Hollywood Bowl Group H1 2025 Earnings Call Transcript

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Provided by Quartr
May 29, 2025
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Operator

Good morning, and welcome to the Hollywood Bowl Group PLC Analyst Meeting. Those online questions can be submitted

Operator

I'd now like to hand over Steven Vern, CEO. Good morning, sir.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Thank you very much, and good morning, everyone. Thank you to everyone for taking the time to attend our financial year '20 '20 '5 half year results presentation. I'm gonna take you through the key highlights of the half and our operational highlights in both The UK and Canada. Laurence will take you through the numbers and the financial outlook. We'll then take any questions from the room first and then from those who have dialed in.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So the first half of our financial year has been a record performance for the group with revenues of 129,200,000.0, up 8.4% on the same period last year. And despite the increased cost burden, record EBITDA of $38,800,000 We opened five new centers in the half, three in The UK and two in Canada, and completed six refurbishments, four in The UK and two in Canada, all of which are on track to deliver returns in line with guidance. Despite the significant levels of capital deployed and the completion of a 10,000,000 share buyback, we finished the half with net cash of 22,700,000.0. We also renewed our revolving credit facility that remains undrawn on more favorable terms. I'll now hand you over to Laurence, who'll take you through the numbers and the financial outlook.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Thanks, Steve. On Slide five, we lay out the revenue bridge from H1 FY 'twenty four to this year. Total revenue growth has been impacted by the September 2024 closure of our Hollywood Bowl Centre in Surrey Quays as part of an overall landlord redevelopment and the requirement to close our Hollywood Bowl Centre at Edge Lane, Liverpool during its refurbishment. UK Centre like for likes and the Hollywood Bowl Centres was up 1.5%, with spend per game growth of 6.3% and game volume reduction of 4.5%. Now as noted, like for like revenues were negatively impacted by Easter moving to the second half, which was worth point 1% when you include the extra trading day in FY 'twenty four due to the leap year.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

The weather impact in late February and all of March as well as the continuing competition from competitive socializing offerings in certain locations were also factors in the game volume reduction versus the prior year. And whilst we have seen game volume reduction, our spend per game is up 6.3 from £11.21 to £11.87 as customers continue to seek value for money. I'll talk to the EBITDA impact of the Easter and leap year effects on the next slide. The like for like revenue growth in The UK, alongside the performance of the new UK centers, resulted in record UK revenues of GBP 108,200,000.0 and growth of 4.7% compared to the comparative period in FY 'twenty four. Canadian like for like center growth was 3.7%, which is a strong performance given the prior year like for likes as well as the weather impact early in the half where it was significantly warmer than the norm, and then the opposite when Toronto got more snow in ten days in February than they got in all of 2024.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Those combined impacted like for likes by negatively by 2.7 percentage points. New centers have contributed significantly over 4,000,000 Canadian dollars to the first half performance as is the performance of Stryker, which saw revenue growth of over 100%, resulting in total CADA revenues of 38,000,000 Canadian dollars, which is GBP 21,100,000.0. Also due to the weaker Canadian dollar but strong pound, the ForEx movement impacted the year by GBP 1,200,000.0. But given we're not translating or bringing back dollars to The UK, we're only sending over, actually, it's working in our favor when we're investing in the Canadian state. On Slide six, we set out the EBITDA bridge.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Now first, I want to bring everybody's attention to the one offs in H1 of FY 'twenty '4. When comparing to the first half, the group is negatively impacted from the one offs to the value of GBP 3,000,000 in total, including business rates rebates of GBP 1,100,000.0, the Surrey Quays and Liverpool Edge Lane closures that I spoke about before of 900,000.0 combined, and then the Easter and leap year impact of 1,000,000 at EBITDA. The rebase number for FY 2024 in the first half would be 35,800,000.0. Now despite the big inflationary costs in H1, as Steve mentioned earlier, the well publicized national minimum wage, living wage and also business rates increases, like for like sensors absorbed all of this even with just a 2.1% increase in like for like revenues. The EBITDA growth in the group came through the new centers in The UK, which was worth GBP 2,200,000.0, and in Canada, which was worth GBP 1,200,000.0, with more to come as these centers continue to maturity over the coming twelve to eighteen months.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

These contributions resulted in EBITDA of GBP 38,800,000.0, a growth of 8.8% compared to the rebased FY 2024 number. Now on Slide seven, we set out the income statement. We've covered off a lot of this on the previous slide as well. The gross profit margin on cost of goods was 83% in the half, a reduction of 40 basis points due to revenue mix. Gross profit in The UK was 84.2%, up 30 bps on H1 of FY 2024 with an increased margin seen in food and drink.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Gross profit margin for the Canadian business was in line with expectations at 76.8%. Now although that was a reduction of 3.4%, that was due to the mix of the Stryker business in the first half of this year versus last year. Splitsville centers themselves had a gross margin on cost of goods sold of 83.3%, also down by 1.4 percentage points, but that was due to the significantly higher revenue growth that we've seen in amusements and food and drink in Canada as they start to adapt to becoming a family entertainment center versus just bowling. Center level admin costs, excluding depreciation and amortization, were up 15.1 to GBP 55,800,000.0. The largest part of this cost, as noted on the slide, is employee costs, which were up 11% to GBP 24,900,000.0, an increase of just NOK 2,600,000.0 compared to the previous period due to the impact of national minimum living wage as well as higher like for like revenues, new UK centers as well as the continued growth in Canada.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Total employee costs in Canada were 8,200,000.0 Canadian dollars, an increase of 2,300,000.0 Canadian dollars. Total property related costs accounted for on a pre IFRS 16 basis were 24,600,000.0, with GBP 21,400,000.0 of that for The UK business. Rate costs were up just GBP 700,000.0 to GBP 9,900,000.0 in the half, and business rate costs were GBP 3,700,000.0. And that's an increase of GBP 700,000.0, but actually a slight decline when you take into effect into account the impact from the business rates rebates we saw last year. Canadian property costs were CAD 5,800,000.0, an increase of CAD 2,600,000.0.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

This is just due to the increased size of the estate. On to corporate costs. Increased marginally to GBP 12,700,000.0, with UK cost marking down to GBP 10,400,000.0 by GBP 200,000. And as we continue to build our support team in Canada for growth, corporate costs increased to 4,200,000.0 Canadian dollars from 2,900,000.0 Canadian dollars. Group adjusted EBITDA pre IFRS 16 increased by 0.5% on the face of the slide.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

But as discussed in the previous slide, the one offs negatively impacted the numbers by GBP 3,000,000, and therefore, we would have seen an increase of 8.8%. Exceptional items, pre interest in the first half actually totaled a GBP 700,000.0 credit. This relates to three areas. The first of GBP 1,600,000.0 income is in relation to a business interruption insurance claim received in the period. The second, small amount of admin costs around $100,000 related to the closure of our Hollywood Bowl Centre in Surrey Quays.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And then the final element is the earn out consideration for the T Quinn President, which exceptional cost of $1,200,000 of which $900,000 is an admin and $300,000 sits within interest expenses. Now as we continue to invest in the expansion of the business from a state perspective, investment in refurbs and also IT, depreciation and amortizations increased year on year by 2,100,000. Canada was a large part of this at over £1,000,000 as we continue to invest, and we'll talk about Canada further on. Now despite this investment and the associated depreciation, clearly, not all of the benefit from the investments in The UK and Canada is evident at this stage in group profits due to the growth and expected maturity both in The U. K.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And in Canada, which will be seen in years ahead and is reflected in the analyst forecasts for 2026 and 2027. Statutory profit before tax for the year was $28,300,000 But if you exclude the one offs from financial year 2024, that actually would have increased by $2,000,000 rather than a decrease of 1,000,000 The group delivered profit after tax of 20,600,000.0 and basic earnings per share of 12p per share. It is worth noting that this is based on the average number of shares rather than the actual number of shares in issue at the end of the half, difference being over 2,000,000 shares, and that effect will obviously iron itself out as we approach year end. With cost inflation top of line and with RPI hitting just over 3.5% in April in The UK, we set out on Slide eight our position on inflation. Now we're mindful of the inflationary impacts, but are well positioned to manage these increases due to our P and L mechanics.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

The impact from national living wage and national insurance is significant as laid out here and we look forward. And pre any pre any efficiencies, the impact from national living wage alone is in excess of 6%. Now just as a reminder, the cost for an average UK hourly paid team member working twenty hours per week on national living wage, the national insurance would increase from just under £400 per annum to £1,155 per annum. So an effect for us on a full year basis of £1,200,000. Business rates in H2 of FY 'twenty five will increase by 4% versus the same period in 2024 given the change in the uniform business rate as announced in November of twenty twenty four.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And also, we don't have any more business rates refunds to come. As a reminder, we're now in our new utility hedge, which saw an increase in FY 'twenty five of just over 1,400,000 for the full year. However, our current view on the look forward to FY 'twenty seven should see minimal like for like increases in usage costs of less than 1% based on the hedge. We also now have 33 centers in The UK portfolio with solar panels, and we are looking at potential solar panels for Canada. Now from a Canada perspective, inflation is forecasted to be lower than The UK.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

April was actually at 1.7% compared to 3.5% in The UK. Now this also results in a lower expected increase in other areas that are based on RPI, like rents. And Toronto payroll inflation is due to increase by just 2.3% in terms of the national minimum wage. And whilst there is no increase in the West, we will still be putting through increases for our team similar to what we see in Toronto. Now on Slide nine, we look at the capital investments.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

During the first half, the group invested net CapEx of 20,000,000, including GBP 10,100,000.0 in relation to the five new centers that opened in the period. That's three in The UK and two in Canada. A total of GBP 4,100,000.0 was invested in the refurb program with four in The UK as well as the completion of two in Canada, and all were trading in line with expectations. Despite the investment, as I spoke about on the previous slide, clearly, not all of the benefit is in here, and we can look back at the EBITDA bridge for any further questions on that. The group's strong liquidity ensures it can continue to invest in growth, and we will open two further new centers in The UK in FY 'twenty five, one in Uxbridge, which is due to open at the back end of next week and one in Reading, which will open in early July as well as complete as well as we've also completed the full refurbishment of our center in Liverpool Edge Lane, plus we'll do an additional four in Canada in the second half.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

This new center pipeline for FY 'twenty five and 'twenty six continues to grow and will continue to contribute to bottom line profits. The group also spent $5,800,000 on maintenance CapEx, including $1,000,000 on pins on strings installations, including one in Canada, part of our trial and also NOK 300,000.0 on solar panels. We still expect total CapEx for FY 'twenty five to be in the region of NOK 40,000,000 to 45,000,000, and we continue to see enhanced EBITDA and profit returns following significant investment in the estate. Now on Slide 10, we lay out a reminder of our capital allocation policy. And in line with this, we paid out a final dividend for FY 'twenty four of 8.08p per share.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

I've covered off the investments made in the portfolio, and also just want to reiterate our dividend policy of 55% of adjusted profit after tax. Now there is a small update to our policy and to provide investors as well as analysts with a clear view on what the interim dividends will be going forward. The group will declare interim dividends equivalent to 34% of the prior year full ordinary dividend, and that's what we've done for this half. The Board declared an interim dividend of 4.1p per share, which is an increase of 3% year on year, with the ex dividend date of the June 26 and the payment date of the July 25. As you'll also be aware, during FY 'twenty five, the group completed a 10,000,000 share buyback program.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And based on our historic special dividend rates, this buyback represents the equivalent of two years' worth of special dividends. And in our view, it's a more efficient method of distributing cash to shareholders. We're also pleased to confirm that during the second half FY 'twenty five, we've agreed a new three year twenty five million pound revolving credit facility with a 5,000,000. That's with our current provider, Barclays, and that's effective as of the 05/08/2025. The terms of the new RCF remain largely the same as the previous one, except for the margin rate, which is reduced to 1.3% above Sonia versus the 1.65% that we had previously.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And the RCF remains fully undrawn. On to Slide 11, and I'm sure based on the turns that I can see across the room, you've been enjoying the sunniest March and the sunniest April since records began in 1910, which isn't favorable to indoor leisure, as we've spoken about previously. Now despite this and the government prescribed cost increases and rising RPI, we're confident of the revenue growth in The UK as well as Canada and also the success of our new opening program. And also, it'll make for easier comparatives when we start reporting on FY 'twenty six as the weather shouldn't affect the FY 'twenty six quantum revenue numbers that are being pulled together by the analysts. We're also well positioned against inflation, as I laid out on the previous slide, and got confidence in our investments in new centers.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Our cash allocation policy remains unchanged at 55% of profit after tax. And with a significant investment in the estate in FY 'twenty four and 'twenty five, where Steve will cover up again in more detail, we're on course for enhanced EBITDA and profit contributions going forward.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Thanks, Laurence. So on Slide 13, we take a look at what's been driving the growth in both The UK and Canada. Before we touch on that, though, it's worth just having a look at the wider sector. And the competitive socializing market has shown no signs of slowing down post post the big leg up it was given as we emerged from the COVID lockdowns. The shift from consumers spending on retail has continued, resulting in more locations becoming available at more accessible rents for leisure.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And as a consequence, an increase in the number of operators alongside the continued growth of the established players. The new entrants tend to be more focused on the young adult market, late night and corporate consumer, albeit there is much more choice available for all customer types. Value for money and inclusivity, however, remain key, and bowling remains the activity of choice with, by far, the widest consumer appeal. We've worked really hard to maintain our position as both the market leader in quality, price and experience. Now relative to inflation, it's cheaper to bowl with us than it was in 02/2019, and you're receiving a better experience through the investments that we've made in the business.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We're located in prime position in the markets that we operate with both sustainable rents and a market leading offer we're continually improving, and we've sustainably and profitably grown our business through the economic cycles. So starting with The UK on Slide 14. We opened three new centers in the half, all on time and on budget, taking the total number of centers in the estate, 75 in The UK. Hollywood Bowl, Swindon at the popular Greenridge Leisure And Retail Park opened on the November 23 for a gross capital spend of $3,500,000 The center is a key anchor complementing the leisure offering of the scheme alongside a well established cinema, gym offer and a good selection of lifestyle retail. The 22 lane center occupying 25,000 square foot has been very well received and is trading in line with expectation.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We opened Hollywood Bowl Preston on the March 8 at the newly developed Animate scheme, a stone's throw from the town center. The 18 lane business set over 25,000 square foot is located next to a brand new cinema, new parking provision and multiple restaurants. This center is also trading in line with expectation. Hollywood Bowl Inverness opened its doors on the March 29, a very popular Inverness retail park. The scheme co anchored by View Cinema has a good mix of retail and leisure in a fabulous location within the city, and early trading has been very encouraging.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

As Lawrence mentioned earlier, Reading and Uxbridge are scheduled to open during the second half of the financial year. And with five more centers signed for the pipeline, we're on track to achieve our ambition of operating 95 centers in The UK by 02/1935. Our UK refurbishment program has remained on track during the period with four refurbishments or space optimization projects completed in Birmingham, Bentley Bridge, Yeovil, Tollworth and the Put And Play Centre in Harrow. The refurbishment of our Benley Bridge Center also included extending the amusement area and adding a darts, live darts experience to complement the existing offer. All of the refurbishments are trading in line with our expectations.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Now one of the projects is scheduled for completion in the second half. It's actually just been completed, and that's a 2,400,000.0 transformation of our center in Liverpool Edge Lane, and that's had a fabulous first couple of weeks trading. The second part of our growth strategy centers around enhancing the experience for our customers to drive spend per game and dwell time as laid out on Slide 15. We completed the rollout of pins on strings in The UK, completed lane upgrades to a number of our centers and commissioned the build of 50 new bowling ball cleaners to keep our core products industry leading. Our new amusement offer continues to excel with amusement spend per game up 11.6 versus the same period last year, driven by more centers offering better choice and earning us the right to charge a little more with tiered pricing.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We're also trialing a new completely cashless offer in four centers, employing the learning from our business across The Atlantic. Our mantra of speed, quality and consistency, a value from any price point remains key to our food and beverage growth strategy with secured new supplier contracts, improving margin and enabling us to keep prices low, a very important part of the overall value proposition in our centers. Now we are, first and foremost, a people business, and having a well trained, engaged, and well remunerated team is the only way we can to continue to deliver the level of customer experience our guests demand. We've once again been recognized as a great place to work, this time by The Times, coming in the top 25 of the best big companies to work for. And we've seen record customer service and the resulting high net promoter scores.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So turning to our Canadian centers on Slide 16. I'm delighted with the progress that we've made now in Canada since acquiring the Splitsville and Stryker businesses in 2022. Now since that acquisition, we've trebled the size of the estate, the levels of revenue and grown EBITDA from 2,800,000.0 to over 9,500,000.0 Canadian dollars. The Canadian business is becoming a more meaningful growth driver, now representing 16% of group revenues and 11% of the group's EBITDA. In the half, we opened two new centers, Splitsville Kanata in the country's capital, Ottawa, opened on the February 28.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

The new center, which is the only 10 pin bowling center in the city, is located on the very popular Kanata Entertainment Centrum mixed leisure and retail park. Now Kanata is the first opening to mirror a Hollywood Bowl style business in both size, offer, and location. The 18 lane pin on string center sells games of bowling rather than time, allows customers to bowl in their own shoes and boasts a fabulous amusement offer provided by our UK partners. The gross capital spend of 5,100,000.0 Canadian is expected to deliver a minimum 19% return and is currently trading ahead of expectation. Splitsville Creekside in Calgary, Alberta, opened on the March 27.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

The 18 lane center is located on a mixed retail leisure park to the north of the city, picking up the residential areas not covered by the three other centers we operate in Calgary. Also following the Hollywood Bowl model, the center has made a very pleasing start and being well received by the Calgarians. In the second half of the financial year, we'll be on-site with the construction of Christie's Corner, which is in Edmonton, Alberta, and we have three further centers signed for the pipeline as we build our presence across Canada and work towards our ambition of operating at least 35 centers by 02/1935. On Slide 18, we show a case study of the transformational refurbishments of an acquired center. Our Kingston Centre in Ontario was acquired in July 2022 for just shy of a hundred thousand Canadian dollars from the owner operator who then leased us back the space.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We invested 5,100,000.0 Canadians, so equivalent to what it would cost us for a new site, transforming the league focused bowling center into a family entertainment center. Key works included modernizing the bowling environment, installing pins on strings, new scoring system, creating a large amusement arcade, a new bar and diner, and a dedicated party area. The center is performing incredibly well with like for like revenues up over 133%, EBITDA up over 300 percent and on track to pay back within three years. So looking at operational improvements on Slide 19. We've defined the growth strategy for Canada following the early learnings of operating the business since acquisition and through customer research completed over the last two years.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Bowling plays a very similar role to the Canadian customers' lives as it does in The UK. Now we've spent years refining the offer in The UK, and those learnings and operational best practices have been very well received by our friends across The Atlantic, which has given us a big head start in new territory. We've started to roll out pins on strings in Canada following a successful trial. Seven of the 15 centers now benefit from the technology, and we'll be installing into the other centers as part of the refurbishment program. Tests of wear your own shoes have been very well received by customers.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

It is also being rolled out as part of the refurb and rebrand relaunches that we do in the businesses. Pricing trials are underway. Currently, there's no dynamic pricing in Canada, and now all centers are run are running out proprietary booking engine software. We were able to test time versus game sales, day part pricing, and dynamic pricing with some very pleasing early results. In the amusements, we've entered into a new agreement with our UK partners under much more favorable terms, and we're excited about the opportunity this presents.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Now in The UK, Twenty Seven Percent of our revenues come from amusements. In Canada, it's 16%. And with the investments and operational changes, we expect to see that gap start to close. We've also been making some changes to the food offer. So in addition to leveraging our increased scale with suppliers, we've reduced some menu complexity, improving the margin, quality, and consistency, and our customer service scores have grown as a result.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Now whilst we still have a way to go with our team, the development foundations are now in place, and the work to date has yielded record team engagement scores. As you can see on Slide 20, our new booking system has now been fully rolled out. And coupled with the restructuring of our marketing and IT teams led by a new CMTO, we started to unlock the opportunities identified as part of our digital transformation initiatives. We've also made solid progress consolidating our operational process across the two territories in which we operate, driving increased synergies and building a platform for our scale ambitions in both The UK and Canada. So in summary, it's been another very successful period for the group.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We are the market leader in the experiential leisure sector and with our value proposition continued to generate strong demand from our customers. Due to our difficult to replicate operating model, we are well insulated from the cost pressures and inflation and have plenty of growth left to come and the balance sheet that supports that growth ambition. Happy to now take any questions from in the room before we move to online.

Jack Cummings
Associate Director at Berenberg

I have a couple. You mentioned obviously you'd Jack coming to Berenberg, and you mentioned investing a lot in the business in the commentary with respect to returns. So we're solid. So as you're thinking about that maturity curve over the coming years in the cannabis sites and The UK sites, over the medium term, do want it to accentuate your your confidence in delivering, say, a mid to high single digit EBITDA growth over the coming years? And second question, just on Creekside and Kanata.

Jack Cummings
Associate Director at Berenberg

And you mentioned they're performing better than expectations. I think the last time you spoke with us, you said they were in line. So what's changed in that period, and what's driven them to surpass your expectations? And then final question, we're now three years on from the Canada acquisition. You take a look back at the last three years.

Jack Cummings
Associate Director at Berenberg

Is there anything that surprised you, any learnings, anything maybe you've done differently? And I think you know your answer, but are you as excited about Canada now as you were back then? Thanks.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

I'll let Laurence answer the first question. I'll be able to.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

So in terms of the maturity curve, yeah, we were very confident of how that's going to progress. Obviously, the way that the centers have matured is different in Canada than it is The UK. But also, we're finding that as you open up in The UK, and we've seen this in the last couple of years, is the maturity curve is slightly slower, but they still hit where we expect them to get to over the sort of short to medium, not even medium to long term. And just to sort of clarify your point in terms of do we expect to see EBITDA growth mid to high single digits? Yes. And also profit growth as well.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So Cutter and Creekside. And Creekside, we haven't opened them the last time we spoke, so it was it was an expectation that they will be trading in line with expectation. It, you know, it was I suppose it's worth just going back a little bit into the trials that we've been trying to put in place over in in Canada, particularly around the new site openings. So the vast majority of the Canadian state is solace located. They tended to have been more league focused bowling businesses.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

It wasn't the the the original sort of four splitsville sites that we acquired. The other acquisitions have tended to be bowling businesses set up for the sport of bowling rather than family entertainment centers. We've then been doing the refurbs to create a family entertainment center, employing lots of the learnings from the Hollywood Bowls. As part of the new site opening program, we wanted to open another Solas location, but with a brand new fit out and and a kind of brand standard for Splitsville that we're starting to develop through the refurbishments as well as then see whether or not we could colocate. So Canatharan Creekside, one's colocated with cinema, casual dining, lifestyle retail.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Another is lifestyle retail, some of the leisure, as it's gym operators, cinemas, but in a UK type location. So the way that we would target locations in The UK, size of demographic, car parking, colocated tenants, to see how they performed in comparison to the the acquisition model that we've been going through. And that then informs the growth strategy going forward. I do we continue to buy existing bowling sites, do the refurb and trade them, or are we better off looking at greenfield developments in those types of locations? And, obviously, super early days.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We've only been trading for a couple of months, but early indications are that they're that is the strategy that we should be employing going forward. You know, they're delivering ahead of expectation, and we expect to see similar returns from the new site openings that we can generate from The UK. That's despite the original view that they'd be a little bit lower at 17% rather than 19%. And and then in terms of the last question, what have been the learnings, like loads? You know, this is the first time that any of us really had looked at opening and developing an international business.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yeah. We should have probably pushed through The UK ways of working a little bit sooner. But equally, not knowing that and going across The Atlantic and from our research, there's not that many UK businesses that have done well over in North America. So we wanted to take a bit of a softly softly approach and, you know, we've we've done huge amount of customer research as well as the research of the team to try and understand what elements of The UK business would be well received by the Canadians. And actually, that program has allowed us to build a really solid operational strategy that we've only now been able to really start pushing through.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And we still got a long way to go. The other key challenges have been team. You we we have we've got a fabulous culture in The UK that's taken years and years to develop and refine. You automatically think that you're just gonna be able to pick that up and and and plump plump it into a new territory, and and that's been one of the the hardest things for us to, to get right and get consistent. Training that in tends to be quite difficult just kind of in in, recruiting new team members in at that level and then assuming that they're gonna pick it up and and and get it right.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And actually, when you look at The UK, Sixty Five Percent of The UK Managers have come through our own internal talent development programs. So come with that culture really well embedded. So actually, what we have done is really accelerated the new team development programs over in Canada so we create that level of talent to operate the new centers that we have the ambition of buying and owning. We've just finished the new center manager and training program in Canada, that first assessment center. We've got 15 great candidates on that program, which will be all ready to take over new sites over the next twelve to eighteen months.

Jack Cummings
Associate Director at Berenberg

Got it. Thanks.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

No worries. K. Yeah. Hi.

Analyst

Good morning. So I have a couple of questions. The first one was, in terms of the weather in the impact, what kind of swings can you see in, like, rush sales based on that in in in any sort of market period? I know you don't wanna get down to the rust itself up in terms of that swing. And then second was in terms of the competitive environment you'd mentioned, to what extent are you seeing that coming through in family orientated venues as opposed to sort of city center corporate orientated competitive socializing? You're seeing much in terms of bowling competition having gearing into.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yeah. No. Great question. Thanks. I mean, terms of the weather swings, I mean, you know, we outperform when it rains to the same degree we underperform when the sun comes out.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And, you know, clearly, when the sun comes out, particularly in the at the early part of the year, when ordinarily, you'd be expected to be a little bit colder. There isn't as much outdoor competition kicking around with the theme parks and that kind of stuff, and it can be quite painful. But equally, it evens itself out. The one thing that we do have in this country is weather. And so, you know, this and it's very inconsistent and unpredictable.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And, you know, over a longer period of time, it comes back. And I suppose the last time was what, Laurence? Two thousand and eighteen, which showed the biggest Yeah.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

02/2018. Second half of 02/2018, we were we were negative if you look back. And over the full year, we were 0.8% up on a like for like basis. And in 2019, we were plus 5.5% on a like for like basis. Heavily weighted towards the second half as you rolled what was a boiling hot summer.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

If people could take themselves back to that time, it was the first time in fifty two years that you would have done anything in a football tournament as well. But all of that effect, but really, the weather is the biggest effect when you're at sort of 80 plus degrees for June, July, August. We've had it earlier this year, late February, March, and then we've spoken about March, April and May as well. But actually, again, it can flip itself. We all know what yeah, we've all sat there and seen July, August, it completely wash out.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And then we're sitting there going, actually, yeah, fantastic for indoor leisure. And then all the pub companies will be coming out and saying, well, it's not great for us, and this is the effect that it has. What was I reiterate the fact that I don't expect FY 2026 numbers to come down because what we should be seeing is that weather effect normal itself out, and that's what we do from budgeting perspective, what we expect the Amazon to do as well.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And do you think one of the things that you well, we look at as well is, you know, is this weather or is it trend? And, you know, we've just had a fabulously wet bank holiday weekend and we traded brilliantly. And so no sort of drop in spend ahead or spend the game, you know. The customers that came were behaving in a very similar way that they always have them. And the fact is that there was a a real incentive for them to come indoors rather than going outside.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And, you know, that's the the downsides of operating at an indoor leisure based business with no other weather hedge. It's what it is. In terms of competitor environment, so, yeah, absolutely. What we've we've tended to find is the competitors coming into our market have been a little more leaning towards the young adult market and corporate business rather than family. Notwithstanding that, there have been new operators coming in trying to capture that part of our market.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And as I mentioned in the update, we are in the best location. We can't be out pitched in the markets that we operate. We're in the best location based on the core family market that we operate in. So concentration of demographic, accessibility, car parking, all of those things that make it really attractive for a family to visit our venue over another, which makes it really difficult for anybody to come into our marketplace and try and steal a share of of of that core family market. So, no, we haven't seen impacts in those markets.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So we operate where we've seen people coming in trying to position a family entertainment based offer. Does that answer your questions, though?

Analyst

Yeah. Alright. Typical.

Analyst

Oh, yeah. Thank you. And can I just ask about VODIES specifically? It'd be useful to know whether they were flat or in growth up to February after, which, as you say, is sort of, you know, watershed for when things change, and whether you expect what what do you expect in terms of volumes if it stays like this weather wise? And then secondly, on page 15, that like flight spend per head wrote yeah.

Analyst

The like flight spend per head is very interesting. It's very weighted towards the new ones. Is there anything you can do to get food and drink back up into growth? Is that an area of opportunity?

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

So, I mean, in terms of volumes, up to a fair part term, they were marginally down, but that was more to do with the competitive socializing piece. But we are talking less than 1% in terms of, like, volumes. And therefore, nothing to be concerned about. As we've said, you know, we've come off with what have been exceptionally strong growth period in terms of volumes. You know, I'm not going to give an expectation in terms of volumes because the weather does have such an effect on the overall numbers.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And if I just reiterate Steve's point is that when you see the bank holiday weekend and the school half term as it's been this week, we look outside to then, it's a bit gray as well. Yeah. We're we're very pleased about that, and we've seen the volumes come through as well as spend, and I think that's really important. The piece around this spend per game, and I'll let I will let Steve talk about the food and drink piece as well, add to add to it, is we also saw a 5.9% growth in spend per game on bowling as well. So you've got 5.9% on bowling, 11.6% on amusements and 1.1% on food and drink.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And we do have to be cognizant of the fact that the the food element of our business is seen as fuel for our customers. We're not sitting there with a steak dinner or lobster or something like that or but also, you've got to be good value for money because we are seen as that convenient opportunity when you're in our centers rather than as a choice when you are coming on to the leisure park or retail park about where should we eat today. And therefore, it's super important that we maintain that value for money proposition. The same with our drink as well, albeit it's about how we can ensure that customers will have more than one and how we continue to enhance that opportunity. And, actually, whilst it might it might not be ideal from a a pricing perspective to be at £7, which you'll see we see some of our competitors at.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

When we're at £4 for an entry price point, we do have opportunities to increase price, and we'll leave that there for the moment. But actually, I would just sort of go to the fact that a two p increase on a game of bowling is the equivalent of a 50 p increase on a price of a burger and a 20 p increase on the price of a drink. That's both from a mix perspective and also a margin perspective, I. E, because we only have 10% of our revenue come from food and drink or from food, sorry, and 17 comes from drink, and they operate at lower margins than bowling, That's why you get a different effect on it. So we just got to be mindful of the fact that it's very difficult for people to say what is good value for a game of bowling and therefore the opportunity to increase price there.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And the elasticity that you have allows you to take the price on bowling and still great value on things that they can compare to around food and drink.

Analyst

Thank you.

Analyst

Sorry. I'm above the front. And the. Couple of questions. Firstly, just on the one offs that you used spit up the first half.

Analyst

I think there were some more business rebates. This could ask. Can you outline the full year of packs for Surrey Quay's business written in bits? Let's see the little thing. Do it first half.

Analyst

Mhmm. Second thing, just on the teak with earn outs Mhmm. Can you remind us I keep on looking and I get confused. Can you just keep remind us what the key dates are and how it's treated p and l, was it just a bit of CapEx, cash flow? And then the the third book, on strike, was hit a very strong first half.

Analyst

I see two months, three years ago, you were sort of slightly looped more on that analytics business.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yes. No, cool. I'll let Laurence answer first, too. I'll talk about strike, and then I'll let Laurence talk about margins.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

So the business rates in the second half last year, had so in total for the year last year, had just under 3,000,000 So it's about 1,800,000.0 for the second half. The other one offs, so Surrey Quays is another 600,000.0. Edge Lane, it was actually closed for a little bit of the second half as well because we hadn't just completed it. But given the upside that we're going to see from the refurbishment, I thought we'll push that to one side, and we'll talk about how that's sort of moved its way through. There are no other one off impacts that we would expect.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

I'll just remind people around the hedge and the electricity has just come out. That's not a one off. That's just a contractual change. These things happen, And everyone was praising our our hedging strategy in twenty twenty, twenty one, '20 '2, '20 '3, '20 '4. You have to come out of it at some point, and we did come out of it in what we believe is a fantastically strong rate.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

In terms of the Tequin earn out, so this is I won't go through all the mechanics of I'm happy to talk about, you know, the how it's all worked out, etcetera, but it all goes through the p and l. So it's already hitting the p and l within administration costs and also within interest. That is then for building up a balance on the balance sheet, which currently sits on the balance sheet is 9,200,000.0 Canadian dollars, sitting as a liability within the balance sheet. And that will come straight out in terms of the dates. Now the dates will be post 2025.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

So it could be September 2025. We're in discussions at the moment. It's more likely to be September 2026, so we'll continue to build that up. And by the time we get to this time next year, we'll have a much clearer view of what the final amount will be. And therefore, there could be a release, but there could also be we're we're planning for the worst, basically, in terms of our accounting.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

It is capped. It can't. Yes. No. It's

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

not That's what we're planning, but we're planning for the highest it can be because what we need to make sure is we're not suddenly going, what's small amount, small amount? Oh, no. It's not, and we need to dump it all into FY 2026. So we are looking forward to FY '6, which is the basic could be. Currently within our provision, we have a 20% chance of it happening in FY 'twenty five or an 80% chance of it happening in FY 'twenty six.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

That forms part of the calculation that we do from a provisions perspective, and then that all gets pushed into the balance sheet. In terms of where it comes out from a cash perspective, it comes out of cash. I mean, it's a P and L impact, which is what we've seen anyway. And we don't get a deduction for it from a tax perspective either, except the Canadian tax rules. Is there anything else on the?

Analyst

So so at the moment, it's $99,000,000 Canadian dollar

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

point 2,000,000 Canadian. Dollar

Analyst

cash outflow potentially.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

No. So that's what we're currently providing for. That then builds, continues to build. So it can build up to $1,515,000,000. But that 15,000,000 will build will continue to build if we do our provisions.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

So there shouldn't you know, it's not that we're gonna have a big jump up in the cost or anything like that.

Analyst

And in case you work with the old you're working.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Correct. Correct.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And then Stryker, we've we've sort of never really been lukewarm on it. It was part of the acquisition. Was it was a difficult business to split out of the splits fill trading, you know, bowls because there's so many shared services, which is why we kind of bought it all together. We saw it as a great way of being able to help do the refurbs, new site openings of our own business. You know, we own a bowling supply company now, so we're able to get all this at cost, and it saved us over a million dollars last year on margin that we would have been paying elsewhere.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

But equally, by adding a bit of professionalization to it, being able to leverage some of the CRM systems, website builds, all that kind of stuff from The UK, we've been able to start growing that business as well. It it's really important in two ways. One, it helps us build relationships with lots of the local operators. You know, at some point, they may wanna sell to us. So having a good relationship with them and a a deeper understanding of the wider bowling market in Canada, as well as them putting us at the forefront as a business for all new new systems, products, ways of working.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We've just invested in the team in Stryker. So we've we've just recently recruited a new sort of equivalent of a managing director, the president or vice president over over in Canada, but the equivalent of a UK MD to really get hold of that business. And I suppose really understand what the true opportunity is if we were to go hard after it so we can continue to grow the revenues and EBITDA of that business, as well as giving us a a wider support function to better serve the growth of the splitsville.

Analyst

It's the margin group was level. Money level. Much, much less.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Yeah. So the EBITDA margin is 8%. Yeah.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yeah. Which just put pressure on the Canadian group business, but equally, there's more cash. So because Lawrence keeps telling me he can't back a percent.

Analyst

Alright. Yeah. Might have lost. I just two questions. On your set now, CapEx positions, could you just provide a bridge? It could be at least £20,000,000 of debt to this, given the few new side of things.

Analyst

There's some more reverbs. And then just trust it on the other places. So you decide kinda and it performs part of your your thinking around the training strategy.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Yes. So in terms of Bridge, we'll spend a similar amount on maintenance CapEx as we did in the first half. Whilst we did open three centers or five centers overall, we've still got some of the money to be paid for those centers. We hold a retention back of 5% on all centers, plus Inverness opened, as Steve mentioned, on March 28. So there's still quite a lot of the over 25% of the Inverness amount to be paid.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Two new centers in The UK, so in Reading and Uxbridge, are to be paid for. They're both $3,300,000 gross CapEx. Or sorry, around Uxbridge, Three Point Three Million. Reading is actually close to 4,000,000 But big site and the returns will be in line with the with the CapEx spend. And also, we'll start on-site in Christie's Corner.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And therefore, there will be a small amount of that around 30% of that. And then the final element is around the refurbishments. So we'll do four refurbishments in Canada. They'll all be in excess of 1,000,000 Canadian dollars, which was an easy big number, obviously, but given the strong exchange rate, which works against just from a statutory P and L reporting perspective, but it's great when you send me cash over there. At 1.8, it does come down to around £640,000.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

But then also Liverpool refurbishment, which is just complete, was a £2,400,000 refurbishment, basically like a new center. It's a shame Greg's not here from Shorecap. Not that you guys aren't all great, but he's also visited there last week with his family and just said it's it's like walking to a completely different center over in Liverpool.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And Stokes. Yeah. I mean, we continue to learn from it for sure. It's about our kind of first proper multi activity venue. The Canadian team are really excited about how we trade, and the customer feedback and then the ease of operation is is much better than we originally thought.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So some fab learning so far. I mean, one of the things that we do have in Canada that we don't really often get the opportunity for in The UK space. So when space comes available, you tend to be able to get hold of quite a lot more in Canada, even in really good locations than we would ever be able to in The UK. And so we are gonna look at maybe doing another version of Stokes. We're just working through the the detail of it now and and, you know, location, like, in The UK is everything.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

You know, notwithstanding that, we've learned quite a lot that we're able to then translate back into The UK. You know, how do these other operations work with the existing customer base that we have? And and, you know, where we where we if we were to come up with a location in The UK where we could employ some of those lady learning some stokes, a slightly higher end food and beverage offer with, you know, the go karting does work really well in those family entertainment centers because you've got that fat mix for the whole family unit with bowling and with amusement arcade and with food and beverage. So, you know, were we to be able to find something in The UK from a space perspective, we we definitely look to try and incorporate those learnings in The UK also.

Ross Broadfoot
Ross Broadfoot
Director, Co-Head SMID Equity Research at RBC Capital Markets

Ross? Rossford for RBC. Just two on Canada, please. I think you mentioned that new sites, colocation, and cinemas have done particularly well. Does knowing that change anything about the shape of the rollout, where you're going to go, and indeed give you more or less enthusiasm around upside and downside to that 35 target?

Ross Broadfoot
Ross Broadfoot
Director, Co-Head SMID Equity Research at RBC Capital Markets

And secondly, just any commentary on how the sort of cultural bowling changes have gone in terms of from time into number of games, shoes, you know, rented shoes, etcetera.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yeah. Yeah. That's for sure. So, I mean, I'll answer it, please, Laurence, to dip dip in. In terms of changing the shape of the rollout, not really because we always kinda had a bit of a hunch as to those locations being probably more profitable and better received by customers than the tertiary stand alone locations just from what we've seen in The UK.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And the understanding that actually, as I mentioned earlier, bowling plays a very similar role in the Canadian's lives as in The UK consumer. It was just getting access to that space. The the Canadian certainly, the retail market is is a little bit behind The UK and The US. In the retail is still super expensive. You know, there aren't huge amounts of space become available like there was in The UK from a glow of all the Toys R Us closing, Devon and British home stores, the the big crashes in a lot of the malls.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

That's just not happened in Canada. It's still really really quite a buoyant market from a retail perspective. You know, notwithstanding that though, the Canadian landlords do recognize that there's gonna be a shift. And at some point, they're gonna want leisure as part of these retail offerings. I'm actually over there next week visiting one of the bigger landlords just to present half year results and showcase what we've been able to achieve in Canastra and Creekside to show the levels of quality.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Because equally, the bowling environment is incredibly under invested in Canada, very much like it was in The UK, like, you know, fifteen, twenty years ago. So people's perception of a bowling center is very different to what we've created. So now we've got these fab locations. We can showcase them to the landlords to show just how great it could be to complement our existing offer, but being mindful that we're just not gonna be able to pay retail style rents. And, you know, we get we're gaining some real traction with those landlords, hence why we've been able to build this pipeline in the Christie's Corner, the new site that we've just signed as well.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

It they're in similar locations to Kanatra and Creeksides to continue to build that footprint. But it's a great question in terms of, you know, do you buy an existing bowl, spend 5,100,000.0, or do you find the Greenfield site in the fab location spend 5,100,000.0? The former, you can do a lot quicker and there's more available. The latter, I think, will be more profitable in the longer term. And, you know, given the reputation we've built as a cautious team focused on profit number, you can imagine which route we're gonna take.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

In terms of the cultural changes and how it's gone, no surprise, people prefer to wear their own shoes than putting their foot in something 20 other people have worn before. Right? So Only 20. Yeah. Well, yeah, that's on the hour.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So, yeah, I mean, these things have the Canadians are just kinda really nice. So that it's not like people would ever kick off what you may do in The UK and go, I just don't wanna do that. They'll you kind of suck it up. But actually, by so we haven't seen this kind of massive shift in net promoter scores or custom service scores that we saw in The UK when we did it. But what you've seen is a much happier and a more engaged customer who's then spending more and coming back a little bit more frequently.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Now these are early we're early doors on these charts. Right? We put it in place in a number of centers pre refurb just to do the absolute swap and test. You know, it's been a couple of months in the making. Open new sites with just this new way of working. The games versus time, it they're pretty chilled and laid back in Canada, so trying to move that game time on is it's been a bit more of a challenge. So we've had to extend whilst we allocate ten minutes per person per game in The UK. We've had to push it to kind of thirteen minutes per person per game in Canada, but with an ambition of slowly bringing that down as people get a bit more used to the ways of working. It's also been about menu change as well. You know, we have a slightly wider menu offering in Canada, and, you know, when the food arrives, people stop bowling.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So you gotta be mindful about what we're selling on the lanes versus time. But it's all really good fun and and fabulous learnings. You know, now we're as excited about it as we were back then. Yeah. %. It's a a fab growth opportunity for the company.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Roberta?

Roberta Ciaccia
Roberta Ciaccia
Equity Research Analyst at Investec Group

Hi. It's Roberta from Investec. Just a question on the cost side. Should, for whatever reason, the trading not be we cannot be great because it's weather, whatever, What are the additional cost levers you can act on at this stage given you're already very tight?

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Yeah. I mean, look, we're a highly operationally geared business. Right? I mean, you know, fixed cost levels are pretty high. We do have some opportunity on labor.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So whilst we are already below 20% on a center level basis, you know, we can pull that back a little bit further. You know, our bonus systems are fabulously rewarding for our team members and our center managers. And as they build up this great outperformance part, the early part of the year, they wanna hold on to it given that they take a percentage of the outperformance. And so they look incredibly hard at all of those core measures that you can influence as an operator. So, you know, how good your margins are, stock wastage, payroll levels, all of those kind of really solid operational changes.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

The flip of it though, Roberto, is always on opportunity rather than savings. Like, you know, you can make the savings and, yes, it is around the margins, but your real opportunity is driving spend per head from those customers that do continue to cut. It's not like nobody comes when the weather goes against us. And, one of the things that we can do is leverage the database. You know, we have a business that appeals to 99% of The UK consumer base.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

There's a percentage of our customers that ordinarily can't afford to go bowling unless we do a discount. And guess what? We do a discount when the weather's against us. So we do have customers coming to us, and then it's the operator's job to really drive spend ahead from those consumers when they're with us.

Roberta Ciaccia
Roberta Ciaccia
Equity Research Analyst at Investec Group

Okay. And on the on the competitive side from, like, the question you have before, am I right in understanding that there's been some new operators coming to the markets, but you think that the effect will be short term?

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Well, I mean, it's not necessarily short term. A lot of these guys are investing kind of £23,000,000 on fit outs of new sites. What we've seen in those start to level off a little bit. So there was a, you know, huge kind of glut of new operators coming into the market post COVID. But, actually, a lot of those guys have been pretty public about saying they're now slowing down their new openings as they're looking to test those trials of new site openings.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So, you know, look at Roxy Lane seven, those guys who had a really ambitious and very aggressive new opening program have now just kind of started to temper that, but they start to gain scale across The UK.

Roberta Ciaccia
Roberta Ciaccia
Equity Research Analyst at Investec Group

Sorry. I think I meant more the other competitive competitive socializing games. So not not just

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Yeah. What what we're seeing is they are still opening. We're seeing the effect in the first year. It's like a new restaurant opens. People go and visit it.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

They come back, and they go, actually, I really enjoyed doing that experience. But to go back again, not really, and they go back to to the bowl. So we do see an effect in the first year. And then more and more of them now are coming outside of London where they go, well, we've sort of nothing else to do in London, really. Let's try somewhere else.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

And you do see them open. It's only really the ones that have got something that is slightly different, more family orientated that will have more of an impact. And there just aren't a lot of those out there. They're few and far between. There's the odd operator who aims at families, but they're very, very few and far between.

Analyst

Any other questions from the room? Do we have any questions from online?

Analyst

Just one from Gavin at Stuckwatch about UK Food and Beverage specifically and if we can expect any discounts or promotions.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

We we we try and keep our well, we try. We keep our food and beverage offer incredibly good value for money already. So, you know, pie session lager in The UK averages just over £4, which is pretty good value in comparison to anything else that you're paying. You know, our burger and chips, the main sort of hero product on the menu, is still kind of pretty much round about the 2,019 pricing level where we were. So we we we managed to offset a lot of the food inflation costs.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

You know, as Lawrence mentioned earlier on, Spit Point was taking the price on on food, keep that super competitive, and really engaging for our customer base. We'll save the profit elsewhere within the business from the easement to food and and and the bowling offer. So offering discounts on food and beverage, it isn't something that we tend to do or what we we do is just keep fabulous value for money at all times.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Other questions?

Analyst

Can I just just follow-up? Just in terms of pressing in the the machines, two things. It is you mentioned tiering. What is the range, like like, game on a machine? Yeah.

Analyst

And how is that stretched? And then is there a slight reduction of volume reads more dwell time at the machines less huge?

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Okay.

Analyst

The machines, is there a slight sort of trade up between volume and and machine?

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

So in terms of the pricing variability, you can play the the entry price point is 50 p. It's on the cranes. You'll then go to a pound for the vast majority of the video and the skill with prices offer. And then we've introduced the this kind of good, better, best, if you like, within the amusement areas, which just earns us the right to charge a little bit more. So the two player games, air hockey, Pac Man smash, pool, we can push the pricing to kinda £1.50 to £2.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And then you've got motion and virtual reality, which again helps you push it a little bit further. So, yeah, normal box standard Mario Karts, pound to play. Motion Mario Karts, two pounds. Virtual reality Mario Karts, four pounds. So you've got that mix within the amusement areas.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

And the and the the products that are north of the quid, so two pound and four pound play, will have the little Nyax boxes where you just tap your debit card, and it will then allow gameplay versus just coin mix. Now the next option with that is then the four trial sites where we've gone fully cashless. This is a brand new cashless product that that there were kind of two main operators of cashless functionality to embed an intercard, which is pretty much global, really. And there's a new operator that's come to market we are testing, which is so a lot more user friendly. You can have it on app.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Use your phone to update via Apple Pay. Use that to kind of uses the payment method across the centers. There's lots of upside that we we're rolling out across all of the Canadian businesses, and we're trialing in The UK. Now that gives you significantly more flexibility and that you can charge £1 5 p, £1 7 p, you know, because you're doing it on credits rather than pounds. Now those who've been coming to these meetings for the last sort of eight, nine years or so will remember that we did try this back early doors, back in sort of 02/2016, '2 thousand '17 where we did do a cashless trial, but it was using this the the slightly old old fashioned, for a more of a better word, proprietary hardware, and it didn't work very well for us.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

A number of things have happened since then. One, the text got a lot better, but two, certainly post COVID, a lot less people are walking around with cash in their pockets. And what they're doing now is kind of tokenizing cash. They'll use their debit cards on our change machines to spit out £10 coins that they'll then use in the amusement areas. If you could reduce those barriers to play, then it could provide even more of an opportunity for us longer term.

Stephen Burns
Stephen Burns
CEO at Hollywood Bowl Group

Any other questions from the room or online? K. I think that's a wrap, my guys. Thank you very much.

Laurence Keen
Laurence Keen
CFO at Hollywood Bowl Group

Thank you.

Executives
    • Stephen Burns
      Stephen Burns
      CEO
    • Laurence Keen
      Laurence Keen
      CFO
Analysts
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Key Takeaways

  • Record H1 performance: Revenue rose 8.4% to £129.2 m and EBITDA reached a record £38.8 m with net cash of £22.7 m after a £10 m share buyback and maintaining an undrawn revolving credit facility on improved terms.
  • UK operations resilience: Like-for-like revenues grew 1.5% and spend per game rose 6.3%, offset by a 4.5% decline in game volumes due to centre closures, Easter timing, weather and competitive socializing offerings.
  • Canadian expansion gains traction: Like-for-like centre growth of 3.7% plus new centres contributed over CAD 4 m in H1, driving total Canadian revenues to CAD 38 m and boosting group EBITDA.
  • Inflation management: The group has hedged utilities, installed solar on 33 UK centres and absorbed national living wage and business rate increases, limiting further cost pressures.
  • Growth pipeline backed by strong CapEx: Invested £20 m in five new centres and six refurbishments in H1, with two more UK openings and four Canadian refurbishments planned and FY 25 CapEx guided at £40–45 m.
AI Generated. May Contain Errors.
Earnings Conference Call
Hollywood Bowl Group H1 2025
00:00 / 00:00

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