Ten Entertainment - Half-Year Results 26 weeks ended 2 July 2023
20/09/2023 07:00
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RNS Number : 9962M Ten Entertainment Group PLC 20 September 2023
20 September 2023
Ten Entertainment Group plc
Half-Year Results 26 weeks ended 2 July 2023
Proven strategy driving sustainable growth in sales, profit and cash
Ten Entertainment Group plc ("Ten Entertainment" or "The Group"), a leading UK
based operator of 51 bowling and family entertainment centres, today announces
its half-year results for the 26 weeks to 2 July 2023.
26 weeks to 2 July 2023 26 weeks to Movement
(H1 23) 26 June 2022
(H1 22)
Total sales £65.3m £63.2m +3.3%
Like-for-like sales growth vs prior year(1) 1.6% 19.0%
Like-for-like sales growth vs 2019 baseline(2) 46.3% 46.0%
Group adjusted EBITDA(3) £28.5m £28.8m (1.0%)
Group adjusted profit before tax(4) £15.8m £15.7m +0.6%
Exceptional items - £4.6m (£4.6m)
Profit after tax £12.3m £18.3m (32.8%)
Bank net cash £5.1m £0.7m +£4.4m
Interim dividend per share 3.5p 3.0p +16.7%
Value for money underpins resilient sales growth
· +3.3% total sales growth
· +1.6% like-for-like sales growth driven by increased footfall
· Bowling prices still frozen at 2019 levels to maintain attractive
proposition
· A strong summer brings year to date like-for-like sales growth to
+4.7%
Excellent progress in strategic investment programme
· Three new openings so far in 2023 bringing total centres up to 51
· At least one more new centre to open in 2023 with a strong
pipeline for 2024
· Over £6m invested in seven refurbishments and core bowling
product to maintain best-invested UK operator status
· Volume growth in all major activities and over 6.5 million
bowling games played in H1 23
A profitable outlook with the worst of the cost pressures behind us
· Group adjusted PBT of £15.8m, ahead of last year despite lapping
£2m of one-off benefits from 2022
· Operating cost inflation limited to 6.0% as a function of tight
cost control and long-term supplier relationships
· Energy costs now hedged to September 2026
· Confident in the outlook despite challenging macro market
conditions
High-quality customer experience continues to drive sales momentum
Sales of £65.3m, +3.3% ahead of H1 22 demonstrates the continued progress of
the business. Overall, the first half delivered like-for-like sales growth of
+1.6% against a robust baseline in H1 22. Since 2 July, the performance over
the summer has been excellent with like-for-like sales growth of +12.8% versus
last year bringing the year-to-date like-for-like growth to +4.7% up to 10
September. Our value-for-money entertainment model continues to deliver for
our customers. A unique blend of high-quality centres and attention to detail
enables us to continue our growth.
Strategic progress in all areas
We are extremely proud of the three new bowling centres we have welcomed to
the Group in 2023, taking our total number of centres to 51. We now estimate
that 13 million people live within a Tenpin catchment area. Crewe opened in
February on the site of a former bowling centre. Crewe now offers escape
rooms, soft play, laser tag and 25 lanes of high-quality bowling with
state-of-the-art lighting technology. Since 2 July we have also opened in
central Milton Keynes on the site of a former Staples and we have transformed
the former Toys'R'Us in Dundee into the city's go-to leisure destination. Each
of these new centres delivers the best bowling experience available anywhere
in the UK, and we have been rewarded with strong customer demand and excellent
feedback.
We have invested in seven full-scale refurbishments in H1 which have similarly
transformed and enhanced the customer experience, expanding the range of
activities available and improving the atmosphere, service and entertainment
experience. Our model is simple: the best quality bowling experience anywhere
in the UK at the best value for money, supplemented by a wide variety of
additional leisure activities. It is a winning formula that continues to
deliver results.
Operational focus to ensure profitable growth
We remain committed to our value-for-money approach to hold bowling prices at
2019 levels in order to maintain our loyal customer base. Sales growth
continues to be delivered through increased footfall rather than through
price. Total footfall has grown by +4.4% in the first half as a function of
new centres, our improved product offering from refurbishments and our strong
digital communications strategy.
Strict operational discipline and control is essential in a cost inflationary
environment where we are holding consumer pricing. Total operational cost
inflation in the first half was 6.0%, well below the headline macroeconomic
levels but still challenging. Continued footfall growth allows site
operational efficiencies to be delivered. Long-term supplier relationships,
including most leases being capped and collared to minimise inflation, helps
reduce the cost of inflation. We remain confident that our operational
expertise insulates the business from the worst impacts of inflation.
The business more than matched H1 22 Group adjusted PBT delivering £15.8m in
H1 23, an increase of £0.1m. However, during H1 22 the business benefited
from £1.0m of additional sales from the tail end of the Government's reduced
rate of VAT on hospitality and £1.0m of business rates relief as the final
element of support post-Covid. Absent these one-off items, the comparable PBT
for H1 22 would have been £13.7m and this year's £15.8m represents +15.3%
growth against that.
The Group is today announcing an interim dividend of 3.5p per share to be paid
in October, an increase of 16.7% compared to last year, reflecting the
continued strong and profitable growth in the business.
Outlook
An ongoing focus on refurbishment, customer service and digital communications
gives us confidence that we can continue to deliver like-for-like sales growth
from the existing estate through addition of new activities and focus on the
core entertainment experience.
Cost inflation remains manageable, and we expect a slightly lower than the UK
headline rate as a function of our long-term supplier strategy. We have
secured energy cost security at sustainable levels beyond our current contract
out to the end of September 2026. These factors give us the ability to drive
modest profit growth from our underlying like-for-like sales growth.
We are delighted with the quality and initial performance of our three new
centres and look forward to adding our city-centre development in Sheffield by
the end of the year. We have a good pipeline and anticipate adding at least
four more new centres during 2024, with runway for further expansion within
the UK. This pipeline forms the platform for significant profit progression.
The Group's £25m RCF facility was due to expire in April 2024 and we are
pleased to announce that we have refinanced this facility with RBS for a
further three years at an increased level of £30m. Management expects to end
the year with a modest cash positive position. This renewed facility supports
the clear growth strategy while offering protection against any potential
downturn or providing headroom for accelerated investment opportunities as
they arise.
FY23 is progressing well. Year to date like-for-like sales to 10 September are
+4.7% which is at the upper range of our full year expectations and management
remain confident of delivering full year expectations.
Graham Blackwell, Chief Executive Officer, commented:
"We have delivered like-for-like sales growth in every reporting period since
we reopened in May 2021 and have converted that into growing profitability.
The fact that we can continue to deliver these results is testament to the
quality of our product offering and the hard work of our teams throughout the
UK.
Our business continues to increase in scale and is in better shape than ever.
We had already achieved 2019's full year sales by August with acceleration of
like-for-like sales over the summer and our profit for the first half of this
year is greater than our total 2019 full year profit.
We will continue to focus on delivering value for money for our customers,
with best-in-class bowling and entertainment across each of our 51 bowling
centres."
Enquiries:
Ten Entertainment Group via Instinctif Partners
plc
Graham Blackwell Chief Executive Officer
Antony Smith Chief Financial Officer
and Company Secretary
Instinctif Partners Tel: 020 7457 2020
Matthew Smallwood
Olga Bate
There will be a presentation today at 9.30 am to analysts via a Webcast. The
supporting slides and audio will also be available on the Group's website,
www.tegplc.co.uk, later in the day.
Forward-looking statements
This announcement contains forward-looking statements regarding the Group.
These forward-looking statements are based on current information and
expectations and are subject to risks and uncertainties, including market
conditions and other factors outside of the Group's control. Readers are
cautioned not to place undue reliance on the forward-looking statements
contained herein, which speak only as of the date hereof. The Group undertakes
no obligations to publicly update any forward-looking statement contained in
this release, whether as a result of new information, future developments or
otherwise, except as may be required by law and regulation.
1 Like-for-like sales growth compared to 2022 figures using only
centres that were open and trading in both periods. Comparative like-for-like
weeks for 2022 are the 26 weeks to 3 July 2022.
2 Like-for-like sales growth compared to 2019 figures using only
centres that were open and trading in both periods. Comparative like-for-like
weeks for 2019 are the 26 weeks to 7 July 2019.
3 Group adjusted EBITDA consists of earnings before interest,
taxation, depreciation, amortisation costs, exceptional items, impairment
reversal, loss on joint venture and profit or loss on disposal of assets.
4 These are non-IFRS measures used by the Group in understanding its
underlying earnings. Group adjusted profit before tax is defined as profit
before tax adjusted for exceptional items and impairment reversals.
Like-for-like sales compare sales while the business is trading and adjusted
for new centres.
5 EBITDA less property rental costs for H1 23 and H1 22 is the
Group adjusted EBITDA less the cash rent paid for rental of the long-term
leasehold properties which are held on the balance sheet as Right of Use
Property assets. For 2019 this measure is the IAS17 EBITDA as reported in
FY19 when the Group was not reporting on an IFRS16 basis.
Chief Executive's Statement and Operating Review
This is the fifth consecutive statement of ongoing like-for-like sales growth,
and our sales are now 57.6% higher than they were in H1 19 and 46.3% higher
than H1 19 on a like-for-like basis. Our proven strategy for continued growth
is a relatively simple one. We operate high-quality entertainment centres,
anchored on tenpin bowling, offering a wide variety of activities and food and
drink for the whole family to enjoy. We do this at a fair and affordable price
that ensures that our customers leave feeling happy that they have received
value for money. We build and develop new opportunities to expand the estate
enabling us to extend our reach to a wider range of customers.
This formula for growth has delivered another period of strong results. Group
adjusted PBT of £15.8m is ahead of H1 22 without the benefit of £2.0m of
one-offs last year. Sales growth has continued at +3.3% in the period, despite
the strong comparative. Our investment programme has transformed seven more
centres and delivered three new centres taking our total to 51. We have
delivered this while maintaining a cash positive position on the balance sheet
and are delighted to announce an increased interim dividend of 3.5p per share
to be paid in October.
Value-for-money entertainment experience drives consistent growth
Bowling is the perfect anchor product for our centres. It has broad appeal
across ages and abilities and is a social entertainment activity that has
stood the test of time. Its longevity and familiarity make it an attractive
place for our customers to guarantee that they can have fun together. The high
quality of our centres ensures that new customers are delighted when they
rediscover bowling at Tenpin and this encourages them to return and enjoy our
other activities.
42.3% of our sales in H1 23 have come from bowling, with 30.0% from other
games and activities and the balance from food and drink. We firmly believe
that keeping our bowling product at excellent value for money drives our
success. The average realised price of a game of bowling in H1 23 was below
£5 at £4.90 including VAT which offers the very best value for money in the
UK market. This is a modest reduction of (5.5%) compared to last year,
principally because of customers trading more into deals as they seek value in
these straitened times.
We have applied inflation to our food and drink prices at an average of +3.3%.
We have taken care to keep our prices competitive and to restrict the
increases to cover our costs. As a result, our increases have been far less
than the headline rate of inflation and help to maintain value for our
customers.
Revenue per head in H1 23 was £15.73 compared to £15.90 in H1 22,
essentially showing that customers are not choosing or able to spend more on
an individual visit. However, by keeping our prices and offer consistent and
stable we have been able to drive repeat visits and attract new customers to
our centres. The result is a +4.4% increase in footfall driving our 3.3%
revenue growth.
The table below shows a consistent track record of delivering like-for-like
sales growth.
6 weeks to 26 weeks to 26 weeks to 27 weeks to 26 weeks to 10 weeks to
27 June 2021 26 Dec 2021 26 June 2022 1 Jan 2023 2 July 2023 10 Sept 2023
Total Sales £10.6m £56.9m £63.2m £63.4m £65.3m not reported
LFL Sales vs 19 +22.5% +30.3% +46.0% +34.2% +46.3% +57.2%
LFL Sales vs 21/22 - - +19.0% +3.2% +1.6% +12.8%
Strategic investment underpins profitability
Our centres are some of the best equipped and most modern in the UK. During
the first half of the year, we invested £1.0m in the core bowling product in
nine of our centres, to ensure that pinsetters, ball returns, lanes and
bumpers are optimised to deliver the best bowling experience.
In addition, we undertook seven full scale refurbishments with an investment
totalling £5.2m. These refurbishments transformed existing centres into
modern and exciting environments for our customers. We have added activities
such as laser tag and soft play; enhanced the ambience, sound and lighting;
upgraded the bar area and kitchens; introduced escape rooms; and refreshed the
external building. These refurbishments are an essential part of growing our
existing customer base and increasing frequency of visit, and we consistently
generate sales uplifts sufficient to deliver a return on investment of over
30%.
Combined with an investment in high-quality centres is a highly focused
digital strategy. 61% of bowling is booked online and we now have 1.2m
contactable customers in our database. There is a growing cohort of our
database that bowl with us on more than six occasions per year and our loyalty
app helps to reward our customers with promotions, vouchers and free games to
encourage repeat visits. We continue to develop our communications strategy
that allows us to target the right customers with the right deals, and this
has helped to significantly grow our digital reach.
Estate expansion accelerates
£3.2m of sales has been delivered in H1 23 from our expanding estate, more
than any other six month period since 2017. This contributed +5.1% of sales
growth delivering against our strategy of UK-focused expansion where there is
clear market capacity.
We opened a new centre in Crewe in February on the site of a former bowling
centre that has remained empty for several years. A £2.8m investment in the
state-of-the-art bowling centre includes 25 lanes, soft play, laser tag,
escape rooms and much more. We have developed our lane lighting and lane
approach area to be the best in the UK, immersing our customers in the bowling
experience. We have been delighted by how well the centre has performed
already.
In July we opened a new centre in Milton Keynes on the site of a former
Staples. A 16-lane city centre site with free parking and laser tag, karaoke,
escape rooms and a fantastic atmosphere. We have already been delighted with
the early trading. We understand our markets well and this is a great example
of a large city that does not have enough bowling lanes for the population. By
creating a new and exciting space for customers, we can generate significant
demand even with local competition.
In August we opened our 51st centre in Dundee on the site of a former
Toys'R'Us. This is a large centre, with 29 lanes and everything the Tenpin
estate has to offer. Unlike Milton Keynes, despite its large population, the
leisure offering in Dundee is somewhat limited, and the initial demand and
interest in our newly opened centre has been very strong. The opening weekend
at the end of August was our most successful opening in the Group's history.
These are three different examples of how the Tenpin offer can stretch and
generate new interest in an expanding bowling market. We expect to open a
multi-storey 20-lane centre in the heart of Sheffield before the end of the
year. This will take our new centres in 2023 to four and our year-end total to
52 centres. We are confident that our new centres will deliver returns on
investment in excess of our 30% target.
The pipeline for 2024 looks equally strong. We have a combination of
repurposed retail sites and bespoke leisure developments which will help us
continue to extend our UK coverage. We are confident of at least four openings
next year.
Responsible business
We continue to invest in the long-term sustainability of the business. As well
as investing in upgrading our heating and cooling systems for improved
efficiency, we are in the process of installing eight solar arrays on the
roofs of our centres which will help reduce our carbon footprint and manage
our exposure to volatility in the energy markets. We anticipate that each
solar array will generate between 25-35% of a centre's energy requirement,
with the balance of energy supplied through our fully renewable energy tariff
from our supplier.
We have secured our energy needs from fully renewable sources until September
2026, extending the contract two years beyond its current end date next year.
We have continued to use a 100% renewable tariff in order to minimise our
CO(2) footprint. Our current energy remains mostly fixed at 2020 prices and
continues to September 2024. Our new contract is more expensive than this
tariff, however, still only represents a 50% increase on those very low
levels. From October 2024 we will experience an annualised £1.8m increase in
the cost of our energy to the business. This increase is far less than may
have been expected and is affordable and sustainable within our current
business model.
Another critical focus area is waste reduction. We have adopted a clear
strategy of Reduce, Reuse and Recycle. We have taken steps to remove single
use plastics and packaging from our supply of food and drink. We have
introduced reusable food serving equipment such as trays, crockery and cutlery
and we have increased our recycling facilities throughout the business with a
target of significantly improving our recycling rate in 2023.
Delivering for our people
Our people are at the heart of our customer experience, and we continue to
develop, reward and nurture our teams. Each of our new centres has been
staffed by managers appointed from within. Our training programme continues to
develop leaders of the future and we continue to reward outstanding
performance of site management and customer facing staff through a service and
profit focused bonus scheme.
Outlook
We are delighted with our first half of the year, delivering sales growth and
tightly managing our cost base. This demonstrates that even in a challenging
macroeconomic environment we can generate profitable growth. Our start to the
second half of 2023 has been strong. Like-for-like sales of +12.8% is
exceptionally good, in part reflecting a reversal of weather trends, where
July 2022 was hot and dry, July 2023 was cool and wet. But the growth also
reflects the better business we have become with a robust underlying
performance. Year to date like-for-like sales to 10 September are +4.7% which
is at the upper range of our full year expectations. We expect demand to cool
in the autumn, as it normally does, but remain confident in our targeted low
to mid-single-digit like-for-like sales growth for the full year.
Cost pressures continue, but we are confident we can continue to manage these
well. Overall, we expect that our underlying like-for-like sales growth is
more than sufficient to cover our cost base increases, with the estate growth
then delivering incremental profit to the Group. On that basis, we are
comfortable with market expectations.
Our customer experience enhancements throughout the estate are strong, and we
anticipate this will continue to drive single-digit like-for-like growth. Our
new centre pipeline is good. Next year will see the full year impact of four
new centres from 2023 as well as new openings planned on a similar scale
throughout 2024.
Our investment programme is targeted at ensuring that we continue to deliver
high returns to our shareholders while funding our growth from existing cash
flow generated in year. We have ended the first half with net cash and expect
to end the year in a similar position. We will continue to deliver
high-quality social entertainment for our broad customer base. Our winning
formula of well-invested centres delivering variety of entertainment at best
value pricing continues to lead the market.
Graham Blackwell
Chief Executive Officer
20 September 2023
Financial Review
£000 26 weeks to 2 July 2023 26 weeks to 26 June 2022 Change 26 weeks to
2023 vs 2022 29 June 2019
Revenue 65,296 63,238 2,058 41,444
Cost of goods sold (9,779) (8,865) (914) (4,999)
Gross margin 55,517 54,373 1,144 36,445
GP% 85.0% 86.0% -1.0% 87.9%
Total operating costs (20,774) (18,982) (1,792) (14,332)
Central and support overheads (6,249) (6,616) 367 (4,984)
Group adjusted EBITDA(3) 28,494 28,775 (281) 17,129
Less property rent costs (6,830) (6,269) (561) (5,909)
Group adjusted EBITDA after rental costs(5) 21,664 22,506 (842) 11,220
Add back property rental costs 6,830 6,269 561 n/a
Depreciation and interest on Right of Use Property Assets (8,697) (8,109) (588) n/a
Depreciation and amortisation (4,085) (4,368) 283 (3,520)
Loss on Joint Venture - (310) 310 -
Net bank interest 49 (274) 323 (401)
Profit/(loss) on disposal of assets 51 15 36 (57)
Amortisation of acquisition intangibles (58) (62) 4 (151)
Group adjusted profit before tax(4) 15,754 15,667 87 7,091
Reversal of impairment - 747 (747) 12
Exceptional items - 4,601 (4,601) (1,169)
Profit before tax 15,754 21,015 (5,261) 5,934
Taxation (3,453) (2,721) (732) (1,261)
Of which: taxation attributable to Group adjusted profit (3,453) (1,847) (1,606) (1,443)
Profit after tax 12,301 18,294 (5,993) 4,673
Earnings per share
Basic earnings per share 17.96 26.8p (8.84) 7.19p
Adjusted basic earnings per share 17.96 20.2p (2.24) 9.01p
Revenue and gross margin
Total revenue of £65.3m was +3.3% ahead of H1 22 (£63.2m). This £2.1m of
growth is a combination of like-for-like sales growth of 1.6%; 5.1% growth
from new centres (Harlow and Walsall opened in 2022 and Crewe in February
2023); and (3.4%) decline as a function of one-off items not repeated from H1
22. These one-off items were the reduced rate of VAT which benefited H1 22 by
£1.0m and a shift in trading weeks in the period. The first week of H1 22
included the very busy period between Christmas and New Year whereas H1 23
commenced on 2(nd) January thereby missing that trading period. The
consequence of that trading shift is around £1.2m of more sales in H1 22.
Like-for-like sales reconciliation for 2022 comparatives
£000 26 weeks to 2 July 2023 26 weeks to 26 June 2022 % change
Revenue 65,296 63,238 3.3%
Less sales from non like-for-like sites (3,216) -
Adjustment for reduced rate of VAT - (971)
Adjustment for 53rd week in 2022 - (1,153)
Like-for-like sales versus 2022 62,080 61,114 1.6%
We have maintained our strategy of offering the best value bowling pricing in
the UK. Average realised price for a game of bowling in H1 23 was £4.90, a
reduction of (5.5%) from the £5.19 it was last year. This reduction is a
function of a shift from customers into our deals which include packaged
discounted bowling and food combinations. It shows that our customers are
becoming more deal conscious in the challenging economic environment, but with
footfall growth of +4.4%, it also shows that this strategy continues to
resonate with our customers and provide sanctuary in an inflationary leisure
landscape. Average revenue per head in the half was £15.73, a reduction of
(1.1%) from the £15.90 from H1 22.
We have also included the pre-Covid 2019 comparative in the table below which
highlights the step change made since recovery from the pandemic. Since 2019,
pricing has remained unchanged, deal participation has increased and average
revenue per head has only increased by +5.7%, far below the rate of inflation.
However, our customers have rewarded us for this relentless focus on value for
money. Footfall has increased by 49.0% over the same period and the resultant
sales have increased by 57.6%.
Like-for-like sales reconciliation for 2019 comparatives
£000 26 weeks to 2 July 2023 26 weeks to 29 June 2019 % change
Revenue 65,296 41,444 57.6%
Less sales from non like-for-like sites (6,093) -
Adjustment 2019 for 53rd week impact - (974)
Like-for-like sales versus 2019 59,203 40,470 46.3%
Gross margin of £55.5m is at 85.0% of sales, a reduction of (1.0%pts) since
last year. This margin reduction is a function of our continued focus on
variety of entertainment and value for money. Our targeted increased
participation in food, drink and other activities drives some mix out of the
very high margin bowling and into lower margin but still highly profitable
categories. Our focus on keeping prices low to drive sales through footfall
growth rather than price inflation means that where we have taken price
increases in food and drink, we have elected to recover the absolute cost
increase rather than maintain a margin rate. The resultant absolute sales
increase more than compensates for modest margin erosion.
Compared to 2019, absolute gross margin has increased by +52.3% from £36.4m
to £55.5m and this additional £19.1m of gross margin is more than enough to
compensate for the inflationary pressures elsewhere in the P&L.
Costs and overheads
Total operating costs in H1 23 have grown by 9.4% to £20.8m. This increase of
(£1.8m) is driven by several elements. Labour cost inflation in the half is
around 10% which drives an increase at around (£1.0m). Other operating costs
inflation, including cleaning, consumables and repairs has had a further
inflationary impact of (£0.5m). However, this inflationary increase has been
offset by operating efficiency savings in our centres where we have focused on
reducing costs without impacting service, as well as efficiencies driven from
the strength of our contracts, has resulted in efficiency savings of £2.1m.
The new sites opened in the previous 12 months have increased operating costs
by (£1.3m) and finally, last year benefited from the last element of Covid
rates relief, which reduced last year's operating costs and thereby creating a
(£1.0m) adverse variance this year.
Central and support overheads in the first half are £0.4m lower than in H1
22. Last year we were driving our digital transformation and accelerating our
pipeline of new centres, and we had always planned to reduce our spend below
last year's peak to these reduced levels.
Property rental costs in the first half are (£0.6m) higher than last year, an
increase of 8.9%. Around a third of this is the inflationary increase which
would be expected from our leases, and the balance is a function not only of
the rent for the non like-for-like centres in Harlow, Walsall and Crewe but
also includes the pre-opening rent in Dundee and Milton Keynes. This same
increase of (£0.6m) is shown in the IFRS 16 depreciation and interest on our
Right of Use property assets.
EBITDA
Group adjusted EBITDA, after property rental costs was £21.7m in H1 23
compared to £22.5m in H1 22. This (£0.8m) reduction of (3.7%) is to be
expected given that last year benefited from £2.0m of one-off items that were
the tail end of Government Covid support: the reduced rate VAT and the
business rates relief for hospitality. Absent those elements of the
comparative, the business continued to show profit progression, and we remain
encouraged that sales growth continues to translate into profit growth.
Group adjusted profit before tax
A slight decline in EBITDA, as described above, leads to a modest improvement
in Group adjusted PBT of £0.1m to £15.8m. A lower depreciation charge in the
Group's fixed asset base, reflects the long-term nature of our recent
investments. Although our strategic investment programme has increased our
overall asset base considerably, this has largely been in long-term assets
such as building fabric, bowling equipment and infrastructure, all of which
benefits from long useful economic lives.
Further year on year profit benefits are delivered from stabilising the growth
phase losses in Houdini's and from the interest income generated from running
a net cash balance.
Financing
£000 26 weeks to 26 weeks to
2 July 2023 26 June 2022
Net bank interest 49 (216)
Amortisation of bank financing costs - (40)
Finance lease interest charges (3,625) (3,276)
Net finance costs (3,576) (3,532)
Net finance costs increased to £3.6m in H1 23 (H1 22: £3.5m) comprising the
implied interest relating to the lease liability under IFRS 16 of £3.6m (H1
22: £3.3m), £0.1m (H1 22: £0.2m) associated with our bank borrowing
facilities, offset by finance income of £0.1m (H1 22: £nil).
The finance lease interest charge of £3.6m has increased by £0.3m due to the
new leases completed since the last half, consisting of Walsall, Crewe, Milton
Keynes and Dundee.
The interest on the bank debt has decreased due to the repayment of the CLBILS
facility in July 2022 and none of the RCF facility being drawn to date. The
interest cost only consisted of the commitment fee of 0.7%.
The other finance income consisted of interest earned on the bank cash and
treasury balances maintained by the Group during H1 23.
Taxation
A tax charge of £3.5m has been recognised for H1 23 (H1 22: £2.7m) arising
on the profit before tax generated in the period. The effective tax rate of
21.9% accounts for the increase in the corporation tax rate from 19% to 25%
from April 2023.
Net debt
As at 2 July 2023 1 January Movement 26 June
£000 2023 2022
Closing cash and cash equivalents 5,137 10,086 (4,949) 7,734
Bank loans - - - (7,000)
Bank net cash 5,137 10,086 (4,949) 734
Finance leases - Machines and other (4,058) (4,291) 233 (4,556)
Finance leases - Property (202,862) (196,111) (6,751) (196,523)
Total net debt (201,783) (190,316) (11,467) (200,345)
The Group ended the first half with a net cash position of £5.1m, (£5.0m)
down on the £10.1m net cash reported at FY22. A final dividend of £4.8m was
paid in June 2023 which accounts for the main part of this reduction, with the
cash generated from profit generated in H1 all being reinvested back into the
Group's strategic investment programme.
The £25.0m RCF facility with RBS was due to expire in April 2024. This
facility was renewed on 11 September 2023 and increased to £30.0m at similar
pricing to the prior facility. None of the facility has been drawn at the time
of this announcement but the increase in facility represents the improved
financial strength of the Group and allows for it to explore opportunistic
acquisition and investment opportunities as well as to secure the Group
against future shocks.
The £6.8m increase in the property leases arose from the addition of two new
leases totalling £10.3m, accrued interest less repayments to landlords.
Cash flow
£000 26 weeks to 26 weeks to Movement
2 July 26 June
2023 2022
Cash flows from operating activities
Group adjusted EBITDA 28,494 28,775 (281)
Maintenance capital (3,058) (1,291) (1,767)
Movement in working capital (4,434) 2,812 (7,246)
Lease and taxation payments (10,214) (11,528) 1,314
Free cash flow 10,788 18,768 (7,980)
Dividends paid (4,795) - (4,795)
Cashflow available for investment and financing 5,993 18,768 (12,775)
Strategic investments:
Existing estate (5,210) (7,044) 1,834
Estate expansion (6,069) (8,749) 2,680
Exceptionals and share-based payments 337 248 89
Cash flow after investment (4,949) 3,223 (8,172)
Repayment of debt - (7,000) -
Opening cash and cash equivalents 10,086 11,511 (1,425)
Cash and cash equivalents - end of period 5,137 7,734 (2,597)
Free cashflow reduced in H1 23 due to the increased maintenance capital spend
of (£1.8m) which was a focused investment programme in the ongoing
replacement of the bowling infrastructure and a working capital outflow of
(£4.4m) compared to an inflow last year of £2.8m. The principal movements
are as follows:
· Timing, the period ended on 2 July 2023 and thus all the month
end creditor, salary and wage payments had already been made while H1 22 ended
on 26(th) June 2022 and so these were not paid out but recorded as creditors.
· Payment on account, due to the continued improvement in trading
performance, the monthly VAT payment on account was significantly increased
versus last year, leading to higher working capital outflows.
In H1 23 £5.2m has been invested in the existing estate through
refurbishments and revenue generating investments in improving the customer
experience. This is slightly lower than last year although is expected to
increase in the second half.
£6.1m was invested in estate expansion, with the building of Crewe (opened in
February 2023), Milton Keynes (opened in July 2023) and Dundee (opened in
August 2023). Overall, the activity in H1 23 has been greater but last year
included the purchase of the £5.0m freehold acquisition in June 2022.
Dividends
The Board have declared an interim dividend of 3.5p per share (H1 22 interim:
3.0p). The interim ex-dividend date is 5 October 2023, the record date 6
October 2023 and the interim dividend payment date is 27 October 2023.
Accounting standards and use of non-GAAP measures
The Group has prepared its consolidated financial statements based on
International Financial Reporting Standards for the 26 weeks ended 2 July
2023. The basis for preparation is outlined in note 2 to the financial
statements.
The Group uses certain measures that it believes provide additional useful
information on its underlying performance. These measures are applied
consistently but as they are not defined under GAAP they may not be directly
comparable with other companies' adjusted measures. The non-GAAP measures
are outlined in note 3 to the financial statements.
Going concern
Having assessed the Group's going concern position and taking the principal
risks faced by the Group 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 12 months from the date of these statements.
Accordingly, the Group continues to adopt the going concern basis in preparing
these condensed consolidated interim financial statements.
Antony Smith
Chief Financial Officer
20 September 2023
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 26 week period ended 2 July 2023
Notes 26 weeks to 2 July 2023 Unaudited 53 weeks to 1 January 2023 Audited
26 weeks to 26 June 2022 Unaudited
£000 £000 £000
Revenue 5 65,296 63,238 126,673
Cost of sales (21,208) (19,707) (40,915)
Gross profit 44,088 43,531 85,758
Administrative expenses (24,758) (24,022) (52,141)
Reversal of impairment - 747 631
Exceptional income - 4,601 7,263
Operating profit 19,330 24,857 41,511
Loss on Joint Venture - (310) (310)
Net finance costs (3,576) (3,532) (7,206)
Profit before taxation 15,754 21,015 33,995
Taxation (3,453) (2,721) (7,399)
Profit for the period and total comprehensive income attributable to owners of 12,301 18,294 26,596
the parent
Earnings per share
Basic earnings per share 6 17.96p 26.75p 38.86p
Diluted earnings per share 6 17.77p 26.62p 38.57p
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 2 July 2023
26 weeks to 2 July 2023 26 weeks to 53 weeks to
Unaudited 26 June 2022 1 January 2023 Audited
Unaudited
Notes £000 £000 £000
Assets
Non-current assets
Goodwill 7 29,740 29,740 29,740
Intangible assets 7 70 195 135
Investments in joint venture - - -
Property, plant and equipment 8 68,205 42,151 57,198
Right of use assets 9 177,538 173,009 171,651
Deferred tax asset - 4,232 -
275,553 249,327 258,724
Current assets
Inventories 1,462 1,250 1,493
Trade and other receivables 3,283 14,777 4,667
Cash and cash equivalents 5,137 7,734 10,086
Corporation tax receivable - 314 1,022
9,882 24,075 17,268
Liabilities
Current liabilities
Bank borrowings and lease liabilities 11 (9,413) (17,964) (10,448)
Corporation tax payable (1,040) - -
Trade and other payables (9,241) (10,568) (15,164)
(19,694) (28,532) (25,612)
Net current liabilities (9,812) (4,457) (8,344)
Non-current liabilities
Bank borrowings and lease liabilities 11 (197,507) (189,987) (189,954)
Deferred tax liabilities (1,247) (2,274) (1,282)
(198,754) (192,261) (191,236)
Net assets 66,987 52,609 59,144
Equity
Share capital 685 685 685
Share premium 4,844 4,844 4,844
Share based payments reserve 1,374 749 1,037
Merger reserve 6,171 6,171 6,171
Retained earnings 53,913 40,160 46,407
Total equity 66,987 52,609 59,144
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the 26 week period ended 2 July 2023
Notes 26 weeks to 2 July 2023 Unaudited 26 weeks to 26 June 2022 Unaudited 53 weeks to 1 January 2023 Audited
£000 £000 £000
Cash flows generated from operating activities
Cash generated from operations 10 24,837 31,851 61,963
Corporation tax paid (1,426) (2,878) (5,024)
Finance costs paid (3,617) (3,474) (7,013)
Net cash generated from operating activities 19,794 25,499 49,926
Cash flows used in investing activities
Acquisitions of sites by Tenpin Limited - (454) (454)
Purchase of property, plant and equipment (14,337) (16,632) (23,366)
Loan to Joint Venture (439) - (1,203)
Purchase of software (3) (13) (40)
Net cash used in investing activities (14,779) (17,099) (25,063)
Cash flows used in financing activities
Lease principal payments (5,169) (5,177) (10,233)
Dividends paid (4,795) - (2,055)
Repayment of borrowings - (7,000) (14,000)
Net cash used in financing activities (9,964) (12,177) (26,288)
Net decrease in cash and cash equivalents (4,949) (3,777) (1,425)
Cash and cash equivalents - beginning of period 10,086 11,511 11,511
Cash and cash equivalents - end of period 5,137 7,734 10,086
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 2 July 2023
Share capital Share premium Share based payment reserve Merger reserve Retained earnings
Total equity
£000 £000 £000 £000 £000
Unaudited 26 weeks to 2 July 2023
Balance at 1 January 2023 685 4,844 1,037 6,171 46,407 59,144
Share based payment charge - - 337 - - 337
Issue of shares - - - - - -
Dividends paid - - - - (4,795) (4,795)
Profit for the period and total comprehensive income attributable to owners of - - - - 12,301 12,301
the parent
Balance at 2 July 2023 685 4,844 1,374 6,171 53,913 66,987
Unaudited 26 weeks to 26 June 2022
Balance at 26 December 2021 684 4,844 498 6,171 21,866 34,063
Share based payment charge - - 251 - - 251
Issue of shares 1 - - - - 1
Profit for the period and total comprehensive income attributable to owners of - - - - 18,294 18,294
the parent
Balance at 26 June 2022 685 4,844 749 6,171 40,160 52,609
53 weeks to 1 January 2023
Balance at 26 December 2021 684 4,844 498 6,171 21,866 34,063
Share based payment charge - - 539 - - 539
Issue of shares 1 - - - - 1
Dividends paid - - - - (2,055) (2,055)
Profit for the period and total comprehensive income attributable to owners of - - - - 26,596 26,596
the parent
Balance at 1 January 2023 685 4,844 1,037 6,171 46,407 59,144
1 General information
Ten Entertainment Group plc (the "Company") is a public limited company
incorporated and domiciled in England, United Kingdom under company
registration number 10672501. The address of the registered office is Aragon
House, University Way, Cranfield Technology Park, Cranfield, MK43 0EQ.
The condensed consolidated interim financial statements for the 26 week period
ended 2 July 2023 ("interim financial statements") comprise the Company and
its subsidiaries (together referred to as the "Group"). The principal activity
of the Group comprises the operation of tenpin bowling centres.
The financial information does not constitute statutory financial statements
within the meaning of Section 434 of the Companies Act 2006. The condensed
consolidated interim financial information should be read in conjunction with
the annual financial statements of the Group for the 53 week period to 1
January 2023 which were approved by the board of directors on 21 March 2023
and have been filed with the Registrar of Companies. The report of the
auditors on those financial statements was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section
498 of the Companies Act 2006.
The interim financial statements were approved by the directors on 20
September 2023.
2 Basis of preparation
The condensed consolidated interim financial statements have been prepared in
accordance with IAS 34 "Interim financial reporting" as endorsed by the
European Union and the Disclosures and Transparency Rules of the United
Kingdom's Financial Conduct Authority, and incorporate the consolidated
results of the Company and all its subsidiaries for the 26 week period ended 2
July 2023. 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 comparative financial information is
for the 26 week period ended 26 June 2022.
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 as modified by the recognition of certain financial
assets/liabilities at fair value through profit or loss.
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 1 January 2023. A
number of other amendments to existing standards are also effective for
periods beginning on or after 2 January 2023.
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.
Going Concern
Having assessed the Group's going concern position and taking the principal
risks faced by the Group 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 12 months from the date of these statements.
Accordingly, the Group continues to adopt the going concern basis in preparing
these condensed consolidated interim financial statements.
3 Accounting estimates, judgements and non GAAP measures
The preparation of condensed consolidated interim financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from these
estimates. In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation uncertainty were
the same as those that applied to the consolidated financial statements for
the 53 week period ended 1 January 2023.
The Company has identified certain measures that it believes will assist in
the understanding of the performance of the business. The measures are not
defined under IFRS and they may not be directly comparable with other
companies adjusted measures. The non-IFRS measures are not intended to be a
substitute for an IFRS performance measure but the business has included them
as it considers them to be important comparators and key measures used within
the business for assessing performance. These condensed interim financial
statements make reference to the following non-IFRS measures:
Group adjusted EBITDA- This measurement is earnings before interest, taxation,
depreciation, amortisation, exceptional items, impairment reversals, loss on
joint venture and profit or loss on disposal of assets. This has been done to
show the underlying trading performance of the Group which these other costs
or income can distort.
Group adjusted EBITDA after rental costs - This measurement is Group adjusted
EBITDA less the cash rent paid for rental of the long-term leasehold
properties which are held on the balance sheet as Right of Use Property
assets.
26 weeks to 26 weeks to
2 July 26 June
2023 2022
Reconciliation of operating profit to Group adjusted EBITDA and Group adjusted £000 £000
EBITDA after rental costs
Group adjusted EBITDA 28,494 28,775
Rental cost (6,830) (6,269)
Group adjusted EBITDA after rental costs 21,664 22,506
Add back rental cost 6,830 6,269
Amortisation of fair valued items on acquisition (58) (62)
Amortisation of software (31) (55)
Loss on Joint Venture - (310)
Profit on disposals 51 15
Depreciation of property, plant and equipment and right-of-use assets (9,126) (9,164)
Operating profit before exceptional items 19,330 19,199
Impairment reversal - 747
Exceptional items - other - 4,601
Operating profit 19,330 24,547
Cost of goods sold and gross margin - The cost of sales as reflected in the
statement of comprehensive income consists of direct bar, food, vending,
amusements, gaming machine related costs, PDQ machine costs and staff costs.
Cost of goods sold excludes staff costs but security and machine licence costs
incurred by the centres are included. Deducting cost of goods sold from
revenue gives the gross margin. This is how cost of goods sold and gross
margin are reported by the business monthly and at centre level as labour
costs are judged as material and thus reported separately with operating
costs.
26 weeks to 26 weeks to
2 July 26 June
2023 2022
Reconciliation of costs of sales £000 £000
Cost of goods sold per the financial review (9,779) (8,865)
Site labour costs (12,064) (11,313)
Machine licence and security costs in administrative expenses 635 471
Costs of sales per the statement of comprehensive income (21,208) (19,707)
Group adjusted profit before tax - This consists of the profit before tax
adjusted for items judged as exceptional and relating to impairment reversals.
Adjusted underlying profit after tax and adjusted earnings per share - This
consists of the profit after tax adjusted for exceptional items and impairment
reversals and is used to determine the adjusted earnings per share. The
reconciliation of this number to profit after tax is included under Note 6.
Exceptional items - These items are those significant cost or income items
which management judges to be one-off in nature and are not excepted to
continue to be incurred as part of the regular trading performance of the
business. The separate reporting of these items helps to provide a better
indication of underlying performance.
26 weeks to 26 weeks to
2 July 26 June
2023 2022
Exceptional income £000 £000
Claim for reduced rate of VAT on bowling - 4,375
Release of provision for updated HMRC VAT guidance - 226
Total exceptional income - 4,601
Like-for-like sales - these are a measure of growth of sales adjusted for new
or divested sites over a comparable trading period.
Bank net debt - This measure is made up of bank borrowings less cash and cash
equivalents as per the statement of financial position.
Free cash flow - This is cash generated from operations less maintenance
capital as reflected in the financial review, finance lease payments, taxation
payments, loans to Joint Ventures and non-cash share based payments.
26 weeks to 26 weeks to
2 July 26 June
2023 2022
Reconciliation of free cash flow £000 £000
Cash generated from operations 24,837 31,851
Maintenance capital (3,058) (1,307)
Finance lease and taxation payments (10,215) (11,528)
Loan to Joint venture (439) -
Non-cash share-based payments charge (337) (248)
Free cash flow per the financial review 10,788 18,768
Maintenance capital, existing estate, estate expansion and loans to Joint
venture outflows - This is cash used in investing activities as reconciled
below:
26 weeks to 26 weeks to
2 July 26 June
2023 2022
Reconciliation of capital investment outflows to cash used in investing £000 £000
activities
Cash used in investing activities (14,779) (17,100)
Analysed as follows:
Maintenance capital (3,058) (1,307)
Existing estate (5,210) (9,562)
Estate expansion (6,069) (6,231)
Loan to Joint venture and purchase of software (442) -
Cash outflows for capital projects (14,779) (17,100)
4 Performance share plan awards
The Company operates a Performance Share Plan (PSP) for its executive
directors. In accordance with IFRS 2 Share Based Payments, the value of the
awards is measured at fair value at the date of the grant. The fair value 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. The
Company currently has four active schemes in place that arose in prior years
as detailed as follows:
· 2020 Share Scheme - This scheme was announced on 30 November 2020
when 428,572 awards were granted to the two executive directors. The vesting
of these awards is conditional upon the achievement of two performance
conditions and a share price underpin. The first performance condition
applying to the awards will be based on EPS of the Company as at 1 January
2023 and will apply to 50 per cent. of the total number of Share Awards
granted. The second performance condition will be based on TSR of the Company
over the period from the date of grant to the announcement of results for
FY2022 relative to a comparator group of companies and will apply to the
remaining 50 per cent. of Share Awards granted. No award or part of an award
may vest unless the average share price of the Company calculated over a
three-month period ending on the vesting date exceeds the share price on the
date of grant.
During the 26 week period ended 2 July 2023 the Group recognised a net charge
of £64k (26 June 2022: £64k, 1 January 2023: £129k) to administration costs
related to these awards.
· 2021 Share Scheme - This scheme was announced on 14 October 2021
when 317,843awards were granted to the two executive directors. The vesting of
these awards is conditional upon the achievement of two performance conditions
which will be measured following the announcement of results for the year to
31 December 2023 ("FY2023"). The first performance condition applying to the
awards will be based on EPS of the Company and will apply to 50 per cent. of
the total number of Share Awards granted. The second performance condition
will be based on TSR of the Company over the period from the date of grant to
the announcement of results for FY2023 relative to a comparator group of
companies and will apply to the remaining 50 per cent. of Share Awards
granted.
During the 26 week period ended 2 July 2023 the Group recognised a net charge
of £111k (26 June 2022: £113k, 1 January 2023: £226k) to administration
costs related to these awards.
· 2022 Share Scheme - This scheme was announced on 30 March 2022
when 327,586 awards were granted to the two executive directors. The vesting
of these awards is conditional upon the achievement of two performance
conditions which will be measured following the announcement of results for
the year to 31 December 2024 ("FY2024"). The first performance condition
applying to the awards will be based on EPS of the Company and will apply to
50 per cent. of the total number of Share Awards granted. The second
performance condition will be based on TSR of the Company over the period from
the date of grant to the announcement of results for FY2024 relative to a
comparator group of companies and will apply to the remaining 50 per cent.
of Share Awards granted.
During the 26 week period ended 2 July 2023 the Group recognised a net charge
of £105k (26 June 2022: £51k, 1 January 2023: £160k) to administration
costs related to these awards.
· 2023 Share Scheme - This scheme was announced on 22 March 2023
when 302,421 awards were granted to the two executive directors. The vesting
of these awards is conditional upon the achievement of two performance
conditions which will be measured following the announcement of results for
the year to 31 December 2025 ("FY2025"). The first performance condition
applying to the awards will be based on EPS of the Company and will apply to
50 per cent. of the total number of Share Awards granted. The second
performance condition will be based on TSR of the Company over the period from
the date of grant to the announcement of results for FY2025 relative to a
comparator group of companies and will apply to the remaining 50 per cent.
of Share Awards granted.
During the 26 week period ended 2 July 2023 the Group recognised a net charge
of £57k to administration costs related to these awards.
5 Segment reporting
Segmental information is presented in respect of the Group's business
segments. Strategic decisions are made by the Board based on information
presented in respect of these segments. The Group comprises the following
segments:
Tenpin (Bowls) - Tenpin is a leading tenpin bowling operator in the UK. All
revenue is derived from activities conducted in the UK.
Central - Comprises central management including company secretarial work, the
board of directors and general head office assets and costs. The segment
results are used by the Board for strategic decision making, and a
reconciliation of those results to the reported profit/(loss) in the
consolidated statement of comprehensive income, and the segment assets are as
follows:
Tenpin Central Group
£000 £000 £000
For the 26 week period ended 2 July 2023:
Segment revenue - external 65,296 - 65,296
Adjusted EBITDA 22,958 (1,294) 21,664
Segment total assets as at 2 July 2023 284,911 4,556 289,467
Segment total liabilities as at 2 July 2023 (216,271) (6,209) (222,480)
Reconciliation of adjusted EBITDA to reported operating profit:
Group adjusted EBITDA after rental costs 22,958 (1,294) 21,664
Amortisation and depreciation of intangibles, property, plant and equipment (9,157) - (9,157)
and right of use assets
Loss on Joint Venture - - -
Profit on disposals 51 - 51
Amortisation of fair valued intangibles (58) - (58)
Impairment reversal - - -
Exceptional income - - -
Add back rental costs 6,830 - 6,830
Operating profit/(loss) 20,624 (1,294) 19,330
Finance (costs)/income (3,488) (88) (3,576)
Profit/(loss) before taxation 17,136 (1,382) 15,754
Tenpin Central Group
£000 £000 £000
For the 26 week period ended 26 June 2022:
Segment revenue - external 63,238 - 63,238
Adjusted EBITDA 23,648 (1,142) 22,506
Segment total assets as at 26 June 2022 269,566 3,836 273,402
Segment total liabilities as at 26 June 2022 (217,605) (3,188) (220,793)
Reconciliation of adjusted EBITDA to reported operating profit:
Group adjusted EBITDA after rental costs 23,648 (1,142) 22,506
Amortisation and depreciation of intangibles, property, plant and equipment (9,262) - (9,262)
and right of use assets
Loss on Joint Venture - (310) (310)
Profit on disposals 15 - 15
Amortisation of fair valued intangibles (19) - (19)
Impairment reversal 747 - 747
Exceptional income 4,601 - 4,601
Add back rental costs 6,269 - 6,269
Operating profit/(loss) 25,999 (1,452) 24,547
Finance (costs)/income (3,277) (255) (3,532)
Profit/(loss) before taxation 22,722 (1,707) 21,015
Disaggregation of revenue
In addition to the breakdown of revenue into the above segments we have
analysed revenue further as following:
26 week period ended 2 July 2023 26 week period ended 26 June 2022 53 week period ended 1 January 2023
Unaudited Unaudited Audited
£000 £000 £000
Bowling 27,589 28,267 55,729
Food and drink 18,145 17,276 35,327
Machines and amusements 16,762 15,143 30,475
Other 2,800 2,552 5,142
65,296 63,328 126,673
6 Earnings per share
Basic earnings per share for each period is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue during the period. Earnings per share is based on
the capital structure of the Company and includes the weighted average of the
68,496,118 ordinary shares in issue. The total shares in issue at the end of
the 26 weeks to 2 July 2023 was 68,496,118.
The Company has 715,690 potentially issuable shares (H1 22: 326,632) all of
which relate to share options issued to Directors of the Company. Diluted
earnings per share amounts are calculated by dividing profit for the year and
total comprehensive income attributable to equity holders of the parent
Company by the weighted average number of ordinary shares outstanding during
the year together with the dilutive number of ordinary shares.
Adjusted basic earnings per share have been calculated in order to compare
earnings per share year on year and to aid future comparisons. Earnings have
been adjusted to exclude impairment, exceptional income and other one-off
costs (and any associated impact on the taxation charge). Adjusted diluted
earnings per share is calculated by applying the same adjustments to earnings
as described in relation to adjusted earnings per share divided by the
weighted average number of ordinary shares outstanding during the year
adjusted by the effect of the outstanding share options.
Basic and diluted 26 weeks to 26 weeks to 53 weeks to
2 July 2023 Unaudited 26 June 2022 Unaudited 1 January 2023 Audited
£000 £000 £000
Profit after tax 12,301 18,294 26,596
Weighted average number of shares in issue 68,496,118 68,381,496 68,447,949
Adjustment for share awards 715,690 326,632 509,325
Diluted weighted average number of shares in issue 69,211,808 68,708,128 68,957,274
Basic earnings per share (pence) 17.96p 26.75p 38.86p
Diluted earnings per share (pence) 17.77p 26.62p 38.57p
Below is the calculation of the adjusted earnings per share.
Adjusted earnings per share 26 weeks to 26 weeks to 53 weeks to
2 July 2023 26 June 2022 Unaudited 1 January 2023 Audited
Unaudited
£000 £000 £000
Profit after tax 12,301 18,294 26,596
Exceptional Income - (4,601) (7,263)
Impairment reversal - (747) (631)
Tax impact on above adjustments - 874 1,380
Adjusted underlying earnings after tax 12,301 13,820 20,082
Adjusted profit after tax 12,301 13,820 20,082
Weighted average number of shares in issue 68,496,118 68,381,496 68,447,949
Adjusted basic earnings per share 17.96p 20.21p 29.34p
Adjusted diluted earnings per share 17.77p 20.11p 29.12p
7 Goodwill and intangible assets
Fair valued Goodwill Software Total
intangibles on
acquisition
£000 £000 £000 £000
Cost
At 26 December 2021 2,938 29,350 1,325 33,613
Additions - 390 13 403
At 26 June 2022 2,938 29,740 1,338 34,016
Additions - - 27 27
Disposals - - (34) (34)
At 1 January 2023 2,938 29,740 1,331 34,009
Additions - - 3 3
At 2 July 2023 2,938 29,740 1,334 34,012
Accumulated amortisation and impairment losses
At 26 December 2021 2,767 - 1,217 3,984
Charge for the period - amortisation 42 - 55 97
At 26 June 2022 2,809 - 1,272 4,081
Charge for the period - amortisation 37 - 50 87
Disposals - - (34) (34)
At 1 January 2023 2,846 - 1,288 4,134
Charge for the period - amortisation 37 - 31 68
At 2 July 2023 2,883 - 1,319 4,202
Net book value
At 2 July 2023 55 29,740 15 29,810
At 26 June 2022 129 29,740 66 29,935
At 1 January 2023 92 29,740 43 29,875
8 Property, plant and equipment
Land and buildings Fixed furnishings Amusement machines Fixtures, fittings and equipment Total
£000 £000 £000 £000 £000
Cost
At 26 December 2021 - 11,105 1,436 52,087 64,628
Additions - - 235 5,933 6,168
Disposals - - - (74) (74)
At 26 June 2022 11,105 1,671 57,946 70,722
Additions 5,000 1,142 224 12,326 18,692
Disposals - - - (2,112) (2,112)
At 1 January 2023 5,000 12,247 1,895 68,160 87,302
Additions - 415 303 13,619 14,337
Disposals - - - - -
At 2 July 2023 5,000 12,662 2,198 81,779 101,639
Accumulated depreciation and impairment
At 26 December 2021 - 4,708 1,260 19,130 25,098
Charge for the period - 502 358 2,765 3,625
Impairment charge - - - (149) (149)
Disposals - Depreciation - - - (3) (3)
At 26 June 2022 - 5,210 1,618 21,743 28,571
Charge for the period - 492 (217) 3,045 3,320
Impairment reversal - - - (26) (26)
Disposals - Depreciation - - - (1,761) (1,761)
At 1 January 2023 - 5,702 1,401 23,001 30,104
Charge for the period - 435 135 2,760 3,330
Impairment reversal - - - - -
Disposals - Depreciation - - - - -
At 2 July 2023 - 6,137 1,536 25,761 33,434
Net book value
At 2 July 2023 5,000 6,525 662 56,018 68,205
At 26 June 2022 - 5,895 53 36,203 42,151
At 1 January 2023 5,000 6,545 494 45,159 57,198
9 Right of use assets
Amusement machines & other
Total
£000 £000 £000
Cost
At 26 December 2021 183,581 11,099 194,680
Lease additions 6,308 569 6,877
Modification of leases 3,793 - 3,793
Lease disposals - (100) (100)
At 26 June 2022 193,682 11,568 205,250
Lease additions 3,239 1,199 4,438
Modification of leases - - -
Lease disposals - (283) (283)
At 1 January 2023 196,921 12,484 209,405
Lease additions 10,288 1,582 11,870
Lease disposals - (837) (837)
At 2 July 2023 207,209 13,229 220,438
Accumulated depreciation and impairment
At 26 December 2021 18,873 8,483 27,356
Charge for the period 4,851 730 5,581
Impairment reversal (598) (98) (696)
At 26 June 2022 23,126 9,115 32,241
Charge for the period 4,935 1,169 6,104
Disposals - depreciation - (277) (277)
Impairment reversal (314) - (314)
At 1 January 2023 27,747 10,007 37,754
Charge for the period 5,072 724 5,796
Disposals - Depreciation - (650) (650)
At 2 July 2023 32,819 10,081 42,900
Net book value
At 2 July 2023 174,390 3,148 177,538
At 26 June 2022 170,556 2,453 173,009
At 1 January 2023 169,174 2,477 171,651
The lease additions are from the entering of two new leases for the Milton
Keynes and Dundee sites.
10 Cashflow from operations
26 weeks to 2 July 2023 Unaudited 26 weeks to 26 June 2022 Unaudited 53 weeks to 1 January 2023 Audited
Cash flows from operating activities £000 £000 £000
Profit for the period 12,301 18,294 26,596
Adjustments for:
Tax 3,453 2,721 7,399
Finance costs, net 3,576 3,532 7,206
Non-cash exceptionals - (4,601) (239)
Non-cash share based payments charge 337 248 539
Loss on Joint Venture - 310 310
Profit on disposal of assets - (15) (271)
Amortisation of intangible assets 68 97 184
Depreciation of property, plant and equipment 3,330 3,625 6,945
Depreciation of right to use assets 5,796 5,581 11,685
Impairment reversal - (747) (631)
Changes in working capital:
Decrease/(increase) in inventories 31 (24) (267)
Decrease in trade and other receivables 1,865 1,173 77
(Decrease)/increase in trade and other payables (5,920) 1,657 1,888
Cash generated from operations 24,837 31,851 61,963
11 Bank borrowings and leases
26 weeks to 2 July 2023 Unaudited 26 weeks to 26 June 2022 Unaudited 53 weeks to 1 January 2023 Audited
Current liabilities £000 £000 £000
Bank loans - 7,000 -
Leases - Machines/other 1,903 2,792 2,728
Leases - Property 7,510 8,300 7,720
Capitalised financing costs - (128) -
9,413 17,964 10,448
Non - current liabilities
Bank loans - - -
Leases - Machines/other 2,155 1,764 1,560
Leases - Property 195,352 188,223 188,394
197,507 189,987 189,954
The bank loans with the Royal Bank of Scotland plc consist of a £30.0m (2022:
£25.0m) committed Revolving Credit Facility (RCF) and £nil (2022: £7.0m)
CLBILS term loan facility. The loans incur interest at SONIA plus a margin of
2.0% (2022: 1.85%). The Group fully repaid the CLBILS facility in July 2022
and then refinanced the RCF in September 2023 for a further 3 years,
increasing the facility to £30.0m.
The increase in property leases arose from the two new leases in Milton Keynes
and Dundee.
12 Financial risk management
Cash flow and fair value interest rate risk
Cash flow interest rate risk derives from the Group's floating rate financial
liabilities, being its bank debt and overdraft facility, which are linked to
SONIA plus a margin of 2.0% (2022: 1.85%). The Group has no fair value
interest rate risk. In managing interest rate risk the Group aims to reduce
the impact of short-term fluctuations on the Group's earnings. Over the longer
term, however, sustained changes in interest rates would have an impact on the
Group's earnings.
Credit risk
As almost all of the Group's sales are for cash, the Group is exposed to
minimal credit risk.
Liquidity risk
The Group's cash position and cash flow forecasts are reviewed by management
on a daily basis. The current bank facilities consist of a £30.0m (2022:
£25.0m) RCF facility of which £nil (2022: £7.0m CLBILS) has been drawn.
13 Principal risks and uncertainties
Ultimate responsibility for the Group's risk management framework sits with
the Board who review the Group's risk appetite on an annual basis. The Group's
principal risks and uncertainties are assessed in detail as set out in the
full Annual Report for the 53 weeks ended 2 July 2023.
The Group does not believe there have been any other significant changes to
its principal risks that will impact on the Group in the remaining half of the
year which in summary include:
· Operational - ageing of estate, deterioration of assets and loss
of key personnel
· Operational - allergens related to food and bar services provided
· Regulatory changes - new laws, re-interpreted laws and updates
from case law
· Business interruption - risk of cyber-attacks, terrorism, failure
or unavailability of IT infrastructure
14 Related Parties
Related party Income from transactions with related party Expenses from transactions with related party Loans to related party Amounts outstanding with related party
As at 2 July 2023 179 - 439 2,240
As at 26 June 2022 164 - 511 1,574
As at 1 January 2023 44 - 1,158 1,801
All intercompany transactions and balances have been eliminated on
consolidation. Other related party transactions consist of compensation of key
management personnel which was disclosed in the Group's Annual Report and
Accounts for the year ending 1 January 2023.
DIRECTORS' RESPONSIBILTY STATEMENT
The directors confirm that these condensed interim financial statements have
been prepared in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and that the
interim management report includes a fair review of the information required
by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months 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 financial year; and
· material related-party transactions in the first 26 weeks and any
material changes in the related-party transactions described in the last
annual report.
The directors confirm to the best of their knowledge that the condensed
interim financial statements have been prepared in accordance with the
Accounting Standards Board 2007 statement on half yearly financial reports.
The
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's website. Legislation in the United Kingdom governing the preparation and
dissemination of
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The responsibility statement was approved by the Board on 20 September 2023
and signed on its behalf by:
Graham Blackwell
Antony Smith
CEO
CFO
20 September
2023
20 September 2023
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