Reflecting capital discipline and a strengthening balance sheet, Hollywood Bowl’s (BOWL) net debt fell from £13.5m to £7.2m in the first half. Operating cash flow was up £0.8m at £14.9m, and management’s confidence in future cash flows prompted a 12.8 per cent dividend hike (see table). Generous indeed, given the 3.33p in special cash paid out at the September year-end.
Organic growth was buoyed by bowling game volumes rising 3.6 per cent to 6.9m, with spend per game increasing 5.5 per cent to £9.20p. The group also expanded its network, opening two new centres to take its entire estate to 59. Refurbishment and rebranding programmes are going to plan, with one Hollywood Bowl refurbishment and two Bowlplex rebrands completed. Three further rebrands are scheduled to finish this financial year. For those questioning the rationale behind such exercises, Hollywood cites a 55.4 per cent average return on investment from the most recent 11 refurbishments.
In all, the half-year figures were largely positive. Still, broker Investec forecasts a decline in second-half profits year on year – highlighting the anticipated closure of the group’s Gravesend site, and the potential headwind of the Fifa World Cup, as punters eschew bowling in favour of watching England get beaten in the comfort of bars with large sports TV screens.
Investec forecasts adjusted pre-tax profits of £23.2m and EPS of 12.1p for the year to September 2018 (FY2017: £21.7m and 11.5p).
| HOLLYWOOD BOWL (BOWL) | ||||
| ORD PRICE: | 224p | MARKET VALUE: | £ 336m | |
| TOUCH: | 224-226p | 12-MONTH HIGH: | 228p | LOW: 148p |
| DIVIDEND YIELD*: | 2.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 61p* | NET DEBT: | 8% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017† | 58.2 | 12.4 | 6.64 | 1.80 |
| 2018 | 63.6 | 14.6 | 7.85 | 2.03 |
| % change | +9 | +17 | +18 | +13 |
| Ex-div: | 14 Jun | |||
| Payment: | 10 Jul | |||
| *Excludes special dividend of 3.33p a share, paid 27 Feb 2018**Includes intangible assets of £78.8m, or 53p a share†Figures restated ahead of IFRS 15 adoption | ||||
