Hollywood Bowl Group Plc · LSE:BOWL
Hollywood Bowl — FY2020 Earnings Presentation
36 slides from Hollywood Bowl's earnings presentation, Dec 14, 2020
Slide 1: Financial Year Ended 30 September 2020
FINANCIAL YEAR ENDED 30 SEPTEMBER 2020
Slide 2: Agenda
AGENDA • FY2020 highlights STEVE BURNS • Response to the pandemic CEO • Operational progress • FY2020 Financial performance LAURENCE KEEN • Property update CFO • Summary and outlook Hollywood Bowl Group plc 2
Slide 3: FY2020 Financial Performance
FY2020 FINANCIAL PERFORMANCE POST CASH AT H1 LFL NET DEBT OPENING BANK LFL VS PY1 +8.6% 68% £20.8M £8.7M PROFIT ADJUSTED NEW AFTER EBITDA CENTRES TAX £1.4M £14.0M 4 1 Six weeks post opening period Hollywood Bowl Group plc 3
Slide 4: Operational Overview
OPERATIONAL OVERVIEW • Excellent H1 FY2020 performance (pre-COVID-19), ahead of prior year period with near double-digit like-for-like revenue growth and significant free cash flow • Effective operational and financial response to estate closure until mid-August reopening (21.3 weeks of FY2020) • Fi
Slide 5: Our COVID-19 Response
OUR COVID-19 RESPONSE Hollywood Bowl Group plc 5
Slide 6: Our COVID-19 Response (March–July timeline)
OUR COVID-19 RESPONSE 16 MARCH 17 APRIL ★ Government announces social distancing measures ★ Equity placing raises £10.5m (net proceeds) 17 MARCH 29 APRIL ★ Hollywood Bowl closes every other lane, removes 50% ★ June quarter (and beyond) rent negotiations commence with of bar furniture and turns off 5
Slide 7: Our COVID-19 Response (July–December timeline)
OUR COVID-19 RESPONSE 16 JULY 21 SEPTEMBER ★ DCMS, PHE and the Cabinet Office approve sector COVID-secure ★ Additional year added to banking facilities (to 9/22) operating guidelines following significant engagement 23 NOVEMBER 28 JULY ★ Welsh centres close under national lockdown (reopen 9 November
Slide 8: Reopening Campaigns
REOPENING CAMPAIGNS July • Extensive reopening lobbying via MPs, Cabinet Ministers and DCMS • Launched #BringBackBowling campaign – seeking customer and MP support • Ahead of the planned 1st August opening, secured national coverage across TV, radio, online and press showcasing our new Covid-secure
Slide 9: Managing Capacity
MANAGING CAPACITY Restrictions impacting trading • Only alternate lanes in operation from reopening on 15 August • Group of six introduced from 14 September • 10pm curfew introduced from 24 September Lane utilisation at peak pre-COVID 50% Morning Afternoon Evening Saturday Sunday School holidays Inc
Slide 10: Sales, Service and Safety Superiority
SALES, SERVICE AND SAFETY SUPERIORITY SALES SERVICE SAFETY • Dynamic pricing • COVID measures survey • Close liaison with DCMS discounts reduced in line • 95% satisfied and Primary Authority to with capacity • Overall customer develop new processes • Midweek value drivers satisfaction since • COVID
Slide 11: Financial Performance
FINANCIAL PERFORMANCE Hollywood Bowl Group plc 11
Slide 12: Excellent H1 Financial Performance
EXCELLENT H1 FINANCIAL PERFORMANCE REVENUE (£M) GROUP ADJUSTED EBITDA (£M) +3.3% 120.5 129.9 +2.4% 38.2 114.0 36.2 104.8 33.4 29.4 67.0 69.2 21.1 21.6 FY2016 FY2017 FY2018 FY2019 H12019 H12020 FY2016 FY2017 FY2018 FY2019 H12019 H12020 STATUTORY OPERATING PROFIT MARGIN % EARNINGS PER SHARE (PENCE) +2
Slide 13: Full Year Financial Performance
FULL YEAR FINANCIAL PERFORMANCE REVENUE (£M) GROUP ADJUSTED EBITDA (£M) -38.8% 120.5 129.9 -36.6% 38.2 114.0 36.2 104.8 33.4 29.4 79.5 14.0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2016 FY2017 FY2018 FY2019 FY2020 STATUTORY OPERATING PROFIT MARGIN % EARNINGS PER SHARE (PENCE) -9.5% pts -91.4% 14.86 21.9
Slide 14: Income Statement on Pre IFRS 16 Basis
INCOME STATEMENT ON PRE IFRS 16 BASIS • LFL revenue up 9.4% pre COVID (£m) FY2020 FY2019 Movement impact, FY2020 +0.4% LFL Revenue 79.5 129.9 (38.8%) • Trading for only 31 weeks Gross profit 67.9 111.4 (39.0%) • Gross profit 85.5% in line with management expectations Gross profit% 85.5% 85.7% (0.2%p
Slide 15: Income Statement Including IFRS 16 Impact
INCOME STATEMENT INCLUDING IFRS 16 IMPACT IFRS 16 Pre IFRS 16 (£m) FY2020 FY2019 Movement • IFRS 16 EBITDA benefit of Group Adjusted EBITDA 14.0 38.2 (63.4%) £15.8m Add back Rent FY2020 15.8 - - • Rent benefit offset by £9.3m Group Adjusted EBITDA 29.8 38.2 (8.4) increase in depreciation and £7.8m i
Slide 16: Controls and Actions Mitigate Cash Outflow
CONTROLS AND ACTIONS MITIGATE CASH OUTFLOW • Group adjusted operating cash flow of £7.0m (FY2018: • Free cash flow of £(4.2)m £24.7m) • Equity placing net proceeds of £10.5m • Landlord agreements benefitted working capital in FY2020 • Net debt at £8.7m (FY2019: £2.9m) • Reduction in maintenance capi
Slide 17: Cash Management: March – September 2020
CASH MANAGEMENT: MARCH – SEPTEMBER 2020 Cash benefits in FY2020 Cash Costs Cash • £21.6m of cash benefits received waived deferred delivered in FY2020 from Government support £7.7m £3.9m £2.1m Government, suppliers and Suppliers - - £1.2m landlords Landlords (rent only) - £2.1m £4.6m • £13.7m is a p
Slide 18: Balance Sheet
BALANCE SHEET (£m) FY2020 FY2019 Movement • Significant change in recognition Assets Intangible assets 78.2 78.5 (0.3) of assets and liabilities under Property, plant and equipment 48.2 47.4 0.8 IFRS 16 Right-of-use assets 140.5 n/a 140.5 Inventories 1.3 1.2 0.1 Trade, other receivables and • Right-
Slide 19: Financial Outlook for FY2021
FINANCIAL OUTLOOK FOR FY2021 • Ongoing uncertainty and impact from local tier restrictions • Positive impact from increased capacity and utilisation • Lower impact from National living and minimum wage in FY2021 c. 2.8% • 5-7 refurbishments planned • Maintenance capital expenditure expected to be c.
Slide 20: Well Positioned for Growth
WELL POSITIONED FOR GROWTH Hollywood Bowl Group plc 20
Slide 21: Long Term Strategy Remains Unchanged
LONG TERM STRATEGY REMAINS UNCHANGED ORGANIC GROWTH INVESTMENT LED GROWTH Constant focus on customer experience Maintaining a high quality, profitable estate • Increasing dwell time through customer • Rolling refurbishment programme which focused culture and innovation prioritises spend on guarantee
Slide 22: Optimising the Experience and Growing SPG
OPTIMISING THE EXPERIENCE AND GROWING SPG Improved food and drink customer feedback • Simplified menu to minimise wastage, increase speed of service whilst protecting quality • Payment app (iOrder) driving SPG • Speed and consistency resulted in service scores increasing YOY, key learnings for post
Slide 23: Technical Excellence and Innovation
TECHNICAL EXCELLENCE AND INNOVATION Pins on strings • Continued roll out – 7 centres this year • Now in 18 centres – 6 centres planned for FY2021 • POS GPS at 1,249 (+51.9% YOY) • Average ROI of POS is 30% on capital invested New scoring system • Continued roll out – 20 centres this year • Now in 44
Slide 24: Team Engagement
TEAM ENGAGEMENT Attracting and retaining top talent • Supported our teams financially during centre closures • Virtual training delivered during lockdown to all levels of management • Maintained team member engagement during closure period including virtual Q&A with leadership team • 29 online train
Slide 25: Managing Our Business in a Sustainable Way
MANAGING OUR BUSINESS IN A SUSTAINABLE WAY Our customers and communities • Affordable, inclusive fun • Subsidised access for concession customers Team members • Strong focus on wellbeing throughout the period • Ongoing team engagement and feedback programmes Charity engagement • National charity par
Slide 26: Bowling Centre Projects Completed During Lockdown 1.0
BOWLING CENTRE PROJECTS COMPLETED DURING LOCKDOWN 1.0 New centre - Hollywood Bowl York • Spend £1.7m net capital expenditure • Next generation VIP lanes • Over lane balls returns • Co-located with Puttstars Refurbishment - Crawley • Spend £517k • Combined bar and diner • Enlarged amusement area • 2
Slide 27: Strong New Centre Pipeline to 2024
STRONG NEW CENTRE PIPELINE TO 2024 LIVERPOOL – FY2021 BELFAST – FY2022 READING – FY2022 HOLLYWOOD BOWL HOLLYWOOD BOWL HOLLYWOOD BOWL • Relocation of existing • First Hollywood Bowl in • First bowling centre in centre to new N. Ireland Reading developed leisure • Leisure scheme with • 200,000+ catchm
Slide 28: A New Brand – A Big Opportunity
A NEW BRAND – A BIG OPPORTUNITY Hollywood Bowl Group plc 28
Slide 29: Leveraging Our Leisure Expertise
LEVERAGING OUR LEISURE EXPERTISE Opportunity in an established market • Family focused offer with wide demographic appeal • Over 1000 indoor and outdoor adventure, crazy and mini golf courses in the UK • Highly fragmented UK market with limited large-scale operators - three largest have 12, 8 and 5
Slide 30: A Sustainable, Profitable Business Model
A SUSTAINABLE, PROFITABLE BUSINESS MODEL 5.00 Strong trading since opening 4.00 • Golf spend per game in line with bowling spend at Hollywood Spend per game Bowl centres 3.00 • Opportunity to drive ancillary spend 2.00 • ROI of 20% in Year 1 1.00 0.00 Positive customer feedback Bowl/Golf Bar Food Am
Slide 31: Summary and Outlook
SUMMARY AND OUTLOOK Hollywood Bowl Group plc 31 Image credit – Inspired Media
Slide 32: Well Positioned for the Future
WELL POSITIONED FOR THE FUTURE • Market leader with high quality, well-invested estate led by experienced management team • Customer-focused business leading the development of the indoor leisure sector • Engaged and performant centre teams • Robust support from bank and shareholders • Demonstrated
Slide 33: Appendices
APPENDICES Hollywood Bowl Group plc 33
Slide 34: Overview of Estate and New Centre Pipeline
OVERVIEW OF ESTATE AND NEW CENTRE PIPELINE CURRENTLY CENTRES NEW OPENINGS BY END OF FY2024 WE OPERATE A HIGH-QUALITY PORTFOLIO OF WELL LOCATED CENTRES AND HAVE A STRONG NEW CENTRE PIPELINE TO 2024 Our centres are typically co-located with cinema and casual dining restaurants, in large, high-footfall
Slide 35: 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 h
Slide 36: Hollywood Bowl Group plc
hollywood bowl group plc hollywoodbowlgroup.com