TIDMTEG
RNS Number : 3727M
Ten Entertainment Group PLC
21 January 2021
21 January 2021
Ten Entertainment Group plc
Full-Year Trading Update
"Strong growth potential, well positioned to take advantage of
tailwinds on reopening"
Ten Entertainment Group plc ("TEG" or "the Group"), a leading UK
based operator of 46 family entertainment centres, today announces
a trading update for the 52 weeks to 27 December 2020.
-- Liquidity extended significantly into 2022 with new GBP14m
financing facility and revised covenants
-- Highly experienced leadership team with Graham Blackwell today confirmed as permanent CEO
-- Exceptional trading performance pre-lockdown with 9.6%
like-for-like growth in first 11 weeks
-- Significant progress in digital capability with H2 online
bookings growing to over 70% of sales
-- Expect a rapid return to cash generation as high-margin model
benefits from reduced market capacity
-- Market-leading and well-invested family entertainment brand
poised to benefit from pent-up demand
Trading
Pre Covid Full Lockdown Reopening Retightening
------------------ -------
YOY % change Jan Feb Mar Apr - Aug Sep Oct Nov Dec Total
Jul
------ ------ ------- -------- ------- ------- ------- ------- ------- -------
Total Sales +10.6 +20.3 (40.1) (100.0) (64.1) (26.4) (41.0) (89.7) (85.7) (56.9)
------ ------ ------- -------- ------- ------- ------- ------- ------- -------
Like-for-like(1) +7.5 +16.7 (24.9) n/a (18.0) (26.0) (39.5) (62.1) (64.3) (17.4)
------ ------ ------- -------- ------- ------- ------- ------- ------- -------
Pre Covid trading was strong, delivering +12.7% total sales
growth and +9.6% like-for-like sales growth in the first 11 weeks
of the year before the Lockdown continuing the business's strong
momentum of 8 consecutive years of like-for-like growth. A
particularly strong February with well executed half-term plans
delivered like-for-like sales growth of +16.7%.
Over the course of the year, our centres were closed for 49% of
the available time, with a full national Lockdown from late March
until mid-August and a further English and Scottish Lockdown in
November.
Reopening in mid-August was encouraging, with August and
September delivering 77% of last year's sales despite operating at
only 50% capacity. Initial consumer appeal, as the country exited
Lockdown, demonstrated good pent-up demand for our family
entertainment centres. Our market leading Covid security measures,
including a rigorous cleaning regime and a food and drink ordering
app for table service, ensured that our customers felt safe to
return. Further investments have now been made in lane dividers at
all sites which means that our business can now safely operate 100%
of available lanes.
However, as the regulatory landscape continued to evolve and
tighten there was a significant impact on consumer demand. The
introduction of curfews; Rule of Six; complex constraints governing
alcohol sales; and most significantly a ban on household mixing
created considerable consumer confusion and impacted on our ability
to run our centres profitably in the final quarter of the year.
Total sales for FY20 were GBP36.3m which is (56.9%) down on FY19
and (17.4%) down on a like-for-like basis adjusting for enforced
site closure periods. Unsurprisingly, with the significant
disruption which has impacted all but three months of 2020, the
Group expects to report a loss for FY20.
The Board are satisfied that consumer demand for family
entertainment remains strong and the underlying fundamentals of the
business model remain in place. This is a highly cash generative
model that typically generates 75% of EBITDA into free cash flow.
We are confident that as restrictions are eased, growth will return
as consumers emerge from a year of Lockdowns and restrictions.
Liquidity
In March the Board acted swiftly to secure an additional GBP5m
of equity funding and to significantly reduce the monthly cash burn
to GBP1.4m per month. This allowed the business to close the year
with GBP12.4m of liquidity headroom, enough to continue closed for
at least another 8 months.
Cash conservation measures remain in place, with full
utilisation of Government support packages where applicable and
strong support from suppliers and landlords meaning that the cash
burn rate is expected to remain at between GBP1.4-1.6m per month
while fully closed.
To further strengthen the liquidity, the Group is pleased to
announce today that it has agreed a further GBP14m term loan with
RBS under the Government's CLBILS scheme and a covenant reset of
the existing GBP25m RCF facility. This assures liquidity well into
2022 should the Lockdown continue. The ongoing support provided by
RBS throughout this time has been very welcome, and this additional
strength to the balance sheet will mean that the business will be
ready to reopen and return to growth as the Lockdown eases.
Leadership
The Group is pleased to confirm the appointment of Graham
Blackwell as CEO following a successful period as interim. His 30
years' experience in the sector and operational acumen is second to
none and has been extremely valuable during this challenging time.
Graham's expertise in his role as Chief Commercial Officer has been
instrumental in gaining the support of our supplier base and
minimising our cash burn through 2020. The Board are confident that
he is the best person to lead the business back to growth.
Nick Basing will return to his Non-Executive Chairman role from
1(st) April 2021 continuing to provide his expert leadership in
guiding the Board and the executive team as they return this strong
business back to its growth trajectory.
Outlook
Our underlying business model remains highly attractive and
strongly cash generative with fully modernised sites, and a
long-standing track record of organic growth and successful
acquisition investment.
Once the national position has eased, we are confident that
customers will be eager to return to experience again our great
value family entertainment offer. The reduced market capacity from
the closure of casual dining and leisure businesses is likely to be
favourable to our business as Lockdown eases and pent-up demand is
released.
TEG plans to announce its full-year results at the end of March
2021. Since there is currently little clarity in the trading
visibility the Group continues to withhold financial guidance.
Nick Basing, Interim Executive Chairman, commented:
"Our leadership team have ensured that the business has been
maintained in first-class shape for when we are able to reopen
fully. We have used this extraordinarily challenging year to
strengthen our underlying business model, and I'm delighted to
confirm Graham Blackwell as CEO who as an executive is second to
none. The relevance of our great value family entertainment
proposition should ensure a rapid return to our trajectory of
sustained growth."
Graham Blackwell, Chief Executive Officer, commented:
"We expect there to be significant pent-up demand when our
business reopens. Our highly popular competitive socialising model,
operating in safe, spacious and well-invested centres, will be
extremely attractive to people in a post vaccine environment. We
have secured strong liquidity headroom well into 2022 and
anticipate a rapid return to profitability and previous sales
levels once the Government eases trading restrictions."
Enquiries:
Ten Entertainment Group plc via Instinctif
Graham Blackwell, Chief Executive Partners
Officer
Antony Smith, Chief Financial
Officer
Instinctif Partners Tel: 020 7457
Matthew Smallwood 2020
Jack Devoy
About Ten Entertainment Group plc
The Group is a market leading family entertainment business in
the UK market with a total of 46 entertainment centres anchored on
Tenpin Bowling and trading under the Tenpin brand with
approximately 1,100 bowling lanes across the estate. The Group also
has a variety of entertainment offerings, such as amusement
machines, table-tennis, soft play, escape rooms, laser games and
pool tables, plus food and beverages.
(1) Like-for-like sales are a measure of sales change adjusted
for new sites, divested sites, and temporary site closures over a
comparable trading period.
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