436, 30 September 2022:463,436) share awards were granted
under the LTIP.
For the six months ended 31 March 2023, the Group has recognised
GBP568,286 of performance share-based payment expense in the profit
or loss account (31 March 2022: GBP399,275 and 30 September 2022:
GBP939,812).
The LTIP shares are dilutive for the purposes of calculating
diluted earnings per share.
15. Principal Risks and Uncertainties
The Directors have reconsidered the principal risks and
uncertainties of the Group and have determined that those reported
in the Annual Report for the year ended 30 September 2022 remain
relevant for the remaining half of the financial year. These risks
are summarised below, and how the Group seeks to mitigate these
risks is set out on pages 69 to 73 of the Annual Report and
Accounts 2022, which can be found at www.hollywoodbowlgroup.com
.
In summary, these include:
-- The economic condition in the UK - results in a decline in
GDP, consumer spending, a fall in revenue and inflation pressure
impacting the Group's strategy
-- Dependency on the performance of IT systems - reducing the
ability of the Group to take bookings and resulting in loss of
revenue
-- Delivery of products from third party suppliers which are key
to the customer experience - impacting on the overall offer to the
customer
-- Retention of key team members - a reduction in our talent
pool, as well as failure to maintain staff engagement, retention of
key team in a tightening labour market
-- Data security and protection - impacting on customer information and potential fines
-- Competitive environment for new centres resulting in less new Group centre openings
-- Climate change
-- Breach of covenants
-- Compliance with regulatory requirements
-- Breach of laws and regulations
16. Related Party Transactions
31 March 2023 and 31 March 2022
There were no related party transactions during either
period.
17. Acquisition of HLD Investments Inc. (operating as YYC
Bowling & Entertainment), Mountain View Bowl Inc and Wong and
Lewis Investments Inc. (operating as Let's Bowl)
On 15 February 2023, the Group acquired 100% of the issued share
capital and voting rights of HLD Investments Inc. (operating as YYC
Bowling & Entertainment), Mountain View Bowl Inc and Wong and
Lewis Investments Inc. (operating as Let's Bowl), based in Canada.
All three businesses are operators of ten-pin bowling centres. The
purpose of the acquisition was to grow the Group's core ten-pin
bowling business in the region.
HLD Investments Inc. (operating as YYC Bowling &
Entertainment), Mountain View Bowl Inc and Wong and Lewis
Investments Inc. (operating as Let's Bowl) are consolidated in
Hollywood Bowl Group plc's interim financial statements with effect
from the completion of the acquisition on 15 February 2023.
The details of the business combination are as follows (stated
at acquisition date fair values):
GBP'000
----------------------------------------------- --------
Fair value of consideration transferred
Amount settled in cash 7,574
----------------------------------------------- --------
Recognised amounts of identifiable net assets
Property, plant and equipment 180
Right-of-use assets 3,982
Intangible assets 503
Inventories 65
Trade and other receivables 204
Cash and cash equivalents 320
Current tax liabilities -
Trade and other payables (255)
Lease liabilities (3,982)
Deferred tax liabilities (140)
----------------------------------------------- --------
Identifiable net assets 877
----------------------------------------------- --------
Goodwill arising on acquisition 6,697
----------------------------------------------- --------
Consideration for equity settled in cash 7,574
Cash and cash equivalents acquired (320)
----------------------------------------------- --------
Net cash outflow on acquisition 7,254
----------------------------------------------- --------
Acquisition costs paid charged to expenses 453
----------------------------------------------- --------
Net cash paid in relation to the acquisition 7,707
----------------------------------------------- --------
Acquisition related costs of GBP453,000 are not included as part
of the consideration transferred and have been recognised as an
expense in the consolidated income statement within administrative
expenses.
The fair value of the identifiable intangible assets acquired
includes GBP503,000 in relation to customer relationships. The
customer relationships have been valued using the multi-period
excess earnings method.
The fair value of right-of-use assets and lease liabilities were
measured as the present value of the remaining lease payments, in
accordance with IFRS 16.
The fair value and gross contractual amounts receivable of trade
and other receivables acquired as part of the business combination
amounted to GBP204,000. At the acquisition date the Group's best
estimate of the contractual cash flows expected not to be collected
amounted to GBPnil.
In the period since acquisition to 31 March 2023, the Group
recognised GBP889,000 of revenue and GBP481,000 of profit before
tax in relation to the acquired business. Had the acquisition
occurred on 1 October 2022, the contribution to the Group's revenue
would have been GBP3,340,000 and the contribution to the Group's
profit before tax for the period would have been GBP1,811,000.
Responsibility Statement
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting'.
-- The interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
entity during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
This responsibility statement was approved by the Board on 30
May 2023 and is signed on its behalf by:
Stephen Burns Laurence Keen
CEO CFO
30 May 2023 30 May 2023
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR DZGZKRVRGFZG
(END) Dow Jones Newswires
May 30, 2023 02:00 ET (06:00 GMT)
Hollywood Bowl (LSE:BOWL)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Hollywood Bowl (LSE:BOWL)
Gráfica de Acción Histórica
De May 2023 a May 2024
