Good morning and welcome to the Hollywood Bowl Group plc Analyst Meeting. For those online, questions can be submitted at any time by the Q&A tab situated on the right of your screen. To ask any of your questions, press send. I'd now like to hand you to Stephen Burns, the Chief Executive Officer.
Thank you very much, and good morning, everyone. Thank you to everyone for taking the time to attend our Financial Year 2025 Half-Year Results Presentation. I'm going to take you through the key highlights of the half and our operational highlights in both the U.K. 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. The first half of our financial year has been a record performance for the Group, with revenues of GBP 129.2 million, up 8.4% on the same period last year. Despite the increased cost burden, record EBITDA of GBP 38.8 million.
We opened five new centres in the half, three in the U.K. and two in Canada, and completed six refurbishments, four in the U.K. 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 GBP 10 million share buyback, we finished the half with net cash of GBP 22.7 million. We also renewed our revolving credit facility that remains undrawn on more favourable terms. I'll now hand you over to Laurence, who'll take you through the numbers and the financial outlook.
Thanks, Steve. On slide V, we lay out the revenue bridge from H1FY24 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. U.K. Centre Light for Lights 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, Light for Light revenues were negatively impacted by Easter moving to the second half, which was worth 1.1% when you include the extra trading day in FY24 due to the leap year.
The weather impact in late February and all of March, as well as the continuing competition from competitive socialising offerings in certain locations, were also factors in the game volume reduction versus the prior year. Now, whilst we have seen game volume reduction, our spend per game is up 6.3% from GBP 11.21 to GBP 11.87, as customers continue to seek value for money. I'll talk to the EBITDA impact of the Easter and leap year effect on the next slide. The like-for-like revenue growth in the U.K., alongside the performance of the new U.K. centres, resulted in record U.K. revenues of GBP 108.2 million and growth of 4.7% compared to the comparative period in 2024.
Canadian like-for-like centre 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. The opposite happened when Toronto got more snow in 10 days in February than they got in all of 2024. Those combined impacted like-for-likes negatively by 2.7 % points. New centres have contributed significantly, over CAD 4 million, to the first half performance, as has the performance of Striker which saw revenue growth of over 100%, resulting in total CAD revenues of CAD 38 million, which is GBP 21.1 million. Also, due to the weaker Canadian dollar but strong pound, the forex movement impacted the year by GBP 1.2 million.
Given we are not translating or bringing back dollars to the U.K., we are only sending over, actually it is working in our favor when we are investing in the Canadian state. On slide VI , we set out the EBITDA bridge. Now, first, I want to bring everybody's attention to the one-offs in H1 of FY2024. When comparing to the first half, the Group is negatively impacted from the one-offs to the value of GBP 3 million in total, including business rates rebates of GBP 1.1 million, the Surrey Quays and Liverpool Edge Lane closures that I spoke about before, of GBP 0.9 million combined, and then the Easter and leap year impact of GBP 1 million at EBITDA. The rebate number for FY2024 in the first half would be GBP 35.8 million.
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 centers 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 U.K., which was worth GBP 2.2 million, and in Canada, which was worth GBP 1.2 million, with more to come as these centers continue to maturity over the coming 12-18 months. These contributions resulted in EBITDA of GBP 38.8 million, a growth of 8.8% compared to the rebased FY2024 number. Now, on slide VII, we set out the income statement. I'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 U.K. was 84.2%, up 30 bps on H1 of FY2024, with an increased margin seen in food and drink. 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 Striker business in the first half of this year versus last year. Splitsville centres themselves had a gross margin on cost of goods sold of 83.3%, also down by 1.4 % points. 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 centre versus just bowling.
Centre-level admin costs, excluding depreciation and amortization, were up 15.1% to GBP 55.8 million. The largest part of this cost, as noted on the slide, is employee costs, which were up 11% to GBP 24.9 million, an increase of just GBP 2.6 million compared to the previous period due to the impact of national minimum living wage, as well as higher like-for-like revenues, new U.K. centres, as well as the continued growth in Canada. Total employee costs in Canada were CAD 8.2 million, an increase of CAD 2.3 million. Total property-related costs accounted for on a pre-IFRS 16 basis were GBP 24.6 million, with GBP 21.4 million of that for the U.K. business. Rent costs were up just GBP 0.7 million to GBP 9.9 million in the half, and business rate costs were GBP 3.7 million.
Now, that's an increase of GBP 0.7 million, but actually a slight decline when you take into account the impact from the business rates rebates we saw last year. Canadian property costs were CAD 5.8 million, an increase of CAD 2.6 million, just due to the increased size of the estate. Onto corporate costs, increased marginally to GBP 12.7 million, with U.K. costs marginally down to GBP 10.4 million by GBP 200,000. As we continue to build our support team in Canada for growth, corporate costs increased to CAD 4.2 million from CAD 2.9 million. Group-adjusted EBITDA pre-IFRS 16 increased by 0.5% on the face of the slide, but as discussed on the previous slide, the one-offs negatively impacted the numbers by GBP 3 million, and therefore we would have seen an increase of 8.8%. Exceptional items pre-interest in the first half actually totaled a GBP 0.7 million credit. This relates to three areas.
The first, of GBP 1.6 million income, is in relation to a business interruption insurance claim received in the period. The second, small amount of admin costs, around GBP 100,000, related to the closure of our Hollywood Bowl Centre in Surrey Quays. The final element is the earnout consideration for the Teaquinn precedent, which is an exceptional cost of GBP 1.2 million, of which GBP0.9 million is in admin and GBP 0.3 million 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 amortization has increased year on year by GBP2.1 million. Canada was a large part of this, over GBP 1 million, 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 U.K. and Canada is evident at this stage in Group profits due to the growth and expected maturity both in the U.K. 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 GBP 28.3 million. If you exclude the one-offs from financial year 2024, that actually would have increased by GBP 2 million rather than a decrease of GBP 1 million. The Group delivered profit after tax of GBP 20.6 million and basic earnings per share of GBP 0.12 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, the difference being over GBP 2 million shares, and that effect will obviously iron itself out as we approach year-end. With cost inflation top of mind and with RPI hitting just over 3.5% in April in the U.K., we set out on slide VIII our position on inflation. Now, we're mindful of the inflationary impacts but are well positioned to manage these increases due to our P&L mechanics. The impact from national living wage and national insurance is significant, as laid out here, and we look forward. And 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 U.K. hourly paid team member working 20 hours per week on national living wage, the national insurance would increase from just under GBP 400 per annum to GBP 1,155 per annum. So, an effect for us on a full year basis of GBP 1.2 million. Business rates in H2 of FY2025 will increase by 4% versus the same period in 2024, given the change in the uniform business rate as announced in November of 2024. Also, we do not have any more business rates refunds to come. As a reminder, we are now in our new utility hedge, which saw an increase in FY2025 of just over GBP 1.4 million for the full year. However, our current view on the look forward to FY2027 should see minimal like-for-like increases in usage costs of less than 1% based on the hedge.
We also now have 33 centres in the U.K. 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 U.K. April was actually at 1.7% compared to 3.5% in the U.K. This also results in a low expected increase in other areas that are based on RPI, like rents. Toronto payroll inflation is due to increase by just 2.3% in terms of the national minimum wage. 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 IX, we look at the capital investments. During the first half, the Group invested net CapEx of GBP 20 million, including CAD 10.1 million in relation to the five new centres that opened in the period.
That's three in the U.K. and two in Canada. A total of GBP 4.1 million was invested in the refurb program with four centers in the U.K., as well as the completion of two in Canada, and all are trading in line with expectations. Despite the investment, and 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 U.K. in FY2025, 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 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. This new centre pipeline for FY2025 and 2026 continues to grow and will continue to contribute to bottom line profits. The Group also spent GBP 5.8 million on maintenance capex, including GBP 1 million on pins-on-strings installations, including one in Canada, part of our trial, and also GBP 0.3 million on solar panels. We still expect total capex for FY2025 to be in the region of GBP40-GBP 45 million, and we continue to see enhanced EBITDA and profit returns following significant investment in the estate. Now, on slide X, we lay out a reminder of our capital allocation policy. In line with this, we paid out a final dividend for FY2024 of GBP 8.08 per share.
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. That is what we've done for this half. The board has declared an interim dividend of GBP 4.1 per share, which is an increase of 3% year- on- year, with the ex-dividend date of the 26th of June and the payment date of the 25th of July. As you'll also be aware, during FY2025, the Group completed a GBP 10 million share buyback program.
Based on our historic special dividend rates, this buyback represents the equivalent of two years' worth of special dividends. In our view, it is a more efficient method of distributing cash to shareholders. We are also pleased to confirm that during the second half of FY2025, we have agreed a new three-year GBP 25 million revolving credit facility with a GBP 5 million accordion. That is with our current provider, Barclays, and that is effective as of the 8th of May 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. The RCF remains fully undrawn.
On slide XI, and I'm sure based on the hands that I can see across the room, you've all 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 U.K., as well as Canada, and also the success of our new opening program. Also, it'll make for easier comparisons when we start reporting on FY2026, as the weather shouldn't affect the FY2026 quantum revenue numbers that are being pulled together by the analysts. We're also well positioned against inflation, as I laid out on a previous slide, and got confidence in our investments in new centers. Our capital allocation policy remains unchanged at 55% of profit after tax.
With a significant investment in the estate in FY 2024 and 2025, we'll see, we'll cover up again in more detail, we're on course for enhanced EBITDA and profit contributions going forward.
Thanks, Laurence. On slide XIII, we'll take a look at what's been driving the growth in both the U.K. and Canada. Before we touch on that, though, it's worth just having a look at the wider sector. The competitive socialising market has shown no signs of slowing down 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. 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. Relative to inflation, it's cheaper to bowl with us than it was in 2019, and you're receiving a better experience through the investments that we've made in the business. 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.
Starting with the U.K. on slide XIV, 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 U.K. Hollywood Bowl, Swindon at the popular Greenbridge Leisure and Retail Park opened on the 23rd of November for a gross capital spend of GBP 3.5 million. 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 sq ft, has been very well received and is trading in line with expectation. We opened Hollywood Bowl Preston on the 8th of March at the newly developed Animate Scheme, a stone's throw from the town center. The 18-lane business set over 25,000 sq ft is located next to a brand new cinema, new parking provision, and multiple restaurants.
This centre is also trading in line with expectation. Hollywood Bowl Inverness opened its doors on the 29th of March at the 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. Early trading has been very encouraging. As Laurence mentioned earlier, Reading and Uxbridge are scheduled to open during the second half of the financial year. With five more centres signed for the pipeline, we're on track to achieve our ambition of operating 95 centres in the U.K. by 2035. Our U.K. refurbishment program has remained on track during the period, with four refurbishments or space optimisation projects completed in Birmingham Bentley Bridge, Yeovil, Tolworth, and the Putt & Play Centre in Harrow.
The refurbishment of our Bentley Bridge Centre 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. Now, one of the projects is scheduled for completion in the second half. It's actually just been completed, and that's a GBP 2.4 million transformation of our centre in Liverpool Edge Lane. That's had a fabulous first couple of weeks trading. The second part of our growth strategy centres around enhancing the experience for our customers to drive spend per game and dwell time, as laid out on slide XV. We completed the rollout of pins-on-strings in the U.K., completed lane upgrades to a number of our centres, and commissioned the build of 50 new bowling ball cleaners to keep our core product industry leading.
Our amusement offer continues to excel with amusement spend per game of 11.6% versus the same period last year, driven by more centres offering better choice and earning us the right to charge a little more with tiered pricing. We are also trialling a new completely cashless offer in four centres, employing the learning from our business across the Atlantic. Our mantra of speed, quality, and consistency, a value for money 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 centres. We are first and foremost a people business, and having a well-trained, engaged, and well-remunerated team is the only way we can 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. We've seen record customer service and the resulting high Net Promoter Scores. Turning to our Canadian centers on slide XVI, I'm delighted with the progress that we've made now in Canada since acquiring the Splitsville and Strike businesses in 2022. Since that acquisition, we've trebled the size of the estate, the levels of revenue, and grown EBITDA from CAD 2.8 million to over CAD 9.5 million. 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 28th of February.
The new centre, which is the only 10-pin bowling centre 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 centre sells games of bowling rather than time, allows customers to bowl in their own shoes, and boasts a fabulous amusement offer provided by our U.K. partners. The gross capital spend of CAD 5.1 million is expected to deliver a minimum 19% return and is currently trading ahead of expectation. Splitsville Creekside in Calgary, Alberta, opened on the 27th of March. The 18-lane centre is located on a mixed retail and leisure park to the north of the city, picking up the residential areas not covered by the three other centres we operate in Calgary.
Also, following the Hollywood Bowl model, the centre has made a very pleasing start and been well received by the Calgarians. In the second half of the financial year, we'll be on site with the construction of Christy's Corner, which is in Edmonton, Alberta, and we have three further centres signed for the pipeline as we build our presence across Canada and work towards our ambition of operating at least 35 centres by 2035. On slide XVIII, we show a case study of the transformational refurbishment of an acquired centre. Our Kingston Centre in Ontario was acquired in July 2022 for just shy of CAD 100,000 from the owner-operator who then leased us back the space. We invested CAD 5.1 million, so equivalent to what it would cost us for a new site, transforming the league-focused bowling centre into a family entertainment centre.
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%, and on track to pay back within three years. Looking at operational improvements on slide XIX, 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. Bowling plays a very similar role to the Canadian customers' lives as it does in the U.K. We've spent years refining the offer in the U.K., 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 the new territory.
We've started to roll out pins-on-strings in Canada following a successful trial. Seven of the 15 centres now benefit from the technology and will be installing into the other centres as part of the refurbishment programme. Tests of wear your own shoes have been very well received by customers. 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 centres are running our proprietary booking engine software. We're able to test time versus game sales, daypart pricing, and dynamic pricing with some very pleasing early results. In the amusements, we've entered into a new agreement with our U.K. partners under much more favorable terms, and we're excited about the opportunity this presents. Now, in the U.K., 27% of our revenues come from amusements.
In Canada, it's 16%. 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. 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. 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 XX, 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've 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 U.K. and Canada. In summary, it's been another very successful period for the group. We are the market leader in the experiential leisure sector, and with our value proposition, we continue 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 a balance sheet that supports that growth ambition. Happy to now take any questions from in the room before we move to online.
I'll work out all. I'm moving to another scene, Jack Cummings , Berenberg, and you mentioned investing a lot in the business and the commentary with respect to returns to be solid.
As you're thinking about that maturity curve over the coming years in the Canada slice and the U.K. slice, over the medium term, do you want to accentuate your confidence in delivering, say, a mid to high single-digit EBITDA growth over the coming years? Second question, just on Creekside and Kanata, you mentioned they're performing better than expectations. I think the last time you spoke to us, you said they were in line. What's changed in that period and what's driven them to surpass your expectations? Final question, we're now three years on from the Canada acquisition. You take a look back at the last three years. Is there anything that surprised you, any learnings, anything maybe you've done differently? I think we know your answer, but are you as excited about Canada now as you were back then? Thanks.
Laurence, that's the first question. I'll put you on the other two.
In terms of the maturity curve, yeah, we're very confident of how that's going to progress. Obviously, the way that the centres have matured is different in Canada than it is the U.K. Also, we're finding that as you open up in the U.K., and we've seen this in the last couple of years, 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. 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.
Kanata and Creekside, we had not opened them the last time we spoke, so it was an expectation that they would be trading in line with expectation. You know, I suppose it is worth just going back a little bit into the trials that we have been trying to put in place over in Canada, particularly around the new site openings. The vast majority of the Canadian estate is solos located. They tended to have been more league-focused bowling businesses. Other than 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 centres. We have then been doing the refurbs to create a family entertainment centre, employing lots of the learnings from the Hollywood Bowls.
As part of the new site opening program, we wanted to open another solos location, but with a brand new fit-out 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 co-locate. Kanata and Creekside, one's co-located with cinema, casual dining, lifestyle retail. Another is lifestyle retail, some of the leisure, it's gym operators, cinemas, but in a U.K.-type location. The way that we would target locations in the U.K., size of demographic, car parking, co-located tenants, to see how they performed in comparison to the acquisition model that we've been going through. That then informs the growth strategy going forward, i.e., 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?
Obviously, super early days, we've only been trading for a couple of months, but early indications are that 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 U.K. That's despite the original view that they'd be a little bit lower at 17% rather than 19%. In terms of the last question, what have been the learnings, like loads? This is the first time that any of us really had looked at opening and developing an international business.
You know, we should have probably pushed through the U.K. 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 U.K. businesses that have done well over in North America. We wanted to take a bit of a softly, softly approach. You know, we've done a huge amount of customer research, as well as the research with the team, to try and understand what elements of the U.K. business would be well received by the Canadians. 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. We've still got a long way to go. The other key challenges have been team.
You know, we've got a fabulous culture in the U.K. that's taken years and years to develop and refine. You automatically think that you're just going to be able to pick that up and plump it into a new territory. That's been one of the hardest things for us to get right and get consistent. Training that in tends to be quite difficult, just kind of recruiting new team members in at that level and then assuming that they're going to pick it up and get it right. Actually, when you look at the U.K., 65% of the U.K. managers have come through our own internal talent development programmes. So, come with that culture really well embedded.
Actually, what we have done is really accelerated the new team development programs over in Canada so we could 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 in 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 12-18 months.
Thanks. No worries. Katie.
Yeah, good morning. I have a couple of questions. The first one was, in terms of the weather in the U.K., what kind of swings can you see in like the last sales based on that in in any sort of market period?
I know you do not want to get down to the bottom reporting on that in the whole rest of South Park in terms of that swing. The second was, in terms of the competitive environment that you mentioned, to what extent have you seen that coming through in family-oriented venues as opposed to sort of city-centre, corporate-oriented competitive socializing? Do you see much in terms of bowling competition having to do with it?
Yeah, no great question. Thanks. I mean, in 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.
You know, clearly when the sun comes out, particularly at the early part of the year, when ordinarily you'd be expected to be a little bit colder, there is not as much outdoor competition kicking around with the theme parks and that kind of stuff. You know, it can be quite painful. Equally, it evens itself out. The one thing that we do have in this country is weather. You know, it is very inconsistent and unpredictable. You know, over a longer period of time, it comes back. I suppose the last time was what, Laurence, 2018, which showed the biggest swing?
Yeah, 2018, second half of 2018, we were negative. If you look back, over the full year, we were 0.8% up on a like-to-like basis. In 2019, we were plus 5.5% on a like-to-like basis.
Heavily weighted towards the second half as you rolled, what was a boiling hot summer. If people can take themselves back to that time, it was the first time in 52 years that you would have done anything in a football tournament as well. All of that affect, but really the weather is the biggest effect when you're at sort of +80° for June, July, August. We've had it earlier this year, you know, late February, March, and then we've spoken about March, April, and May as well. Actually, again, it can flip itself. We all know what, you know, we've all sat there and seen July, August, it completely wash out. Then we're sitting there going, actually, yeah, fantastic for indoor leisure.
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. 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. That's what we do from a budgeting perspective, and what we expect the analysts to do as well.
I think one of the things that you, well, we look at as well is, you know, is this weather or is it trend? You know, we've just had a fabulously wet bank holiday weekend, and we traded brilliantly. We saw no sort of drop in spend ahead or spend a game. The customers that came were behaving in a very similar way that they always have done.
The fact is that there was a real incentive for them to come indoors rather than going outside. You know, that's the downsides of operating an indoor leisure-based business with no other weather hedge. It is what it is. In terms of competitor environment, yeah, absolutely. What 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. As I mentioned in the update, we are in the best location. We can't be outpitched in the markets that we operate. We're in the best location based on the core family market that we operate in.
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 that core family market. No, we have not seen impacts in those markets. We operate where we have seen people coming in trying to position a family entertainment-based offer. Does that answer your question, sir?
Yeah, that is our typical. Thank you. Can I just ask about Voody specifically? It would be useful to know whether they were flat or in growth up to February half term, which, as you say, is sort of, you know, watershed for when things change. And whether you expect what you expect in terms of volumes if it stays like this, weather-wise.
Then secondly, on page XV, that like-to-like spend per head ropes, you know, like-to-like spend per head is very interesting. It is very weighted towards the new spend. Is there anything you can do to get food and drink back up into growth? Is that an area of opportunity?
I mean, in terms of volumes up to February half term, they were marginally down, but that was more to do with the competitive socializing piece. We are talking less than 1% in terms of like-to-like volumes. Therefore, you know, nothing to be concerned about, as we have said, you know, we have come off of what have been exceptionally strong growth period in terms of volumes. You know, I am not going to give an expectation in terms of volumes because the weather does have such an effect on the overall numbers.
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, and we look at it, it's a bit grey as well. You know, we're very pleased about that. We're seeing the volumes come through as well as spend. I think that's really important. The piece around this spend per game, and I'll let Steve talk about the food and drink piece as well, add to it is we also saw a 5.9% growth in spend per game on bowling as well. You have 5.9% on bowling, 11.6% on amusements, and 1.1% on food and drink. We do have to be cognizant of the fact that 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. Also, you've got to be good value for money because we are seen as that convenient opportunity when you're in our centres rather than as a choice when you are coming onto the leisure park or retail park about where should we eat today. 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. Actually, whilst it might, it might not be ideal from a pricing perspective to be at GBP 7, which obviously we see some of our competitors at, when we're at GBP 4 for an entry price point, we do have opportunity to increase price.
We'll leave that there for the moment. Actually, I would just sort of go to the fact that a GBP 0.02 increase on a game of bowling is the equivalent of a GBP 0.50 increase on the price of a burger and a GBP 0.20 increase on the price of a drink. That's both from a mixed perspective and also a margin perspective, i.e., because we only have 10% of our revenue come from food and 17% comes from drink, and they operate at lower margins than bowling, that's why you get a different effect on it.
We just have 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 and the elasticity that you have allows you to take the price on bowling and still create value on things that they can compare to around food and drink.
Thank you. Sorry, the person at the front. Have your neighbor talking. A couple of questions. Firstly, just on the one obstruction you spit out the first half, I think there were some more business rebates this past. Can you outline the full year impacts for Surrey Quays business rebate? I'm going to assume the little people that do all it in the first half.
Second thing, just on the Teaquinn and earnout, can you remind us, I keep on looking and I get confused, can you just keep reminding us what the key dates are and how it's treated, P&L always includes the CapEx, cash flows. Then the third book just on Striker was hit a very strong first half. I see to a moment three years ago, you were sort of slightly more on that element of business. I just wonder what your thinking is and how that's going to be done. Implication of margins, maybe.
Yeah, no, cool. I'll let Laurence answer first. I'll talk about Striker and then I'll let Laurence talk about margins. Yeah, so that's fine.
So the business rates in the second half last year, we had, so we totaled for the year last year, we had just under GBP 3 million.
It is about GBP 1.8 million for the second half. The other one-offs, Surrey Quays is another GBP 0.6 million. Edge Lane, it was actually closed for a little bit of the second half as well because we had not just completed it. Given the upside that we are going to see from the refurbishment, I thought we will push that to one side and we will talk about how that has sort of moved its way through. You know, there are no other one-off impacts that we would expect. I just remind people around the hedge and the electricity hedge that has come out. That is not a one-off. That is just a contractual change. These things happen. Everyone was praising our hedging strategy in 2020, 2021, 2022, 2023, 2024. You have to come out of it at some point. We did come out of it in what we believe is a fantastically strong rate.
In terms of the Teaquinn earnout, so this is, I won't go through all the mechanics of, I'm happy to talk about, you know, how it's all worked out, et cetera, but it all goes through the P&L. It is all already hitting the P&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 as CAD 9.2 million sitting as a liability within the balance sheet. That will come straight out in terms of the dates. Now, the dates will be post 2025, so it could be September 2025. We're in discussions at the moment. It is more likely to be September 2026, so we'll continue to build that up.
By the time we get to this time next year, we'll have a much clearer view of what the final amount will be. Therefore, there could be a release, but there could also be, we're planning for the worst, basically, in terms of our account. It is capped. It cannot. It is not, it is not. That is what we're planning for. We're planning for the highest it can be. Because what we need to make sure is we're not suddenly going, what is a small amount, small amount, oh, no, it is not, and we need to dump it all into FY 2026. We are looking forward to an FY 2026, which is the basic could be. Currently, within our provision, we have a 20% chance of it happening in FY 2025, an 80% chance of it happening in FY 2026.
That forms part of the calculation that we do from a provisions perspective. 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&L impact, which is what we've seen anyway. We don't get a deduction for it from a tax perspective either, in terms of Canadian tax rules. Is there anything else on the Tequinn?
So CAD 9 million? At the moment, it's CAD 9 million. CAD 9.2 million cash outflow potentially.
No, that's what we're currently providing for. That then builds, continues to build. It can build up to CAD 15 million. That CAD 15 million will build, will continue to build as we do our provisions.
There should not, you know, it is not like we are going to have a big jump up in the costs or anything like that.
In case you work with your working caps, it is correct.
Correct. Striker, we have sort of never really been lukewarm on it. It was part of the acquisition. It was a difficult business to split out of the Splitsville trading bowls, because there were 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 refurbished new site openings of our own business. You know, we own a bowling supply company now, so we are able to get all this at cost, and it saved us over CAD 1 million last year on margin that we would have been paying elsewhere.
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 U.K., we've been able to start growing that business as well. 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 want to sell to us. Having a good relationship with them and 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 systems, products, ways of working, is important.
We've just invested in the team in Striker , so we've just recently recruited a new, so it's the equivalent of a managing director, obviously the president or vice president over in Canada, but the equivalent of a U.K. MD to really get hold of that business. 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 wider support function to better serve the growth of the Splitsville.
It's the margin creep on level. Much less. Much, much, much less.
Yeah, so the EBITDA margin is 8%. Yeah. Yeah, which does put pressure on the Canadian group business, but equally, there's more cash. As Laurence keeps telling me, you can't bank a percent. Right there. Might have us having this. Just two questions.
On your satin now, pathetic expectations, could you just provide a bridge? It'd be at least GBP 20 million expected given your new size and news report. There's some more refurbs. And then just stress it on the other places, soup site in Canada. How that's been performing and the learnings, how kind of forms part of your thinking around the Canadian strategy.
Yep. In terms of a bridge, we'll spend a similar amount on Mason's CapEx as we did in the first half. Whilst we did open three centres or five centres overall, we've still got some of the money to be paid for those centres. We hold a retention back with 5% on all centres. Plus, Inverness opened, as Steve mentioned, on the 28th of March. There's still quite a lot of the over 25% of the Inverness amount to be paid.
Two new centres in the U.K., so in Reading and Uxbridge, are to be paid for. They're both GBP 3.3 million gross CapEx. Or sorry, Uxbridge is GBP 3.3 million. Reading is actually close to GBP 4 million. Big site. The returns will be in line with the CapEx spend. Also, we'll start on site in Christy's Corner. Therefore, there will be a small amount of that, around 30% of that. The final element is around the refurbishments. We'll do four refurbishments in Canada. They'll all be in excess of CAD 1 million, which, whilst it's a big number, obviously, but given the strong exchange rate, which works against us from a statutory P&L reporting perspective, it's great that you're sending cash over there at 1.8, does come down to around GBP 640,000.
Then also Liverpool refurbishment, which is just completed, was a GBP 2.4 million refurbishment. Basically like a new centre. It is a shame Greg is not here from Shore Capital. Not that you guys are not all great, but he also visited there last week with his family and just said it is like walking into a completely different centre over in Liverpool.
And Stokes, yeah, I mean, we continue to learn from it for sure. It is about our kind of first proper multi-activity venue. The Canadian team are really excited about how it trades and the customer feedback and the ease of operation is much better than we originally thought. Some fab learnings so far. I mean, one of the things that we do have in Canada that we do not really often get the opportunity for in the U.K. space.
When space comes available, we 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 U.K. We are going to look at maybe doing another version of Stokes. We're just working through the detail of it now. You know, location, like in the U.K., is everything. Notwithstanding that, we've learned quite a lot that we're able to then translate back into the U.K. You know, how do these other operations work with the existing customer base that we have?
You know, if we were to come up with a location in the U.K. where we could employ some of those learnings from Stokes, a slightly higher-end food and beverage offer with, you know, the Go Karting does work really well in those family entertainment centres because you have that fat mix for the whole family unit with bowling and with amusement arcade and with food and beverage. You know, were we to be able to find something in the U.K. from a space perspective, we would definitely look to try and incorporate those learnings in a U.K. offer.
Ross Ford with RBC? Just two on Canada, please. I think you mentioned that new sites co-located with 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? Secondly, just any commentary on how the sort of cultural bowling changes have gone in terms of from timed into number of games, shoes, you know, rented shoes, et cetera?
Yeah, yeah, no for sure. I'll answer with please, Laurence, to dip in.
In terms of changing the shape of the rollout, not really, because we always kind of had a bit of a hunch as to those locations being probably more profitable and better received by customers than the tertiary standalone locations, just from what we've seen in the U.K. and the understanding that actually, as I mentioned earlier, bowling plays a very similar role in the Canadians' lives as it does in the U.K. consumer. It was just getting access to that space. The Canadian, certainly the retail market is a little bit behind the U.K. and the U.S. in that retail is still super expensive. You know, there aren't huge amounts of space become available like there was in the U.K. from a glut of all the Toys R Us closing, Debenhams, British Home Stores, the big crashes in a lot of the malls.
That's just not happened in Canada. They're still really, really quite a buoyant market from a retail perspective. You know, notwithstanding that, though, the Canadian landlords do recognize that there's going to be a shift and at some point they're going to want leisure as part of these retail offerings. I'm actually over there next week visiting one of the figure landlords just to present our results and showcase what we've been able to achieve in Kanata and Creekside to show the levels of quality. Because equally, the bowling environment is incredibly underinvested in Canada, very much like it was in the U.K., like, you know, 15, 20 years ago. So people's perception of a bowling centre is very different to what we've created.
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 going to be able to pay retail-style rents. You know, we're getting some real traction with those landlords, hence why we've been able to build this pipeline, you know, Christy's Corner, the new site that we've just signed as well, you're in similar locations to Kanata and Creekside to continue to build that footprint. It's a great question in terms of, you know, do you buy an existing bowl, spend GBP 5.1 million, or do you find the Greenfield site in the fab location, spend GBP 5.1 million? 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.
You know, given the reputation we've built as a cautious team focused on profit number, you can imagine which route we're going to take. In terms of the cultural changes and how it's gone, you know, no surprise, people prefer to wear their own shoes than putting their foot in something 20 other people have worn before them, right? Twenty, yeah. Yeah, that's on that hour. I mean, these things have, the Canadians are just kind of really nice. It's not like people would ever kick off what you may do in the U.K. and go, I just don't want to do that. You're kind of sucking up. Actually, we haven't seen this kind of massive shift in Net Promoter Scores and customer service scores that we saw in the U.K. when we did it.
What you have seen is a much happier and a more engaged customer who is then spending more and coming back a little bit more frequently. Now, these are early, we are early doors on these charts, right? We have put it in place in a number of centres pre-refurb just to do the absolute swap and test. You know, it has been a couple of months in the making, open new sites with just this new way of working. The games versus time, they are pretty chilled and laid back in Canada. Trying to move that game time on has been a bit more of a challenge. We have had to extend whilst we allocate 10 minutes per person per game in the U.K.
We've had to push it to kind of 13 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 offer in Canada. And, you know, when the food arrives, people stop bowling. You have to be mindful about what we're selling on the lanes versus time. It's all really good fun and fabulous learnings. You know, and are we as excited about it as we were back then? Yeah, 100%. It's a fab growth opportunity for the company. Roberta.
It's Roberta from Investec. Just a question on the cost side.
Should, for whatever reason, the trading not be continuing to not be great because of weather, whatever, what are the additional cost levers you can act on at this stage, given you're already very tired?
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. So whilst we are already below 20% on a centre-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 centre managers. And as they build up this great outperformance part, the early part of the year, they want to hold on to it, given that they take a percentage of the outperformance.
They look incredibly hard at all of those core measures that you can influence as an operator. You know, how good your margins are, stock wastage, payroll levels, all of those kind of really solid operational changes. The flip of it, though, Roberta, is always on opportunity rather than savings. 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 cook. It's not like nobody comes when the weather goes against us. Actually, one of the things that we can do is leverage the database. You know, we have a business that appeals to 99% of the U.K. consumer base. 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. We do have customers coming to us, and then it's the operator's job to really drive spend per head from those consumers when they're with us.
Okay. On the competitive side, from the question you had before, am I right in understanding that there's been some new operators coming to the market, but you think that the effect will be short-term?
I mean, it's not necessarily short-term. A lot of these guys are investing kind of GBP 2 million-GBP 3 million on fit-outs of new sites. What we've seen, though, is start to level off a little bit. There was a, you know, huge kind of glut of new operators coming into the markets post-COVID.
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 kind of test those trials of new site openings. You know, look at Roxy, Lane 7, those guys who had a really ambitious and very aggressive new opening program have now just kind of started to temper that, that they've started to gain scale across the U.K.
Sorry, I think I meant more the other competitive socializing games. Not just...
Yeah, I mean, what we're seeing is they are still opening. We've seen the effect in the first year. It's like a new restaurant opens, people go and visit it. They come back and they go, actually, I really enjoyed doing that experience, but to go back again, not really. They go back to the bowl.
We do see an effect in the first year. There are more and more of them now coming outside of London where they go, we have sort of nothing else to do in London, really. Let's try somewhere else. You do see them open. It is only really the ones that have got something that is slightly different, more family-orientated, that will have more of an impact. There just are not a lot of those out there. They are few and far between. There is the odd operator who aims at families, but they are very, very few and far between.
Any other questions from the room? Do we have any questions from online?
Just one from Gavin Beck at Stoke. What about U.K. food and beverage specifically and if we can expect any discounts or promotions.
We try and keep our, well, we try, we keep our food and beverage offer incredibly good value for money already. You know, a pint of session lager in the U.K. averages just over GBP 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 around about the 2019 pricing level where we were. We managed to offset a lot of the food inflation costs. As Laurence mentioned earlier on, it's a bit pointless taking the price on food, keep that super competitive and really engaging for our customer base, and we'll take the profit elsewhere within the business from amusement to food and then the bowling offer. Offering discounts on food and beverage isn't something that we tend to do.
What we do is just keep it fabulous value for money at all times. No other questions?
Just to pull up, just in terms of pricing and the machines, two things. You mentioned tiering. What is the range like for a game or a machine and how is that stretched? Is there a slight reduction in bonding means more dwell time at the machines, less queue? Okay. Is there a slight sort of trade-off between bonding and machining?
In terms of the pricing variability, you can play, the entry price point is GBP 0.50. It is on the cranes. You will then go to GBP 1 for the vast majority of the video and the skill with prizes offer. We have introduced 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.
The two-player games, air hockey, Pac-Man smash, pool, we can push the price into kind of GBP 1.50-GBP 2. And then you have motion and virtual reality, which again helps you push it a little bit further. You know, normal box standard Mario Kart is GBP 1 to play, motion Mario Kart is GBP 2, virtual reality Mario Kart is GBP 4. You have that mix within the amusement areas. The products that are north of a Teaquinn, so GBP 2 and GBP 4 play, will have the little Nayax boxes where you just tap your debit card and it will then allow gameplay versus just coin mech. The next option with that is the four trial sites where we have gone fully cashless. This is a brand new cashless product. There were kind of two main operators of cashless functionality, Embedcard and Intercard, which is pretty much global, really.
There's a new operator that's come to market that we are testing, which is a lot more user-friendly. You can have it on app, use your phone to update via Apple Pay, use that to kind of use it as the payment method across the centers. There's lots of upside that we're rolling out across all of the Canadian businesses and we're trialing in the U.K. Now, that gives you significantly more flexibility in that you can charge GBP 1.50, GBP 1.70, 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 2016, 2017, where we did do a cashless trial, but it was using the slightly older fashion, for want of a better word, proprietary hardware, and it did not work very well for us. A number of things have happened since then. One, the tech's got a lot better, but two, certainly post-COVID, a lot less people are walking around with cash in their pockets. What they're doing now is kind of tokenizing cash. They'll use their debit cards on our change machines to spit out GBP 10 coins that they'll then use in the amusement areas.
If you can reduce those barriers to play, then it could provide even more of an opportunity for us longer term. Any other questions from the room or online? Okay, I think that's a wrap, guys. Thank you very much.