6th Jul 2022 10:50
(Alliance News) - Ten Entertainment PLC on Wednesday impressed investors as it affirmed a plan to reinstate its dividend this year.
The ten-pin bowling operator's fortunes have defied tumbling UK consumer confidence. Sales in the 26 weeks to June 26 were 53% above pre-virus levels.
Ten has perhaps been rewarded for preserving "entertainment prices at 2019 levels". Food and drink prices have been "managed", however.
The company has been able to preserve what it labels "value for money pricing".
Liberum noted Ten is not as exposed to inflationary pressures as some of its leisure peers.
"[Food and beverage] direct costs and consumables comprise around 11% of the total cost base with around 5% inflation passed through to customers," analysts at broker Liberum commented.
"High sales growth" and efficiency measures are helping to offset 7% labour cost inflation, meanwhile, Liberum added.
The broker said: "The business is relatively less exposed to input price or labour inflation when
compared to other quoted leisure companies, with just 28% of sales coming from F&B and labour costs accounting for 19% of sales pre-Covid, versus 30% across our wider leisure coverage."
The firm said it plans to repay financing received as part of the UK's Coronavirus Large Business Interruption Loan Scheme this month, allowing Ten to resume dividends.
Liberum expects a dividend per share of 11.7 pence, before rising to 14.2p in 2023 and 15.2p in 2024.
It also lifted its pretax profit forecast to GBP23.0 million, which would be a sharp hike from GBP3.1 million achieved in 2021.
"Ten Entertainment is structurally well placed to benefit from the growth in experiential leisure with its focus on low-cost family entertainment as demonstrated by the very strong footfall growth," Liberum summarised.
Shares in the company were 4.9% higher at 223.00p each in London on Wednesday morning.
By Eric Cunha; [email protected]
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