Hollywood Bowl Group Plc · LSE:BOWL
Hollywood Bowl — FY2022 Earnings Presentation
32 slides from Hollywood Bowl's earnings presentation, Dec 16, 2022
Slide 1: Hollywood Bowl Group plc Full Year Results FY2022
Hollywood Bowl Group plc Full Year Results FY2022
Slide 2: Agenda
Agenda Stephen Burns Chief Executive Officer •Operational and financial highlights •Resilient sector •Growth strategy •Canada update •Summary and outlook Laurence Keen Chief Financial Officer •Financial review •Capital allocation policy •Investment led growth •Property pipeline Hollywood Bowl Group
Slide 3: FY2022 highlights
FY2022 highlights Capital invested UK centres £21.8m refurbished/rebranded (FY2019: £16.2m) 8 New UK centres opened Centres acquired in Canada 3 5 Hourly paid team members Net promoter score 61% receiving performance bonus 64% Best Big companies To Work UK centres with solar installs 32% For Top 25
Slide 4: FY2022 highlights
FY2022 highlights Total revenue LFL sales growth1 £193.7m +28.3% (FY2019: £129.9m) (FY2019: +5.5%) LFL average spend per game1 Group adjusted EBITDA £10.45 pre-IFRS 162 (FY2019: £9.64) £60.6m (FY2019: £38.2m) Adjusted profit after tax Adjusted earnings per share £39.4m 23.07 pence (FY2019: £22.3m) (
Slide 5: Resilient sector, well insulated from rising costs
Resilient sector, well insulated from rising costs Manageable inflationary pressures • 74.8% revenue has no cost of goods inflation • Food and drink costs represent <8% of total revenue • Labour costs account for <20% of revenue at centre level • Total inflationary increases of just 3.5% on overall
Slide 6: Exciting growth potential
Exciting growth potential Industry leading operating model, market leading position Significant runway for long-term sustainable growth Bowling - 64 UK centres • Pipeline secured to 72 - Potential for 85 • Targeted EBITDA on new centres £0.5m Mini-golf - 5 UK Puttstars trial centres • Pipeline to 7
Slide 7: Financial review
Financial review
Slide 8: Excellent FY2022 financial performance
Excellent FY2022 financial performance Revenue (£m) Group Adjusted EBITDA1 pre-IFRS 16 (£m) +49.2% vs FY2019 +58.6% vs FY2019 193.7 60.6 129.9 38.2 79.5 71.9 14.0 15.1 FY2019 FY2020 FY2021 FY2022 FY2019 FY2020 FY2021 FY2022 Statutory Operating Profit Margin (%) Adjusted Earnings Per Share (Pence) +6
Slide 9: Strong growth in all areas leading to record revenues
Strong growth in all areas leading to record revenues • LFL revenue1 growth of 28.3% (vs FY2019) driven by • New centre performance in line with expectations number of games played and spend per game growth • Strong summer trade despite unfavourable weather • Games LFL volume1 increase of 18.3% driv
Slide 10: Underlying profit increased by 77.0%
Underlying profit increased by 77.0% (£m) FY2022 FY2021 FY2019 Movement vs FY2019 •Total revenue up 49.2% on FY2019 Revenue 193.7 71.9 129.9 +49.2% •Gross profit margin 84.8% in line Gross profit 164.3 61.6 111.4 +47.6% with management expectations Gross profit % 84.8% 85.7% 85.7% -0.9%pts (given LF
Slide 11: Exceptional costs/(income)
Exceptional costs/(income) (£m) FY2022 •Total of £3.7m exceptional income VAT reclaim for reduced hospitality rate – prior year (5.6) in FY2022 Professional fees in relation to Teaquinn acquisition 1.6 •Reclaim in relation to TRR of VAT relating to prior year of £5.6m Fair value of 5 months of earn
Slide 12: Profit growth supported by strong cost controls
Profit growth supported by strong cost controls Payroll (c.18% of total UK revenue) FY2022 UK P&L breakdown • Pay increases in line with expectations • Flexible payroll model 15.0% • Successful hourly incentive scheme • Biggest centre management bonus ever 32.6% Energy costs (c.2.5% of total UK reve
Slide 13: Strong trading driving free cash flow and capital returns
Strong trading driving free cash flow and capital returns •Group adjusted operating cash flow of £55.7m •8 refurbishments/rebrands completed at a cost of £3.6m •Record trading and effective cost management drove •Total spend of £9.3m on new centres cash inflow •Includes £7.8m spend on 3 new centres
Slide 14: Updated capital allocation policy focused on profitable growth and shareholder returns
Updated capital allocation policy focused on profitable growth and shareholder returns New Additional Maintenance Transformational Ordinary Dividend centres and distributions to capital refurbishments 50% of PAT acquisitions shareholders Calculation FY2022 FY2022 FY2023 FY2024 FY2025 Cash at bank at
Slide 15: Financial outlook for FY2023
Financial outlook for FY2023 Strong start to FY2023 •Christmas bookings in line with expectations •More modest LFL growth vs FY2019 – still 23%+ › Analyst consensus at -5% LFL vs FY2022 •Full year effect of Canada acquisition Managing cost pressures • Payroll inflation as expected for FY2023 •Electr
Slide 16: Driving our growth strategy
Oo Driving our 7 | | on | | | growth strategy
Slide 17: Continuous improvement and innovation
Continuous improvement and innovation Ongoing Investment in core offer Best in class amusement offer Value, quality product, served fast • Pins on strings installed in an • Improving density of machines whilst • Simple menu content with small additional 15 centres enhancing the quality of offer i.e.
Slide 18: A well invested team delivering a fantastic experience
A well invested team delivering a fantastic experience Team focused on areas that we know customers really value Excellent customer feedback • 61% Net Promoter Score Talent attraction and retention is key to delivering the best customer experience • 7.5% increase in salaried team members’ pay • £0.6
Slide 19: Evolving our brand journey with technology
Evolving our brand journey with technology Digital marketing enhancements •Investment in website enhancements and booking engine •Improved dynamic pricing presentation and conversion •Online revenue up 97% vs FY2019 •Customer data platform (CDP) improving targeting and engagement •Increased investme
Slide 20: Embedding sustainability in everything we do
Embedding sustainability in everything we do Safe and inclusive leisure Outstanding workplaces Sustainable centres destinations • Talent attraction and retention • Waste management • Health and safety • Diversity and inclusion • Energy efficiency • Accessibility and wellbeing • Training and developm
Slide 21: Refurbishments and new centre openings
Refurbishments and new centre openings Continued investment in the estate to drive returns • Total of £12.5m expansionary UK capital spent Refurbishments/rebrands - £3.6m • 8 centres refurbished/rebranded • LFL SPG performance +22.9% • Lineage +19.3% • Sunsetting AMF brand by end of H1 FY2023 • Ongo
Slide 22: Puttstars trial progressing
Puttstars trial progressing Robust five centre trial group •Continue testing, learning and evolving the concept •Excellent customer feedback to date •All centres profitable •Limited trading period due to COVID-19 Major customer research programme undertaken •Insights included in fit out of new Peter
Slide 23: Strong UK new centre pipeline to FY2025
Strong UK new centre pipeline to FY2025 Strong performance from FY2022 openings Pipeline of targets on high footfall leisure developments Build costs c. £2.8m + given inflationary environment ROI % target maintained FY2023 • Speke, Liverpool open • Peterborough Puttstars open • Merry Hill, Dudley 1
Slide 24: Investment in onsite solar technology
Investment in onsite solar technology Onsite solar investments in partnership with landlords •17 centres added during FY2022 •Total of 22 roof arrays at end of September 2022 •In FY2019 we used 19.6 MWh •In FY2022 we used 20.5 MWh › 1.9 MWH self generated › 0.3 MWH sold back to the grid Strong payba
Slide 25: International expansion
International expansion
Slide 26: Teaquinn investment thesis and trading update
Teaquinn investment thesis and trading update Rationale • Canada is a well-established market with similarities to the UK • Well operated, asset backed business that provides the Group with a strategic platform for growth • Value add via our customer-led operating model and technology Financials • F
Slide 27: Long term sustainable international growth
Long term sustainable international growth Extending reach via acquisition Refurbishment of core estate Greenfield sites • Single site and multi site groups • Investment to drive dwell time and • Extend reach across Canada with spend through transformational new centre development • Over 190 bowling
Slide 28: Summary and outlook
Summary and outlook
Slide 29: Outlook for FY2023
Outlook for FY2023 Market leader with high quality, well-invested estate •Led by experienced management team Continued demand for affordable leisure experiences • Strong start to FY2023 and Christmas trading Well positioned against cost inflation elements Strong balance sheet and cash generative mod
Slide 30: Appendices
Appendices
Slide 31: New centre case study - Resorts World Birmingham
New centre case study - Resorts World Birmingham Strong demographics in the vicinity • Over 600k population within 16 min drive time • 45% key customer groups • Close proximity to other footfall drivers Worked with landlord to unearth opportunity and terms • Conversion of 14 empty shop units • Low b
Slide 32: Management
Management Stephen Burns Chief Executive Officer Appointment Stephen joined the Group as Business Development Director in 2011. He was promoted to Managing Director in 2012 and became Chief Executive Officer in 2014. Skills and experience Before joining the Group, Stephen worked within the health an