16th Dec 2022 17:44
(Alliance News) - Hollywood Bowl Group PLC on Friday revealed its annual pretax profit surged past pre-pandemic 2019 figures, following "continued buoyant momentum".
For the year that ended September 30, the Hertfordshire, England-based ten-pin bowling operator recorded a pretax profit of GBP46.7 million, multiplying from GBP462,000 a year before. It beat pre-pandemic pre-Covid financial year 2019 by 69%, for which Hollywood Bowl reported a pretax profit of GBP27.6 million.
Revenue multiplied to GBP193.7 million from GBP71.9 million in financial 2022 from the prior-year, with revenue growth across all divisions. Revenue was up 49% from GBP129.9 million posted for financial year 2019, and Hollywood Bowl said the growth was driven by increases in footfall and spend.
"Continued buoyant momentum, alongside relatively limited exposure to cost inflation, means we continue to believe the company is well-placed to navigate the macroeconomic backdrop, while over the medium-term we also see a significant opportunity for new centres, as well as additional shareholder returns," said analysts at Berenberg.
Hollywood Bowl has a "healthy" pipeline of openings to come over the next few years. Around 10 centres are targeted for opening in the UK over the next five years, and Hollywood Bowl sees the potential to add at least a further 20 sites over the next 10 years.
The company reinstated its dividend in financial 2022, with a total dividend per share of 14.53 pence. No dividend was paid in financial 2021, but the new figure is up 22% from 11.93p in financial 2019. A special dividend of 3.0p per share will be paid to shareholders alongside an ordinary dividend of 8.53p.
Berenberg said across the group's three brands – Hollywood Bowl, Puttstars and Splitsville – it has significant scope to expand and gain market share.
"We are well-positioned to continue to grow our business, supported by our strong balance sheet, highly cash generative business model and our resilience to inflationary pressures," Hollywood Bowl Chief Executive Stephen Burns said.
"We have had a strong start to the new financial year, with an encouraging number of pre-bookings received ahead of Christmas."
Berenberg added: "While we still forecast a meaningful reversion in like-for-like momentum in financial 2023, resilience thus far would suggest upside risk." It said Hollywood Bowl trades at 12.8x 2024E P/E, which it thinks is "far too cheap for the growth and resilience on offer".
Absent of any accretive mergers and acquisitions, Berenberg said, and considering that the company aims for a pro-forma net cash ratio of 0.5-0.6x over the coming few years, it predicts that shareholders are likely to receive further additional cash returns.
Analysts at Berenberg said Hollywood Bowl is "on a roll", and the firm reiterates its 'buy' recommendation with a 350 pence price target.
Shares in Hollywood Bowl closed up 3.5% at 237.50p on Friday in London.
By Jaskeet Briah, Alliance News reporter
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