TIDMTEG
RNS Number : 7939Z
Ten Entertainment Group PLC
23 September 2020
23 September 2020
Ten Entertainment Group plc
Half-Year Results 26 weeks ended 28 June 2020
"In excellent shape with a proven strategy to maximise our
future opportunity."
Ten Entertainment Group plc ("Ten Entertainment" or "The
Group"), a leading UK operator of 46 family entertainment centres,
today announces its half-year results for the 26 weeks to 28 June
2020. The results reflect a period of very significant disruption
as a result of the enforced Government closure of all leisure and
hospitality venues ("Lockdown") from 20 March 2020 as a result of
the Covid-19 pandemic.
26 weeks 26 weeks
to 28 June to 30 June
2020 2019
(H1 20) (H1 19)
Total sales GBP22.5m GBP41.4m
Like-for-like sales growth first
11 weeks 9.6% 5.1%
Group adjusted EBITDA(1) (GBP1.5m) GBP11.2m
Group adjusted profit before (GBP5.7m) GBP7.3m
tax(1)
Reported profit after tax (GBP5.1m) GBP4.7m
---------------------------------- ------------ ------------
Cash / (Bank net debt)(1) (GBP6.7m) (GBP3.2m)
Available debt headroom GBP18.3m GBP11.8m
---------------------------------- ------------ ------------
Cash (out-flow)/in-flow after (GBP2.6m) GBP1.0m
investments
-- A strong start in the first quarter with accelerating
like-for-like sales growth of 9.6% before Lockdown
-- Robust financial position showing the resilience of the underlying business model
- Cost control, supplier support and Government support reduced cash burn by over 70%
- Liquidity secured through low net debt, GBP25m of undrawn RCF
and equity raise of GBP4.9m and covenant waiver
- Significant remaining headroom with Bank net debt only
increasing to (GBP6.7m) (H1 19: (GBP3.2m))
-- Recovered quickly from Lockdown as restrictions were eased. All centres are now fully open
-- Trading has begun well at 83% of previous levels:
- All 46 centres now open
- Initial customer feedback has been good, with customers
understanding the measures in place
- Spend per head (SPH) has been maintained at last year's levels
-- Returned to profit and cash generation despite only 50% lane capacity at this stage
-- Discrete bowling lane areas well suited to Government's "Rule of Six" guidelines
-- Strategically well positioned to benefit from ongoing
consumer demand and future opportunities
-- Seamless transition to new leadership
Nick Basing, Executive Chairman said:
I am pleased that even in extreme adversity the team have taken
decisive action that has enabled the Group to emerge from Lockdown
so strongly, putting in place sufficient cash liquidity to protect
it through a continued period of uncertainty.
We have made a very good start, showing that we have a safe and
attractive business for customers and staff. I fully expect our
strategy for growth, proven over the years, to return us to
profitable growth in the near future once circumstances
permit."
Graham Blackwell, Chief Executive Officer, commented:
"I am pleased to have been given the opportunity to lead the
Group at this crucial time and I am grateful for the fantastic
support from my colleagues as we have secured our long-term
position. My 30 years in the business have shown me that the
strength and stability of our teams, the quality of our estate and
our great service can stand the test of time.
We are really encouraged by our reopening performance. Our
primary focus is to return the business to the trend of the first
quarter through our strengths in operational improvements and
commercial innovation. Our proven strategy remains relevant, and
with a track record of eight consecutive years of like-for-like
sales progression, I am confident that we will return the business
to growth."
Enquiries:
Ten Entertainment Group plc via Instinctif Partners
Graham Blackwell Chief Executive Officer
Antony Smith Chief Financial Officer
Instinctif Partners Tel: 020 7457 2020
Matthew Smallwood
Jack Devoy
There will be a presentation today at 9.00 am to analysts via a
Webcast. The supporting slides and audio will also be available on
the Group's website, www.tegplc.co.uk, later in the day.
Forward-looking statements
This announcement contains forward-looking statements regarding
the Group. These forward-looking statements are based on current
information and expectations and are subject to risks and
uncertainties, including market conditions and other factors
outside of the Group's control. Readers are cautioned not to place
undue reliance on the forward-looking statements contained herein,
which speak only as of the date hereof. The Group undertakes no
obligations to publicly update any forward-looking statement
contained in this release, whether as a result of new information,
future developments or otherwise, except as may be required by law
and regulation.
1 These are non-IFRS measures used by the Group in understanding
its underlying earnings. Group adjusted EBITDA consists of earnings
before interest, taxation, depreciation, amortisation costs,
exceptional items, profit or loss on disposal of assets and
adjustments to onerous lease and impairment provisions. Group
adjusted profit before tax is defined as profit before exceptional
items, profit or loss on disposal of assets, amortisation of
acquisition intangibles and adjustments to onerous lease and
impairment provisions. Adjusted basic earnings per share represents
earnings per share based on adjusted profit after tax.
Like-for-like sales are a measure of growth of sales adjusted for
new or divested centres over a comparable trading period.
Executive Chairman's Introduction
We entered 2020 with a strong sense of optimism after an
excellent 2019. Our strategy continued to deliver excellent returns
and good growth and we had an exciting number of new centres in the
pipeline. At the time that the Covid-19 pandemic caused a dramatic
halt to operations, we had been trading well, were growing and were
confident for the future. Our response to the pandemic has been
equally strong. Within a week of closure, we had raised GBP4.9m
through an equity placing. We acted swiftly with our business
partners and dramatically reduced our cash outflow and we welcomed
the unprecedented levels of Government support. All these actions
have helped us to minimise the cash outflow, and we ended the
half-year with more liquidity headroom than we had in 2019.
The business is a strong one. We operate in a market that has
seen long-term structural growth, and customers still want to enjoy
competitive socialising activities as part of their leisure
activities with families and friends. We have a highly cash
generative business that operates on high margins. This will allow
us to rebuild quickly so that we can refocus on our proven
strategy. It is for these reasons that I remain confident for the
future. Five months of Lockdown has enforced a pause in our
investment programme, but our cash position remains strong, and
once we have certainty of the landscape, we will be able to return
to and resume our successful growth model.
We now enter a new phase as we open the business post Lockdown.
I am delighted to have Graham Blackwell at the helm as our new CEO.
He is ideally placed to lead the business back to its previous
levels and beyond, having been instrumental in getting the business
there once already.
Chief Executive's Statement and Operating Review
I am pleased to take on the leadership of the Group to guide it
through this crucial phase of development and regrowth. With over
30 years' experience in the industry I remain confident of the
enduring appeal of our family entertainment centres. That appeal
remains, and with our operational experience and strong customer
proposition, we are well placed to stabilise our position and
return to growth.
The Group had an excellent start to the year, with the first 11
weeks delivering double-digit sales growth and good progress on
developing the customer experience. On 20 March the Covid-19
pandemic resulted in widespread Lockdown across the UK and our
entire estate was closed and remained so until the majority of
centres opened again on 15 August.
Our strong Q1 sales and our prudent approach to cost and cash
management meant that we began the closure period in robust
financial health. Swift action from management and strong support
from shareholders and many other stakeholders gave the business a
good level of liquidity headroom.
In response to the Government's Lockdown measures and the
growing crisis, the Board set out clear priorities: to protect our
people and their jobs; to preserve the long-term future; and to
prepare for reopening. I am pleased to report that we delivered
against those objectives and our business is now fully open with
some encouraging early results.
Protecting our people
On 20 March the Government announced the enforced closure of
hospitality and leisure businesses throughout the UK. The Board
responded immediately, and within a week had safely secured all
centres in the estate in preparation for a period of closure.
During this period, the Government also announced the Coronavirus
Job Retention Scheme (CJRS), a mechanism through which staff could
be furloughed with their costs covered by a Government rebate.
95% of the 1,170 people in the Group were furloughed by early
April, with a small core of support staff remaining in place
throughout the closure period. The Government supported 80% of
wages up to a maximum of GBP2,500 per month for people who had been
in place since the end of February.
Preserving financial security during closure meant that our
employees were able to look after their families, develop their
skills or help out in their local community. Many volunteered for
charities or the NHS or simply supported their neighbours and
friends. Our commitment to doing the right thing together with the
support from the Government ensured that we could reopen our
centres with well over 90% of our people able to return to work.
None of our site-based people were made redundant.
Preserving the long-term future
The Group entered Lockdown with GBP25m of headroom in its
financing facility. The Board responded to the high levels of
uncertainty around closure period and decided to take the prudent
action of securing an additional GBP4.9m of equity funding from
shareholders. The successful raise, within a week of the start of
Lockdown, secured significant long-term resilience with GBP30m of
available liquidity headroom.
We were delighted with the level of support that we received
from our suppliers and partners. Most of our contractual
commitments providing services at our centres were paused. We
halted all our capital investment except where projects were
already in progress and committed. We tightly controlled our
spending such that only the essential services such as insurance,
security and controls were left in place.
Government support in the form of the Coronavirus Job Retention
Scheme (CJRS) and the waiver of business rates was extremely
welcome and enabled a significant reduction to an otherwise
committed cost base without the need for more draconian action.
Further cash support from the Government in terms of their Time to
Pay scheme with HMRC has given the opportunity to improve working
capital further.
Landlords have been supportive, with over GBP3m of cash rent
saved since closure. This has been a mix of rent-free periods, rent
deferrals and a number of lease regears that have extended our
tenure in exchange for cashflow benefits during Lockdown and
beyond.
Delivering of over GBP10m of cash saving is testament to the
quality of our supplier relationships, the strength of the
Government support, and the effectiveness of our operational teams.
As a result, the cash burn rate was reduced by 70% to GBP1.4m per
month. Combined with the funds raised from shareholders, this meant
that the business could resist a period of closure of around 18
months without taking actions that might cause long-term damage to
the underlying successful business model.
Preparing to reopen
The Group has been instrumental in developing the operating
protocols for the industry as it exits Lockdown. Our operational
expertise has ensured that we can implement these protocols to the
highest standards in order to ensure our employees and customers
can enjoy a safe environment and an enjoyable experience.
We have invested in ensuring all our teams undertook a specially
designed Covid training programme before they returned to work, as
well as a refresher course to remind them of how we help our
customers have fun in a safe environment. We have added new roles
in our centres to take extra care of sanitising the lanes as well
as introducing greeters at the entrance to help navigate our rules
around masks and distancing, and ensuring customers are completing
Track and Trace details.
Our centres have been modified to protect our customers with
clear signage, one-way systems and protective screens. Our gaming
areas have been reflowed to enable customers to continue to enjoy
our activities at a safe distance. For now, we are limiting
capacity and only using every other lane. However, we have
developed protocols that mean we can open all of our lanes when the
time is right.
Prior to the closure, two significant refurbishments and a new
centre build were in progress. We took the opportunity during
Lockdown to fully complete these programmes. Both refurbishments
have built on what we have learned from our development centre at
Cheshire Oaks which we refurbished in 2019, with some brand-new
trial concepts. We have developed these trials and have now
implemented our very latest thinking on design, customer flow and
entertainment experience at two of our busiest and most important
centres. Manchester Printworks, which opened last week, is the
Group's first new build development. This too has the very latest
in design and entertainment experience.
Our busy Acton centre now has additional lane capacity as well
as a modernised bar area, improved machines and best-in-class
lighting and lane effects to create a fully immersive bowling
experience. We have added space for Escape Rooms which we will be
opening there shortly. Star City in Birmingham has also benefited
from a modern new bar and dining area and we have introduced
karaoke booths and increased the number of Escape Rooms.
Manchester Printworks opened in mid-September and offers the
very best in metropolitan competitive socialising, including state
of the art lane effects, Beer Pong, Shuffleboard and an exciting
balcony viewing area to watch the bowling and enjoy a drink. This
is the Group's first new build brownfield development, giving the
opportunity to design the centre from scratch and deliver a truly
unique bowling experience. We have used contemporary local
designers to enhance the aesthetic and have developed a bespoke
menu that is well suited to the city centre customer base.
During Lockdown we increased our social media presence, and our
engagement with our customers was strong, with games, competitions
and offers. Facebook engagement doubled and we increased our
presence on Instagram to broaden the customer reach. Since we have
reopened there has been a fundamental shift in customer behaviour.
Advanced bookings online have more than doubled and now make up the
majority of our bowling sales. This helps us to plan and manage
capacities carefully and would not have been possible without the
website development we completed in January. Our new digital
platforms have allowed us to communicate better with our customers
during Lockdown as well as to ensure we have very strong Track and
Trace capabilities and best practice Covid security measures.
We have developed a web-based ordering system for food and drink
which is already proving successful. Customers can now use their
phones to order and pay in a completely contact-free environment
and to have their meals and drinks delivered directly to their lane
or table. This not only helps social distancing but allows us to
increase ancillary spend and give customers a better service. We
have been pleased to see that average spend per head has been
maintained since reopening.
These preparations made us ready to open strongly, and while
mid-August was later than we had hoped, we did benefit from the
last two weeks of the school summer holidays and we were pleased to
see that our customers were happy to return, with some excellent
feedback on the experience.
Environmental, social and governance
Our NHS Heroes campaign resulted in over 7,000 NHS staff
registering for free bowling with their families. We have now
extended this successful offer to other keyworkers and we are
pleased to be welcoming and thanking those who have worked so hard
over the Lockdown.
We helped our employees with the transition to furlough with
additional financial support. We maintained their wages at 100%
throughout April to ensure families could manage their existing
financial commitments. In addition, we supported those employees
unfortunate enough to miss the transition date of the end of
February and have paid their furlough costs throughout
Lockdown.
The Board's scrutiny of the financial position and swift action
to secure long-term liquidity has been robust. The Board have
embraced video conferencing as a platform to meet and make
decisions and have met during Lockdown more than a dozen times to
ensure that actions taken are in the best interests of all the
business stakeholders.
Strategic priorities
Prior to Lockdown we had been making very pleasing progress on
our strategic priorities giving us confidence that they remain the
right focus for growth. However, we decided to pause our investment
programme for all projects apart from those already in progress. We
will continue to review our cash position and intend to reignite
our strategic investment when there is more certainty.
Transforming the customer experience - We are delighted that our
investment last year in our digital platforms was completed in
January. This was timely, giving the business a far stronger tool
to communicate with customers during Lockdown. Customer engagement
on social media actually increased during the period of closure. We
have developed an improved menu and secured a new food supplier
which we expect will enable us to benefit from the reduction in
supply in the casual dining sector. Absent refurbishments, which
are on hold, this is the least capital-intensive area of our
strategy and will become our principal focus in the short term. We
will further develop our food and beverage offering; we can enhance
and maximise our new digital platforms; and our great customer
service will continue to ensure that our customers have a great
time whenever they visit.
Houdini's, our Escape Room joint venture, was of course also
affected by Lockdown but has conserved cash and is now back open
and trading. We will continue to roll out new Escape Rooms in our
estate.
Inward investment - The refurbishments during Lockdown at Acton
and Birmingham Star City have significantly enhanced the estate. In
the first quarter we added a further six Pins & Strings
centres, bringing the total to 38 out of 46 (83%). We will
reinstate the programme when our cash position allows.
Expanding our estate - We were delighted to welcome Manchester
Printworks to the estate last week. This exciting new development
in the heart of Manchester's Northern Quarter is the Group's first
new build centre for some time. Further estate expansion is under
review, with the existing pipeline being fully reassessed in the
light of the Covid-19 pandemic and the availability of investment
capital.
Initial trading
We opened our Welsh centres first at the beginning of August,
with the majority of our centres opening in England on 15 August,
followed by our Scottish centres towards the end of the month. We
now have all 46 of our centres opened, including our brand new
centre at Manchester Printworks, which had its opening night last
week.
Initial trading has been encouraging. In the five weeks from 17
August to 20 September, like-for-like sales have been at 83% of the
same period last year and spend per head has been maintained. At
this level the business is profitable and cash generative.
All centres are operating with every other lane out of use in
order to comply with guidelines on social distancing. This capacity
restriction does limit sales growth, although the impact during
holidays is less pronounced than at other times as the business has
more scope to use its daytime weekday capacity.
Customer feedback has been positive. Our customers understand
the restrictions in place and have been complimentary about the way
our centres have been set up to help keep them safe. Structurally
our centres benefit from being large and open spaces with discrete
places for customers to enjoy their game away from other groups.
The new "Rule of 6" is well suited to the bowling environment where
games are already limited to six people per lane.
With the addition of easier smartphone-based ordering for food
and drink, our centres are ideally placed to provide safe and
socially distanced family activities and fun. The principal issue
we have encountered is in respect of waiting times at peak which is
a function of the reduced lane capacity. We continue to work to
improve capacity management.
We have increased staffing to meet and greet our customers to
remind them of rules, enforce capacity constraints and to help them
navigate the centre, including lane booking and food and drink
ordering. We have also added specific roles responsible for
cleaning and sanitising the lanes and machine areas and ensuring a
fast turnaround such that we can keep our customers safely moving
to a clean and discrete area within their groups. These roles are
performing well in ensuring we have great customer feedback on our
Covid security measures as well as helping us to increase customer
spend per head. The additional costs are manageable, and savings
have been identified elsewhere to partially mitigate the
impact.
Outlook
We have successfully positioned ourselves for a return to
profitability and growth. Rigorous control of costs, excellent
supplier relationships and strong support from shareholders and our
bank have allowed us to limit the cash impact of the five month
Lockdown. As at 20 September, the Group still retains over GBP15m
of available liquidity headroom which will continue to provide
resilience and security in these uncertain times.
Our initial trading has been encouraging and has enabled the
business to return to profit and cash generation. We are confident
that when capacity restrictions are lifted, we will be able to
improve our sales further. However, the situation across the UK
remains uncertain, with local lockdowns still likely to impact some
of our centres and with changing Government guidance under constant
review.
Our focus is to continue to build the confidence of our
customers to enjoy their experience with us and to welcome them
back to our centres. We have a strong model that resonates with our
customer base, providing great value family entertainment in large
centres that we have worked hard to make Covid secure.
Our capacity constraints, particularly in respect of alternate
lane usage and the 10pm curfew, limit our scope for delivering
sales growth in the short term. We are working closely with the
Department for Digital, Culture, Media and Sport (DCMS) to address
this and to agree and implement safe protocols for opening all our
estate's lane capacity when appropriate to do so.
In the short term we are focused on the customer experience and
sales growth. In the medium to long term our strategy remains
unchanged. We will develop our customer experience; invest in our
existing centres; and grow our estate. Our business remains
relevant and well positioned to provide good value entertainment to
a broad range of customers with their friends or families.
Graham Blackwell
Chief Executive Officer
23 September 2020
Financial Review
26 weeks 26 weeks 26 weeks Movement
to 28 June to 28 June to 30
2020 (IFRS 2020 (IAS June 2019
GBP000 16) 3 17)
----------------------------------------- ------------ ------------ ----------- ---------
Revenue 22,471 22,471 41,444 (18,973)
Cost of sales (3,084) (3,084) (4,999) 1,915
Gross margin 19,387 19,387 36,445 (17,058)
Total operating costs (9,465) (15,701) (20,241) 4,540
Central and support overheads (5,112) (5,140) (4,984) (156)
Group adjusted EBITDA 4,810 (1,454) 11,220 (12,674)
Depreciation and amortisation (9,627) (3,957) (3,520) (437)
Net interest (2,123) (277) (401) 123
Group adjusted profit before tax(2) (6,940) (5,690) 7,299 (12,989)
Exceptional items - - (1,169) 1,169
(Loss)/profit on disposal of assets - - (57) 57
Amortisation of acquisition intangibles (54) (74) (151) 77
Adjustments in respect of onerous
lease & impairment provisions - - 12 (12)
Profit before tax (6,994) (5,764) 5,934 (11,698)
Taxation 696 696 (1,261) 1,957
Of which: taxation attributable
to Group adjusted profit 696 696 (1,443) 2,139
Profit after tax (6,298) (5,068) 4,673 (9,741)
Earnings per share
Basic earnings per share (9.45)p (7.61)p 7.19p (14.80)p
Adjusted basic earnings per share (9.37)p (7.50)p 9.01p (16.51)p
The results are presented on an IFRS 16 basis and on an IAS 17
basis to enable comparatives to H1 19. For the purposes of this
review, unless otherwise stated the commentary will refer to the
figures on an IAS 17 basis.
The first half of 2020 is very clearly split into two distinct
trading periods. The business traded until 20 March and then was
fully closed in Lockdown for the remainder of the period. During
this Lockdown, the business generated no income. The split is
trading for 11.7 weeks and was closed for the remaining 14.3 weeks:
a 45% open and 55% closed split of the period.
As a result, total sales were GBP22.5m which is a reduction of
(45.8%) on H1 19. This had a knock-on impact on the gross margin
which ended the period at GBP19.4m, a (46.8%) reduction
year-on-year. The gross margin rate for the Group remained high at
86.3% which reflects the nature of our business model where 47% of
revenue comes from bowling sales which have no associated COGS.
Gross margin fell by 160bps compared to last year. This was
principally a result of increased waste as the Group entered
Lockdown where c.GBP0.4m of fresh food and drink was written off
due to the centre closures. Absent this write off, underlying gross
margin remained broadly at last year's levels.
The enforced closure created a focus on reducing the operating
costs of the Group in the second quarter in order to minimise the
cash outflow and conserve the liquidity of the business. Total
operating costs for H1 20 were GBP15.7m, a saving of GBP4.5m
compared to H1 19. This 22.4% year-on-year reduction reflects the
strong work by the Operations and Commercial teams to reduce costs
while the business was in Lockdown. During the 14 weeks of
Lockdown, the cost reduction was 50% and was principally a result
of reduced staffing costs with the support of the Government's
Coronavirus Job Retention Scheme (CJRS) and the rate cut for the
hospitality sector. These Government measures benefited the
business by GBP3.7m with further savings generated through reduced
contractual payments, lower use of site consumables and energy. The
cost savings were in part offset by one-off expenses to clean,
sanitise and make safe our centres as they were mothballed. It
should be noted that rent on an IAS 17 basis continued to be
charged to the P&L, although cash savings were made through
negotiations with the landlords to preserve cashflow.
Central and Support costs increased in H1 20 by 3.1% to GBP5.1m
(H1 19: GBP5.0m). Significant savings were made to the support
office cost base but these were more than offset by the increased
costs incurred in order to secure liquidity. Savings included
support office staff savings through the CJRS scheme. In line with
the site-based teams, the Group supported the payment of salaries
at 100% in April and then moved to the Government supported 80% for
the balance of Lockdown. We also elected to top up salaries to a
full 80% for those individuals who earn more than the CJRS GBP2,500
monthly threshold. Staff furloughing and CJRS relief on Support
Centre staff saved GBP0.2m in the HY 20 Central and Support cost
base. Other savings were made by deferrals and waivers of
contractual commitments and a reduction in marketing spend.
However, many contracts for essential services, such as IT
infrastructure, insurance, and professional services remained in
place to manage the business in Lockdown.
The Group also bore additional one-off Central and Support costs
during Lockdown of GBP0.5m. These included development and roll-out
of Covid security protocols and measures; HR support to control the
furlough process; IT investment to develop essential Covid security
apps (Track and Trace and Web based F&B ordering); and legal
and professional fees to enact changes to contractual arrangements
including lease regears.
The business has not reported any exceptional items in the
period. The continued work on lease regears is now incorporated
into the central costs.
Financing
26 weeks 26 weeks
to to
28 June 2020 30 June
GBP000 2019
----------------------------------------------------- ---------------- ----------
Interest on bank debt (159) (136)
Amortisation of bank financing costs (25) (33)
Finance lease interest charges (1,906) (145)
Other finance costs (33) (87)
---------------- ----------
Net interest excluding shareholder loan note
interest (2,123) (401)
---------------- ----------
Finance costs increased to GBP2.1m in H1 20 (H1.19: GBP0.4m) comprising
the implied interest relating to the lease liability under IFRS 16 of
GBP1.9m and GBP0.2m associated with our bank borrowing facilities. Interest
on the bank net debt increased as a function of the higher drawings
on the RCF facility.
Taxation
A tax credit of (GBP0.7m) has been recognised for H1 20 (H1.19: GBP1.3m
charge) arising from the recognition of a deferred tax asset on the
loss generated in the period. The Group expects to generate profits
in the future which this loss can be utilised against.
Statutory net debt
As at 28 June 28 June 29 December Movement 30 June
2020 2020 2019 2019
IFRS 16 IAS 17
Closing cash and cash equivalents 13,326 13,326 2,188 11,138 3,027
Bank loans (20,000) (20,000) (6,250) (13,750) (6,200)
Bank net debt (6,674) (6,674) (4,062) (2,612) (3,173)
Finance leases - Machines
and other (7,621) (7,621) (8,109) 488 (7,273)
Finance leases - Property (182,893) - - - -
Statutory net debt (197,188) (14,295) (12,171) (2,124) (10,446)
The increase in the cash balances by GBP11.1m to GBP13.3m is
detailed in the cash flow below and has mainly arisen from the
GBP4.9m in net proceeds from the share placement in March 2020 and
the higher drawdown of the bank loans which increased from
(GBP6.3m) at FY19 to (GBP20.0m) at HY20.
The Group increased its bank borrowings to ensure that it had
sufficient cash resources during the uncertainty of the Covid-19
pandemic and Lockdown period. The Group still has a further GBP5.0m
of the RCF bank loan facility available to draw down if
required.
On an IAS 17 comparative basis, the business has only increased
net debt by GBP2.1m to (GBP14.3m) in the period between the year
end and the half-year results. This is a function of strong cash
generation in the first quarter, shareholder funds raised and a
robust approach to cash conservation.
With the adoption of IFRS 16 by the Group from 30 December 2019,
as explained further on note 5, the Group now recognises a finance
lease liability for its property lease which as at H1 20 amounts to
(GBP182.9m).
Cash flow
26 weeks 26 weeks 52 weeks
to 28 June to 30 June to 29 December
2020 2019 2019
GBP000 GBP000 Movement GBP000
-------------------------------------- ------------ ------------ --------- ----------------
Cash flows from operating activities
Group adjusted EBITDA (1,454) 11,220 (12,674) 23,568
Maintenance capital (357) (1,430) 1,073 (2,369)
Movement in working capital 2,775 192 2,583 1,829
Finance lease and taxation payments (1,858) (2,522) 664 (5,325)
Free cash flow (894) 7,460 (8,354) 17,703
Dividends paid (2,405) (2,145) (260) (7,150)
------------ ------------ --------- ----------------
Cash flow available for investment (3,299) 5,315 (8,614) 10,553
Proceeds from issue of shares 4,878 - 4,878 -
Existing estate refurbishments (2,615) (1,202) (1,413) (4,183)
Transformative investment (8) (478) 470 (2,198)
Centre acquisitions including
Tenpinisation (1,429) (1,536) 107 (2,618)
Exceptionals & share based payments (139) (1,070) 931 (1,414)
------------ ------------ --------- ----------------
Cash flow after investment (2,612) 1,029 (3,641) 140
(Repayment)/Draw down of debt 13,750 (3,300) 17,050 (3,250)
Opening cash and cash equivalents 2,188 5,298 (3,110) 5,298
Cash and cash equivalents - end
of period 13,326 3,027 10,299 2,188
============ ============ ========= ================
Free cash flow has been significantly impacted by the Lockdown
which halted sales generation for the last 14 weeks of the period.
As a result, an EBITDA loss was generated. A robust approach to
cash management restricted maintenance capital spend to only 25% of
last year's level and finance lease and tax payments were reduced
following negotiation with suppliers. A significant improvement in
the working capital position arose from initiatives such as HMRC's
Time to Pay scheme as well as concessions from suppliers and
landlords. These measures ensured that despite the Lockdown, the
underlying business only consumed (GBP0.9m) of free cash flow in H1
20.
The business raised a net GBP4.9m from an equity placing on 25
March which helped improve the liquidity headroom further.
At the start of Lockdown there were a number of capital
programmes that were already committed and in progress. These
projects were all completed, the main ones being the completion of
Manchester Printworks and refurbishments at Acton and Star City, as
well as six implementations of Pins & Strings and the
finalisation of the IT development started in 2019. The total of
GBP4.0m of capital spend is all anticipated to be returns
generating once the business rebuilds from Lockdown.
Accounting standards and use of non-GAAP measures
The Group has prepared its consolidated financial statements
based on International Financial Reporting Standards for the 26
weeks ended 28 June 2020. The basis for preparation is outlined in
note 2 to the financial statements.
The Group uses certain measures that it believes provide
additional useful information on its underlying performance. These
measures are applied consistently but as they are not defined under
GAAP they may not be directly comparable with other companies
adjusted measures. The non-GAAP measures are outlined in note 4 to
the financial statements.
IFRS 16
The Group has applied IFRS 16 as at 30 December 2019. A
right-of-use asset and a lease liability is included on the balance
sheet, and interest and depreciation has been charged to the
consolidated income statement instead of existing rental expenses.
A charge to retained earnings has been recognised for the
impairment that has been calculated on adoption of IFRS 16 for the
amount by which the assets carrying amount exceeds its recoverable
amount. The adoption of IFRS 16 doesn't impact on the operation of
the business and has no changes to the cash flows of the Group. The
Group has adopted the modified retrospective method under which
comparative data is not restated and the cumulative effect of
applying IFRS 16 is recognised in retained earnings at the date of
initial application.
A summary of the impact on the Group consolidated income
statement and consolidated statement of financial position is as
below:
H1 FY 2020
GBP000
----------------------------------------------- -----------
Administrative expenses
Rent 6,276
Onerous lease and lease incentive adjustments 12
Depreciation (5,671)
----------------------------------------------- -----------
Net reduction to administrative expenses 617
Finance costs (1,847)
Net decrease to profit before tax (1,230)
Impact on the Group consolidated statement of financial position
from the following entries upon adoption of the standard:
H1 FY 2020
GBP000
------------------- -----------
Assets 169,304
Liabilities (177,603)
Retained earnings (8,299)
------------------- -----------
Further detail of the adoption of IFRS 16 is included in note
5.
Covid-19 financial update
As highlighted previously, all centres were closed on 20 March,
in line with government guidance but the three Welsh centres
reopened on 5 August 2020 and 35 centres in England opened on 15
August 2020 and the remaining centres reopening on a staggered
basis in August and September. The closure of the centres had a
significant impact on the performance of the Group but the
following schemes offered by the government were taken up:
-- 12 months rates relief which provided a GBP5.0m cash saving, with GBP1.3m received in H1;
-- Time to Pay for the VAT quarter to March 2020 providing a GBP1.7m cash saving; and
-- furlough relief from the Government's Coronavirus Job
Retention Scheme (CJRS) providing a GBP2.6m cash saving as at the
end of the interim period.
The Group increased it bank drawings to (GBP20.0m) to ensure it
had sufficient cash during the Lockdown period. The Group had cash
and cash equivalents of GBP13.3m leaving net debt of (GBP6.7m) as
at the interim period end and still has GBP5.0m of the bank
facility available to draw on.
The Board has always adopted a prudent approach to the Group's
cost base and capital expenditure and identified self-help
initiatives by working with suppliers and landlords to reduce the
cost base in the short term to ensure the Group remains in a strong
financial position.
Going concern
As part of the adoption of the going concern basis, the Group
has considered the uncertainty caused by the recent Covid-19
outbreak . All of the Group's centres were closed for trade from 20
March 2020 with the three Welsh centres only reopening on 5 August
2020, 35 centres in England opening on 15 August 2020 and the
remaining centres reopening on a staggered basis in August and
September. In response to the Covid-19 pandemic, in the period
since 20 March 2020, the Group has:
-- raised GBP4.9m in cash resources from its shareholders after
completing the Placing announced on
25 March 2020;
-- taken advantage of the business rates relief available until March 2021;
-- claimed furlough relief from the Government's Coronavirus Job Retention Scheme (CJRS);
-- taken advantage of the VAT payment deferral up to 30 June 2020;
-- increased its drawdown on its bank borrowings with Royal Bank
of Scotland (RBS) to GBP20m, with GBP5m still available;
-- obtained a waiver letter setting aside any potential breaches
of the financial covenants until the end of June 2021; and
-- negotiated rent deferrals and rent regears with landlords.
As part of the review and the potential impact of the Covid-19
outbreak on the Group's results for the next 12 months, a base case
and a downside scenario were prepared. The base case assumed
resumption of business in August, with trade ramping up until the
end of FY21 at levels of between 60% and 90%, while still factoring
the impact of socially distanced operations on the revenue and cost
lines. A downside scenario was prepared using the following key
assumptions:
-- trade levels assumed at 20% down on the base case scenario;
-- a "second wave" lockdown occurred and there was no trade in December and January;
-- all administration costs remained as normal during this two
month closure, with no furlough claims reflected;
-- trade resumed from February 2021 onwards for the rest of the
year at levels of between 65% to 70% of 2019 levels
The downside scenario would still provide sufficient liquidity
within its GBP25m debt financing facilities such that the business
would still have headroom of over 20% of the facility throughout
the downside case. The waiver letter with RBS expires at the end of
June 2021 and the financial covenants will need to be reported on
to RBS at the end of September 2021. Under the base case scenario
the covenants will be passed but under a downside scenario they
would not be met. An extension of the waiver letter would need to
be negotiated and the Directors believe that it is likely that an
agreement could be reached with RBS in these circumstances.
Accepting the risks as described above, the Directors have
concluded that the potential impact of the Covid-19 pandemic and
uncertainty over possible mitigating actions to prevent a breach of
covenants, represents a material uncertainty that may cast
significant doubt on the Group's ability to continue as a going
concern. Nevertheless, having assessed these options and the impact
of a potential liquidity shortfall in the event of further periods
of closure the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the next 12 months. The interim financial statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern.
The Group continues to adopt the going concern basis as set out
in note 3 to the financial statements.
Antony Smith
Chief Financial Officer
23 September 2020
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 26 week period ended 28 June 2020
26 weeks 26 weeks 52 weeks to
to 28 June to 30 June 29 December
Notes 2020 Unaudited 2019 Unaudited 2019 Audited
GBP000 GBP000 GBP000
----------------------------------------- ------ ---------------- ---------------- --------------
Revenue 7 22,471 41,444 84,122
Cost of sales (7,481) (12,081) (24,930)
Gross profit 14,990 29,363 59,192
Administrative expenses (19,861) (23,028) (46,609)
Operating (loss)/profit (4,871) 6,335 12,583
Analysed as:
----------------------------------------- ------ ---------------- ---------------- --------------
Group adjusted EBITDA 4,810 11,220 23,568
Exceptional administrative costs - (1,157) (2,391)
Amortisation of acquisition intangibles (54) (151) (293)
Depreciation and amortisation (9,627) (3,520) (7,379)
Profit on share of joint venture - - 10
(Loss) / profit on disposal of
assets - (57) (932)
Operating (loss)/profit (4,871) 6,335 12,583
----------------------------------------- ------ ---------------- ---------------- --------------
Finance costs (2,123) (401) (788)
(Loss)/profit before taxation (6,994) 5,934 11,795
Taxation 696 (1,261) (2,758)
(Loss)/profit for the period
and total comprehensive (loss)/income
attributable to owners of the
parent (6,298) 4,673 9,037
----------------------------------------- ------ ---------------- ---------------- --------------
Earnings per share
Basic earnings per share 8 (9.45p) 7.19p 13.90p
Diluted earnings per share 8 (9.45p) 7.17p 13.87p
Adjusted basic earnings per share 8 (9.37p) 9.01p 19.33p
Adjusted diluted earnings per
share 8 (9.37p) 8.98p 19.27p
IFRS 16 was adopted on 30 December 2019 without restating prior
year figures as permitted by the standard. As a result, the primary
statements are shown on an IFRS 16 basis for the 26 weeks ended 28
June 2020 and on an IAS 17 basis for the 26 weeks ended 30 June
2019 and year ended 29 December 2019. Note 5 provides a
reconciliation of the two measures.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 28 June 2020
26 weeks
to 28 June 26 weeks to 52 weeks to
2020 30 June 2019 29 December
Unaudited Unaudited 2019 Audited
Notes GBP000 GBP000 GBP000
------------------------------ ----- ----------- ----------------------------- -------------
Assets
Non-current assets
Goodwill 9 29,350 29,350 29,350
Intangible assets 9 495 776 653
Investments in joint venture 310 - 310
Property, plant and equipment 10 47,808 43,250 47,248
Right of use assets 11 173,679 - -
251,642 73,376 77,561
Current assets
Inventories 875 1,449 1,297
Trade and other receivables 2,151 4,957 4,929
Cash and cash equivalents 13,326 3,027 2,188
Corporation tax receivable 463 - -
----------- ----------------------------- -------------
16,815 9,433 8,414
Liabilities
Current liabilities
Bank borrowings and finance
leases(1) 13 (38,998) (8,802) (9,227)
Trade and other payables (11,770) (12,456) (9,819)
Corporation tax payable - (930) (907)
Provisions - (63) (91)
----------- -----------------------------
(50,768) (22,251) (20,044)
----------- ----------------------------- -------------
Net current liabilities (33,953) (12,818) (11,630)
Non-current liabilities
Bank borrowings and finance
leases(1) 13 (171,402) (4,616) (4,991)
Other non-current liabilities - (959) (1,284)
Deferred tax liabilities (1,362) (2,113) (2,057)
Provisions - (341) (688)
(172,764) (8,029) (9,020)
Net assets 44,925 52,529 56,911
Equity
Share capital 683 650 650
Share premium 4,844 - -
Share based payments reserve 414 257 275
Merger reserves 6,171 6,171 6,171
Retained earnings 32,813 45,451 49,815
Total equity 44,925 52,529 56,911
------------------------------ ----- ----------- ----------------------------- -------------
IFRS 16 was adopted on 30 December 2019 without restating prior
year figures as permitted by the standard. As a result, the primary
statements are shown on an IFRS 16 basis for the 26 weeks ended 28
June 2020 and on an IAS 17 basis for the 26 weeks ended 30 June
2019 and year ended 29 December 2019. Note 5 provides a
reconciliation of the two measures.
(1) The IFRS 16 lease liabilities are presented as current and
non-current balances within these two sections
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the 26 week period ended 28 June 2020
26 weeks 26 weeks 52 weeks
to 28 June to 30 June to 29 December
Notes 2020 Unaudited 2019 Unaudited 2019 Audited
GBP000 GBP000 GBP000
----------------------------------------- ------ ---------------- ---------------- ----------------
Cash flows generated from operating
activities
Cash generated from operations 12 6,258 10,342 23,917
Corporation tax paid (1,370) (1,022) (2,616)
Finance costs paid (2,098) (365) (681)
---------------- ---------------- ----------------
Net cash generated from operating
activities 2,790 8,955 20,620
Cash flows used in investing activities
Investment in joint venture - - (300)
Acquisition of centres by Tenpin
Limited - (1,456) (1,400)
Purchase of property, plant and
equipment (4,412) (3,109) (8,556)
Purchase of software - (81) (212)
Net cash used in investing activities (4,412) (4,646) (10,468)
Cash flows (used in)/ from financing
activities
Cash costs capitalised from new
borrowings - - (153)
Cash received from issue of new
shares 5,005 - -
Fees paid for issue of new shares (127) - -
Finance lease principal payments (3,463) (1,135) (2,709)
Dividends paid (2,405) (2,145) (7,150)
Drawdown of bank borrowings 18,350 6,200 17,000
Repayment of borrowings (4,600) (9,500) (20,250)
Net cash from/(used in) financing
activities 12,760 (6,580) (13,262)
Net increase/(decrease) in cash
and cash equivalents 11,138 (2,271) (3,110)
Cash and cash equivalents - beginning
of period 2,188 5,298 5,298
Cash and cash equivalents - end
of period 13,326 3,027 2,188
----------------------------------------- ---------------- ---------------- ----------------
IFRS 16 was adopted on 30 December 2019 without restating prior
year figures as permitted by the standard. As a result, the primary
statements are shown on an IFRS 16 basis for the 26 weeks ended 28
June 2020 and on an IAS 17 basis for the 26 weeks ended 30 June
2019 and year ended 29 December 2019. Note 5 provides a
reconciliation of the two measures.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
as at 28 June 2020
Share
based
Share Share payment Merger Retained Total
capital premium reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- --------- --------- --------- --------- ---------- ---------
Unaudited 26 weeks to 28 June
2020
Balance at 29 December 2019 650 - 275 6,171 49,815 56,911
Adjustment on initial application
of IFRS 16 - - - - (8,299) (8,299)
Adjusted balance at 30 December
2019 650 - 275 6,171 41,516 48,612
Share based payment charge - - 139 - - 139
Issue of shares 1 33 4,844 - - - 4,877
Dividends paid - - - - (2,405) (2,405)
Loss for the period and total
comprehensive loss attributable
to owners of the parent - - - - (6,298) (6,298)
Balance at 28 June 2020 683 4,844 414 6,171 32,813 44,925
Unaudited 26 weeks to 30 June
2019
Balance at 30 December 2018 650 - 159 6,171 47,928 54,908
Share based payment charge - - 98 - - 98
Dividends paid - - - - (7,150) (7,150)
Profit for the period and
total comprehensive income
attributable to owners of
the parent - - - - 4,673 4,673
Balance at 30 June 2019 650 - 257 6,171 45,451 52,529
52 weeks to 29 December 2019
Balance at 1 January 2019 650 - 159 6,171 47,928 54,908
Dividends paid - - - - (7,150) (7,150)
Share based payment charge - - 116 - 116
Profit for the period and
total comprehensive income
attributable to owners of
the parent - - - - 9,037 9,037
Balance at 29 December 2019 650 - 275 6,171 49,815 56,911
IFRS 16 was adopted on 30 December 2019 without restating prior
year figures as permitted by the standard. As a result, the primary
statements are shown on an IFRS 16 basis for the 26 weeks ended 28
June 2020 and on an IAS 17 basis for the 26 weeks ended 30 June
2019 and year ended 29 December 2019. Note 5 provides a
reconciliation of the two measures.
(1) The share issue arose from the share placement announced on
25 March 2020. 3,250,000 ordinary shares were issued for gross
proceeds of GBP5,005,000. The balance exceeding the nominal value
has been included as share premium and netted off against the costs
arising from the share placement.
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
For the 26 week period ended 28 June 2020
1 General information
Ten Entertainment Group plc (the "Company") is a public limited
company incorporated and domiciled in England, United Kingdom under
company registration number 10672501. The address of the registered
office is Aragon House, University Way, Cranfield Technology Park,
Cranfield, MK43 0EQ.
The condensed consolidated interim financial statements for the
26 week period ended 28 June 2020 ("interim financial statements")
comprise the Company and its subsidiaries (together referred to as
the "Group"). The principal activity of the Group comprises the
operation of tenpin bowling centres.
The financial information for the 26 week period ended 28 June
2020 has been reviewed by the Company's auditors. Their report is
included within this announcement.
The financial information does not constitute statutory
financial statements within the meaning of Section 434 of the
Companies Act 2006. The condensed consolidated interim financial
information should be read in conjunction with the annual financial
statements of the Group for the 52 week period to 29 December 2019
which were approved by the board of directors on 13 May 2020 and
have been filed with the Registrar of Companies. The report of the
auditors on those financial statements was unqualified, did not
contain an emphasis of matter paragraph and did not contain any
statement under section 498 of the Companies Act 2006.
The interim financial statements were approved by the directors
on 23 September 2020.
2 Basis of preparation
The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 "Interim financial
reporting" as endorsed by the European Union and the Disclosures
and Transparency Rules of the United Kingdom's Financial Conduct
Authority, and incorporate the consolidated results of the Company
and all its subsidiaries for the 26 week period ended 28 June 2020.
They do not include all of the information required for a complete
set of IFRS financial statements. However, selected explanatory
notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's
financial position and performance since the last financial
statements. The comparative financial information is for the 26
week period ended 30 June 2019.
The interim financial statements are presented in Pounds
Sterling, rounded to the nearest thousand pounds, except where
otherwise indicated; and under the historical cost convention as
modified by the recognition of certain financial assets/liabilities
at fair value through profit or loss.
The accounting policies adopted in the preparation of the
interim financial statements are consistent with those applied in
the presentation of the Group's consolidated financial statements
for the year ended 29 December 2019, other than the adoption of
IFRS 16 Leases which became effective for the Group from 30
December 2019. A number of other new European Union endorsed
amendments to existing standards are also effective for periods
beginning on or after 30 December 2019. IFRS 16 is a replacement
for IAS 17 Leases. There has been a significant impact on the
Group's accounting for leases as a result of IFRS 16, the effect of
which is set out in note 5.
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. Except for the amendment to IFRS 16, these have not
been adopted early by the Group and the impact of these standards
is not expected to be material. On the amendment to IFRS 16 to
allow deferred rentals to be treated as variable payments rather
than modifications, this has been adopted early as it was effective
from 1 June 2020.
3 Going concern
As part of the adoption of the going concern basis, the Group
has considered the uncertainty caused by the recent Covid-19
outbreak . All of the Group's centres were closed for trade from 20
March 2020 with the three Welsh centres only reopening on 5 August
2020, 35 centres in England opening on 15 August 2020 and the
remaining centres reopening on a staggered basis in August and
September. In response to the Covid-19 pandemic, in the period
since 20 March 2020, the Group has:
-- raised GBP4.9m in cash resources from its shareholders after
completing the Placement announced on 25 March 2020;
-- taken advantage of the business rates relief available until March 2021;
-- claimed furlough relief from the Government's Coronavirus Job Retention Scheme (CJRS);
-- taken advantage of the VAT payment deferral up to 30 June 2020;
-- increased its drawdown on its bank borrowings with Royal Bank
of Scotland (RBS) to GBP20m, with GBP5m still available;
-- obtained a waiver letter setting aside any potential breaches
of the financial covenants until the end of June 2021; and
-- negotiated rent deferrals and rent regears with landlords.
As part of the review and the potential impact of the Covid-19
outbreak on the Group's results for the next 12 months, a downside
scenario was prepared using the following key assumptions:
-- a base case was prepared with trade levels of between 60% and
90% of last year and the downside case assumed levels of 20% down
on the base scenario;
-- a "second wave" lockdown occurred and there was no trade in December and January;
-- all administration costs remained as normal during this two
month closure, with no furlough claims reflected;
-- trade resumed from February 2021 onwards for the rest of the
year at levels of between 65% to 70% of 2019 levels
The downside scenario would still provide sufficient liquidity
within its GBP25m debt financing facilities such that the business
would still have headroom of over 20% of the facility throughout
the downside case. The waiver letter with RBS expires at the end of
June 2021 and the financial covenants will need to be reported on
to RBS at the end of September 2021. Under the base case scenario
the covenants will be passed but under a downside scenario they
would not be met. An extension of the waiver letter would need to
be negotiated and the Directors believe that it is likely that an
agreement could be reached with RBS in these circumstances.
Accepting the risks as described above, the Directors have
concluded that the potential impact of the Covid-19 pandemic and
uncertainty over possible mitigating actions to prevent a breach of
covenants, represents a material uncertainty that may cast
significant doubt on the Group's ability to continue as a going
concern. Nevertheless, having assessed these options and the impact
of a potential liquidity shortfall in the event of further periods
of closure the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the next 12 months. The interim financial statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern.
4 Accounting estimates, judgements and non GAAP measures
The preparation of condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. In preparing these
condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the 52 week period ended 29 December 2019.
The Company has identified certain measures that it believes
will assist in the understanding of the performance of the
business. The measures are not defined under IFRS and they may not
be directly comparable with other companies adjusted measures. The
non-IFRS measures are not intended to be a substitute for an IFRS
performance measure but the business has included them as it
considers them to be important comparables and key measures used
within the business for assessing performance. These condensed
interim financial statements make reference to the following
non-IFRS measures:
Group adjusted EBITDA - This consists of earnings before
interest, taxation, depreciation, amortisation costs, exceptional
items, profit or loss on disposal of assets and adjustments to
onerous lease and impairment provisions. The reconciliation to
operating profit is included on the condensed consolidated
statement of comprehensive income.
Adjusted underlying profit after tax - This consists of the
profit after tax adjusted for exceptional items, profit or loss on
disposal of assets, amortisation of acquisition intangibles and
adjustments to onerous lease and impairment provisions. The
reconciliation of this number to profit after tax is included under
note 7.
Like-for-like sales - are a measure of growth of sales adjusted
for new or divested centres over a comparable trading period.
Free cash flow - this is Group adjusted EBITDA less cash flows
from maintenance capital, working capital, finance lease and
taxation payments.
Bank net debt - This is made up of bank borrowings less cash and
cash equivalents.
5 IFRS 16 Leases
IFRS 16 Leases replaces existing guidance under IAS 17 and
introduces a fundamental change to the recognition, measurement,
presentation and disclosure of leases for lessees.
The Group adopted IFRS 16 with effect from 30 December 2019. The
Group applied the standard using the modified retrospective
approach and thus comparative information has not been restated and
is presented, as previously reported, under IAS 17. The new
standard results in all property leases being recognised on the
Statement of Financial Position as, from a lessee perspective,
there is no longer any distinction between operating and finance
leases. Under IFRS 16, an asset, based on the right to use a leased
item over a long-term period and a financial liability to pay
rentals are recognised. The only exceptions are short-term and
low-value leases.
The Group leases properties, which under IAS 17 were classified
as operating leases with payments made charged to profit or loss as
arising over the period of the lease. From 30 December 2019, under
IFRS 16, leases are recognised as a right-of-use asset with a
corresponding lease liability from the date at which the leased
asset becomes available for use by the Group. Each lease payment is
allocated between the liability and a finance cost. The finance
cost is charged to profit or loss over the lease period using the
effective interest method. The right-of-use asset is depreciated
over the shorter of the asset's useful life and the determined
lease term, on a straight-line basis.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- Use of a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- Short-term leases (leases of less than 12 months) and leases
with less than 12 months remaining as at the date of adoption of
the new standard are not within the scope of IFRS 16;
-- Leases for which the asset is of low value (IT equipment and
small items of office equipment) are not within the scope of IFRS
16;
-- Exclusion of initial direct costs from the measurement of the
right-of-use asset on transition.
On transition to IFRS 16, the Group elected to apply the
practical expedient to apply the definition of a lease from IAS 17
for contracts in place at 30 December 2019 and has not applied IFRS
16 to arrangements that were not previously identified as leases
under IAS 17. For all leases, these liabilities and assets were
measured at the present value of the remaining lease payments,
discounted using the Group's average incremental borrowing rate as
of 30 December 2019, specific to the portfolio of leases. This was
2.10% for property leases. This rate was deemed appropriate given
that the respective type of lease have reasonably similar
characteristics. Under IFRS 16, the right-of-use assets are tested
for impairment in accordance with IAS 36 'Impairment of Assets'.
This replaces the previous requirement to recognise a provision for
onerous leases. An impairment assessment of the cash generating
unit ("CGU") assets was performed on transition at 30 December 2019
with an impairment charge of GBP9.1m identified as part of the
adoption of IFRS 16. The impairment assessment has been carried out
on the same basis as the estimate at year end which is detailed in
the Statement of Accounting Policies as applied to the consolidated
financial statements for the 52 week period ended 29 December 2019.
Due to the Covid-19 pandemic, a number of landlords allowed the
deferral of rent payments for periods prior to the period end. The
Group has not treated these as lease modifications but rather as
variable lease payments and the impact was not material to adjust
the consolidated statement of income.
The effect of the accounting policy change on the Consolidated
Statement of Financial Position at implementation on 30 December
2019 was:
As at 29 December As at 30 December
2019 IFRS adjustment 2019
Assets GBP000 GBP000 GBP000
-------------------------- ------------------ ---------------- ------------------
Right of use assets - 171,863 171,863
Prepayments 2,559 (2,559) -
2,559 169,304 171,863
Liabilities
-------------------------- ------------------ ---------------- ------------------
Finance lease - Property
current - (12,958) (12,958)
Finance lease - Property
non-current - (166,847) (166,847)
Deferred income - Lease
incentive (1,423) 1,423 -
Onerous lease provision (779) 779 -
(2,202) (177,603) (179,805)
Retained Earnings
-------------------------- ------------------ ---------------- ------------------
Retained earnings 49,815 (8,299) 41,516
49,815 (8,299) 41,516
The adoption of IFRS 16 reduced opening retained earnings as at
30 December 2019 by GBP8.3m.
During the period ended 28 June 2020, the application of IFRS 16
resulted in increased adjusted EBITDA, as reported in the
Consolidated Income Statement and Statement of Comprehensive
Income, of GBP6.3m in comparison to treatment under IAS 17. There
was an increase to operating profit of GBP0.6m. The differences
have arisen as operating lease payments under IAS 17 were replaced
by a depreciation charge on right-of-use assets, onerous lease
provision under IAS 17 has been replaced by impairment of assets
and adjustments to rent free periods and other lease incentives.
Profit before taxation therefore decreased by a total of GBP1.2m
with the inclusion of GBP1.9m of finance costs under the new
standard. The table below reconciles operating profit between IAS
17 and the new standard, IFRS 16:
GBP000
--------------------------------------------------------- --------
Add: Operating lease costs under IAS 17 6,276
Impact on adjusted EBITDA for the period ended 28 June
2020: 6,276
Less: Depreciation of right of use assets for leases
previously recognised as operating leases under IAS
17 (5,671)
Add: amortisation of lease incentives recognised on
consolidation 22
Less: Onerous lease provision previously recognised
under IAS 17 (10)
Impact on operating profit for the period ended 28 June
2020 617
Less: Finance costs (interest) (1,847)
--------------------------------------------------------- --------
Net decrease to profit before tax (1,230)
6 Performance share plan awards
The Company operates a Performance Share Plan (PSP) for its
executive directors. In accordance with IFRS 2 Share Based
Payments, 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. Due to the Covid-19
pandemic, no 2020 scheme has been announced. The Company currently
has three schemes in place that arose in prior years as detailed as
follows:
-- 2017 Share Scheme - This scheme was announced on 22 May 2017
and vested on 22 May 2020 when Graham Blackwell exercised 96,970
options being 50% of the awards granted him and 96,970 ordinary
shares were allotted to him. This consisted of 50% of the awards
that vested upon the Total Shareholder Return (TSR) condition being
met.
-- 2018 Share Scheme - This scheme was announced on 14 June 2018
when 207,089 awards were granted to the Chief Financial Officer,
Mark Willis and Chief Commercial Officer, Graham Blackwell and
updated on 11 December 2018 when the new Chief Executive Officer,
Duncan Garrood was issued 111,940 awards on the same terms. The
vesting of these awards is conditional upon the achievement of two
performance conditions which will be measured following the
announcement of results for the year to 27 December 2020
("FY2020"). The first performance condition applying to the awards
will be based on EPS of the Company and will apply to 50 per cent.
of the total number of Share Awards granted. The second performance
condition will be based on TSR of the Company over the period from
the date of grant to the announcement of results for FY2020
relative to a comparator group of companies and will apply to the
remaining 50 per cent. of Share Awards granted. Upon the
resignation of the Chief Financial Officer, Mark Willis on 29
October 2018, 111,940 of these awards are now not expected to vest
and upon the resignation of the Chief Executive Officer, Duncan
Garrood on 8 September 2020, a further 111,940 awards are not
expected to vest which will be adjusted for in the 2(nd) half of
the year.
-- 2019 Share Scheme - This scheme was announced on 20 May 2019
when 456,666 awards were granted to the three executive directors.
The vesting of these awards is conditional upon the achievement of
two performance conditions which will be measured following the
announcement of results for the year to 2 January 2022 ("FY2021").
The first performance condition applying to the awards will be
based on EPS of the Company and will apply to 50 per cent. of the
total number of Share Awards granted. The second performance
condition will be based on TSR of the Company over the period from
the date of grant to the announcement of results for FY2021
relative to a comparator group of companies and will apply to the
remaining 50 per cent. of Share Awards granted. Upon the
resignation of the Chief Executive Officer, Duncan Garrood on 8
September 2020, 200,000 of these awards are not expected to vest
which will be adjusted for in the 2(nd) half of the year.
During the 26 week period ended 28 June 2020 the Group
recognised a net charge of GBP139,463 (30 June 2019: GBP98,424, 29
December 2019: GBP116,195) to administration costs related to these
awards.
7 Segment reporting
Segmental information is presented in respect of the Group's
business segments. Strategic decisions are made by the Board based
on information presented in respect of these segments. The Group
comprises the following segments:
Tenpin (Bowls) - Tenpin is a leading tenpin bowling operator in
the UK. All revenue is derived from activities conducted in the
UK.
Central - Comprises central management including company
secretarial work, the board of directors and general head office
assets and costs. The segment results are used by the Board for
strategic decision making, and a reconciliation of those results to
the reported profit/(loss) in the consolidated statement of
comprehensive income, and the segment assets are as follows:
Tenpin Central Group
GBP000 GBP000 GBP000
For the 26 week period ended 28 June 2020:
Segment revenue - external 22,471 - 22,471
Adjusted EBITDA 5,894 (1,084) 4,810
Segment total assets as at 28
June 2020 249,934 18,061 267,995
Segment total liabilities as at
28 June 2020 (203,243) (19,827) (223,070)
Reconciliation of adjusted EBITDA to reported
operating profit:
Adjusted EBITDA 5,894 (1,084) 4,810
Amortisation and depreciation
of intangibles and property, plant
and equipment (9,627) - (9,627)
Amortisation of fair valued intangibles (34) (20) (54)
---------- ---------- ----------
Operating loss (3,767) (1,104) (4,871)
Finance (costs)/income (2,151) 28 (2,123)
---------- ---------- ----------
Loss before taxation (5,918) (1,056) (6,994)
Tenpin Central Group
GBP000 GBP000 GBP000
For the 52-week period ended 29 December 2019:
Segment revenue - external 84,122 - 84,122
Adjusted EBITDA 25,526 (1,958) 23,568
Segment total assets as at 29
December 2019 88,420 (2,445 85,975
Segment total liabilities as at
29 December 2019 (28,189) (875) (29,064)
Reconciliation of adjusted EBITDA
to reported operating profit :
Adjusted EBITDA 25,526 (1,958) 23,568
Amortisation and depreciation
of intangibles and property, plant
and equipment (7,379) - (7,379)
Loss on disposals (932) - (932)
Profit on share of joint venture 10 - 10
Amortisation of fair valued intangibles (114) (179) (293)
Exceptionals (2,300) (91) (2,391)
Operating profit/(loss) 14,811 (2,228) 12,583
Finance costs (865) 77 (788)
---------- ---------- ----------
Profit/(loss) before taxation 13,946 (2,151) 11,795
Tenpin Central Group
GBP000 GBP000 GBP000
For the 26 week period ended 30 June 2019:
Segment revenue - external 41,444 - 41,444
Adjusted EBITDA 12,287 (1,067) 11,220
Segment total assets as at 30
June 2019 81,384 1,425 82,809
Segment total liabilities as at
30 June 2019 (44,121) 13,841 (30,280)
Reconciliation of adjusted EBITDA to reported
operating profit :
Adjusted EBITDA 12,287 (1,067) 11,220
Amortisation and depreciation
of intangibles and property, plant
and equipment (3,520) - (3,520)
Amortisation of fair valued intangibles (61) (90) (151)
Loss on disposals (57) - (57)
Exceptional costs (1,169) - (1,169)
Onerous lease provision movement 12 - 12
---------- ---------- ----------
Operating profit/(loss) 7,492 (1,157) 6,335
Finance (costs)/income (437) 36 (401)
---------- ---------- ----------
Profit/(loss) before taxation 7,055 (1,121) 5,934
All assets have been allocated
to segments.
Disaggregation of revenue
In addition to the breakdown of revenue into the above segments
we have analysed revenue further as following:
52 week
26 week period 26 week period period ended
ended 28 ended 30 29 December
June 2020 June 2019 2019
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
--------------- --------------- --------------
Bowling 10,555 20,218 39,912
Food and drink 5,926 10,119 21,426
Machines and amusements 5,169 9,503 19,649
Other 821 1,604 3,135
22,471 41,444 84,122
8 Earnings per share
Basic earnings per share for each period is calculated by
dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
period. Earnings per share is based on the capital structure of the
Company and includes the weighted average of the 66,617,889
ordinary shares in issue. The total shares in issue at the end of
the 26 weeks to 28 June 2020 was 68,346,970.
The Company has 663,755 potentially issuable shares (2019:
857,694) all of which relate to share options issued to Directors
of the Company. Diluted earnings per share amounts are calculated
by dividing profit for the year and total comprehensive income
attributable to equity holders of the parent Company by the
weighted average number of ordinary shares outstanding during the
year together with the dilutive number of ordinary shares.
Adjusted basic earnings per share have been calculated in order
to compare earnings per share year on year and to aid future
comparisons. Earnings have been adjusted to exclude IPO expenses,
share based payments and other one-off costs (and any associated
impact on the taxation charge). Adjusted diluted earnings per share
is calculated by applying the same adjustments to earnings as
described in relation to adjusted earnings per share divided by the
weighted average number of ordinary shares outstanding during the
year adjusted by the effect of the outstanding share options.
Basic and diluted 26 weeks 26 weeks to 52 weeks to
to 28 June 30 June 2019 29 December
2020 Unaudited Unaudited 2019 Audited
GBP000 GBP000 GBP000
--------------- ------------- -------------------
(Loss)/profit after tax (6,298) 4,673 9,037
Weighted average number of shares
in issue 66,617,889 65,000,000 65,000,000
Adjustment for share awards - 191,908 179,451
Diluted weighted average number of
shares in issue 66,617,889 65,191,908 65,179,451
Basic earnings per share (pence) (9.45p) 7.19p 13.90p
Diluted earnings per share (pence) (9.45p) 7.17p 13.87p
Below is the calculation of the adjusted earnings per share.
Adjusted earnings per share 26 weeks 26 weeks to 52 weeks to
to 28 June 30 June 2019 29 December
2020 Unaudited Unaudited 2019 Audited
GBP000 GBP000 GBP000
----------------- --------------- ----------------
(Loss)/profit after tax (6,298) 4,673 9,037
Amortisation of fair valued items
on acquisition 54 151 293
Loss on disposals - 57 932
Profit on share of joint venture - - (10)
Exceptional costs - 1,157 2,391
Tax impact on above adjustments - (182) (78)
Adjusted underlying earnings after
tax (6,244) 5,856 12,565
Adjusted profit after tax (6,244) 5,856 12,565
Weighted average number of shares
in issue 66,617,889 65,000,000 65,000,000
Adjusted basic earnings per share (9.37p) 9.01p 19.33p
Adjusted diluted earnings per share (9.37p) 8.98p 19.27p
9 Goodwill and intangible assets
Fair valued
intangibles
on acquisition Goodwill Software Total
GBP000 GBP000 GBP000 GBP000
-------------------------------------- ---------------------- --------- --------- -------
Cost
At 30 December 2018 2,938 28,045 1,010 31,993
Additions - 1,305 81 1,386
At 30 June 2019 2,938 29,350 1,091 33,379
Disposals - - - -
Additions - - 131 131
At 29 December 2019 2,938 29,350 1,222 33,510
Additions - - - -
At 28 June 2020 2,938 29,350 1,222 33,510
Accumulated amortisation
and impairment losses
At 30 December 2018 2,331 - 648 2,979
Charge for the period - amortisation 130 - 144 274
At 30 June 2019 2,461 - 792 3,253
Charge for the period - amortisation 115 - 139 254
At 29 December 2019 2,576 - 931 3,507
Charge for the period - amortisation 54 - 104 158
At 28 June 2020 2,630 - 1,035 3,665
Net book value
At 28 June 2020 308 29,350 187 29,845
At 29 December 2019 362 29,350 291 30,003
At 30 June 2019 477 29,350 299 30,126
Due to the Covid-19 pandemic, the Group has assessed goodwill,
intangibles and property, plant and equipment for impairment. The
Group has used the same principles that were applied in the 2019
Annual Report with each centre being identified as a cash
generating unit (CGU), though for goodwill, the Group was
considered to be one CGU. There has been no impairment recognised
given the recent reopening of the centres and this will be
reassessed again at the year end. The overall process for testing
impairment follows the same methodology as detailed in note 10 for
property, plant and equipment.
10 Property, plant and equipment
Amusement
Short Fixtures,
Long leasehold leasehold fittings
premises premises machines and equipment Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------- --------------- ----------- ------------ --------------- ----------
Cost
At 30 December 2018 2,122 9,569 9,461 33,901 55,053
Additions - - 1,940 3,109 5,049
Acquisition of new
centres - - - 111 111
Disposals - - (890) (79) (969)
At 30 June 2019 2,122 9,569 10,511 37,042 59,244
Additions - - 1,684 6,842 8,526
Disposals - - (624) (864) (1,488)
At 29 December 2019 2,122 9,569 11,571 43,020 66,282
Additions - - - 4,443 4,443
Disposals - - (61) - (61)
At 28 June 2020 2,122 9,569 11,510 47,463 70,664
Accumulated depreciation
and impairment
At 30 December 2018 185 1,743 4,391 7,017 13,336
Charge for the period 27 484 1,029 1,838 3,378
Disposals - Depreciation - - (706) (14) (720)
At 30 June 2019 212 2,227 4,714 8,841 15,994
Charge for the period 27 485 1,148 2,058 3,718
Disposals - Depreciation - - (458) (220) (678)
At 29 December 2019 239 2,712 5,404 10,679 19,034
Charge for the period 27 484 1,163 2,178 3,852
Disposals - Depreciation - - (30) - (30)
At 28 June 2020 266 3,196 6,537 12,857 22,856
Net book value
At 28 June 2020 1,856 6,373 4,973 34,606 47,808
At 29 December 2019 1,883 6,857 6,167 32,341 47,248
At 30 June 2019 1,910 7,342 5,797 28,201 43,250
Due to the Covid-19 pandemic, property, plant and equipment was
tested for impairment on the same principles as reflected in the
2019 Annual Report. The recoverable amount of each CGU open at the
period end has been calculated as the higher of its value in use
and its fair value less cost to sell. The calculation of value in
use is based on pre-tax cash flow projections from the financial
forecasts after accounting for the impact of Covid-19 and
extrapolated by management using an estimated medium-term growth
rate for a further two years. Cash flows beyond this three-year
period are extrapolated over the life of the lease relating to that
centre. The Right of Use Asset values have also been factored into
the impairment calculations along with the adjustment to the 2019
year end pre-tax discount rate which has been changed to 8.06%
after accounting for the transition to IFRS 16 and the significant
change in the debt to equity ratio. A GBP9.1m impairment provision
has been made against the right of use asset on transition but t
here has been no further impairment recognised during the period
given the recent reopening of the centres and this will be
reassessed again at the year end.
11 Right of use assets
Leasehold properties
GBP000
----------------------------------------------- ---------------------
Cost
At transition on 30 December 2019 180,940
Impairment of assets on transition to IFRS 16 (9,077)
Lease additions -
Modification of leases 7,487
Lease surrenders -
At 28 June 2020 179,350
Accumulated depreciation and impairment
At transition on 30 December 2019 -
Charge for the period 5,671
Disposals - Depreciation -
At 28 June 2020 5,671
Net book value
At 28 June 2020 173,679
At 29 December 2019 -
The lease modification relates to the regear of 2 leases at the
period end with a rent free period agreed in exchange for an
increase in the term of the leases.
12 Cashflow from operations
26 weeks 26 weeks 52 weeks
to 28 June to 30 June to 29 December
2020 Unaudited 2019 Unaudited 2019 Audited
Cash flows from operating activities GBP000 GBP000 GBP000
----------------------------------------- ---------------- ---------------- ----------------
(Loss)/profit for the period (6,298) 4,673 9,037
Adjustments for:
Tax (696) 1,261 2,758
Finance costs, net 2,123 401 788
Profit on share of joint venture - - (10)
Non-cash exceptionals - - 800
Non-cash share based payments charge 139 98 116
Loss on disposal of assets - 57 921
Amortisation of intangible assets 158 274 528
Depreciation of property, plant and
equipment 3,852 3,378 7,096
Depreciation of right to use assets 5,671 - -
Changes in working capital:
Decrease in inventories 423 56 208
Increase in trade and other receivables 220 (613) (622)
Increase in trade and other payables 666 769 1,938
(Increase)/decrease in provisions - (12) 359
Cash generated from operations 6,258 10,342 23,917
13 Bank borrowings and finance leases
26 weeks 26 weeks 52 weeks
to 28 June to 30 June to 29 December
2020 Unaudited 2019 Unaudited 2019 Audited
Current liabilities GBP000 GBP000 GBP000
--------------------------------- ---------------- ---------------- ----------------
Bank loans 20,000 6,200 6,250
Finance leases - Machines/other 3,066 2,658 3,118
Finance leases - Property 16,048 - -
Capitalised financing costs (116) (56) (141)
33,998 8,802 9,227
Non - c urrent liabilities
--------------------------------- ---------------- ---------------- ----------------
Finance leases - Machines/other 4,555 4,616 4,991
Finance leases - Property 166,847 - -
171,402 4,616 4,991
--------------------------------- ---------------- ---------------- ----------------
The bank loans with the Royal Bank of Scotland plc consist of a
GBP25.0m committed Revolving Credit Facility (RCF). The loans incur
interest at LIBOR plus a margin of 1.40%. The Group has drawn
GBP20.0m of the RCF as at the interim period.
14 Financial risk management
Cash flow and fair value interest rate risk
Cash flow interest rate risk derives from the Group's floating
rate financial liabilities, being its bank debt and overdraft
facility, which are linked to LIBOR plus a margin of 1.4%. The
Group has no fair value interest rate risk. The average period to
the expected maturity date of the interest-free financial
liabilities, being the onerous lease provision, is 8 years.
Sensitivity analysis: In managing interest rate risk the Group aims
to reduce the impact of short-term fluctuations on the Group's
earnings. Over the longer term, however, sustained changes in
interest rates would have an impact on the Group's earnings.
Credit risk
As almost all of the Group's sales are for cash, the Group is
exposed to minimal credit risk.
Liquidity risk
The Group's cash position and cash flow forecasts are reviewed
by management on a daily basis. The current bank facilities consist
of a GBP25.0m RCF. The risk around liquidity is discussed further
under the going concern note 3.
15 Principal risks and uncertainties
Ultimate responsibility for the Group's risk management
framework sits with the Board who review the Group's risk appetite
on an annual basis. The Group's business has been significantly
disrupted as a result of the Covid-19 pandemic. All of the Group's
centres were closed for trade from 20 March 2020 with the three
Welsh centres only reopening on 5 August 2020 and 35 centres in
England opening on 15 August 2020. There still remains some
uncertainty as to whether this will change as local lockdowns get
implemented and there is still the risk that a country wide
lockdown could happen again if the pandemic were to significantly
worsen. There are a number of potential risks and uncertainties
which could have a material impact on the Group's performance over
the remaining months of the financial year.
The Covid-19 pandemic will have an impact on the economic
condition in the UK and hence on the Group and could potentially
increase other risk factors including the impact on third party
suppliers. These two risks were identified at 29 December 2019, but
Covid-19 has increased their likelihood.
The Group's principal risks and uncertainties are assessed in
detail as set out in the full Annual Report for the 52 weeks ended
29 December 2019. The Group does not believe there have been any
significant changes to its principal risks that will impact on the
Group in the remaining half of the year which in summary
include:
-- Operational - ageing of estate, deterioration of assets and loss of key personnel
-- Operational - allergens related to food and bar services provided
-- Regulatory changes - new laws, re-interpreted laws and updates from case law
-- Business interruption - risk of cyber-attacks, terrorism,
failure or unavailability of IT infrastructure
The Group's Board notes that whilst the immediate uncertainties
surrounding Brexit have been removed, a level of uncertainty will
remain until negotiations around trading arrangements are
concluded. However, Brexit may ultimately impact consumer
prosperity and disposable income, which may adversely affect demand
for the Group's services.
16 Covid-19
All centres were closed on 20 March, in line with government
guidance but the three Welsh centres reopened on 5 August 2020 and
35 centres in England opened on 15 August 2020. The closure of the
centres had a significant impact on the performance of the Group
but the following schemes offered by the government were taken
up:
-- 12 months rates relief which provided a GBP5.0m cash saving, with GBP1.3m received in H1;
-- Time to Pay for the VAT quarter to March 2020 providing a GBP1.7m cash saving; and
-- furlough relief from the Government's Coronavirus Job
Retention Scheme (CJRS) providing a GBP2.6m cash saving as at the
end of the interim period.
The Group increased it bank drawings to (GBP20.0m) to ensure it
had sufficient cash during the Lockdown period. The Group had cash
and cash equivalents of GBP13.3m leaving net debt of (GBP6.7m) as
at the interim period end and still has GBP5.0m of the bank
facility available to draw on.
The Board has always adopted a prudent approach to the Group's
cost base and capital expenditure and identified self-help
initiatives by working with suppliers and landlords to reduce the
cost base in the short term to ensure the Group remains in a strong
financial position.
17 Related Parties
There are no related party transactions nor any related party
balances receivable or payable that are not intercompany related.
All intercompany transactions and balances have been eliminated on
consolidation. There were no material related party transactions
requiring disclosure, other than compensation of key management
personnel which was disclosed in the Group's Annual Report and
Accounts for the year ending 29 December 2019.
18 Post balance sheet events
The Group closed all 45 centres on 20 March 2020 and has
re-opened all the centres over August and September 2020 as
Lockdown restrictions were eased and the businesses were allowed to
reopen.
DIRECTORS RESPONSIBILTY STATEMENT
The directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required by DTR 4.2.7 and
DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and
-- their impact on the condensed set of financial statements,
and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related-party transactions in the first 26 weeks and
any material changes in the related-party transactions described in
the last annual report.
The directors confirm to the best of their knowledge that the
condensed interim financial statements have been prepared in
accordance with the Accounting Standards Board 2007 statement on
half yearly financial reports.
The directors are responsible for the maintenance and integrity
of the company 's website. Legislation in the United Kingdom
governing the preparation and dissemination of interim financial
statements may differ from legislation in other jurisdictions.
The responsibility statement was approved by the Board on 23
September 2020 and signed on its behalf by:
Graham Blackwell Antony Smith
Interim-CEO CFO
23 September 2020 23 September 2020
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Ten Entertainment Group plc's condensed
consolidated financial statements (the "interim financial
statements") in the Half-Year Results of Ten Entertainment Group
plc for the 26 week period ended 28 June 2020. Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
Emphasis of matter
Without modifying our conclusion on the interim financial
statements, we have considered the adequacy of the disclosure made
in note 3 of the interim financial statements concerning the
group's ability to continue as a going concern. The group's
forecasts and projections includes a downside scenario which
includes a 20% reduction in trading levels on the disclosed base
case, and a further second wave full lockdown in December 2020 and
January 2021 with no trade, and administration costs remaining as
per base case during this two month closure. In this downside
scenario, whilst liquidity would remain within the available cash
and financing facilities, the group would be in breach of its
banking covenants and would need to negotiate a waiver up to
September 2021 with its lenders in order to avoid its borrowings
becoming repayable immediately.
These conditions, along with other matters explained on page 11
to the interim financial statements, indicate the existence of a
material uncertainty which may cast significant doubt about the
group's ability to continue as a going concern. The interim
financial statements do not include the adjustments that would
result if the group were unable to continue as a going concern.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 28 June 2020;
-- the condensed consolidated statement of comprehensive income for the period then ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-Year
Results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half-Year Results, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
Half-Year Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half-Year Results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half-Year
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
23 September 2020
a) The maintenance and integrity of the Ten Entertainment Group
Plc website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the interim financial
statements since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
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END
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(END) Dow Jones Newswires
September 23, 2020 02:00 ET (06:00 GMT)
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