While ‘strikes’ abound around the country, it is well worth noting just how well this group is doing by encouraging more strikes.
But then this company, which has just announced its results for the year to end September, feeds itself upon its customers enjoying strikes.
I am not talking about industrial disputes but instead in terms known by any efficient bowler.
The Business – fun, safe and family-friendly
Capitalised at £393m, the Hollywood Bowl Group (LON:BOWL) is the UK’s largest operator of ten-pin bowling and mini-golf centres.
Since the closure of its centres due to the Covid hassles, this group is starting to score well again.
With its headquarters in Hemel Hempstead, this company’s estate includes some 73 centres operating both in the UK and in Canada.
Its AMF and Hollywood Bowl brand-names are highly visible across the UK, while it goes under the Splitsville tag in Canada and under Puttstars for its mini-golf.
Each ten-pin centre, of which there are 69, is equipped with 24 bowling lanes, while the four mini-golf centres have three nine-hole attractions.
Its large, high-quality bowling centres are generally located in ‘out-of-town’ multi-use leisure parks close to cinema and casual dining sites and with large retail areas.
Offering a complete family entertainment experience, each centre provides bowling lanes or mini-golf courses alongside its group on-site dining, licensed bars, and state-of-the-art family games arcades.
The group operates in quite a resilient part of the market, offering affordable low-price family entertainment.
It is well insulated from cost pressures, with its UK energy contracts into 2024. The group is managing to keep its prices low, while its headline price remains the lowest of all the branded bowling operators – with a family of four being able to bowl for less than £24.
A Strike or a Spare?
Just in case you are not up with ‘ten-pin bowling’ terms, please let me inform you.
When you bowl and knock down all ten bowling pins with your first ball, it’s called ‘a strike’. You get ten points for that, and then any pinfall points scored with the next two balls are doubled.
If it takes two balls bowled to knock down ten pins it is called ‘a spare’.
The Final Results and Outlook
The year to the end of September showed the group making excellent operational and financial advances, boosted by a programme of refurbishments, rebrands and new openings.
Total revenues rose to £193.7m (£129.9m), pre-tax profits £46.7m (£0.5m) while its net profit increased to £37.5m (£1.7m), generating basic earnings of 21.91p (1.05p) per share.
The interim dividend was 3.00p per share, while the final is 8.53p together with a special dividend of 3.0p per share for the year.
Very encouragingly the group’s net cash position at the end of September was £56m (£29.9m) and an undrawn revolving credit facility of £25m.
On a sales per business basis the group makes around 49% from bowling, 1% from mini-golf, some 25% from amusements and about 25% from food and drink.
Looking ahead, the company sees a significant opportunity to grow its business to more than 110 centres across its three experiential leisure brands: Hollywood Bowl and Puttstars in the UK and Splitsville in Canada.
The company has continued the momentum from the last year into the start of the current financial year, with strong demand and encouraging pre-bookings for the Christmas period.
Conclusion – excellent upside for 2023
The group’s strong balance sheet and cash-generative business model, together with its resilience to inflationary pressures, will enable it to capitalise on its organic and international growth potential.
The company’s shares in the last year or so have been as low as 161.5p, while its peak of 294p was scored in mid-January this year.
Currently trading at around the 230p level, the undervalued shares offer excellent upside for 2023.