Hollywood Bowl Group plc (2H4.F) Earnings Call Transcript & Summary

Financial year '23 was another very successful period for the group despite the very tough comps in 2022. We grew revenues by 4.5% on a like-for-like basis. That was driven by growth in both spend and volume. The group delivered total revenue of GBP 215.1 million, which we built 11% on FY '22. We posted EBITDA on a pre-IFRS 16 basis of GBP 64.9 million and closed the period with GBP 52.5 million of net cash on the balance sheet. In line with our progressive dividend policy, we proposed to pay an ordinary dividend of 11.81p per share topped up with a 2.73p per share special dividend, reflecting the success enjoyed in the period. Looking at the operational highlights, our growth strategy remains unchanged. The new center of new program is on track in both the U.K. and Canada. We continue to grow like-for-like revenue through the improvement of the existing estate. And our refurbishment program continues to deliver both our returns hurdle rate. It's fairly been a bit of a busy year for the business, much matching our record revenues and profits, FY '23 was a record year of investment in the group. It's helpful we invested just over GBP 30 million on new center openings, refurbishments, rebrands, acquisitions and the development of our technological capabilities, all funded from cash generated by the business in the year. In the U.K., we opened three new centers, rebranded the 3 remaining legacy AMF centers to Hollywood Bowl, completed transformational refurbishment from space optimization project in line of the centers and installed Pins on Strings in 13 more volume venues. In Canada, we completed on refurbishment and started on site in one more. We acquired three centers and built a strong pipeline for new openings and further acquisitions, two such acquisitions that have already completed at the start of FY '24, taking the total centers currently trading in North America to 11. I'll now hand over to Laurence, who will take you through the numbers.

Thanks, Stephen. . On Slide 6, just to show the financial performance on the back of an exceptionally strong FY '22, it was pleasing that we continued like-for-like revenue growth 4.5%. Total group revenue of GBP 215.1 million, which was growth at the end compared to the same period last year, but actually it was growth of 16.2% when you exclude the reduced rate of VAT on [indiscernible] that we got in FY 2022, which was worth, as a reminder, GBP 8.8 million of revenue and GBP 6.6 million at an earnings level. This very strong trading, coupled with us is put on costs relate to a record group adjusted EBITDA on a pre-IFRS 16 basis of GBP 64.9 million, which was up 7% on FY 2022 and an EBITDA margin of 30.2%. Adjusted profit after tax was GBP 36.8 million, resulting in an EPS of 21.48 per share. And as you can see from the graph, we've tried to really split out what the benefit was on a reduced rate of BAC and what loans would have been [indiscernible] when taking that out. On Slide 7, we set out the growth in total revenues compared to last year. And as previously noted, FY '22 included the benefit of VAT on bowling. Therefore, the underlying U.K. revenue, we're taking that out as well as the GBP 6.3 million of Canadian revenue in FY '22 with GBP 178.7 million. Our U.K. like-for-like growth of 4.1% was a combination of spend per game growth of 3.4%, placing like-for-like average spend to just over GBP 11 as well as life-for-like game volume growth of 0.7% which is an improvement on the half year number of 0.6%. This like-for-like growth alongside the performance of the new U.K. centers, which contributed GBP 6.3 million, resulted in record U.K. revenues of GBP 192.6 million. Our Canadian business continues to trade well. The Canada business showed like-for-like growth of 15.1% post May 2023 when we annualized the acquisition with games growth of 9.5% over game growth at 5.7%. Total revenues in Canada for CAD 37.2 million, GBP 22.5 million. And as you see from the graph, the centers accounted for GBP 18.2 million of that GBP 22.5 million with the balance coming from our Striker installations business. Total group revenue was GBP 215.1 million, as I mentioned earlier, 16.2% growth on FY '22. The average family of four could still come bowling headline price runs at GBP 25. And we believe that maintaining its value for money a pricing strategy is a big backbone in our continued revenue growth alongside our investment strategy. [indiscernible] read off to numbers now. On Slide 8, [indiscernible] . Gross profit was GBP 177.6 million, which was 8.1% growth in FY '22, but a 14% growth when you exclude the VAT benefit. Gross margin in the year was 82.6%. Now to break that down, gross profit for the U.K. business was GBP 161.2 million with a margin of 83.7%, with the trend of amusements growing at a higher rate than bowling reducing a higher gross profit overall, albeit at a reduced margin because amusements have a lower margin than the rest of the business. Gross profit for the Canadian business was in line with expectations at CAD 27.2 million, which was GBP 16.4 million and a margin of 73.1%. The lower margin rate when compared to the U.K. business was as expected due to the lower gross profit margin of the Striker bowling equipment and installations business, the higher food and drinks mix, which was around 23% compared to the 26% in the U.K. and the lower contractual amusement gross profit margin was current at around 52.5% compared to the U.K., which is over 64%. The Splitsville centers contributed GBP 15.2 million of gross profit of the GBP 16.4 in Canada. [indiscernible] admin costs, excluding depreciation and amortization, were up 15.4% to GBP 87.6 million. Of that GBP 87.6 million, employee costs were GBP 40.7 million, maybe high and that was an increase of GBP 7 million compared to the prior year due to a combination of salary increases, the impact of higher light by revenues, new U.K. centers, which contributed GBP 1.2 million of the GBP 7 million as well as the full year effects of employee costs in Canada, which is worth GBP 4 million of the GBP 7 million. Total property costs accounted for under pre-IFRS 16 was GBP 36.6 million with GBP 33.9 million of those in the U.K., which was only an increase year-on-year of GBP 0.6 million. Rent costs in the U.K. accounted for GBP 17.6 million and [indiscernible] got of GBP 33.9 million. And underlying business rates increased year-on-year by GBP 1.6 million as the COVID-19 concessions were removed during the year. However, due to business rate appeals that we've made in respect of the 2018 revaluation finally being agreed only 5 years late, the group received GBP 2.3 million in cash refunds in the year resulting in an overall decrease of U.K. business rates of GBP 0.7 million. We don't expect that one-off to repeat in FY '24. The total property costs in the U.K. increased by GBP 1.1 million, in total, but with new centers accounted for GBP 0.9 million of that. Canadian property center costs much more straightforward. They were in line with expectations at GBP 2.7 million, which is CAD 4.5 million. Now back to the introduction of [indiscernible] in our centers and improvement in our energy efficiency, we also benefited in the year as discussed at the half year results from selling off some of our electricity hedge, which we agreed back in 2020. The volume that we hedged was no longer required. And therefore, we sold off just under the highs of the market in the second half, and that benefited the P&L to the tune of GBP 1 million in the year. But there'll be no further [indiscernible] selling of any hedges in the future. Total property costs under IFRS 16 were GBP 39.6 million. Corporate costs include all central costs as well as the outperformance bonus for centers and they increased by GBP 3.3 million to GBP 25.3 million in the year. U.K. corporate costs increased by GBP 1.3 million with the main driver being increased marketing and digital spend. Now as we continue to build out our support team in Canada, this combined with the full year of ownership resulted in corporate costs increasing by GBP 1.8 million, that's GBP 2.3 million in total. The additional people in Canada included a new Director of Operations as well as leaders in marketing, people and property. Group adjusted EBITDA pre-IFRS 16 increased to GBP 64.9 million, including a GBP 4.5 million contribution from the Canadian business. Exceptional costs stabilize to two main areas. The first is the acquisition cost simulation to the three centers that we bought in Calgary in February as well as the acquisitions, which were in progress in year-end, which obviously have now been released one in the U.K. and two in Canada. The total costs for acquisition in the year were GBP 0.7 million. The second is the earn-out consideration as noted as part of the original Calgary acquisition, which an exceptional cost of GBP 2 million in the year, of which GBP 1.8 million in admin costs and GBP 0.2 million would be within the interest. The statutory depreciation, amortization and impairment charge for the year was GBP 26.4 million, only marginally up on FY '22 by GBP 0.7 million. All of this led to an adjusted cost before tax of GBP 47.8 million, which was down only GBP 0.8 million versus the statutory PBT in the year previous and that included an GBP 8.6 million, as I mentioned earlier, over the reduced rate of VAT. When you remove that benefit, PBT was up 19.8%. Adjusted cost after tax of GBP 36.8 million and EPS of 21.48p per share, which was up 1.2p on prior year. We'll have further questions at the end for any of those recaps. On Slide 9, we step out the inflationary presses. But we've all seen inflationary pressures in FY '23, but we are better protected than most with 72% of our group revenue not impacted by subsequent inflation. With a reminder that bowling is 100% gross profit margins and amusements is on a revenue share. Food and drink costs account for less than 8% of total revenue. And whilst we are seeing the previous increases, there are still some small amounts coming through. Labor costs are less than 19% of revenue at center level, now we aren't immune to it. And the national living wage and minimum wage increase announced in the [indiscernible] will be a 10% increase in payroll, which is actually 3.5 percentage points of price than most people had forecasted. And therefore, for us, a hit of an incremental GBP 600,000 in April 2024 and a GBP 1.2 million announced annualized. In relation to energy costs, we've been extremely well protected from the increases that have been seen due to our hedge which aims in FY -- sorry, in September '24. Now whilst it would be great to be able to get back to those loans out again it's highly likely. And we were right to wait until most recently, when we agreed a new hedge that's effective out until September 2027. It increase for FY '25 will be around 30% and the FY '24 increases to about GBP 1 million, which compares to others in the sector that we're talking a 50% increase is the 70% increases were made successfully in Investor commerce agreed their hedges, and we're really pleased with this. We would also be able to trade the market for a lower FY 2026 cost if the market prevails as such. And we'll be continuing with our solar installs, which are now 38% of our estate. Capital cost inflation has impacted us, particularly as we've seen accelerating our refurbishment and new center opening program and actually the one that we foresee continuing for the longest. This has obviously impacted on our ROI stake. But we are confident this will still be above the 33% target we set ourselves on refurbishment and the 19% on new centers. All of this, plus our wide demographic appeal, strong footfall locations, means we're able to continue to see lower than CPI price increases. On Slide 10, we set out our free cash flow, and we drove an exceptionally strong free cash flow in the period with group adjusted operating cash flow of GBP 52 million. There's a small work on capital in the movement, mainly in the move, sorry, mainly due to the record center level bonuses in FY 2022 and the near record ones in FY 2023 [indiscernible]. The group spent a total of GBP 9.1 million on maintenance CapEx, including the implementation of Pins on Strings across 30 more centers and now at 83% of the U.K. bowling centers and solar panels, which are now in 27 centers as well as maintenance spend in our Canadian business. A total GBP 7 million was spent on refurbishments in the year with GBP 2.1 million of that on Canadian refurbishment. Richmond Hill that was completed in FY '23 in [indiscernible] that started in September and was due to finish in January in Canada. The refurbishment of 13 U.K. centers were completed including the final three rebranded AMS to Hollywood. And despite inflationary pressures, we continue to exceed the hurdle rate of 33% as what we on about on the next slide. New U.K. centers CapEx was a net GBP 6.8 million in the year, GBP 5.8 million related to the centers opened in the year and GBP 1 million relates to one in FY 2024. Post tax, interest, capital lease repayments, we generated GBP 29.5 million of free cash. Also, it's worth noting we paid out GBP 25.3 million on the final ordinary and special dividend and the interim dividend for FY '24 as well as GBP 7.3 million for our Calgary acquisitions. Now post all of this, our cash balance was a very healthy GBP 52.5 million. But it's also worth noting the three centers we acquired in October, there was no burnout in the any of those and the total consideration was GBP 7.6 million. On Slide 11, we review our U.K. refurbishments, which will continue to pay back at industry-leading rates. Our spend per game performance of 13.2% and lineage volume up 3.7%, and our average payback on capital invested is over 55% for the last 17 refurbishments. On top of that, it's even more pleased to see an increase of 4.5 percentage points on our net promoter score, and this is really a testament to the continued evolving the investments within our centers. We've also noted by some stars in the bottom axis, those centers that are on their second generation and even third generation refurbishments, which are still generating strong returns. We've also completed already one refurbishment in financial year 2024. We continue to see strong performance from our new centers in the U.K. And as you see on Slide 12, the EBITDA continues to be tough in the industry. This is down to our focus really on long-term sustainable EBITDA as well as the quality reputation that we continue to focus on. Our last 4 openings are on track to deliver returns on gross CapEx in excess of 35% against as a reminder, a target of 19%, and on a net CapEx basis of over 45%. Just to note, those centers are not in chronological order. Our successful U.K. new center pipeline continues to grow. We opened up 3 centers in FY '23 and have seen some exceptionally strong performance from those. Our FY '24 pipeline is also strong with Lincoln already opened, the purchase of the non-leasehold unit. The only Bowling Lincoln limited to no opportunities for another operator as well [indiscernible] and total consideration for that GBP 4.4 million, GBP 2 million of that is for the long lease hold and then less than 4.5x EBITDA for the trading business. We're due to be on site in two further locations in January, already on site in one, and therefore, we forecast to open at least two centers in the U.K. in FY '24. Our strong covenant, good relationships with landlords and importantly, our investment cycle through our refurbishments is making us the first choice of the [indiscernible] of land or looking for a long-term intent. We've secured a pipeline beyond FY 2025 with even more in legals and head returns discussions with one even being signed today. Now on to Slide 13, where we set out our capital allocation policy. We grew highly castrated equipment model start earlier and strong balance sheet meets the business is well placed to continue to invest in its customer-led U.K. and an international growth strategy and to take advantage of opportunities as they arise while continuing to deliver attractive shareholder returns. In line with [indiscernible] capital allocation policy for the updated priorities for cash in the following order. Cash and investments in the existing estate through refurbishments and maintenance, investments into new center opportunities and acquisitions, including the expansion in both the U.K. and Canada. To pay and grow the ordinary dividend in line with adjusted profit after tax. Given our strong performance on our cash balance, the ordinary dividend will be based on a payout of 55% of adjusted profit after tax for FY 2023 and onwards. And any excess cash will be available for distribution to shareholders as the board deems appropriate, importantly without impacting on investment in the growth of the business. Now the board has declared a final order dividend of 8.54p per share based on the adjusted earnings per share of 21.48p. And in line with the allocation policy, there's also a proposed special dividend of 2.73p per share, which will be paid alongside the ordinary dividends, taking full year 14.54p per share, marginally up on the prior year. Furthermore, given the surplus cash at the end of FY '23, the board's confidence in the strategy, strong balance sheet as well as the board's view that the business is undervalued in the public market, the group is also announcing a share buyback program of up to GBP 10 million, which is intended to commence shortly after the AGM. We'll continue to periodically assess the progress of the share buyback program in light of our inflation policy, investing in the group's growth and profitable run it will be in the priority on use of cash. And on to Slide 14 in our financial investment outlook. We continue to be excited by the period ahead. We're a strong well customized business really an advantage of opportunities. We're pleased with the FY '23 performance and in light of the beneficial weather, we've mentioned earlier, in the U.K., we're expecting a more modest like-for-like growth in FY 2024. We will see the full year effect of the Calgary acquisition as well as the new centers opened in FY '23 and those already acquired in FY '24. We're mindful of the inflationary pressures. And as I said earlier, we expect to be able to manage these through our P&L dynamics. Payroll inflation is marginally higher than expected. Our electricity use is now hedged until the end of FY 2027. And all of these cost increases can be offset by minimal price inflation if needed. We'll continue to invest in the quality of our space with at least 7 centers across the group to open in FY 2024 with 3 already done. 10 refurbishments planned across the group, including Canada, and then continued investment in our cost saving and ESG initiatives. Given all of this, we expect CapEx to be in the region of GBP 35 million to GBP 40 million. Now that doesn't include the money that we've already spent from the acquisitions in FY '2024. And to recap our final special dividend brings to total 14.54p per share and also the share buyback program of GBP 10 million.

Thanks, Laurence. On Slide 16, we show that how we've grown the estate consistently and sustainably since we first acquired the Hollywood Bowl brand back in 2010. We closed financial year '23 operating 79 centers that individually generated an average EBITDA of over GBP 1 million, testament to the quality of site selection and acquisition criteria. Since the start of the new financial year, we've acquired three more centers 2 in Canada and on long leasehold in Lincoln. We're on site in one new build in Canada. And as you saw from Laurence's earlier slides, plan to open a further three new centers in the U.K. in the year. We've developed a strong pipeline both in the U.K. and Canada. And based on the information that we have in front of us now, we expect to be operating at least 130 centers by 2035. In addition to the new center expansion, we've continued to drive marginal gains through the continuous improvements we make to our office. Starting with the bowling environment. We continued to roll out the Pins on Strings technology installing into a further 9 centers during the half. 83% of these centers now benefit from the tech and we'll be installing into at least six more centers during FY '24. The target return of investment of 30% is still being beaten despite the increase in the cost and cost inflation that we've seen. And we continue to drive improvements in both freefall centers as well as Pins on Strings centers as we continue to refine the offering. Our latest new opening in the Merry Hill Shopping Center boasts all of our refined design elements with new lighting, digital signage and sound that allows us to vary the atmosphere for the different day parts. It's actually our most successful new openings to date and showcases the very best the Hollywood Bowl brand has to offer. We've also been leveraging the learning from Puttstars, introducing the concept into one of our existing centers with plans to include into two more Hollywood Bowls during FY '24. In the amusement areas, space optimization projects have allowed us to improve machine density and accommodate larger high-quality games. We've seen 510 new machines installed during the year as part of our rotation program and over 100 new player positions added to the amusement areas. The new payment options have been trialing has been installed and from all machines through the year enabling us to take some price as well as remove barriers to play. We've been rewarded with a 7.8% increase in the amusement spend per game during the year. And this growth has come from a mixture of both increasing play as well as of moving the average price per play on amusements by 11.7% versus the prior year. In our food and drink offer, our well-tested mantra of delivering a quality product served quickly, consistently, our value price point continues to resonate with our customers. We refined the menu in readiness for the winter trading period, managing to keep prices well below inflation with our bestsellers of burger and chips still being the same price as it was in 2019. Keeping customers at the lanes is important in a capacity-constrained business like ours where customers buy a game rather than time. In the year, we grew food and beverage sales that delays the 20% of all food and beverage revenue through a mixture of lane house delivering sales and service superiority and new app lane mobile ordering for those that prefer to order using their own devices. We saw a 4.8% increase in our food and beverage fund game during the year under review. On the next slide, we look at technologies. For the last 8 months, we've been developing our own bespoke booking system Compass. As our business has evolved, we have become increasingly aware that the current off-the-shelf systems are not suitable for the size and complexity of our business. The open-source multichannel booking technology that we've developed will integrate with our current CRM tools and handle multiple data sets from all of our different revenue streams. The system has been built to handle multiple currency and tax treatment and the pilot testing has been very positive. Now nearing completion, Compass will be launched in the second half of FY '24 through a phased rollout in the U.K. and in Canada. Investment in the digital customer journey has continued as we've refined our sales and marketing and our online booking systems. Online sales conversion, center yields and capacity utilization have all improved through targeted marketing, our upgraded website and continued use of our dynamic pricing. We do have a strong culture in Hollywood Bowl when it comes to our team, one of high trust, high support and high accountability. We're really focused on creating outstanding workplaces, at least one of our three pillars of the sustainability strategy. In FY '23, we refreshed our employer brand [indiscernible] designed to improve communication in our business and attract a more diverse team. The response since launch has been fantastic with a significant uptaking team engagement, social media and website traffic which has resulted in more job applications. For the second year running, we rank amongst one of the top U.K. best businesses to work for. Our Hemel office was awarded 3 stars for its working practices placing us among the select few businesses rated as a world-class business. The group team member Net Promoter Score has also increased on the prior period. I'm really grateful for all of the hard work and effort our team put into delivering a record results the business generated this year. Our team members are supported by our industry-leading in-house trading development programs. And although there continues to be considerable competition for leisure -- for labor in the leisure market, our refreshed employee brand that launched during the year has made a significant difference in our ability to attract and retain top talent. When we look at financial rewards, average pay for team members has increased by 7.4% and we paid out GBP 3.2 million in bonuses to our team members with every team member in the business able to earn a bonus. Center managers received an average of 64% of their base pay in bonuses and our system managers received an average of 14% of their base pay in bonus for the year. On Slide 20, we look at the progress that we've made against our ESG strategy. We have a focus on three core areas: safe and inclusive leisure destinations, creating outstanding workplaces and a commitment to operating sustainable centers. In FY '23, just under 1 million concessionary games were bowled by a mixture of special lease groups and their carriers, skill groups and local community support groups as we strengthen the relationships within the local communities that we operate. As I mentioned on the earlier slide, we were once again voted as one of the U.K.'s top 25 businesses to work for, and our internal tunnel development programs continue to deliver 45% for management appointments came from our internal talent pipeline. Building a sustainability focus within our centers, 82% of all waste is recycled in the half and 27 centers now have solar arrays on their roofs that generate 34% of the energy that they use through their solar panels. All of our managers and support team have access to a company car electric vehicle scheme, and we're installing electric charge stations in as many of our centers as we can. This year also saw the formation of the new Corporate Responsibility Committee, chaired by Non-Executive Director Ivan Schofield. Our U.K. transition plan has been developed and we are working towards our net zero goals. So turning our attention to Canada. On Slide 22, we have enjoyed some real success over in North America in the year. Our growth strategy in Canada is a bit of a reminder, is focused on four areas: investing in the existing estate, acquiring existing businesses that complement the current space, opening new centers and supporting the Canadian bowling market with Striker products and services. The Canadian operation traded ahead of expectation in FY '23. Like-for-like revenues grew by 15.1% and a center level contributed EBITDA of CAD 10.3 million. We've made good progress on margin improvement, payrolls to revenue down to 28% and EBITDA margin up to 34%, that's a 10 percentage point improvement on last year. We continue to share ideas between the businesses, adapting the U.K. operating model to a Canadian audience, whilst maintaining the entrepreneurial spirit of the original business owners. We were able to sponsor four U.K. team members to take a permanent role in Canada, one to help in HR, which is vital to growing our operations and evolving the business culture, one to head of operations and the other two as center managers. We completed a major customer research program to really get under the skin of what people value about our proposition and what we could do to improve, and we've been rolling those learnings into the Splitsville brand evolution program. The refurbishment program is progressing well, supported by the Striker businesses with one refurbishment and rebrand to Splitsville completed and another due for completion in the coming weeks. Newly refurbished centers have been very well received by customers with returns on investments performing well above our hurdle rate. For example, profits from the Richmond Hill Center have more than doubled in the period post completion of the refurbishment works. We acquired three fabulously located centers in Calgary that will all benefit from investments and rebrand in the coming months. We have a very busy FY '24 plan. We're investing revenues generating new cost-saving CapEx into the estate to improve the customer experience. In addition to the planned refurbishments, we'll be commencing the trial of Pins on Strings out in Canada. We've been working hard modernizing the Splitsville brand. We're launching a new website, new signage, CRM program, digital marketing strategy, and we continue to cherry-pick the very best of the U.K. practices to improve the Canadian operation and margins. As we mentioned earlier, we acquired two more centers in October, one in Vancouver and one in [indiscernible], Toronto. We have a new build due to open in April, and we're in legals on three of the new build centers securing the future pipeline. The Striker business remains an important part of the Canadian growth story. We have a strong order book for FY '24, and we're in discussions to extend the exclusivity with runs [indiscernible] suppliers their products out to 2027. On the next slide, Slide 23, you just look at a case study of Richmond Hill. This was a center that we acquired very soon after we bought Splitsville business. Now we spent just over CAD 4 million acquiring and refurbishing the center, and it's traded exceptionally well since the reopening and deliver a return on investment north of 40%. On the next slide, we just set out the details of the Calgary transaction. So we acquired the three centers for a total consideration of CAD 12 million. That's for 4.3x EBITDA multiple. Now whilst the centers are now trading to Splitsville, they're yet to have any transformational refurbishment CapEx spend. From the limited essential CapEx investors and change in management and processes, we've seen a 10% uplift in revenues and a 30% improvement in profitability. We plan on refurbishing all of the Calgary centers in FY '24, and we'll target a 25% return on invested capital. On Slide 26, we've pulled together a bit of those market reviews quite a long time since we last did one in 2017 or '18. Competition for the leisure pound has never been as fierce as it is today. And whilst there are many benefits to being listed, one of the downsides is having to tell everyone else how well you're doing. There's been a real and sustained shift of consumer spending on experiences with a reported 13% uplift in participation since 2019, and bowling remains the most popular activity in the category, and we certainly benefited from that trend. It has meant, however, that lots of other operators have started accelerating their opening program and new entrants have come into the experiential leisure market. Lane 7 have now 13 units, Roxy Leisure up to 18 units, Tenpin now operating 52 units. And there isn't a huge amount of white space, meaning that we have seen an increase in competition. And as an example, in the Birmingham, Liverpool and Sheffield markets, all markets that we trade in, there have been no fewer than 29 new operators chasing the leisure patent. There are plenty of retail opportunities around with landlords looking for leisure to complement their retail offer. And with more and more competition for the space there is becoming upward pressure on leisure rents. As a consequence, most new offerings tend to be seen as innovative, but needs to be more expensive and exclusive. Price, quality of offer and location remain key. And on those fronts, we maintain a very strong competitive advantage with the best value, have the most inclusive offer operating in by far the best locations. But there is more competition around than there ever was before. So in summary, it's been another very busy and successful year for the group. Demand for our offer remains strong, and we worked hard to keep our price increases well below inflation and the cost of our product fabulous value for money. And we have a strong balance sheet with a simple proven business model and a capital allocation policy focused on progressive shareholder returns. Happy to take any questions that we may have. We'll start with questions in the room, and then we'll go to questions from people who have dialed in.

Laurence, you said you expect a modest like-for-like increase in the U.K. before. Can you elaborate on that and this would be the component between the volume and price it to come?

Yes. So no, we're not going to give out cost of people, can't do that. So if you look back, what we've always said is three, three [indiscernible] where we expect the market would be. Last year, we benefited from the weather being in our playbook dropout no snow. It was funny in June when everyone would [indiscernible] in school. It then got funny again in September when we use past [indiscernible] and in behind August, it was lower for the notice anybody else. So we benefited about 4.1%. If you take the 3% or what would be over a 2-year basis, you get about 1 8% to 2% like-for-like growth for FY 2024. In terms of volume and spend, it's -- I mean we expect a mixture of both to be positive. But it's not like a restaurant business or something like that. The incremental volume doesn't lead to incremental payroll. So it's not something you sit there and we need to do this. And also, in some of our centers, we visit already, and we saw at those peak times. And you can start to play around with price on Monday between 9 and 4 when it's really quiet. But guess what, most days, everyone is at school, everyone is at work. So you can mess around the price and not really get anywhere. Our focus is on trying to build those shoulder periods at peak days. So can we get this come in at 9:30 more on [ packaway ] And if we can, what's the discount that we need to want for you, and that will be different by center as well. So both will be, in our view, what is the positive growth on both where we see the benefit from the weather, the weather is volume-related. So I'll just have out back with that.

Okay, clear. And November, December 2021, when just after the daily COVID [indiscernible] your were among the few leisure base that could be open to benefited from [indiscernible] several people who haven't in bowling for many years came back to the centers. We saw a completely different experience. So I was wondering these people coming by these becoming regular customers, do you have any views or data on this?

I think if you look back at where we were trading pre-Covid in the 2019 period, post Covid, our revenues are up north of 30%, and then we've comped those numbers and grow from them. So that would indicate, yes, we've rebased and those people have continued to come back. From a data perspective, I think it is always really difficult to really get under the skin of the average customer because when you strip out the lead bowler, the special needs and concession groups that come in a lot more frequently, we're still around that kind of 1.3, 1.3, 1.4...

Still 1.3, 1.4...

Yes, early. Again, it's really -- if we were all to go a bowling as a group, we would only know that one a few of all [indiscernible] we managed to capture all of your data from that visit.

It's another one. So on Puttstars, it's the only one that basically we don't expect to grow, et cetera. What would want you to start growing it again. Or nothing really...

Certainly -- there are two reasons really why the Puttstars rollout was stalled. One, mainly because -- and the main reason being most of the new flight opportunities that we -- well, all of the new flight of opportunities that have come our way, building the pipeline, we've been able to fit in Hollywood Bowl. And then we always said, if we could fit in a Hollywood, we would do a Hollywood, because the return is just so much better. The second element was the cost inflation of new site openings. We have seen significant cost of not just fitting out in terms of the labor cost, but also the fit-out costs of just supplies then the fixtures and fittings. And when we were already on that kind of between 16% and 19% return on the Puttstars versus the -- you've seen in the results targeted 19%, but we turned by 40% for Hollywood Bowl. It just makes sense to deploy the revenues into the most cost-effective way for the ones that generate the best returns.

And what you said about the weather and the benefit last year, is that consistent with only 0.7% growth in gains is actually the big issue put to your point, value of management. And then the second question was around the buyback of GBP 10 million. We all know there's always differences in shareholder pending, some more [indiscernible] some more private. But basically, you're not giving a target leverage point do still there.

Both questions here [indiscernible].

So in terms of the life migrate, I mean, we saw volume growth of 0.7%, 20% as you mentioned, and some of it was attributable to us, some of the rents the is mostly felt through the volumes, but we did see it in both. In terms of the we -- yes, we do have different opinions on it. But at a forward we decided this is a good mixture of the two in terms of a special dividend, increasing the ordinary dividend to 55% invested profit after that. And also then allocating some towards the share buyback. It's important to note, I mean we didn't put an average number on, but we don't have any leverage. We don't have any debt. We didn't got a cash number either. And that's partly because we don't want to be beholden to that number. And actually, as an acquisition came up in the year, and we expect ourselves, let's say, we got of GBP 25 million as a target. We haven't, and we did discuss it in terms of actually noting a number now. But if an acquisition came up in the year, and we felt that doing an acquisition was the right thing to do, plus continuing with the buyback was the right thing to do, but that took us below our GBP 25, we certainly be holding ourselves to a number. On the flip side, an acquisition might come up, which is significantly larger means that we would go below whatever this number is, and we wanted to stop the share buyback. All one was coming up that we wanted to hold on to the money for. So by putting a number in as advised by our bonus as well and by the experienced board. It was important for us we didn't hold ourselves to just some sort of number that could be broken and they have to explain why we've moved away from that number.

And sorry, last one, the 130 longer-term aspiration. Yes, are you indifferent between single items, you build you talked about the most white space.

Yes. Well, I mean, certainly in the U.K., but we define that pipeline. So we think there's probably an opportunity for to open up about 20 more in the U.K., and we've already in discussions on 12 of those. Equally, having said that, I can remember it here in the very first meeting that we did post listing phase. We think there's probably about 20 sites we can open in the U.K. The landscape changes and new opportunities come available, and we've certainly seen that as the retail landscape, for example, has continued to develop. But notwithstanding that, there is only a finite amount of people who live in the U.K., and we've got some pretty punchy coverage now across the whole of the U.K., which is why we were looking at international opportunity so that we could continue with the sustainable, profitable long-term growth of the business.

Two for me. First just on the amusement side you thought about new payment options going through. And I think in the release you say price to play for a lot machines do we tackle GBP 1. With the new payment technology utilized, is there more opportunity to say GBP 1? Or was the option expect for 5%, 10% growth or would you see any impact on volumes?

Yes, absolutely. And that's sort of what we tried to demonstrate during the presentation as showing you that it's a large part of our revenue movements and therefore potential risk if we're to revenue and then no ability to leverage price. With the change in the machines, multiplayer machines, we've been able to move price a little bit on. So we've more than 2-player machines or 4-player machines like air hockey, for example, to GBP 1.50 a game rather than GBP 1 a game the paying technology enables you to do that without having the impact on volume. . One of the biggest challenges by moving to a purely cash flow system with the customer is committing suspending that multiple, whether it GBP 10 or GBP 15 or GBP 20 when you're buying that card. And by having the tap to play boxes on the machines, then you can move the price to GBP 1.50 or GBP 1.25 like we've done on pool tables, for example, against play game or air hockey. Then some of the bigger machines that we brought in, where you've got virtual reality and motion. So even like the Superbike games, for example, we now have a virtual reality version of that. That's coin-operated, you can then charge GBP 2 per player rather than GBP 1 per player. So you've got the choice in the using area for the value-conscious customer or those who are slightly better heeled and able to spend a little bit more on the experiences. So long as you've earned the right to charge more. So the motion machine with virtual reality machine, again, gives you the ability to do that. We've also increased the length of play on some of the machines where we've increased price. So you do get more play time on the machines and therefore, a better perceived value for money.

Okay. And then on the food and beverage, you talked about 20% of food and drink revenue from lane sales and the ordering technology. Where was that a couple of years ago? Where do you think we could go with respect to the people booking online and also having the option to factor in their when they get their lane [indiscernible] how many people use that option?

So that's been an area that we've grown considerably certainly post COVID, where we were doing lots of prebook your food and drink. A lot of it -- I don't really want to give specific percentages or where we're trying to get into because actually, they are all levers that we can use to help drive volume because it tends to be when you bundle products you're doing offers. Now we'll remove offers during the peak trading period or the when the web is in favor or introduce them to drive volume, drive yields and get us back on the demand curve. It's certainly something that we saw a huge amount of growth post COVID that we've managed to maintain and we've been developing our websites and payment options to capitalize on those opportunities. In terms of where we were before, it was -- it probably wasn't been too far away from 20%. It was just that it was being delivered by a team member rather than by customers being able to use it on their own devices. Now what that does is we've not taken a reduction in team. It's just meant that the team that we do have are a lot more productive and can spend more of their time running the orders rather than taking them so customers get quicker service. Any more questions from in the room?

I think it's pretty comprehensive. That's all.

Would have to take any questions for anybody who's dialed in online?

[Operator Instructions]

Okay, if there aren't any questions, clearly, we just did such a great job of the presentation. And we'll close the call. Thank you very much.