Hollywood Bowl Group Stock

Thank you very much. A warm welcome to you, those of you in the room and to those dialing into our 2026 half year results presentation. My name is Steve Burns, Chief Executive, and I'm joined by our shiny new CFO, Antony Smith, who I know most of you around the table have already met.

I plan to take you through the key highlights of the half and our operational highlights in both the U.K. and Canada. Antony will take you through the numbers and the financial outlook. We'll then take any questions from the room first and then from those who have dialed in. So, the first half of our financial year has been a record performance for the group with revenues of GBP 141.5 million. That's up 9.5% on the same period last year and up 2.3% on a like-for-like and constant currency basis.

Despite the increased cost burden, we converted that revenue growth to a record EBITDA of GBP 42.2 million on a pre-IFRS 16 basis and profit after tax of GBP 22.2 million. In line with our progressive dividend policy of paying 34% of the previous year's full year dividend at the half year, we're proposing an interim dividend of 4.52p per share funded from a net cash balance at the half of GBP 26 million. We're very pleased with the first half of this financial year and made excellent progress in our trading performance, cost control and strategic execution.

First, on trading, we've enjoyed a strong performance in both territories. Demand for high-quality family leisure experiences has stayed resilient. On top of that demand, we're using more sophisticated operational levers to support yield and revenue growth.

Second, on costs, we kept things well controlled and maintained our disciplined track record of cost management. That has helped us protect margins and more importantly, our fabulous margin dynamics gives us enviable insulation against inflationary and government or macroeconomic pressures.

Energy is another major factor in that resilience. We've hedged 76% of the group's total energy needs through to the end of FY '29, which provides meaningful visibility and stability over a key cost line. On strategic progress, we opened a new prime location in Edmonton, Alberta during the half, and it's trading well. The estate now stands at 93 centers, 77 in the U.K. and 16 in Canada. And we've got momentum into H2 with two new U.K. centers and one Canadian center left to open. Beyond that near-term pipeline, we're also accelerating the flow of new centers for FY '27 and beyond, particularly in Canada, as I'll come on to talk about later in the presentation.

And finally, capital allocation remains disciplined. We invested GBP 8.6 million of CapEx into expansion, refurbishments and center enhancements whilst maintaining a robust balance sheet. We ended March with GBP 26 million of cash and an undrawn GBP 25 million revolving credit facility, giving us significant flexibility to keep investing in growth and returning cash into a financially resilient.

We plan to commence a GBP 5 million share buyback in the second half. H1 has shown strong demand, tight execution and a balance sheet that supports continued momentum into H2 and beyond. I'll now hand over to Antony, who will take you through the numbers.

Thank you, Steve. Good morning, everyone, and it's nice to be here. So, I'll start by taking you through our revenue growth on Slide 6. So, as Steve has already mentioned, we've delivered record revenues of GBP 141.5 million, that's 9.5% up versus last year. In the U.K., sales grew by 9.4%, split roughly 3:1 new centers to like-for-like growth.

The underlying like-for-like in the U.K. was a very creditable 2.6% against what was a tough U.K. market backdrop, and that shows the resilience of our value for money proposition. This was delivered through a 7.7% increase in spend per game, offsetting a 3.4% decline in our game volumes.

We continue to optimize our yield management and pricing and to grow our add-on sales. New centers in the U.K. are performing really well, and we're delighted with last year's openings in Inverness, Uxbridge and Reading, which are the principal contributors to that GBP 7.5 million of revenue growth from new centers.

Canadian revenue of 12.5% on a constant currency basis is almost entirely driven by our new centers. FY '25 openings in Kanata and Creekside as well as this year's Edmonton contribute GBP 3.2 million of additional revenue.

Like-for-like in Canada is marginally positive at plus 0.5%, but that does include suffering from some short-term closures in February during major snowstorms on the East Coast of North America. The non-core Striker business saw a revenue decline of GBP 0.6 million in the period, and that was a conscious decision by us to focus our resources on intra-group installations of Pins on Strings and to help build our new centers.

This creates long-term value for us as we get access to cheaper capital investment by doing so. There's a small noncash currency conversion adjustment of GBP 0.6 million. So turning to Slide 7, where we show how this revenue growth translates into strong profit progression. So, I'll start by saying I'm showing on this chart our profit progression on a PBT basis. That should be helpful as it deals with both EBITDA movements but also shows where there are increases in depreciation and financing costs that affect the reported profit.

You should note that group adjusted PBT refers to a pre-IFRS 16 PBT. That helps exclude the noncash profit compression resulting from our lease profile as well as removing the impact of adjusting items that we don't consider part of the ordinary course of business. If you need further information on APMs and how they reconcile to reported numbers, there's a slide in the appendix that gives detail as well as in the RNS. So, I'll concentrate on the central section of this chart, showing 8.1% growth of adjusted PBT from GBP 29.7 million to GBP 32.1 million. Much of this growth is driven from the excellent U.K. performance, where underlying like-for-like centers grew by GBP 1.5 million and new centers contributed a further GBP 3.4 million.

Canadian like-for-like centers saw a small decline in profits at GBP 0.6 million as the 0.5% sales growth wasn't quite enough to offset inflationary pressures on input costs. Our new centers in Canada are performing well and contributed an additional GBP 1.3 million of profit in the period. Our recent capital investments in growth, notably new centers have grown the depreciation of our fixed assets by GBP 0.9 million and interest revenue has reduced by GBP 0.2 million as we deployed some of last year's surplus cash as buybacks in the second half of last year.

And finally, you'll see a GBP 2 million increase in corporate costs. That includes a small GBP 0.1 million FX translation, which is noncash, but the corporate cost investment comprises 3 things, which are all investments in growing the business for the long term. Firstly, we've upweighted marketing investment. Secondly, we've invested in our people capability to drive long-term growth and identify future opportunities, including investing ahead of the curve in our Canadian leadership team. And finally, we've accelerated our pipeline, meaning we've spent a little more on external advisers to secure the right assets for our business.

Moving to Slide 8, where I'll briefly take you through the balance of the P&L. I've already taken you through most of the drivers of the movements in profit, but there are a couple of things to draw your attention to. Firstly, you'll see I've made a slight change to naming conventions. I'm now referring to group adjusted EBITDA after rent. And to be clear, this is exactly the same as EBITDA pre-IFRS 16 but moves away from describing our core business with reference to an accounting standard that's been in place for 6 years.

As I've already mentioned, PBT is on a pre-IFRS 16 basis. I've already described that 8.1% increase in PBT, which is a really strong drop-through from 9.5% revenue growth. But I'll call out a couple of additional items on this slide. Gross profit, which I'm describing here on a reported basis, is growing a little more slowly than revenue at plus 7.8%. This is impacted by an 18.5% increase in center labor, and there's a 50-50 split of that. You have the labor increase you'd expect from the extra centers and volume, and you have the inflationary pressures from national living wage and national insurance increases. And while these pressures are unwelcome, our labor ratio remains at just 20% of revenue. And you can see from the overall P&L that even at this level of inflation, it's manageable and doesn't significantly impede profit growth.

Finally, on this slide, below adjusted PBT, you can see two layers of adjusting items. The first is the profit compression of GBP 1.6 million, which is a function of our depreciation and interest on leases being higher than the rent payable. This is a non-cash profit compression, hence, why we continue to discuss PBT on a pre-IFRS 16 basis.

And the second are adjusting items, which we consider to be outside the underlying business. GBP 3.3 million of adjusted items comprised a GBP 0.5 million accrual for the contingent acquisition of the Canadian business and a GBP 2.8 million impairment of one of our U.K. bowling centers, something I'll cover in a little more detail on the next page.

Last year, adjusting items included a GBP 1.6 million income from a historic insurance claim related to COVID-19. The result of PBT reported for the year was GBP 27.2 million, GBP 1.1 million and 3.9% behind last year. So turning to Page 9, and I'll give a bit more detail on that impairment.

So, this slide shows our last 12 U.K. bowling center openings, capital expended and the right-of-use lease asset added to the balance sheet. As you can see, on average, we've spent GBP 3.6 million per center and recognized the right-of-use lease asset of GBP 2.2 million, a total of GBP 5.8 million investment for the center.

On the whole, our return on investment for those centers has been excellent. ROI shown here is the annual EBITDA generated divided by that original capital. Return on investment is an average of 26% across these 12 centers. But of course, as with any multi-site business, you do see a range. The lowest returning center on here still generates cash, but as you can see, the returns are single digit.

An impairment test requires you to discount cash flows and compare against the carrying value of the asset, including the lease. And with a pretax weighted average cost of capital of 13%, this particular center at single digit is therefore unable to support the carrying value on the balance sheet. As such, we've taken a GBP 2.8 million impairment, GBP 2 million of the capital spend and GBP 0.8 million of right-of-use assets. This is, of course, a non-cash item in the period, reflecting historic asset values, and we remain confident in the quality of our new openings and the ability to generate returns. In this instance, for one center, we have got it slightly wrong. But in the other 12 and indeed, the rest of the Bowling estate, we've got it right. We remain confident in investments.

So, moving on to cash flow on Slide 10. So I've aligned the slide left to right according to our really clear capital allocation policy. So, starting with our group operating profit, we add back depreciation, amortization and adjusting items, which includes the IFRS16 profit compression of the difference between rent paid and the depreciation and lease interest on the right-of-use asset.

Our working capital cash outflow of GBP 4.5 million is a combination of cash outflow from payment of some of the deferred consideration on the Canadian acquisition and some timing differences. Rent costs from the property portfolio were GBP 12.1 million, replacing the depreciation and interest charges, and then we have GBP 4.6 million of maintenance capital in the period. These elements are combined to give us GBP 30 million free cash inflow before investments and shareholder distribution. It's a very healthy 71% conversion from the GBP 42.2 million group adjusted EBITDA. In this half, we've invested a relatively low GBP 3.9 million on completing Edmonton in Canada and commencing work on Cardiff in the U.K. as well as some smaller revenue-enhancing investments. We anticipate 2 to 3x that spend in the second half as we have two openings in the U.K., one more in Canada, and we commenced build on our pipeline for the first half of FY '22.

And finally, in the period, we returned GBP 15.3 million to shareholders from the final dividend from FY '25. We've announced a 4.52p interim dividend today, a cash outflow of GBP 7.5 million in H2. And in addition to that, we've announced a GBP 5 million buyback program to be executed during the second half. Overall, trading in the first half generated a total cash inflow of GBP 10.7 million to leave a cash balance of GBP 26 million.

And finally, turning to Slide 11 and our outlook for this year and the midterm. So while we don't give a formal forecast, we can give some guidance about how we see the landscape over the balance of the year and beyond into '27 and '28. So, while the consumer market remains challenging, we know that we do have a really strong customer proposition. We have a long-term proven track record of like-for-like growth and expect to continue to do so through yield and capacity management, add-on sales and modest inflation through our dynamic pricing. We see good like-for-like potential in Canada as we continue to improve that proposition.

Our costs are well controlled, and our business model provides resilience against inflation. Labor is a relatively low percent of revenue at around 20% and energy is well covered into the future. Corporate costs are slightly ahead of the growth curve, but these will get fractionalized by the continued growth in our centers. Overall, we don't expect inflationary pressure to significantly impact our overall profit margin. We have a good track record of converting sales growth to profit growth and expect self-help initiatives to offset market headwinds.

Our capital allocation policy remains consistent. We ensure our assets are well maintained. We typically convert free cash flow at 65% to 75% of EBITDA. And the balance, we invest in growth and return to shareholders to give an attractive yield. We have good visibility of our pipeline over the next 18 months, and we can see a modest acceleration in the long-term four centers per year stated targets. In the second half of this year, we anticipate our investment capital to be 2 to 3x in the first half and have today announced we'll be launching the GBP 5 million buyback. Overall, we expect to deliver in line with expectations. I'll be happy to answer questions at the end of the presentation, but I'll hand you back to Steve now to take you through the operational highlights of the year.

Thanks, Antony. We'll take a look at what's been driving the growth in both the U.K. and Canada. And turning to Slide 13. We look at the key highlights from the U.K. performance in the period. Strong revenue momentum, compelling value proposition, disciplined cost control and continued progress on growth and engagement. On U.K. revenue, we delivered GBP 118.4 million, which is 9.4% growth, 2.6% like-for-like growth. A big driver behind that performance is the value for money offer around GBP 26 for a family of four. We're staying accessible, and we're also leaning harder into digital demand levers to keep customer flow strong to support yield.

On investment and expansion, we're continuing to execute the prime location strategy. We've got two new U.K. centers due to open in H2, and we have a strong pipeline for FY '27 with two further centers slated. There could be three if the landlord enabling works go in our favor. Customer metrics are another standout in the half. We achieved record results on both our Net Promoter Scores and blended service scores, a great value for money experience delivered consistently is the mantra for our operators.

As with service, our people metrics moving in the right direction, too. We've seen record engagement scores, low turnover, record internal promotions plus external recognition with another Sunday Times award as one of the best big companies to work for. Overall, we've had resilient demand, disciplined execution and have a platform to build on during the second half.

Slide 14 lays out the main levers we're using to protect and grow revenue even in a tougher volume environment. It's a mix of smarter pricing, more targeted demand creation and better in-center execution. At center level, the first lever is revenue optimization through price position, staying competitive where we need to, but being deliberate about where we hold or increase price. We're using more targeted campaigns to bring the right customers in at the right times rather than relying purely on broad-based promotions.

We continue to refine our dynamic pricing framework to protect peak periods and avoid giving away margin when demand is already there while still using price tactically to stimulate off-peak visits. We have some exciting new trials and technology to further enhance this key growth lever as we move into the summer months.

On promotions, the focus is being more selective, using offers where they genuinely drive incremental visits or spend and avoiding activity that just dilutes yield. We're also leaning into amusement investments and targeted upsells through the use of AI in our proprietary booking system to increase in-center spend and when capacity allows, encourage more customers to add one more game, one more activity or one more purchase once they're already on site.

The game volume decline that we've experienced on a like-for-like basis over the last 2 years has been due to the normalization of trade posts the bounce experienced in '22 and the increased competitive environment. That was arrested during the half. As ever, there is a delicate balance between volume and price and the improvements in our digital capabilities are helping us remain the go-to family entertainment operator in the markets in which we trade.

Disciplined cost control is a core organizational priority and continues to support margin resilience and our strong cash generation. There has been persistent inflationary pressure, including labor costs, utilities, rates increases, I could go on. But we've proactively managed these headwinds through detailed operational management as well as benefiting from a business model that is structurally well insulated against external cost volatility. 70% of Group's revenues are not subject to cost of goods inflation, providing us with some meaningful protection.

Labor productivity continues to be managed at a granular center level basis, ensuring service standards are delivered while controlling payroll costs with U.K. center payroll remaining below 20% of the U.K. revenue and Canada below 26%. Our energy costs are largely hedged, and we're expecting 16% of what we need from our on-site solar.

Significantly reducing our exposure to market volatility and providing excellent forward visibility on a key cost line.

On Slide 15, we look at the continued evolution of the estate and why the Group remains strongly positioned despite an increasingly competitive backdrop. Experiential Leisure continues to attract new entrants, but Hollywood Bowl is structurally advantaged given its leading brand, customer appeal and continued investment in the customer proposition. When a new competitor opens in the markets in which we trade, we, of course, expect some impact on volumes and revenues. But as we've seen in the last 18 examples where this has happened, trade performance normalizes and improves from the third year onward. And that's because of the strength of the model, particularly our price accessibility, pace of innovation and the quality of our estate.

We have the best locations in these shared catchments. Alongside that resilience, we continue to see attractive growth opportunities through the new center rollout, where returns continue to be encouraging, as you saw from the slide that Antony presented earlier. The U.K. pipeline is progressing well, and we remain disciplined, prioritizing prime locations and return quality over simply adding volume.

In the near term, we have two additional centers planned alongside four further committed sites for FY '27 and '28 in the U.K. and remain on track to deliver on our 95-site target by 2035. So, turning our attention to Canada on Slide 17, we're really pleased with how things are going across the Atlantic and Splitsville remains an exciting growth opportunity for the Group. We have one more center to refurbish from the original acquisitions. We're currently on site completing a major GBP 3.4 million refurbishment of Richmond Riverport that includes the removal of eight bowling lanes to accommodate a larger amusement offer and the installation of Pins on Strings. The new centers we've opened closely mirror the U.K. property strategy, so co-location with retail and leisure in high footfall locations, supported by a strong local demographic.

And we have one further site due to open in the second half in Canada. The brand is now gaining traction with the large institutional landlords, and we're being offered some fabulous space now we've demonstrated the quality of our product. We'll open five sites now in FY '27, an upgrade from the two previously communicated. And with a strong balance sheet and a bolstered senior leadership team with a new Territory CEO, we've got ambition to keep this momentum.

On Slide 18, we've been driving sustainable profitable growth in Canada since 2022 when we acquired five sites that we grew to 12 through acquiring existing centers to build a presence and a platform in the key geographies that we wanted to trade. We've since been building on that platform, opening new greenfield centers that closely mirror the Hollywood Bowl format whilst ensuring they remain relevant for the Canadian market and Canadian consumer. In 2022, the Canadian business was 3% of revenues. In the half, Canada is now 16% of revenues and with those numbers set to grow as we accelerate our new opening pipeline. Whilst there are still numerous potential acquisition opportunities, the returns that we're generating from the new centers are much more compelling. The four new greenfield sites are generating an average site level EBITDA 39% higher than the platform assets.

As you can see on the slide, the new sites are averaging CAD 1.8 million EBITDA and revenue of CAD 5.2 million, whilst the platform assets post their refurbishments are generating on average CAD 4.3 million of revenue and CAD 1.3 million of EBITDA. We invested ahead of the curve in Canada into a support center for long-term growth, and we now expect only modest increases in corporate costs between now and FY '28 to facilitate the accelerated growth.

So, on Slide 19, I've pulled out some of the country highlights. In the half, we delivered 12.8% revenue growth like-for-likes of 0.5%. Now these were impacted through a number of center closures in Toronto due to the severe winter storms with a relatively small estate out there concentrated around the Greater Toronto area, the loss of revenue had a big impact on the like-for-likes. As a comparison, a listed peer posted negative 8% like-for-likes over the same period. The new centers that you've seen from earlier in the deck are performing nicely ahead of expectation. The new center we opened in Edmonton, Alberta got off to a strong start, and our new site in Barrie, Ontario, that will open in the second half of the year was starting to take shape when I visited it a couple of weeks ago.

So, in summary, it's been another very successful period for the group. We are the market leader in the experiential leisure sector and with our value proposition continue to generate strong demand from our customers. Due to our difficult to replicate operating model, we're well insulated from the cost pressures and inflation and have plenty of growth left to come and a balance sheet that supports that growth ambition.

Good morning, everyone. Thank you for taking the time to attend our financial year '25 full year results presentation. I'll take you through the key highlights of the year and our operational highlights in both the U.K. and Canada. Laurence will take you through the numbers and the financial outlook. We'll then take any questions from the room to begin with and then from those who have dialed in.

FY '25 was a record year for the group on a number of levels. Record revenues of GBP 250.7 million, which were up 8.8% versus last year. Record EBITDA on a pre-IFRS 16 basis is GBP 68.4 million is in line with market expectation and up from GBP 67.7 million in FY '24 and statutory profits up from GBP 29.9 million to GBP 34.6 million. We closed the year with net cash of GBP 15.2 million after significant investment in shareholder returns totaling GBP 71 million, testament to the highly cash-generative nature of our business.

In line with our progressive dividend policy, the Board is proposing to pay a final dividend of 9.18p per share, taking the full year dividend to 13.28p per share. That's a 10.1% increase on last year's payment. The business got off to a great start in FY '25, but the final 3 quarters of the year were challenging for indoor leisure. Despite those challenges, we grew revenues in our business on a like-for-like basis by 1.3% on a constant currency basis and like-for-likes in the U.K. by 1.1%.

As a consequence of the adverse trading conditions, we saw game volumes decline but mitigated the impacts by driving spend per game and off-peak volumes. That was without damaging price integrity. We had a record number of new openings in the period, 5 in the U.K. and 2 in Canada, taking the total estate size to 92 venues. The pipeline remains strong as does our reputation with landlords. We have a strong brand, covenant and compelling offer, helping us win competitive processes for the best locations.

Our highly cash-generative business model has allowed us to self-fund GBP 36 million of investment in system improvements, new centres and refurbishments as well as returning GBP 35 million to shareholders by way of dividends and share buybacks. Team and customer focus remained at the top of the leadership agenda. We grew our already impressive customer engagement scores in the year, once again being recognized in the Times Best Big Companies to Work For in the U.K. and Great Places to Work in Canada. I know many of you here today have attended the Canada teaching session at our Reading Centre, where we articulated the improvements made since the acquisition.

I'll now hand over to Laurence who will take you through the financial review and outlook.

Thanks, Steve. On Slide 6, we lay out the revenue bridge from FY '24 to the end of FY '25. Total group revenue for FY '25 was GBP 250.7 million, as Steve mentioned, 8.8% growth on the prior year, up 1.3% like-for-like on a constant currency basis. Excluding the closure of our Surrey Quays centre, which closed in at the end of FY '24, revenues were up 10.3%, as you can see from the graph.

Now looking at each territory. U.K. revenues were up 6.4% with Hollywood Bowl like-for-like growth up 1.3% and overall like-for-likes up 1.1%. This was driven through spend per game growth of 9.2%, taking average spend per game to only GBP 12.22. And this was offset by a 7.5% decline in like-for-like game volumes that Steve will discuss further on this section later. New centres performed well in the year, and I'll discuss more on that later, too.

Canadian like-for-like revenue growth when reviewing in Canadian dollars and off the back of 2 consecutive years of strong like-for-like growth was up 3.2%. FY '25 was a year of investment in Canada with 7 refurbishments completed as well as the commencement of a major partnership with our U.K. amusement supplier, Bandai Namco.

Now we experienced some short-term disruption to trading in the year in Canada due to the refurbs and the removal and then install of over 500 amusement machines. But in spite of this, still saw like-for-like growth of 3.2% and combined with the strong new set of performance, overall Splitsville bowling revenue was up 35.1% to CAD 61.1 million. Our Striker business generated revenues of CAD 8.6 million in the year, and that was up 17.8% with a good order book for FY 2026 as well.

The Canadian dollar continued to weaken throughout the year with average ForEx in FY '25 of 1.82 versus 1.72 in the previous year, resulting in a ForEx movement of GBP 1.3 million on revenue. However, given we are investing from the U.K. into Canada, this movement in ForEx actually benefited us by 6% in terms of cash being sent to Canada.

On Slide 7, we just show the impact of revenue growth and cost inflation on EBITDA for FY '25. Starting with FY '24's EBITDA and removing the one-offs from FY '24 that we've spoken about before, business rebates -- business rates rebates of GBP 2.8 million in the full year and also the profit generated from our Surrey Quays centre of GBP 1.1 million. Now despite the weather conditions in the U.K., like-for-like sales growth offset most of the inflationary costs in the year, including national minimum wage, national living wage and the increase in employers NIC, which obviously kicked in for part year for us in H2.

The strong performance from our new centres in U.K. and Canada contributed GBP 6.6 million combined in EBITDA, whilst we continued our investment into group corporate costs as we expanded our support centre to allow for future growth in Canada as well as invested into the marketing and IT functions of the group. Taking into account the ForEx movement of a negative hit of GBP 0.3 million, this ended EBITDA marginally up on consensus at GBP 68.4 million. And following the investments made in FY '25, we expect to benefit from increased profitability in FY '26 as well as operational performance in FY '26 and beyond.

On Slide 8, we delve into more detail on the P&L. Gross profit on cost of goods sold was up 9.2% to GBP 208.8 million, with a gross profit margin on cost of goods at 83.3%, which is up 30 basis points on the prior year. For the U.K., gross profit was 84.4%, up 40 basis points with higher margins seen in all areas of the U.K. business with strong cost controls throughout. Gross profit margin on cost of goods for Splitsville was 82.8%, which was down year-on-year, but that's to do with mix, and we'll talk about that later on, but most notably, amusements being up high double digits versus the rest of the business, which was up low single digits.

The total Canadian business was in line with expectations at 77.2%, which was up 40 basis points on the prior year. Admin expenses were up 15.2% with the 2 main areas noted on the graph with employee cost in centres of GBP 51.8 million in total, up 13.3% due to a combination of the impact of the higher than inflationary national minimum wage and living wage increases, the impact of the higher like-for-like revenues, new centres as well, as I mentioned before, the part year impact of employers NIC.

U.K. centre costs -- employee costs, sorry, were up to GBP 42 million, an increase of GBP 4.1 million on the prior year. Like-for-likes costs and employee costs were up 6.8%. Total centre employee costs in Canada were CAD 18 million, an increase of GBP 4.5 million, up 33% with most of it due to the new centres in Canada rather than rate per hour or number of hours used. Total property-related costs accounted for under pre-IFRS 16 were GBP 49.9 million, and the U.K. was GBP 43.1 million of this. Of that GBP 43.1 million in the U.K., rents were GBP 20.2 million.

Canadian property centre costs were in line with expectations at CAD 12.4 million, an increase of GBP 4.4 million due to the size of the estate. It's worth just pulling out, and I know we mentioned it in the half year, but utility costs increased by GBP 1.9 million year-on-year, GBP 1.6 million of that coming from the U.K. as we exited our hedge at the end of FY '24 and started a new one in FY '25.

It's worth noting that we don't expect to see material increases in utility costs for FY '26 or '27. And really, it's only the standing charges, which will increase given our hedge we've got set out to the end of FY '27. All of this, alongside corporate costs up GBP 2 million in the year, which remaining in Canada was spoken about, led to group adjusted EBITDA pre-IFRS 16 of GBP 68.4 million and post IFRS 16 of GBP 91.2 million. Adjusting items, which I'll go into more detail on the next slide were GBP 1.7 million in FY '25.

And as can be seen on this slide, and again, I'll talk to on a slide on its own, the impact of the IFRS 16 accounting standard continues to have a noncash impact on results of GBP 3.4 million this year versus the actual P&L rent. This is a result of more new centres being opened, but also the regear of existing leases, which were more than halfway through their term. I'll talk about that again more later.

As noted in H1 results, depreciation on PPE was up on the year with the investments made and we'll guide on FY '26 and beyond later on. Statutory PBT, as Steve mentioned, was up 3.6% to GBP 44.3 million and PAT was at GBP 34.6 million. Now on to the adjusting items. The total for this year were a charge of GBP 1.7 million in the period compared to a charge of GBP 7.5 million in the prior year. During the period, we had impairments of GBP 2.3 million, GBP 3 million less than the prior year, all in relation to our Putt & Play mini-golf centres.

Other adjusting items related to 3 areas: the earn-out consideration for the Teaquinn President or the Canadian President, sorry, Pat Haggerty of GBP 0.7 million, aborted acquisition and legal costs of GBP 0.2 million and GBP 1.6 million credit in relation to a business interruption insurance claim received in the period. For those that want more detail on all of these, they can go to Note 5 in the financial statements. The continued noncash impact of IFRS 16 on our results is making underlying trade -- is masking underlying trade.

And as you can see here, when we strip this out to provide a true underlying comparison on profit after tax, we've got GBP 40.3 million, which is down 2% on the prior year. Pre-IFRS 16 is the focus for underlying cash from operations. And actually, if we hadn't regeared the leases or opened up the new sites in this year, that impact would have reduced by just over GBP 1 million.

On Slide 10, just talk about cash and the fact that it's another strong year of cash from operations, which allowed us to continue to invest in our estate as well as record shareholder returns in the year. Adjusting operating cash flow was GBP 64.1 million. And then alongside expansionary CapEx, we generated cash flow pre-shareholder distributions of GBP 22.5 million in the year. We paid the final 2024 dividend and the interim for FY '25 and alongside the share buybacks to the value of GBP 15 million, returned over GBP 35 million to shareholders in the year. Post all of this investment and shareholder return in FY '25, we finished the year still with a healthy cash balance of GBP 15.2 million.

Now Slide 11, we go into more detail on the CapEx in FY '25. During the year, group capital expenditure was 30.6% lower than the prior year at GBP 36.5 million compared to GBP 52.7 million in the prior year. Maintenance CapEx was in line with previous years as we finished the rollout of Pins on Strings in the U.K. and continued the rollout in Canada, which now sits at 60% of the estate. We also spend capital on those areas that the customer values and are seen as business protectors for investment, furniture, air conditioning, digital initiatives. These were things that keep us in the game and keep us relevant.

U.K. expansionary CapEx for the year was GBP 20.7 million, with GBP 4.8 million on refurbishments and GBP 15.9 million on the 5 new centres in the period. Whilst expansionary CapEx in Canada was CAD 20.2 million, GBP 10.8 million, but it is worth noting that the refurbishments in Canada have cost us more than the U.K. ones, and that's for a few reasons. So firstly, we end up having to complete an amount of maintenance spend at the same time, which we still classify as refurbishment. And secondly, we see significant layout changes to achieve our model centre for this area as well as we've been on a learning curve with our contractors in Canada.

Accordingly, and as communicated previously, FY '26 CapEx is expected to comprise a lower level of spend in the year through a broadly consistent level of maintenance CapEx, taking into account some of the Canadian maintenance CapEx completed on the refurbs, up to 3 planned refurbs, the development of 2 new centres in the U.K. and also 2 in Canada.

Now before we move on from this slide, the explanation behind the lower number of refurbs in FY '26 is twofold. Firstly, in the U.K., given the U.K. refurbishment program, which is every 5 to 8 years, the COVID impact of less use of those FY '29 and early FY 2020 refurbs means we can extend the gap between those refurbishments. And it's expected that refurbs will return to normalized levels in FY 2027 in the U.K.

Secondly, in relation to Canada, we've completed all but 2 refurbs now in the estate with one of those due to be done in FY '26 and the other one more of a property play as we own the freehold here as well. So total CapEx for FY '26 is anticipated to be in the range of GBP 25 million to GBP 30 million, with the only potential more higher spend would be if we get on site with more Canadian centres during the year.

Now as noted earlier, we've opened 7 amazing centres this year, 5 in the U.K., all in prime high footfall areas, Reading, Uxbridge, Inverness, Preston and Swindon. CapEx was an average of GBP 3.5 million, and all of these centres are trading in line or above expectations, and we're on track to deliver 2 new centres in the U.K. Both of those centres will be opening in H2. So please ensure that analysts reflect that within their numbers.

We also opened up 2 greenfield centres in Canada, both mirroring the U.K. portfolio in high footfall areas in prime locations. Both of these centres and as those at the Canada [indiscernible] will know, are performing well and give us confidence in the future pipeline for Canada, focusing on these types of greenfield locations. We'll open up 2 centres in Canada in the year. One will open at the end of H1 and the second one towards the end of H2.

And we pulled out Reading on the right-hand side of this slide, our new U.K. centre, which has performed well. It's in a prime location, it's partly Oracle. It's the ex-house of Fraser unit co-located with retail, dining and cinema. Also, we've got our first learning from our Canadian business and implemented our first U.K. sports bar in a Hollywood Bowl centre and that's really performing well as well, driving both our amusement spend, but also most notably bar spend. It also had a U.K. amusement revenue weekly record and it cost just over GBP 4.5 million in terms of investment given the size of the unit of 38,500 square foot.

On Slide 13, we want to take a moment to run through the new centre economics, and these go essentially for both regions in the U.K. and Canada. Now these are large investments, which we spend a huge amount of time researching, plus we tried a few different models. On average, a new site will cost about GBP 3.4 million pre any landlord's contributions, be the rent freeze or landlord capital contributions. We exclude those from our analysis, and they're excluded from this as well.

EBITDA on a pre-IFRS 16 basis is targeted at 19%, although over our last 14 centres across both geographies, we have in all but one case in each territory exceeded this threshold with EBITDA returns ranging up to and in excess of 35%. Property, plant and equipment depreciation for new centre is on average GBP 230,000 with our targeted PBT on a pre-IFRS 16 basis of just over 12%.

Now we don't ignore IFRS 16 rents, but we do need to remember this is noncash. It impacts the early years of leases on a volatile basis versus cash in the normal P&L. Canadian centre investment is moderately more with some of the impact coming from tariffs, which leads to an overall increase of between 3% and 5% versus a U.K. centre. Our disciplined focus on strict EBITDA and pre-IFRS 16 PBT criteria and new centre developments for both the U.K. and in Canada served us well, and we continue to strive towards 130 centres by 2035 across the U.K. and Canada.

Brace yourself for an IFRS 16 slide, everyone. Now I mentioned this earlier on Slide 14. I just want to take you through the IFRS 16 impact. Now we feel it's pertinent to do it this year given the increased number of new centre openings in the year-7 and also the number of regears that we conducted during the year-6 and therefore, the noncash impact it has on the P&L for this year and going forward.

Now this slide is an example of a new centre. And as can be seen, the profit in this centre would be lower by GBP 170,000 because the rent is higher by 36% and on a pre-IFRS 16 basis, that's the red line versus the blue line. The IFRS 16 charge merges with the P&L rent around year-9 of this 15-year lease, about 60% of the way through and then turns into a credit, noncash credit, although this is based on the assumption that we don't regear the leases as we have done in FY '25.

Now we've taken advantage of the strong covenant we have, the positive cash rent versus the statutory P&L rent. And what that also means is the good deals that we're getting from our landlords. As an example, we had one site this year. We have 6 years left on it. The P&L rent and cash rent is GBP 240,000. The IFRS 16 number for this year would have been -- FY '25 would have been GBP 180,000. However, we regeared the lease, got 12 months rent free from the landlord, a brand-new 25-year lease and first rent review at 0, but that means that the IFRS 16 charge moves from GBP 180,000 to just over GBP 310,000, noncash, but does have an impact on statutory P&L.

Now it's worth noting that our average new centre lease is anywhere between 15 and 25 years, and we have an average lease length remaining at the moment of 13.4 years. It's also worth noting that we have 20 of our 74 centres are less than 60% of the way through and we will be regearing leases during FY '26 and beyond. What I can commit Antony to, and I won't commit into too much, is that every 6 months, we will update the analysts on the leases that have been regeared and the impact those have had on the IFRS 16 number because unless we tell you, you'll have no information available to show that.

Our continued focus on getting the best rents for the centres, for new centres as well as existing ones does result in a higher impact due to the IFRS 16 interest charge. And therefore, this is why we'll be showing profit metrics on a pre- and post-IFRS 16 basis to reflect the cash from operations on a more transparent basis. Is there any follow-up questions on IFRS 16? Antony starts in a couple of months.

On Slide 15, we lay out a reminder of our capital allocation policy to invest to maintain the business in those business protectors, maintain a strong balance sheet, conduct the transformational refurbishment in both the U.K. and Canada, continue on our new centre expansion and acquisition and also to continue to pay our ordinary dividend of 55%. Now in line with my comments on IFRS 16, it's a noncash impact, a small change to our dividend policy is that we will be paying dividends based on an adjusted earnings number on a pre-IFRS 16 basis, i.e., on a cash basis from operations.

Therefore, our final dividend, as Steve mentioned earlier, is proposed to be 9.18p per share, bringing the total for the year to 13.28p, which is up 10.1% and the ex-dive date will be the 29th of January 2026. As you'll be aware, during FY '25, the group completed a GBP 15 million share buyback program. This means for the year, we'll have returned over GBP 37 million to shareholders, continue our policy of investing in the estate and also that final block returning excess cash to shareholders.

As you can see from this slide, since FY '22, we've returned over GBP 100 million to shareholders in the form of share buybacks, ordinary dividends and special dividends, which is approximately 20% of our market cap. Now this is on top of investments made to the estate. And as you have seen earlier, that's over GBP 150 million in the last 5 years. We still have a good healthy cash balance at the end of the financial year, and we'll continue to focus on our capital allocation policy to ensure that we utilize that cash in the best way for returning to shareholders as well.

Final financial slide looks at the outlook for FY '26. Like-for-like new centre growth expected to be in line with previous guidance and be around GBP 267 million to GBP 275 million in total. And in the U.K., we're expecting slightly more rain than we got in FY 2025, whilst in Canada, the benefit of the refurbishment investments into our centres will drive like-for-like. We're well positioned against inflation with cost of goods subject to inflation at less than 10% of group revenue. The national living wage and minimum wage the government prescribed was in line with our internal expectations, and it's worth noting that we still have the full year effect of the employee NIC.

The business rates announcement of a little respite on business rates as a lower multiple is more than offset against the higher valuations that kick off in April 2026. And as you said, we expect business rates to increase by up to 10% in H2, which is around GBP 0.5 million for the year. We expect depreciation on PPE to increase by GBP 2 million to GBP 2.5 million based on our capital forecast, which will be between GBP 25 million and GBP 30 million. And our focus on cash from operations means we'll continue to look at the pre-IFRS 16 results as noted and do what's right for the business in terms of lease years and also lease maintenance terms.

Thanks, Laurence. Let's look at competition. The competitive socializing market has shown no signs of slowing down post the big leg up it was given as we emerge from the COVID lockdowns. And the shift from consumer spending on retail has continued, resulting in more locations becoming available at more accessible rents for leisure. And as a consequence, we've seen a number -- an increase of new operators alongside the continued growth of the established players. The new entrants, however, do tend to be more focused on the young adult late night and corporate consumer, albeit there is now more choices available for all customer types.

Value for money and inclusivity remain key and bowling remains the activity of choice with by far the widest customer appeal. And we've worked really hard to maintain our position as both the market leader in quality, price and experience, making we remain accessible from a price point of view to all of the customers and customer groups that live in our catchment areas. We're located in prime positions in the markets that we operate with both sustainable rents, easy to get to locations with plenty of parking and a market-leading offer.

We have a strong pipeline of new centres, and we will not compromise on our selection criteria or overpay for sites. The strength of our brand, covenant and quality of our offer is unparalleled in the sector where we do remain the tenant of choice even when offering lower rents than others are prepared to pay.

FY '25 was another year of solid growth for the U.K. business on both a total and like-for-like basis. We were able to adapt to the trading environment quickly to protect profit, leverage our significant database and digital capabilities whilst protecting the value for money price points. While spend per game was up 9.8% versus the prior period, overall spend per game remained below GBP 12.30, great value for money given the quality of the experience.

As you saw from Laurence's slide earlier, the new centres opened this year have all performed in line or ahead of expectation. And although we had one centre closed in the early part of this new financial year due to a landlord redevelopment of the scheme in Bracknell, the new centres opened have improved the overall quality of the estate. We completed 5 refurbishments in the U.K. in Tolworth, Portsmouth, Bentley Bridge, Birmingham Resorts World and Basingstoke. These investments are delivering strong returns in line with expectations and enhancing the customer experience through the introduction of upgraded interiors, digital signage and Pins on Strings.

In November '25, we refurbished our Norwich centre and have no more planned in the U.K. for FY '26 following significant refurbishment investments in FY '24 and '25. Creating outstanding workplaces for our team is a key element of our strategy, and I'll talk a little bit more later on that as part of the group overview. Like-for-like game volumes were down 7.5% compared to the prior year, reflecting the impact of unseasonable weather in the spring and the hot summer as well as the muted consumer confidence this year.

Despite these factors through the operational levers that we have in place, we were able to deliver record results, reducing the historical impacts the weather has always had on our performance. Now whilst we will always be impacted by the sunshine, we are in a much stronger position as a business. Dynamic pricing, new marketing initiatives and the full year effect of the amusement upgrades are just some of the levers that we have. The rest are trade secrets.

Hand-in-hand with revenue improvements, our cost mitigation, our centre managers were quick to react during the year, deploying the correct labor levels to maximize trade and protect margin. The margin dynamics of our business make us very resilient and uniquely able to weather the cost increases imposed upon us by the government. Just 1% like-for-like growth in the core estate covers all of the year's cost inflation.

So turning our attention to the Canadian operations on Slide 23. We have been delighted with our progress in Canada since acquiring the Splitsville and Striker businesses in April '22. In the 3 short years we've owned the business, we've tripled the size of the estate, quadrupled the revenues and grown the EBITDA from $2.8 million to $10.5 million.

On Slide 24, we've outlined some of the key Canadian highlights. We saw a 32% growth in revenues and a 3.2% growth in like-for-likes. That's against the backdrop of significant growth on like-for-likes in the previous 2 years. As a consequence of the operational initiatives, efficiencies and improvements, spend per game has grown in all revenue lines. This is despite some price reductions in some of the acquired centres. Overall spend per game grew 14.8% to $17.36.

The standout amusement performance is in part due to the improved layouts and machine quality and density post the switch over to our U.K. amusement partner. We've added new greenfield centres, 2 new centres during the year in prime high footfall locations in Kanata, Ottawa, and Creekside, Calgary which are trading above expectation. We completed 7 refurbishments, leveraging our U.K. expertise to enhance the customer offer and bring new innovations into the market.

The investment profile differs from the U.K. as there's more from capital investment required to bring the acquired centres that we get for relatively low multiples up to a base level from which we can then implement our brand standards. We're confident most of these investments will hit our EBITDA target return in Canada of 25% in their first year post refurbishment. We've continued the rollout of Pins on Strings in Canada. 8 of the 15 centres now benefit from the tech, and we'll be installing into the other centres as part of the refurbishment program with all centres completed by the end of FY '26.

Tests of wear your own shoes have been very well received by customers and is also being rolled out as part of the refurb and rebrand launch. Pricing trials are underway, and now all centres are running our proprietary booking engine software, we're able to test time versus game sales, daypart pricing and dynamic pricing and are seeing some really encouraging early results.

We've also been making some changes to the food offer. We've reduced menu complexity, improving the margin and consistency and as a consequence, our customer service scores. To further support Canada, we also create group departments for all central support functions, which has improved efficiency and crucially decision-making.

So looking at the growth strategy. Phase 1 was finding a platform asset to acquire, low-risk market entry, good established business with a local management team. Phase 2, building scale through acquisitions of the immediate targets that we'd identified during our diligence on the market to build a presence in the key locations that we wanted to operate. Phase 3 was about testing the property strategy on acquisitions versus new build locations.

Location size and proposition to the Canadian market to determine what was going to deliver the best return so that we could build the blueprint for growth for the 3 options that were available, which was acquiring existing, then refurbishing and rebranding, opening stand-alone but bigger locations with lower property costs or following the U.K. model of AAA locations, co-located with casual diners, cinema, those kind of things on a smaller footprint, very much like we've done with the 2 new centres in Kanata and Creekside.

We also wanted to test a multi-activity offer. We acquired a large multi-activity centre in Saskatoon, offering bowling, amusements, the competition size go-kart tracks, indoor high rocks, large sports bar and the diner. And the learnings from operating that asset has given us the confidence to take advantage of some of the larger space that's on offer in Canada in key locations.

On to the future focus, Phase 4, now we've built the blueprint for growth. We're building out the pipeline for new centres in prime locations following the U.K. bowling format and acquisitions at attractive multiples in prime markets, but only in those markets where we can't be outpitched that we can then refurbish and rebrand.

And then finally, in Phase 5 over the next 10 years, building out a national chain of more than 35 centres, establishing the Splitsville brand in the key markets identified and growing the business in a sustainable and profitable way, much as we have done in the U.K.

Turning to Slide 28. Our new booking system has now been fully rolled out across the group, and we have a very exciting road map for future developments now that we have an open source platform to build from. We're using AI in many aspects of our business, helping the digital booking journey, marketing campaigns and yield management, stock management and labor scheduling, just as a few examples. We restructured our marketing and IT teams led by a new CMTO, who's brought with him a wholly incremental skill set to the business and has started to unlock the opportunities identified as part of the digital transformational initiatives.

Our amusement offering continues to excel with amusement spend per game of 15.1% versus the same period last year across the group, driven by more machines offering better choice and earning us the right to charge more with tiered pricing. We're also trialing a new completely cashless offer now in 8 centres in the U.K., employing the learnings from our business across the Atlantic after the install into 13 of the Canadian businesses last year.

Running and growing our business in a sustainable manner remains a key focus for the group, and we made good progress this year against our sustainability strategy and targets. Our centres continue to play an important social role in our local communities, and we were pleased to have beaten our U.K. targets for concessionary discounts, school games played and for the charity fundraising for our charity partner, Macmillan. Our teams are at the heart of delivering an excellent customer experience, which resulted in increased dwell time and record levels of positive customer satisfaction and Net Promoter Scores in the U.K. and Canada.

We're delighted to have been ranked in the Sunday Times Best Places to Work 2025, achieving a 3-star excellent employee experience and recognized as one of the happiest places to work in the world by WorkL in the U.K. and have also been accredited as a Great Place to Work in Canada. This year, we achieved record attendance on our sector-leading management development programs, including our new graduate scheme, and we were delighted that 61% of internal U.K. management positions were achieved through internal appointments.

We've recycled more U.K. waste than ever, thanks to behavioral programs and standardized procedures. Solar arrays are now installed at 34 centres and increasing renewable energy use at more location remains a priority as we reduce both our carbon footprint and our reliance on purchased electricity. Our Canadian operations have started to become more closely aligned to our U.K. sustainability strategy, including team development and behavioral change programs so that we can further improve our environmental and social performance. And we've extended our associated targets for FY '26, details of which will be in the annual report.

On Slide 30, we lay out some changes we've made to our group management structure to set the business up for the next phase of our growth strategy. We're very excited to welcome Antony Smith to the leadership team supporting Mel, Rob and I. Antony joins the business in February as Chief Financial Officer, replacing Laurence, who will lead the Canadian business as CEO. Darryl Lewis, our COO, has been promoted into the position of MD for the U.K. business, with Mat supporting his capacity as Group Business Development Director. And I'd like to take this opportunity to thank Laurence for his service to the Board over the last 11 years.

So in summary, it's been another very successful year for the group. We are the market leader in the experiential leisure sector and with our value proposition, continue to generate strong demand from our customers. Due to our difficult to replicate operating model, we are well insulated from the cost pressures and inflation and have plenty of growth left to come and a balance sheet that supports that growth.