Rising to challenges
and reigniting growth
Hollywood Bowl Group plc
Annual report and accounts 2021
Driven by
our purpose
Bringing families and friends together for
affordable fun and safe, healthy competition
Our strategy
Delivering like-for-
like revenue growth
Actively refurbishing
our assets
Developing new centres
and acquisitions
Focusing on
our people
Leveraging our indoor
leisure experience
Read more on pages 28 and 29
Our focus on sustainability
Managing our business in a
sustainable way is a key element
of our strategy and culture
We’ve identified three key areas
where we can have the greatest
positive impact
Comprehensively measuring and
monitoring our activity to ensure that
we achieve our objectives
Read more on pages 36 to 43
Our focus on stakeholders
Inspiring customers to become
loyal fans of our brands
Read more on pages 22 to 25
Building energetic and engaging
teams who share our values and are
proud to be part of our culture
Creating value for our stakeholders
by focusing on long-term,
sustainable success
Our performance
+28.6%
LFL revenue growth1
(2020: +0.4%)
£71.9m
Revenue
(2020: £79.5m)
-9.6%
Total revenue vs PY
(2020: -38.9%)
13.3%
Operating profit margin1
(2020: 12.4%)
£30.6m
Group adjusted EBITDA1
(2020: £29.8m)
£1.7m
Profit after tax
(2020: £1.4m)
£10.29
LFL average spend
per game1
1.05p
Earnings per share
(2020: 0.90p)
1
Definitions for these measures are in the key performance indicators section (pages 30 and 31). Management believe providing these specific financial highlights gives valuable
supplemental detail regarding the Group’s results, consistent with how management evaluate the Group’s performance. A reconciliation between Group adjusted EBITDA and
statutory operating profit is provided on page 34. Due to the restriction in FY2020 and FY2021, LFL calculations above are from 17 May and compared to the same period in FY2019.
Text to be provided
In this report
Strategic report
2 At a glance
4 Chairman’s statement
8 Our brands
14 Chief Executive Officer’s review
20 Business model
22 Section 172
23 Stakeholder engagement
26 Our market environment
28 Strategy
30 Key performance indicators
32 Chief Financial Officer’s review
36 Sustainability overview
44 Risk management
48 Going concern and
viability statement
Corporate governance
50 Chairman’s introduction
to governance
52 Board of Directors
54 Corporate governance report
59 Report of the Nomination Committee
62 Report of the Audit Committee
67 Report of the Remuneration
Committee
71 Director’s Remuneration Policy
80 Annual report on remuneration
87 Directors’ report
90 Statement of Directors’
responsibilities
Financial statements
91 Independent auditor’s report
99 Consolidated income statement
and statement of comprehensive
income
100 Consolidated statement of
financial position
101 Consolidated statement of changes
in equity
102 Consolidated statement of cash flows
103 Notes to the financial statements
128 Company statement of
financial position
129 Company statement of changes
in equity
129 Company statement of cash flows
130 Notes to the Company
financial statements
IBC Company information
Hollywood Bowl Group plc
Annual report and accounts 2021
1
At a glance
Rolling out
fun nationwide
Through our customer-focus and insight led product and
technological innovation, we are on a mission to continually
enhance our customers’ experience of the competitive
socialising activities of ten-pin bowling and mini-golf.
Our brands
Our core ten-pin bowling brand, with centres
typically situated in prime locations on
leisure or retail parks.
Our secondary ten-pin bowling brand with
centres in stand-alone locations.
Our new indoor mini-golf brand with centres
situated in prime locations on leisure or
retail parks.
Centres
56
Centres
5
Centres
3
Read more on page 8
Read more on page 8
Read more on page 12
Our investment case
People and leadership Market opportunities
Hollywood Bowl Group is the market leader
with national scale, operating a high-quality,
well-invested estate with diverse revenue
streams and multiple levers to drive
further growth
A highly motivated and engaged team
delivers our customer-focused experiences,
led by stable and experienced management
As the clear leader in both the ten-pin
bowling and the competitive socialising
markets, we are best placed to capitalise on
the growth opportunities available
Read more on pages 20 and 21
Read more on pages 20 and 21
2
Hollywood Bowl Group plc
Annual report and accounts 2021
i
S
t
r
a
t
e
g
c
r
e
p
o
r
t
Our locations
Hollywood Bowl Group is the UK’s largest
ten-pin bowling operator. We have 61 bowling
and three mini-golf centres, each equipped with
an average of 24 bowling lanes or three, nine
hole mini-golf courses, a licensed bar, a diner
and an amusements zone featuring the latest
games designed to keep everyone entertained.
64
Centres open as of
30 September 2021
14–18
Target range of new
centres opening before
end of FY2024
Key
Hollywood Bowl: 56
AMF Bowling: 5
Puttstars: 3
Central support office: 1
Read more on page 8
Balance sheet
strength
Exciting growth
pipeline
Customer focus
By driving revenues, continuing to achieve
healthy margins and maintaining a strong
balance sheet with low net debt, we
continue to invest appropriately in
enhancing and scaling our business
Alongside our ongoing centre refurbishment
plan, we are targeting to open more new
centres, which is backed by our rigorous and
disciplined location selection process
Our ten-pin bowling and mini-golf experiences
provide fun and safe environments for people
of all ages, and are evolved by customer
insight and a culture of continuous
improvement in all areas of the business
Read more on pages 20 and 21
Read more on pages 20 and 21
Read more on pages 20 and 21
Hollywood Bowl Group plc
Annual report and accounts 2021
3
Chairman’s statement
Meeting challenges
head on and
delivering
excellent results
I was extremely proud of the way
our team came together after
another prolonged period of
closure, and delighted that this
summer, our centres were packed
with happy and excited customers
in a safe environment.”
Peter Boddy, Non-Executive Chairman
4 Hollywood Bowl Group plc
Annual report and accounts 2021
Last year, I ended my statement with my belief that
after an unprecedented year of disruption, it was the
spirit and enthusiasm of our people that would be our
greatest asset when it came to reigniting our momentum
and success this year. My comments were proved right
and I am extremely proud of the way our team came
together after another prolonged period of closure,
and also delighted that this summer, our centres across
the country were packed with happy and excited
customers in a safe environment.
In the face of two more nationwide lockdowns, we could
have simply battened down the hatches and waited until
the disruption had passed. Instead, we invested wisely,
using the downtime to enhance our centres where
possible and ensure that our offering was even stronger
when our doors did reopen. Our strong performance
since reopening in May and the enthusiastic feedback
we have received from our customers and our team,
shows that this was absolutely the right decision.
Just like last year, a large portion of FY2021 was spent
with our centres closed and even when we were able
to reopen in May, we did so with several COVID-19
restrictions in place. In July our centres were able to
trade with no restrictions and we brought the whole of
our team back to work, making the most of a remarkable
summer period of trading.
The last two years have demanded strong and confident
leadership from the Group’s senior management, and
the Board has been focused on supporting them and
helping them make timely, well-informed decisions. The
Board composition has remained stable in the post IPO
period, and we decided to further strengthen the Board
by appointing our Chief People Officer, Melanie Dickinson
to the Board in October 2021. Melanie is a great asset to
the team and I want to thank her and the other members
of the Board for their valued contribution. We have a
succession plan in place which will see new Non-Executives
joining the Board, as existing Non-Executives rotate off,
from FY2023. I look forward to the introduction of some
new perspectives and ideas, as the Group begins
another exciting period of growth.
I truly believe that we are best in
class in our market when it comes
to customer experience.”
Our CEO, Stephen Burns, and the rest of the senior
management team have certainly had to make some
strategically important decisions this year. Most notable
amongst them was choosing to undertake an equity
placing in March 2021. This bold move allowed the Group
to raise gross proceeds of £30m from new and existing
shareholders and has given us considerable scope in
terms of executing our customer led strategy, doubling
our new site pipeline, carrying out refurbishments on
existing sites and restructuring our balance sheet as well
as securing a new, more favourable bank debt facility.
The decision has reinforced the underlying strength
of our business and strategy and helped reaffirm the
confidence our stakeholders have in our decision
making and proven strategy. The Board and I are
extremely grateful for their continued support.
A personal highlight for me has been the way the team
has responded to another challenging year and embraced
getting back to work and providing industry-leading leisure
experiences for our customers. From having 98.6 per cent
of our team furloughed in January, to bringing a large
majority of our team back in May, our people have stood
by the business and worked incredibly hard since our
centres reopened. I have had the pleasure of visiting
many of our centres this summer, and seeing them full
of customers and enthusiastic team members
was exhilarating.
28.6%
LFL revenue growth
since May reopening
£20.1m
Record revenue
month – August
1.97m
Record games /
rounds played
– August
Hollywood Bowl Group plc
Annual report and accounts 2021
5
Strategic report Chairman’s statement continued
Rewarding and supporting our team’s hard work has
always been a priority. This year, we introduced a new
bonus scheme that rewards people for displaying the
behaviours that align with our strategy, and provided all
returning team members with a range of training and
support to ensure they were ready to get back to work
and felt safe in the working environment. We worked
hard to make sure the whole Group was aligned around
our purpose of bringing people together for affordable
fun and safe, healthy competition, and there is a great
sense of excitement around the opportunities ahead.
The last 18 months have provided a unique chance
to reflect and strengthen the business. The work and
investments we made during lockdown allowed us to
hit the ground running when our centres reopened.
We completed refurbishments on two centres and
continued to roll out our innovative Pins on Strings
system, which is reducing the number of faults by half
and further enhance customer satisfaction. We have
invested in our digital experience, including our website
and CRM systems and the completion of the rollout
of our new scoring system. I am also pleased with the
progress we have made this year with our important
sustainability initiatives and the development of our
strategy in this area.
This summer saw very high demand from consumers.
Despite only being open restriction free for two months,
we achieved record activity for both a single day and an
entire month and exceeded our FY2019 trading levels
by 28.6 per cent on a like-for-like (LFL) basis. We saw
an increase in the number of visits and an increase in the
number of games played, as well as an increase in the
average spend per game.
Several factors contributed to this increased consumer
demand, including weather conditions that encouraged
indoor entertainment and the fact that many people
opted for UK holidays rather than international travel.
There also appeared to be pent-up consumer demand
for safe, family-friendly and fun group activities. Positive
feedback from customers shows that measures such
as the lane seating dividers, as well as the exceptional
service from our team, helped to create a relaxed and
safe environment for our customers.
Looking forward to FY2022, we will continue to roll out
new centres for both Hollywood Bowl and Puttstars,
as well as driving improvements in our offering and
customer service. We are constantly reviewing the
opportunities available to us, and by ending the year in a
strong cash and liquidity position, we are in a great place
to move fast to capitalise on the opportunities ahead.
I truly believe that we are best in class in our market
when it comes to customer experience, and with such a
well-organised, high-quality and focused team, we can
extend our leadership position further in FY2022.
When we look back on how important our team has
been this year, I feel it is also important to acknowledge
others that have contributed to our success. On behalf
of the Board, I want to thank all the suppliers, landlords,
partners, shareholders, government bodies and other
stakeholders that have worked with us to ensure our
business was not only able to weather the storm but
emerge from it stronger. With a whole range of exciting
opportunities for growth ahead of us, I hope you will
continue to share in Hollywood Bowl Group’s success
in the years ahead.
Peter Boddy
Non-Executive Chairman
We have a whole range of exciting
opportunities for growth ahead
of us.”
17.4%
LFL games growth since May
£13.4m
Profit generated in H2 FY2021
6 Hollywood Bowl Group plc
Annual report and accounts 2021
Image credit: Inspired Media
Q+A with
Peter
We ask Chairman Peter Boddy about his highlights
of the last year and ambitions for the coming year.
Q
Q
What do you think was driving
customer demand in the summer?
At Hollywood Bowl Group we have always
been fully committed to providing a
welcoming, inclusive experience to everyone.
From the young to the old, we always want
our centres to be fun and safe places. This
summer, fewer people were travelling abroad
and many families were looking to maximise
their time together after months spent in
lockdown and continued pandemic-related
restrictions. The wet weather also meant
people were looking for indoor activities.
Importantly, I think that the safety measures
we had in place gave people the confidence
to continue enjoying themselves in a fun
environment as they always do in our centres.
Why was continuing to invest in
refurbishments and technology
during the closures so important?
It was essential for the Group to keep moving
forward and to take steps towards delivering
on our strategic and operational goals for
FY2022. Proactively improving our offering
not only meant that when customers did
return, our offering was better than ever,
but it also demonstrated to our team that
the business was still focused on continuous
operational improvement. The ways we have
invested will have lasting impacts on the
business and have positioned us for a period
of organic growth over the coming years.
Evolving an efficient and streamlined digital
journey, as well as continuing to apply
innovative solutions like Pins on Strings to
more centres, remains an ongoing focus.
Q
Q
Are there any changes that were made
as a response to COVID-19 that you
think are going to remain in place?
There have been a range of health and safety
measures introduced over the last 18 months,
and customers have responded well to the
majority of them. We will be continuing to
have bowling balls available for individual
lanes, and we will also be maintaining our
increased cleaning measures. Overall, the
lane seating area dividers have been the
biggest hit. Although originally conceived as
a temporary measure, we took the decision
to integrate them into our interior design and
customer feedback shows that it enhances
the experience. The dividers are likely to
remain in place for the foreseeable future.
What are you most excited for in
FY2022?
We are entering FY2022 in a really strong
cash and liquidity position which means
we can operate with confidence. As well as
accelerating our new property pipeline and
continuing to roll out our innovative Puttstars
concept across the country, the Group is
constantly reviewing the adjacent leisure
space opportunities in the UK and further
afield. The strength with which we ended the
year means that we have the capability,
capacity and ability to take on new challenges
and exciting opportunities if and when they
present themselves. For me, that is an
incredibly exciting position to be in, particularly
when taking into account the challenges we
have overcome during the last 18 months.
Hollywood Bowl Group plc
Annual report and accounts 2021
7
Strategic report Our brands
Our brands
The complete
entertainment
experience
The Group operates 1,453 ten-pin bowling lanes
in 61 high-quality centres located across the UK
8
Hollywood Bowl Group plc
Annual report and accounts 2021
9.6%
LFL SPG growth since reopening in
May 2021 compared to FY20191
Games played (m) – bowling centres
2021
6,960,526
2020
7,826,716
2019
2018
13,475,286
13,068,664
Spend per game (£) – bowling centres
2021
2020
2019
2018
10.06
10.08
9.64
9.22
Market-leading brand
The ten-pin bowling market is part of the UK’s diverse
‘out of home’ leisure sector. Its popularity is based
around offering a competitively priced experience
that appeals to a broad range of consumers.
Hollywood Bowl is the market leader in the UK and
is our flagship brand. Its centres are predominantly
located alongside cinemas and casual dining sites
in out of town multi-use leisure parks, or adjacent to
large retail parks. Our secondary AMF brand has
centres in standalone locations.
Customer insight
Our market research and post-visit digital customer
experience programmes provide clear and fast visibility
on satisfaction levels. This means we are always ready
to react quickly to any operational issue or respond
to wider customer trends in our drive for continued
improvement. Of note in FY2021, customer feedback
directly led to the retention of our bespoke lane seating
dividers after social distancing regulations were lifted.
Our teams
Our team members are key to delivering on our purpose
and our sales and service ambitions. Our in-house
development and training programmes attract, retain
and nurture top talent. Our centre teams are rewarded
for displaying our cultural behaviours through our
coveted pin badge scheme and financially incentivised
based on customer feedback, recycling targets
and financial performance.
£1.4m
Invested in COVID-19 secure
measures for team and customers
77%
Of centre teams receiving a bonus
since reopening in May 2021
1
LFL SPG is total bowling centre revenue divided by the number of games excluding
any new centres and closed centres. New centres are included in the LFL growth
calculation for the period after they complete the calendar anniversary of their
opening date. Due to the restrictions in FY2020, LFL SPG is compared to the same
period in FY2019.
Hollywood Bowl Group plc
Annual report and accounts 2021
9
Strategic report Our brands continued
£8.0m
Record monthly online revenue
– achieved in August
% of bowling revenue booked online
2021
2020
2019
2018
63
46
37
34
Bowling 50%
Food and drink 24%
Amusements 26%
FY2021 revenue mix
Other 0%50+
10 Hollywood Bowl Group plc
Annual report and accounts 2021
Diverse revenue streams
Alongside bowling, our food, drink and amusements
offerings give our customers a complete entertainment
experience and provide more reasons to visit, increase
dwell time and secondary spend.
We continue to enhance the bar and diner experience
for our customers. The reduced menu, which was
introduced in response to COVID-19 operating
restrictions, has seen some evolution but continues
to deliver strong quality and speed of service scores.
Amusements remains an area where innovation and
new product development are key and we work closely
with our partner, Namco, and our in-centre games
keeper teams to drive further revenues from our
family-focused offering, in addition to expanding the
footprint of our amusement areas in high-lineage
centres through reconfiguration as part of our centre
refurbishment programme.
Digital customer journey
We continued to evolve and increase our investment
in a wide range of digital solutions and marketing
activities to enhance many stages of the Hollywood
Bowl experience and customer journey.
These included the estate wide rollout of a new scoring
system which is integrated with our CRM programmes,
a new Customer Data Platform (which enables increased
quality of engagement with our database of 1.79 million
contactable contacts) and enhancements to our
mobile-focused booking platform and infrastructure
and in-centre food and drink ordering system. We also
continued the rollout of digital leaderboards and bar and
reception screens as an integral part of our refurbishments.
Our targeted customer awareness, acquisition and
retention programmes use automated digital technology
to engage prospects and customers before and after
their centre visits through numerous social and digital
media channels.
Digital channels remain a key strategic focus area
and are an increasing source of revenue (accounting
for 63 per cent of bowling revenue in FY2021),
enhancement of the wider customer experience
and increased brand engagement.
1.79m
Contactable contacts on database
for use in CRM programmes
230,000
Hollywood Bowl Group and centre
Facebook followers
24
+
26
+
0
+
M
Hollywood Bowl Group plc
Annual report and accounts 2021
11
Strategic report Our brands continued
On the right
course
The Puttstars brand brings our passion for
delivering affordable fun and safe, healthy
competition to the indoor mini-golf market.
12 Hollywood Bowl Group plc
Annual report and accounts 2021
4
Centres exchanged for opening
before end of FY2024
98%
Of customers were highly
satisfied or satisfied with their
experience since May reopening
30
Potential high-quality locations
for UK market rollout
11,000
The top score you can achieve
with our digital scoring system
18,000 sq.ft
Typical unit size required for a
three-course Puttstars centre
In line with our strategy of leveraging our indoor leisure
experience to widen our profitable growth opportunities,
we launched a new brand and opened three Puttstars
mini-golf centres in FY2020.
As with bowling, mini-golf appeals to a broad range of
consumers. The market is highly fragmented with more
than 1,000 indoor and outdoor locations in the UK, with the
vast majority run by independent operators.
An innovative offering
Each centre offers a diverse experience with three nine-hole
interactive courses and bar, diner and amusement areas.
Unique course designs are complemented by creative use
of technology.
Using experience gained from our bowling operations,
digital channels form an integral part of the Puttstars
customer journey and marketing approach. A unique,
bespoke scoring system introduces digital gamification
and replaces the traditional pencil and scorecard method.
In-centre installations, like our course leaderboards,
encourage increased dwell time and ancillary spend on
food and drink as well as giving our customers content
for their social media accounts.
An encouraging launch
Since launch, customer and team member feedback has
been overwhelmingly positive and the brand has traded in
line with expectations since the centres reopened in May.
Outlook
We are very excited about the long-term opportunities the
brand presents for organic and new centre growth. Whilst we
will maintain the Group’s focus on securing prime locations,
mini-golf has more flexible space requirements than bowling.
We are pleased to have an exchanged pipeline of four new
centres to the end of FY2024, including opening in some
markets where we already have a bowling centre present.
Hollywood Bowl Group plc
Annual report and accounts 2021
13
Strategic report Chief Executive Officer’s review
A strong recovery
to open the door
for accelerated
growth
We are well positioned to accelerate
the rollout and refurbishment
programme of both the Hollywood
Bowl and Puttstars brands.”
Stephen Burns, Chief Executive Officer
14 Hollywood Bowl Group plc
Annual report and accounts 2021
Our centres in England and Wales opened from 17 May
2021 with capacity and experience restrictions in place;
these restrictions were lifted on 19 July, leaving just over
two months of restriction-free trading during FY2021.
Our revenue for the year was £71.9m, down 9.6 per cent
compared to FY2020. Taking into account the fact that
centres were closed for over half the year, as well as
other trading restrictions, it was very pleasing to record
Group adjusted EBITDA of £30.6m in FY2021. I am
hugely proud of everything we have achieved this year,
and especially to be able to report a profit in a financial
year that presented us with one challenge after another.
Among those challenges were the well-documented
supply chain and labour issues affecting the hospitality
sector in the post-lockdown period. By bringing in the
simplified food menu launched after the first lockdown,
coupled with a very robust and well-practised COVID-19
rota plan, we were able to ensure that no centres were
closed due to product or labour shortages.
Customers have been very positive about our COVID-19
secure measures like increased sanitation and cleaning,
lane seating area dividers, unique bowling balls per lane
and the at-lane and at-table food and drink order
systems, so these will remain in place.
We began the financial year with our centres trading
under severe restrictions, then by the end of December
all our centres were closed and nearly 99 per cent of our
team were put on furlough. Ending the year, our position
could not be more different. We enter FY2022 with all
centres open and I am delighted with the strong start we
have made to the new financial year; we have a strong
balance sheet and significant free cash flow and are well
positioned to accelerate the rollout and refurbishment
programme of both the Hollywood Bowl and Puttstars
brands. I believe that the growing demand for experiential
leisure will continue and accelerate over the coming
years. The Hollywood Bowl Group is ready to benefit
from this demand with our high-quality, differentiated,
all-inclusive and affordable experience, delivered in a
well-invested and well-located estate.
Managing the continued impact of COVID-19
As a Group we spent over half of FY2021 closed due
to prolonged lockdowns and have only operated
restriction free for just over two months. This has had
a significant impact on our financial performance, as it
did in FY2020. Whilst continued government support
through furlough, local government grants and business
rates relief helped us mitigate the effects of six months
of closure, this period still meant zero revenue for the
Group. Unlike other businesses, we had no option to pivot
to a takeaway business model or offer an online product
or service, so it was essential that when we were finally
able to reopen, we really made it count.
Capital allocations policy
1
2
Operating and capital
productivity
Net
operating
cash flow
• Maintenance capital
• Strong balance sheet
• Minimum 50 per cent
payout ratio dividend
3
Excess
cash
4
Maximise
returns and
value
• Organic development
• Acquisitions and new
developments
• Additional dividend
amounts
• Share buy-backs
• Appropriate bank debt
What we said we’d do
in FY2021
Renegotiate banking facility
Restart refurbishment process
Strong cost discipline during lockdown
What we achieved
in FY2021
Successful equity placing
New banking facility
Continued investment in the estate
Strong cost management
What to expect
in FY2022
Five to seven refurbishments and four new
centre openings
Accelerated rollout of Pins on Strings
Continued digital investment
Hollywood Bowl Group plc
Annual report and accounts 2021
15
Strategic report Following the reopening of our
business after the end of the third
lockdown, our focus was on creating
a safe, fun environment for both
our customers and team.”
A loyal and engaged team
The hard work and dedication shown by our team in
every part of our business has not just been a source
of inspiration and pride, but a vital part of our ability to
take full advantage of the summer surge in demand.
They stepped up to deliver incredible results and great
customer experiences in some very challenging
circumstances. A large part of this was the willingness
of team members to lend a hand at all levels of
the business.
We brought our teams back in May, two weeks before
reopening, to make sure we were fully prepared and our
team had all of the additional training and support they
needed in order to reopen successfully.
Despite this, like most of the hospitality sector, we saw
some pandemic-related disruption to our workforce.
One of the creative solutions we implemented was a
roaming team ready to drop in to plug capacity gaps
wherever they were needed.
Chief Executive Officer’s review continued
Capitalising on pent-up demand
Following the reopening of our business after the end
of the third lockdown, our focus was on creating a safe,
fun environment for both our customers and our team.
We streamlined the online booking process and made
sure our team members were well trained and engaged
and had the support they needed to operate the centres.
Initial demand over the summer was very high, and we
have recorded both record days and months in terms
of consumer activity.
We are grateful to the government for the success of
the vaccine programme as well as the continued support
it has offered businesses. The vaccine programme was
a decisive factor in making consumers feel safer about
getting back to the activities they love, but increased
levels of staycations, wet weather, weaker competition
and the safety measures we put in place also played
a part in our success since reopening.
Trading during the months post the final lockdown in
FY2021 was very encouraging with LFL sales vs FY2019,
up 28.6 per cent for the period post 17 May. When all
restrictions were relaxed, LFL sales continued to grow,
with August up over 50 per cent compared to August
2019. Sales growth was primarily footfall driven, as new
and returning customers visited our centres. LFL spend
per game increased by 9.6 per cent compared to the
same period in FY2019, to £10.29, as customers extended
their dwell time and product and sales initiatives, launched
at the time of the reopening, bore fruit. The LFL numbers
were also marginally buoyed by the VAT benefit of
circa 3.0 per cent on food and drink revenues.
£10.29
LFL SPG +9.6% vs FY2019
£3.6m
Expansionary capital expenditure
in FY2021
16 Hollywood Bowl Group plc
Annual report and accounts 2021
Q+A with
Stephen
We ask CEO Stephen Burns about mini-golf,
strategic progress and reopening the estate.
Q
Q
How do you think Puttstars has
performed, considering it only
launched a few weeks before
the pandemic?
I am really pleased with the way Puttstars has
performed so far and I am excited about the
opportunity ahead. It is testament to the
strength of the underlying proposition but also
the carefully considered strategy that we put
in place. Whilst performance varied by centre,
the overall brand delivered ahead of its
pre-pandemic plan, which gives us confidence
moving forward with our rollout. We have
delivered against our KPIs, including dwell time
and level of spend. Puttstars represents a
fantastic opportunity to deliver an all-inclusive
family experience which can also appeal to a
younger adult market, and I look forward to
seeing how it performs under hopefully more
‘normal’ circumstances.
What were your priorities for the business
whilst the centres were closed?
At the start of 2021, 98.6 per cent of our team
were furloughed with the senior leadership
team running the business. It was a challenging
time for us professionally, but I felt it was
really important to keep the wheels turning.
We focused on some important strategic
priorities, including the equity placing in
March 2021, the development of our ESG
strategy, expanding our new centre pipeline
and evaluating UK and international acquisition
opportunities. Alongside these, we invested
in refurbishments and improving our digital
experience as well as negotiating with
landlords and government bodies to mitigate
the impact of closure periods.
Q
Q
Reopening the centres in May 2021
must have been an exciting period for
you and the team. Can you walk us
through your thoughts at the time?
Confidence was high for a number of
reasons, both across our team and customer
base. As a Group, we knew that we were well
prepared and that the work we had done
during the lockdowns meant our offering
was stronger than ever. The success of the
vaccine rollout, as well as the measures we
put in place to protect consumers, gave
people the confidence to have fun in our
centres. Other factors were very clear
guidance from the government, as well as
both team members and customers being
much more practised when it came to
restrictions. This all came together to create
a great environment when we opened.
Do you expect the dividend to be
reinstated next year?
The financial impact of COVID-19 on the
Group was clearly significant, and required
us to focus on cash conservation and
readying the business for a return to trade.
We finished the financial year with some
excellent performance behind us and a
healthy balance sheet. We have always
managed our business for the long term
and will continue to do so, and the Board
will continue to assess the most appropriate
use of the Group’s financial resources to
enhance shareholder returns, with a view
to returning to our wider stated capital
allocations policy as soon as is appropriate.
Hollywood Bowl Group plc
Annual report and accounts 2021
17
Strategic report Chief Executive Officer’s review continued
A loyal and engaged team continued
We have endeavoured to reward our team’s exceptional
hard work this year and to support them however we
can. We launched a bonus scheme based on individual
behaviour rather than financial targets and worked hard
to make sure that success was recognised quickly.
Additionally, a range of other ad-hoc measures were
introduced, such as handing out food and drink packs
at the start of the day and giving the entire Group time
off to watch England playing in the final of Euro 2020.
As part our ongoing reopening activities, we reinstated
our talent development programmes, with 13 new
candidates joining our Centre Manager in Training
programme, and 47 candidates joining our Assistant
Manager in Training programme.
All of this hard work over the last year has really paid off.
Not only do we enter FY2022 in a strong position
financially, but our customer feedback since reopening
has been strong with an overall net promoter score 8
percentage points higher than that achieved in 2019.
Sustainability is about much more
than ticking boxes. It cuts right to
the heart of the way we want to
operate as a business.”
Continuing to invest in innovation and growth
The equity placing that took place in March 2021 was a
very important accomplishment for the Group this year,
raising £30m in gross proceeds. I am very grateful to the
investors that supported us, as this equity finance gave
us the headroom and flexibility we needed to continue
pursuing our strategic goals. When combined with our
available debt facilities and cash generation, we were
well positioned to move forward with our investment
programme during the lockdown period. We were also
able to commit to cost-saving and revenue-generating
capital projects and accelerate our new opening pipeline
for Hollywood Bowl and Puttstars, while maintaining
very low levels of leverage.
Despite the business being out of action for over half
the year, we have been able to drive improvements at
every level.
Full centre refurbishments were completed in Basildon
and Stevenage with amusement enlarging works in The
O2 and Cheltenham. The ongoing rollout of Pins on Strings
is continuing to enhance the customer experience by
reducing the number of game faults by half. Investment
in optimising our digital customer journey, including our
internal CRM and backend architecture, has improved
the online booking process and our ability to engage
with customers. This was essential this year, as we saw
online bookings jump from pre-pandemic levels of circa
35 per cent of all bookings, to reaching levels in excess
of 70 per cent. And, of course, we continued to invest in
our people, including a variety of new roles across our
support teams.
A special mention must go to the Puttstars team.
Launching a new concept just before COVID-19 was
not ideal, but for a brand that has only ever operated
in a pandemic environment Puttstars has still managed
to outperform our expectations.
33%
Self-generated electricity in centres
with solar panels
71.6%
Of our waste was recycled in FY2021
18
We have managed to lay the
foundations for an exciting period
of renewed growth for the Group.”
In terms of customer type, dwell time, level of spend,
quality of location and feedback, the three sites opened
have been a great success. Part of this performance can
be attributed to the favourable environment of increased
consumer demand, but it also highlights the underlying
strength of our proposition and strategy. We will continue
to roll out new locations in FY2022 and beyond.
Moving forward with our sustainability strategy
Despite the disruption of the pandemic, we have
continued to work towards our ambitious sustainability
goals. During FY2020 and the lockdowns at the start of
this financial year, we were unable to move forward with
our programme of solar panel installations on our sites.
I am pleased to report that the planning process has
been restarted and three installations were completed
in FY2021, with more planned in FY2022.
Sustainability is about much more than ticking boxes.
It cuts right to the heart of the way we want to operate
as a business. We are on track to meet our 70 per cent
recycling target in FY2022, having achieved it in FY2021.
Reaching this goal means making sure that the waste we
generate, and the materials provided to customers, are
sourced and dealt with in a sustainable way. This goal
has been included in our team member incentive
schemes to help build and keep momentum and to push
for further improvements in the years to come.
We have also evolved our wider ESG strategy this year,
highlighting the areas of our business where we can make
the most impact. The key sustainability pillars of providing
safe and inclusive leisure destinations, an outstanding
workplace and sustainable centres are aligned to our
overall business strategy. We have made good progress
in all of these areas and our whole team is focusing on
maintaining this momentum moving forward.
Ready for an exciting year
FY2021 has been a challenging year, but also a rewarding
one. I want to thank everyone that has contributed to the
Group’s impressive performance this year.
Despite our business being closed for a large part of
the year, we have laid the foundations for an exciting
period of renewed growth for the Group. We are well
placed to continue our exciting rollout programme for
both Hollywood Bowl and Puttstars and are also reviewing
domestic and international acquisition opportunities.
£55m
Liquidity available at end of FY2021
£21m-£23m
Planned capital expenditure for FY2022
It is fantastic to be entering FY2022 with a proven
strategy, a motivated and engaged team and a strong
cash and liquidity position for investment in technology,
infrastructure and people.
Now is the time to celebrate our achievements and look
forward to an exciting year ahead. We are very pleased
with our first two months performance and expect to be
in line with the Board’s expectations for the financial year
ending 30 September 2022.
Stephen Burns
Chief Executive Officer
Hollywood Bowl Group plc
Annual report and accounts 2021
19
Strategic report Business model
An unrelenting focus on
delivering the best experiences
What sets us apart
What we do
Successful brands
We operate a portfolio of bowling and
mini-golf centres across the UK under
our flagship ‘Hollywood Bowl’ brand,
‘AMF Bowling’ and our emerging
‘Puttstars’ brand.
High-quality estate
Our centres are predominantly in prime
locations, in out of town multi-use
leisure and retail parks, alongside
cinema and casual dining sites.
Motivated and engaged teams
Our teams are the face of our business
and are focused on delivering the best
brand experience for our customers.
Landlord relationships
Excellent relationships with developers
and landlords ensure that we maintain
a strong pipeline of potential new sites.
Strong balance sheet
By driving revenues, continuing to
achieve healthy margins and maintaining
a strong balance sheet with low net debt,
we are able to invest appropriately in all
areas of our business and create value
for our stakeholders.
Our centres offer a complete entertainment experience for customers
of all ages. Alongside our core offer of bowling or mini-golf, they can
also enjoy amusements and food and drink which enhances their visit
and also increases reasons to visit, dwell time and secondary spend.
Bowling
Multiple
revenue
streams
Beverages
Read more on our purpose IFC
Mini-golf
Food
Amusements
Our ESG strategy:
1. Safe and inclusive leisure destinations
20 Hollywood Bowl Group plc
Annual report and accounts 2021
What we do
Where we invest
Value creation
Investment
Link to strategy
Customer experience
• Safe and secure environments
• Technology to enhance the wider
customer journey
• Centre maintenance and upgrades
• Centre refurbishments and
reconfigurations
• Customer insight programme
Growth
• New centre developments
• Broadening the appeal to new
and existing customers through
marketing programmes and
market expansion
• Acquisitions
• Evaluating new markets
People
• A fair deal for our team members
• Extensive training and development
• Team engagement and
wellbeing programmes
1 Delivering like-for-like
revenue growth
2
Actively refurbishing
our assets
3
5
Developing new centres
and acquisitions
Leveraging our indoor
leisure experience
4
Focusing on our people
Our customers
We strive to deliver exceptional service,
in unique, contemporary, safe and
exciting environments at a highly
accessible price point.
Our people
Our team members are highly focused
on commercial and satisfaction
measures to ensure our customers
enjoy the best possible experience.
Management programmes are in place
to attract, retain and nurture top talent.
Our partners
We support a wide eco system of
partners and suppliers through
commercial arrangements designed
to build mutually beneficial
long-term relationships.
Our communities
The inclusive nature of bowling and
mini-golf makes them an important
contributor to social wellbeing. We offer
subsidised access for concessionary
users and educational groups.
Our investors
We are focused on sustainable,
profitable growth by driving revenues
and managing our margins and cash
position to provide attractive returns.
1. Safe and inclusive leisure destinations
2. Outstanding workplaces
3. Sustainable centres
Read more on pages 36 to 43
Hollywood Bowl Group plc
Annual report and accounts 2021
21
Strategic report Section 172
Working with
our stakeholders
Section 172
Effective engagement. Considered collaboration.
Considering all our stakeholders is a vital part of the Board’s strategic decision making. Engaging our stakeholders in a way that
aligns with our culture and supports our goal of remaining an industry leader is fundamental to the long-term sustainable success
of the Group.
Section 172 of the Companies Act 2006 requires directors to always act in good faith and in a way that would most likely promote
the success of the company for the benefit of its stakeholders. As part of this, the Board must always consider how decisions balance
the needs of our different stakeholders, as well as the consequences on long-term performance. The nature of operating a large-scale
business means it is not always possible to provide positive outcomes for every stakeholder. In these situations, the Board has to
make decisions despite competing stakeholder priorities. Our stakeholder engagement processes allow us to better understand
what matters to stakeholders, consider all relevant factors and select the best course of action for long-term business success.
The disruption caused by the pandemic and the government restrictions to address it has made working as closely as possible
with our stakeholders more important than ever.
Our key stakeholders
The Board considers the Group’s key
stakeholders to be:
• its team members (employees);
• customers;
• investors;
• suppliers and partners;
• lending banks; and
• the communities in which it operates
and the environment
Read more on the Business model on pages 20 and 21
Read more on Sustainability on pages 36 to 43
Read more on Governance on pages 54 to 58
S172(1) statement:
In accordance with section 172(1) of the
Companies Act 2006, a director of a
company must act in the way he or she
considers, in good faith, would be most likely
to promote the success of the Group for the
benefit of its members as a whole and, in doing
so have regard, amongst other matters, to:
a.
the likely consequences of any decision
in the long term;
b. the interests of the Group’s employees;
c.
d.
e.
the need to foster the Group’s business
relationships with customers and suppliers;
the impact of the Group’s operations on
the community and the environment;
the desirability of the Group maintaining
a reputation for high standards of
business conduct; and
f.
the need to act fairly between members
of the Group.
The following disclosure describes how the
Directors of the Group have taken account
of the matters set out in section 172(1) (a) to
(f) and forms the Directors’ statement
required under section 172 of the
Companies Act 2006.
How we engage with our
key stakeholders
Here, we will outline the Board and Group’s
approach to considering and engaging with
our key stakeholder groups. As well as our
ongoing engagement activities, we also
regularly receive and respond to specific
feedback as well as provide updates on
important issues to our stakeholders.
However, the Board does reserve certain
matters for its own decision making. These
are outlined on page 54.
In response to the outbreak of COVID-19 we
took steps to increase our communication,
collaboration and information sharing with
stakeholders regarding our actions and the
potential impacts on them as well as the
information we have considered.
Here are the details of our stakeholder
groups, the activities in FY2021 and the
outcome of the engagement.
22 Hollywood Bowl Group plc
Annual report and accounts 2021
Stakeholder engagement
Our team
Our customers
Our team are key to our business success and the driving force
behind our positive customer feedback. They are principally
responsible for the experiences our customers look forward to,
and revisit us for.
Providing our customers with a great experience every time
they visit is a core consideration for the Board. Customer
feedback remains our best indicator for whether we are
delivering on this.
What is important to them
• A great value visit every time.
• A COVID-19 safe environment.
• Excellent customer service.
• Fully working, fault-free equipment.
How the Board considers the interests of the
stakeholder group
• The Board reviews customer satisfaction scores at every meeting.
• Customer satisfaction scores form parts of all bonus schemes from
team member to senior leadership.
• The senior leaders use customer feedback to identify improvements
to ways of working and ongoing investments into new centres
and refurbishments.
How we engaged with them during FY2021
• We kept our customers updated through clear email and social media
communications in the closure periods. We offered all booked customers
the chance to reschedule their booking or receive a full refund in the event
of closures. All gift card expiry dates were extended.
• We clearly communicated our COVID-19 secure protocols throughout
the year.
• Regular feedback and monitoring ensured safety standards and
expectations were being met.
Outcomes of engagement during FY2021
• We saw improved overall satisfaction scores from our customer visits
after reopening.
• Our COVID-19 secure protocols were signed off by our health and safety
experts and rolled out across the estate. The majority of our centres
received visits from local authorities during the reopening period, and
received positive feedback on our operating protocols.
What is important to them
• Regular, relevant and clear communication.
• Engagement with all levels of management.
• Opportunities to provide feedback.
• Career and skills development options.
• Attractive salary, benefits and opportunities to share in the success
of the Group.
• An inclusive employer who embraces diversity at all levels.
How the Board considers the interests of the
stakeholder group
• All Directors visit multiple new, refurbished and existing centres each year.
• Whilst the Group has been unable to hold its annual conference during the
COVID-19 pandemic, the Directors have remained in contact virtually
using our communications platform.
• Due to lockdowns, the usual bi-annual feedback sessions between
management and team members were reduced to one event in FY2021.
Virtual Q&A sessions were held regularly throughout the year.
• The Board’s diversity policy is detailed on page 60. Diversity is a key
consideration of the Board’s succession planning.
How we engaged with them during FY2021
• As the majority of team members were furloughed at some point during
FY2021, our Fourth Engage platform enabled us to share regular updates
as well as gather feedback.
• Virtual sessions were held nationally and regionally throughout the year.
• Virtual training sessions ensured team members were up to speed with
changes being implemented due to COVID-19, as well as retraining all
team members on the key areas of their roles.
• Since the reopening in May 2021, we have undertaken employee
engagement surveys and pulse surveys. The results were presented to the
Board in September 2021 and action plans are being compiled at all levels
of the business.
Outcomes of engagement during FY2021
• Fourth Engage enabled us to launch our internal training and wellbeing
initiatives to support our team throughout both lockdown and the return
to work.
• Microsoft Teams and Fourth Engage were used to provide e-learning
content and messages to all our team members.
• The outputs of the engagement surveys were considered by the Board
and senior leadership team, resulting in actions being identified and put in
place. A follow-up pulse survey will be undertaken within the first half of
FY2022.
Hollywood Bowl Group plc
Annual report and accounts 2021
23
Strategic report Stakeholder engagement continued
Our investors
Our suppliers & partners
Our investors have provided capital for growth into a business
that has consistently delivered returns through a proven
strategy, led by an experienced senior leadership team.
Our partnerships extend beyond the small number of main
suppliers we have for IT services, amusements, food and
beverages to also encompass our landlords.
Investors are also an important source of feedback on our
business model and plans for future growth.
We expect high ethical standards from every supplier
and partner we work with.
What is important to them
• Clear and concise communication to our suppliers and partners
that shows integrity and reliability at all times.
• Strong listed covenant.
• Acting as a responsible tenant.
How the Board considers the interests of the
stakeholder group
• The Board is committed to high standards of ethics.
• Executive directors held discussions directly with our main suppliers
to develop joint plans during the closure periods.
• The Board takes a zero-tolerance approach to bribery, corruption and
modern slavery and reviews supplier and partner policies in these areas.
How we engaged with them during FY2021
• The Executive Directors continued to closely engage with landlords
to agree revisions to payment schedules in relation to the March 2021
rent quarter.
• We actively manage our supplier relationships and have worked with our
major suppliers through the pandemic to minimise costs and disruption.
• The Company has a Whistleblowing policy in place, which enables
employees to raise concerns on any areas of the business. All cases are
reported on at every Board meeting.
• We publish our Payment Practices Report twice a year and Gender Pay
Gap report once a year.
Outcomes of engagement during FY2021
• We maintained positive relationships with our major suppliers and
landlords throughout FY2021.
• During FY2021 we managed to reduce discretionary costs and rental
payments by over £4m, through negotiations and agreed concessions.
What is important to them
• Relevant and timely information on Group performance, the measures taken
to mitigate the financial impact of COVID-19 and team member support.
• Regular engagement with management.
• Growth of share price and dividend returns data.
• Information on ESG strategy and performance.
• Information on Remuneration policy.
How the Board considers the interests of the
stakeholder group
• The Board receives feedback from shareholder meetings and through the
Group’s broker, Investec.
• The Board welcomes questions from our shareholders at any time.
• The Remuneration Chair continues to consult shareholders on any future
major changes to its Policy. The Remuneration report can be found on
pages 67 to 86.
• The Board remains focused on the Group’s ESG initiatives. The sustainability
report is on pages 36 to 43 and corporate governance report on pages 54
to 58.
How we engaged with them during FY2021
• The AGM was held virtually for the first time in January 2021, due to
COVID-19 restrictions.
• Investor relations during the year consisted of meetings with our current
and prospective shareholders, presentations given to shareholders upon
the release of annual or interim results and feedback from brokers
following investor engagement.
• A full roadshow was carried out in relation to the successful equity placing
in March 2021.
• In FY2021, the Remuneration Chair met with many of our investors in
relation to our remuneration policy.
Outcomes of engagement during FY2021
• We provided regular updates on our COVID-19 response to our shareholders.
• Our shareholders supported us in the equity placing in March 2021, in
which we issued a further 13,043,480 shares. This funding allows us to
continue with our investment programme into the core estate and new
centres, as well as aiding in the new lending agreement outlined in the
financial review on pages 33 to 35.
• The Board did not recommend a dividend for FY2020 and does not
recommend a final dividend for FY2021, as a cash preservation measure
due to COVID-19. The Board’s view on future dividends is outlined in the
financial review on page 35.
• Swift action was taken on remuneration including salary and fee
reductions and deferrals. FY2021 will see no bonus or LTIP payments
to Executive directors.
• We have made further progress in our ESG strategy and initiatives.
24 Hollywood Bowl Group plc
Annual report and accounts 2021
Our lending banks
Our communities & environment
Our lending banks provide funds for growth and working
capital as required.
What is important to them
• Regular monthly reporting, including 12-month forecasts.
• Regular invitations to new openings and refurbishment launches.
How the Board considers the interests of the
stakeholder group
• Bank representatives are able to attend half-year and full-year
results presentations.
• Forward-looking forecasts are provided at every monthly Board meeting
to ensure covenant compliance.
How we engaged with them during FY2021
• We provided regular monthly updates on company performance and
reported on debt covenant look forwards.
• During the second half of FY2021, we entered discussions with
Lloyds Bank Group plc and Barclays plc to provide a new banking
facility for the continued investment in the Group’s strategy.
Outcomes of engagement during FY2021
• In July 2021 the Board agreed to proceed with Barclays on a new
facility agreement.
• This new agreement was signed before the end of the financial year,
for a term of 39 months.
• The new facility is a £25m revolving credit facility (RCF) with lower
margin rates and looser leverage covenant tests than the previous facility.
There is also an agreed £5m accordion.
We take pride in being an active part of our communities,
with school outreach programmes, concession discounts
and charity fundraising.
We always take into account the environmental impacts
of business operations and strategy.
What is important to them
• A positive contribution to local communities through employment and
amenity provision.
• Ongoing support for local and national charities.
• Energy efficiency and sustainable working practices.
How the Board considers the interests of the
stakeholder group
• The Board considers the longer-term impact of its operations as part of its
sustainability strategy.
• The Board continues to focus on improving its energy efficiency.
How we engaged with them during FY2021
• We worked closely with all of our local authorities during COVID-19 visits,
as well as actioning any points raised effectively.
• Our Sustainability report details our environmental strategy, activities
undertaken and future initiatives. This can be found on pages 36 to 43.
Outcomes of engagement during FY2021
• Our COVID-19 secure protocols were developed in close conjunction with
the DCMS, UK Hospitality and the TBPA as well as our Primary Authority.
• We continued with our investment into solar panels, with three installations
completed during FY2021.
Hollywood Bowl Group plc
Annual report and accounts 2021
25
Strategic report Our market environment
Responding to a
changing landscape
Our position as UK market leader in both the ten-pin bowling and competitive socialising
markets enhances our ability to respond to changing market dynamics. There are a
number of emergent trends which we see as important opportunities for the Group.
Emergence of competitive socialising
As consumers are returning to pre-pandemic
spending, they are increasingly preferring to
create and share social experiences rather
than accumulating material items, which is
shaping how they allocate their discretionary
budgets and leisure time.
Opportunity
The ‘competitive socialising market’ evolved due to strong consumer
appetite for unique and inclusive experiences, including updated
takes on traditional activities such as bowling, mini-golf, table tennis
and bingo.
Response
Through our active refurbishment programme and the introduction
of innovations like our scoring systems, leaderboards, and new
mini-golf concept, we are continuing to set the standard for
competitive socialising in our nationwide locations.
Link to strategy
1
32
4 5
Combined retail and leisure experiences
High street and out-of-town traditional
retail outlets and development schemes
are under increasing pressure from
online channels and the rise of the
‘experience economy’.
Opportunity
Numerous retail property landlords and developers are responding
to this by looking to expand their leisure offering and create a wider
destination customer experience to increase footfall and extend
dwell time.
Response
Our strong record of proactive and successful partnerships with
landlords, alongside our unique customer experiences, means we
are considered key existing and potential new anchor tenants
alongside cinema and casual dining operators.
Link to strategy
1 3
26 Hollywood Bowl Group plc
Annual report and accounts 2021
Key to strategy
1
2
3
4
5
Driving like-for-like revenue growth
An active refurbishment programme
Development of new centres and acquisitions
Focusing on our people
Leveraging our indoor leisure experience
See our strategy on pages 28 and 29
Low market penetration
In the UK, ten-pin bowling has historically been
a relatively low-frequency activity and, with
327 centres, has lower levels of location
accessibility when compared to cinema.
Outlook
In the UK, the activities of ten-pin bowling and mini-golf enjoy a wide
demographic appeal and high level of participation interest when
compared to other offerings in the competitive socialising sector.
Sector consolidation
Well-capitalised businesses can increase their
share of the wider leisure market as financially
challenged operators become less competitive
or exit the market.
Response
In the last year, we have worked closely with agents and landlords
to double our new centre pipeline which will enable us to accelerate
the expansion of our market coverage into prime locations for
both the Hollywood Bowl and Puttstars brands.
Link to strategy
3 5
Opportunity
This trend and the associated opportunities are expected to
accelerate due to the COVID-19 pandemic and the resultant
trading and liquidity pressures experienced by many operators
in the leisure and hospitality sectors.
Response
The wider leisure market remains highly fragmented with many
independent operators in existence. Whilst in the bowling sector
there are only 21 independent centres with more than 16 lanes, we
continue to closely monitor wider opportunities of varying scale
with our strict high-quality location criteria guiding our evaluations,
both in the UK and internationally.
Link to strategy
3 5
Hollywood Bowl Group plc
Annual report and accounts 2021
27
Strategic report Strategy
A proven strategy
Driving like-for-like
revenue growth
Actively
refurbishing
our assets
Developing
new centres
& acquisitions
We grow our LFL revenue by
attracting new customers, increasing
the frequency of visits of existing
customers and stimulating higher
spend per game.
Progress in the year
• In FY2021 our LFL revenue (from
May 2021 reopening vs same period
in FY2019) was up by 28.6 per cent.
• Investments were made across the
Group to improve customer
experience – including the website,
a new CRM platform and the rollout
of a new scoring system
• During restriction-free trading the
Group recorded both record days
and months in terms of consumer
activity and LFL revenue
Priorities
• Further investments in technology,
the digital customer journey,
marketing, developing our people,
optimising space and lane capacity
28.6%
LFL growth from May 2021
reopening vs same period
in FY2019
Investing in the customer experience
creates improved sales and profitability
at existing centres. Our upgrades
attract new customers and increase
customer satisfaction and encourage
repeat usage.
Progress in the year
• Full centre refurbishments were
completed in Basildon and
Stevenage, with amusement
enlarging works in The O2
and Cheltenham
• Pins on Strings installed in a further
six centres
• Glasgow Springfield Quay full
refurbishment completed in
November 2021
Priorities
• Six refurbishments to be carried
out in FY2022
• The continued rollout of Pins
on Strings to improve games
per stop (GPS)
We actively explore growth
opportunities via new build centres
and through acquisition and
rebranding of the sites of
other operators.
Progress in the year
• We have doubled our new centre
pipeline to take advantage of our
leading position in the sector and
favourable market trends
• On site in Birmingham Resorts
World and Belfast (Hollywood
Bowl) and Harrow (Puttstars),
which will open in FY2022
Priorities
• Opening of four new centres in
FY2022 and at least a further ten
centres by the end of FY2024
• Continuing to work with landlords to
grow our pipeline beyond FY2024
• Continuing review of UK and
overseas acquisition opportunities
3
Centres refurbished
in FY2021
14-18
New centre openings
targeted by end FY2024
Link to risks
1 3 6 7
Link to risks
1 6 7
Link to risks
2 7 9
Image credit: Inspired Media
28 Hollywood Bowl Group plc
Annual report and accounts 2021
Focusing on
our people
Our dedicated and dynamic teams
enable us to deliver on our Group
purpose. Attracting and retaining the
top talent is a key priority.
Progress in the year
• The full team was brought back
to work on full pay in June, after
98.6 per cent were furloughed
in January
• All team members were provided
with tailored training and support
before centres were reopened
• New bonus and incentive
schemes were introduced for
all team members
Priorities
• Training, development, internal
succession planning and
team wellbeing
• Continuing to attract and retain the
best talent in the leisure industry
Leveraging our
indoor leisure
experience
We believe there are potential
sustainable, profitable growth
opportunities through acquisition or
organic expansion into other indoor
leisure sectors.
Progress in the year
• Strong trading levels for the new
Puttstars brand when the centres
have been open
• Excellent customer and team
member feedback
Priorities
• Evolution of the Puttstars brand
through insight led brand
positioning, centre environment
and customer proposition
enhancements
• Opening of two Puttstars centres
in FY2022, with five planned
by FY2024
• Continuing the review of adjacent
market opportunities
49%
Of management positions
filled internally
79%
Customer net promoter
score since Puttstars
reopened in May
Link to risks
4 7 9
Link to risks
2 4 5
Key to risks
1
2
3
4
5
6
7
8
9
10
11
Revenue
Covenant breach
Business interruption (Finance)
Core systems
Supplier (non-amusements)
Amusement supplier
Management recruitment & retention
Food safety
Business interruption (Operations)
GDPR & cyber security
Compliance
See our risks on pages 44 to 49
See our markets on pages 26 and 27
Hollywood Bowl Group plc
Annual report and accounts 2021
29
Strategic report Key performance indicators
We monitor our performance by regularly reviewing KPI metrics1.
We use these to gain a thorough understanding of the drivers of
our performance, of our operations and of our financial condition.
Financial KPIs
Revenue (£m)
-9.6%
Revenue-generating capex (£m)
-59.0%
Group adjusted EBITDA (£m)
+2.5%
2021
2020
2019
2018
71.9
79.5
2021
2020
3.6
2021
129.9
2019
8.1
120.5
2018
4.3
8.9
2020
2019
2018
30.6
29.8
38.2
36.2
Definition
Revenue is generated from customers
visiting our centres to bowl or play mini-golf,
and spending money on one of the ancillary
offers – our amusements, diner or bar.
Comment
Revenue was impacted by the COVID-19
closure of over six months, as well as the
restrictions once reopened. Revenue
decreased by 9.6 per cent to £71.9m.
Definition
Capital expenditure on refurbishments,
rebrands and new centres (excluding
maintenance capex).
Comment
Revenue-generating capex decreased by
59.0 per cent (£5.3m) due to lower spends
on new centres and refurbishments.
Definition
Group adjusted EBITDA is calculated as
operating profit before depreciation,
impairment, amortisation, loss on disposal
of property, plant, equipment and software
and exceptional items. A reconciliation
between Group adjusted EBITDA and
statutory operating profit is on page 34.
There are no exceptional items in FY2021
or FY2020.
Comment
Group adjusted EBITDA increased by £0.8m.
Government grant income of £2.8m is included
in Group adjusted EBITDA for FY2021.
Profit before tax (£m)
-61.4%
Like-for-like revenue growth (%)
+28.2% pts
Net cash/(debt) (£m)
N/A
2021
0.5
2020
1.2
2019
2018
2021
2020
0.4
27.6
2019
5.5
23.9
2018
1.8
28.6
2021
29.9
(8.7)
2020
(2.1)
2019
(2.5)
2018
Definition
Profit before tax as shown in the
Financial Statements.
Comment
Profit before tax fell due to the impact
of COVID-19.
Definition
LFL revenue growth is total revenue
excluding any new centres and closed
centres. New centres are included in the
LFL growth calculation for the period after
they complete the calendar anniversary of
their opening date. Due to the restrictions in
FY2020, LFL revenue is compared to the
same period in FY2019.
Comment
LFL revenue has increased 28.6 per cent
since the reopening on 17 May.
Definition
Net cash/(debt) is defined as cash and cash
equivalents (£29.9m) less borrowings from
bank facilities (£nil) excluding issue costs.
Comment
The Group is in a net cash position as at
year-end due to the strong trading since
reopening and tight cost controls during the
lockdown, as well as the equity placing
completed in March.
30 Hollywood Bowl Group plc
Annual report and accounts 2021
1
Some of the measures described are not financial measures under Generally Accepted Accounting Principles
(GAAP), including International Financial Reporting Standards (IFRS), and should not be considered in isolation
or as an alternative to the IFRS Financial Statements. These KPIs have been chosen as ones which represent
the underlying trade of the business and which are of interest to our shareholders.
Gross profit (%)
+0.2% pts
Group adjusted operating cash flow
(£m) +49.4%
Group operating profit margin (%)
+0.9% pts
2021
2020
2019
2018
85.7
2021
22.1
85.5
2020
14.8
2021
2020
13.3
12.4
85.7
2019
86.1
2018
25.1
2019
24.7
2018
21.9
20.6
Definition
Operating profit margin is calculated as
operating profit per the Financial Statements
divided by revenue.
Comment
Operating profit margin increased year on
year due to the strong cost discipline during
the year..
Definition
Gross profit percentage is calculated as
revenue minus the cost of sales and any
irrecoverable VAT, divided by revenue.
Bowling has a gross profit of 100 per cent,
with the costs of operating bowling in
administrative costs, while each of the other
revenue streams has an associated cost
of sales.
Comment
Gross profit percentage increased year
on year. This was due in the main to the
lower output VAT rate on food and
non-alcoholic drinks.
Definition
Group adjusted operating cash flow is
calculated as Group adjusted EBITDA less
working capital, maintenance capex and
corporation tax paid. A reconciliation of
Group adjusted operating cash flow to net
cash flow is provided on page 35.
Comment
Group adjusted operating cash flow
increased due to a combination of higher
Group adjusted EBITDA, a positive
movement in working capital and lower
expansionary capital expenditure.
Group adjusted EBIDA margin (%)
+5.0% pts
Total average spend per game (£)
+1.7%
2021
2020
2019
2018
42.5
2021
37.5
29.4
30.0
2020
2019
2018
10.33
10.15
9.64
9.22
Definition
Group adjusted EBITDA margin is
calculated as Group adjusted EBITDA
divided by total revenue.
Comment
Group adjusted EBITDA margin percentage
increased due to tight cost controls during
lockdown as well as the strong EBITDA
performance post reopening in May. Group
adjusted EBITDA margin on a pre-IFRS 16
basis was 21.1 per cent.
Definition
Total average spend per game is defined
as total revenue in the year divided by the
number of bowling games and golf rounds
played in the year.
Comment
Average spend per game increased by
1.7 per cent, to £10.33, due to customers
continuing to spend more during their visits.
Hollywood Bowl Group plc
Annual report and accounts 2021
31
Strategic report Chief Financial Officer’s review
We’ve proved
our resilience
and paved
the way for
a great 2022
We have emerged as a strong, well-
capitalised business ready to take
full advantage of a wide range of
future opportunities.”
Laurence Keen, Chief Financial Officer
32 Hollywood Bowl Group plc
Annual report and accounts 2021
Group financial results
Revenue
Gross profit
Gross profit margin
Administrative expenses
Group adjusted EBITDA1
Group adjusted EBITDA1 pre-IFRS 16
Group profit after tax
Free cash flow2
Group expansionary capital expenditure3
FY2021
FY2020
Movement
£71.9m
£61.6m
85.7%
£54.9m
£30.6m
£15.1m
£1.7m
£8.7m
£3.6m
£79.5m
£67.9m
85.5%
£58.1m
£29.8m
£14.0m
£1.4m
(£4.1m)
£8.9m
-9.6%
-9.3%
+0.2% pts
-5.5%
+2.5%
+8.4%
+24.8%
n/a
-59.0%
1
Group adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) reflects the underlying trade of the overall business. It is calculated as statutory operating
profit plus depreciation, amortisation, loss on disposal of property, right-of-use assets, plant and equipment and software and any exceptional costs or income, and is also shown
pre-IFRS 16 as well as adjusted for IFRS 16. Government grant income of £2.8m is included in Group adjusted EBITDA for FY2021. The reconciliation to operating profit is set out
below in this section of the report.
2
Free cash flow is defined as net cash flow pre-dividends, bank funding and any equity placing.
3
Group expansionary capital expenditure includes all capital on new centres, refurbishments and rebrands only.
Following the introduction of the new lease
accounting standard IFRS 16, the Group has
decided to maintain the reporting of Group
adjusted EBITDA on a pre-IFRS 16 basis as
well as on an IFRS 16 basis. This is because
the pre-IFRS 16 measure is consistent with
the basis used for business decisions, as
well as a measure investors use to consider
the underlying business performance. For
the purposes of this review, the commentary
will clearly state when it is referring to figures
on an IFRS 16 or pre-IFRS 16 basis.
The trading periods for FY2020 and FY2021
were disrupted due to a combination of
COVID-19 lockdowns and trading restrictions
once open, as well as the local tiering system
seen in the first half of the financial year.
During FY2021, all of our English centres
were closed for at least five and a half
months, with many closed for longer than
this due to the local tier restrictions.
The Group’s operations were closed for a
large proportion of the year, before opening
with restrictions in place on 17 May 2021.
Our centres have only operated without
restrictions for just over two months since
19 July 2021. Given the closures and impacts
during FY2020 and FY2021, we consider
FY2019 to be the best comparable for
revenue performance metrics for the periods
where the centres were able to trade.
Despite the restrictions, performance has
been strong since reopening in May. LFL
revenue growth for the period post
reopening was 28.6 per cent against the
same period in FY2019, with August
achieving a record monthly revenue of
£20.1m, which is more than 40 per cent
higher than the Group’s previous record
month. Total revenue for the period post
reopening to the end of FY2021 was £61.3m,
just £1.6m short of a record second half,
even though centres traded for only four
and a half months.
The total revenue for FY2021 was £71.9m
(FY2020: £79.5m).
Gross profit margin
Despite the prolonged closure of the
Group’s centres, gross profit was £61.6m
(FY2020: £67.9m), with a gross profit
margin rate of 85.7 per cent. It is worth
noting that there is a benefit to the gross
margin due to the reduced VAT rate on food
and non-alcoholic drinks. This increased
gross profit margin by 0.3 percentage points
during FY2021. Without this, gross profit
margin rate was in line with historical trends
and, barring changes in sales mix, we expect
these trends to continue in FY2022.
Administrative expenses
Following the adoption of IFRS 16,
administrative expenses exclude property
rents (turnover rents are not excluded)
and include the depreciation of property
right-of-use assets.
Administrative expenses on a statutory
basis were £54.9m, 5.5 per cent lower when
compared to FY2020. On a pre-IFRS 16
basis, administrative expenses were
£60.5m, compared to £64.6m during the
corresponding period in the prior year.
Using the experience gained during the first
lockdown in FY2020, the Group was able
to continue to manage cash effectively
during the lockdown period of FY2021.
During this period, administrative expenses
remained low, primarily due to a reduction in
employee costs through the Coronavirus
Job Retention Scheme (CJRS), a continuation
of the rent savings agreed with landlords
and the business rates suspension, as well
as effective cost management of other
cost lines.
Once centres reopened, the Group reduced
its reliance on CJRS, before ending it at the
end of June 2021. The total value of CJRS
in the consolidated income statement for
FY2021 was £8.3m. Centre employee costs
for FY2021 were £13.9m.
There were significant costs to prepare the
centres for the big reopening in May 2021,
including, but not limited to, team training
and the use of consumables for the
continuation of the increased cleaning
protocols in place since August 2020, as
well as marketing costs.
Business rates remained suspended during
FY2021 until the end of June, with the Group
subject to the £2m exemption cap post this
period. Business rates were £1.2m in FY2021,
£2.4m lower than FY2020 and £5.9m lower
than FY2019. Total property costs for FY2021,
accounted for under pre-IFRS 16, were £23.2m
– lower by £3.2m when compared to FY2020,
and £7.4m when compared to FY2019.
Alongside all other costs, energy costs
continue to be a focus for the Group. There
are three components to this: reduction in
usage, cost per unit and the implementation
of solar panels on more centres. The central
control of heating and cooling, as well as the
use of LED lights in all centres, helps reduce
usage in centres. Electricity costs are hedged
out to 2024, and we have continued to work
closely with our landlords to install solar
panels on more centres. During FY2021
three more centres benefited from solar
Hollywood Bowl Group plc
Annual report and accounts 2021
33
Strategic report Chief Financial Officer’s review continued
Administrative expenses continued
panels, with plans for a further ten during
FY2022. This will mean that by the end of
FY2022, 15 centres will be utilising solar
panels, resulting in 33 per cent of their
electricity being self-produced.
The statutory depreciation, amortisation
and impairment charge for FY2021 was
£20.9m compared to £19.9m in FY2020.
Excluding property lease assets’ depreciation,
this charge in FY2021 was £11.2m. This is
due to the continued capital investment
programme, including new centres,
refurbishments and our centre scoring
technology rollout.
During the year we have recognised
an impairment charge for one centre
of £299,000 against property, plant
and equipment and £551,000 against
right-of-use assets.
Group adjusted EBITDA and
operating profit
Group adjusted EBITDA pre-IFRS 16
continued to be impacted by the COVID-19
closures. Group adjusted EBITDA pre-IFRS
16 in FY2021 increased by 8.4 per cent
compared to the prior year, to £15.1m. Whilst
Group adjusted EBITDA pre-IFRS 16 was
negative during the months of closure, all
months were positive from reopening in May
onwards. Group adjusted EBITDA pre-IFRS
16 in the months of reopening totalled
£23.9m, compared to £13.0m for the same
months in FY2019.
The reconciliation between statutory
operating profit and Group adjusted
EBITDA is below.
Share-based payments
During the second half of the year, the Group
granted further Long Term Incentive Plan
(LTIP) shares to the senior leadership team.
These awards vest in three years providing
continuous employment during this period
Group adjusted EBITDA and operating profit
and attainment of performance conditions
relating to earnings per share (EPS). Due to
the EPS performance in FY2021, the LTIP
granted in 2019 did not vest.
The Group recognised a total charge of
£16,477 in relation to the Group’s share-
based payment arrangements.
Equity placing
In March 2021, the Group raised £29.2m of
net proceeds on the stock market through
an equity placing. The funds were raised to
help the Group achieve its strategic goals in
three key areas: investment in the property
pipeline, centre refurbishments and IT
investments, as well as securing future bank
debt with enhanced terms.
Financing
Finance costs increased to £9.1m in FY2021
(FY2020: £8.7m) comprising the implied
interest relating to the lease liability under
IFRS 16 of £8.0m and £1.1m associated with
our bank borrowing facilities.
The funds raised through the equity placing
allowed the Group to review and renew its
bank debt that was due to mature at the end
of September 2022. We are pleased to
announce the details of this new debt facility
with Barclays. It is a revolving credit facility
(RCF) of £25m at a margin rate of 1.75 per
cent above SONIA and an agreed accordion
of £5m. The leverage covenant is 1.75 times
of net debt to a rolling 12-month Group
adjusted EBITDA pre-IFRS 16. The loan term
runs to the end of December 2024.
At the year end, this RCF remains fully
undrawn, as well as at the time of signing the
accounts. The Group also cancelled its
£10m Coronavirus Large Business
Interruption Scheme (CLBILS) RCF.
The liquidity position of the Group remains
strong, with a cash position of £29.9m and
£25m available through the RCF.
Taxation
The Group received a tax credit of £1.3m
compared to a credit of £0.2m in the prior
year. The Group has had to carry back losses
of £384,000 for FY2019 and FY2020. We
expect a tax refund from HMRC of £650,000
to be repaid in the early part of FY2022.
Earnings
Statutory profit before tax for the year
was £0.5m. The Group delivered profit
after tax of £1.7m (FY2020: £1.4m) and
basic earnings per share was 1.05 pence
(FY2020: 0.90 pence).
Cash flow and net debt
Net cash at 30 September 2021 was
£29.9m compared to a net debt position
of £8.7m at the end of FY2020. Detail on
the cash movement in the year is shown in
the table opposite.
Capital expenditure
During the financial year, net capex was
£9.6m. Refurbishments were completed at
Basildon, Stevenage and Cheltenham, with
Glasgow Springfield Quay started during
FY2021 and completed early in FY2022.
Six more refurbishments are planned for
FY2022. The returns on those investments
are expected to all exceed the Group’s
hurdle rate of 33 per cent. As part of its best
in class COVID-19 secure guidelines, the
Group invested £1.3m in rolling out lane
seating dividers across all bowling centres.
The Group continued implementing Pins
on Strings technology across the centres,
with six completed in FY2021, and a target
of rolling this out to 16 more centres during
FY2022. It is forecasted that 43 centres will
benefit from Pins on Strings by the end of
FY2022.Investments were also made in the
Group’s CRM, website and IT architecture
to increase performance and improve our
customers’ digital experience.
Operating profit1
Depreciation and impairment
Amortisation
Loss on property, right-of-use assets, plant and equipment and software disposal
Group adjusted EBITDA under IFRS 16
IFRS 16 adjustment2
Group adjusted EBITDA pre-IFRS 16
FY2021
£’000
9,580
20,472
477
29
30,558
(15,416)
15,142
FY2020
£’000
9,861
19,418
507
22
29,808
(15,840)
13,968
1 Operating profit in FY2021 includes government grant income of £2.8m (FY2020: £0m)
2
IFRS 16 adoption has an impact on EBITDA, with the removal of rent from the calculation. For Group adjusted EBITDA pre-IFRS 16, it is deducted for comparative purposes and is
used by investors as a key measure of the business.
34 Hollywood Bowl Group plc
Annual report and accounts 2021
Cash flow and net debt
Group adjusted EBITDA
Movement in working capital
Maintenance capital expenditure
Taxation
Payment of capital elements of leases
Adjusted operating cash flow (OCF)1
Adjusted OCF conversion
Expansionary capital expenditure2
Net bank loan interest paid
Lease interest paid
Debt repayments3
Free cash flow (FCF)4
Debt facility repayment3
(Repayment)/drawdown of RCF3
Dividends paid
Equity placing (net of fees)
Net cash flow
FY2021
£’000
30,558
6,905
(5,951)
—
(9,420)
22,092
72.3%
(3,631)
(1,207)
(7,952)
(600)
8,702
(24,900)
(4,000)
—
29,356
9,158
FY2020
£’000
29,808
(3,546)
(4,862)
(3,117)
(3,500)
14,783
49.6%
(8,852)
(858)
(7,770)
(1,500)
(4,197)
—
4,000
(14,489)
10,541
(4,145)
1
Adjusted operating cash flow is calculated as Group adjusted EBITDA less working capital, maintenance capital expenditure, taxation and payment of the capital element of
leases. This represents a good measure for the cash generated by the business after taking into account all necessary maintenance capital expenditure to ensure the routine
running of the business. This excludes exceptional items, net interest paid, debt drawdowns and any debt repayments.
2
Expansionary capital expenditure includes refurbishment and new centre capital expenditure.
3 Note 21 to the Financial Statements includes the aggregated amounts debt repayments, debt facility repayment and repayment/drawdown of the RCF.
4 Free cash flow is defined as net cash flow pre-debt facility repayment, RCF drawdowns, dividends and equity placing.
The current liquidity will allow the Group
to move forward with plans to open more
locations during FY2022 and beyond. The
Group is currently fitting out new sites in
Birmingham Resorts World and Belfast
(both Hollywood Bowl), as well as Harrow
(Puttstars), with Liverpool (Puttstars) due
on site during the second half of FY2022.
A total of £2.5m net capex was incurred
on new sites during FY2021.
In light of all of the above investments, as
well as the continued maintenance capital
expenditure, we expect capital expenditure
to be in the region of £21m–£23m in FY2022.
We are also pleased to announce a further
two centres have exchanged and will open
before the end of FY2024. The pipeline of
new high-quality sites will continue to grow
throughout FY2022.
Dividend
Consistent with FY2020, the Board did not
recommend a final dividend for FY2021 as a
cash preservation measure due to COVID-19.
However, should trading continue in line with
expectations, the Group intends to resume
its capital allocation policy, which will include
the redistribution of funds in the most
appropriate way.
Going concern
As part of the adoption of the going concern
basis, the Directors have considered the
Group’s cash flow, liquidity, and business
activities, as well as the ongoing uncertainty
caused by the COVID-19 outbreak. The Group
has taken a number of actions to improve
overall liquidity to ensure it is well placed to
operate and to achieve its strategic goals.
During FY2021, the Group raised £29.2m
on the stock market through an equity
placing and entered into a new £25m RCF.
At 30 September 2021, the Group had a net
cash position of £29.9m.
The base case forecast assumes all centres
remain open and there are no trading
restrictions. In the base case forecast, there
is no drawdown of the RCF, and financial
covenants are passed.
As detailed in note 2 to the Financial
Statements, the most severe downside
scenario modelled includes an assumption
of a two-month winter lockdown over
December 2021 and January 2022.
Under this severe but plausible downside
scenario, the Group would still have
sufficient liquidity within its cash position,
no drawdown of the RCF and financial
covenants passed.
Taking the above, and the principal risks
faced by the Group, into consideration, the
Directors are satisfied that the Group has
adequate resources to continue in operation
for the foreseeable future, a period of at
least 12 months from the date of this report.
Outlook and guidance
We are excited about the year ahead. We
have a strong, well capitalised business,
ready to take full advantage of the new
opportunities we have been presented with.
For the period October and November,
LFL revenue growth is 38.1 per cent when
compared to the same period in FY2019,
and whilst we are mindful of the Omicron
variant, we are optimistic looking ahead to
the Christmas period and into the rest of
the financial year, especially given we have
seen no negative structural change in the
consumer sentiment for our offering. With
our strong liquidity position we will be able
to continue with our successful capital
deployment programme, investing in five
to seven refurbishments in our core estate,
opening four new centres in FY2022 and
adding Pins on Strings to 16 further centres.
Laurence Keen
Chief Financial Officer
Hollywood Bowl Group plc
Annual report and accounts 2021
35
Strategic report Sustainability overview
Our evolving
approach to
sustainability
Our business is inherently people focused
and has social aims and social responsibility
at its heart, but we also know it is vital to
consider our impact on the environment
and climate change, as well as to ensure
that our governance approach is ethical
and robust. Finding more sustainable
ways of doing business isn’t just important
to us – we know that our customers,
team members, investors and other
stakeholders value it highly too.
Wider international trends in environment, social and governance
issues are shaping the way the world will look in the future. From
climate change to diversity and inclusion, and the focus on
Company culture, we need to be aware of the trends that will
impact our business. Meanwhile, huge leaps in technology
continue to disrupt all sectors of the economy, with big data,
artificial intelligence, virtual reality and the digital revolution
transforming the world of entertainment and leisure.
To align the business with these challenges, throughout 2021
we worked with sustainability consultants to undertake a full
environmental, social and governance (ESG) materiality
assessment, and to evolve our sustainability strategy.
Our ESG strategy is based on three pillars:
1 Safe & inclusive leisure destinations
We bring friends and families together in our welcoming centres
where we prioritise health and safety, a responsible approach to
eating and drinking, accessibility to all, and positive local
community relations.
2 Outstanding workplaces
We focus on developing and training our team members,
supporting their wellbeing and maintaining a diverse and inclusive
Company culture in which they can thrive.
3 Sustainable centres
The centres we operate for playing, working and socialising are
increasingly more energy efficient, low-emission, sustainably
sourced and recycling-oriented places.
Our initiatives, metrics and current and future targets are
measured against each of these pillars and we will continue to
update our stakeholders on our progress.
36 Hollywood Bowl Group plc
Annual report and accounts 2021
Our purpose
Bringing families and friends together for affordable fun
and safe, healthy competition
1. Safe & inclusive
leisure destinations
2. Outstanding
workplaces
3. Sustainable
centres
Addresses priority issues:
• Health & safety
• Responsible food & beverage
• Accessibility & wellbeing
• Community relations
Addresses priority issues:
• Talent attraction & retention
• Diversity & inclusion
• Training & development
• Team wellbeing
Addresses priority issues:
• Waste management
• Energy efficiency
• Greenhouse gas emissions
• Climate change
Supports strategic objectives:
Supports strategic objectives:
Supports strategic objectives:
1
2
4
5
1
4
2
3
5
Helps mitigate principal risks:
Food safety and Compliance
Helps mitigate principal risks:
Employee retention and Compliance
Helps mitigate principal risks:
Compliance
Stakeholder value for:
Customers, People,
Communities, Investors
Stakeholder value for:
Customers, People,
Communities, Investors
Stakeholder value for:
Environment, Customers, People,
Communities, Investors,
Partners & Suppliers
Underpinned by a dynamic Group culture, robust Board governance of
ESG and progressive relationships with suppliers and partners
Key to strategy
1
4
Driving like-for-like revenue growth
Focusing on our people
2
5
An active refurbishment programme
3
Development of new centres
and acquisitions
Leveraging our indoor leisure experience
Hollywood Bowl Group and the SDGs
The UN Sustainable Development Goals (SDGs) are the global blueprint to achieve a better and more sustainable future for all. The call for action is an urgent one and we want
to play our part.
It is an important framework that we use to guide our approach and ensure that our strategy supports broader sustainable development priorities. All the goals are of the utmost
importance but we believe our business is best placed to contribute to six goals which we have used to align our strategy as shown above.
Over the next year we will continue to use the SDGs, and the targets and indicators that sit under the goals, to guide us as we further develop the measurement, structures and plans
that will support our ESG strategy.
Hollywood Bowl Group plc
Annual report and accounts 2021
37
Strategic report Sustainability overview continued
Sustainability overview continued
Evolving our strategy
We have developed our three pillar strategy through collaboration
with internal stakeholders, interviews, research and a comprehensive
review of our material ESG issues. Our materiality matrix shows our
highest priority ESG issues, their significance to stakeholders and
their impact on our business. The pillars are based on this materiality
assessment and the materiality matrix below which captures the
output of this process.
To develop the matrix, we worked with external consultants to
conduct detailed analysis, drawing on industry intelligence and
macro trends to create a long-list of material ESG topics. We then
conducted risk and opportunity analysis against each topic to
establish its potential to impact on the business (plotted on the
x-axis, ‘Impact’), and its significance to the business and stakeholders
and prevalence in the market (plotted on the y-axis, ‘Significance’).
We already report against many of the material issues that rated
highly, and will be developing reporting and targets against additional
material issues. The matrix includes environmental issues such as
waste management; social issues such as health and safety,
diversity and inclusion, employee development, wellbeing and
responsible food and drink; and governance issues such as values
and culture.
Materiality matrix
Energy efficiency
e
c
n
a
c
fi
n
g
S
i
i
GHG emissions
Waste management
Board diversity
Diversity & inclusion
Climate change
Values & culture
Team wellbeing
Health and safety
Responsible supply chains
ESG governance
Responsible food and beverage
Training & development
Executive pay
Business ethics
Water use
Community relations
Talent attraction & retention
Accessibility & affordability
Biodiversity
Product development
Socioeconomic impact
Environment
Social
Governance
Impact
38 Hollywood Bowl Group plc
Annual report and accounts 2021
Over the following pages, we describe our progress and approach to each strategic pillar of our strategy and our most material ESG issues.
1. Safe & inclusive leisure destinations
Accessibility, wellbeing and community relations
Bowling and mini-golf are fun, active, inclusive and sociable activities
that enable families and friends to spend quality time together,
contributing to their overall wellbeing. The COVID-19 pandemic
highlighted the importance of these type of social activities, where
people can enjoy some escapism and have fun together. We work
hard to ensure that our centres are welcoming, and accessible to all
in our communities. We aim to keep our activities as affordable as
possible and offer concessionary discounts to different user groups
through our local community engagement and outreach. The Group
continued to support Barnardo’s as our national charity partner.
Health and safety
There is nothing more important to us than the health and safety of
our teams, customers and anyone visiting our centres. It is a critical
part of our approach to business and the experience we offer.
Operating through COVID-19 has reinforced the important role of
strong policies and practices in protecting everyone who visits us.
Providing COVID-19 secure operations was a key priority during
the year. From the outset of the pandemic, we have been integral
in developing the government-approved guidelines for the sector,
working with the sector trade body and the Department for Digital,
Culture, Media & Sports (DCMS). We have continued to follow
COVID-19 secure operating protocols, implementing comprehensive
risk assessments and new safety innovations, including significant
investment in lane seating dividers. We comply with all safety
legislation and act on all reported incidents. As part of our internal
audit reviews, we undertake safety audits and any incident reports
are reviewed by the Board on a monthly basis.
Responsible food and beverage
We continue to work with our suppliers to reduce the salt and sugar
content of the food and beverages we offer. Although simplified to
protect our customers through the COVID-19 pandemic, our food
menu continues to offer a selection of healthier options and includes
our popular range of sugar-free soft drinks.
We have strict protocols in place to mitigate the risk of food allergy,
contamination and preparation-related incidents. These include
robust policies, transparent communication, close management
of long-term partnerships with established suppliers and regular
team training. We also welcome new legislation that will require large
businesses to display calorie information on menus and food labels
from April 2022.
We think carefully about the food and drink options that we offer
and communicate clearly to give customers the information they
need to make choices that are right for them.
We work hard to ensure that our centres
are welcoming, and accessible to all in
our communities.”
Hollywood Bowl Group plc
Annual report and accounts 2021
39
Strategic report Sustainability overview continued
2. Outstanding workplaces
Talent attraction and retention
We are incredibly proud of our team members, who are the face of
our business and critical to our success. Attracting and retaining
top talent remains a key focus for our business and competition
for talent is intense both inside and outside our sector. Our aim has
always been to build a business with people at its heart and provide
an outstanding workplace where all team members feel included,
valued and nurtured. Diversity and inclusion, training, development
and team member wellbeing are all vital to achieving this.
Communication and engagement with team members underpin our
approach and we are constantly looking for new ways to improve. To
do this, we use several ways to listen and capture ongoing feedback
from our team. In FY2021, we undertook our 11th team member
engagement survey, partnering with Best Companies for the third
time. We also conduct regular centre and assistant manager
listening sessions, female-only listening groups, video conference
updates, leadership team visits to all our centres, and Q&A sessions
with the leadership team that are open to all team members.
Our employee engagement app, Fourth Engage, continues to go
from strength to strength with over 6,000 engagements in the year
and we also launched a new intranet named HAPI, which has been
well received.
Reward and recognition of our team members is an important part of
our strategy to engage and retain great people. It’s also an essential
part of fostering a high performance, purpose led culture across the
business. In addition to providing fair pay to all our team members,
we also offer benefits such as free activities and discounted food
and drink when they visit our centres with their friends and family.
During the year, we launched an innovative incentive scheme for
all team members that is linked not only to financial performance
and customer satisfaction but also to centre waste recycling targets.
We continue to give our team members an opportunity to share in
the success of the business through our Save-As-You-Earn (SAYE)
Sharesave scheme, which, although it was postponed in FY2021,
we plan to restart in FY2022.
Values and culture
Our culture and team member behaviours are a real differentiator
for Hollywood Bowl Group and central to our ability to deliver
long-term value to all of our stakeholders by promoting ethical
behaviours and sustainable long-term performance. The Board
and executive management team play a key role in living and
shaping a values-based company culture.
The positive, fun, high-performance culture that we nurture through
our engagement, training and reward and recognition programmes
encourages the behaviours and attitudes needed to create an
outstanding customer experience.
The positive, fun, high-performance
culture that we nurture through our
engagement, training and reward and
recognition programmes encourages the
behaviours and attitudes needed to create
an outstanding customer experience.”
40 Hollywood Bowl Group plc
Annual report and accounts 2021
Diversity and inclusion
We are committed to fostering an inclusive culture and a welcoming
and diverse workplace where differences are valued and no one
experiences discrimination on the grounds of gender, race, ethnicity,
religious belief, political affiliation, sexual orientation, age or disability.
Senior managers are offered a place on our i2i programme which
we’ve been running since September 2019. This flagship 12-month
intensive development course gives participants greater insight into
how people work, and helps to accelerate their professional and
personal potential.
Team wellbeing
We are acutely aware that, on average, one in five employees in the
hospitality and leisure sector experiences work-related mental
health issues. COVID-19 also added pressure on team members,
many of whom experienced long periods out of the business while
centres were closed and had to adapt to new ways of working on
their return.
The pandemic has also demonstrated the importance of work life
balance and having flexibility in the workplace. We are committed to
providing training and support to our people to promote wellbeing
and manage workplace stress. Not only is it our duty to protect team
members, but it also helps us attract and retain talent as people look
for greater support and understanding from their employer.
We want talented people to progress
through our business and achieve a happy,
fulfilling career at Hollywood Bowl Group.”
We believe diversity is critical to our success, helping us innovate to
provide the best experience for our customers and help make our
centres accessible and welcoming to everyone. We have identified
focus areas for improving our diversity including addressing why
women are still under-represented in senior roles. Our female-only
listening groups have helped us make progress in understanding and
acting on the issues that prevent female team members seeking
senior roles in the business. As a result, we’ve taken steps to embed
more flexibility in the structure of senior roles.
In addition, we’ve continued to develop our employer branding.
This includes the development of a new careers website designed
to reach and appeal to a broad range of audiences.
Training and development
We want talented people to progress through our business and
achieve a happy, fulfilling career at Hollywood Bowl Group.
To that end, we have continued to build on the success of our
industry-leading talent development programmes. During FY2021,
we were pleased to be able to fill 49 per cent of our management
vacancies through internal promotions, including centre and
regional manager appointments.
Every Hollywood Bowl career now begins with our virtual induction
and training in our ways of working, ensuring all team members are
supported to provide the best experience for our customers.
Ongoing development is provided by our 23 module online learning
system, which 93.5 per cent of team members completed during
FY2021. Assistant managers and deputy managers are encouraged
to develop their management skills via our Centre Manager in
Training (CMIT) programme, with 13 high-potential candidates
undertaking this training during FY2021.
Hollywood Bowl Group plc
Annual report and accounts 2021
41
Strategic report Sustainability overview continued
3. Sustainable centres
As a Group we have a strong commitment to conduct each part
of our operations in an ethical and responsible manner. This is
demonstrated in our environmental and energy achievements.
Centre closures prompted by COVID-19 impacted on our gas and
electricity usage as well as the amount of waste generated.
Solar
Five solar array installs on our centres have now been completed
and a further ten are planned for early 2022.
Site
Year
installed
Output
(kWp)
Onsite
consumption
Yield
(kWh)
Solar
fraction
2019 108.59
Rochester
Bentley Bridge
2019 225.62
Birmingham Rubery 2021 170.94
2021 211.40
Leeds
2021 186.30
Basildon
92% 100,861 29%
73% 186,603 35%
78% 140,678 32%
79% 161,083 33%
79% 167,119 35%
Greenhouse gas
Greenhouse gas (GHG) emissions for FY2021 have been measured
as required under the Large and Medium-Sized Companies and
Groups (Accounts and Reports) Regulations 2008 as amended in
2013. The GHG Protocol Corporate Accounting and Reporting
standards (revised edition) and the electricity and gas consumption
data has been provided by Schneider Electric and Total. Conversion
factors are taken from: https://www.gov.uk/government/
publications/greenhouse-gas-reporting-conversion-factors-2021
Our Scope 1 emissions
Natural gas, company car (the Group no longer provides ICE
company cars and has introduced an Electric Vehicle Scheme for
regional support team members) and refrigerant gas loss emissions:
Natural gas
Company car
F gas losses
Total
354 tCO2e
0 tCO2e
206 tCO2e
560 tCO2e
Our Scope 2 Emissions
Emissions from electricity for the year are 12,192,555 x 0.21233 =
2,588,845 kgCO2e or 2,588.8 tCO2e.
Intensity Ratio
Scope 1 emissions
Scope 2 emissions
Total Scope 1 and 2 emissions
Intensity ratio (tCO2e per centre)
560 tCO2e
2,588.8 tCO2e
3,148.8 tCO2e
50.8
Over 63.2 per cent of all Scope 1 emissions were from natural gas.
This includes heating, hot water and cooking as it is not possible
to accurately determine a percentage from each. 100 per cent
of electricity emissions resulted from our UK operations.
An example of a fully
installed solar array on
the roof of Hollywood
Bowl in Basildon
42 Hollywood Bowl Group plc
Annual report and accounts 2021
Our total electricity and gas usage
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
Electricity (KWH)
Gas (KWH)
17,380,346
18,581,702
18,849,729
19,573,573
11,560,010
12,192,555
4,866,065
4,384,837
5,260,995
4,104,855
2,830,792
1,932,559
Data from centres where the landlord supplies electricity/gas have
been excluded.
Electricity usage
We continue to increase the efficiently and ethically use of natural
resources, particularly with regards to the electricity we source.
We have reduced our emission ratio for Scope 1 and 2 emissions
by 111.5 or 68.7 per cent for FY2021 compared to the base year
(FY2016).
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
Scope 1
895.7
807.5
967.8
773.6
568.4
560.0
Scope 2
Scope 1 +2
Intensity ratio
8,195
6,532.6
5,335.6
5,003
2,695
2,588.8
9,090.7
7,340.1
6,303.4
5,776.6
3,263.4
3,148.8
162.3
132.9
113.7
102.6
55.1
50.8
In FY2021 we achieved the goal we set ourselves in FY2019 of an
intensity ratio of under 100. However this was significantly impacted
by the COVID-19 lockdowns and the challenge will be to maintain
that level in FY2022.
Reducing our usage
Our action plan for reducing the environmental impact of our
business includes increasing onsite generation of renewable
electricity. To reduce our usage we will be:
Climate change
We understand that climate change is likely to impact our business in
a number of ways. So we welcome the framework and recommendations
from the Task Force on Climate-Related Financial Disclosures
(TCFD) designed to improve and increase corporate reporting of
climate-related financial information. From FY2022 we will integrate
these recommendations into our reporting as we begin assessing
climate-related risks and mitigations in greater depth as part of our
ESG strategy.
Waste recycling
Recycling the waste we produce is part of our commitment
to mitigate against the environmental impacts of our operations.
In FY2016 we recycled 63.3 per cent of our waste and this has
increased to 71.6 per cent for FY2021. All of our waste is 100 per cent
diverted from landfill and in September 2021 we achieved over
75 per cent recycling for the month.
Waste volumes were impacted by the Covid-19 lockdown.
General
Glass
7,334.14
7,443.72
6,770.04
7,096.24
4,160.00
2,536.16
1,477.80
1,621.44
1,652.26
1,831.92
1,215.12
914.4
General
Recycling
Total waste
7,334.14 12,641.84 19,975.98
7,443.72 14,317.32 21,761.04
6,770.04 14,631.12 21,401.16
7,096.24 14,577.34 21,673.58
4,160.00 8,775.86 12,935.86
2,536.16 6,387.16 8,923.32
Mixed recycling/
organic
11,164.04
12,695.88
12,978.86
12,745.42
7,560.74
5,472.76
Recycling
percentage
63.3%
65.8%
68.4%
67.3%
67.8%
71.6%
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
• driving behaviour change within our teams such as conscious
All waste data supplied by Biffa.
efforts to reduce electricity;
• continuing the roll out of more energy efficient air handling plant
to replace old technology plant (plant changed in Liverpool
and Branksome in FY2021);
• increasing our focus with ESG Meetings that are chaired
by Board-level Directors;
• rolling out more solar panels on roofs; and
• developing our net zero targets to support the identification
and elimination of carbon.
This excludes data from centres where the landlord manages the
waste streams.
Our targets
We have set ourselves ambitious targets and the actions we
undertook in FY2021 mean we are well on our way to achieving them:
1.
2.
3.
100 per cent of the electricity we purchase to come from
renewable sources by 2022
20 per cent of our electricity to be generated from onsite
renewables by 2028
75 per cent of waste generated to be recycled with 100 per cent
diversion from landfill by 2025
Reaching net zero
We are committed to reducing our Scope 1 and 2 GHG emissions
by FY2026, from a base year of FY2019, by 85 per cent, and to begin
measuring and reducing our Scope 3 emissions from 2023.
Hollywood Bowl Group plc
Annual report and accounts 2021
43
Strategic report Risk management
Our approach to risk
When we look at risk, we specifically consider
the effects it could have on our business
model, our culture and therefore our ability
to deliver our long-term strategic purpose.
We have a low appetite for, and tolerance
of, risks that have a downside only,
particularly when they could adversely
impact health and safety or our values,
culture or business model.
Read more on pages 28 and 29
We consider both short and long-term
risks within a timeframe of up to three years.
We consider social, operational, technical,
governance and environmental risks, as well
as financial risks.
Risk appetite
This describes the amount of risk we are
willing to tolerate as a business. We have a
higher appetite for risks accompanying
a clear opportunity to deliver on the strategy
of the business.
COVID-19
The COVID-19 pandemic, the associated
lockdown and the closure of our business
significantly impacted our financial year.
The pandemic, as well as the social and
macroeconomic impact it brought, has
created a risk event for the Group, which
has been considered as set out in the
Viability statement.
In our initial response phase to COVID-19,
our priority was to safeguard the health
and wellbeing of our colleagues and
customers, and to mitigate the closure
of our centres. We moved into a resilience
phase early in the lockdown period following
extensive modelling of the financial impact
of COVID-19. A number of key decisions
were made in relation to the pandemic,
including the furloughing of colleagues
and negotiating payment terms with our
suppliers, as well as landlords in regard to
rental support. We also received support
from our new and existing shareholders
through an equity raise in March 2021.
Where the impact of the pandemic has
exacerbated a principal risk, we have
incorporated commentary on the COVID-19
mitigation being taken, as well as new risks
where relevant.
Our principal risks are described on the
following pages, along with a summary of our
mitigation activities.
Our risk management process
The Board is ultimately responsible for ensuring that a robust risk management process is in place and
that it is being adhered to. The main steps in this process are:
1
2
3
Department heads
Formally review their risks on a
six-monthly basis to compile their
department risk register. They
consider the impact each risk could
have on the department and overall
business, as well as the mitigating
controls in place. They assess the
likelihood and impact of each risk.
The Executive team
Reviews each departmental risk
register. Any risks which are deemed
to have a level above our appetite
are added to/retained on the Group
risk register (GRR) which provides an
overview of such risks and how they
are being managed. The GRR also
includes any risks the Executive team
is managing at a Group level. The
Executive team determines mitigation
plans for review by the Board.
The Board
Challenges and agrees the Group’s
key risk, appetite and mitigation
actions twice yearly and uses its
findings to finalise the Group’s
principal risks.
The principal and emerging
risks are taken into account in
the Board’s consideration of
long-term viability as outlined
in the Viability statement.
Read more on pages 48 and 49
We acknowledge that risks
and uncertainties of which
we are unaware, or which
we currently believe are
immaterial, may have an
adverse effect on the Group.
Risk management activities
Risks are identified through operational reviews
by senior management; internal audits; control
environments; our whistleblowing helpline;
and independent project analysis.
The internal audit team provides independent
assessment of the operation and effectiveness of
the risk framework and process in centres, including
the effectiveness of the controls, reporting of risks
and reliability of checks by management.
d
o
o
h
i
l
e
k
L
i
Since the reopening of our centres on 17 May 2021,
we have undertaken a review of the organisation’s
risk profile to verify that current and emerging risks
have been identified and considered by each head
of department.
Each risk has been scaled as shown on the risk
heat map.
44 Hollywood Bowl Group plc
Annual report and accounts 2021
9
3
High
1
7
2
4 5 6
8
11
Low
10
Impact
Financial risks
1 – Economic environment
2 – Covenant breach
3 – Business interruption
(Finance)
Operational risks
4 – Core systems
5 – Suppliers (non-
amusements)
6 – Amusement supplier
7 – Management retention
and recruitment
8 – Food safety
9 – Business interruption
(Operations)
Technical risks
10 – GDPR and cyber
security
Regulatory risks
11 – Compliance
Financial risks
Risk
1
Economic
environment
2
Covenant
breach
Risk and impact
• Change in economic conditions, in
particular a recession, due to the
after-effects of COVID-19, as well
as inflationary pressures.
• A prolonged period of uncertainty
due to COVID-19.
• Adverse economic conditions
may affect Group results.
• A decline in spend on discretionary
leisure activity could negatively
affect all financial as well as
non-financial KPIs.
• The new banking facilities, with
Barclays plc, have quarterly
leverage covenant tests.
• Covenant breach could result in a
review of banking arrangements
and potential liquidity issues.
Mitigating factors
• An economic contraction is possible, impacting consumer confidence and
discretionary income. The Group has low customer frequency per annum and also
the lowest price per game of the branded operators. Therefore, whilst it would
suffer in such a recession, the Board is comfortable that the majority of centre
locations are based in high-footfall locations which should better withstand a
recessionary decline.
• Along with appropriate financial modelling and available liquidity, a focus on opening
new centres in high-quality locations only with appropriate property costs, as well
as capital contributions, remains key to the Group’s new centre-opening strategy.
• We have an unrelenting focus on service, safety, quality and value, and are continuing
to invest in our centres. Plans are developed to mitigate many cost increases.
• The potential for future pandemic lockdowns still exists, and financial resilience
has therefore become central to our decision-making and will remain key for the
foreseeable future. Further information on the impact to covenants due to a
closure of the Group’s centres is included in financial risk 3 below.
• A new banking facility, with Barclays plc, has been agreed. The facility is a £25m
RCF, with a margin of 175bps above SONIA as well as an accordion of £5m. Net
leverage covenants are 1.75 times and will be tested quarterly from December
2021. The facility is currently undrawn.
• Group revenue and profit performance since reopening in May 2021 has been
above internal forecasts, which has resulted in a net cash position of £29.9m as at
the end of the financial year.
• Appropriate financial modelling has been undertaken to support the assessment
of the business as a going concern. The Group has headroom on the current
facility with leverage cover within its covenant levels, as shown in the monthly
Board packs. We prepare short-term and long-term cash flow, EBITDA and
covenant forecasts to ensure risks are identified early. Tight controls exist over the
approval for capital expenditure and expenses.
• The Directors consider that the combination of events required to lower the
profitability of the Group to the point of breaching bank covenants is unlikely.
3
Business
interruption
(Finance)
NEW
• Extended periods of closure would
• In relation to COVID-19, management identified and implemented a number of
result in a loss of revenue.
• This was especially the case
during the COVID-19 affected
period. Over an extended period,
a loss of revenue and the inability
to remove elements of its cost
base in a closure scenario could
lead to a material uncertainty in
the Group’s ability to continue as
a going concern.
measures to preserve cash and reduce discretionary expenditure during the period
when all of the Group’s centres were closed, allowing them to reopen quickly.
• Successful negotiation with the Group’s new lender of new, less stringent financial
covenants in the event of another lockdown which results in the closure of the
Group’s centres.
• We have developed a comprehensive framework of protocols for operating our
centres in a COVID-19 secure way. This framework was developed, and revised,
in line with government guidelines for the wider hospitality and leisure sectors and
also includes specific protocols for bowling.
Key to risk change
Increasing
Decreasing
Unchanged
Hollywood Bowl Group plc
Annual report and accounts 2021
45
Strategic report Risk management continued
Operational risks
Risk
4
Core systems
5
Suppliers
(non-
amusements)
6
Amusement
supplier
7
Management
retention and
recruitment
Risk and impact
• Failure in the stability
or availability of
information through
IT systems could
affect Group business
and operations.
• Customers not being
able to book through
the website is a bigger
risk given the higher
proportion of online
bookings compared
to prior years.
• Inaccuracy of data
could lead to
incorrect business
decisions being made.
• Operational
business failures
from key suppliers.
• Unable to provide
customers with a
full experience.
• Any disruption which
affects the Group’s
relationship with
amusement suppliers.
• Customers would be
unable to utilise a core
offer in the centres.
• Loss of key personnel
– centre managers.
• Lack of direction at
centre level with
effect on customer
experience.
• More competitive
recruitment
landscape due to
Brexit and COVID-19
pandemic.
• More difficult to
execute business
plans and strategy,
impacting on revenue
and profitability.
Mitigating factors
• All core systems (non-cloud based) are backed up to our disaster recovery centre.
• The reservation systems, provided by a third party, are hosted by Microsoft Azure Cloud
for added resilience and performance. This also has full business continuity provision and
scalability for peak trading periods. The CRM/CDP system is hosted by a third party
utilising cloud infrastructure with data recovery contingency in place.
• The reservations system also has an offline mode, so in centres customers could still book
but the CCC and online booking facility would be down. A back-up system exists for CCC
to take credit card payments offline. A full audit process exists for offline functionality.
• The business has migrated to Microsoft 365 for added resilience and to ensure that email
is always available for communications.
• All technology changes which affect core systems are authorised via change
control procedures.
• The Group undertakes periodic strategic reviews of its core system set-up with
associated market comparisons of available operating systems to ensure that it has the
most appropriate technology in place.
• The Group has key suppliers in food and drink under contract with tight service level
agreements (SLAs). Alternative suppliers that know our business could be introduced,
if needed, at short notice. Centres hold between 14 and 21 days of food, drink and
amusement product. Regular reviews and updates are held with external partners to
identify any perceived risk and its resolution. This process has been required since
reopening in May 2021, with substitute products available in all scenarios.
• Regular reviews of food and drink menus are also undertaken to ensure appropriate
stockturn and profitability.
• Regular key supplier meetings between our Head of Amusements and Namco and
Inspired Gaming. There are half-yearly meetings between the CEO, CFO and Namco.
• Namco is a long-term partner that has a strong UK presence and supports the Group
with trials, initiatives and discovery visits.
• The Group runs Centre Manager in Training (CMIT) and Assistant Manager in Training
(AMIT) programmes annually, which identify centre talent and develop team members
ready for these roles. Centre managers in training run centres, with assistance from their
regional support manager as well as experienced centre managers from across the
region, when a vacancy needs to be filled at short notice.
• The Group’s bonus schemes were reviewed for the estate reopening in May 2021, to
ensure they were still a strong recruitment and retention tool. The incentives now benefit
all team members in centres including hourly and salaried team members. These will
continue for FY2022.
• Performance-related pay has been introduced, as a trial, for hourly team members to
make their salary packages more attractive.
• Wellbeing guides were issued across the business during the pandemic, as well as
frequent Group Zoom Q&A sessions and updates via our team member app, to improve
team engagement.
46 Hollywood Bowl Group plc
Annual report and accounts 2021
Operational risks continued
Risk
8
Food safety
Risk and impact
• Major food incident
including allergen or
fresh food issues.
• Loss of trade and
reputation, potential
closure and litigation.
9
Business
interruption
(Operations)
NEW
• Loss of team
members through
isolation due to them
either testing positive
for COVID-19 or being
deemed a close
contact of such
an individual.
Mitigating factors
• Food and drink audits are undertaken in all centres based upon learnings of prior year and
food incidents seen in other companies, as well as for health, safety and legal compliance.
STRIKES training, which includes allergen and intolerance issues, is reviewed, understood
and complied with by team members.
• Allergen awareness is part of our team member training matrix which needs to be
completed before team members can take food or drink orders. Information is regularly
updated and remains a focus for the centres. This was enhanced further in the latest
menu, along with an online allergens list which is available for all customers. A primary
local authority partnership is in place with South Gloucestershire covering health and
safety, as well as food safety.
• We train team members via the AMIT programme to run emergency shift cover.
• Each regional support manager has a cover plan by clustering centres and adjusting team
rotas accordingly.
• Risk assessments are completed for back of house operations to minimise team
member contact.
• Resources will be used in the largest centres to minimise the risk.
Technical risks
Risk
10
GDPR and
cyber
security
Risk and impact
• Data protection or GDPR breach.
Theft of customer email addresses
and impact on brand reputation in the
case of a breach.
• Risk of cyber-attack/terrorism could
impact the Group’s ability to keep
trading. More bookings are being taken
online currently, which increases this risk.
Mitigating factors
• The Group adopts a multi-faceted approach to protecting its IT networks through
protected firewalls and secure two-factor authentication passwords, as well as
the frequent running of vulnerability scans to ensure integrity of the firewalls.
• A Data Protection Officer has been in position for a number of years and
attends external courses to continue to build knowledge.
• All team members have been briefed via online presentations. A training course
on GDPR awareness was created on STRIKES and all team members have to
complete this before being able to work on shift.
• A cyber security partner is in place to handle any cyber security breaches and
will work with the Group on a priority basis – 365x24x7 – if necessary.
• Periodic penetration testing is conducted through a third-party cyber
security company.
Regulatory risks
Risk
11
Compliance
Risk and impact
• Failure to adhere to
Mitigating factors
• Expert opinion is sought where relevant. We run regular training and development for
regulatory requirements
such as listing rules,
taxation, health and
safety, planning
regulations and
other laws.
• Potential financial
penalties and
reputational damage.
appropriately qualified staff.
• The Board has oversight of the management of regulatory risk and ensures that each member
of the Board is aware of their responsibilities.
• Compliance documentation for centres to complete for health and safety, and food safety,
are updated and circulated twice per year. Adherence to Company/legal standards is audited
by the internal audit team.
Hollywood Bowl Group plc
Annual report and accounts 2021
47
Strategic report
Going concern and viability statement
Going concern
In assessing the going concern position of the Group for the
Consolidated Financial Statements for the year ended
30 September 2021, the Directors have considered the Group’s
cash flow, liquidity, and business activities, as well as the ongoing
uncertainty caused by the COVID-19 outbreak.
The outbreak of COVID-19 and its continued impact on the economy,
and specifically the hospitality sector, casts uncertainty as to the
future financial performance and cash flows of the Group. The
Group has taken a number of actions to improve overall liquidity to
ensure it is well placed to operate through the pandemic and to
achieve its strategic goals. In March 2021, the Group raised £29.2m
on the stock market through an equity placing. During September
2021, the Group repaid and cancelled its borrowing facilities with
Lloyds Bank plc, negotiating a new £25m RCF, and agreed a £5m
accordion, with Barclays Bank plc with a term to December 2024.
At 30 September 2021, the Group had cash balances of £29.9m,
no outstanding loan balances, and with the undrawn RCF of £25m,
has overall liquidity of £54.9m.
As part of the review of the potential impact of the COVID-19
outbreak on the Group’s cash flows and liquidity over the next 12
months, a base case and a severe but plausible downside scenario
were prepared.
The base case forecast assumes all centres remain open and there
are no trading restrictions. In the base case forecast, the Group
trades in line with market consensus, there is no drawdown of the
RCF, and financial covenants are passed.
The most severe downside scenario was prepared using the
following key assumptions:
• a national ‘winter’ lockdown in December 2021 and January 2022
resulting in the closure of all centres;
• revenue assumed at 18 percentage points down on the base case
for FY2022;
• when centres are forced to close, taking advantage of a
reinstated CJRS and business rates holiday, at the same rates
seen during the most recent lockdown. No government grant
income is assumed;
• reduced maintenance and marketing spend, as well as reducing
all non-essential expenditure during the closure period, in line
with that experienced during previous lockdowns in FY2020
and FY2021;
• no dividend payments in FY2022;
• deferral of non-committed capital expenditure to later months
in FY2022, but no change to the new centre capital expenditure
for FY2022; and
• trade to return to base case forecasts from February 2022.
Under this severe but plausible downside scenario, the Group would
still be profitable and have sufficient liquidity within its cash position
to not draw down the RCF, with all financial covenants passed.
Taking the above and the principal risks faced by the Group into
consideration, and the Directors’ expectation that they could
negotiate an extension to the covenant should the need arise,
the Directors are satisfied that the Group has adequate resources to
continue in operation for the foreseeable future, a period of at least
12 months from the date of this report. Accordingly, the Group
continues to adopt the going concern basis in preparing these
Financial Statements.
Viability statement
In accordance with the 2018 UK Corporate Governance Code, the
Directors have assessed the prospects of the Group over a period
significantly longer than 12 months and have made this assessment
over a three-year period to 30 September 2024. The Directors have
determined that a three-year period is an appropriate period over
which to assess viability, as it aligns with the Group’s investment
plans and gives a greater certainty over the forecasting assumptions
used. The viability scenarios take into account the principal risks the
Group faces across the three-year period. The Directors are mindful,
however, of the heightened uncertainty driven by the COVID-19
pandemic and accept that forecasting across this timeframe
remains challenging and have, therefore, also focused on
understanding the level of headroom available before the Group
reaches a position of financial stress.
In making this viability statement, the Directors have reviewed
the overall resilience of the Group and have specifically considered
a robust assessment of the impact, likelihood and management
of principal risks facing the Group, as at 30 September 2021 and
looking forwards over the next three-year period, including
consideration of those risks that could threaten its business
model, future performance, solvency or liquidity or sustainability.
The assessment of viability has specifically considered risks that
could threaten the Group’s day to day operations and existence.
The assessment considered how risks could affect the business
now, and how they may develop over three years and financial
analysis and forecasts showing current financial position and
performance, cash flow and covenant requirements.
The Group’s business model and strategy are central to an
understanding of its prospects, and details can be found in
the Strategy section.
Context
The Group undertook a review of the previously approved financial
plan and forecasts in light of the uncertainty caused by COVID-19,
including, but not limited to, the potential of trading restrictions
impacting on forecasts.
The Group established a base case model of financial performance
over the three-year assessment period and a ‘viability scenario’
upon which the Board has made its assessment of the Group’s
ongoing viability, and which reflects prudent expectations of future
customer demand and the successful execution of the Group’s
strategic plans.
Assessment process
The Directors subsequently made a robust consideration of the
key risks and uncertainties that could impact the future performance
of the Group and the achievement of its strategic objectives, as
discussed on pages 44 to 47 of this annual report. Particular regard
was paid to the potential impacts of COVID-19 and the related
government response to this.
48 Hollywood Bowl Group plc
Annual report and accounts 2021
The viability scenario takes into account all of the principal risks
and uncertainties facing the Group across the three-year period in
order to assess the Group’s ability to withstand multiple challenges.
The impacts of COVID-19 have been built into the scenario, but the
impact of further one-off events that cannot be reasonably
anticipated has not been included.
Key assumptions
The base case forecast, which is prepared on a prudent basis,
assumes high single-digit LFL revenues when compared with
FY2019, with FY2023 returning to low single-digit LFL growth
when compared to FY2022. The process undertaken considers
the Group’s adjusted EBITDA, capital spend, cash flows and other
key financial metrics over the projection period.
The base case assumes no significant change in gross margin
percentage and that dividend payments will resume from FY2022,
with both interim and final dividends for the financial year.
The Board considers this scenario to be reasonable, especially given
the performance since the start of the financial year, which has been
exemplary, with LFL revenue increasing by 38.1 per cent compared
with the same period in FY2019.
Assessment of viability
Although the viability scenario reflects the Board’s best estimate
of the future prospects of the Group, the Board has also tested
the potential impact of a severe downside scenario, by quantifying
the financial impact and overlaying this on the detailed financial
forecasts in place.
This severe but plausible downside scenario includes a lockdown
period of two months when all centres would be closed, over
December and January in FY2022. The impact of the downside
scenario on the revenue is an 18 percentage point reduction on the
base case for FY2022. It is then forecasted that revenue will return
to base case forecasts from February 2022 to September 2024.
Whilst the assumptions of a two-month ‘winter’ lockdown in this
scenario is plausible, it does not represent our view of the likely
outturn. However, the results of this scenario help to inform the
Directors’ assessment of the viability of the Group.
The new banking facility runs to December 2024.
Viability statement
The Board has a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due, retain
sufficient available cash and not breach any covenants under any
drawn facilities over the remaining term of the current facilities.
Hollywood Bowl Group plc
Annual report and accounts 2021
49
Strategic report Chairman’s introduction to governance
Supporting
the Group’s
purpose
50 Hollywood Bowl Group plc
Annual report and accounts 2021
Our positive culture and robust
governance framework have
served us well in a challenging year.”
Peter Boddy, Non-Executive Chairman
Read full biography on page 52
Dear shareholders,
On behalf of the Board, I am pleased to present our
Corporate governance report for the year ended
30 September 2021.
The Board has maintained its focus on high standards of
corporate governance and we continue to seek to ensure
that our governance framework meets the needs of the
business and is appropriately aligned with best practice.
This section of the Annual Report sets out how we have
applied the principles of the Code, highlighting the key
activities of the Board and its Committees in the period.
We routinely consider our approach to governance to
ensure it is appropriate in supporting the long-term
success of the Group and its stakeholders. Throughout
the year ended 30 September 2021, the Company
complied with the principles and applicable provisions
of the Code.
COVID-19 related national lockdowns and social distancing
measures (and therefore capacity restrictions) continued
to create a challenging operating environment during the
year. Despite those challenges, the business continued
to adapt to the changing environment and performance
has been strong since centres reopened in May 2021.
As a Board, we continued to meet remotely until measures
were relaxed in May, but since then have reverted to
meetings in person, with the Directors also getting back
out into our centres to engage with our team. Our positive
culture and robust governance framework enabled the
Board to continue to effectively support the Executive
team in making important decisions to ensure our
continuing financial stability, to provide a COVID-safe
environment for team members and customers, and
to reignite our customer led growth strategy (through
investment in new centre pipeline, refurbishments and the
rollout of initiatives to enhance our customer proposition).
In making those decisions, the Board was mindful of
both the impact on stakeholders and likely long-term
consequences; our statement setting out how the
Directors have discharged their duty under s172 of the
Companies Act 2006, which includes a description of
how the Company has engaged with its key stakeholders,
is set out on pages 22 to 25 of the Strategic report.
The culture and values of our business remain the key
drivers of our success. The Board continuously monitors
culture through our interactions with team members,
and regular reports from the Executive team. We
recognise that our team members are fundamental to
the success of the business, and it is therefore essential
that we continue to promote a culture and values that
support them in providing a positive, safe and enjoyable
environment for our customers.
We also recognise our responsibility to lead by
example and demonstrate our culture and values in the
way we conduct ourselves as a Board, and I’m pleased
to report that this approach has been confirmed by all
Board attendees through our annual performance
evaluation process.
Throughout the year, we continued to consider the
outputs from our robust employee engagement
programme. This focused on team wellbeing and
included engagement sessions, virtual training and
re-induction sessions. More information on employee
engagement is set out on page 23 of the Strategic report.
Although the advisory vote on our Directors’ remuneration
report at the 2021 AGM was passed, a significant
minority of shareholders voted against the resolution.
Since the AGM, both Claire Tiney (our Remuneration
Committee Chair) and I have engaged and met with a
number of our major shareholders to understand their
concerns (which related principally to the Remuneration
Committee’s discretion to allow the vesting of LTIPs
granted in 2018 for a pro-rated period). Claire provides
an update on that engagement, and how the
Remuneration Committee has responded, in the
Directors’ remuneration report from page 67.
Our ESG approach continues to evolve, with the Board
discussing and approving the articulation of our ESG
strategy (as set out in the Sustainability overview on
pages 36 to 43) during the year. We will continue to
monitor performance against our ESG goals in the
coming year.
In order to refresh our approach to the Board evaluation
process (described in more detail on page 57), we have
moved away from a questionnaire-based approach this
year and instead I met individually with all regular
attendees of Board meetings. This method was used to
encourage a broader range of discussion and feedback,
although key themes arising from previous evaluations
were used to set some context. Committee evaluations
were conducted using questionnaires in the normal way.
A summary of key discussion points and feedback from
those meetings was presented and discussed by the
Board at its meeting in December 2021, and showed
that the Directors continue to believe that the Board
and its Committees are operating well, and that each
individual Director continues to be committed to the
business and effective in their role. It is our intention
that the evaluation process in FY2022 will be
externally facilitated.
Peter Boddy
Non-Executive Chairman
15 December 2021
Hollywood Bowl Group plc
Annual report and accounts 2021
51
Governance report Board of Directors
Committee key
N
A
N
R
Audit committee
Nomination committee
Remuneration committee
Committee chair
Peter Boddy
Non-Executive Chairman
Appointment
Peter joined the Group as
Non-Executive Chairman
in 2014.
Skills and experience
Peter has extensive
non-executive experience
at Board level, including roles
at Thwaites plc (SID and Chair
of Remuneration Committee
2007–2015), Novus Ltd
(Chairman 2015–2018),
Xercise4less (Chairman
2013–2019) and the Harley
Medical Group (Chairman
2012–2019). Previously, he
held the position of CEO
or Managing Director in a
number of successful private
equity-backed leisure sector
companies including Fitness
First UK, Megabowl Group
Limited and Maxinutrition
Limited. Peter has a degree in
economics from De Montfort
University and an MBA from
Warwick Business School.
Top bowling score
220
Stephen Burns
Chief Executive Officer
Appointment
Stephen joined the Group as
Business Development Director
in 2011. He was promoted to
Managing Director in 2012 and
became Chief Executive Officer
in 2014.
Skills and experience
Before joining the Group,
Stephen worked within the
health and fitness industry,
holding various roles within
Cannons Health and Fitness
Limited from 1999. He became
sales and client retention
director in 2007 upon the
acquisition of Cannons Health
and Fitness Limited by Nuffield
Health, and became regional
director in 2009. In 2011,
Stephen was appointed to
the operating board of MWB
Business Exchange, a public
company specialising in
serviced offices, meeting
and conference rooms,
and virtual offices.
Stephen was appointed
Chairman at the Club Company
Limited (operator of UK country
clubs) in 2018.
Top bowling score
189
Laurence Keen
Chief Financial Officer
Appointment
Laurence joined the Group
as Finance Director in 2014.
Skills and experience
Laurence has a first-class
degree in business,
mathematics and statistics
from the London School of
Economics and Political
Science. He qualified as a
chartered accountant in 2000
and has been an ICAEW Fellow
since 2012. Previously, Laurence
was UK development director
for Paddy Power from 2012.
He has held senior retail and
finance roles for Debenhams
PLC, Pizza Hut (UK) Limited
and Tesco PLC.
Laurence was appointed
Non-Executive Director at
Tortilla Mexican Grill Plc in 2021.
Top bowling score
191
52 Hollywood Bowl Group plc
Annual report and accounts 2021
Melanie Dickinson
Chief People Officer
Appointment
Melanie joined the Group as
Talent Director in October 2012
Skills and experience
Melanie has over 20 years of
HR experience across the
leisure and hospitality sectors.
Starting her career in retail
operations before moving into
HR, Melanie has held HR roles
at Pizza Express, Holmes Place
Health Clubs and Pizza Hut UK;
as well as obtaining a post
graduate diploma in Personnel
and Development.
Most recently, she headed
the People function at Zizzi
Restaurants, part of the
Gondola group.
Top bowling score
144
A
N
R
A
N
R
A
N
R
Nick Backhouse
Senior Independent
Non-Executive Director
Appointment
Nick joined the Group as Senior
Independent Non-Executive
Director in June 2016.
Claire Tiney
Independent Non-
Executive Director
Appointment
Claire joined the Group as an
Independent Non-Executive
Director in June 2016.
Ivan Schofield
Independent Non-
Executive Director
Appointment
Ivan joined the Group as an
Independent Non-Executive
Director in October 2017.
Skills and experience
Ivan has extensive experience
in the leisure sector in the UK
and across continental Europe.
He held a number of senior roles
for Yum Brands Inc. over 15 years,
notably as Managing Director of
KFC France and Western Europe
and more recently as CEO of
itsu. Prior to this, he held roles
at Unilever and LEK Consulting.
Ivan runs his own executive
coaching and leadership
development business and is
also Non-Executive Director
of Thunderbird Fried Chicken
Limited. Ivan holds a BSc in
economics with econometrics
from the University of Bath,
an MBA from INSEAD and is a
graduate of the Meyler Campbell
Business Coaching Programme.
Top bowling score
165
Skills and experience
Nick has extensive experience
at board level, including
non-executive roles at Guardian
Media Group plc (2007–2017)
where he was also the Senior
Independent Director, All3Media
(2011–2014) and Marston’s PLC
(2012–2018), and has chaired the
Audit Committees of each of
those businesses. He is currently
Chairman at the Giggling Squid
Restaurant Group, the Senior
Independent Director at
Loungers plc and a Non-Executive
Director and chair of the Audit
Committee at Hyve Group plc.
In his executive career, Nick was
the Deputy Chief Executive
Officer of the David Lloyd
Leisure Group and was previously
Group Finance Director of NCP,
Chief Financial Officer of the
Laurel Pub Company and CFO
of Freeserve PLC. Prior to that,
he was a Board Director of
Baring Brothers International.
Nick is a Fellow of the ICAEW
and has an MA in economics
from Cambridge University.
Top bowling score
203
Skills and experience
Claire has over 20 years’ board
level experience encompassing
executive and non-executive
roles in blue-chip retailing,
property development and
the services sector across
the UK and Western Europe.
Claire spent 20 years as an
executive director in a number
of businesses including
Homeserve plc, Mothercare plc
and WH Smith Group plc. Most
recently, Claire was HR Director
at McArthurGlen Group, the
developer and owner of designer
outlet malls throughout Europe.
Claire was previously Senior
Independent Director at Topps
Tiles and retired from the Board
in June 2021 having served
nine years. She is currently
Non-Executive Director and
Chair of the Remuneration
Committee at Volution Plc.
She has an MBA from
Stirling University.
Top bowling score
144
Hollywood Bowl Group plc
Annual report and accounts 2021
53
Governance report
Corporate governance report
UK Corporate Governance Code – Compliance statement
As a company with a premium listing on the London Stock Exchange,
Hollywood Bowl Group plc is required under the FCA Listing Rules to
comply with the provisions of the UK Governance Code (the Code)
(a copy of which can be found on the website of the Financial
Reporting Council, www.frc.org.uk). For the financial year ended
30 September 2021, and as set out in the following report, the
Company complied with all provisions of the Code.
Governance framework and structure
The Board is responsible for ensuring an appropriate system of
governance is in operation throughout the Group. This includes a
robust system of internal controls and a sound risk management
framework. The Schedule of Matters Reserved to the Board and the
Board Committees’ terms of reference, which are available to view
on the Group’s website, www.hollywoodbowlgroup.com, as well as
Group policies and procedures which address specific risk areas,
are core elements of the Group’s governance framework. These
are reviewed annually by the Board and Committees to ensure that
they remain appropriate to support effective governance processes.
Matters outside of the Schedule of Matters Reserved or the
Committees’ terms of reference fall within the responsibility and
authority of the CEO, including all executive management matters.
Generation and preservation of value
The Group’s business model and strategy are set out on pages 2 to 49
and detail how the Group strategy generates value in the long term.
The Board and culture
The Board establishes the Group’s purpose, values and strategy,
and is satisfied that these are aligned with the culture of the business
and demonstrated throughout the Group. The Board also continuously
monitors the culture of the Group, through interactions with team
members, regular reports to the Board on team member and
stakeholder engagement, and specific updates on team culture
and development from the Operations and Talent Directors.
Key Board roles and responsibilities
The Chief Executive Officer, Chief Financial Officer and Executive
Committee are responsible for executing the strategy determined
by the Board. There is a clear division of responsibilities between
the Chairman and Chief Executive Officer. The key responsibilities
of members of the Board are set out below. Biographies of each
Director, which describe the skills and experience he or she brings
to the Board, can be found on pages 52 and 53.
Non-Executive Chairman
Peter Boddy
Peter is responsible for the leadership and overall effectiveness of
the Board and for upholding high standards of corporate governance
throughout the Group and particularly at Board level. In line with the
culture promoted throughout the business, the Chairman encourages
open debate and discussion in the interaction of the Board, and
facilitates the effective contribution of the Non-Executive Directors.
54 Hollywood Bowl Group plc
Annual report and accounts 2021
Chief Executive Officer (CEO)
Stephen Burns
Stephen is responsible for all executive management matters,
including: performance against the Group’s strategy and objectives;
leading the executive leadership team in dealing with the day to day
operations of the Group; and ensuring that the culture, values and
standards set by the Board are embedded throughout the organisation.
Senior Independent Director (SID)
Nick Backhouse
Nick provides a valuable sounding board for the Chairman and leads
the Non-Executive Directors’ annual appraisal of the Chairman.
Nick is available to shareholders if they have concerns which are
not resolved through the normal channels of the CEO or Chairman,
or where such contact is inappropriate.
Chief Financial Officer (CFO)
Laurence Keen
Laurence works with the CEO to develop and implement the Group’s
strategic objectives. He is also responsible for the financial
performance of the Group and the Group’s property interests and
supports the CEO in all investor relations activities.
Chief People Officer (CPO)
Melanie Dickinson
Melanie works with the CEO and executive leadership to develop
and implement the Group’s strategic objectives, with a particular
focus on people strategy and team member development. Melanie
is responsible for the Group’s HR function, including pay and reward,
culture, training and team engagement.
Non-Executive Directors
Nick Backhouse, Claire Tiney and Ivan Schofield
Nick, Claire and Ivan provide objective and constructive challenge
to management and help to develop proposals on strategy. They
also scrutinise and monitor financial and operational performance,
and support the executive leadership team, drawing on their
background and experience from previous roles.
Board independence
The Board consists of seven Directors (including the Chairman),
three of whom are considered to be independent as indicated in the
table below:
Non-independent
Peter Boddy (Chairman)
Stephen Burns (Chief Executive Officer)
Laurence Keen (Chief Financial Officer)
Melanie Dickinson (Chief People Officer)
(appointed October 2021)
Independent
Nick Backhouse (SID)
Claire Tiney
Ivan Schofield
Board and Committee attendance
The Board normally meets formally at least nine times per year, with
ad-hoc meetings or calls convened to deal with urgent matters
between formal Board meetings, but met formally on ten occasions
during FY2021. Additional ad-hoc meetings (all held via conference
call during periods when restrictions were in place) were also convened
where specific Board approvals were required (e.g. in connection
with the equity placing in March 2021). The table below shows the
attendance of each Director at the formal scheduled meetings of
the Board and of the Committees of which they are a member:
Membership and attendance of Board and Committees
Director
Peter Boddy
Stephen Burns
Laurence Keen
Nick Backhouse
Ivan Schofield
Claire Tiney
Board
10/10
10/10
10/10
10/10
10/10
10/10
Audit
Committee
Remuneration
Committee
Nomination
Committee
3/3
3/3
3/3
3/3
4/4
4/4
4/4
4/4
4/4
4/4
In addition to the Chief Executive and Chief Financial Officer, the
Chief Marketing and Technology Officer, Chief People Officer and
Chief Operating Officer were present at Board meetings during
the year, to take questions from the Non-Executive Directors.
Where Non-Executive Directors are unable to attend a Board or
Committee meeting, they are encouraged to submit any comments
or questions on the matters to be discussed to the Chairman (or
Committee Chair, as appropriate) in advance to ensure that their
views are recorded and taken into account.
All Directors attended a full strategy review session in June and the
Non-Executive Directors remain in regular contact with the Chairman,
whether in face-to-face meetings or by telephone, to discuss
matters relating to the Group without the executives present.
Executive Committee
Mathew Hart
Chief Marketing and Technology Officer
Top bowling score
151
Mathew joined the Group as Commercial Director in
January 2015. He has over 25 years of commercial,
marketing, e-commerce and general management
experience across the travel, leisure and healthcare sectors.
Mathew has held executive positions at Holiday Autos
(Managing Director), Lastminute.com (Group Marketing
Director), Cannons Health Clubs (Group Marketing and
Commercial Director), Nuffield Health (Group Marketing
Director) and Encore Tickets (Group Marketing Director).
Darryl Lewis
Chief Operating Officer
Top bowling score
187
Darryl joined the Group as Regional Director in September
2013. He has over 25 years’ experience in key operational roles
across the leisure sector, including cinemas and theme parks.
Darryl worked in general management, film and content
planning and senior operational support roles in the cinema
industry for 20 years with Showcase Cinemas, Warner Bros,
International Theatres and Vue.
How the Board and Executive Committee
work together
The Board and Executive Committee work closely together to
ensure the robust governance of the business and successful
execution of our strategy. Over the year, the Board and
Executive Committee have managed issues related to
COVID-19 impact and the reopening strategy for May 2021.
Hollywood Bowl Group plc
Annual report and accounts 2021
55
Governance report Corporate governance report continued
Activity during the year
The Board approves an annual calendar of agenda items to ensure that all matters are given due consideration and are reviewed at the
appropriate point in the regulatory and financial cycle. The activity of the Board during 2021 is shown in the table below:
Board agenda for year to 30 September 2021
Oct
Dec
Jan
Mar
Apr
May
Jun
Jul
Sep
Corporate governance
Directors’ conflicts of interest
Board, Director and Committee performance evaluation
Review Schedule of Matters Reserved to the Board
Approach to ESG
Compliance and risk
Reviewing the principal risks and uncertainties affecting the Group
Risk register and risk heat map
Review of internal controls matrix
Going concern review and approval of long-term Viability statement
Review and approval of Modern Slavery and Human
Trafficking Statement
Approve anti-bribery policy
Review of Gender Pay Gap reporting
Review of Disclosure Policy, Insider List & Share Dealing Code
Group insurances
Operations, customers and suppliers
Reviewing customer experience measures
Pricing review
COVID-secure reopening plans
People
Review results of team engagement survey
Review of team member incentive schemes
Team training and engagement
Support centre structure
Culture and development update
Performance
Approval of full-year results, the Annual Report and Accounts,
half-year results, the Notice of Annual General Meeting and dividends
Investment review (refurbishments)
Budget
Review of dividend policy
Strategy
IT projects update
Review of progress on strategic projects
56 Hollywood Bowl Group plc
Annual report and accounts 2021
Information and support
Agendas and accompanying papers are distributed to the Board and
Committee members well in advance of each Board or Committee
meeting via an electronic Board paper system for efficiency and
security purposes. These include reports from Executive Directors,
other members of senior management and external advisers.
The Non-Executive Directors are also in regular contact with the
Executive Directors and other senior executives outside of formal
Board meetings.
All Directors have direct access to senior management should they
require additional information on any of the items to be discussed.
The Board and the Audit Committee receive regular and specific
reports to allow the monitoring of the adequacy of the Group’s
systems of internal controls (described in more detail in the Audit
Committee report on page 65).
Appointment and election
Each Non-Executive Director is expected to devote sufficient time to
the Group’s affairs to fulfil his or her duties. Their letter of appointment
anticipates that they will need to commit a minimum of two days per
month to the Group, specifying that more time may be required.
This time commitment was reviewed and confirmed as appropriate
by the Nomination Committee during the year, and each of the
Non-Executive Directors has confirmed that they continue to be
able to devote sufficient time to discharge their duties effectively
as a Director of the Company.
The performance of each Director was assessed through the Board
evaluation process this year, with the feedback showing that the
Board continues to consider each of the Directors to be effective
and committed to their role. In accordance with provision 18 of the
Code, all members of the Board will be offering themselves for
re-election at the Company’s AGM on 28 January 2022.
All of the Directors have a service agreement or a letter of
appointment. The details of their terms are set out on page 76.
Induction
All new Directors appointed to the Board undertake a tailored induction
programme designed by the Chairman and Executive Directors, with
assistance from the Company Secretary. The purpose of the induction
is to give new Directors an understanding and awareness of the Group,
focusing on its culture, operations and governance structure.
Performance evaluation
In accordance with the principles and provisions of the Code,
the Board is committed to conducting a thorough review of the
effectiveness of the performance of the individual Directors,
the Board as a whole and its Committees on an annual basis.
The 2021 Board evaluation was conducted by way of individual
meetings between the Chairman and all regular attendees of Board
meetings. The broad context for the discussions was framed by
findings from previous evaluations, but the aim was to encourage an
open discussion covering all areas of Board and individual Director
relationships and effectiveness.
A summary of key discussion points and feedback from those meetings
was presented and discussed by the Board at its meeting in December
2021, with the outcomes and suggested actions from the evaluations of
the Board and its Committees summarised into an action plan for the
coming year. The outcomes of the Board evaluation process indicated
the general view that the Board continues to operate effectively.
Committee evaluations were conducted by way of specific
questionnaires, with the results discussed separately in each of the
Committee reports, and the Senior Independent Director met with the
other Non-Executive Directors to appraise the Chairman’s performance.
The outcomes of the evaluation process indicated that the Board and
Committees continue to perform effectively, and their operation reflects
the culture and values of the Group. Areas of focus for the coming
year are highlighted in the table below. Progress in these areas will be
reviewed and monitored by the Board and Nomination Committee,
and assessed as part of the Board evaluation exercise next year.
The table below illustrates the areas of focus resulting from the 2021
performance evaluation and the proposed actions for 2022:
Areas of focus from 2021
performance evaluation
Increase focus on risk
Board pack contents
Proposed actions for 2022
Deep dive reviews into key strategic
risks to be built into the Board’s annual
activity schedule
Periodic overview of Board pack to be
conducted, with any agreed improvements
to be implemented during the year
In accordance with provision 21 of the Code, during the year the
Chairman and Board considered whether to conduct an externally
facilitated evaluation process, but determined that due to the ongoing
focus on cost preservation it would not be appropriate to do so
during 2021. It was however agreed that there would be benefits
from extending the evaluation cycle from a questionnaire based
approach (FY2020), through a Chairman led interview process
(FY2021) to an externally facilitated process (which we have agreed
to operate in FY2022). The outcomes of that process will be
disclosed in the FY2022 Annual Report.
Conflicts of interest and external appointments
In accordance with the Board-approved procedure relating to
Directors’ conflicts of interest, all Directors have confirmed that they
did not have any conflicts of interest with the Group during the year.
During the year, and in accordance with provision 15 of the Code,
the Board gave prior approval to Laurence Keen to take on the role
of Non-Executive Director (and Chair of the Audit and Remuneration
Committees) of Tortilla Mexican Grill plc which was admitted to AIM
on 8 October 2021. As part of the executive development plan
discussed regularly by the Nomination Committee, the potential
benefits (in terms of personal development and broader listed
company exposure) of Laurence taking on an appropriate external
Non-Executive role had previously been agreed. Having considered
that the required time commitment would not detrimentally impact
on Laurence’s contribution to the Company the Board was
comfortable supporting the appointment.
Whistleblowing Policy
The Group has adopted procedures by which employees may,
in confidence, raise concerns relating to possible improprieties in
matters of financial reporting, financial control or any other matter.
The Whistleblowing Policy applies to all employees of the Group,
who are required to confirm that they have read the policy and
are aware of how the procedure operates as part of an ongoing
internal training programme. The Board receives regular updates
with respect to the whistleblowing procedures during the year,
with all incidents reported to the Board having been addressed
under appropriate Group HR policies and procedures.
Hollywood Bowl Group plc
Annual report and accounts 2021
57
Governance report Corporate governance report continued
Stakeholder engagement
Engagement with the workforce
The Chairman and the Non-Executive Directors frequently visit the
Group’s centres, including attending new or refurbished centre openings,
accompanied by regional support managers and centre management
teams. At those centre visits, the Non-Executive Directors take the
opportunity to engage directly with team members at all levels,
allowing them to assess the understanding of the Group’s culture
across the business. Our team members are encouraged to engage
openly with all colleagues, and as a result the Non-Executives are
able to effectively gauge the views of the workforce.
The closure of our centres due to national lockdowns and localised
tier restrictions affected the Board’s ability to directly engage with
team members in the normal way throughout the year. However,
regular updates on team member engagement activity during centre
closures or where restrictions were enforced were provided to the
Board by the CEO, Chief People Officer and Chief Operating Officer.
These included feedback from regular team member engagement
sessions, operational training and re-induction sessions which were
held for all team members to re-engage with the teams.
The Board receives regular presentations from the Chief Operating
Officer on the output and feedback from centre management and
team member listening sessions. In normal circumstances, the
Chairman and Non-Executive Directors are also invited to attend
the annual conference, which provides further opportunity to engage
with team members in a more informal environment; however,
the conference was again cancelled this year due to the ongoing
impact of the COVID-19 pandemic.
The Board has assessed the various methods by which the Directors
engage with the wider workforce and continues to be of the view that
the combination of the methods described above ensures that the
Board is appropriately informed about, and understands, workforce
views. The Board therefore believes that this approach appropriately
addresses the requirement to engage with the workforce under
provision 5 of the Code and does not currently intend to adopt one
of the three workforce engagement methods suggested in that
provision. The Board will, of course, continue to keep its stakeholder
engagement mechanisms under review.
Relations with shareholders
As part of its ongoing investor relations programme, the Group aims
to maintain an active dialogue with its shareholders, including
institutional investors, to discuss issues relating to the performance
of the Group. Communicating and engaging with investors means
the Board can express clearly its strategy and performance and
receive regular feedback from investors. It also gives the Board the
opportunity to respond to questions and suggestions.
In response to the significant votes received against the Directors’
Remuneration Report resolution at the 2021 AGM, the Chairman
and Remuneration Committee Chair engaged with investors to
understand the reasons behind the votes. More information on this
engagement, and our response, can be found in the Directors’
Remuneration Report on pages 67 to 86.
The Non-Executive Directors are available to discuss any matter
shareholders might wish to raise and to attend meetings with
investors and analysts, as required. Investor relations activity is a
standing item on the Board’s agenda and ensuring a satisfactory
dialogue with shareholders, and receiving reports on the views of
shareholders, is a matter reserved to the Board.
The Company’s AGM will be held on Friday 28 January 2022 and it
is intended that the meeting will be held in person at Investec Bank
plc, 30 Gresham Street, London EC2V 7QP. Electronic proxy voting
will be available to shareholders through both our registrar’s website
and the CREST service. Voting at the AGM will be conducted by way
of a poll and the results will be announced through the Regulatory
News Service and made available on the Group’s website.
More information on AGM arrangements is included in the AGM
Notice which will be distributed to shareholders and made available
on the Group’s website.
58 Hollywood Bowl Group plc
Annual report and accounts 2021
Report of the Nomination Committee
Report of the
Nomination Committee
Peter Boddy
Nomination Committee Chair
Read full biography on page 52
Nomination Committee
Chair
Committee members
Number of meetings
held in the year
Peter Boddy
Nick Backhouse
Claire Tiney
Ivan Schofield
3
Role and responsibilities
The role of the Nomination Committee is set out in its terms
of reference, which were last updated in September 2020
and reviewed in September 2021 and are available on the
Group’s website. The Committee’s primary purpose is to
develop and maintain a formal, rigorous and transparent
procedure for identifying appropriate candidates for Board
appointments and reappointments, and to make
recommendations to the Board.
Specific duties of the committee include:
• regularly reviewing the structure, size and composition
(including the skills, knowledge, experience and diversity)
of the Board and making recommendations to the Board
with regard to any changes;
• keeping under review the leadership needs of the
organisation, both Executive and Non-Executive, with a
view to ensuring the continued ability of the organisation
to compete effectively in the marketplace; and
• reviewing annually the time commitment required of
Non-Executive Directors.
The Nomination Committee is also responsible for keeping
Board succession plans under review, monitoring
compliance with the Company’s Board Diversity Policy, and
for making recommendations on the composition of the
Board Committees.
Activity during the year
The Nomination Committee has met on three occasions during
the year and once since the year end. Committee meetings have
focused on the matters set out in the table below:
Activities of the Committee during the year to 30 September 2021
Performance
evaluation
Board and Committee
composition
Board appointments
and reappointments
Succession planning
Review of results from Committee
performance evaluation and discussion
on related actions
Review of the Committee’s terms
of reference
Review of composition of the Board
Review of Non-Executive Directors’
independence
Review of time commitment requirements,
including each Director’s external interests
Consideration and approval of the
appointment of Melanie Dickinson to
the Board as an Executive Director
(effective 21 October 2021)
Consideration of succession planning
for Executive Directors and senior
management team
Membership of Board and Committees
Diversity Policy
Review of Board Diversity Policy
Hollywood Bowl Group plc
Annual report and accounts 2021
59
Governance report Report of the Nomination Committee continued
Annual review of Board and Committee composition and Board appointments
The Committee reviews annually the composition of the Board and its Committees, and the independence of the Non-Executive Directors.
As part of this review, the Committee also takes into account diversity considerations (in accordance with the Board Diversity Policy objectives
discussed below). The Committee has recognised the need to improve gender diversity on the Board, but also the need to maintain appropriate
Board independence and to avoid unnecessarily increasing the Company’s cost base (particularly given the challenging operating environment
that has been faced during the year). The Committee therefore recommended to the Board that Melanie Dickinson be appointed as an
Executive Director of the Board with effect from 21 October 2021. Melanie, in her role as Chief People Officer, has routinely been invited to
attend Board meetings since the Company’s IPO, but it was the Committee’s view that her formal appointment would encourage further
diversity of thought and approach in the Board’s decision-making process, as well as supporting the development of a statistically more
diverse Board.
Following Melanie’s appointment, the Committee remains satisfied that the balance of skills, experience, independence and knowledge on
the Board and Committees is appropriate.
Diversity
The Board Diversity Policy that has operated during the year recognises the benefits of greater diversity, including gender diversity, and sets
out the Board’s commitment to ensuring that the Company’s Directors bring a wide range of skills, knowledge, experience, backgrounds and
perspectives to their role. The key objective of the policy is to set out the process to be followed by the Nomination Committee during the
recruitment process in order to ensure that an appropriately diverse pool of candidates is considered to enhance the balance of skills and
backgrounds on the Board. As there has been no formal Board recruitment process during the year (Melanie Dickinson’s appointment was
effective after the year end, and in any event was an internal appointment), there is no progress to report against that objective. However, the
policy also sets out additional Nomination Committee responsibilities and objectives, and progress against those items is set out below:
Objective/responsibility
Progress/activity in FY2021
Review regularly the structure, size and composition of the Board
(including the balance of skills, knowledge and experience), taking
into account this Policy, and make recommendations to the Board
for any changes.
When considering Board succession planning, have regard to the
Board Diversity Policy.
Review the Board Diversity Policy annually, assessing its
effectiveness and recommending any changes to the Board.
This is an annually recurring item on the Committee’s agenda and
was reviewed by the Committee at a meeting in September 2021.
In considering the structure of the Board the Committee agreed that
the appointment of Melanie Dickinson as an Executive Director
would broaden the Board’s knowledge, skills and experience whilst
also increasing female representation on the Board.
The NED succession planning matrix highlights current diversity
statistics on the Board and will continue to be considered against
the Board Diversity Policy.
The Policy was reviewed by the Committee in November 2020, with no
changes recommended. It has also been reviewed in December 2021,
with some changes recommended to the Board as set out below.
Following the appointment of Melanie Dickinson, the Board consists of two female (28 per cent) and five male (72 per cent) Directors. The
Committee recognises that this remains below the proportion of female representation recommended by bodies such as the Investment
Association, and remains committed to continuing to improve Board diversity (both in terms of gender and other characteristics) through its
succession planning process. The Committee reviews the Board Diversity Policy on an annual basis and further formalised that commitment
by amending the Policy in FY2022 to include an aspiration to achieve longer-term targets of 40 per cent female representation, and at least
one Director being from a non-white ethnic minority background.
Overall gender diversity across the business is good with the Committee and the Executive team recognising the need to support the
development of women into senior management roles. Diversity considerations will be a factor of all future Board recruitment processes
in line with the Board Diversity Policy described above.
60 Hollywood Bowl Group plc
Annual report and accounts 2021
Succession planning
The Committee’s oversight of Executive succession planning
continued during the year, with the aim of ensuring that the Group’s
future leadership will have the qualities necessary to support the
delivery of our strategic objectives. The Executive team maintains
a detailed succession planning matrix identifying at least one potential
internal successor for each key role. The usual programme of
opportunities for potential executive successors to meet and
present to the Board to further their development has been
reinstated during FY2021 following the COVID-19 disruption of the
prior year, and the Committee recognises the need to ensure that
such opportunities continue to be made available in the future.
Succession plans for all members of the senior management team
were also presented and discussed during the year.
A Non-Executive succession planning matrix is used as a tool to
support consideration of the timing for future appointments and to
identify key search criteria (including skills, experience and diversity)
for potential candidate shortlists. This includes a plan to ensure that
the current Non-Executives do not stand down from the Board at
the same time, and that the orderly succession of Committee Chairs
is also considered.
Annual evaluation
The Committee has evaluated its own performance during the year
through the completion by Committee members (and other regular
attendees at Committee meetings) of a detailed questionnaire. The
results were discussed at the Committee’s meeting in December 2021,
and generally confirmed that the Committee has operated effectively
during the year, with good progress made in terms of succession
planning and the broader approach to diversity considerations. It has
been agreed that the 2022 Board evaluation process will be carried
out by an external facilitator.
Peter Boddy
Chair of the Nomination Committee
15 December 2021
Hollywood Bowl Group plc
Annual report and accounts 2021
61
Governance report Report of the Audit Committee
Report of the
Audit Committee
Dear shareholders,
On behalf of the Board, I am pleased to present the Audit
Committee report for the year ended 30 September 2021.
The COVID-19 pandemic continued to impact significantly on the
business during the year, in particular with restrictions on trading
due to lockdowns and social distancing measures during the first
half. The Committee’s role, in particular in monitoring the integrity
of annual and half-year financial statements and monitoring the
effectiveness of financial controls and risk management systems,
is always important, but has continued to be heightened as a result,
albeit the positive performance of our centres in the periods in
which we have been able to trade, and the proactive and pragmatic
approach of our management team, has ensured that our financial
position at the year end is robust.
The Committee’s formal schedule of annual activity ensures that
we cover our key responsibilities and that we adhere to the Code
and other regulatory requirements. Areas of focus this year include
the significant financial judgements identified by the finance team
(see more detail in the table on page 65), reviewing and supporting
development of the internal controls matrix, re-instigating our
engagement with our Internal Audit function (which had been
reduced in FY2020 due to centre closures and furlough), and
considering the accounting implications of actions taken both
as a result of the pandemic (e.g. the installation of lane dividers)
and to maximise opportunities as life returns to normal (e.g. the
acceleration of the implementation of Pins on Strings).
Liquidity and cash remained key focuses during the year, in particular
during the first half centre closures, and further steps were taken
(including an equity placing and debt refinancing) to strengthen the
cash position and to ensure that the Company is well placed to
capitalise on opportunities as the economy recovers. As a result of
those actions, and our strong operational performance, the Committee
is satisfied that the financial position of the Group supports both the
going concern basis of accounting and the long-term Viability statement
(set out on pages 48 and 49). In the absence of an external audit
review at the half year, the Committee ensured that the scenarios
prepared by management to assess the impact of potential
assumed risks on future forecasts, and the going concern
assessment, were appropriately challenged and scrutinised.
Nick Backhouse
Audit Committee Chair
Read full biography on page 53
Audit Committee
Chair
Committee members
Number of meetings
held in the year
Nick Backhouse
Claire Tiney
Ivan Schofield
4
Role and responsibilities
The Audit Committee’s duties and responsibilities
are set out in full in its terms of reference, which are
available on the Company’s website. The terms of
reference were reviewed by the Committee during
the year and no changes were proposed.
Specific duties of the committee include:
• monitoring the integrity of the annual and interim
financial statements;
• keeping under review the internal financial
control systems; and
• overseeing the relationship with the internal and
external audit functions.
62 Hollywood Bowl Group plc
Annual report and accounts 2021
The Committee’s formal schedule
of annual activity ensures that we
cover our key responsibilities and
that we adhere to the Code and other
regulatory requirements.”
Nick Backhouse, Chair of the Audit Committee
Our annual review of the effectiveness of the external audit process
is described in more detail on page 66. We have reviewed KPMG
LLP’s (KPMG) continuing independence, and the Committee is
satisfied that KPMG continues to be independent and provides an
effective audit service. The Committee also considered the report
of the Financial Reporting Council’s Audit Quality Review Team of
KPMG’s audit of our FY2020 annual report.
The Audit Committee has evaluated its own performance this year
by way of a questionnaire completed by each member of the Committee
and other regular attendees. We discussed the outcome of the
evaluation process at our meeting in December 2021. The evaluation
responses indicated that the Committee continues to operate
effectively. Although no particular areas of concern were highlighted,
some amendments have been made to the Committee’s annual
agenda to ensure all areas within its responsibility are allocated
sufficient time for in-depth discussions and debate.
There have been no changes to the composition of the Committee
during the year and we therefore continue to be comprised wholly
of independent Non-Executive Directors. The Board has confirmed
that it is satisfied that I have recent and relevant financial experience
as recommended under the Code by virtue of my qualification as a
chartered accountant, my executive background in finance roles,
and my experience as an audit committee chair in other non-executive
positions. As all members of the Committee have experience as
Directors of other companies in the retail and leisure sector, the
Board is also satisfied that the Audit Committee as a whole continues
to have competence relevant to the sector in which the Group operates.
Nick Backhouse
Chair of the Audit Committee
15 December 2021
Hollywood Bowl Group plc
Annual report and accounts 2021
63
Governance report Report of the Audit Committee continued
Meetings and attendees
The Audit Committee meets at least three times per year. The names of the attendees of the Audit Committee meetings are set out in the
table on page 62.
The external auditor has the right to attend meetings. Outside of the formal regular meeting programme, the Audit Committee Chair
maintains a dialogue with key individuals involved in the Group’s governance, including the Chairman, the Chief Executive Officer, the Chief
Financial Officer and the external audit lead partner.
Activity during the year
The Audit Committee met four times during the year, and discussed the topics set out in the table below:
Activities of the Committee during the year to 30 September 2021
Dec
Mar
May
Sept
Financial statements and reports
Review and recommendation to the Board of full-year results, the Annual Report and Accounts and
half-year results
Going concern assessment
Fair, balanced and understandable assessment
Review of significant accounting policies
Risk register review
External audit
External audit plan and engagement
External auditor reports to the Committee (including full-year reports)
Assessment of external auditor effectiveness
Independence confirmation and review of non-audit services, spend and policy
Internal controls
Annual review of internal audit function requirement
Review of risk management and internal controls
Internal audit reports
Assessment of internal audit effectiveness
Other
Review of results from Committee performance evaluation and discussion of related actions
Review of the Committee’s terms of reference
IFRS accounting standards update (in particular, review of the impact of IFRS 16)
The key areas of focus of the Committee are discussed in more detail in the rest of this report.
Significant issues considered in relation to the financial statements
Significant issues and accounting judgements are identified by the finance team and the external audit process and are reviewed by the
Audit Committee. The significant issues considered by the Committee in respect of the year ended 30 September 2021 are set out in the
table opposite:
64 Hollywood Bowl Group plc
Annual report and accounts 2021
Significant issues and judgements
How the issues were addressed
Valuation of property, plant and equipment and right-of-use assets
The Committee reviewed the calculations and assumptions
(including growth rates of revenue and expenses, and discount
rates applied) underlying the trigger tests for impairment of PPE
and ROU assets at the Group’s cash generating units (CGUs), and
agreed with management’s estimates of the recoverable amount
of PPE and ROU assets, the recommended impairment in relation
to the Cwmbran centre, and that there was no impairment in
respect of other CGUs.
Risk management and internal controls
The Board has overall responsibility for setting the Group’s risk appetite and ensuring that there is an effective risk management framework
to maintain appropriate levels of risk. The Board has, however, delegated responsibility for review of the risk management methodology,
and the effectiveness of internal controls, to the Audit Committee.
The Group’s system of internal controls comprises entity-wide, high-level controls, controls over business processes and centre-level
controls. Policies and procedures, including clearly defined levels of delegated authority, have been communicated throughout the Group.
Internal controls have been implemented in respect of the key operational and financial processes of the business. These policies are
designed to ensure the accuracy and reliability of financial reporting and govern the preparation of the financial statements. The Board
is ultimately responsible for the Group’s system of internal controls and risk management and discharges its duties in this area by:
• holding regular Board meetings to consider the matters reserved for its consideration;
• receiving regular management reports which provide an assessment of key risks and controls;
• scheduling annual Board reviews of strategy including reviews of the material risks and uncertainties (including emerging risks) facing the business;
• ensuring there is a clear organisational structure with defined responsibilities and levels of authority;
• ensuring there are documented policies and procedures in place; and
• reviewing regular reports containing detailed information regarding financial performance, rolling forecasts, actual and forecast covenant
compliance, and financial and non-financial KPIs.
The process by which the Audit Committee has monitored and reviewed the effectiveness of the system of internal controls and risk
management during the year has included:
• development of a detailed internal controls matrix which addresses and tracks actions against items such as control deficiencies identified
by KPMG;
• conducting an annual review of the Group’s control systems and their effectiveness; and
• reporting and updating the Board on the risk and control culture within the Group.
Internal audit
The Group has an internal audit function which focuses on performing regular testing of the processes and controls implemented in centres.
Internal audit findings are presented to the relevant centre manager and the Chief Financial Officer for review.
The remit of the internal audit function has been expanded over time to cover other operational processes, including supplier onboarding,
employee expenses, and the issuance of customer refunds, and reports on the outcomes of those audits (none of which resulted in any
significant areas of concern) were presented to the Committee’s meeting in September 2021. A review of team loyalty benefits is due to be
carried out during the first quarter of FY2022.
Hollywood Bowl Group plc
Annual report and accounts 2021
65
Governance report Appointment and tenure
KPMG was first appointed as the Group’s external auditor in 2007.
Peter Selvey was appointed as the lead audit partner for the FY2017
audit and retired from his position in KPMG prior to commencement
of the FY2021 audit work. Stuart Burdass was appointed as the lead
audit partner for the FY2021 audit.
The Audit Committee continues to be satisfied with the scope of the
external auditor’s work and the effectiveness of the external audit
process, and that KPMG continues to be independent and objective.
The Committee is therefore pleased to recommend that KPMG be
re-appointed as the Group’s auditor at the 2022 AGM.
During the year, the Committee considered the appropriate timing
for putting the external audit contract out to tender in the context
of the requirement to do so at least every ten years (commencing
from the date of the Group’s IPO, at which point it became a ‘public
interest entity’ for the purpose of audit tendering requirements).
The Committee concluded there was no immediate need to
conduct a tender process.
Nick Backhouse
Chair of the Audit Committee
15 December 2021
Report of the Audit Committee continued
Internal audit continued
A member of the internal audit team attends Audit Committee
meetings at least once per year to provide updates on the activities
of the internal audit function.
The Committee has assessed the effectiveness of the internal audit
function as part of its annual performance evaluation process and is
satisfied that the current arrangements remain appropriate and
effective for the Company.
External auditor
The Audit Committee is responsible for overseeing the Group’s
relationship with its external auditor, KPMG. During the year, the
Audit Committee has discharged this responsibility by:
• agreeing the scope of the external audit and negotiating the
remuneration of the external auditor;
• receiving regular reports from the external auditor, including with
regard to audit strategy and year-end audits;
• regularly meeting the external auditor without management
present; and
• assessing the auditor’s independence and the effectiveness
of the external audit process.
External audit effectiveness review
The Committee reviewed the effectiveness of the external audit
process following completion of the FY2020 audit. A report was
prepared by the finance team summarising its view of KPMG’s
effectiveness based on interactions during the audit and set out
under three headings: ‘Mindset and Culture’; ‘Skills, Character and
Knowledge’; and ‘Quality Control’. The Committee also took into
account its own interactions with the external auditor in forming its
conclusion that, whilst there were practical challenges in the audit
process, both KPMG and the external audit process were effective,
and that KPMG provided an appropriate level of professional
scepticism and openness to the process, as well as having a clear
and unrestricted feedback process to the Audit Committee.
Non-audit services
The engagement of the external audit firm to provide non-audit
services to the Group can impact on the independence assessment.
The Company has a policy which requires Audit Committee approval
for any non-audit services which exceed £25,000 in value. The
engagement of the external auditor to provide any non-audit services
for less than £25,000 (with the exception of the issuance of turnover
certificates and financial covenant tests, for which authority was
delegated to the Chief Financial Officer to approve where the fee is
less than £5,000 per certificate) must be discussed with the Audit
Committee Chair in advance. All requests to use the external auditor
for non-audit services must be reviewed by the Chief Financial
Officer. The policy recognises that certain non-audit services may
not be carried out by the external auditor.
During the year ended 30 September 2021, KPMG was engaged to
provide permitted non-audit services relating to EBITDA certification
and turnover rent certificates for a fee of £10.5k, representing 3.3 per
cent of the total audit fee. The external auditor is best placed to
undertake other accounting, advisory and consultancy work in view
of its knowledge of the business, as well as confidentiality and cost
considerations. This is shown in further detail in note 6 to the
financial statements.
66 Hollywood Bowl Group plc
Annual report and accounts 2021
Report of the Remuneration Committee
Report of the
Remuneration Committee
Claire Tiney
Remuneration Committee Chair
Read full biography on page 53
Remuneration Committee
Chair
Committee members
Number of meetings
held in the year
Claire Tiney
Nick Backhouse
Ivan Schofield
4
Role and responsibilities
The role of the Remuneration Committee is set
out in its terms of reference, which are available
on the Group’s website. The Committee’s
primary purpose is to develop and determine
the Group’s Remuneration Policy for the
Executive Directors, Chairman and senior
management.
Specific duties of the committee include:
• setting the Remuneration Policy for Executive
Directors, Chairman and senior management;
• determining individual pay awards within the
terms of the agreed Policy; and ensuring that
the Remuneration Policy operates to align
the interests of management with those of
shareholders.
The Committee also has responsibility for
reviewing pay and conditions across the Group
and the alignment of incentives and rewards
with culture.
Dear shareholders,
On behalf of the Remuneration Committee, I am pleased to
present the Directors’ Remuneration Report for the year ended
30 September 2021.
This report has been prepared in accordance with The Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013, The Companies (Directors’
Remuneration Policy and Directors’ Remuneration Report)
Regulations 2019, the FCA Listing Rules and the Code. The report
is split into three parts:
• the annual statement by the Chair of the Remuneration Committee;
• the Directors’ Remuneration Policy which is to be put to a binding
shareholder vote at the AGM in January 2022 and will then apply
for three years from the date of approval; and
• the annual report on remuneration which sets out payments made
to the Directors and details the link between Company performance
and remuneration for FY2021. The annual report on remuneration
is subject to an advisory shareholder vote at the 2022 AGM.
Update on 2021 AGM vote and remuneration framework
Following a significant minority of shareholders voting against
the Directors’ Remuneration Report at the Company’s AGM on
29 January 2021, Peter Boddy and I engaged with a number of
our significant shareholders to seek to understand the reasons
for the adverse feedback. We understand that this was primarily
due to the Committee’s decision to allow the 2018 LTIP award to
partially vest. Although other feedback indicated that shareholders
were generally supportive of our existing Remuneration Policy,
we decided it would be appropriate to bring forward the normal
three-yearly review of the Policy to this year. As part of this review,
I also wrote to our major shareholders to gather their views on
remuneration, and their feedback has been reflected in the key
changes to the policy which are summarised below (and set out in
detail in the full Remuneration Policy on pages 71 to 79. I am pleased
that the feedback we received demonstrated that they were largely
supportive of our proposals.
Hollywood Bowl Group plc
Annual report and accounts 2021
67
Governance report
Report of the Remuneration Committee continued
Update on 2021 AGM vote and remuneration framework
continued
The Committee believes that the existing remuneration structure as
a whole remains appropriate; however, there are a small number of
areas in which we are proposing a change to ensure full compliance
with the UK Corporate Governance Code and guidance issued by
shareholder representative bodies, as follows:
FY2022 LTIP
During FY2022, the Committee intends to grant LTIPs with a
maximum opportunity of 100 per cent of salary. These levels are
unchanged from previous years. The awards will vest three years
after grant, and will be subject to a further two year holding period.
The performance measures for the LTIP awards are set out in detail
in the Annual Report on Remuneration on page 86.
Stakeholder engagement
The Committee is regularly updated on pay and benefits
arrangements for team members across the Group, and takes into
account colleague remuneration as part of its review of Executive
remuneration. Engagement with the workforce on remuneration
matters, including to explain how executive pay is aligned with wider
company pay policy, is conducted through engagement sessions led
by the CEO and COO and the wider team engagement survey.
I am always happy to engage with shareholders and investors on
remuneration matters, in particular to ensure transparency around
our decision-making on Executive pay. I have been very pleased with
the level of engagement with our significant shareholders during the
course of the year, and the support shown for our proposals.
Executive director appointment
I am delighted that Melanie Dickinson joined the Board effective
from 21 October 2021. The Remuneration Committee was consulted
in relation to her remuneration prior to the appointment being made,
and the Executive Remuneration Policy will apply to Melanie in the
same way as it does to Stephen Burns and Laurence Keen. The
application of the Remuneration Policy in FY2022 is set out on
page 81 of the Annual Report on Remuneration.
Annual General Meeting
On behalf of the Board, I would like to thank shareholders for their
continued support. I look forward to meeting shareholders at the
AGM on 28 January 2022. In the meantime, I am always happy to
hear from the Company’s shareholders. You can contact me via the
Company Secretary if you have any questions on this report or more
generally in relation to the Group’s Remuneration Policy.
Claire Tiney
Chair of The Remuneration Committee
15 December 2021
• introduction of a post-employment shareholding requirement
under which the Executive directors will be required to retain
100 per cent of their shareholding requirement for a period of
two years post-cessation;
• reduction in on-target bonus payout from 62.5 per cent to
50 per cent of maximum in line with best practice; and
• diversification of bonus and LTIP performance conditions to move
away from them being solely based on earnings-related
measures, and introduce an element of non-financial
performance. At least 50 per cent of bonus and LTIP awards
will continue to be based on financial performance.
Performance in FY2021 and remuneration outcomes
During FY2021, national lockdowns and localised tier restrictions
resulted in further restrictions on trading with capacity limitations
and curfews in place for part of the year. However, trading since our
centres reopened in May 2021 has been strong, and our Executive
team has performed extremely well in ensuring that the Company
is well positioned to take advantage of opportunities as the
economy recovers.
As noted in the Annual Report on Remuneration on page 80,
although our team has worked hard to deliver a positive Group
adjusted EBITDA outcome for the year, given that the Company
has benefited from government support through rates relief and
furlough claims, and as shareholders have supported the Company
through the equity placing in March 2021 and the continued
suspension of dividends, we have agreed that no bonus will be
payable to the Executive Directors in respect of FY2021.
The LTIP award granted in February 2019 was due to vest in
February 2022, based on EPS performance over the three-year
period to 30 September 2021. The EPS for the year ended
30 September 2021 was 1.05 pence, which fell below the threshold
to maximum target range of 15.19 pence to 16.28 pence and
therefore the formulaic outcome has resulted in the award lapsing
in full. No discretion was exercised to adjust this formulaic outcome.
FY2022 remuneration
Salary and benefits
The Committee has approved salary increases of 5 per cent to
the CEO and CFO (as set out in the Annual Report on Remuneration
on page 85), which are below the average increase being awarded
to the wider workforce.
FY2022 bonus
The maximum bonus opportunity for Executive Directors in FY2022
will be 100 per cent of salary. Subject to shareholder approval of
the new Policy, the bonus outcomes will be determined based on
achievement of a scorecard of financial and strategic targets, with
at least half of the bonus being based on financial performance.
In line with our usual practice, actual targets, performance achieved
and awards made will be disclosed in the FY2022 annual report.
68 Hollywood Bowl Group plc
Annual report and accounts 2021
As part of its review of the Remuneration Policy, the Committee has considered the factors set out in provision 40 of the Code. In our view,
the proposed Policy addresses those factors as set out below:
Factor
How addressed
Clarity – remuneration arrangements
should be transparent and promote
effective engagement with shareholders
and the workforce
Simplicity – remuneration structures
should avoid complexity and their rationale
and operation should be easy to understand
The remuneration policy is clearly disclosed each year in the Annual Report.
Engagement is sought from shareholders on remuneration matters, and the Committee
receives regular updates on workforce pay and benefits during the course of its activity.
Our remuneration structure is comprised of fixed and variable remuneration, with
the performance conditions for variable elements clearly communicated to, and
understood by, participants. The LTIP provides a clear mechanism for aligning
Executive Director and shareholder interests, and the diversification of measures
in both the annual bonus and LTIP scheme will allow for clearer alignment with
our strategic pillars rather than reliance solely on earnings based-measures.
Risk – remuneration arrangements should
ensure reputational and other risks from
excessive rewards, and behavioural risks
that can arise from target-based incentive
plans, are identified and mitigated
The remuneration policy and relevant scheme rules provide discretion to the
Committee to reduce award levels (see Remuneration Policy table on page 74, and
awards are subject to malus and clawback decisions. The Committee also has
overriding discretion to reduce awards where outturns are not a fair and accurate
reflection of business performance.
Predictability – the range of possible
values of rewards to individual directors and
any other limits or discretions should be
identified and explained at the time of
approving the policy;
Proportionality – the link between
individual awards, the delivery of strategy
and the long-term performance of the
company should be clear. Outcomes should
not reward poor performance
Alignment to culture – incentive schemes
should drive behaviours consistent with
company purpose, values and strategy
See scenario charts on page 77.
Maximum outturns are clearly set out in the Remuneration Policy.
As shown in the scenario charts on page 77, variable, performance-related elements
represent a significant proportion of the total remuneration opportunity for our Executive
Directors. With the diversification of performance measures in both the bonus and LTIP
schemes, the Committee will consider the appropriate financial and non-financial
performance measures each year to ensure that there is a clear link to strategy. Discretions
available to the Committee ensure that awards can be reduced if necessary to ensure
that outcomes represent a fair and accurate reflection of business performance.
The Committee seeks to ensure that personal performance measures under the
annual bonus scheme incentivise behaviours consistent with the Group’s culture,
purpose and values. The LTIP clearly aligns Executive interest with those of
shareholders, ensuring a focus on delivering against strategy to generate long-term
value for shareholders.
Hollywood Bowl Group plc
Annual report and accounts 2021
69
Governance report Report of the Remuneration Committee continued
The Remuneration Committee met on four occasions during the year and has met three times since the year end, and discussed the topics
set out in the table below:
Activities of the Committee during the year to 30 September 2021
Dec
Mar
Jul
Sep
Review of FY2020 performance and bonus outturn and approval of Directors’ bonuses for FY2020
Approval of Directors’ bonus KPIs/targets for FY2021 and FY2021 pay
Agreeing approach to FY2022 bonus targets
Proposed 2021 LTIP performance targets
Share plan awards and vestings
Review of Directors’ Remuneration Report
(including to ensure compliance with the Remuneration Reporting Regulations)
Approval of implementation of the Remuneration Policy for FY2021
Review of Remuneration Policy
Consideration of engagement and feedback from shareholders
Consideration of pay and conditions across the Group
Review of 2021 AGM and proxy advisory comments
Review of the Committee’s terms of reference
COVID-19 impacts on remuneration
Discussion of Committee evaluation results
70 Hollywood Bowl Group plc
Annual report and accounts 2021
Directors’ Remuneration Policy
Introduction
The Policy as set out below will be put to a binding shareholder
vote at the AGM on 28 January 2022 and will apply for the period
of three years from the date of approval.
Policy summary
The Remuneration Committee determines the Policy for the
Executive Directors, Chairman and senior executives for current
and future years. The Remuneration Committee considers that a
successful policy needs to be sufficiently flexible to take account
of future changes in the Company’s business environment and
in remuneration practice.
The Policy is designed around the following key principles:
• Shareholder alignment – ensuring a strong link between reward
and individual and Company performance aligns the interests of
Executive Directors, senior management and employees with
those of shareholders.
• Competitive remuneration – maintaining a competitive package
against businesses of a comparable size and nature helps to
attract, retain and motivate high-calibre talent to enable the
Company’s continued growth and success as a listed company.
• Strategic alignment – providing a package with an appropriate
balance between short and longer-term performance targets
linked to the delivery of the Company’s business plan.
• Performance focused compensation – encouraging and
supporting a high performance culture.
• Setting appropriate performance conditions in line with the
agreed risk profile of the business.
The Remuneration Committee will review the remuneration
arrangements for the Executive Directors and key senior
management annually, drawing on trends and adjustments made
to all employees across the Group and taking into consideration:
• business strategy over the period;
• overall corporate performance;
• market conditions affecting the Company;
• changing practice in the markets where the Company competes
for talent; and
• changing views of institutional shareholders and their
representative bodies.
Discretion
The Remuneration Committee has discretion in several areas of
policy as set out in this section. The Remuneration Committee may
also exercise operational and administrative discretions under
relevant plan rules approved by shareholders and as set out in those
rules. In addition, the Remuneration Committee has the discretion
to amend the Policy with regard to minor or administrative matters
where it would be, in the opinion of the Remuneration Committee,
disproportionate to seek or await shareholder feedback.
Differences in policy from the wider employee population
The Group aims to provide a remuneration package for all employees
that is market competitive and operates the same reward and
performance philosophy throughout the business. As with many
companies, the Group operates variable pay plans primarily focused
on the senior management level.
Proposed changes to the directors’ remuneration policy
The Committee has undertaken a review of the remuneration policy,
taking into account alignment with the business strategy and best
practice. We believe that the structure as a whole remains appropriate
and are therefore not proposing any significant changes to the package;
however, there are a small number of areas in which we are proposing
a change to ensure full compliance with the UK Corporate Governance
Code and guidance issued by shareholder representative bodies.
The Committee is also aware that some shareholders have provided
feedback on the metrics in our incentive plans, in particular the annual
bonus and LTIP, which are based on earnings-related measures. In
addition, we are conscious of developing market practice in relation to
the incorporation of non-financial measures, in particular ESG metrics.
We have reviewed the incentives in the context of the business
strategy and are proposing to diversify the metrics to more closely
align with our strategic pillars and provide more flexibility to amend
the metrics from year to year to align with the strategy, while
retaining a majority weighting to our core financial KPIs.
Hollywood Bowl Group plc
Annual report and accounts 2021
71
Governance report Directors’ Remuneration Policy continued
Proposed changes to the existing directors’ remuneration policy continued
The proposed changes are set out in the table below.
Element of remuneration
Current Policy summary
Proposed amendment to Policy
Reason for change
No change.
N/A
No change.
N/A
Base salary and
benefits
Pension
Salaries are reviewed annually and any
changes are effective from 1 April. Base
salaries will be set at an appropriate
level with a comparator group of
comparable sized listed companies and
will normally increase with increases
made to the wider employee workforce.
A competitive level of benefits is
provided, including company cars.
The maximum level of pension
funding is either 5 per cent of salary
(for the current Executive Directors)
or the level received by the wider
employee workforce (for future
incoming Executive Directors),
currently 5 per cent.
The Remuneration Committee
retains the discretion to provide
pension funding in the form of a
salary supplement.
Annual bonus plan
Up to 100 per cent of base salary based
on performance against financial targets.
No change to the maximum
opportunity.
Up to 65 per cent may be paid in cash
and the balance deferred into shares
for two years. The deferred element
counts towards achieving the
Executive Directors’ shareholding
requirements as appropriate.
The annual bonus will be based
on a scorecard of financial and
non-financial performance
targets which are aligned to the
business strategy. At least half
of the bonus will be based on
financial performance.
The level of bonus payout for
on-target performance will be
reduced from 62.5 per cent to
50 per cent.
Long Term Incentive
Plan (LTIP)
Annual awards of up to 150 per cent
of base salary.
No change to maximum
opportunity.
The majority of the awards will
be based on financial metrics,
with the balance based on
strategic metrics.
Awards vest at the end of the
performance period subject to
continued employment and
performance against EPS targets, and
are subject to a two-year post-vesting
holding period.
The Executive Directors currently
receive LTIP awards equal to 100 per
cent of base salary.
Shareholding
requirement
200 per cent of base salary to be built
up over a five-year period.
No change to overall shareholding
requirement level.
Executive Directors are required to
retain 50 per cent of any shares they
acquire under the LTIP, after allowing
for the sale of shares to pay tax and
other deductions, until such time as
they have built up the required
holding level.
Introduction of a post-cessation
shareholding requirement where,
from FY2022, Executive Directors
will be required to retain 100 per cent
of their shareholding requirement
(i.e. 200 per cent of base salary) for
two years post-cessation (or full
actual holdings if lower). For existing
Executive Directors, the post-
cessation shareholding requirement
will apply only to shares acquired
through the vesting of LTIP awards
granted from FY2022 onwards.
The diversification of performance
metrics ensures closer alignment
with our strategic pillars and reflects
market practice to incorporate
non-financial ESG measures.
The reduction in on-target payout
levels ensures alignment with
market best practice and
institutional investor guidelines.
The diversification of performance
metrics ensures closer alignment
with our strategic pillars and reflects
market practice to incorporate
non-financial measures.
Maximises longer-term alignment
with shareholders and ensures full
compliance with the UK Corporate
Governance Code.
72 Hollywood Bowl Group plc
Annual report and accounts 2021
The following table sets out each element of remuneration and how it supports the Company’s short- and long-term strategic objectives.
Operation
Opportunity
Performance metrics used, weighting and
time period applicable
None
How the element supports
our short and long-term
strategic objectives
Salary
Provides a base level of
remuneration to support the
recruitment and retention of
Executive Directors with the
necessary experience and
expertise to deliver the
Company’s strategy.
Benefits
Provides a competitive level
of benefits.
Pensions
Provides market
competitive retirement
benefits.
Salaries are normally reviewed annually
and any changes are effective from
1 April. When determining an appropriate
level of salary, the Remuneration
Committee considers:
• remuneration practices within
the Company;
• the performance of the individual
Executive Director;
• the individual Executive Director’s
experience and responsibilities;
• the general performance of
the Company;
• salaries within the ranges paid by
companies in the comparator group
used for remuneration benchmarking;
and
• the economic environment.
The Executive Directors receive benefits
which include, but are not limited to,
family private health cover, death in
service life assurance, income protection
insurance, car allowance, and travel
expenses for business-related travel
(including tax if any).
The Remuneration Committee
recognises the need to maintain
suitable flexibility in the determination
of benefits that ensure it is able to
support the objective of attracting and
retaining employees. Accordingly, the
Remuneration Committee would expect
to be able to adopt benefits such as
relocation expenses, tax equalisation
and support in meeting specific costs
incurred by the Directors.
The Committee retains discretion to
provide pension funding in the form
of a salary supplement or a direct
contribution to a pension scheme.
Any salary supplement would not
form part of the salary for the
purposes of determining the extent
of participation in the Company’s
incentive arrangements.
Base salaries will be set at an
appropriate level with a comparator
group of comparable sized companies
and will normally increase with
increases made to the wider
employee workforce.
Individuals who are recruited or
promoted to the Board may, on
occasion, have their salaries set below
the targeted Policy level until they
become established in their role. In
such cases subsequent increases in
salary may be higher than the average
until the target positioning is achieved.
The maximum will be set at the cost
of providing the benefits described.
None
The current Executive Directors
receive pension funding equal to
5 per cent of base salary.
None
Future incoming Executive Directors
will receive pension funding in line
with the level received by the wider
employee workforce.
Hollywood Bowl Group plc
Annual report and accounts 2021
73
Governance report Directors’ Remuneration Policy continued
Proposed changes to the existing directors’ remuneration policy continued
How the element supports
our short and long-term
strategic objectives
Annual bonus plan
Provides a significant
incentive to the Executive
Directors linked to
achievement in delivering
goals that are closely
aligned with the Company’s
strategy and the creation
of value for shareholders.
Provides market competitive
retirement benefits.
Long Term Incentive
Plan (LTIP)
Incentivises the Executive
Directors to maximise total
shareholder returns by
successfully delivering the
Company’s long-term
objectives and to share in
the resulting increase in
total shareholder value.
Operation
Opportunity
The maximum bonus opportunity
is 100 per cent of base salary.
Award maximum of 150 per cent
of base salary.
The Executive Directors currently
receive LTIP awards of 100 per cent
of base salary.
The Remuneration Committee will
determine the bonus payable after the
year end based on performance against
objectives and targets. Bonus payments
per individual will be both proportionate
to the overall size of the bonus pot and
each individual’s performance versus
their personal objectives.
Annual bonuses are paid part in cash and
part in shares deferred for two years. The
maximum proportion of an annual bonus
which may be paid in cash is 65 per cent.
It should be noted that the Remuneration
Committee has taken the view that due to
their considerable shareholdings in the
Company, automatic deferral of annual
bonuses into shares is unnecessary for
the current Executive Directors. As such
the Remuneration Committee intends to
pay annual bonuses to the current
Executive Directors in cash, but will retain
the ability to apply an appropriate level of
deferral following any material selldown to
ensure that shareholding requirements
continue to be met.
On change of control, the Remuneration
Committee may pay bonuses on a
pro-rata basis measured on performance
up to the date of change of control.
Malus and clawback provisions will apply
to enable the Company to recover sums
paid or withhold the payment of any sum
in the event of a material misstatement
resulting in an adjustment to the audited
consolidated accounts of the Company
or action or conduct which, in the
reasonable opinion of the Board,
amounts to employee misbehaviour,
fraud or gross misconduct.
Awards are granted annually in the form
of nil-cost options or conditional awards
of shares. These will vest at the end of a
three-year period subject to:
• the Executive Directors’ continued
employment at the date of vesting; and
• satisfaction of the
performance conditions.
A further two-year holding period will
apply post-vesting.
The Remuneration Committee may
award dividend equivalents on awards
to the extent that these vest.
Malus and clawback provisions will apply
to enable the Company to recover sums
paid or withhold the payment of any sum
in the event of a material misstatement
resulting in an adjustment to the audited
consolidated accounts of the Company
or action or conduct which, in the
reasonable opinion of the Board,
amounts to employee misbehaviour,
fraud or gross misconduct.
Performance metrics used, weighting and
time period applicable
The annual bonus outcomes will be
determined based on achievement of
a scorecard of financial and strategic
targets, with at least half of the bonus
being based on financial performance.
The Remuneration Committee retains
discretion in exceptional circumstances
to change performance measures
and targets and the weightings
attached to performance measures
part-way through a performance year
if there is a significant and material
event which causes the Remuneration
Committee to believe that the original
measures, weightings and targets are
no longer appropriate. Discretion may
also be exercised in cases where the
Remuneration Committee believes
that the bonus outcomes are not a
fair and accurate reflection of
business performance.
The Remuneration Committee
considers that the detailed
performance targets used for the
annual bonus awards are commercially
sensitive and that disclosing precise
targets for the annual bonus plan in
advance would not be in shareholder
interests. Actual targets, performance
achieved, and awards made will be
disclosed at the end of the performance
period so that shareholders can fully
assess the basis for any payouts
under the annual bonus plan.
The majority of awards will be subject
to financial performance targets, with
the balance based on strategic metrics.
The Remuneration Committee retains
discretion in exceptional circumstances
to change performance measures
and targets and the weightings
attached to performance measures
part-way through a performance
period if there is a significant and
material event which causes the
Remuneration Committee to believe
the original measures, weightings and
targets are no longer appropriate.
Discretion may also be exercised in
cases where the Remuneration
Committee believes that the vesting
outcome is not a fair and accurate
reflection of business performance
74 Hollywood Bowl Group plc
Annual report and accounts 2021
How the element supports
our short and long-term
strategic objectives
All-Employee Plan
To encourage wide
employee share ownership
and thereby align
employees’ interests with
shareholders.
Shareholding
Requirement
To support long-term
commitment to the
Company and the alignment
of Executive Director
interests with those of
shareholders.
Chairman and
Non-Executive Director
fees
Provides a level of fees to
support recruitment and
retention of Non-Executive
Directors with the
necessary experience to
advise and assist with
establishing and monitoring
the Company’s strategic
objectives.
Operation
Opportunity
Performance metrics used, weighting and
time period applicable
UK scheme in line with HMRC limits
as amended from time to time.
None
200 percent of salary.
None
The base fees for Non-Executive
Directors are set with reference to the
market rate.
None
In general, the level of fee increase
for the Non-Executive Directors will
be set taking account of any change
in responsibility and will take into
account the general rise in salaries
across the UK workforce.
The Company will pay reasonable
expenses incurred by the Chairman
and Non-Executive Directors.
The Company has a Share Incentive Plan
in which the Executive Directors are
eligible to participate (which is HMRC
approved and is open to all eligible staff).
The Company also operates a
Sharesave scheme.
The Remuneration Committee has
adopted formal shareholding guidelines
that will encourage the Executive
Directors to build up over a five-year
period, and then subsequently hold a
shareholding equivalent to a percentage
of base salary.
Executive Directors must retain 50 per
cent of any shares they acquire under
the LTIP, after allowing for the sale of
shares to pay tax and other deductions,
until such time as they have built up
the required holding level.
Executive Directors must retain a
shareholding on cessation of employment
for two years, equal to the lower of
200 per cent of salary and the actual
shareholding on cessation.
Adherence to these guidelines is a
condition of continued participation
in the equity incentive arrangements.
The Board as a whole is responsible
for setting the remuneration of the
Non-Executive Directors, other than
the Chairman, whose remuneration is
considered by the Remuneration
Committee and recommended to the Board.
Non-Executive Directors are paid a
base fee. An additional payment is paid
to the Senior Independent Director in
respect of the additional duties of this
role. No additional fees are paid to
Non-Executive Directors or the Chairman
of the Company for the membership
or chairmanship of Committees.
Fees are reviewed annually, based on
equivalent roles in an appropriate
comparator group used to review salaries
paid to the Executive Directors.
Non-Executive Directors do not
participate in any variable remuneration
or benefits arrangements.
Recruitment policy
The Company’s approach when setting the remuneration of any newly recruited Executive Director will be assessed in line with the same
principles for the Executive Directors, as set out in the Policy table. The Remuneration Committee’s approach to recruitment remuneration
is to pay no more than is necessary to attract candidates of the appropriate calibre and experience needed for the role from the market in
which the Company competes. The Remuneration Committee is mindful that it wishes to avoid paying more than it considers necessary
to secure the preferred candidate and will have regard to guidelines and shareholder sentiment regarding one-off or enhanced short or
long-term incentive payments made on recruitment and the appropriateness of any performance measures associated with an award.
The remuneration package for a new Executive Director would be set in accordance with the terms of the Company’s approved Policy.
Given a new Executive Director would not have the significant shareholding of the current Executive Directors, the base salary may be higher
than the incumbent and they will be entitled to pension funding in line with the level received by the wider employee workforce, in line with the
Policy. In the year of recruitment, the maximum variable pay will be 250 per cent of salary (other than in exceptional circumstances, where up
to 350 per cent of salary may be made if sign-on compensation is provided).
Hollywood Bowl Group plc
Annual report and accounts 2021
75
Governance report Directors’ Remuneration Policy continued
Recruitment policy continued
The Remuneration Committee’s policy is not to provide sign-on compensation. However, in exceptional circumstances where the
Remuneration Committee decides to provide this type of compensation, it will endeavour to provide the compensation in equity, subject to
a holding period during which cessation of employment will generally result in forfeiture and will be subject to the satisfaction of performance
targets. The maximum value of this one-off compensation will be proportionate to the overall remuneration offered by the Company and in all
circumstances is limited to 100 per cent of salary. The Committee will carefully consider this matter to ensure consistency with the principles
outlined earlier, particularly in relation to shareholder alignment, and will take appropriate external advice before finalising a decision in this
regard and, where practical, consult with the Company’s key shareholders.
The Remuneration Committee’s policy is not to provide buyouts as a matter of course. However, should the Remuneration Committee
determine that the individual circumstances of recruitment justify the provision of a buyout, the equivalent value of any incentives that will be
forfeited on cessation of a Director’s previous employment will be calculated, taking into account the following:
• the proportion of the performance period completed on the date of the Director’s cessation of employment;
• the performance conditions attached to the vesting of these incentives and the likelihood of them being satisfied; and
• any other terms and conditions having a material effect on their value (lapsed value).
The Remuneration Committee may then grant up to the same value as the lapsed value, where possible, under the Company’s incentive plans.
To the extent that it was not possible or practical to provide the buyout within the terms of the Company’s existing incentive plans, a bespoke
arrangement would be used.
Where an existing employee is promoted to the Board, the Policy set out above would apply from the date of promotion but there would be
no retrospective application of the Policy in relation to subsisting incentive awards or remuneration arrangements. Accordingly, prevailing
elements of the remuneration package for an existing employee would be honoured and form part of the ongoing remuneration of the person
concerned. These would be disclosed to shareholders in the Remuneration Report for the relevant financial year.
The Company’s policy when setting fees for the appointment of new Non-Executive Directors is to apply the Policy which applies to current
Non-Executive Directors.
Service agreements and letters of appointment
Each of the Executive Directors’ service agreements is for a rolling term and may be terminated by the Company or the Executive Director
by giving six months’ notice.
The Remuneration Committee’s policy for setting notice periods is that a six-month period will apply for Executive Directors. The Remuneration
Committee may in exceptional circumstances arising on recruitment allow a longer period, which would in any event reduce to six months
following the first year of employment.
Name
Stephen Burns
Laurence Keen
Melanie Dickinson
Position Date of service agreement
CEO
CFO
CPO
24 June 2016
24 June 2016
21 October 2021
Notice period by Company
(months)
Notice period by Director
(months)
6
6
6
6
6
6
The Non-Executive Directors of the Company (including the Chairman) do not have service contracts. The Non-Executive Directors are
appointed by letters of appointment. Their terms are subject to their re-election by the Company’s shareholders at the AGM scheduled to be
held on 28 January 2022 and to re-election at any subsequent AGM at which the Non-Executive Directors stand for re-election.
The details of each Non-Executive Director’s current terms are set out below:
Name
Peter Boddy
Nick Backhouse
Claire Tiney
Ivan Schofield
Date of appointment Commencement date of current term
13 June 2016
14 June 2016
14 June 2016
16 September 2019
14 June 2019
14 June 2019
Unexpired term as at
15 December 2021
9 months
6 months
6 months
1 October 2017
1 October 2020
1 year 10 months
External board appointments
Where Board approval is given for an Executive Director to accept an outside non-executive directorship, the individual is entitled to retain
any fees received. Stephen Burns is non-executive chairman of Club Company Limited for which he receives an annual fee of £60,000.
Laurence Keen was appointed as a Non-Executive Director (and Chair of the Audit and Remuneration Committees) of Tortilla Mexican Grill plc
which was admitted to AIM on 8 October 2021, and for which he will receive an annual fee of £40,000.
76 Hollywood Bowl Group plc
Annual report and accounts 2021
Illustrations of the application of the policy
The chart below illustrates the remuneration that would be paid to each of the Executive Directors on a forward-looking basis under the
policy under the following performance scenarios: (i) minimum; (ii) on-target; (iii) maximum; and (iv) maximum with 50 per cent share price
appreciation. The elements of remuneration have been categorised into three components: (i) fixed; (ii) annual bonus; and (iii) LTIP, with the
assumptions set out below:
Element
Fixed
Description
Minimum
On-target
Salary, benefits and pension
Included in full
Included in full
Maximum
Included in full
Annual bonus
Annual bonus awards
No variable pay
LTIP
Awards under the LTIP
No variable pay
Payout of 50 per cent of
the maximum bonus
Full payout of the
maximum bonus
Vesting of 73.75 per cent
of the maximum award
Full vesting of the
maximum award
Dividend equivalents have not been added to LTIP share awards for the purpose of this illustration.
CEO
Maximum with 50%
SP appreciation
Maximum
On-target
Minimum
28%
32%
28%
14%
£1,491,280
32%
£1,285,112
21%
31%
£970,707
31%
36%
47%
100%
£460,442
At minimum, variable remuneration is 0 per cent of base salary, at on-target, variable remuneration represents 110.8 per cent of base salary
and at maximum, variable remuneration represents 179.1 per cent of base salary. At maximum, and accounting for a 50 per cent appreciation
in share price, variable remuneration represents 223.9 per cent of base salary.
Base
Bonus
LTIP
LTIP with 50% share price appreciation
CFO
Maximum with 50%
SP appreciation
Maximum
On-target
Minimum
32%
37%
27%
32%
27%
14%
£977,832
32%
£843,957
48%
21%
31%
£639,797
100%
£308,457
At minimum, variable remuneration is 0 per cent of base salary, at on-target, variable remuneration represents 107.4 per cent of base salary
and at maximum, variable remuneration represents 173.6 per cent of base salary. At maximum, and accounting for a 50 per cent appreciation
in share price, variable remuneration represents 217 per cent of base salary.
Base
Bonus
LTIP
LTIP with 50% share price appreciation
CPO
Maximum with 50%
SP appreciation
Maximum
33%
38%
27%
31%
27%
13%
£570,467
31%
£490,467
On-target
50%
20%
30%
£368,467
Minimum
100%
£170,467
At minimum, variable remuneration is 0 per cent of base salary, at on-target, variable remuneration represents 116.2 per cent of base salary
and at maximum, variable remuneration represents 187.7 per cent of base salary. At maximum, and accounting for a 50 per cent appreciation
in share price, variable remuneration represents 234.7 per cent of base salary.
Base
Bonus
LTIP
LTIP with 50% share price appreciation
Hollywood Bowl Group plc
Annual report and accounts 2021
77
Governance report Directors’ Remuneration Policy continued
Payment for loss of office
The Remuneration Committee will honour Executive Directors’ contractual entitlements. Service contracts do not contain liquidated
damages clauses. If a contract is to be terminated, the Remuneration Committee will determine such mitigation as it considers fair and
reasonable in each case. There are no contractual arrangements that would guarantee a pension with limited or no abatement on severance
or early retirement. There is no agreement between the Company and its Executive Directors or employees providing for compensation for
loss of office or employment that occurs because of a takeover bid. The Remuneration Committee reserves the right to make additional
payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such
an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director’s office
or employment. When determining any loss of office payment for a departing individual, the Remuneration Committee will always seek to
minimise cost to the Company whilst seeking to address the circumstances at the time.
Remuneration element
Treatment on exit
Salary, benefits
and pension
Salary, benefits and pension will normally be paid over the notice period. The Company has discretion to make a lump sum
payment on termination equal to the salary, value of benefits and value of Company pension contributions payable during
the notice period. In all cases, the Company will seek to mitigate any payments due.
Annual bonus plan
Good leaver reason – pro-rated to time and performance for year of cessation.
Other reason – no bonus payable for year of cessation.
LTIP
Good leaver reason – pro-rated to time and performance in respect of each subsisting LTIP award.
A good leaver reason is defined as a cessation for a reason other than resignation (save in circumstances in which the
participant successfully claims constructive dismissal) or dishonesty, fraud, gross misconduct or any other circumstances
justifying summary dismissal.
Other reason – lapse of any unvested LTIP awards.
The Remuneration Committee has the following elements of discretion:
• To determine that an executive is a good leaver. It is the Remuneration Committee’s intention to only use this discretion
in circumstances where there is an appropriate business case which will be explained in full to shareholders.
• To pro-rate the maximum number of shares to the time from the date of grant to the date of cessation. The Remuneration
Committee’s policy is generally to pro-rate to time. It is the Remuneration Committee’s intention to only use this
discretion in circumstances where there is an appropriate business case which will be explained in full to shareholders.
• To reduce the level of vesting of an award from the formulaic level of vesting if, in the opinion of the Board,
the performance of the Executive Director or the Company justifies such a reduction.
• The post-vesting holding period for LTIP awards granted from 2019 onwards will continue to apply irrespective of
employment status unless the Committee, in exceptional circumstances, determines otherwise.
Upon departure, individuals will be required to retain 100 per cent of their shareholding requirement (or full actual holding
if lower) for a period of two years post cessation.
Post cessation
shareholding
requirement
Change of control
The Remuneration Committee’s policy on the vesting of incentives on a change of control is summarised below:
Name of incentive plan
Change of control
Discretion
Annual bonus plan
Pro-rated to time and performance to the date of the
change of control.
The Remuneration Committee has discretion to continue
the operation of the plan to the end of the bonus year.
LTIP
The number of shares subject to subsisting LTIP awards
vesting on a change of control will be pro-rated to time
and performance to the date of the change of control.
The Remuneration Committee retains absolute discretion
regarding the proportion vesting taking into account time
and performance.
There is a presumption that the Remuneration Committee
will pro-rate to time. The Remuneration Committee will
only waive pro-rating in exceptional circumstances where
it views the change of control as an event which has
provided a material enhanced value to shareholders
which will be fully explained to shareholders. In all cases
the performance conditions must be satisfied.
78 Hollywood Bowl Group plc
Annual report and accounts 2021
Consideration of conditions elsewhere in the Company
The Remuneration Committee considers pay and employment conditions across the Company when reviewing the remuneration of the
Executive Directors and other senior employees. In particular, the Remuneration Committee considers the range of base pay increases
across the Group.
The Committee supports the Board’s initiative to ensure employee views and concerns are taken into account in its decision making and has
a clear understanding of pay and benefits at all team member levels in the Group. This includes decisions relating to the remuneration
arrangements for senior management, the Executive Directors and centre managers.
Consideration of shareholder views
The Remuneration Committee considers shareholder feedback received in relation to the AGM each year and guidance from shareholder
representative bodies more generally.
In formulating the 2021 remuneration policy the Committee also consulted directly with a number of the Company’s significant shareholders
regarding their views on remuneration practices and policies. The views expressed during these consultations were taken into consideration
as part of the review of the policy, in particular feedback received on the performance metrics used within the incentive plans.
Hollywood Bowl Group plc
Annual report and accounts 2021
79
Governance report Annual report on remuneration
Single total figure of remuneration (audited)
Executive Directors (audited)
The table below sets out the single total figure of remuneration and breakdown for each Executive Director in respect of FY2021.
Comparative figures for FY2020 have been provided. Figures provided have been calculated in accordance with the UK disclosure
requirements: The Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013
(Schedule 8 to the Regulations).
Name
Stephen Burns
Laurence Keen
Salary
£’000
392.7
392.1
255.0
254.6
Benefits1
£’000
Pension
£’000
2.5
2.7
2.3
2.4
19.6
19.5
12.7
12.6
Bonus
£’000
—
LTIP
£’000
—
— 208.92
—
—
— 142.12
Total
414.8
623.2
270.0
411.7
2021
2020
2021
2020
Total
fixed
pay
£’000
414.8
Total
variable
pay
£’000
—
414.3
208.9
270.0
—
269.7
142.1
1 Benefits include private medical insurance.
2 Truing up of 2020 single figure table numbers (audited). The 2020 LTIP figure was calculated based on the average of mid-market closing price of a share for each dealing day in
the three-month period to 30 September 2020. The 2020 LTIP figure in the single figure table above has therefore been adjusted to reflect the actual share price of 198 pence on the
vesting date of 6 February 2021.
Non-Executive Directors (audited)
The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director:
Name
Peter Boddy – Chairman
Nick Backhouse – Senior Independent Director; Chair
– Audit Committee
Ivan Schofield
Claire Tiney – Chair – Remuneration Committee
2021
Taxable
benefits
£’000
Total
£’000
Fees
£’000
2020
Taxable
benefits
£’000
Total
£’000
— 121.6
123.5
— 123.5
—
—
—
48.3
42.9
43.6
49.1
43.6
44.3
—
—
—
49.1
43.6
44.3
Fees
£’000
121.6
48.3
42.9
43.6
Bonus awards (audited)
Due to the uncertainty around the trading environment at the time of granting the FY2021 annual bonus awards, the Committee agreed to set
the targets for the bonus awards on a quarterly basis, and to review those targets based on performance during the year. Despite the team’s
delivery of positive EBITDA performance for the year, in light of the fact that the Group has benefited from government grants and furlough
credits, and that shareholders have supported the balance sheet position through the equity placing in March 2021 and the continued
suspension of dividends, the Committee agreed that no bonus would be payable to the Executive Directors for FY2021.
Long Term Incentive Plan vesting of 2019 awards
The LTIP values included in the single total figure of remuneration table for 2021 relate to the 2019 LTIP award. Awards with a face value of
100 per cent of salary were granted to the Executive Directors on 14 February 2019 and, following a three-year performance period ending on
30 September 2021, were due to vest on 14 February 2022. Performance against the performance targets is set out below:
Adjusted EPS for the final year of the performance period
15.19 pence
15.19 pence – 16.28 pence
16.28 pence
Vesting
25%
Vesting determined on a straight-line basis
100%
Actual performance achieved was 1.05 pence (audited); therefore based on performance at the end of the vesting period, the awards will
lapse in full.
Additional information regarding single figure table (audited)
The Remuneration Committee considers that performance conditions for all incentives are suitably demanding, having regard to the
business strategy, shareholder expectations, the markets in which the Group operates and external advice.
80 Hollywood Bowl Group plc
Annual report and accounts 2021
Long-term incentives awarded in 2021 (audited)
Awards were made under the LTIP scheme on 22 July 2021. The following share awards were granted in the form of nil cost options in
accordance with the Remuneration Policy:
Director
Stephen Burns
Laurence Keen
Position
Chief Executive Officer
Chief Financial Officer
Basis of award
100% of salary
100% of salary
Face value
£392,700
£255,000
Number of share
awards granted
165,696
107,594
A five-day average share price prior to grant of 237 pence was used to calculate the number of awards granted.
The vesting of these awards will be based on adjusted EPS performance measured in the final year of a three-year performance period commencing
on 1 October 2020. The proportion of the awards vesting will be based on the following adjusted EPS targets and will vest three years from grant:
Adjusted EPS for the final year of the performance period
13.91 pence
13.91 pence – 15.37 pence
15.37 pence
Vesting
25%
Vesting determined on a straight-line basis
100%
Payments to past Directors/payments for loss of office (audited)
No payments were made to past Directors or for loss of office.
Statement of Directors’ shareholdings and share interests (audited)
The number of shares of the Company in which current Directors had a beneficial interest and details of long-term incentive interests as at
30 September 2021 are set out in the table below:
Outstanding scheme interests 30 September 2021
Beneficially owned shares3
Unvested LTIP
interests subject
to performance
conditions
Scheme interests
not subject to
performance
measures1
Vested but
unexercised
scheme
interests2
Total shares
subject to
outstanding
scheme interests
As at
1 October
2020
As at
30 September
2021
Total of all scheme
interests and
shareholdings at
30 September
2021
299,814
194,684
105,129
39,053
26,861
2,378
265,251
180,370
116,710
604,118
3,313,798 3,175,049 3,779,167
401,915
1,530,594 1,368,348 1,770,263
224,217
678,797
589,591
813,808
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
870,492
874,839
874,839
17,348
18,784
18,794
140,344
154,691
154,691
4,848
7,021
7,021
Executive Directors
Stephen Burns3
Laurence Keen3
Melanie Dickinson
Non-Executive Directors
Peter Boddy
Nick Backhouse
Ivan Schofield3
Claire Tiney
1 Sharesave awards that have not vested, Deferred bonus shares subject to holding period.
2 LTIP awards that have vested but remain unexercised.
3 Share interests of Stephen Burns, Laurence Keen and Ivan Schofield include shares held by their spouses.
Directors’ share ownership guidelines (audited)
Shareholding requirements in operation at the Company are currently 200 per cent of base salary for the CEO and the CFO. Executive Directors are
required to build their shareholdings over a five-year period from appointment. Non-Executive Directors are not subject to a shareholding requirement.
Director
Stephen Burns
Laurence Keen
Melanie Dickinson
Shareholding
requirement
(percentage of
salary
Current
shareholding
(percentage
of salary)1
Beneficially
owned shares
held as at
30 September
2020
Shareholding
requirement met?
200
200
200
1,961% 3,175,049
1,301% 1,368,348
1,038%
589,591
Yes
Yes
Yes
1
The share price of 242.5 pence as at 30 September 2021 has been taken for the purpose of calculating the current shareholding as a percentage of salary. Unvested LTIP shares
and options do not count towards satisfaction of the shareholding guidelines.
Hollywood Bowl Group plc
Annual report and accounts 2021
81
Governance report Annual report on remuneration continued
Executive Directors’ share plan interest movements during FY2020 (audited)
The tables below set out the Executive Directors’ interests in deferred shares under the annual bonus plan, and their interests in the LTIP
scheme and the Sharesave scheme.
Awards under the Sharesave scheme are not subject to any performance conditions (other than continued employment on the vesting date).
Deferred shares are not subject to any performance conditions or continued employment. The LTIP awards are subject to performance
conditions as set out in the table on page 86.
Face values for LTIP awards are calculated by multiplying the number of shares granted during FY2021 by the average share price for the five
business days preceding the awards. Face value for the Sharesave scheme is calculated by reference to the exercise price of options granted
in 2020. Deferred shares are acquired on behalf of the Executive Directors by the Company’s Employee Benefit Trust (EBT), which is provided
with the appropriate post-tax value of the deferred element of bonus awards to effect the acquisition. Legal title to the shares is held by the
EBT for a period of two years before being transferred to the Executive Directors.
Vesting,
exercise or
release date
No. of shares/
awards held as
at 1 October
2020
Date of award
Awarded
Exercised/
vested
Lapsed
No. of shares/
awards held
as at
30 September
2021
Grant/award
price in pence
(exercise price
for Sharesave)
Face value
of awards
granted
during
FY2021
Stephen Burns
Deferred shares
04/01/2019 04/01/2021
07/01/2020 07/01/2022
17,113
18,312
LTIP
27/02/2017 27/02/2020
159,744 1
—
—
—
—
—
—
— 17,113
— 18,312
— 159,744
06/02/2018 06/02/2021
130,256 2
— 105,507
24,749 105,507
— 165,948
—
— 134,118
— 165,696
237.0 £392,700
14/02/2019 14/02/2022
165,948
06/02/2020 06/02/2023
134,118
—
—
22/07/2021 22/07/2024
— 165,696
Sharesave
01/02/2018 01/02/2021
01/02/2019 01/02/2022
05/02/2020 01/02/2023
2,621
2,378
1,250
Laurence Keen
Deferred shares
04/01/2019 04/01/2021
07/01/2020 07/01/2022
11,361
11,872
LTIP
27/02/2017 27/02/2020
108,626 1
—
—
—
—
—
—
14/02/2019 14/02/2022
107,759
06/02/2020 06/02/2023
87,090
—
—
22/07/2021 22/07/2024
— 107,594
Sharesave
01/02/2018 01/02/2021
01/02/2019 01/02/2022
05/02/2020 01/02/2023
2,621
2,378
1,250
Melanie Dickinson
LTIP
27/02/2017 27/02/2020
70,287 1
—
—
—
—
14/02/2019 14/02/2022
06/02/2020 06/02/2023
60,345
47,028
—
—
22/07/2021 22/07/2024
— 58,101
Sharesave
01/02/2018 01/02/2021
01/02/2019 01/02/2022
05/02/2020 01/02/2023
2,621
2,378
—
—
—
—
1 Vested but unexercised.
—
—
2,621
—
—
—
—
—
—
—
2,621
—
—
—
—
—
2,621
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,378
1,250
— 11,361
— 11,872
— 108,626
—
—
—
—
2,378
1,250
— 70,827
— 60,345
—
— 47,028
— 58,101
237.0 £137,700
—
—
—
—
2,378
—
—
—
—
—
—
—
06/02/2018 06/02/2021
88,574 2
— 71,744
16,830
71,744
— 107,759
—
— 87,090
— 107,594
237.0 £255,000
06/02/2018 06/02/2021
57,3132
— 46,423
10,889
46,423
2 These awards will have a two-year holding period and the release of these awards will be subject to a requirement to remain in service until 6 February 2023.
82 Hollywood Bowl Group plc
Annual report and accounts 2021
LTIP awards vest on the basis of adjusted EPS performance measured in the final year of the performance period. Vesting of the awards
shown in the table above will be based on the following adjusted EPS targets:
Award year
2020
2021
Vested level
25%
Straight line between 25% and 100%
100%
17.26 pence
13.91 pence
17.26 pence – 18.49 pence
18.49 pence
13.91 pence – 15.37 pence
15.37 pence
Chief Executive Officer historical remuneration
The table below sets out the total remuneration delivered to the Chief Executive Officer over the last five years, valued using the methodology
applied to the single total figure of remuneration. The Remuneration Committee does not believe that the remuneration paid in earlier years
as a private company bears any comparative value to that paid in its time as a public company and, therefore, the Remuneration Committee
has chosen to disclose remuneration only for the five most recent financial years:
Chief Executive Officer
Total single figure (£’000)
2021
414.8
2020
623.2
2019
1,061.1
2018
536.1
2017
514.6
Annual bonus payment level achieved (percentage of
maximum opportunity)
LTIP vesting level achieved (percentage of maximum
opportunity)
0%
0%
0%
74.3%
68.1%
100%
81%
100%
N/A
N/A
It should be noted that the Company only introduced the LTIP on admission to the London Stock Exchange in 2016.
Performance graph
The graph below shows the total shareholder return (TSR) performance of an investment of £100 in Hollywood Bowl Group plc’s shares from
its listing in September 2016 to the end of the period, compared with £100 invested in the FTSE Small Cap Index over the same period. The
FTSE Small Cap Index was chosen as a comparator because it represents a broad equity market index of which the Company is a constituent.
200
180
160
140
120
100
80
60
40
20
0
21/09/2016
30/09/2016
30/09/2017
30/09/2018
30/09/2019
30/09/2020
30/09/2021
Hollywood Bowl
FTSE Small Cap
Hollywood Bowl Group plc
Annual report and accounts 2021
83
Governance report Annual report on remuneration continued
Change in remuneration of Directors compared to Group employees
The table below sets out the percentage change in salary, taxable benefits and annual bonus set out in the single figure of remuneration
tables (on page 80) paid to each Director in respect of FY2020 and FY2021, compared to that of the average change for employees in the
Group as a whole.
Executive Directors
Stephen Burns
Laurence Keen
Non-Executive Directors
Peter Boddy
Nick Backhouse
Ivan Schofield
Claire Tiney
All Group employees1
% increase in element between FY2020 and FY2021
Salary and fees
Taxable benefits
Annual bonus
0.2
0.2
(1.6)
(1.6)
(1.6)
(1.6)
4.2
(9.1)
(2.4)
—
—
—
—
—
—
—
—
—
—
(2.5)
496.7
1 Reflects the change in average pay for all Group employees employed in both FY2019 and FY2020.
CEO pay ratio
The table below shows the ratio between the single total figure of remuneration of the CEO for FY2021 and the lower quartile, median and
upper quartile pay of UK employees.
Year ended 30 September 2021
Year ended 30 September 2020
Methodology
Option A
Option A
25th percentile
ratio
50th percentile
ratio
75th percentile
ratio
27
50
25
44
22
38
Total UK employee pay and benefits figures used to calculate the CEO pay ratio
Salary
Total employee pay and benefits
Notes
25th
percentile pay
£000
15.2
15.4
Median
pay
£000
15.9
16.4
75th
percentile pay
£000
18.1
18.9
1.
The Group has chosen the Option A methodology to prepare the CEO pay ratio calculation as this is the most statistically robust method and is in line with the general preference
of institutional investors.
2. As ratios could be unduly impacted by joiners and leavers who may not participate in all remuneration arrangements in the year of joining and leaving, the Committee has
excluded any employee not employed throughout the financial year.
3.
Employee pay data is based on full-time equivalent (FTE) pay for UK employees as at 30 September 2021. For each employee, total pay is calculated in line with the single figure
methodology (i.e. fixed pay accrued during the financial year and the value of performance-based incentive awards vesting in relation to the performance year). Leavers and
joiners are excluded. Employees on maternity or other extended leave are included pro-rata for their FTE salary, benefits and short-term incentives. No other calculation
adjustments or assumptions have been made.
4. CEO pay is per the single total figure of remuneration for 2021, as set out in the table on page 80.
Supporting information for the CEO pay ratio
The calculations used to determine these figures are reflective of the Group’s pay proposition across the workforce as all pay elements have
been included to ensure equal comparisons.
84 Hollywood Bowl Group plc
Annual report and accounts 2021
Relative importance of the spend on pay
The table below sets out the relative importance of the spend on pay in FY2021 and FY2020 compared with other disbursements. All figures
provided are taken from the relevant Company accounts.
Profit distributed by way of dividend
Overall spend on pay including Executive Directors
Disbursements
from profit in
FY2021 £m
Disbursements
from profit in
FY2020 £m
—
17.9
—
18.9
Percentage
change
—
(5.7)
Shareholder voting at General Meetings
The following table shows the results of the advisory vote on the Directors’ Remuneration Report at our AGM held on 29 January 2021:
For (including discretionary)
Against
Votes withheld
Notes
Approval of the Directors’ Remuneration Report
(2021 AGM)
Approval of the Directors’ Remuneration Policy
(2020 AGM)
Total number of votes
% of votes cast
Total number of votes
% of votes cast
66,867,375
60,978,534
3,694,864
52.30
47.701
119,661,858
3,272,605
97.34
2.66
4,477
1.
Following consultation with a number of our significant shareholders we understand that the primary reason for the significant minority votes against the approval of the FY2020
Directors’ Remuneration Report was the Remuneration Committee’s decision to allow the FY2018 LTIP award to partially vest. Although the Remuneration Committee believes
that the existing remuneration structure as a whole remains appropriate, we have undertaken a review of the Policy following the AGM and consulted with major shareholders to
ensure that their views were taken into consideration.
Implementation of the Policy in FY2022
The Remuneration Committee proposes to implement the Policy for FY2022 as set out below:
Salary:
The salaries for FY2022 (effective from 1 October 2021) are set out below:
Name
Stephen Burns
Laurence Keen
Salary
2022
2021
£412,335
£392,700
£267,750
£255,000
Melanie Dickinson (appointed as an Executive Director from 21 October 2021)
£160,000
N/A
Percentage
change
5.0%
5.0%
N/A
Non-Executive Directors’ fees
The Board approved the increase of fees for the Non-Executive Directors by two per cent with effect from 1 October 2021. The Committee
approved an increase to the Chairman’s fee of two per cent, also with effect from 1 October 2021.
Chairman fee
Senior Independent Director fee
Base fee
Chair of Audit Committee fee
Chair of Remuneration Committee fee
1
Ivan Schofield’s base fee is set at £47,754.
Benefits and pension
No changes are proposed to benefits or pension.
£135,252
£5,000
£48,620 1
No additional fee
No additional fee
Hollywood Bowl Group plc
Annual report and accounts 2021
85
Governance report Annual report on remuneration continued
Annual bonus plan
The maximum bonus opportunity for the Executive Directors will remain at 100 per cent of salary. Subject to approval of the new
Remuneration Policy, annual bonus outcomes will be based on a scorecard of financial and non-financial performance targets which
are aligned to the business strategy. At least 50 per cent of the bonus will be based on financial performance.
The Remuneration Committee considers that the detailed performance targets for the FY2022 annual bonus awards are commercially
sensitive and that disclosing precise targets for the annual bonus plan in advance would not be in shareholder interests. Actual targets,
performance achieved and awards made will be disclosed in the FY2022 Annual Report so that shareholders can fully assess the basis
for any payouts under the annual bonus plan.
LTIP award
Awards will be made in FY2022 under the LTIP. The LTIP awards for the Executive Directors will be:
• CEO 100 per cent of salary;
• CFO 100 per cent of salary; and
• CPO 100 per cent of salary
These awards will vest three years after grant and will be subject to a further two-year holding period.
The following performance targets will apply to the FY2022 LTIP awards:
Description
Weighting
Threshold
Target
Max
Measure
Adjusted EPS1
Return on centre
invested capital
Emissions ratio for
Scope 1 and Scope 2
Adjusted EPS for the final year of the
performance period – FY2024
20% return on all centre invested capital
(refurbs and new centres)
Intensity ratio (IR) of under 100
70%
10%
10%
14.65p
(25% payout)
15.42p
(62.25% payout)
16.19p
(100% payout)
N/A
20% return
(100% payout)
IR under 100
(100% payout)
5%
(100% payout)
N/A
N/A
Team member development 5% of team members progressed through
10%
N/A
internal development programmes
1
Adjusted EPS is defined as stated in the Group’s accounts and is subject to such adjustments as the Board, in its discretion, determines are fair and reasonable. Vesting on a
straight-line basis between threshold and target, and target and max performance.
The Committee believes these targets are no less challenging in relative terms than the targets set for the FY2021 awards.
Composition and terms of reference of the Remuneration Committee
The Board has delegated to the Remuneration Committee, under agreed terms of reference, responsibility for the Remuneration Policy and for
determining specific remuneration packages for the Chairman, Executive Directors and such other senior employees of the Group as the Board
may determine from time to time. The terms of reference for the Remuneration Committee were reviewed, with no changes proposed, during the
year, and are available on the Company’s website, www.hollywoodbowlgroup.com, and from the Company Secretary at the registered office.
All members of the Remuneration Committee are Non-Executive Directors. The Remuneration Committee receives assistance from the
Chairman, CEO, CFO, CPO and Company Secretary, who attend meetings by invitation, except when issues relating to their own
remuneration are being discussed. The Remuneration Committee met four times during the year. All members attended each meeting.
Advisers to the Remuneration Committee
During the financial year, the Committee received advice from PwC who were retained as an external independent advisers to the
Committee. PwC advised the Company on all aspects of the Remuneration Policy for the Executive Directors and members of the Executive
team, including the grant of the LTIP award.
The Remuneration Committee is satisfied that the advice received was objective and independent. PwC is a member of the Remuneration
Consultants Group and the voluntary code of conduct of that body is designed to ensure objective and independent advice is given to
remuneration committees.
PwC received fees of £39,600 for its advice during the year to 30 September 2021.
On behalf of the Board
Claire Tiney
Chair of the Remuneration Committee
15 December 2021
86 Hollywood Bowl Group plc
Annual report and accounts 2021
Directors’ report
The Directors present their report for the year ended 30 September 2021. Additional information which is incorporated by reference into this
Directors’ Report, including information required in accordance with the Companies Act 2006 and the Listing Rule 9.8.4R of the UK Financial
Conduct Authority’s Listing Rules, can be located as follows:
Disclosure
Future business developments
Greenhouse gas emissions
Location
Strategic Report – pages 2 to 35
Sustainability – pages 42 and 43
People, culture and employee engagement
Sustainability – pages 40 and 41
Financial risk management objectives and policies
(including hedging policy and use of financial instruments) Note 30 to the Financial Statements – pages 126 and 127
Exposure to price risk, credit risk, liquidity risk and cash
flow risk
Details can be found on pages 44 to 49 of the Strategic Report and note 30
to the Financial Statements
Details of long-term incentive schemes
Annual report on remuneration – pages 80 to 86
Directors’ responsibilities statement
Page 90
Directors’ interests
s172 Statement
Details can be found on pages 81 and 82 of the Annual report on remuneration
Details can be found on pages 22 to 25 of the Strategic Report
Stakeholder engagement in key decisions
Details can be found on pages 22 to 25
Directors
The Directors of the Company who held office during the year are:
Peter Boddy (Chairman)
Stephen Burns (Chief Executive Officer)
Laurence Keen (Chief Financial Officer)
Nick Backhouse (Senior Independent Director)
Claire Tiney (Non-Executive Director)
Ivan Schofield (Non-Executive Director)
The roles and biographies of the Directors in office as at the date of this report are set out on pages 52 and 53. There have been no changes
to the Directors during the year and up to the date of this report. The appointment and replacement of Directors is governed by the
Company’s Articles of Association (as detailed below), the UK Corporate Governance Code and the Companies Act 2006.
Articles of association
The rules governing the appointment and replacement of Directors are set out in the Company’s Articles of Association. The Articles of
Association may be amended by a special resolution of the Company’s shareholders. A copy of the Articles of Association can be found on
the Company’s website: www.hollywoodbowlgroup.com/investors/corporate-governance.
Results and Dividend
The results for the year are set out in the consolidated income statement on page 99.
The Directors are not recommending the payment of a final dividend for the year ended 30 September 2021.
Share Capital
Details of the Company’s share capital, including changes during the year, are set out in note 23 to the Financial Statements. As at 30 September 2021,
the Company’s share capital consisted of 170,631,183 Ordinary shares of one pence each.
Ordinary shareholders are entitled to receive notice of, and to attend and speak at, any general meeting of the Company. On a show of hands,
every shareholder present in person or by proxy (or being a corporation represented by a duly authorised representative) shall have one vote,
and on a poll every shareholder who is present in person or by proxy shall have one vote for every share of which he or she is the holder.
The Notice of Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies.
Other than the general provisions of the Articles of Association (and prevailing legislation), there are no specific restrictions on the size of a
holding or on the transfer of the Ordinary shares.
The Directors are not aware of any agreements between holders of the Company’s shares that may result in the restriction of the transfer of
securities or of voting rights. No shareholder holds securities carrying any special rights or control over the Company’s share capital. Shares
held by the Company’s Employee Benefit Trust rank pari passu with the shares in issue and have no special rights, but voting rights and rights
of acceptance of any offer relating to the shares rest with the plan’s Trustees and are not exercisable by employees.
Hollywood Bowl Group plc
Annual report and accounts 2021
87
Governance report Directors’ report continued
Authority for the company to purchase its own shares
Subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance with the Companies Act 2006.
Any shares which have been bought back may be held as treasury shares or cancelled immediately upon completion of the purchase.
At the Company’s AGM held on 29 January 2021, the Company was generally and unconditionally authorised by its shareholders to make
market purchases (within the meaning of section 693 of the Companies Act 2006) of up to a maximum of 15,750,000 of its Ordinary shares.
The Company has not repurchased any of its Ordinary shares under this authority, which is due to expire at the AGM to be held on 28 January 2022,
and accordingly has an unexpired authority to purchase up to 15,750,000 Ordinary shares with a nominal value of £15,750.00.
Directors’ interests
The number of Ordinary shares of the Company in which the Directors were beneficially interested as at 30 September 2021 are set out in
the Annual Report on Remuneration on page 81.
Directors’ indemnities
The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors and officers of the
Company and the Group in respect of liabilities they may incur in the discharge of their duties or in the exercise of their powers.
Directors’ and Officers’ Liability Insurance
Directors’ and officers’ liability insurance cover is maintained by the Company and is in place in respect of all the Company’s Directors at the
date of this report. The Company reviews its level of cover on an annual basis.
Compensation for Loss of Office
The Company does not have any agreements with any Executive Director or employee that would provide compensation for loss of office or
employment resulting from a takeover except that provisions of the Company share schemes may cause options and awards outstanding
under such schemes to vest on a takeover. Further information is provided in the Directors’ Remuneration Policy set out on page 78.
Significant Interests
The table below shows the interests in shares (whether directly or indirectly held) notified to the Company in accordance with the Disclosure
Guidance and Transparency Rules as at 30 September 2021 and 14 December 2021 (being the latest practicable date prior to publication of
the Annual Report):
Name of shareholder
Aggregate of abrdn plc affiliated investment management
entities with delegated voting rights on behalf of multiple
managed portfolios
Ameriprise Financial, Inc. and its group (Columbia
Threadneedle)
AXA Investment Managers
Invesco Ltd
At 30 September 2021
At 14 December 2021
Number of Ordinary
shares of 1 pence
each held
Percentage of
total voting rights held
Number of Ordinary
shares of 1 pence
each held
Percentage of
total voting rights held
20,318,505
11.90%
21,273,387
12.90%
8,253,053
7,783,664
7,504,478
4.83%
4.56%
4.40%
8,413,257
7,783,664
7,504,478
4.93%
4.56%
4.40%
Employee involvement and policy regarding disabled persons
The Group actively encourages employee involvement and consultation and places emphasis on keeping its employees informed of the
Group’s activities and financial performance by such means as employee briefings and publication (via the Group’s intranet) to all staff of
relevant information and corporate announcements. The Group also publishes a weekly staff bulletin. The closure of our centres due to
national lockdowns and localised tier restrictions affected the Board’s ability to directly engage with team members in the normal way
throughout the year. However regular updates on team member engagement activity during centre closures or where restrictions were
enforced were provided to the Board by the CEO, Chief People Officer and Chief Operating Officer. These included feedback from regular
team member engagement sessions, operational training and re-induction sessions which were held for all team members to re-engage with
the teams. Further information about employees, including how they are incentivised, can be found in the Sustainability section on pages 40
and 41.
88 Hollywood Bowl Group plc
Annual report and accounts 2021
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In
the event of a member of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that
appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of a disabled member of
staff should, as far as possible, be identical to that of other employees.
Branches Outside the UK
The Company has no branches outside of the UK.
Political Donations
The Company did not make any political donations during the year.
Change Of Control – Significant Agreements
There are a number of agreements that may take effect after, or terminate upon, a change of control of the Company, such as commercial
contracts, bank loan agreements and property lease arrangements. None of these are considered to be significant in terms of their likely
impact on the business as a whole.
Audit Information
Each of the Directors at the date of the approval of this report confirms that:
• so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
• the Director has taken all the reasonable steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant
audit information and to establish that the Company’s auditors are aware of the information.
The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
Auditors
KPMG has indicated its willingness to continue in office and a resolution seeking to re-appoint KPMG will be proposed at the forthcoming AGM.
Annual General Meeting
The 2022 AGM of the Company will be held on 28 January 2022 at 9.30am. The notice convening the meeting, together with details of the
business to be considered and explanatory notes for each resolution, will be published separately and will be available on the Company’s
website and distributed to shareholders who have elected to receive hard copies of shareholder information.
The Strategic Report on pages 2 to 49, the Corporate governance report on pages 54 to 58 and this Directors’ Report have been drawn up
and presented in accordance with, and in reliance upon, applicable English company law and any liability of the Directors in connection with
these reports shall be subject to the limitations and restrictions provided by such law.
By order of the Board
Laurence Keen
Chief Financial Officer
15 December 2021
Hollywood Bowl Group plc
Annual report and accounts 2021
89
Governance report Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law
they are required to prepare the Group financial statements in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and applicable law and have elected to prepare the parent Company financial statements in
accordance with UK Accounting Standards, including FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland.
In addition the Group financial statements are required under the UK Disclosure Guidance and Transparency Rules to be prepared in
accordance with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and parent Company and of the Group’s profit or loss for that period. In preparing each of the Group and parent
Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant, reliable and prudent;
• for the Group Financial Statements, state whether they have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and, as regards the Group Financial Statements, International Financial
Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applied in the European Union;
• for the Parent Company Financial Statements, state whether applicable UK accounting standards have been followed, subject to any
material departures disclosed and explained in the Parent Company Financial Statements;
• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations,
or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s
transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and
have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’
Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the directors in respect of the annual financial report
We confirm that to the best of our knowledge:
• the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
• the Strategic Report includes a fair review of the development and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and performance, business model and strategy.
By order of the Board
Stephen Burns
Chief Executive Officer
15 December 2021
Laurence Keen
Chief Financial Officer
15 December 2021
90 Hollywood Bowl Group plc
Annual report and accounts 2021
Independent auditor’s report
To the members of Hollywood Bowl Group plc
1. Our opinion is unmodified
We have audited the financial statements of Hollywood Bowl Group plc
(“the Company”) for the year ended 30 September 2021 which
comprise the Consolidated Income Statement and Statement of
Comprehensive Income, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity, Consolidated
Statement of Cash Flows, Company Statement of Financial Position,
Company Statement of Changes in Equity, Company Statement of
Cash Flows, and the related notes, including the accounting policies
in note 2.
In our opinion:
• the financial statements give a true and fair view of the state of the
Group’s and of the parent Company’s affairs as at 30 September
2021 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
Overview
Materiality:
Group financial statements
as a whole
Coverage
Key audit matters
Recurring risks
• the parent Company financial statements have been properly
◄◄
£0.635m (2020: £0.800m)
4.3% of 5 year average of
Group profit before tax
(2020: 4.3% of 4 year average of
Group profit before tax)
100% (2020: 100%)
of Group profit before tax
vs 2020
Valuation of property, plant
and equipment and right of
use assets
Recoverability of parent
company investment in
subsidiaries/amounts due
from group entities
prepared in accordance with UK accounting standards, including
FRS 102, the Financial Reporting Standard applicable in the UK
and Republic of Ireland; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006 and, as
regards the Group financial statements, Article 4 of the IAS
Regulation to the extent applicable.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
are described below. We believe that the audit evidence we have
obtained is a sufficient and appropriate basis for our opinion. Our
audit opinion is consistent with our report to the audit committee.
We were first appointed as auditor by the directors on 2 June 2016.
The period of total uninterrupted engagement is for the six financial
years ended 30 September 2021. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No non-audit
services prohibited by that standard were provided.
2. Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the
efforts of the engagement team. We summarise below the key audit
matters, in decreasing order of audit significance, in arriving at our
audit opinion above, together with our key audit procedures to
address those matters and, as required for public interest entities,
our results from those procedures. These matters were addressed,
and our results are based on procedures undertaken, in the context
of, and solely for the purpose of, our audit of the financial statements
as a whole, and in forming our opinion thereon, and consequently are
incidental to that opinion, and we do not provide a separate opinion
on these matters.
Hollywood Bowl Group plc
Annual report and accounts 2021
91
Financial statements Independent auditor’s report continued
To the members of Hollywood Bowl Group plc
2. Key audit matters: our assessment of risks of material misstatement continued
The risk
Our response
Valuation of property, plant and
equipment and right of use assets
£182 million (2020: £183 million).
Impairment charge: £0.3m for property,
plant and equipment (2020: £nil) and
£0.6m for right of use assets (2020: nil).
Refer to page 65 (Report of the Audit
Committee), page 108 (accounting
policy) and pages 116 and 118 (financial
disclosures).
Forecast based valuation:
The Group has significant property, plant
and equipment (PPE), and right-of-use assets
held on its consolidated balance sheet.
The estimated recoverable amount is
subjective due to the inherent uncertainty
involved in forecasting and discounting future
cash flows. The key assumptions used in the
value in use (“VIU”) calculations for estimating
the recoverable amount are expected revenues
and costs in the short-term cash flow forecasts,
the long-term growth rate and the discount rate.
Despite recent actual results, since the easing
of restrictions and re-opening of centres to
near full capacity, exceeding budget, there is
still uncertainty regarding any future lockdowns
that may be imposed, as well as uncertainty
about economic recovery and the impact
these factors will have on trading.
The effect of these matters is that, as part of
our risk assessment for audit planning purposes,
we determined that the VIU had a high degree
of estimation uncertainty, with a potential range
of reasonable outcomes greater than our
materiality for the financial statements as
a whole.
We performed the detailed tests below rather
than seek to rely on any of the group’s controls
because our knowledge of the design of these
controls indicated that we would not be able to
obtain the required evidence to support reliance
on controls. Our procedures included:
• Assessing principles: We evaluated whether
the inputs used in the Group’s assessment of
impairment indicators were suitable, through
discussions with management, our own
knowledge of the business and market,
inspection of Board minutes and other
management information.
• Re-performance: We re-performed the
calculations that management performed for
the initial trigger test in determining the VIU of
each cash generating unit and compared data
used in the model against source information,
when applicable.
• Our sector experience: For the centres
where indications of impairment existed,
we evaluated the assumptions used in the
forecasts and plans by the management,
in particular those relating to revenue and
EBITDA growth for the centres. We also
challenged management as to the achievability
of their forecasts and business plan, taking
into account the historical accuracy of
previous forecasts, wider market factors
(such as market expectation of the Group’s
performance) and other specific evidence
to support the assumptions.
• Benchmarking assumptions: We compared
management’s assumptions to externally
derived data in relation to key inputs such
as projected economic growth, cost inflation
and discount rates.
• Sensitivity analysis: We performed
sensitivity analysis to stress test the
assumptions noted above.
• Assessing disclosures: We also assessed
whether the Group’s disclosures about the
sensitivity of the outcome of the impairment
assessment to changes in key assumptions
reflected the risks inherent in the carrying
amount of PPE and right-of-use assets
in its cash generating units.
Our results
We found the resulting estimate of the
recoverable amount of PPE and right-of-use
assets in each cash generating unit to be
acceptable (2020: acceptable).
92 Hollywood Bowl Group plc
Annual report and accounts 2021
2. Key audit matters: our assessment of risks of material misstatement continued
The risk
Our response
Recoverability of parent company’s
investment in subsidiaries /amounts
due from group entities
£124 million (2020: £124 million).
Refer to page 130 (accounting policy)
and pages 132 and 133 (financial
disclosures).
Low Risk – High value:
The carrying amount of the parent company
investments in subsidiaries and amounts due
from group entities represent 91% (2020: 93%)
of the company’s total assets. Their recoverability
is not at a high risk of significant misstatement
or subject to significant judgement. However
due to their materiality in the context of the
parent company financial statements, this is
considered to be the area that had the
greatest effect on our overall parent
company audit.
We performed the detailed tests below rather
than seek to rely on any of the group’s controls
because our knowledge of the design of these
controls indicated that we would not be able to
obtain the required evidence to support reliance
on controls. Our procedures included:
• Historical comparisons: We assessed the
reasonableness of budgets by considering the
historical accuracy of the previous forecasts;
• Benchmarking assumptions: We compared
the assumptions to externally derived and
historical data, as well as our own assessments
in relation to key inputs, in particular the
discount and growth rates;
• Sensitivity analysis: We performed
breakeven analysis of the key assumptions
noted above to assess whether a reasonably
possible change in these assumptions could
trigger an impairment charge; and
• Comparing valuations: We compared the
sum of the discounted cash flows to the Group
market capitalisation to assess the
reasonableness of those cash flows.
Our results
We found the Group’s assessment of the
recoverability of the parent company’s
investment in subsidiaries and amounts due
from group entities to be acceptable
(2020: acceptable).
We continue to perform procedures over Going Concern. However, taking into consideration the cash position of the group as a result of
the equity share issue and the available undrawn facility, we have not assessed this as one of the most significant risks in our current year
audit and, therefore, it is no longer dealt with in the key audit matter section of our audit report, but is addressed in section 4 on page 95.
In addition, the application of IFRS 16 lease accounting identified previously was specific to the year of transition. Upon transition to IFRS 16
in 2020, there was a risk that existing leases were not completely identified, transition date recognition and measurement adjustments were
not accurately recorded and that transition disclosures were incomplete, inaccurate or not fairly presented, due to it being the first year of
application and the magnitude of the balance. We continue to perform procedures over new leases entered during the year, along with any
lease modifications, but we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not
separately identified in our report this year.
Hollywood Bowl Group plc
Annual report and accounts 2021
93
Financial statements Independent auditor’s report continued
To the members of Hollywood Bowl Group plc
3. Our application of materiality and an overview of the
scope of our audit
Materiality for the Group financial statements as a whole was set
at £0.635 million determined with reference to a benchmark
of Group profit before tax by averaging over the last five years
(2020: £0.800 million determined with reference to benchmark
of Group profit before tax by averaging over the last four years),
of which it represents 4.3% (2020: 4.3% of Group profit before
tax averaged over the last four years). This is due to continued
fluctuations in the business cycle arising as a result of the impact
of Coronavirus in the current year and prior year.
Materiality for the parent Company financial statements as a whole
was set at £0.550 million (2020: £0.740 million), determined with
reference to a benchmark of company total assets (2020: company
total assets) of which it represents 0.4% (2020: 0.5%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a lower
threshold, performance materiality, so as to reduce to an acceptable
level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial
statements as a whole.
Performance materiality was set at 75% (2020: 75%) of materiality for
the financial statements as a whole, which equates to £0.475 million
(2020: £0.600m) for the group and £0.413m (2020: £0.555m) for
the parent company. We applied this percentage in our determination
of performance materiality because we did not identify any factors
indicating an elevated level of risk.
We agreed to report to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £ 31,750
(2020: £40,000), in addition to other identified misstatements
that warranted reporting on qualitative grounds.
Of the group’s 3 reporting components we subjected 2 to full scope
audits for group purposes and 1 to specific risk-focused audit
procedures over finance expenses. The latter was not individually
financially significant enough to require a full scope audit for group
purposes, but did present specific individual risks that needed to
be addressed.
For the prior year, the Group audit team performed the audit of the
Group as if it was a single aggregated set of financial information, at
the Group’s Head office in Hemel Hempstead. Both the current year
and prior year audit was performed using the materiality level set out
on this page and covered 100% of the Group’s profit before tax, total
revenues and total assets.
Our audit of the parent Company was undertaken to the materiality
level specified above and was all performed at the company’s head
office in Hemel Hempstead.
Average profit before tax
(5 year average) £ 14.9m
(2020: Profit before tax
(4 year average) of £18.3m)
Group Materiality
£ 0.635m (2020: £0.800m)
20
Group revenue
AMPT £0.032m
Misstatements reported to the
audit committee (2020: £0.040m)
Total profits and losses
that make up group profit
before tax
95+5+M
100+
80+
M100+
100+
100+
100+
100%
(2020 100%)
100%
(2020 100%)
100%
(2020 100%)
Group total assets
Full scope for group audit purposes 2021
100
100
100
100
100
80
Specified risk-focused audit procedures 2021
Full scope for group audit purposes 2020
Specified risk-focused audit procedures 2020
Residual components
94 Hollywood Bowl Group plc
Annual report and accounts 2021
M
M
20
+
M
M
M
4. Going concern
The Directors have prepared the financial statements on the going
concern basis as they do not intend to liquidate the Group or the
Company or to cease their operations, and as they have concluded
that the Group’s and the Company’s financial position means that
this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability
to continue as a going concern for at least a year from the date of
approval of the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the general
economic environment to identify the inherent risks to its business
model and analysed how those risks might affect the Group’s and
Company’s financial resources or ability to continue operations
over the going concern period. The risk that we considered most
likely to adversely affect the Group’s and Company’s available
financial resources and metrics is the demand for the Group’s
services being adversely impacted by closure of the Group’s
bowling and mini golf centres as a result of further government
regulation to combat Covid-19.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the Directors’ sensitivities over the level of available
financial resources and covenant thresholds indicated by the Group’s
financial forecasts taking account of severe, but plausible adverse
effects that could arise from these risks individually and collectively.
Our procedures also included:
• Critically assessing assumptions in the downside scenarios
relevant to liquidity and covenant compliance, in particular in
relation to profitability by comparing to historical performance
prior to the impact of the Covid-19 pandemic, assessing the
financial performance of the group during the current year,
considering the potential timing of further lockdowns, and our
knowledge of the entity and the sector in which it operates.
• Assessing whether downside scenarios applied mutually
consistent assumptions in aggregate, using our assessment
of the possible range of each key assumption and our knowledge
of inter-dependencies.
We considered whether the going concern disclosure in note 2 to
the financial statements gives a full and accurate description of
the Directors’ assessment of going concern, including the identified
risks and, dependencies, and related sensitivities.
Our conclusions based on this work:
• we consider that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements
is appropriate;
• we have not identified, and concur with the directors’ assessment
that there is not, a material uncertainty related to events or
conditions that, individually or collectively, may cast significant
doubt on the Group’s or Company’s ability to continue as a going
concern for the going concern period;
• we have nothing material to add or draw attention to in relation to
the directors’ statement in note 2 to the financial statements on
the use of the going concern basis of accounting with no material
uncertainties that may cast significant doubt over the Group and
Company’s use of that basis for the going concern period, and we
found the going concern disclosure in note 2 to be acceptable; and
• the related statement under the Listing Rules set out on page 54
is materially consistent with the financial statements and our
audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the
above conclusions are not a guarantee that the Group or the
Company will continue in operation.
5. Fraud and breaches of laws and regulations – ability
to detect
Identifying and responding to risks of material misstatement
due to fraud
To identify risks of material misstatement due to fraud (“fraud risks”)
we assessed events or conditions that could indicate an incentive or
pressure to commit fraud or provide an opportunity to commit fraud.
Our risk assessment procedures included:
• Enquiring of directors, the audit committee, internal audit and
inspection of policy documentation as to the Group and the
Company’s high-level policies and procedures to prevent and
detect fraud, including the internal audit function, and the Group
and the Company’s channel for “whistleblowing”, as well as whether
they have knowledge of any actual, suspected or alleged fraud.
• Reading Board minutes.
• Considering remuneration incentive schemes and performance
targets for management including the EPS target for management
remuneration under the Long Term Investment Plan scheme.
• Using analytical procedures to identify any unusual or
unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the audit.
As required by auditing standards, and taking into account possible
pressures to meet profit targets, we perform procedures to address
the risk of management override of controls, in particular the risk that
Group and component management may be in a position to make
inappropriate accounting entries and the risk of bias in accounting
estimates and judgements such as assumptions used in impairment
testing. On this audit we do not believe there is a fraud risk related to
revenue recognition because of the limited opportunity due to the
high correlation to cash.
We also identified a fraud risk related to the valuation of property,
plant and equipment and right of use assets in response to possible
pressures to present an optimistic outlook for the Group.
We also performed procedures including:
• Identifying journal entries and other adjustments to test for all full
scope components based on risk criteria and comparing the
identified entries to supporting documentation. These included
journals posted to unusual accounts.
• Assessing significant accounting estimates for bias.
Hollywood Bowl Group plc
Annual report and accounts 2021
95
Financial statements Independent auditor’s report continued
To the members of Hollywood Bowl Group plc
5. Fraud and breaches of laws and regulations – ability
to detect continued
Identifying and responding to risks of material misstatement
due to non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably
be expected to have a material effect on the financial statements
from our general commercial and sector experience and through
discussion with the directors and other management (as required
by auditing standards), and discussed with the directors and other
management the policies and procedures regarding compliance
with laws and regulations.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the financial
statements varies considerably.
Firstly, the Group is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation (including related companies legislation), distributable
profits legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part of
our procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations
where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation. We identified
the following areas as those most likely to have such an effect: data
protection, health and safety and employment law recognising the
nature of the Group’s activities. Auditing standards limit the required
audit procedures to identify non-compliance with these laws and
regulations to enquiry of the directors and inspection of regulatory
and legal correspondence, if any. Therefore if a breach of
operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable
risk that we may not have detected some material misstatements
in the financial statements, even though we have properly planned
and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
6. We have nothing to report on the other information
in the Annual Report
The directors are responsible for the other information presented in
the Annual Report together with the financial statements. Our opinion
on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except as
explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether, based on our financial statements audit work,
the information therein is materially misstated or inconsistent with
the financial statements or our audit knowledge. Based solely on
that work we have not identified material misstatements in the
other information.
Strategic report and directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the strategic
report and the directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial statements; and
• in our opinion those reports have been prepared in accordance
with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of principal risks and longer-term viability
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ disclosures in respect
of emerging and principal risks and the viability statement, and the
financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
• the directors’ confirmation within the Viability statement on page
48 that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency and liquidity;
• the Principal Risks disclosures describing these risks and
explaining how they are being managed and mitigated; and
• the directors’ explanation in the Viability statement of how
they have assessed the prospects of the Group, over what period
they have done so and why they considered that period to be
appropriate, and their statement as to whether they have a
reasonable expectation that the Group will be able to continue
in operation and meet its liabilities as they fall due over the period
of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We are also required to review the Viability statement, set out on
page 48 under the Listing Rules. Base on the above procedures, we
have concluded that the above disclosures are materially consistent
with the financial statements and our own knowledge.
96 Hollywood Bowl Group plc
Annual report and accounts 2021
6. We have nothing to report on the other information
in the Annual Report continued
Disclosures of principal risks and longer-term viability continued
Our work is limited to assessing these matters in the context of only
the knowledge acquired during our financial statements audit. As we
cannot predict all future events or conditions and as subsequent
events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the absence of
anything to report on these statements is not a guarantee as to the
Group’s and the parent Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a
material inconsistency between the directors’ corporate governance
disclosures and the financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the financial statements and
our audit knowledge:
• the directors’ statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy;
• the section of the annual report describing the work of the
Audit Committee, including the significant issues that the audit
committee considered in relation to the financial statements,
and how these issues were addressed; and
• the section of the annual report that describes the review of
the effectiveness of the Group’s risk management and internal
control systems.
We are required to report to you if the Corporate Governance
Statement does not properly disclose a departure from the provisions
of the UK Corporate Governance Code specified by the Listing
Rules for our review. We have nothing to report in these respects.
Based solely on our work on the other information described above:
• with respect to the Corporate Governance Statement disclosures
about internal control and risk management systems in relation to
financial reporting processes and about share capital structures:
– we have not identified material misstatements therein; and
– the information therein is consistent with the financial
statements; and
• in our opinion, the Corporate Governance Statement has
been prepared in accordance with relevant rules of the
Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority.
7. We have nothing to report on the other matters
on which we are required to report by exception
Under the Companies Act 2006, we are required to report to you if,
in our opinion:
• adequate accounting records have not been kept by the parent
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the parent Company financial statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
8. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 90, the
directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error; assessing the Group
and parent Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and using
the going concern basis of accounting unless they either intend to
liquidate the Group or the parent Company or to cease operations,
or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or other irregularities (see below), or error, and
to issue our opinion in an auditor’s report. Reasonable assurance
is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud, other irregularities or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
financial statements.
A fuller description of our responsibilities is provided on the FRC’s
website at www.frc.org.uk/auditorsresponsibilities.
Hollywood Bowl Group plc
Annual report and accounts 2021
97
Financial statements Independent auditor’s report continued
To the members of Hollywood Bowl Group plc
9. The purpose of our audit work and to whom we owe
our responsibilities
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members,
as a body, for our audit work, for this report, or for the opinions
we have formed.
Stuart Burdass (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
58 Clarendon Road,
Watford,
WD17 1DE.
15 December 2021
98 Hollywood Bowl Group plc
Annual report and accounts 2021
Consolidated income statement and statement of comprehensive income
Year ending 30 September 2021
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Operating profit
Finance income
Finance expenses
Profit before tax
Tax credit
Profit for the year attributable to equity shareholders
Other comprehensive income
Total comprehensive income for the year attributable to equity shareholders
Basic earnings per share (pence)
Diluted earnings per share (pence)
The accompanying notes on pages 103 to 127 form an integral part of these Financial Statements.
30 September
2021
£’000
30 September
2020
£’000
71,878
(10,257)
61,621
2,814
(54,855)
9,580
—
(9,118)
462
1,266
1,728
—
1,728
1.05
1.04
79,473
(11,543)
67,930
—
(58,069)
9,861
78
(8,743)
1,196
189
1,385
—
1,385
0.90
0.90
Note
3
4
6
9
9
10
11
11
Hollywood Bowl Group plc
Annual report and accounts 2021
99
Financial statements 30 September
2021
£’000
30 September
2020
£’000
Note
12
13
14
22
16
17
18
19
13
21
19
13
21
20
23
24
24
24
49,036
132,342
77,948
6,290
265,616
29,942
3,330
650
1,461
35,353
48,220
135,176
78,173
5,295
266,864
20,784
1,720
285
1,340
24,129
300,969
290,993
18,142
13,811
—
31,953
565
160,129
—
3,635
164,329
196,282
104,687
1,706
39,691
(49,897)
113,187
104,687
9,940
14,404
5,205
29,549
814
159,400
23,833
3,903
187,950
217,499
73,494
1,575
10,466
(49,897)
111,350
73,494
Consolidated statement of financial position
As at 30 September 2021
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill and intangible assets
Deferred tax asset
Current assets
Cash and cash equivalents
Trade and other receivables
Corporation tax receivable
Inventories
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Non-current liabilities
Other payables
Lease liabilities
Loans and borrowings
Provisions
Total liabilities
NET ASSETS
Equity attributable to shareholders
Share capital
Share premium
Merger reserve
Retained earnings
TOTAL EQUITY
The accompanying notes on pages 103 to 127 form an integral part of these Financial Statements.
These Financial Statements were approved by the Board of Directors on 15 December 2021.
Signed on behalf of the Board by:
Laurence Keen
Chief Financial Officer
Company registration number 10229630
100 Hollywood Bowl Group plc
Annual report and accounts 2021
Consolidated statement of changes in equity
For the year ended 30 September 2021
Equity at 30 September 2019
Adjustment on initial application of IFRS 16
Taxation on IFRS 16 transition adjustment
Adjusted balance at 1 October 2019
Shares issued during the year
Dividends paid
Share-based payments (note 28)
Profit for the year
Equity at 30 September 2020
Shares issued during the year
Share-based payments (note 28)
Deferred tax on share-based payments
Profit for the year
Equity at 30 September 2021
Share
capital
£’000
1,500
—
—
1,500
75
—
—
—
1,575
131
—
—
—
1,706
Share
premium
£’000
—
—
—
—
10,466
—
—
—
10,466
29,225
—
—
—
39,691
Merger
reserve
£’000
Retained
earnings
£’000
Total
£’000
(49,897)
150,038
101,641
—
—
(49,897)
—
—
—
—
(49,897)
—
—
—
—
(31,696)
5,388
123,730
—
(14,489)
724
1,385
111,350
—
16
93
1,728
(31,696)
5,388
75,333
10,541
(14,489)
724
1,385
73,494
29,356
16
93
1,728
(49,897)
113,187
104,687
The accompanying notes on pages 103 to 127 form an integral part of these Financial Statements.
Hollywood Bowl Group plc
Annual report and accounts 2021
101
Financial statements 30 September
2021
£’000
30 September
2020
£’000
Note
462
1,196
12
13
14
12, 13
7,740
11,882
477
850
9,118
29
16
30,574
(121)
(1,446)
8,456
37,463
—
—
(1,207)
(7,952)
28,304
(9,330)
(252)
(9,582)
(29,500)
—
(9,420)
29,356
—
(9,564)
9,158
20,784
29,942
7,247
12,171
507
—
8,665
22
724
30,532
(128)
1,727
(5,868)
26,263
85
(3,117)
(943)
(7,770)
14,518
(13,492)
(223)
(13,715)
(1,500)
4,000
(3,500)
10,541
(14,489)
(4,948)
(4,145)
24,929
20,784
Consolidated statement of cash flows
For the year ended 30 September 2021
Cash flows from operating activities
Profit before tax
Adjusted by:
Depreciation of property, plant and equipment (PPE)
Depreciation of right-of-use (ROU) assets
Amortisation of intangible assets
Impairment of PPE and ROU assets
Net interest expense
Loss on disposal of property, plant and equipment and software
Share-based payments
Operating profit before working capital changes
Increase in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in payables and provisions
Cash inflow generated from operations
Interest received
Income tax paid – corporation tax
Bank interest paid
Lease interest paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Repayment of bank loan
Drawdown of borrowings
Payment of capital elements of leases
Issue of shares
Dividends paid
Net cash used in financing activities
Net change in cash and cash equivalents for the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
16
The accompanying notes on pages 103 to 127 form an integral part of these Financial Statements.
102 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements
For the year ended 30 September 2021
1. General information
Hollywood Bowl Group plc (together with its subsidiaries, ‘the Group’) is a public limited company whose shares are publicly traded on the
London Stock Exchange and is incorporated and domiciled in England and Wales. The registered office of the Parent Company is Focus 31,
West Wing, Cleveland Road, Hemel Hempstead, HP2 7BW, United Kingdom. The registered company number is 10229630. A list of the
Company’s subsidiaries is presented in note 15.
The Group’s principal activities are that of the operation of ten-pin bowling and mini-golf centres as well as the development of new centres
and other associated activities.
The Directors of the Group are responsible for the consolidated Financial Statements, which comprise the Financial Statements of the
Company and its subsidiaries as at 30 September 2021.
2. Accounting policies
The principal accounting policies applied in the consolidated Financial Statements are set out below. These accounting policies have been
applied consistently to all periods presented in these consolidated Financial Statements. The financial information presented is as at and for
the financial years ended 30 September 2021 and 30 September 2020.
Statement of compliance
The consolidated Financial Statements have been prepared in accordance with International Account Standards in conformity with the
requirements of the Companies Act 2006 and in accordance with International Financial Reporting Standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. The functional currency of each entity in the Group is Pounds Sterling.
The consolidated Financial Statements are presented in Pounds Sterling and all values are rounded to the nearest thousand, except where
otherwise indicated.
Basis of preparation
The consolidated Financial Statements have been prepared on a going concern basis under the historical cost convention.
The Company has elected to prepare its Financial Statements in accordance with FRS 102, the Financial Reporting Standard applicable in
the UK and Republic of Ireland. On publishing the Parent Company Financial Statements here together with the Group Financial Statements,
the Company has taken advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and
statement of comprehensive income and related notes that form a part of these approved Financial Statements.
Judgements made by the Directors, in the application of these accounting policies, that have significant effect on the Financial Statements
and estimates with a significant risk of material adjustment in the next year are discussed on page 111.
Basis of consolidation
The consolidated financial information incorporates the Financial Statements of the Company and all of its subsidiary undertakings.
The Financial Statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.
Acquisitions are accounted for under the acquisition method from the date control passes to the Group. On acquisition, the assets, liabilities
and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over
the fair values of the identifiable net assets acquired is recognised as goodwill.
Earnings per share
The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue
during the year.
The adjusted earnings per share figures have also been calculated based on earnings before adjusting items that are significant in nature
and/or quantum and are considered to be distortive. These have been presented to provide shareholders with an additional measure of the
Group’s year-on-year performance.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive
potential ordinary shares. The Group has one type of dilutive potential ordinary shares, being those unvested shares granted under the
Long Term Incentive Plans.
Hollywood Bowl Group plc
Annual report and accounts 2021
103
Financial statements Notes to the financial statements continued
For the year ended 30 September 2021
2. Accounting policies continued
Standards issued not yet effective
At the date of authorisation of this financial information, certain new standards, amendments and interpretations to existing standards
applicable to the Group have been published but are not yet effective, and have not been adopted early by the Group. These are listed below:
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to
specify the requirements for classifying liabilities as current or non-current.
Applicable for financial
years beginning on/after
1 October 2023
Standard/interpretation
Content
IAS 1 Classification of
liabilities as current or
non-current’
IAS 1 Presentation of
financial statements and
IFRS Practice Statement 2
making materiality
judgements-disclosure of
accounting policies
IAS 8 Definition of
accounting estimates
The amendments change the requirements in IAS 1 with regard to disclosure of
accounting policies. The amendments replace all instances of the term ‘significant
accounting policies’ with ‘material accounting policy information’.
1 October 2023
The amendments replace the definition of a change in accounting estimates with a
definition of accounting estimates. Under the new definition, accounting estimates are
“monetary amounts in financial statements that are subject to measurement uncertainty”.
1 October 2023
IAS 12 Deferred tax
related to assets and
liabilities arising from a
single transaction
The amendments introduce a further exception from the initial recognition exemption.
Under the amendments, an entity does not apply the initial recognition exemption for
transactions that give rise to equal taxable and deductible temporary differences.
Following the amendments to IAS 12, an entity is required to recognise the related
deferred tax asset and liability.
1 October 2023
Annual improvements
to IFRS Standards
2018–2020
The annual improvements include amendments to four Standards: IFRS 1 First-time
adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments,
IFRS 16 Leases, and IAS 41 Agriculture.
1 October 2022
IFRS 3 Reference to the
conceptual framework
In May 2020, the IASB issued amendments to IFRS 3 Business Combinations – Reference
to the Conceptual Framework.
1 October 2022
IAS 16 Property, plant and
equipment: proceeds
before intended use
In May 2020, the IASB issued property, plant and equipment: proceeds before intended
use, which prohibits entities deducting from the cost of an item of property, plant and
equipment any proceeds from selling items produced while bringing that asset to the
location and condition necessary for it to be capable of operating in the manner intended
by management.
1 October 2022
Interest rate benchmark
reform: Phase 2
The amendments address issues that might affect IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 as a result of the reform of an interest rate benchmark.
1 October 2021
None of the above amendments are expected to have a material impact on the Group.
Going concern
In assessing the going concern position of the Group for the Consolidated Financial Statements for the year ended 30 September 2021, the
Directors have considered the Group’s cash flow, liquidity, and business activities, as well as the ongoing uncertainty caused by the COVID-19
outbreak. The outbreak of COVID-19 and its continued impact on the economy, and specifically the hospitality sector, casts uncertainty to
the future financial performance and cash flows of the Group. The Group has taken a number of actions to improve overall liquidity to ensure
it is well placed to operate through the pandemic and to achieve its strategic goals. In March 2021, the Group raised £29.2m on the stock
market through an equity placing. In September 2021, the Group repaid and cancelled its borrowing facilities with Lloyds Bank plc and
entered into a new £25m RCF and agreed £5m accordion with Barclays Bank plc to December 2024. At 30 September 2021, the Group
had cash balances of £29.9m, no outstanding loan balances and undrawn financing facilities of £25m.
As part of the review of the potential impact of the COVID-19 outbreak on the Group’s cash flows and liquidity over the next twelve months,
a base case and a severe but plausible downside scenario were prepared. The base case forecast assumes all centres remain open and
there are no trading restrictions. In the base case forecast, there is no drawdown of the RCF, and financial covenants are passed.
104 Hollywood Bowl Group plc
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2. Accounting policies continued
Going concern continued
The most severe downside scenario was prepared using the following key assumptions:
• a national ‘winter’ lockdown in December 2021 and January 2022 resulting in the closure of all centres;
• revenue assumed at 18 percentage points down on the base case for FY2022;
• when centres are forced to close, taking advantage of a reinstated Coronavirus Job Retention Scheme and rates holiday, but no
government grant income;
• reduced maintenance and marketing spend, as well as reducing all non-essential expenditure during the closure period in line with that
experienced during previous lockdowns in FY2020 and FY2021;
• no dividend payments in FY2022;
• deferral of non-committed capital expenditure to later months in FY2022 and no change to the new centre capital expenditure
for FY2022;
• trade to return to base case forecasts from February 2022.
This severe but plausible downside scenario would still provide sufficient liquidity within its cash position, no drawdown of the RCF and
financial covenants passed.
Taking the above, and the principal risks faced by the Group, into consideration, the Directors are satisfied that the Group has adequate
resources to continue in operation for the foreseeable future, a period of at least twelve months from the date of this report. Accordingly, the
Group continues to adopt the going concern basis in preparing these financial statements.
Revenue
Revenue from customers is the total amount receivable by the Group for goods and services supplied, excluding VAT and discounts,
and excludes amounts collected on behalf of third parties. The Group’s performance obligations in respect of individual revenue streams are
outlined below.
Revenue arising from bowling and mini golf is recognised when the customer actually plays, with deposits paid in advance being held on the
balance sheet until that time and then recognised as income.
Revenue for food and drink is recognised when the product has been transferred to the buyer at the point of sale, which is generally when
payment is received.
Revenue for amusements is recognised when the customer plays the amusement machine.
Revenue from customers is disaggregated by major product and service lines, being bowling, food and drink, amusements and other.
Disaggregated revenue from contracts with customers is disclosed in note 3 on page 112.
Given the nature of the Group’s revenue streams, recognition of revenue is not considered to be a significant area of judgement.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers.
The chief operating decision-makers have been identified as the management team including the Chief Executive Officer and Chief
Financial Officer.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses.
The Board considers that the Group’s activity constitutes one operating and one reporting segment, being the provision of ten-pin bowling
and mini-golf centres entirely in the United Kingdom, as defined under IFRS 8. Management review the performance of the Group by
reference to total results against budget.
The total profit measures are operating profit and profit after tax for the period, both disclosed on the face of the consolidated income
statement and statement of comprehensive income. No differences exist between the basis of preparation of the performance measures
used by management and the figures in the Group’s financial information, as adjusted where appropriate.
Employee benefits
(i) Short-term benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated
services are rendered by employees of the Group.
(ii) Defined contribution plans
The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the
Group. The annual contributions payable are charged to the income statement. The Group also contributes to the personal pension plans of
the Directors.
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105
Financial statements 2. Accounting policies continued
Employee benefits continued
(iii) Share-based payments
The Group operates equity-settled share-based payment plans for its employees, under which the employees are granted equity
instruments of Hollywood Bowl Group plc. The fair value of the services received in exchange for the equity instrument is recognised as
an expense. The total amount expensed is determined by reference to the fair value of the instruments granted, including any market
performance conditions and excluding the impact of any service and non-performance vesting conditions.
The cost of equity-settled transactions is recognised together with a corresponding increase in equity, over the period in which
the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award.
(iv) Save-As-You-Earn plans
The Group operates two equity-settled SAYE plans. The fair value is calculated at the grant date using the Black-Scholes pricing model.
The resulting cost is charged to the Group income statement over the vesting period. The value of the charge is adjusted to reflect expected
and actual levels of vesting.
Leases
The Group as lessee
The Group assesses whether a contract is, or contains, a lease, at inception of the contract. The Group recognises a right-of-use asset and a
corresponding lease liability with respect to all lease arrangements in which it is the lessee from the date at which the leased asset becomes
available for use by the Group, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value
assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease
unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, less any lease incentives received.
Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.
Lease liabilities are measured at the present value of lease payments to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index
or a rate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because
the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to
reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term or a change in the lease payments (e.g. changes to future payments resulting from a change
in an index or rate used to determine such lease payments).
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described in the ‘impairment’ policy.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated
non-lease components as a single arrangement. The Group has not used this practical expedient. For contracts that contain a lease component
and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component
on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those leases that
have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term
leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.
Amendments to IFRS 16: COVID-19 Related Rent Concessions
On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions – amendment to IFRS 16 Leases. The amendments provide relief
to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the
COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19-related rent concession from a lessor
is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19-related
rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification.
The practical expedient was adopted by the Group and the impact on the consolidated Financial Statements is outlined in note 13.
106 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 2. Accounting policies continued
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle that obligation. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the end
of the reporting period, and are discounted to present value where the effect is material.
Dilapidation provision
A provision will be recorded, if as lessee, the Group has a commitment to make good the property at the end of the lease, which would be for
the cost of returning the leased property to its original state. Changes to the dilapidation provision are recorded in property, plant and equipment.
Property, plant and equipment
Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item,
less accumulated depreciation and impairment losses.
Depreciation is provided to write off the cost of all property, plant and equipment evenly over their expected useful lives, calculated at the
following rates:
Leasehold property
lesser of lease period and 25 years
Lanes and pins on strings
over 30–40 years
Plant and machinery and
fixtures, fittings and equipment
Pinspotters
over 3–25 years
up to 10 years
The carrying value of the property, plant and equipment is compared to the higher of value-in-use and the fair value less costs to sell. If the
carrying value exceeds the higher of the value-in-use and fair value less the costs to sell the asset, then the asset is impaired and its value
reduced by recognising an impairment provision. New centre landlord contributions are offset against leasehold property expenditure where
the related assets remain the property of the landlord. Refurbishment costs are included within plant and machinery and fixtures, fittings and
equipment and are depreciated over the relevant useful economic life.
Residual values, remaining useful economic lives and depreciation periods and methods are reviewed annually and adjusted if appropriate.
Assets under construction represents the construction of centres and are included in property, plant and equipment. No depreciation is
provided on assets under construction until the asset is available for use.
Goodwill and intangible assets
Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair
value of the assets and liabilities acquired. Positive goodwill is capitalised. Goodwill is stated at cost less any impairment losses. Impairment
tests on the carrying value of goodwill are undertaken:
• at the end of the first full financial period following acquisition and at the end of every subsequent financial period; and
• in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.
Software which is not an integral part of hardware assets is stated at historic cost, including expenditure that is directly attributable to the
acquired item, less accumulated amortisation and impairment losses.
Amortisation is provided to write off the cost of all intangible assets, except for goodwill, evenly over their expected useful lives, calculated at
the following rates:
Software
Hollywood Bowl brand
Trademark
over 3 years
over 20 years
over 20 years
The amortisation charge is recognised in administrative expenses in the income statement.
Cash and cash equivalents
Cash and cash equivalents includes cash held at centres, short-term deposits with banks and other financial institutions, and credit card
payments received within 72 hours.
Inventories
Inventories are carried at the lower of cost or net realisable value. Net realisable value is calculated based on the revenue from sale in the
normal course of business less any costs to sell. Due allowance is made for obsolete and slow-moving items.
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Financial statements
2. Accounting policies continued
Impairment
(i) Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) on financial assets measured at amortised cost. These are always
measured at an amount equal to lifetime ECL. The maximum period considered when estimating ECLs is the maximum contractual period
over which the Group is exposed to credit risk. There is limited exposure to ECLs due to the business model.
ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the
difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of
recovery. This is generally the case when the Group determines that the debtor does not have the assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject
to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
(ii) Impairment of non-financial assets
The carrying values of goodwill and intangible assets are reviewed at the end of each reporting period for impairment. Impairment is
measured by comparing the carrying values of the assets with their recoverable amounts.
The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value-in-use, which is measured by
reference to discounted future cash flows. A sensitivity analysis is also performed (see note 14). An impairment loss is recognised in the
income statement immediately.
In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a
subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the
extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss
been recognised. The reversal is recognised in the income statement immediately.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial
position differs from its tax base, except for differences arising on:
• the initial recognition of goodwill;
• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects
neither accounting nor taxable profit; and
• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the
difference will not reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which
the asset can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date
and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:
• the same taxable Group company; or
• different entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the
liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled
or recovered.
108 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 2. Accounting policies continued
Equity
The following describes the nature and purpose of each reserve within equity:
• share capital: the nominal value of equity shares;
• share premium account: proceeds received in excess of the nominal value of shares issued, net of any transaction costs;
• retained earnings: all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere; and
• merger reserve: represents the excess over nominal value of the fair value consideration for the business combination which arose during
the Company’s IPO listing. This was satisfied by the issue of shares in accordance with s612 of the Companies Act 2006.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
(i) Recognition and initial measurement
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised
when the Group becomes a party to the contractual provisions of the instrument.
On initial recognition, a financial asset is classified as measured at amortised cost, fair value through other comprehensive income (FVOCI)
or fair value through profit or loss (FVTPL). A financial liability is classified as measured at either amortised cost or FVTPL.
(ii) Classification and subsequent measurement
Financial assets
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing
financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in
the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are ‘solely payments of principal and interest’ (SPPI) on the principal
amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
All financial assets not measured at amortised cost or FVOCI are measured at FVTPL, irrespective of the business model. On initial
recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised
cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets: business model assessment
The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows.
The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.
Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in
order to collect contractual cash flows while financial assets classified and measured at FVOCI are held within a business model with the
objective of both holding to collect contractual cash flows and selling.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.
Financial assets: assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as
consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period
of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.
In assessing whether contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the
instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of
contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:
• contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable rate features;
• prepayment and extension features; and
• terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).
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Annual report and accounts 2021
109
Financial statements 2. Accounting policies continued
Financial instruments continued
(ii) Classification and subsequent measurement continued
Financial assets: subsequent measurement and gains and losses
Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend
income, are recognised in profit or loss.
Financial assets
at amortised cost
Debt instruments
at FVOCI
These assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.
The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and
impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
The Group’s financial assets at amortised cost include trade receivables.
These assets are subsequently measured at fair value. Interest income, calculated using the effective interest
method, foreign exchange revaluation and impairment losses or reversals are recognised in profit or loss and
computed in the same manner as for financial assets measured at amortised cost. The remaining fair value
changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is
recycled to profit or loss.
Financial liabilities: classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held
for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or loss. All other financial liabilities are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.
(iii) Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not
retain control of the financial asset.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which
case a new financial liability based on the modified terms is recognised at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any
non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net position presented in the statement of financial position when, and only when,
the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the
asset and settle the liability simultaneously.
Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency at the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the
reporting date.
Exchange gains and losses are included within administrative expenses in the income statement.
110 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 2. Accounting policies continued
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be
complied with. Where the income relates to a distinct identifiable expense, the income is offset against the relevant expense e.g. income
received under the Coronavirus Job Retention Scheme has been offset against staff costs in administrative expenses. Where an expense is
not distinctly identifiable or the income relates to multiple expenses, the income is recognised within other income.
Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs are recognised as other income in the consolidated income statement in the
period in which they become receivable.
Exceptional items and other adjustments
Exceptional items and other adjustments are those that in management’s judgement need to be disclosed by virtue of their size, nature
and incidence, in order to draw the attention of the reader and to show the underlying business performance of the Group more accurately.
Such items are included within the income statement caption to which they relate and are separately disclosed either in the notes to the
consolidated Financial Statements or on the face of the consolidated income statement.
Adjusted measures
The Group uses a number of non-Generally Accepted Accounting Principles (non-GAAP) financial measures in addition to those reported
in accordance with IFRS. The Directors believe that these non-GAAP measures, listed below, are important when assessing the underlying
financial and operating performance of the Group by investors and shareholders. These non-GAAP measures comprise of like-for-like revenue
growth, net debt, Group operating cash flow, Group EBITDA, Group EBITDA margin, earnings per share and diluted earnings per share.
A reconciliation between key adjusted and statutory measures is provided on pages 34 and 35 of the Financial Review which details the
impact of exceptional and other adjusted items when comparing to the non-GAAP financial measures in addition to those reported in
accordance with IFRS.
Summary of critical accounting estimates and judgements
The preparation of the consolidated Group Financial Statements requires management to make judgements, estimates and assumptions in
applying the Group’s accounting policies to determine the reported amounts of assets, liabilities, income and expenditure. Actual results may
differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis, with revisions applied prospectively.
Judgements made by the Directors in the application of these accounting policies that have a significant effect on the consolidated Group
Financial Statements are discussed below.
Critical accounting judgements
Determining the incremental borrowing rate used to measure lease liabilities
The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure
lease liabilities. Judgement is applied in determining the components of the IBR used for each lease including risk-free rates, the Group’s
credit risk and any lease specific adjustments.
IBRs depend on the term and start date of the lease. The IBR is determined based on a series of inputs including: the risk-free rate based on
government bond rates and a credit risk adjustment based on the average credit spread from commercial bank lenders.
Key sources of estimation uncertainty
The key estimates are discussed below:
Property, plant and equipment and right-of-use asset impairment reviews
Plant and equipment and right-of-use assets are reviewed for impairment when there is an indication that the assets might be impaired by
comparing the carrying value of the assets with their recoverable amounts. The recoverable amount of an asset or a CGU is typically
determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates.
The key assumptions in the value-in-use calculations include growth rates of revenue and expenses, and discount rates. The carrying value
of property, plant and equipment and right-of-use assets have been assessed to reasonable possible changes in key assumptions and these
would not lead to a material impairment.
Further information in respect of the Group’s property, plant and equipment and right-of-use assets is included in notes 12 and 13 respectively.
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Annual report and accounts 2021
111
Financial statements 3. Segmental reporting
Management consider that the Group consists of a single segment, and operates within the UK. No single customer provides more than ten
per cent of the Group’s revenue. Within this one operating segment there are multiple revenue streams which consist of the following:
Bowling
Food and drink
Amusements
Other
4. Other income
Government grant for the purpose of immediate financial support
30 September
2021
£’000
30 September
2020
£’000
34,769
17,396
18,625
1,088
71,878
38,542
21,516
18,819
596
79,473
30 September
2021
£’000
30 September
2020
£’000
2,814
—
Government grants totalling £2,814,000 (FY2020: £nil) were received as part of a government initiative to provide immediate financial support for businesses
that were forced to close as a result of trading restrictions due to the pandemic.
5. Reconciliation of operating profit to Group adjusted EBITDA
Operating profit
Depreciation of property, plant and equipment (note 12)
Depreciation of right-of-use assets (note 13)
Amortisation of intangible assets (note 14)
Impairment of property, plant and equipment (note 12)
Impairment of right-of-use assets (note 13)
Loss on disposal of property, plant and equipment, right-of-use assets and software (notes 12-14)
Group adjusted EBITDA
30 September
2021
£’000
30 September
2020
£’000
9,580
7,740
11,882
477
299
551
29
30,558
9,861
7,247
12,171
507
—
—
22
29,808
Group adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) reflects the underlying trade of the overall business.
It is calculated as operating profit plus depreciation, amortisation, impairment losses and loss on disposal of property, plant and equipment,
right-of-use assets and software. Operating profit includes government grant income of £2.8m in FY2021.
Management use Group adjusted EBITDA as a key performance measure of the business and it is considered by management to be a
measure investors look at to reflect the underlying business.
6. Profit from operations
Profit from operations includes the following:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Impairment of property, plant and equipment
Impairment of right-of-use assets
Operating leases
Loss on disposal of property, plant and equipment, right-of-use assets and software
Loss on foreign exchange
Auditor’s remuneration:
– Fees payable for audit of these Financial Statements
Fees payable for other services:
– Audit of subsidiaries
– Audit of subsidiaries relating to prior year
– Other services
112 Hollywood Bowl Group plc
Annual report and accounts 2021
30 September
2021
£’000
30 September
2020
£’000
477
7,740
11,882
299
551
43
29
16
228
47
35
11
321
507
7,247
12,171
—
—
50
22
23
155
45
20
14
234
Notes to the financial statements continuedFor the year ended 30 September 2021 7. Staff numbers and costs
The average number of employees (including Directors) during the year was as follows:
Directors
Administration
Operations
Total staff
The cost of employees (including Directors) during the year was as follows:
Wages and salaries
Social security costs
Pension costs
Share-based payments (note 28)
Total staff cost
FY2021 wages and salaries includes £8,287,000 (FY2020: £8,232,000) of CJRS government grant received.
8. Remuneration of Directors and key management personnel
A) Directors’ emoluments
The Directors’ emoluments and benefits were as follows:
Salaries and bonuses
Pension contributions
Share-based payments (note 28)
Total
30 September
2021
30 September
2020
6
58
1,723
1,787
6
65
1,970
2,041
30 September
2021
£’000
30 September
2020
£’000
15,853
1,648
336
16
17,853
16,563
1,371
297
695
18,926
30 September 1
2021
£’000
30 September 1
2020
£’000
909
32
(38)
903
912
32
472
1,416
1 This includes two (FY2020: two) Executive Directors and four (FY2020: four) Non-Executive Directors.
The aggregate of emoluments of the highest paid Director was £392,000 (FY2020: £699,000) and company pension contributions of
£20,000 (FY2020: £19,000) were made to a defined contribution scheme on their behalf.
B) Key management personnel
The Directors and the senior managers of the Group are considered to be the key management personnel of the Group.
The remuneration of all key management (including Directors) was as follows:
Salaries and bonuses
Pension contributions
Share-based payments (note 28)
Total
30 September
2021
£’000
30 September
2020
£’000
1,312
51
(9)
1,354
1,265
51
730
2,046
Hollywood Bowl Group plc
Annual report and accounts 2021
113
Financial statements 9. Finance income and expenses
Interest on bank deposits
Finance income
Interest on bank borrowings
Other interest
Finance costs on lease liabilities
Unwinding of discount on provisions
Finance expense
10. Taxation
The tax (credit)/expense is as follows:
– UK corporation tax
– Adjustment in respect of prior years
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Effect of changes in tax rates
Adjustment in respect of prior years
Total deferred tax
Total tax credit
30 September
2021
£’000
30 September
2020
£’000
—
—
1,155
3
7,952
8
9,118
78
78
904
5
7,770
64
8,743
30 September
2021
£’000
30 September
2020
£’000
(384)
20
(364)
287
(1,202)
13
(902)
(1,266)
339
(24)
315
39
(546)
3
(504)
(189)
Factors affecting current tax credit:
The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK of 19 per cent (30 September 2020:
19 per cent). The differences are explained below:
Profit excluding taxation
Tax using the UK corporation tax rate of 19% (2020: 19%)
Change in tax rate on deferred tax balances
Non-deductible expenses
Effects of other reliefs
Share-based payments
Adjustment in respect of prior years
Total tax credit included in profit or loss
30 September
2021
£’000
30 September
2020
£’000
462
88
(1,202)
22
(137)
(69)
32
(1,266)
1,196
227
(546)
58
—
93
(21)
(189)
The Group’s standard tax rate for the year ended 30 September 2021 was 19 per cent (30 September 2020: 19 per cent).
At Budget March 2021, the government confirmed that the corporation tax main rate would remain at 19 per cent and increase to 25 per cent
from 1 April 2023. As such, the rate used to calculate the deferred tax balances as at 30 September 2021 has increased from 19 per cent to a
blended rate up to 25 per cent depending on when the deferred tax balance will be released.
114 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 11. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of Hollywood Bowl Group plc by the weighted
average number of shares outstanding during the year, excluding invested shares held pursuant to Long Term Incentive Plans (note 28).
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of
all dilutive potential ordinary shares. During the years ended 30 September 2021 and 30 September 2020, the Group had potentially dilutive
ordinary shares in the form of unvested shares pursuant to Long Term Incentive Plans (note 28).
30 September
2021
30 September
2020
Basic and diluted
Profit for the year after tax (£’000)
Basic weighted average number of shares in issue for the period (number)
Adjustment for share awards
Diluted weighted average number of shares
Basic earnings per share (pence)
Diluted earnings per share (pence)
12. Property, plant and equipment
1,728
1,385
164,607,791 153,401,639
935,738
859,432
165,467,223 154,337,377
1.05
1.04
0.90
0.90
Cost
At 1 October 2019
Adjustment on initial application of IFRS 16
Additions
Disposals
At 30 September 2020
Additions
Disposals
At 30 September 2021
Accumulated depreciation
At 1 October 2019
Adjustment on initial application of IFRS 16
Depreciation charge
Disposals
At 30 September 2020
Depreciation charge
Impairment charge
Disposals
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
Long leasehold
property
£’000
Short leasehold
property
£’000
Lanes and
pinspotters
£’000
Amusement
machines
£’000
1,241
—
—
(1)
1,240
—
—
1,240
245
—
48
(1)
292
48
—
—
340
900
948
23,598
—
5,125
(71)
28,652
1,435
(424)
29,663
8,664
—
2,417
(70)
11,011
2,773
—
(38)
13,746
15,917
17,641
10,070
—
2,537
(338)
12,269
1,489
(448)
13,310
4,021
—
647
(321)
4,347
694
—
(428)
4,613
8,697
7,922
16,362
(16,362)
—
—
—
—
—
—
10,050
(10,050)
—
—
—
—
—
—
—
—
—
Plant &
machinery,
fixtures and
fittings
29,411
—
6,780
(34)
36,157
6,406
(406)
42,157
10,337
—
4,135
(24)
14,448
4,225
299
(337)
18,635
23,522
21,709
Total
£’000
80,682
(16,362)
14,442
(444)
78,318
9,330
(1,278)
86,370
33,317
(10,050)
7,247
(416)
30,098
7,740
299
(803)
37,334
49,036
48,220
Plant & machinery, fixtures and fittings includes £2,162,000 (30 September 2020: £nil) of assets in the course of construction, relating to the
development of new centres.
Hollywood Bowl Group plc
Annual report and accounts 2021
115
Financial statements 12. Property, plant and equipment continued
Impairment
Impairment testing is carried out at the CGU level on an annual basis at the balance sheet date, or more frequently if events or changes
in circumstances indicate that the carrying value may be impaired. A CGU is the smallest identifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from other assets or groups of assets. Each individual centre is considered to be
a CGU.
An initial impairment test was performed on all sixty four centres. A detailed impairment test based on a base case was then performed
on seven centres, where the excess of value-in-use over the carrying value calculation was sensitive to changes in the key assumptions.
Property, plant and equipment and right-of-use assets for seven centres have been tested for impairment by comparing the carrying value
of each CGU with its recoverable amount determined from value-in-use calculations using cash flow projections based on financial budgets
approved by the Board covering a three-year period. This base case assumes all centres remain open during FY2022, and the financial years
thereafter, and there are no further trading restrictions associated with the COVID-19 pandemic.
The key assumptions used in the value-in-use calculations were the outcome of the COVID-19 pandemic during FY2022 and the next two
financial years. Cash flows beyond this three-year period are extrapolated over the length of the property lease using the estimated growth
rates stated in the key assumptions. The other assumptions used in the value-in-use calculations were:
Discount rate (pre-tax)
Growth rate (beyond three years)
2021
12.7%
2.5%
2020
8.5%
2.0%
Discount rates reflect current market assessments of the time value of money and the risks specific to the industry. This is the benchmark
used by management to assess operating performance and to evaluate future capital investment proposals. These discount rates are
derived from the Group’s weighted average cost of capital. Changes in the discount rates over the years are calculated with reference to
latest market assumptions for the risk-free rate, equity risk premium and the cost of debt.
Detailed impairment testing resulted in the recognition of an impairment charge in the year of £299,000 against property, plant and
equipment assets and £551,000 against right-of-use assets for one centre.
Sensitivity to changes in assumptions
The estimate of the recoverable amounts for six centres affords reasonable headroom over the carrying value of the property, plant and
equipment and right-of-use asset, and an impairment charge of £850,000 for one centre under the base case. Management have sensitised
the key assumptions in the impairment tests of these seven centres under the base case.
A reduction in revenue of 18 percentage points down on the base case for FY2022 and associated cost savings from a two month ‘winter’
lockdown in December 2021 and January 2022 would not cause the carrying value to exceed its recoverable amount for these six centres.
Therefore, management believe that any reasonable possible changes in the key assumptions would not result in an impairment charge.
A further impairment of £104,000 would arise under this sensitised case in relation to one centre where we have already recognised an
impairment charge in the year.
13. Leases
Group as a lessee
The Group has lease contracts for property and amusement machines used in its operations. The Group’s obligations under its leases are
secured by the lessor’s title to the leased assets. The Group is restricted from assigning and subleasing the leased assets. There are eight
lease contracts that include variable lease payments in the form of revenue-based rent top-ups.
The Group also has certain leases of equipment with lease terms of 12 months or less and leases of office equipment with low value.
The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
116 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 13. Leases continued
Group as a lessee continued
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:
Right-of-use assets
Cost
At 1 October 2019
Lease additions
Lease surrenders
Lease modifications
At 30 September 2020
Lease additions
Lease surrenders
Lease modifications
At 30 September 2021
Accumulated depreciation
At 1 October 2019
Depreciation charge to profit or loss
Depreciation charge to PPE
Lease surrenders
At 30 September 2020
Depreciation charge
Impairment charge
Lease surrenders
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
Set out below are the carrying amounts of lease liabilities and the movements during the year:
Lease liabilities
At 1 October 2019
Lease additions
Accretion of interest
Lease modifications
Payments1
At 30 September 2020
Lease additions
Accretion of interest
Lease modifications
Payments1
At 30 September 2021
Current
Non-current
At 30 September 2021
Current
Non-current
At 30 September 2020
Property
£’000
Amusement
machines
£’000
130,227
1,762
—
7,710
139,699
2,581
—
6,442
148,722
—
9,481
261
—
9,742
9,339
551
—
19,632
6,110
1,995
(443)
—
7,662
587
(140)
—
8,109
—
2,690
—
(247)
2,443
2,543
—
(129)
4,857
Total
£’000
136,337
3,757
(443)
7,710
147,361
3,168
(140)
6,442
156,831
—
12,171
261
—
12,185
11,882
551
(129)
24,489
129,090
129,957
3,252
5,219
132,342
135,176
Property
£’000
161,161
1,762
7,609
7,710
(11,142)
167,100
2,581
7,836
6,442
(15,429)
168,530
11,644
156,886
168,530
11,438
155,662
167,100
Amusement
machines
£’000
6,221
1,995
161
(203)
(1,470)
6,704
587
116
(11)
(1,986)
5,410
2,167
3,243
5,410
2,966
3,738
6,704
Total
£’000
167,382
3,757
7,770
7,507
(12,612)
173,804
3,168
7,952
6,431
(17,415)
173,940
13,811
160,129
173,940
14,404
159,400
173,804
1
As a result of COVID-19 rent concessions, £991,000 (FY2020: £3,591,000) of property payments and £745,000 (FY2020: £1,376,000) of amusement machine payments noted
above were deferred during the year and are netted off the payments. A further £2,110,000 (FY2020: £1,400,000) of rent savings were taken to profit or loss as a credit to variable
lease payments within administrative expenses.
The maturity analysis of lease liabilities is disclosed in note 30.
Hollywood Bowl Group plc
Annual report and accounts 2021
117
Financial statements 13. Leases continued
Group as a lessee continued
The following are the amounts recognised in profit or loss:
Depreciation expense of right-of-use assets
Impairment charge of right-of-use assets
Interest expense on lease liabilities
Expense relating to leases of low-value assets (included in administrative expenses)
Variable lease payments (included in administrative expenses)
COVID-19 rent savings (included in administrative expenses)
Total amount recognised in profit or loss
2021
£’000
11,882
551
7,952
43
581
(2,110)
18,899
2020
£’000
12,171
—
7,770
50
110
(1,400)
18,701
The Group has contingent lease contracts for eight (FY2020: eight) sites. There is a revenue-based rent top-up on these sites. Variable lease
payments include revenue-based rent top-ups at six (FY2020: three) centres totalling £320,000 (FY2020: £110,000). It is anticipated that
top-ups totalling £343,000 will be payable in the year to 30 September 2022 based on current expectations.
Impairment testing is carried out as outlined in note 12. Detailed impairment testing resulted in the recognition of an impairment charge in the
year of £551,000 against right-of-use assets for one centre.
14. Goodwill and intangible assets
Cost
At 1 October 2019
Additions
At 30 September 2020
Additions
At 30 September 2021
Accumulated amortisation
At 1 October 2019
Amortisation charge
At 30 September 2020
Amortisation charge
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
Goodwill
£’000
Brand 1
£’000
Trademark 1
£’000
Software
£’000
Total
£’000
75,034
—
75,034
—
75,034
—
—
—
—
—
75,034
75,034
3,360
—
3,360
—
3,360
852
168
1,020
168
1,188
2,172
2,340
798
—
798
—
798
266
50
316
50
366
432
482
1,637
223
1,860
252
2,112
1,254
289
1,543
259
1,802
310
317
80,829
223
81,052
252
81,304
2,372
507
2,879
477
3,356
77,948
78,173
1 This relates to the Hollywood Bowl brand and trademark only.
Impairment testing is carried out at the CGU level on an annual basis. A CGU is the smallest identifiable group of assets that generates cash
inflows that are largely independent of the cash inflows from other assets or groups of assets. Each individual centre is considered to be a
CGU. However, for the purposes of testing goodwill for impairment, it is acceptable under IAS 36 to group CGUs, in order to reflect the level
at which goodwill is monitored by management. The whole Group is considered to be one CGU, for the purposes of goodwill impairment
testing, on the basis of the level at which goodwill is monitored by management and historical allocation of goodwill upon acquisition.
118 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 14. Goodwill and intangible assets continued
The recoverable amount of the CGU is determined based on a value-in-use calculation using cash flow projections based on financial
budgets approved by the Board covering a three-year period. This base case assumes all centres remain open during FY2022, and the
financial years thereafter, and there are no further trading restrictions associated with the COVID-19 pandemic.
Cash flows beyond this period are extrapolated using the estimated growth rates stated in the key assumptions. The key assumptions used
in the value-in-use calculations are:
Discount rate (pre-tax)
Growth rate (beyond three years)
2021
12.7%
2.5%
2020
8.5%
2.0%
Discount rates reflect current market assessments of the time value of money and the risks specific to the industry. This is the benchmark
used by management to assess operating performance and to evaluate future capital investment proposals. These discount rates are
derived from the Group’s weighted average cost of capital. Changes in the discount rates over the years are calculated with reference to
latest market assumptions for the risk-free rate, equity risk premium and the cost of debt.
Sensitivity to changes in assumptions
Management has sensitised the key assumptions in the impairment tests of the CGU under the base case scenario.
The key assumptions used and sensitised were forecast growth rates and the discount rates, which were selected as they are the key
variable elements of the value-in-use calculation. The combined effect of a reduction in revenue of six percentage points on the base case
for FY2022 to FY2024, an increase in the discount rate applied to the cash flows of the CGU of one per cent and a reduction of one per cent
in the growth rate (beyond three years), would reduce the headroom by £86.1m. This scenario would not cause the carrying value to exceed
its recoverable amount. Therefore, management believes that any reasonable possible change in the key assumptions would not result in an
impairment charge.
15. Investment in subsidiaries
Hollywood Bowl Group plc’s operating subsidiaries as at 30 September 2021 are as follows:
Name
Direct holdings
Kanyeco Limited1, 2
Hollywood Bowl EBT Limited1, 2
Indirect holdings
Kendallco Limited1, 2
The Original Bowling Company Limited2
Original Bowling Company (NI) Limited3
AMF Bowling (Eastleigh) Limited2
MABLE Entertainment Limited2
Milton Keynes Entertainment Limited2
Bowlplex Limited2
Bowlplex European Leisure Limited2
Wessex Support Services Limited2
Wessex Superbowl (Germany) Limited2
Bowlplex Properties Limited2
Company
number
09164276
10246573
09176418
05163827
NI679991
06998390
01094660
01807080
01250332
05539281
01513727
03253033
05506380
Principal activity
Country of incorporation
Percentage
of ordinary
shares owned
Investment holding
Dormant
England and Wales
England and Wales
Investment holding
Ten-pin bowling
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
England and Wales
England and Wales
Northern Ireland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1
These subsidiaries are controlled and consolidated by the Group and the Directors have taken the exemption from having an audit of their financial statements for the year ended
30 September 2021. This exemption is taken in accordance with Section 479A of the Companies Act 2006.
2 The registered office of these subsidiaries is Focus 31, West Wing, Cleveland Road, Hemel Hempstead, Hertfordshire, HP2 7BW.
3 The registered office of this subsidiary is Cleaver Fulton Rankin, 50 Bedford Street, Belfast, BT2 7FW, Northern Ireland.
16. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
Cash at bank and in hand
30 September
2021
£’000
30 September
2020
£’000
29,942
20,784
Hollywood Bowl Group plc
Annual report and accounts 2021
119
Financial statements 17. Trade and other receivables
Trade receivables
Other receivables
Prepayments
30 September
2021
£’000
30 September
2020
£’000
611
89
2,600
3,300
143
48
1,529
1,720
Trade receivables have an ECL against them that is immaterial. There were no overdue receivables at the end of any year.
18. Inventories
Goods for resale
Goods bought for resale recognised as a cost of sale amounted to £6,207,000 (2020: £7,632,000).
19. Trade and other payables
Current
Trade payables
Other payables
Accruals and deferred income
Taxation and social security
Total trade and other payables
Non-current
Other payables
30 September
2021
£’000
30 September
2020
£’000
1,461
1,340
30 September
2021
£’000
30 September
2020
£’000
5,121
1,131
7,421
4,469
18,142
2,909
1,251
4,229
1,551
9,940
30 September
2021
£’000
30 September
2020
£’000
565
814
Accruals and deferred income includes a staff bonus accrual of £1,405,000 (30 September 2020: £410,000). Deferred income includes
£746,000 (30 September 2020: £148,000) of customer deposits received in advance, all of which is recognised in the income statement
during the following financial year.
20. Provisions
Lease dilapidations provision
30 September
2021
£’000
30 September
2020
£’000
3,635
3,903
120 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 20. Provisions continued
The dilapidations provision relates to potential rectification costs expected should the Group vacate its retail locations. There are no onerous
leases within the estate. The movements in the dilapidations provision are summarised below:
As at 30 September 2019
Change in discount rate1
Released during the year
Unwind of discounted amount
As at 30 September 2020
Change in discount rate1
Provided during the year
Unwind of discounted amount
As at 30 September 2021
Dilapidations
£’000
3,150
714
(25)
64
3,903
(461)
185
8
3,635
1
There was an increase in the discount rate from 0.25 per cent at 30 September 2020 to 1.22 per cent at 30 September 2021 (FY2020: a reduction in the discount rate from
2.0 per cent at 30 September 2019 to 0.25 per cent at 30 September 2020), used in preparing the dilapidations provision for the year ended 30 September 2021. This resulted
in a decrease in the provision of £461,000 (FY2020: an increase of £714,000), and will unwind over the term of the property leases.
A provision is made for future expected dilapidation costs on the opening of leasehold properties not covered by the Landlord and Tenant
Act 1985 (LTA), and is expected to be utilised on lease expiry. This also includes properties covered by the LTA where we may not extend the
lease, after consideration of the long-term trading and viability of the centre. The provision in the year relates to one new centre. The provision
in FY2020 related to lease extensions at nine centres.
It is not anticipated that the provision will be utilised within the foreseeable future as there are no sites currently earmarked for closure that
have a dilapidations provision.
21. Loans and borrowings
Current
Bank loan
Borrowings (less than 1 year)
Non-current
Bank loan
Borrowings (greater than 1 year)
Total borrowings
Bank borrowings have the following maturity profile:
Due in less than 1 year
Less issue costs
Due 2 to 5 years
Less issue costs
Total borrowings
30 September
2021
£’000
30 September
2020
£’000
—
—
—
—
—
5,205
5,205
23,833
23,833
29,038
30 September
2021
£’000
30 September
2020
£’000
—
—
—
—
—
—
5,500
(295)
5,205
24,000
(167)
29,038
The bank loans were secured by a fixed and floating charge over all assets. The loans carried interest at LIBOR plus a variable margin.
Hollywood Bowl Group plc
Annual report and accounts 2021
121
Financial statements 21. Loans and borrowings continued
Loans and borrowings brought forward
Repayment during the year
Drawdown during the year
Issue costs
Amortisation of issue costs
Loans and borrowings carried forward
30 September
2021
£’000
30 September
2020
£’000
29,038
(29,500)
—
—
462
—
26,763
(1,500)
4,000
(350)
125
29,038
On 29 September 2021, the Group repaid and cancelled its borrowing facilities with Lloyds Bank plc, and on the same day entered into a new
£25m revolving credit facility (RCF) with Barclays Bank plc.
The RCF has a termination date of 31 December 2024. Interest is charged on any drawn balance based on the reference rate (SONIA), plus a
margin of 1.75 per cent.
A commitment fee equal to 35 per cent of the drawn margin is payable on the undrawn facility balance. The commitment fee rate as at
30 September 2021 was therefore 0.6125 per cent.
Issue costs of £135,000 were paid to Barclays Bank plc on commencement of the RCF. These costs are being amortised over the term of the
facility and are included within prepayments (note 17).
As at 30 September 2021, the outstanding loan balance, excluding the amortisation of issue costs, was £nil (30 September 2020: £29,500,000).
As at 30 September 2020, the Group also had an undrawn £1m revolving credit facility and undrawn £10m CLBILS facility with Lloyds Bank plc.
The terms of the Barclays Bank plc facility include the following Group financial covenants:
(i) For the 7 month period ending 31 December 2021, the ratio of total net debt to adjusted EBITDA shall not exceed 1.75:1.
(ii) For the 12 month period ending on each reference date, commencing 31 March 2022 and each quarter thereafter, the ratio of total net
debt to adjusted EBITDA shall not exceed 1.75:1.
The Group operated within the covenants during the year and the previous year.
22. Deferred tax assets and liabilities
30 September
2021
£’000
30 September
2020
£’000
7,809
(1,519)
6,290
6,115
(820)
5,295
30 September
2021
£’000
30 September
2020
£’000
5,295
915
93
—
(13)
6,290
(596)
500
—
5,388
3
5,295
Deferred tax assets and liabilities
Deferred tax assets
Deferred tax liabilities
Reconciliation of deferred tax balances
Balance at the beginning of the year
Deferred tax credit for the year – in profit or loss
Deferred tax credit for the year – in equity
IFRS 16 transition adjustment
Adjustment in respect of prior years
Balance at the end of the year
122 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 22. Deferred tax assets and liabilities continued
The components of deferred tax are:
Deferred tax assets
Fixed assets
Trading losses
Other temporary differences
Deferred tax liabilities
Property, plant and equipment
Intangible assets
30 September
2021
£’000
30 September
2020
£’000
6,706
439
664
7,809
(721)
(798)
(1,519)
5,740
—
375
6,115
(376)
(444)
(820)
Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the periods when the assets are realised or
liabilities settled, based on tax rates enacted or substantively enacted at 30 September 2021.
23. Share capital
Ordinary shares of £0.01 each
30 September 2021
30 September 2020
Shares
£’000
Shares
170,631,183
1,706 157,500,000
£’000
1,575
The share capital of the Group is represented by the share capital of the Parent Company, Hollywood Bowl Group plc.
During the year 13,043,480 ordinary shares of £0.01 each were issued at a premium of £29,206,000, which is recorded in the share premium
account. The net proceeds of the placing will be utilised to provide additional liquidity headroom during this unknown period of uncertainty
relating to COVID-19 and provide the ability to continue investment in the Group’s new centre pipeline and ongoing refurbishment programme.
In addition, 87,703 ordinary shares of £0.01 each were issued under the Group’s SAYE scheme at an exercise price of £2.06 each. The
premium is recorded in the share premium account.
The ordinary shares are entitled to dividends.
24. Reserves
Share premium
The amount subscribed for share capital in excess of nominal value.
Retained earnings
The accumulated net profits and losses of the Group.
Merger reserve
The merger reserve represents the excess over nominal value of the fair value consideration for the business combination which arose
during the Company’s IPO listing; this was satisfied by the issue of shares in accordance with Section 612 of the Companies Act 2006.
25. Lease commitments
The Group had total commitments under non-cancellable operating leases set out below:
Within 1 year
In 2 to 5 years
30 September
2021
Other
£’000
30 September
2020
Other
£’000
57
172
229
50
49
99
These operating leases are not included as IFRS 16 assets as the Group applies the low-value assets recognition exemption to leases of
office equipment.
Hollywood Bowl Group plc
Annual report and accounts 2021
123
Financial statements 26. Capital commitments
As at 30 September 2021, the Group had entered into contracts to fit out new and refurbish existing sites for £3,041,000 (2020: £229,000).
These commitments are expected to be settled in the following financial year.
27. Related party transactions
30 September 2021 and 30 September 2020
During the year, and the previous year, there were no transactions with related parties.
28. Share-based payments
Long-term employee incentive costs
The Group operates long-term incentive plans (LTIPs) for certain key management. In accordance with IFRS 2 Share-based Payment, the
values of the awards are measured at fair value at the date of grant. The exercise price of the LTIPs is equal to the market price of the
underlying shares on the date of grant. The fair value is determined based on the exercise price and number of shares granted, and is written
off on a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually vest.
A summary of the movement in the LTIPs is outlined below:
Scheme name
Year of grant
Method of
settlement
accounting
Outstanding at
1 October
2020
Granted
during
the year
Lapsed/
cancelled
during the year
Exercised
during
the year
Outstanding at
30 September
2021
Exercisable at
30 September
2021
LTIP 2017
LTIP 2018
LTIP 2019
LTIP 2020
LTIP 2021
2017
2018
2019
2020
2021
Equity
Equity
Equity
Equity
Equity
428,113
349,087
403,018
358,809
—
—
—
(66,327)
— (403,018)
—
—
452,993
—
—
—
—
—
—
—
428,113
428,113
282,760
282,760
—
358,809
452,993
—
—
—
In accordance with the LTIP schemes outlined in the Group’s Remuneration Policy, the vesting of these awards is conditional upon the
achievement of an EPS target set at the time of grant, measured at the end of a three-year period ending 30 September 2019, 30 September
2020, 30 September 2021, 30 September 2022 and 30 September 2023, and the Executive Directors’ continued employment at the date
of vesting.
The awards will vest based on the following adjusted EPS targets:
LTIP 2019
LTIP 2020
LTIP 2021
15.19
15.19–16.28
16.28
17.26
17.26–18.49
18.49
13.91
13.91–15.37
15.37
Vesting
25%
Vesting determined on a straight-line basis
100%
During the year ended 30 September 2021, 452,993 (30 September 2020: 358,809) share awards were granted under the LTIP. For all
LTIPs, the Group recognised a credit of £8,753 (30 September 2020: charge of £729,829) and related employer National Insurance credit of
£1,208 (30 September 2020: charge of £100,716).
The following assumptions were used to determine the fair value of the LTIPs granted:
Financial year LTIP granted
Share price at date of grant
Discount rate/dividend yield
2021
2.370
3%
2020
2.928
3%
2019
2.320
3%
2018
1.950
3%
The shares are dilutive for the purposes of calculating diluted earnings per share.
Save-As-You-Earn (SAYE) schemes
The Group currently operates three SAYE schemes, available to all employees of the Group. The SAYEs permit the grant to employees of
options in respect of ordinary shares linked to a bank SAYE contract for a term of three years with contributions from employees of an amount
between £5 and £500 per month. During the year, no new SAYE scheme was launched. In the prior year (SAYE 2020), 126 employees took
up a total of 117,143 options with an exercise date of 1 February 2023 and an exercise price of £2.88, being equal to the market price of the
shares on the date of grant. The options vest if the employee remains in employment by the Group on the exercise date; otherwise, the
options lapse on the date the employee leaves. Employees can opt to leave the SAYE at any time, at which point their options will lapse.
The shares are not dilutive for the purposes of calculating diluted earnings per share.
In accordance with IFRS 2 Share-based Payment, the values of the awards are measured at fair value at the date of the grant. The fair value is
expensed on a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually vest.
124 Hollywood Bowl Group plc
Annual report and accounts 2021
Notes to the financial statements continuedFor the year ended 30 September 2021 28. Share-based payments continued
Save-As-You-Earn schemes continued
The fair value at grant date is estimated using a Black-Scholes pricing model, taking into account the terms and conditions upon which the
options were granted. The contractual life of each option granted is three years. The fair value of options granted during the years ended
30 September 2021, 30 September 2020 and 30 September 2019 was estimated on the date of grant using the following assumptions:
Exercise price
Dividend yield
Expected volatility
Risk-free interest rate
Life of option
Anticipated number of options to vest
SAYE
2020
£2.88
3.0%
56.1%
0.00%
3 years
43%
SAYE
2019
£2.27
3.0%
32.1%
0.28%
3 years
43%
SAYE
2018
£2.06
3.0%
28.3%
0.77%
3 years
25%
The expected volatility is based on the annualised standard deviation of the continuously compounded rates of return on the share over a
period of time.
The assessed fair value of the options granted during the year ended 30 September 2021 was £nil (30 September 2020: £0.18).
For the year ended 30 September 2021, the Group has recognised £25,230 of share-based payment charge in the income statement
(30 September 2020: credit of £5,965).
During the year, the SAYE 2018 scheme became exercisable and 87,703 ordinary shares of £0.01 each were issued at an exercise price of
£2.06 each (see note 23).
29. Financial instruments
Fair value hierarchy
IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of the inputs used in the
value measurements:
Level 1: inputs are quoted prices in active markets.
Level 2: a valuation that uses observable inputs for the asset or liability other than quoted prices in active markets.
Level 3: a valuation using unobservable inputs (i.e. a valuation technique).
There were no transfers between levels throughout the periods under review.
Fair values
All financial assets held at the balance sheet date, which comprise trade and other receivables and cash and cash equivalents, are classified
as financial assets held at amortised cost. All financial liabilities, which comprise trade and other payables and borrowings, are classified as
financial liabilities held at amortised cost.
The following table shows the fair value of financial assets and financial liabilities within the Group at the balance sheet date. The fair value of
all financial assets and liabilities are categorised as Level 2.
Financial assets – measured at amortised cost
Cash and cash equivalents
Trade and other receivables
Financial liabilities – measured at amortised cost
Trade and other payables
Borrowings
30 September
2021
£’000
30 September
2020
£’000
29,942
700
14,238
—
20,784
191
9,203
29,500
There is no difference between the carrying value and fair value of any of the above financial assets and financial liabilities.
30. Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (fair value interest rate and price risk).
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to
minimise this risk the Group endeavours to deal only with companies which are demonstrably creditworthy. In addition, a significant proportion
of revenue results from cash transactions. The aggregate financial exposure is continuously monitored. The maximum exposure to credit risk
is the value of the outstanding amount of trade receivables. Management does not consider that there is any concentration of risk within
either trade or other receivables.
Hollywood Bowl Group plc
Annual report and accounts 2021
125
Financial statements Notes to the financial statements continued
For the year ended 30 September 2021
30. Financial risk management continued
Credit risk continued
The Group held cash and cash equivalents with banks which are rated AA- to AA+ of £27,885,000 at 30 September 2021
(30 September 2020: £19,397,000).
The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.
Trade receivables have not been impaired as any ECL is deemed to be insignificant.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing
liquidity is to ensure, as far as is possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
Cash flow and fair value interest rate risk
The Group’s borrowings are variable rate bank loans. The Directors monitor the Group’s funding requirements and external debt markets
to ensure that the Group’s borrowings are appropriate to its requirements in terms of quantum, rate and duration.
The Group currently holds cash balances to provide funding for normal trading activity. The Group also has access to both short-term
and long-term borrowings to finance individual projects. Trade and other payables are monitored as part of normal management routine.
The table below summarises the maturity profile of the Group’s financial liabilities:
2021
Trade and other payables
Lease liabilities
Borrowings
2020
Trade and other payables
Lease liabilities
Borrowings
Within 1 year
£’000
1 to 2 years
£’000
2 to 5 years
£’000
More than
5 years
£’000
Total
£’000
12,877
13,811
—
26,688
8,179
14,404
1,184
23,767
339
10,184
—
10,523
460
10,713
29,472
40,645
226
28,265
—
28,491
354
26,985
—
27,339
—
121,680
—
13,442
173,940
—
121,680
187,382
—
121,702
—
8,993
173,804
30,656
121,702
213,453
Capital risk management
The Group’s capital management objectives are:
(i) to ensure the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits
for other stakeholders; and
(ii) to provide an adequate return to shareholders by pricing products and services commensurate with the level of risk.
To meet these objectives, the Group reviews the budgets and forecasts on a regular basis to ensure there is sufficient capital to meet
the needs of the Group through to profitability and positive cash flow.
The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity. All working
capital requirements are financed from existing cash resources and borrowings.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
126 Hollywood Bowl Group plc
Annual report and accounts 2021
30. Financial risk management continued
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with
floating interest rates.
The Group manages its interest rate risk by entering into interest rate derivatives when it is considered appropriate to do so by management.
At 30 September 2021 and 30 September 2020, none of the Group’s borrowings were at fixed rates of interest.
The effect on the profit after tax of a notional one per cent movement in SONIA is as follows:
Increase in interest rate of 1%
Decrease in interest rate of 1%
31. Dividends paid and proposed
The following dividends were declared and paid by the Group:
Final dividend year ended 30 September 2019 – 5.16p per ordinary share
Special dividend year ended 30 September 2019 – 4.50p per ordinary share
2021
£’000
(225)
22
2020
£’000
(251)
163
30 September
2021
£’000
30 September
2020
£’000
—
—
—
7,739
6,750
14,489
Hollywood Bowl Group plc
Annual report and accounts 2021
127
Financial statements Company statement of financial position
As at 30 September 2021
ASSETS
Non-current assets
Investments
Trade and other receivables
Current assets
Cash and cash equivalents
Deferred tax asset
Trade and other receivables
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Total liabilities
NET ASSETS
Equity attributable to shareholders
Share capital
Share premium
Retained earnings
TOTAL EQUITY
These financial statements were approved by the Board of Directors on 15 December 2021.
The accompanying notes on pages 130 to 134 form an integral part of these financial statements.
Signed on behalf of the Board
Laurence Keen
Chief Financial Officer
Company registration number: 10229630
30 September
2021
£’000
30 September
2020
£’000
Note
5
8
6
7
8
9
10
10
50,672
72,934
50,644
72,934
123,606
123,578
10,959
514
257
11,730
10,304
173
82
10,559
135,336
134,137
24,719
24,719
110,617
1,706
39,691
69,220
110,617
52,089
52,089
82,048
1,575
10,466
70,007
82,048
128 Hollywood Bowl Group plc
Annual report and accounts 2021
Company statement of changes in equity
For the year ended 30 September 2021
Equity as at 30 September 2019
Shares issued during the year
Dividends paid
Share-based payments (note 5, 11)
Total comprehensive loss for the year
Equity as at 30 September 2020
Shares issued during the year
Share-based payments (note 5, 11)
Total comprehensive loss for the year
Equity as at 30 September 2021
Share
capital
£’000
1,500
75
—
—
—
1,575
131
—
—
1,706
Share
premium
£’000
—
10,466
—
—
—
10,466
29,225
—
—
39,691
Retained
earnings
£’000
84,702
—
(14,489)
730
(936)
70,007
—
(9)
(778)
Total
£’000
86,202
10,541
(14,489)
730
(936)
82,048
29,356
(9)
(778)
69,220
110,617
The accompanying notes on pages 130 to 134 form an integral part of these financial statements.
Company statement of cash flows
For the year ended 30 September 2021
Cash flows from operating activities
Loss before tax
Adjusted by:
Share-based payments (note 11)
Operating loss before working capital changes
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables*
Cash outflow generated from operations and net cash outflow from operating activities
Cash flows from financing activities
Issue of shares
Net cash flows used in financing activities
Net change in cash and cash equivalents for the year
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
30 September
2021
£’000
30 September
2020
£’000
(1,118)
(976)
(38)
(1,156)
(175)
(27,370)
(28,701)
29,356
29,356
655
10,304
10,959
472
(504)
3,117
(2,867)
(254)
10,541
10,541
10,287
17
10,304
*
In the year ended 30 September 2021, the decrease is driven by funds raised from the issue of shares being distributed to other Group companies in order to settle the Group’s
borrowing facilities. Dividends paid in year ended 30 September 2020 were paid by a subsidiary undertaking.
The accompanying notes on pages 130 to 134 form an integral part of these financial statements.
Hollywood Bowl Group plc
Annual report and accounts 2021
129
Financial statements Notes to the Company financial statements
1. General information
Hollywood Bowl Group plc is a public limited company which is listed on the London Stock Exchange and is domiciled and incorporated in
the United Kingdom under the Companies Act 2006. The Company was incorporated on 13 June 2016, registered number 10229630.
2. Summary of significant accounting policies
A summary of the significant accounting policies is set out below; these have been consistently applied throughout the period.
Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Financial Reporting Standard
applicable in the UK and Republic of Ireland (FRS 102) as issued in August 2014. The amendments to FRS 102 issued in July 2015 and
effective immediately have been applied. The functional and presentational currency of the Company is Pounds Sterling. The financial
statements are presented in Pounds Sterling and all values are rounded to the nearest thousand, except where otherwise indicated.
The financial statements have been prepared on a going concern basis under the historical cost convention.
The financial information presented is at and for the years ended 30 September 2021 and 30 September 2020.
As the consolidated financial statements of the Company include the equivalent disclosures, the Company has taken the exemptions under
FRS 102 available in respect of the following disclosures:
• certain disclosures required by FRS 102.26 Share-based Payment; and
• certain disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect
of financial instruments not falling within the fair value accounting rules of paragraph 36(4) of Schedule 1.
As permitted by Section 408 of the Companies Act 2006, an entity income statement and statement of comprehensive income are not
included as part of the published consolidated financial statements of Hollywood Bowl Group plc. The loss for the financial period dealt with
in the financial statements of the Parent Company is £778,000 (2020: loss £936,000).
Investments in subsidiaries
Investments in subsidiaries are held at cost, which is the fair value of the consideration paid. Investments in subsidiaries are reviewed
for impairment at the end of each reporting date with any impairment charged to the income statement.
Employee benefits
Share-based payments
The Company operates an equity-settled share-based payment plan for its Directors, under which the Directors are granted equity
instruments of Hollywood Bowl Group plc. The fair value of the services received in exchange for the equity instrument is recognised as an
expense. The total amount expensed is determined by reference to the fair value of the instruments granted:
• including any market performance conditions; and
• excluding the impact of any service and non-performance vesting conditions.
The cost of equity-settled transactions is recognised together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award.
Financial instruments
The Company has elected to apply the provisions of section 11 and section 12 of FRS 102 in full.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
130 Hollywood Bowl Group plc
Annual report and accounts 2021
2. Summary of significant accounting policies continued
Deferred taxation
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different
from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences
between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances
have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the
foreseeable future and the reporting entity is able to control the reversal of the timing difference.
Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are
disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which an asset
(other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be deducted or assessed for
tax. Goodwill is adjusted by the amount of such deferred tax.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or
substantively enacted at the balance sheet date. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against
the reversal of deferred tax liabilities or other future taxable profits.
3. Directors’ remuneration
The Company has no employees other than the Directors.
The Directors’ emoluments and benefits were as follows:
Salaries and bonuses
Pension contributions
Share-based payments (note 11)
Total
30 September
2021 1
£’000
30 September
2020 1
£’000
909
32
(38)
903
912
32
472
1,416
1 This includes two Executive Directors and four Non-Executive Directors.
The aggregate of emoluments of the highest paid Director was £392,000 (FY2020: £699,000) and company pension contributions of
£20,000 (FY2020: £19,000) were made to a defined contribution scheme on their behalf.
4. Taxation
The tax credit is as follows:
– UK corporation tax
Total current tax
Deferred tax:
Origination and reversal of temporary differences
Effect of changes in tax rates
Total deferred tax
Total tax credit
30 September
2021
£’000
30 September
2020
£’000
—
—
259
82
341
341
—
—
23
16
39
39
Hollywood Bowl Group plc
Annual report and accounts 2021
131
Financial statements Notes to the Company financial statements continued
4. Taxation continued
Factors affecting current credit
The tax assessed on the loss for the period is different to the standard rate of corporation tax in the UK of 19 per cent (30 September 2020:
19 per cent). The differences are explained below:
Loss excluding taxation
Tax using the UK corporation tax rate of 19% (2020: 19%)
Change in tax rate on deferred tax balances
Share-based payments
Group relief
Total tax credit included in profit or loss
30 September
2021
£’000
30 September
2020
£’000
(1,118)
(212)
(82)
(47)
—
(341)
(976)
(185)
(16)
56
106
(39)
The Group’s standard tax rate for the year ended 30 September 2021 was 19 per cent (30 September 2020: 19 per cent).
In the March 2021 Budget, the government confirmed that the corporation tax main rate would remain at 19 per cent and increase to 25 per
cent from 1 April 2023. As such, the rate used to calculate the deferred tax balances as at 30 September 2021 has increased from 19 per
cent to a blended rate up to 25 per cent depending on when the deferred tax balance will be released.
5. Investments
Investments in subsidiary undertakings are as follows:
At the beginning of the year
Additions
At the end of the year
30 September
2021
£’000
30 September
2020
£’000
50,644
28
50,672
50,386
258
50,644
Details of the investments in subsidiary undertakings are outlined in note 14 to the consolidated financial statements.
6. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:
30 September
2021
£’000
30 September
2020
£’000
10,959
10,304
30 September
2021
£’000
30 September
2020
£’000
514
514
173
173
30 September
2021
£’000
30 September
2020
£’000
173
341
514
134
39
173
Cash and cash equivalents
7. Deferred tax asset
Deferred tax asset
Deferred taxation asset
Reconciliation of deferred tax balances
Balance at beginning of year
Deferred tax credit for the year
Balance at end of year
132 Hollywood Bowl Group plc
Annual report and accounts 2021
7. Deferred tax asset continued
The components of deferred tax are:
Deferred tax asset
Temporary differences
Trading losses
30 September
2021
£’000
30 September
2020
£’000
223
291
514
173
—
173
The Group will shortly be implementing a policy in relation to the payment for tax losses surrendered between Group companies under the
group relief provisions. The Company has therefore recognised a deferred tax asset in respect of its accumulated tax losses on the basis it
expects to receive economic benefits in the form of payments for amounts surrendered as group relief in future accounting periods.
8. Trade and other receivables
Current
Other receivables
Prepayments
Non-current
Amounts owed by Group companies
Amounts owed by and to Group companies are non-interest bearing and are repayable on demand.
30 September
2021
£’000
30 September
2020
£’000
88
169
257
82
—
82
30 September
2021
£’000
30 September
2020
£’000
72,934
72,934
30 September
2021
£’000
30 September
2020
£’000
23,873
488
358
24,719
51,447
289
353
52,089
30 September 2021
30 September 2020
Shares
£’000
Shares
£’000
170,631,183
1,706 157,500,000
1,575
During the year 13,043,480 ordinary shares of £0.01 each were issued at a premium of £29,206,000, which is recorded in the share premium
account. The net proceeds of the placing will be utilised to provide additional liquidity headroom during this unknown period of uncertainty
relating to COVID-19 and provide the ability to continue investment in the Group’s new centre pipeline and ongoing refurbishment programme.
In addition, 87,703 ordinary shares of £0.01 each were issued under the Group’s SAYE scheme at an exercise price of £2.06 each.
The premium is recorded in the share premium account.
Hollywood Bowl Group plc
Annual report and accounts 2021
133
9. Trade and other payables
Amounts owed to Group companies
Trade and other payables
Accruals and deferred income
10. Share capital
Allotted, called up and fully paid
Ordinary shares of £0.01 each
Financial statements Notes to the Company financial statements continued
11. Share-based payments
Long-term employee incentive costs
The Company operates LTIPs for the Directors. The value of the awards is measured at fair value at the date of the grant. The fair value is
written off on a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually vest.
A summary of the movement in the LTIPs is outlined below:
Scheme name
Year of grant
Method of
settlement
accounting
Outstanding at
1 October
2020
Granted
during
the year
Lapsed/cancelled
during the year
Exercised
during the year
LTIP 2017
LTIP 2018
LTIP 2019
LTIP 2020
LTIP 2021
2017
2018
2019
2020
2021
Equity
Equity
Equity
Equity
Equity
268,370
218,830
273,707
221,208
—
—
—
—
(41,578)
— (273,707)
—
—
—
273,290
—
—
—
—
—
Outstanding at
30 September
2021
Exercisable at
30 September
2021
268,370
177,252
—
221,208
273,290
268,370
177,252
—
—
—
In accordance with the LTIP schemes outlined in the Group’s Remuneration Policy, the vesting of these awards is conditional upon the
achievement of a Group EPS target set at the time of grant, measured at the end of a three-year period ending 30 September 2019,
30 September 2020, 30 September 2021, 30 September 2022 and 30 September 2023 and the Executive Directors’ continued
employment at the date of vesting.
The awards will vest based on the following adjusted EPS targets:
LTIP 2019
LTIP 2020
LTIP 2021
15.19
15.19–16.28
16.28
13.91
17.26
17.26–18.49 13.91–15.37
18.49
15.37
Vesting
25%
Vesting determined on a straight-line basis
100%
During the year ended 30 September 2021, 273,290 (30 September 2020: 221,208) share awards were granted under the LTIPs. For all
LTIPs, the Company recognised a credit of £37,588 (30 September 2020: charge of £472,366) and related employer National Insurance
credit of £5,187 (30 September 2020: charge of £65,186).
The following assumptions were used to determine the fair value of the LTIPs granted:
Financial year LTIP granted
Share price at date of grant
Discount rate/dividend yield
2021
2.370
3%
2020
2.928
3%
2019
2.320
3%
2018
1.950
3%
12. Loans and borrowings
On 29 September 2021, the Group repaid and cancelled its borrowing facilities with Lloyds Bank plc, and on the same day entered into a
new £25m revolving credit facility (RCF) with Barclays Bank plc. The outstanding balance at 30 September 2021 was £nil.
The RCF has a termination date of 31 December 2024. Interest is charged on any drawn balance based on the reference rate (SONIA),
plus a margin of 1.75 per cent.
A commitment fee equal to 35 per cent of the drawn margin is payable on the undrawn facility balance. The commitment fee rate as at
30 September 2021 was therefore 0.6125 per cent.
Issue costs of £135,000 were paid to Barclays Bank plc on commencement of the RCF. These costs are being amortised over the term of
the facility and are included within prepayments (note 8).
The terms of the Barclays Bank plc facility include the following Group financial covenants:
(i) For the 7 month period ending 31 December 2021, the ratio of total net debt to adjusted EBITDA shall not exceed 1.75:1.
(ii) For the 12 month period ending on each reference date, commencing 31 March 2022 and each quarter thereafter, the ratio of total net
debt to adjusted EBITDA shall not exceed 1.75:1.
The Group operated within the covenants during the year and the previous year.
13. Guarantee
The Company has given a guarantee over certain subsidiaries under Section 479A of the Companies Act 2006 such that the financial
statements of these subsidiaries for the year ended 30 September 2021 will be exempt from audit (note 14 of the Group financial statements).
134 Hollywood Bowl Group plc
Annual report and accounts 2021
Company information
Hollywood Bowl Group plc
Focus 31, West Wing
Cleveland Road
Hemel Hempstead Industrial Estate
Hemel Hempstead
Hertfordshire
HP2 7BW
Company number
10229630
Company Secretary
Prism Cosec
Elder House
St George’s Business Park
207 Brooklands Road
Weybridge
KT13 0TS
E: hollywoodbowl@prismcosec.com
Investor relations
Tulchan Communications LLP
85 Fleet Street
London
EC4Y 1AE
T: 020 7353 4200
E: hollywoodbowl@tulchangroup.com
Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
T: 0871 664 0300
E: enquiries@linkgroup.co.uk
Auditor
KPMG LLP
58 Clarendon Road
Watford
WD17 1DE
Financial adviser and broker
Investec
30 Gresham Street
London
EC2V 7QN
hollywoodbowlgroup.com
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HBG
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