Driving our

growth strategy

Hollywood Bowl Group plc

Annual report and accounts 2022

Hollywood Bowl Group plc Annual report and accounts 2022

Strategic report

2 Highlights

3 Investment case

4 At a glance

6 Chairman’s statement

10 Our brands

16 Canadian acquisition

18 Chief Executive Officer’s review

24 Business model

26 Section 172

27 Stakeholder engagement

30 Our market environment

32 Strategy

38 Key performance indicators

40 Chief Financial Officer’s review

46 Sustainability overview

59 TCFD

69 Risk management

70 Principal risks

74 Going concern and viability statement

Corporate report

76 Chairman’s introduction to governance

78 Board of Directors

80 Corporate governance report

86 Report of the Nomination Committee

91 Report of the Audit Committee

96 Report of the Remuneration Committee

101 Annual report on remuneration

114 Directors’ report

117 Statement of Directors’ responsibilities

Financial statements

119 Independent auditor’s report

127 Consolidated income statement and

statement of comprehensive income

128 Consolidated statement of

financial position

129 Consolidated statement of changes

in equity

130 Consolidated statement of cash flows

131 Notes to the financial statements

157 Company statement of financial position

158 Company statement of changes in equity

158 Company statement of cash flows

159 Notes to the Company

financial statements

165 Company information

Driving our

growth strategy

Our unique purpose-led culture and proven investment-led strategy are enabling us

to capitalise on the significant growth opportunities in the markets we operate in.

Text to be provided

Our purpose is bringing families and

friends together for affordable fun

and safe, healthy

competition

enabling us to create value for our stakeholders

Continually enhancing our

customers’ experience

Building energetic and

engaging teams who share

our values and are proud

to be part of our culture

Maintaining support of

our investors to help us grow

the business and consistently

deliver returns

and strong market fundamentals…

Growth of competitive

socialising

Combined retail and

leisure experiences

Low market

penetration

Sector consolidation

opportunities

is underpinned by our commitment to sustainable growth…

Safe and inclusive

leisure destinations

Outstanding

workplaces

Sustainable

centres

Our strategy…

Delivering

like‑for‑like

revenue growth

Actively

refurbishing

our assets

Developing new

centres and

acquisitions

Focusing on

our people

Leveraging our

indoor leisure

experience

Read more on pages 27 to 29

Hollywood Bowl Group plc

Annual report and accounts 2022

Highlights

+28.3%

LFL revenue growth

(2021: +28.6%)

£193.7m

Revenue

(2021: £71.9m)

+169.5%

Total revenue growth

(2021: -9.6%)

£7 7.5m

Group adjusted EBITDA

(2021: £30.6m)

£37.5m

Profit after tax

(2021: £1.7m)

8.53p

Final ordinary dividend

per share

21.91p

Earnings per share

(2021: 1.05p)

3.0p

Special dividend

per share

£39.4m

Adjusted profit after tax

(2021: £1.7m)

23.07p

Adjusted earnings

per share

(2021: 1.05p)

1 Definitions for these measures are in the key performance indicators section (pages

38 and 39). A reconciliation between key adjusted and statutory measures, as well

as notes on alternative performance measures, is provided in the Chief Financial

Officer’s review (pages 40 to 45). Management believes providing these specific

financial highlights gives valuable supplemental detail regarding the Group’s results,

consistent with how management evaluates the Group’s performance. Due to the

restrictions in FY2020 and FY2021, like-for-like (LFL) calculations above are compared

to the last uninterrupted year of trading in FY2019.

Our financial performance

Hollywood Bowl Group plc

Annual report and accounts 2022

Investment case

Reasons to invest

Hollywood Bowl Group is the UK’s market leader with national scale, and

the second largest operator of ten-pin bowling centres in the world.

We operate a high-quality, well-invested estate with diverse revenue streams

and multiple levers, including our expansion into Canada, to drive further growth.

Our highly motivated and engaged operational teams

deliver our customer-focused experiences, and are led

by a stable and experienced management team who is

committed to sustainable growth

Read more on page 16

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Chairman’s statement

I salute our team members’ effort

in delivering on our purpose and

providing consistently excellent

customer experiences.”

Peter Boddy, Non-Executive Chairman

Hollywood Bowl Group plc

Annual report and accounts 2022

The Group’s excellent

performance has

exceeded expectations

I am extremely proud of the way our senior leadership

team (SLT) has continued to create stakeholder value

while innovating and elevating customer experiences.

We have seized opportunities to make the Group more

operationally efficient, while supporting our Centre

Managers to make well-informed decisions at local level.

Together, the Board and SLT remain laser focused on our

strategic growth initiatives.

We have invested further in our portfolio, refurbishing or

rebranding eight centres during the year. We continue

to implement and introduce a number of performance

enhancing initiatives, such as optimising the layouts in our

centres to create more lanes and extra space for our

amusements. We have accelerated our digital offering

and improved how we interact with customers –

amplifying their experiences to meet heightened

expectations. Work included in-centre digital displays,

improved Customer Relationship Management (CRM)

capability, as well as website and IT architecture

improvements that collectively help improve our

customers’ interactions.

We have grown the portfolio during the year, opening two

new Hollywood Bowl centres in Resorts World Birmingham

and in Belfast, both of which are trading in line with

expectations, and we continue to see significant opportunity

to grow the brand in the UK and add to our pipeline.

Since the launch of our new Puttstars leisure brand, a

unique and modern twist on indoor mini-golf, in March

2020, we have been testing the format and refining the

value proposition. COVID-19 halted progress for nearly

two years, however, since the lifting of restrictions, the trial

is progressing well. Informed by customer research and

the lessons we have learned, we are refining the operational

delivery and making modifications in the centre environments

and game-play. We opened two new Puttstars during the

calendar year, and we continue to see opportunity to add

to our pipeline and grow the brand by expanding into

those five-star locations across the UK where a Hollywood

Bowl centre is not suitable, for example, where there is a

smaller available footprint.

Looking further afield, an exciting highlight of the year

was the acquisition in May of Teaquinn Holdings Inc

(Teaquinn) in Canada for an initial consideration of CAD

17m (approximately £10.6m), which was funded from the

Group’s existing cash resources.

Each year, I cannot help but enthuse about the people

who work with us at Hollywood Bowl Group, and FY2022

has been no different.

A record year flashed by and, as customers returned in

their droves, our Centre Managers and team members

delivered excellent customer service unfailingly

throughout the year.

The Group’s excellent financial performance in FY2022

exceeded the Board’s expectations, as well as the FY2019

(the last full year of uninterrupted trading) revenue levels

by 28.3 per cent on a like-for-like (LFL) basis. We have

made further progress against our customer-led strategy,

investing in and growing our estate, including announcing

a new milestone for the business this year with our first

international acquisition in Canada. We have continued

to improve our customer experience, and we are proud of

the great value for money we offer families and friends

across the UK and Canada. As a result of this excellent

performance we were pleased to reinstate our dividend

for the year and set out the Group’s updated capital

allocation policy, which centres on sustainable profit

growth and shareholder returns, on page 44.

Demand for great value competitive socialising remains

strong, and we achieved four of our five-highest ever

revenue months during the year. The UK summer of travel

disruptions in 2021, knocked foreign travel off the agenda

for many, benefiting the domestic leisure and entertainment

sector in that period, and we continued to see the benefit

of that during the early months of FY2022. We also

experienced our second-highest revenue month on

record during August 2022, despite the heatwave, with

our centres also providing our customers a welcome

reprieve from the hot weather.

This excellent performance has been achieved by our

teams who have stood up to the many, well-publicised

challenges experienced by businesses throughout the

year, including COVID-19 related absences, labour shortages

and supply chain issues. Our Centre Managers successfully

navigated these challenges while coordinating multiple

on-site operations and leading their teams on a daily basis.

I salute their efforts in delivering on our purpose and

providing consistently excellent customer experiences.

We were pleased to reward this significant team effort

with a sector-leading bonus scheme in the year.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

The business comprises Splitsville, a Canadian ten-pin

bowling brand, and Striker Bowling Solutions, a supplier

and installer of bowling equipment across Canada.

This was an excellent opportunity to acquire a well-operated,

freehold-backed business with an experienced existing

management team led by founder Pat Haggerty. The

Canadian bowling market is well established but fragmented

and under invested, and ripe for consolidation. Together

with Pat, we see significant potential for profitable growth

in a territory which shares many characteristics of the UK

market of some ten years ago. In addition to refurbishment

opportunities, we have the potential to add up to ten sites

to the portfolio over the next five years. The Board

believes this is an opportunity that aligns well with our

strategic growth plans with targeted returns in line with

our financial investment criteria.

In October 2021, we appointed Melanie Dickinson to the

Board as Chief People Officer in recognition of the huge

importance we place on our team members, and the

impact that her role has had on the success of the Group.

We conducted full pay reviews and awarded well-earned

bonuses to our team members, recognising their

contribution to a stellar performance in FY2022. We did

this on the back of a bonus scheme introduced last year,

rewarding our centre teams for displaying behaviours that

align with Group strategy and environmental performance

targets. Excellent service is fundamental to our success,

and is embedded in everything we do and the rewards

we offer.

In the context of our focus on our team members, I was

delighted that the Group was recognised as one of The

UK’s 25 Best Big Companies to Work For in 2022.

We welcomed Julia Porter as an Independent Non-Executive

Director on 1 September 2022, and as a member of the

Audit, Nomination and Remuneration Committees.

We will sadly say goodbye to Claire Tiney following a

three-month handover with Julia, who will become Chair

of the Remuneration Committee as Claire will be retiring

by rotation at the AGM in January 2023.

I would like to thank Claire for her excellent insights and

contribution to the Group since 2016, and the other

members of the Board for their valued contributions

during the year.

Operating sustainably has long been a priority for the

Group. Having evolved our wider environmental, social

and governance (ESG) strategy in FY2021, this year we

have further embedded sustainability considerations in

the way we operate, and have extended our targets and

stated ambitions.

This year for the first time, we have integrated the Task

Force on Climate-related Financial Disclosures (TCFD)

framework and recommendations in our reporting, giving

more visibility on the climate-related risks we face, the

environmental initiatives we are currently undertaking,

and the steps required to meet stakeholder expectations.

We are putting additional systems and processes in place

to mitigate against future risks and measure performance

in this area.

We work hard to mitigate business risks, and although

inflationary pressures are expected to continue, we are

well placed to withstand them through our operating

model, as well as our multiple revenue streams. We are

exceptionally pleased to have closed FY2022 in a robust

cash and liquidity position. With no current debt we are

not directly impacted by interest rate rises.

The investments and refurbishments made to our

estate have allowed us to deliver great value to all of our

stakeholders, while keeping true to our purpose of bringing

people together for affordable and healthy competition

that is safe and fun, in a wholly positive environment.

Our strict return on investment hurdle rate currently has

sufficient headroom to allow us to continue our capital

investment and refurbishment programmes, as well as

pursue our expansion plans. We are confident in our

ability to not only withstand but to succeed in the face of

the current headwinds, and are committed to keeping our

prices affordable for customers so they can continue to

enjoy a family treat at one of our bowling or mini-golf centres.

I would like to thank all the suppliers, landlords, partners,

shareholders and other stakeholders that have worked

with us to ensure our business could deliver such an

outstanding performance, and I hope you will continue

to share in the Group’s success in the years ahead.

Peter Boddy

Non-Executive Chairman

15 December 2022

18.3%

LFL games growth vs FY2019

14.53 pence

Total dividend per share

Chairman’s statement continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Q – Describe what has made you most proud this year?

A – I am most proud of our team of talented people and the hard

work that they have put into achieving our success this year.

A major contributor to our ability to attract and retain our

talented people is the training and development opportunities

we offer to our team members. Outside of the structured

training however, lies a genuine spirit and ethos of empowering

people. One of the proudest moments of the year was

being able to reward these efforts with pay increases and

exceptional bonuses, as well as the recognition of being

named one of the UK’s 25 Best Big Companies To Work For.

Q – What have been the most difficult obstacles faced by

the business?

A – The past couple of years have presented so many

exceptional challenges that it is difficult to know where to

begin to answer that question. Naturally, the spectre of

COVID-19 looms large over much of what we have done and

achieved in recent years, but we have become stronger in the

face of it. Businesses have faced a number of operational

challenges in the aftermath, and never before have so many

global, political and environmental factors been under

consideration in the daily actions of our SLT and the people

they manage. However, we came through it and delivered an

outstanding performance, underpinned by great service and

excellent teamwork.

Q – What are your priorities for the Group for the future?

A – More of the same – growth and performance. The Canadian

acquisition has been a real highlight, and we are naturally very

excited to grow the Splitsville brand and refine our offer in a

new market . Closer to home, we still see opportunity to grow

both our Hollywood Bowl and Puttstars brands and to invest

in the quality of our portfolio. The SLT is constantly stretching

ideas on how we can make customers’ experience better, and

remain true to our core proposition of offering great value-

for-money, family-friendly leisure experiences.

Q – How has the Group responded to the increased

profile of ESG?

A – It has always been a priority of the Group to look after our

people and customers, and to reduce our environmental

impact. We will continue to do all of this as we evolve our ESG

strategy, extending our ambitious targets. For the first time

this year, we have incorporated the TCFD framework in our

reporting, which highlights our strategies to mitigate against

the climate-related risks we face. Our consistently high

standards of corporate governance ensure our governance

framework meets the needs of the business and is

appropriately aligned with best practice, and we are

extending the Committee structure in 2023 to include a

Corporate Responsibility Committee, which will be chaired

by one of our Non-Executive Directors.

We ask Chairman Peter Boddy about his highlights

of FY2022 and ambitions for the coming year.

Q&A

with Peter

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Our brands

We’re all about

the entertainment

experience

A passion for bringing friends and families together

to share memorable entertainment experiences is

at the very heart of what we do.

Our three unique brands create inclusive fun and

healthy competition for customers of all ages and

abilities to enjoy.

Our drive for constant improvement and innovation

helps us to evolve and enhance our customers’

experience when they visit one of our centres.

1,508

Bowling lanes

UK centres

New centres opened

in FY2022

Hollywood Bowl Group operates with three core

customer-facing brands.

We are the UK’s largest ten-pin bowling operator,

where we have 64 bowling centres under the

Hollywood Bowl brand.

Also in the UK, we have five indoor mini-golf

centres operating under the Puttstars brand.

Following the acquisition of Teaquinn, we now

have the platform to grow our first overseas

bowling business under the Splitsville brand in

Canada, where we have six ten-pin bowling centres.

Read more on pages 12 to 17

Hollywood Bowl Group plc

Annual report and accounts 2022

135

Mini-golf holes

174

Bowling lanes

UK centres

Canadian centres

New centre opened

in FY2022

New centre opened in

FY2022 (post acquisition)

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Our brands

Ten-pin bowling is part of the UK’s diverse ‘out-of-home’

leisure sector. Its popularity is based around offering an

inclusive, fun, affordable and sociable experience for

friends, families or work colleagues, appealing to a broad

range of consumers.

Hollywood Bowl is the market leader in the UK and is our

most recognised brand. We specialise in operating large,

high-quality bowling centres which are predominantly

located in prime ‘out-of-town’ multi-use leisure parks

alongside cinemas and casual dining sites.

We will complete the rebranding of the remaining two

AMF Bowling centres to the Hollywood Bowl brand,

in FY2023.

Understanding the experiences our customers

really value

We believe that customer service is a true point of

differentiation in a competitive leisure market. We focus

on the critical customer satisfaction drivers: value for

money, cleanliness, team friendliness and service speed.

Our customer experience programmes provide valuable

insights into our customers’ preferences, by digitally

capturing satisfaction levels following each visit. As well

as understanding what our customers want and value,

we monitor our customer satisfaction and net promoter

scores carefully, and are always ready to react quickly to

any operational issue or respond to customer feedback.

Our brands continued

FY2022 revenue mix

Bowling 47.8%

Food and drink 26.1%

Amusements 26.1%

48+26+26+0+M

29%

Market share of UK bowling lanes

16.6m

Games bowled

+6.1%pts

Net promoter score versus

FY2019

£21.8m

Capital invested in FY2022

The market-leading brand

Hollywood Bowl Group plc

Annual report and accounts 2022

The complete entertainment experience

Alongside bowling, our food, drink and amusements

offerings give our customers a complete entertainment

experience, providing more reasons to visit and increase

dwell time and secondary spend.

We continue to offer the great value, simplified food

menu that was introduced during COVID-19, focusing on

good quality and speed of service. We have also introduced

a ‘snacks and sharers’ lane menu, which sits alongside

lane drinks ordering.

Amusements remains an area where innovation and

new product development are key. As part of our

ongoing refurbishment programme, we are increasing

the density and quality of family-friendly games and

amusement machines. Over time, it has become

relatively cheaper to play a game – encouraging more

play at a lower entry cost – and we have removed

additional barriers to play by rolling out Nayax ‘tap

to play’, which provides digital coin credit to be used

on our games.

295

New amusement machines added in FY2022

49.9%

Growth in amusement revenue vs FY2019

Enhancing the digital customer experience

We continue to develop and enhance the customer

journey through investment in the use of technology.

Post COVID-19, we saw an upsurge in online bookings,

when compared to FY2019, a trend which continued

in FY2022.

We increased our investment in content development,

and in digital brand and sales activation advertising

across a wide variety of customer groups and channels,

including social media, which resulted in increased revenues

and reduced cost per acquisition from this activity.

We also continued to invest in our website, to simplify the

online customer journey and enhance the booking process.

This has helped improve the presentation of products,

dynamic pricing, sales conversion levels and increased

booking lead times.

Our customer data platform is improving engagement

rates and driving revenue from our database of over two

million contactable customers via our automated and

tactical CRM programmes.

Internal digital screens continue to be rolled out. They

help promote healthy competition through our live leader

boards, support the upsell of food and beverages, and

enhance the overall ambience of the centres with

varying content by time of day. We also have external

digital signage in some of our centres to increase

kerb appeal.

We have strengthened our in-house digital team and the

agencies we work with, and have several exciting digital

transformation projects planned for FY2023.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

+97%

Increase in online bowling revenue

vs FY2019

+28%

Increase in website conversion

vs FY2019

Visitors to hollywoodbowl.co.uk

Contactable contacts on database

for use in CRM programmes

Our brands continued

A fragmented market

Leveraging our indoor leisure experience, we have opened

five Puttstars mini-golf trial centres since 2020, with the

most recent opened in November 2022 in Peterborough.

As with bowling, mini-golf appeals to a broad range

of consumers. The market remains highly fragmented

with more than 1,000 indoor and outdoor locations in

the UK, where the vast majority are managed by

independent operators.

Each centre offers a diverse entertainment experience,

including three nine-hole courses, bar, diner and

amusement areas.

Technology and digital channels form an integral part

of the Puttstars customer journey and its marketing

approach. We have adopted a bespoke digital-scoring

system, replacing the traditional paper and

pencil scorecard.

Our in-centre screen installations provide centre-wide

leader board information, promoting friendly

competition and heightened customer participation,

which in turn leads to increased dwell time and ancillary

spend on food and drink.

Trial phase ‑ testing, learning and evolving

Since launching in FY2020, we have been pleased with

the excellent customer satisfaction levels being achieved,

but we continue to look for opportunities to evolve the

Puttstars brand and customer proposition through

insights gained from customer and team

member feedback.

We have made enhancements to our existing centre

environments, as well as developing our brand

framework and improving the customer proposition.

Our new Peterborough centre, which opened in

November 2022, incorporates learnings from a major

customer research project which informed some

changes to the centre’s environment.

Our indoor mini-golf brand

Hollywood Bowl Group plc

Annual report and accounts 2022

490k+

Rounds played

£8.27

Average spend per round

92.4%

Customers highly satisfied or satisfied

£2.6m

Investment in new

Peterborough centre

These included:

• varying the course difficulties to encourage second

games and return visits

• a more defined visual style for each course

• hole design improvements

• a mobile scoring app

• improved customer sight lines of the courses from

inside and outside the centre

• upgraded external signage and digital journey

In FY2023 we will also be enhancing the brand

communications framework to reflect some of the

visual changes in the Peterborough centre.

Strategy unchanged but rollout slowed

We remain committed to the Puttstars concept and we

continue to test and learn from operating our trial sites.

Our rollout plan in prime locations will continue for

Puttstars, albeit at a slower pace. Alongside this we are

evaluating adding mini-golf courses to Hollywood Bowl

centres as a fourth offer, where space allows.

As we have historically done, we will continue to

prioritise opening new Hollywood Bowl centres over

mini-golf centres where the space and configuration

of a unit allows.

The market opportunity for indoor mini-golf remains

strong and with more flexible space requirements than

bowling, we believe there is scope to open a further

10-15 centres in the UK over the coming years, as the

proposition and Puttstars brand become more

established in the local markets they operate in.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

A well-operated business in

an attractive growthmarket

Developing our business in international markets is part of our long-term

growth strategy and, after an extensive and thorough search, we identified

a target in Canada. It is a well-established market with similarities to the

UK, but is fragmented and underinvested, and ripe for consolidation.

Canadian acquisition

A well‑operated, asset‑backed business

Splitsville is made up of six large family entertainment

centres. All centres have ten-pin bowling lanes, a large

bar and diner and an amusements offer.

The company is a well-operated, freehold asset-

backed business that provides the Group with a

strategic platform for growth.

The company met our strict investment criteria; it has

a quality management team with ambition for growth.

There is low downside risk due to the freehold

valuations, with good medium to longer-term opportunity

for sustained profitable growth.

The purchase was made at an attractive multiple,

funded from cash on our balance sheet and is already

earnings accretive in FY2022.

Hollywood Bowl Group believes there is significant

opportunity to add value to the existing Splitsville

business through leveraging its customer-led operating

model, technology and digital marketing experience,

and through increasing the scale of the business.

In addition, there are a number of well-populated urban

areas that are currently underserved by family

entertainment offers. The Group has an identified

pipeline of new centre opportunities and sees the

potential that at least ten centres can be added over

the next five years.

Centres in highly populated areas

174

Bowling lanes

Average number of bowling lanes

per centre

Pipeline of new centre opportunities

to be opened over next five years

Hollywood Bowl Group plc

Annual report and accounts 2022

Striker Bowling Solutions is a B2B supplier and installer

to the Canadian bowling industry and exclusive

Canadian agent for Brunswick Bowling, the largest

bowling manufacturer in the world.

The business works with clients to build new, and

modernise existing, bowling centres, providing

comprehensive advice, design and installation

services, as well as supplying parts and maintenance

servicing. The business has an established network in

the Canadian bowling market and unmatched insight

into the changes that are ever present in today’s

bowling industry. Through Striker, Splitsville will be

able to fit out its own centres at cost as the business

expands in Canada.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Consideration terms

Hollywood Bowl acquired Teaquinn for a total

consideration of CAD 17m (approximately £10.6m)

satisfied by an initial payment of CAD 13.6m in cash and

a deferred consideration of CAD 3.4m.

The deferred consideration will be payable at the earlier

of Pat Haggerty leaving the business and the end of

FY2025. There are no other conditions on payment

of this consideration. Additionally, Pat Haggerty will be

incentivised by a separate cash-based earn out scheme.

The earn out will be calculated using an EBITDA (pre-IFRS 16)

multiple of 9.2 times at the time of calculation (no earlier

than end of FY2025), deducting any intra-group debt

and applying a 20 per cent apportionment for Pat’s

allocation, before finally deducting the deferred consideration

A proportion of this earn out will be charged to the

Group income statement each financial year until it is

paid out. See note 33 to the Financial Statements for

more information on the earn out and other key

elements of the Teaquinn acquisition.

The total aggregate amount payable under the terms of

the acquisition, including the earn-out and deferred

consideration, is capped at CAD 34m. The earn-out

crystallises no earlier than the end of FY2025.

Acquisition highlights

Teaquinn is a well-operated business with a high-quality

management team and a long track record of trading

performance. Teaquinn comprises Splitsville, an operator

of ten-pin bowling centres, and Striker Bowling Solutions,

a B2B supplier and installer of bowling equipment. Splitsville,

pre-COVID-19, operated four bowling centres with CAD

12.3m revenue and CAD 2.7m EBITDA (pre-IFRS 16)

in FY2019, with the combined businesses generating

CAD 18.7m revenue with an EBITDA (pre-IFRS 16) of

CAD 3.0m. A fifth centre was acquired in 2021.

For the financial year ended 31 December 2021, Teaquinn

reported unaudited EBITDA (pre-IFRS 16) of CAD 2.7m

and net income of CAD 1.9m.

Chief Executive Officer’s review

Our investment strategy

andamazing team

combined to deliver

excellent results

Hollywood Bowl Group plc

Annual report and accounts 2022

We are confident that our unique blend

of inclusive leisure experiences provides

significant growth opportunities in the UK

and Canadian markets.”

Stephen Burns, Chief Executive Officer

I am very pleased to report another excellent performance

for Hollywood Bowl Group in FY2022. For the first time

since FY2019, trading has been largely uninterrupted. Our

results are reflective of the effectiveness of our industry-

leading operating model, the execution of our clear and

consistent strategy, and the continued strong customer

demand for fantastic value-for-money family

entertainment experiences.

This excellent performance is also due to the efforts of

our team members who have worked hard to deliver great

value-for-money and family-friendly experiences, as

shown by the consistently high customer satisfaction

scores achieved throughout the year.

We started the financial year with real momentum and

trading has remained strong throughout the year. Our

strong financial position enabled us to take advantage of

the favourable market environment to invest in growing

our portfolio in the UK. We marked a key milestone for

the business with our first international expansion into

Canada via an acquisition in May 2022. The quality of

our overall estate is constantly improving, with new

centre openings and refurbishments generating

attractive returns and enhancing our customer

experience.

A record performance across all revenue lines

The profit before tax grew by £46.2m when compared

to FY2021, to £46.7m and was £19.1m (69.2 per cent)

ahead of FY2019 (our last year of uninterrupted trading).

Group adjusted EBITDA pre-IFRS 16 was £60.6m vs £38.2m

in FY2019. Each of our centres, that has been open for at

least 12 months, had a positive contribution with an

average EBITDA for FY2022 (on a pre-IFRS 16 basis) of

£1.15m per centre, which is an industry-leading result.

The free cash flow of £34.8m demonstrates our highly

cash generative business model, and with net cash of

£56.1m at the end of FY2022, the business is in excellent

financial health.

Total revenues grew to £193.7m, a 49.2 per cent

increase when compared to FY2019, with all revenue

lines seeing considerable growth driven by increases in

footfall and spend. Games volumes grew by 18.3 per

cent on a LFL basis compared to FY2019, whilst LFL

spend per game grew by 8.4 per cent, up from £9.64

in FY2019 to £10.45 in FY2022.

As well as increased game volumes, the improvements

and investments we have made in our centres have

continued to drive average spend per game. We have

optimised the layout of centres to increase the space

allocated to amusements, and have also added

additional lanes in certain centres. Amusement spend

per game benefited from this increased density, as well

as new game formats and improvements in payment

technology which remove barriers to play. Food and

beverage LFL revenue saw an increase of 18.6 per cent

compared to FY2019, despite a reduction in average

menu pricing. This was a result of our strategic decision

to simplify our menus during the COVID-19 period, to

focus on speed of delivery and quality at accessible

price points which in turn increased our order volume.

We have been pleased with the trading we have seen in

Canada since our acquisition. Total revenue was CAD

9.6m with EBITDA pre-IFRS 16 of CAD 1.6m. COVID-19

restrictions were lifted in Canada at the end of March 2022,

and the result reflects a similar ‘bounce’ in demand that

was experienced in the UK from May 2021.

An outstanding, committed team

I cannot praise our team members enough for their hard

work and dedication, and for delivering great customer

experiences throughout the year, as reflected by our net

promoter score which has increased by 6.1 percentage

points compared to FY2019. This was achieved against

a backdrop of challenges experienced across the leisure

sector including supply chain issues and COVID-19

related absences, particularly during the peak of the

Omicron wave.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

£10.45

LFL SPG +8.4% vs FY2019

£12.5m

Expansionary UK capital spent in

FY2022

An outstanding, committed team continued

We recognised and incentivised these efforts with a

generous review of our pay and benefits packages and

bonus schemes reflecting our long-held belief that the

Group’s success should be shared appropriately.

Incentive-based bonuses paid out to our Centre Managers

in FY2022 were on average 135 per cent of base pay,

whilst our Assistant Managers received an average

24 per cent of base pay. Furthermore, 64 per cent of our

hourly rate team members received bonuses measured

against financial, environmental and customer satisfaction

performance criteria, which equated to £0.7m in FY2022.

These payments were well deserved in an excellent year

and our teams have entered FY2023 stronger than ever.

We have worked very hard on our people initiatives to

continue to attract and retain the very best talent in an

increasingly competitive labour market. We have expanded

our industry-leading training and development programmes,

introducing talent programmes for our Technicians and

Contact Centre team for the first time. In total, 25 new

candidates joined our Centre Manager in Training

programme and 75 candidates joined our Assistant

Manager in Training programme.

We are acutely aware that the cost of living crisis has the

potential to impact our team members over the coming

months. We therefore took the decision to further support

them by providing a one-off cost of living payment to

team members in September which totalled £0.6m.

We were enormously proud to have been recognised

as one of the UK’s Best Big Companies To Work for

in 2022. This accolade is a testament to the fantastic

working culture we have built, and the importance we

place on creating outstanding workplaces, which is one

of the three pillars of our sustainability strategy.

Innovating and investing

We have continued to generate attractive returns on the

investments in our portfolio during the year and our new

centre pipeline is progressing well.

We are pleased to have opened two new Hollywood

Bowl centres in Resorts World Birmingham and Belfast,

as well as a Puttstars in Harrow. At the end of FY2022,

our UK estate consisted of 67 centres, including four

Puttstars. We opened two new centres, Hollywood Bowl

Speke and Puttstars Peterborough, at the start of

FY2023, and are due on site at two new Hollywood Bowl

locations in FY2023. Our pipeline continues to build and

we are targeting to open a further ten UK centres before

the end of FY2025.

We refurbished or rebranded eight centres during the

year, all of which are delivering returns in line with our

hurdle rate of 33 per cent or above. As part of our

refurbishment strategy, we have invested in enhancing

the customer experience in our centres resulting in

higher spend per game. The combination of our dining

and bar areas means that they can be managed more

efficiently, and has also increased the capacity and

density of family-friendly games and amusement

machines. This initiative, alongside the introduction of

payment technology that removes barriers to play, has

helped drive revenues in amusements. We plan to

commence at least seven further refurbishments or

rebrands in FY2023, including converting our last two

AMF Bowling centres to Hollywood Bowl.

A total of 15 centres have benefited from the installation

of Pins on Strings technology in the period, taking the

total of the estate now completed to 41 centres (65 per

cent of the estate).

Investment in all aspects of the digital customer journey

has continued. Since lockdowns ended, there has been

a shift in the way customers make bookings, with the

majority now made online. We have made further

investments in our website and booking engine to

improve sales conversions, encourage early bookings

and improve dynamic pricing, allowing us to offer better

value for customers at non-peak periods, driving overall

capacity utilisation, whilst also automatically driving yield

during the peak periods. We have also improved our

CRM capabilities, enabling us to be more selective and

targeted in our marketing to improve engagement and

conversion rates.

Chief Executive Officer’s review continued

Hollywood Bowl Group plc

Annual report and accounts 2022

During the year, we continued to introduce dynamic

digital displays to encourage customer engagement and

friendly competition at our centres. Positioned strategically,

these displays publish live scoring leader boards and

showcase food and drink content that reflect customer

profile changes through the day. To stimulate food and

beverage sales further, we have upgraded our WIFI

networks in all centres to support at-lane ordering.

We continue to significantly invest in our technology

initiatives and grow our IT team. We have recently

appointed a new IT and Digital Transformation Director

who takes on a strategic role in the ongoing development

of our IT capability, as the digital customer journey

becomes ever more important.

International expansion and acquisition

In May 2022, we were delighted to announce the acquisition

of Teaquinn, comprising Splitsville, an operator of five

ten-pin bowling centres, and Striker Bowling Solutions, a

B2B supplier and installer of bowling equipment, for an

initial consideration of CAD 17m (approximately £10.6m).

This acquisition is a key milestone for the Group as we

take our first steps internationally, in line with our

long-term growth plan.

The company is a well-operated, freehold asset-backed

business that provides us with an exciting platform for growth

in the fragmented and under-invested Canadian market.

Bowling is well established in Canada; it is a popular

pastime and there are more established leagues and

regular, committed players when compared to the UK,

but we believe there is an opportunity to leverage our

customer-led operating model, technology and digital

marketing experience to meet unmet demand for

affordable family leisure experiences.

The Canadian market is ripe for consolidation with many

centres under single ownership and few groups

operating more than three centres. In addition, there are

a number of well-populated urban areas that are

currently under-served by family entertainment offers

where we see potential for growth.

We will work with Pat Haggerty, Founder and President

of Teaquinn, and his management team, to grow our

portfolio in this new market while maintaining our typical

‘test and learn’ approach. Since the acquisition, we have

focused on putting in place the financial systems and

structure that will support this growth, including

recruiting a VP of Operations, Head of Marketing and

Director of Finance.

We have completed our first acquisition in Kingston,

Ontario, bringing the number of centres we own in Canada

to six; five in Ontario and one in British Columbia.

We have an identified pipeline of new site opportunities

with the potential that at least ten sites can be added

over the next five years, and at least a further 20 sites

over the next ten years. Our mid-term goal is to open

two new sites per year on average.

Similar to our UK strategy, we will continue to apply

a rolling refurbishment programme that fits within our

strict return on investment criteria. Our first refurbishment

is expected to complete in H1 FY2023, and we also plan

to refurbish the recently acquired centre in Kingston,

Ontario. Striker supplies and maintains a large number of

bowling centres across Canada, which will benefit us and

allow us to fit out our own centres at cost, as we build

the business.

We have been very pleased with the trading results since

the acquisition. COVID-19 restrictions were lifted fully in

March 2022, and trading has followed a similar pattern

to the UK with an initial rebound in demand. We achieved

double digit LFL revenue growth against 2019 for the

four months to 30 September 2022.

Placing sustainability at the heart

of our business

Energy efficiency remains a key focus, and the Group’s

programme of solar panel installations remained on

track with a total of 22 centres now completed or under

construction, with more than 30 per cent of our centres

close to, or actively generating, their own energy. We will

continue to negotiate with our landlords if we see a

feasible opportunity to install solar panels; we believe

that circa. 50 per cent of our UK current estate could

benefit from this approach.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

£81.1m

Liquidity available at end of FY2022

£21m-£23m

Planned capital expenditure

for FY2022

Placing sustainability at the heart

of our business continued

We are making good progress with our waste reduction

and recycling targets, with our team members’ bonus

allocation in part being measured against how effectively

waste is managed and recycled. This has supported an

excellent performance with eight centres recycling over

85 per cent of all waste produced. On average, 77.7 per

cent of our waste in FY2022, in the UK, was recycled,

compared to 71.6 per cent in FY2021.

We continue to embed more targets and stated ambitions

in our ESG strategy and have, for the first time this year,

integrated the TCFD framework and recommendations

in our reporting. By doing so we are giving our stakeholders

more visibility on the climate-related risks we face, and

the current and developing plans to mitigate against them.

In recognition of our commitment to sustainability, in

FY2023 we are establishing a Corporate Responsibility

Committee that will report directly to the Board and will

be headed by Ivan Schofield.

Well insulated from inflationary pressures

We are mindful of the increasing cost pressures and

have continued to focus on controlling our costs

throughout the year and we remain well insulated from

wider inflationary pressures. Our UK electricity usage

costs are hedged to the end of FY2024 and over 70 per

cent of our revenues are not subject to inflation in cost

of goods sold. Labour costs account for less than 20 per

cent of revenue at centre level, and food and drink costs

represent less than 10 per cent of overall costs and

through the work undertaken to simplify our menus, we

have reduced our exposure to supply chain and

food inflation.

This enables us to keep our prices low, and our headline

price remains the lowest of all the branded bowling

operators – a family of four is able to bowl with us for

less than £24.

Outlook

We have continued the momentum from FY2022 into

the start of the current financial year with strong

demand and encouraging pre-bookings for the

Christmas period.

Against the backdrop of the increasing cost of living,

we believe our great value-for-money offer will remain

attractive to families seeking affordable, family-friendly

leisure experiences. We are committed to continuing to

invest in and supporting our team members to deliver

these positive customer experiences.

We are focused on continuing to execute our customer-

led strategy and generate attractive returns through

investing in the overall quality of the estate via new

centre openings, refurbishments and rebrands,

innovation of the customer offer and technology

enhancements.

The strength of our balance sheet, alongside our highly

cash generative business model, means we are in an

excellent position to pursue our growth strategy, and we

see the potential in the future to grow our business to

more than 110 centres, through our Hollywood Bowl and

Puttstars brands in the UK, and Splitsville in Canada.

I would like to thank each and every member of our team

for their efforts last year and look forward to another

successful and exciting year ahead.

Stephen Burns

Chief Executive Officer

15 December 2022

Chief Executive Officer’s review continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Q&A

with Stephen

Q – To what extent is the demand experienced in the last

18 months reflective of a structural change in the

bowling industry?

A – There clearly was a post-COVID-19 ‘bounce’, and it is fair to

expect this to drop back a bit, although we haven’t seen it so

far. Customers that have visited a Hollywood Bowl for the first

time since we reopened are finding that our offer is stronger

than ever. We are giving our customers more reasons to stay

for longer and come back more often by providing a family-friendly

and great value-for-money entertainment experience. It’s also

important to remember that our headline prices are very

attractive for customers and remain the lowest of all the

branded bowling operators – with a family of four able to

bowl with us for less than £22.

Q – What are your plans for Puttstars and how are the

trials progressing?

A – We launched our first Puttstars in March 2020, following

which our centres were closed almost immediately due to

COVID-19, so it is still early days for the concept and the

brand in terms of time that the business has traded. With our

recent new centre in Peterborough, we now have five Puttstars

open. We have continued to test and learn, supported by

customer research in order to refine the ‘value’ experience,

alongside evolving our marketing and branding to increase

customer appeal. The customer feedback has been excellent

so far and we are waiting to see the feedback from our updated

design in Peterborough before we decide on what to retrofit

into the earlier centres. We continue to see a good deal of

opportunity to grow the brand in a fragmented market by

securing sites in prime locations where the space isn’t suitable

for a Hollywood Bowl or by introducing mini-golf courses in

Hollywood Bowls as a fourth offer where space allows.

Q – Why have you decided to expand into Canada above

other territories?

A – In line with our stated Group strategy, we long set our sights

on overseas expansion and have carried out extensive

research into potential markets where we could apply our

operating model. We began with the premise that we wanted

to find out what bowling businesses were doing in other

countries, in part so that we could learn and apply innovation

to our own business. We found that when it comes to

family-friendly leisure bowling, the UK is without a doubt the

world leader. That also provides us a with the opportunity to

bring our operating model into other countries. Canada

represents the best fit for us as it shares many similarities with

the UK bowling market, and we believe there is unmet demand

for well-invested, affordable, family-friendly bowling-led

experiences. Splitsville’s operations and brand provide us with

an excellent platform for further growth, and we believe there

is a significant opportunity to add value to the existing

Splitsville business by leveraging our customer-led operating

model, technology and digital marketing experience, and

through increasing the scale of the business.

Q – Why is the rollout of Pins on Strings so important

to the business?

A – One of the key indicators in operating a bowling centre is

games per stop (GPS), which measures the number of games

played before a mechanical failure stops play. Because there

are fewer mechanical parts to Pins on Strings compared to

traditional pinsetters, we are able to increase GPS from an

average of 409 to an average of 1,108. This can have a

massive impact on the performance of a centre, since fewer

stops means more play and higher asset utilisation at 100 per

cent gross margin. Pins on Strings also requires a reduced

level of labour to operate and uses less energy which is of

benefit to our operating costs and the environment.

We ask CEO Stephen Burns about trading since

COVID‑19 and strategic progress

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Business model

Our business model delivers value through

continual investment in enhancing our

customers’ experience

What sets us apart

Our ESG strategy:

What we do

Our centres offer a complete entertainment experience for customers of all ages.

Alongside our core offer of bowling or mini-golf, they can also enjoy amusements

and food and drink. These additional offerings not only enhance their experience

and increase reasons to visit, but also increase dwell time and secondary spend.

Multiple revenue streams

1. Safe and inclusive leisure destinations

Bowling Mini‑golf

Amusements Food

Beverages

Read more on pages 46 to 58

Where we invest Value creation

1. Safe and inclusive leisure destinations 3. Sustainable centres2. Outstanding workplaces

Investment

Customer experience

• Safe and secure environments

• Technology to enhance the wider customer journey

• Centre maintenance and upgrades

• Centre refurbishments and reconfigurations

• Customer insight programmes

Link to strategy

Delivering like-for-like revenue growth

Actively refurbishing our assets

People

• Attracting and retaining the best people in the leisure industry

• A fair deal for our team members with comprehensive bonus and

incentive schemes

• Extensive training and development

• Team engagement and wellbeing programmes

Link to strategy

Focusing on our people

Growth

• New centre developments

• Broadening the appeal to new and existing customers through digital

marketing programmes and environment upgrades

• Acquisitions

• UK and international market expansion

Link to strategy

Developing new centres and acquisitions

Leveraging our indoor leisure experience

Our customers

We strive to deliver the best possible

experience through exceptional service,

in unique, contemporary, safe and

exciting environments at a highly

accessible price point.

Our people

Our team members are highly focused on

commercial, satisfaction and sustainability

measures to ensure our customers enjoy

the best possible experience whilst we

minimise our impact on the environment.

Management programmes are in place to

attract, retain and nurture top talent.

Our partners

We support a wide ecosystem of

partners and suppliers through

commercial arrangements designed

to build mutually beneficial

long-term relationships.

Our communities

The inclusive nature of bowling and

mini-golf makes them an important

contributor to social wellbeing. We offer

subsidised access for concessionary

users and educational groups.

Our investors

We are focused on sustainable, profitable

growth by driving revenues, and managing

our margins and cash position to provide

attractive returns.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Effective engagement and collaboration.

Considering all our stakeholders is a vital part of the Board’s strategic

decision making. Engaging our stakeholders in a way that aligns with

our culture and supports our goal of remaining an industry leader is

fundamental to the long-term sustainable success of the Group.

Section 172 of the Companies Act 2006 requires directors to always

act in good faith and in a way that would most likely promote the

success of the company for the benefit of its stakeholders. As part

of this, the Board must always consider how decisions balance the

needs of our different stakeholders, as well as the consequences

on long-term performance. The nature of operating a large-scale

business means it is not always possible to provide positive

outcomes for every stakeholder. In these situations, the Board has

to make decisions despite competing stakeholder priorities. Our

stakeholder engagement processes allow us to better understand

what matters to stakeholders, consider all relevant factors and

select the best course of action for long-term business success.

The disruption caused by the pandemic and the government

restrictions to address it has made working as closely as possible

with our stakeholders more important than ever.

Working with our

stakeholders Section 172

S172(1) statement:

In accordance with section 172(1) of the

Companies Act 2006, a director of a

company must act in the way he or she

considers, in good faith, would be most likely to

promote the success of the Group for the

benefit of its members as a whole and, in doing

so, have regard, amongst other matters, to:

a. the likely consequences of any decision

in the long term;

b. the interests of the Group’s employees;

c. the need to foster the Group’s business

relationships with customers and suppliers;

d. the impact of the Group’s operations on

the community and the environment;

e. the desirability of the Group maintaining

a reputation for high standards of

business conduct; and

f. the need to act fairly between members

of the Group.

The following disclosure describes how the

Directors of the Group have taken account

of the matters set out in section 172(1) (a) to

(f) and forms the Directors’ statement

required under section 172 of the

Companies Act 2006.

How we engage with

our key stakeholders

Here, we will outline the Board and

Group’s approach to considering and

engaging with our key stakeholder groups.

As well as our ongoing engagement

activities, we also regularly receive and

respond to specific feedback as well as

provide updates on important issues to

our stakeholders.

However, the Board does reserve certain

matters for its own decision making. These

are outlined on page 80.

In response to COVID-19 we took steps to

increase our communication, collaboration

and information sharing with stakeholders

regarding our actions and the potential

impacts on them, as well as the information

we have considered, and we have continued

this approach as we have emerged from

the pandemic.

Here are the details of our stakeholder

groups, the activities in FY2022 and the

outcomes of the engagement.

Our key

stakeholders

The Board considers the Group’s

key stakeholders to be:

• Team members (employees)

• Customers

• Investors

• Suppliers, partners and

lending banks

• The communities in which it

operates

• The environment

Section 172

Read more on the Business model on pages 24 and 25

Read more on Sustainability on pages 46 to 58

Read more on Governance on pages 76 to 85

Hollywood Bowl Group plc

Annual report and accounts 2022

Our team members are key to our business success and the

driving force behind our positive customer feedback. They are

principally responsible for the experiences our customers look

forward to, and revisit us for.

What is important to them

• Regular, relevant and clear communication

• Engagement with all levels of management

• Opportunities to provide feedback

• Career and skills development options

• Attractive salary, benefits and opportunities to share in the success

of the Group

• An inclusive employer who embraces diversity at all levels

How the Board considers the interests of the

stakeholder group

• All Directors visit multiple new, refurbished and existing centres each year

• Attendance at the annual management conference

• Bi-annual feedback sessions between management and team members

• The Board’s diversity policy is detailed on page 89. Diversity is a key

consideration of the Board’s succession planning

How we engaged with them during FY2022

• Fourth Engage enabled us to communicate key messages instantly, with

the opportunity for the team to interact; we have also used the platform to

deliver wellbeing initiatives to support our team

• We have undertaken employee engagement surveys and pulse surveys

• The Company has a Whistleblowing policy in place, which enables

employees to raise concerns on any areas of the business. All cases are

reported on at every Board meeting

• We publish our Gender Pay Gap report once a year

Outcomes of engagement during FY2022

• Fourth Engage enabled us to deliver our internal training and wellbeing

initiatives to support our team

• We were pleased to have been able to reintroduce face-to-face training

sessions this year, following virtual training sessions being delivered in the

COVID-19 period. We have updated our learning platform to include more

user-generated content and encourage social learning. This content has

also been shared through Fourth Engage

• The outputs of the engagement surveys were considered by the Board

and senior leadership team, resulting in actions being identified and put

in place

• We were delighted to be recognised as one of the UK’s Top 25 Best Big

Companies to Work for in 2022

Stakeholder engagement

Our team

Providing our customers with a great experience every time

they visit is a core consideration for the Board. Customer

feedback remains our best indicator for whether we are

delivering on this.

What is important to them

• A great value visit every time

• A clean and safe environment

• Excellent customer service from friendly team members

• Fully working, fault-free equipment

How the Board considers the interests of the

stakeholder group

• The Board reviews customer satisfaction scores at every meeting

• Customer satisfaction scores form part of all bonus schemes from team

members to senior leadership

• The senior leaders use customer feedback to identify improvements

to ways of working and ongoing investments into new centres

and refurbishments

How we engaged with them during FY2022

• Post-visit customer satisfaction surveys

• Qualitative market research programmes

• Quantitative market research programmes

• Social media and customer queries submitted via the contact centre

• Regular feedback and monitoring ensured safety standards and

expectations were being met

Outcomes of engagement during FY2022

• We saw improved overall satisfaction scores from our customer visits

versus FY2019

• Enhancements to the Hollywood Bowl and Puttstars brand propositions

Our customers

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Stakeholder engagement continued

Investors are an important source of feedback on our business

model and plans for future growth.

What is important to them

• Relevant and timely information on Group performance

• Regular engagement with management

• Growth of share price and dividend returns data

• Information on ESG strategy and performance

• Information on Remuneration policy

How the Board considers the interests of the

stakeholder group

• The Board receives feedback from shareholder meetings and through the

Group’s brokers, Investec and Berenberg

• The Board welcomes questions from our shareholders at any time

• The Remuneration Committee Chair continues to consult shareholders

on any future major changes to its Policy. The Report of the Remuneration

Committee can be found on pages 96 to 100

• The Board remains focused on the Group’s ESG initiatives. The Sustainability

report is on pages 46 to 58 and Corporate governance report on pages

76 to 85

How we engaged with them during FY2022

• The AGM was held in January 2022

• Investor relations during the year consisted of meetings with our current

and prospective shareholders and presentations given to shareholders

upon the release of annual or interim results. These meetings included

identifying key overseas markets for expansion, including but not limited

to Canada

• Attendance and presentations given at investor conferences

Outcomes of engagement during FY2022

• The Board’s view on dividends is outlined in the Chief Financial Officer’s

review on page 44

• We have made further progress in our ESG strategy and initiatives

• Awarded best Annual Report for European Small Cap Business

• Investor Relations Best Practice Awards Finalist - Small Cap Annual Report

Our investors

We take pride in being an active part of our communities, with

school outreach programmes, concession discounts and

charity fundraising.

We always take into account the environmental impacts of

business operations and strategy.

What is important to them

• A positive contribution to local communities through employment and

amenity provision

• Ongoing support for local and national charities

• Energy efficiency and sustainable working practices

How the Board considers the interests of the

stakeholder group

• The Board considers the longer-term impact of its operations as part of

its sustainability strategy

• The Board continues to focus on improving its energy efficiency

How we engaged with them during FY2022

• Our Sustainability report details our ESG strategy, activities undertaken

and future initiatives. This can be found on pages 49 and 50

Outcomes of engagement during FY2022

• We continued with our investment into solar panels, with 17 installations

completed or nearing completion during FY2022

• Increase in uptake of concessionary discount rates versus FY2019

• Continuation of support for Barnardo’s as our national charity partner

• We have made further progress in our ESG strategy and initiatives (read

more on pages 46 to 48)

Our communities and the

environment

Hollywood Bowl Group plc

Annual report and accounts 2022

Our lending banks provide funds for growth and working capital

as required.

What is important to them

• Regular monthly reporting, including rolling 12-month forecasts

• Regular invitations to new openings and refurbishment launches

How the Board considers the interests of the

stakeholder group

• Bank representatives are able to attend half-year and full-year

results presentations

• Forward-looking forecasts are provided at every monthly Board meeting

to ensure covenant compliance

How we engaged with them during FY2022

• We provided regular monthly updates on Company performance and

reported on debt covenant look forwards

Outcomes of engagement during FY2022

• The £25m revolving credit facility (RCF) remains in place until

December 2024

Our lending banks

Our partnerships extend beyond the small number of main

suppliers we have for IT services, amusements, food and

beverages to also encompass our landlords.

We expect high ethical standards from every supplier and

partner we work with.

What is important to them

• Clear and concise communication to our suppliers and partners that

shows integrity and reliability at all times

• Strong listed covenant

• Acting as a responsible tenant

How the Board considers the interests of the

stakeholder group

• The Board is committed to high standards of ethics

• Executive Directors hold regular discussions directly with our main suppliers

• The Board takes a zero-tolerance approach to bribery, corruption and

modern slavery and reviews supplier and partner policies in these areas

How we engaged with them during FY2022

• The Executive Directors continued to closely engage with landlords to

agree extensions and revised terms as required

• We actively manage our supplier relationships and have worked with our

major suppliers to carefully manage costs and supply chain disruption

• We publish our Payment Practices Report twice a year

• Our suppliers our audited annually on their compliance with modern

slavery and human trafficking legislation

Outcomes of engagement during FY2022

• We maintained positive relationships with our major suppliers and

landlords throughout FY2022

Our suppliers and partners

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Our market environment

Responding to a

changing landscape

Our position as UK market leader in both the ten-pin bowling and competitive socialising

markets enhances our ability to respond to changing market dynamics. There are a

number of UK market trends which we see as important opportunities for the Group.

Popularity of competitive socialising

As consumers are returning to pre‑pandemic spending, they are

increasingly preferring to create and share social experiences

rather than accumulating material items, which is shaping how

they allocate their discretionary budgets and leisure time.

Opportunity

The ‘competitive socialising market’ evolved due to strong consumer appetite

for unique and inclusive experiences, including updated takes on traditional

activities such as bowling, mini-golf, table tennis and bingo.

Response

Through our active refurbishment programme and the introduction of

innovations like our scoring systems, leaderboards, and new mini-golf

concept, we are continuing to set the standard for competitive socialising in

our nationwide locations.

Link to strategy

1 4 5

Combined retail and leisure experiences

High street, and out‑of‑town, traditional retail outlets and

development schemes are under increasing pressure from

online channels and the rise of the ‘experience economy’.

Opportunity

Numerous retail property landlords and developers are responding to this by

looking to expand their leisure offering and create a wider destination

customer experience to increase footfall and extend dwell time.

Response

Our strong record of proactive and successful partnerships with landlords,

alongside our unique customer experiences, means we are considered key

existing and potential new anchor tenants alongside cinema and casual

dining operators.

Link to strategy

1 3

Hollywood Bowl Group plc

Annual report and accounts 2022

Low market penetration

In the UK, ten‑pin bowling has historically been a relatively

low‑frequency activity, and with 338 centres, has lower levels of

location accessibility when compared to cinema.

Outlook

In the UK, the activities of ten-pin bowling and mini-golf enjoy a wide

demographic appeal and high level of participation interest when compared

to other offerings in the competitive socialising sector.

Response

In the last year, we have worked closely with agents and landlords to further

strengthen our new centre pipeline which will enable us to accelerate the

expansion of our market coverage into prime locations for both the

Hollywood Bowl and Puttstars brands.

Link to strategy

3 5

Sector consolidation

Well‑capitalised businesses can increase their share of the

wider leisure market as financially challenged operators become

less competitive or exit the market.

Opportunity

This trend and the associated opportunities accelerated due to the

COVID-19 pandemic and the subsequent trading and liquidity pressures

experienced by many operators in the leisure and hospitality sectors.

Response

The wider leisure market remains highly fragmented with many independent

operators in existence. Whilst in the bowling sector there are less than 25

independent centres with more than 16 lanes, we continue to closely monitor

wider opportunities of varying scale with our strict high-quality location

criteria guiding our evaluations.

Link to strategy

3 5

Driving like-for-like revenue growth

Actively refurbishing out assets

Developing new centres and acquisitions

Focusing on our people

Leveraging our indoor leisure experience

Key to strategy

See our strategy on pages 33 to 37

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategy

Our proven growth strategy

Driving like‑for‑like revenue growth

Actively refurbishing our assets

Focusing on our people

Developing new centres and acquisitions

Leveraging our indoor leisure experience

Key to risks

Economic environment

Covenant breach

Expansion/growth

Core systems

Supplier (non-amusements)

Amusement supplier

Management recruitment and

retention

Food safety

GDPR and cyber security

Targeted IT threat/attack

Compliance

Climate change

See our risks on pages 69 to 73 See our markets on pages 30 and 31

Hollywood Bowl Group plc

Annual report and accounts 2022

Driving like-for-like

revenue growth

We do this by

• Focusing on sales, service and safety superiority

• Providing an outstanding customer experience by attracting and

retaining the best talent

• Increasing dwell time through a diverse entertainment experience

• Investing in technology and improving the digital customer journey

to drive sales and engagement

• Continually improving the food and beverage and amusement offering

• Maximising customer awareness and engagement through

targeted digital marketing to a variety of customer groups

What we achieved

• Customer service score of 59.3 per cent

• Net promoter score of 61.0 per cent

• Ongoing improvements to training and development programmes

for all team members

• Our customer data platform is helping to improve engagement

rates and opportunities for database-generated revenue, with

insights used to drive digital advertising effectiveness and to

improve conversion rates

• Development of our website and booking engine functionality,

which has simplified the customer journey, and improved

presentation of dynamic pricing and conversion levels

• Introduced an improved value snacks and sharers food menu and

increased ‘at lane’ food and beverage orders by improving

in-centre WIFI and networks

• Space optimisation to add extra bowling lanes and extended

amusement areas

18.3%

LFL games growth vs FY2019

8.4%

LFL average spend growth vs FY2019

28.3%

LFL revenue growth vs FY2019

We grow our LFL revenue by attracting new customers

and increasing the frequency of existing customer

visits, and stimulating higher spend per game.

1 Economic environment

6 Amusement supplier

7 Management recruitment and retention

What’s next?

• Continued focus on innovation, and investment in technology at

circa. 30 per cent ROI

• Digital transformation projects to improve core systems and

marketing capabilities

• Drive additional improvements and excellent value-for-money

customer experiences

Links to risks

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategy continued

Actively refurbishing

ourassets

We do this by

• Typically refurbishing our centres on a five to seven-year cycle

with an average spend of £0.4m per refurbishment, keeping our

centres fresh and introducing innovations

• Reconfiguring centres to drive sales in high-growth sales streams,

for example combining the bar and diner space to create more

amusement space – without reducing the number of covers

• Phasing out the AMF brand by rebranding centres to Hollywood

Bowl to improve customer brand recognition and loyalty

• Increasing the space, density and quality of family games

and amusement machines, driving ancillary revenues

• Introducing in-centre digital upgrades to improve customer

engagement, and encourage food and beverage spend

• Investing in solar panels to reduce impact on the environment

and our exposure to energy price increases

What we achieved

• Completed the refurbishment or rebrand of eight centres

• Spent £12.9m on continuously improving our centres

• Added an average of 1,000 sq ft to amusements space during

refurbishments – creating on average eight new machine places

and adding 323 new amusement pieces to our estate

• Continued to rollout our in-centre digital installations with

enhanced content – now in 33 centres

• Continued to rollout Nayax ‘tap to play’ and upgraded WIFI

at all centres

• Completed rollout of Pins on Strings in 15 centres – now in 41 centres

• Installed solar panels at 17 centres to bring the total to 22 centres

• Two AMF centres rebranded with final two to complete in FY2023

Centres refurbished or rebranded in FY2022

14.7%

LFL spend growth in first year after refurbishment

40%+

Average ROI on capital spend

Investing in the customer experience creates improved

sales and profitability at existing centres. Our upgrades

attract new customers, increase customer satisfaction

and ultimately increase revenues.

1 Economic environment

6 Amusement supplier

7 Management recruitment and retention

What’s next?

• Seven refurbishments and rebrands to be completed in FY2023

• Continued rollout of Pins on Strings to improve games per

stop (GPS)

• Negotiate with landlords to continue solar panel rollout

Links to risks

Hollywood Bowl Group plc

Annual report and accounts 2022

Developing newcentres

andacquisitions

We do this by

• Focusing on quality openings and setting minimum ROI on net

capital expenditure

• Looking to international markets that are fragmented and

underinvested, and ripe for consolidation

• Seeking acquisitions meeting strict investment criteria, overseas

or at home, where we can add value and where there is significant

potential for sustained profitable growth

What we achieved

• Opened two new Hollywood Bowl centres and one new

Puttstars centre

• Completed the acquisition of the Splitsville brand in Canada,

adding five large well-operated bowling centres with bar, dining and

amusements in populous locations, and providing a new strategic

platform for growth

What’s next?

• At least ten further centres scheduled to open in the UK by the

end of FY2025 including a sixth Puttstars centre

• Leverage our customer-led operating model, technology

and digital marketing experience to add value to the

Splitsville business

• Continue to develop a pipeline of new Canadian site

opportunities, with more than ten additional sites planned in the

next five years

Overseas acquisition completed in FY2022

15-20

New centre openings targeted by end of FY2025

New centres opened in FY2022

We actively explore growth opportunities via new build

centres and the acquisition of sites or operators.

2 Covenant breach

3 Expansion/growth

7 Management recruitment and retention

Links to risks

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategy continued

4 Core systems

7 Management recruitment and retention

We do this by

• Having a positive, fun, high-performance corporate culture

• Providing industry-leading training and development programmes

• Offering highly competitive pay, benefits and bonus schemes to

all our team members

• Actively engaging and communicating with all team members

What we achieved

• Reassessed team members’ pay in current inflationary

environment, increasing salaried teams’ remuneration

• Introduced new bonus schemes and rewarded more than 64 per cent

of our hourly paid team members with performance-related bonuses

• Carried out a number of diversity initiatives, including reviewing

our careers website to appeal to all ethnic, cultural and

religious backgrounds

• Introduced, and held, five Assistant Centre Manager in

Training programmes

• Introduced talent programmes for our technicians and

contact centres

• Filled 40 per cent of management vacancies from our internal

talent pipeline

• Provided a one-off cost of living payment to all team members

• Recognised as one of the UK’s Top 25 Best Big Companies To

Work For in 2022

What’s next?

• Launch the new employer brand to our team members

• Continue to run market-leading incentive schemes for our teams

Links to risks

Our dedicated, dynamic and diverse teams enable

us to deliver on our Group purpose. Attracting and

retaining top talent is a priority.

Hollywood Bowl Group plc

Annual report and accounts 2022

£5.6m

Bonuses paid to centre teams

64%+

Of hourly paid team members received performance-

related bonuses

40%

Of management vacancies filled from internal

talent pool

Focusing on

ourpeople

We believe there are potential sustainable and profitable

growth opportunities, through acquisition or organic

expansion into other indoor leisure sectors.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

We do this by

• Conducting extensive research into adjacent leisure market

opportunities and indoor amusement offerings

• Applying strict investment criteria before entering new sectors,

as well as insight-led brand positioning

• Conducting trials to test centre environments and

customer propositions

What we achieved

• Extended our Puttstars trial centres with the opening of a fifth new

centre during the period

• Enhanced the customer proposition and centre environments to

drive customer interaction and sales

What’s next?

• Latest Puttstars centre in Peterborough opened in November 2022

with environment, technology and brand upgrades

• Updated brand framework and increased marketing spend in

local catchments

• Increased co-promotion between Hollywood Bowl and

Puttstars brands

• Continued evaluation of rollout of Puttstars centres in high-quality

locations where bowling centres are not viable due to existing

centres or unit space constraints

• Opportunity to trial mini-golf courses in selected Hollywood Bowl

centres as a fourth offer

Leveraging our indoor

leisure experience

2 Covenant breach

3 Expansion/growth

4 Core systems

18,000 sq ft

Unit size required for a three course Puttstars centre

66%

Net promoter score for Puttstars in FY2022

Puttstars centre opened in FY2022

Links to risks

Key performance indicators

We monitor our performance by regularly reviewing KPI metrics

We use these to gain a thorough understanding of the drivers of

our performance, of our operations and of our financial condition.

Financial KPIs

Revenue (£m)

+169.5%

Definition

Revenue is generated from customers

visiting our centres to bowl or play mini-golf,

and spending money on one of the ancillary

offers – our amusements, diner or bar.

Comment

Revenue increased by 169.5 per cent, to

£193.7m, driven through significant LFL

growth, new centre performance as well as

the acquisition of Teaquinn. It is also worth

noting that FY2022 traded uninterrupted

from COVID-19 restrictions.

2022 193.7 2022 12.5 2022 77.5

0.5

1.2

0.4

(2.1)5.5

2022 28.32022 4 6.7 2022 56.1

2021 29.9

(8.7) 2020

2019

2021 71.9 2021 3.6 2021 30.6

2021

2020

2021 28.6

2020 79.5 2020 8.9 2020 29.8

2020

2019 129.9 2019 8.1 2019 38.2

2019 27.6 2019

Profit before tax (£m)

+10000.6%

Definition

Profit before tax as shown in the financial

statements.

Comment

Profit before tax grew to £46.7m due to the

growth in revenues and strong cost controls

in the year.

Revenue generating capex (£m)

+244.5%

Definition

Capital expenditure on refurbishments,

rebrands and new centres (excluding

maintenance capex).

Comment

Revenue generating capex increased by

244.5 per cent, to £12.5m, as three new

centres were opened in FY2022, whilst no

new centres opened in FY2021. The Group

also returned to its pre-pandemic level of

refurbishments and rebrands.

Group adjusted EBITDA (£m)

+153.5%

Definition

Group adjusted EBITDA is calculated as

operating profit before depreciation,

impairment, amortisation, loss on disposal

of property, plant, equipment and software

and exceptional items. A reconciliation

between Group adjusted EBITDA and

statutory operating profit is on page 42.

Comment

Group adjusted EBITDA increased by

£46.9m to £77.5m, largely due to revenue

growth as well as being open for the full

financial year.

Like‑for‑like revenue growth (%)

+28.3% pts

Definition

LFL revenue growth is total revenue

excluding any new centres and closed

centres. New centres are included in the

LFL revenue growth calculation for the

period after they complete the calendar

anniversary of their opening date. Due to the

restrictions in FY2020 and FY2021, LFL

revenue is compared to FY2019.

Comment

LFL revenue has increased 28.3 per cent

when compared to FY2019.

Net cash/(debt) (£m)

+87.6%

Definition

Net cash/(debt) is defined as cash and cash

equivalents (£56.1m) less borrowings from

bank facilities (£nil) excluding issue costs.

Comment

The Group is in a net cash position as at

year-end due to the strong trading during

the year and tight cost controls.

Hollywood Bowl Group plc

Annual report and accounts 2022

2022 84.8 2022 55.9 2022 28.6

2022 40.0 2022 10.45

2021 85.7 2021 22.1 2021 13.3

2021 42.5 2021 10.33

2020 85.5 2020 14.8 2020 12.4

2020 37.5 2020 10.15

2019 85.7 2019 25.1 2019 21.9

2019 29.4 2019 9.64

Gross profit margin (%)

-0.9% pts

Definition

Gross profit margin is calculated as revenue

minus the cost of sales and any irrecoverable

VAT, divided by revenue. Bowling has a

gross profit of 100 per cent, with the costs of

operating bowling in administrative costs,

while each of the other revenue streams has

an associated cost of sales.

Comment

Gross profit margin decreased year-on-year

due to a combination of higher LFL revenue

growth in amusements outstripping other

revenue lines as well as the lower margin in the

Canadian business as guided on acquisition.

Group adjusted operating cash flow (£m)

+152.9%

Definition

Group adjusted operating cash flow is

calculated as Group adjusted EBITDA less

working capital, maintenance capex and

corporation tax paid. A reconciliation of

Group adjusted operating cash flow to net

cash flow is provided on page 43.

Comment

Group adjusted operating cash flow

increased due to a combination of higher

Group adjusted EBITDA and a positive

movement in working capital.

Group adjusted EBITDA margin (%)

-2.5% pts

Definition

Group adjusted EBITDA margin is

calculated as Group adjusted EBITDA

divided by total revenue.

Comment

Group adjusted EBITDA margin was 40 per

cent, in line with management expectations.

Group adjusted EBITDA margin on a

pre-IFRS 16 basis was 31.3 per cent.

Total average spend per game (£)

+1.2%

Definition

Total average spend per game is defined

as total revenue in the year divided by the

number of bowling games and golf rounds

played in the year. It does not include

Canada where bowling is sold by time,

not games.

Comment

Average spend per game increased by

1.2 per cent, to £10.45, due to customers

continuing to spend more during their visits.

Group operating profit margin (%)

+15.3% pts

Definition

Operating profit margin is calculated as

operating profit per the Financial Statements

divided by revenue.

Comment

Operating profit margin increased year on

year to 28.6 per cent, due in the main to the

strong revenue performance during the year.

1 Some of the measures described are

not financial measures under Generally

Accepted Accounting Principles (GAAP),

including International Financial Reporting

Standards (IFRS), and should not be

considered in isolation or as an

alternative to the IFRS Financial

Statements. These KPIs have been

chosen as ones which represent the

underlying trade of the business and

which are of interest to our shareholders.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Chief Financial Officer’s review

Our strong,

well-capitalised

business is delivering

robust returns

The liquidity position of the

Group remains strong and we are

well prepared to mitigate most

inflationary pressures.”

Laurence Keen, Chief Financial Officer

Hollywood Bowl Group plc

Annual report and accounts 2022

Group financial results

FY2022

(statutory) FY2021 FY2019

Movement

FY2022 vs

FY2019

Revenue £193.7m

£71.9m £129.9m +49.2%

Gross profit £164.3m £61.6m £111.4m +47.6%

Gross profit margin 84.8% 85.7% 85.7% -0.9%pts

Administrative expenses £108.9m £54.9m £82.9m +31.3%

Group adjusted EBITDA

£77.5m £30.6m N/A N/A

Group adjusted EBITDA

pre-IFRS 16 £60.6m £15.1m £38.2m +58.6%

Group profit after tax £37.5m £1.7m £22.3m +68.1%

Adjusted group profit after tax

£39.4m £1.7m £22.3m +77.0%

Free cash flow

£34.8m £8.7m £14.4m +142.6%

Total dividend per share 14.53p nil 11.93p +21.8%

1 Group adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) reflects the underlying trade of the overall business. It is calculated as statutory operating

profit plus depreciation, amortisation, impairment, loss on disposal of property, right-of-use assets, plant and equipment and software and any exceptional costs or income, and is

also shown pre-IFRS 16 as well as adjusted for IFRS 16. Government grant income of £2.8m is included in Group adjusted EBITDA for FY2021. The reconciliation to operating profit

is set out below in this section of the report.

2 Adjusted group profit after tax is calculated as group profit after tax, adding back the Teaquinn acquisition fees of £1.6m, the non-cash expense of £0.4m related to the fair value

of the earn out consideration on the Teaquinn acquisition and deducting the non-cash credit in relation to the Teaquinn bargain purchase of £39,075.

3 Free cash flow is defined as net cash flow pre exceptional items, cost of acquisitions, debt facility repayment, RCF drawdowns, dividends and equity placing.

4 During FY2020 the Chancellor announced the reduced rate (TRR) of VAT on hospitality activities from which bowling activities were initially excluded. The Tenpin Bowling

Proprietors Association has been lobbying on the industry’s behalf, since that date, for the sector to be treated in line with the hospitality industry. We received confirmation on

12 April 2022 that HMRC agreed that there is indeed a clear distinction between the sport of competitive bowling and the leisure activity of bowling – with the latter being able

to benefit from TRR of VAT retrospectively. The total value of this is detailed in note 6 .

Following the introduction of the new lease

accounting standard IFRS 16, the Group has

decided to maintain the reporting of Group

adjusted EBITDA on a pre-IFRS 16 basis, as

well as on an IFRS 16 basis. This is because

the pre-IFRS 16 measure is consistent with

the basis used for business decisions, as

well as a measure investors use to consider

the underlying business performance. For

the purposes of this review, the commentary

will clearly state when it is referring to figures

on an IFRS 16 or pre-IFRS 16 basis.

The trading periods of FY2020 and FY2021

were disrupted due to a combination of

COVID-19 lockdowns and trading

restrictions once open; therefore

comparisons for this FY2022 financial

review are made with FY2019 (the last full

year of uninterrupted trading) unless

otherwise stated.

All LFL revenue commentary excludes the

impact of TRR of VAT on bowling and

revenue relating to the Group’s Canadian

business, which was acquired in May 2022,

as well as any new centres opened from

FY2019 onwards.

Revenue

The Group continued its trajectory of strong

momentum from FY2021 into FY2022, with

significant LFL growth at 28.3 per cent when

compared to the same period in FY2019. It

is worth noting that the warm summer

weather in the UK did not impact negatively

on revenues, with August 2022 recording

the second-highest revenue month (after

August 2021) at £17.8m.

LFL revenue growth was a combination of a

growth in spend per game of 8.4 per cent, as

well as game volume growth of 18.3 per cent.

The exceptionally strong LFL growth, alongside

the performance of the Group’s new UK

centres, resulted in record UK revenues of

£181.7m, and growth of 37.6 per cent

compared to FY2019. This excludes the

prior periods impact of TRR of VAT on

bowling activities which was worth £5.8m.

The Group is very pleased with the

performance of our Canadian business

Teaquinn since its acquisition in May 2022.

Total revenues were CAD 9.6m, (£6.2m)

with Splitsville accounting for CAD 6.4m.

Total statutory revenue for FY2022 (including

the prior periods impact of TRR) was £193.7m.

Gross profit margin

Statutory gross profit was £164.3m with

margin at 84.8 per cent.

Gross profit for the UK business

was £160.2m with a margin of 85.4 per cent.

Excluding the prior periods impact of TRR of

VAT, gross profit was £154.4m at a margin of

85.0 per cent, a decline of 70 basis points

compared to FY2019, which was in line

with expectations.

Revenues grew across all categories, but the

strongest growth was seen in amusements,

with LFL revenue growth of over 40 per

cent, outstripping other revenue lines. Given

the amusements’ lower margin rate, this has

impacted on the overall gross profit margin

but equated to more gross profit overall.

Gross profit for Teaquinn was in line with

expectations at CAD 6.4m (£4.1m), with a

margin of 66.2 per cent. This lower margin

rate when compared to the UK business is

as guided on acquisition, and is due to a

combination of the higher food and drink

mix in the Splitsville centres, the lower

amusement gross margin as well as the

effect of the lower gross profit margin of

the Striker business (which as a gross profit

margin of circa. 30 per cent).

Administrative expenses

Following the adoption of IFRS 16 in FY2020,

administrative expenses exclude property

rents (turnover rents are not excluded), and

include the depreciation of property

right-of-use assets.

Administrative expenses on a statutory

basis were £108.9m. On a pre-IFRS 16 basis,

administrative expenses were £114.1m, compared

to £82.9m during the corresponding period

in FY2019.

Employee costs in centres increased to

£33.7m, an increase of £8.7m when compared

to FY2019, due to a combination of salary

increases over the periods and the impact

of higher revenues. The balance of the

increase compared to FY2019 is in respect

of new centres in the UK and the employee

costs in the Canadian business of CAD

2.5m (£1.8m).

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Chief Financial Officer’s review continued

Administrative expenses continued

Total property-related costs, accounted for

under pre-IFRS 16, were £34.5m, with

£33.3m for the UK business (FY2019:

£30.6m). Property costs in the UK increased

by £2.7m, with new centre costs of £4.5m,

whilst business rates were lower due to the

government implemented COVID-19

concession in the first half of FY2022.

Energy costs continue to be a focus for the

Group. UK electricity usage costs are hedged

to the end of FY2024, and we continue to

work closely with our landlords to install

solar panels on more centres. In all, 17 centres

had solar panels installed in FY2022 resulting

in nearly 30 per cent (22 centres) of our UK

estate benefiting from this technology. The

Group generated 1,865,982 kWh of electricity

from its solar panels and used 20,480,858

kWh of electricity in total. It is estimated that

on an annual basis, solar will generate up to

20 per cent of electricity used.

Total property costs, under IFRS 16, were

£35.9m, including £9.8m accounted for as

property lease assets depreciation and

£8.5m in implied interest relating to the

lease liability under IFRS 16.

Corporate costs include all central costs as

well as the out-performance bonus for

centres. Total corporate costs increased by

£10.2m when compared to FY2019, to £22.1m.

The main driver of this increase is centre

management out-performance bonuses,

which account for £6.4m incremental cost.

This is reflective of the hard work and

commitment of our outstanding centre

teams across the estate. Other increases

have been seen in marketing spend, of

£0.9m, and £1.4m in the support centre

headcount as we continue to invest in

our teams.

The statutory depreciation, amortisation

and impairment charge for FY2022 was

£25.7m compared to £20.9m in FY2021.

Excluding property lease assets

depreciation, this charge in FY2022 was

£14.1m. This is due to the continued capital

investment programme, including new

centres and refurbishments.

Detailed impairment testing resulted in an

impairment charge in the year of £2.5m

against property, plant and equipment and

£1.8m against right-of-use assets for three

centres. The discount rate used for the

weighted average cost of capital (WACC)

is calculated with reference to the latest

market assumptions for the risk-free rate,

equity risk premium and the cost of debt.

These discount rates were impacted by

the volatility in the debt markets as at

30 September 2022. The WACC discount

rate (pre-tax) is 16.0 per cent (FY2021:

12.7 per cent).

Exceptional items

As a result of the HMRC position on TRR of

VAT, the Group made a retrospective claim

for overpaid VAT, and the prior period amounts

have been classified as exceptional items.

The total exceptional income in relation to

this, net of associated expenses, is £5.6m.

Note 6 to the financial statements includes

more detail on the impact of TRR of VAT

included in the full year results.

Exceptional costs relate to the acquisition of

Teaquinn. Acquisitions costs totalled £1.6m.

The earn out consideration for Pat Haggerty

has been recognised as an exceptional cost

of £0.5m in FY2022. The earn out

consideration is considered as a post

acquisition employment expense and not

in the scope of IFRS 3., but instead is accounted

for under IAS 19. The earn out has a cost

impact in the following financial years up to

and including at least FY2025.

More detail on this and the acquisition of

Teaquinn is shown in note 33 to the Financial

Statements.

Group adjusted EBITDA and

operating profit

Group adjusted EBITDA pre-IFRS 16

(excluding the prior periods impact of TRR

of VAT on bowling activities) increased to a

record £60.6m and includes a contribution

of £1.0m from Teaquinn.

Compared to FY2019 this was an increase

of 58.6 per cent. The increase is primarily

due to the increased revenue performance

and the Group’s relatively fixed cost base.

The reconciliation between statutory

operating profit and Group adjusted

EBITDA on both a pre-IFRS 16 and

under-IFRS 16 basis is shown in the

table below.

Share-based payments

During the year, the Group granted further

Long Term Incentive Plan (LTIP) shares to

the senior leadership team. These awards

vest in three years providing continuous

employment during the period, and

attainment of performance conditions

relating to earnings per share (EPS), as

outlined on page 102 of the Annual Report.

The Group recognised a total charge of

£939,812 in relation to the Group’s

share-based LTIP arrangements. Share-

based costs are not classified as

exceptional costs.

Group adjusted EBITDA and operating profit

FY2022

£’000

FY2021

£’000

Operating profit

55,449 9,580

Depreciation and impairment 25,052 20,472

Amortisation 624 477

Loss on property, right-of-use assets, plant and equipment and software disposal 18 29

Exceptional items (3,688) —

Group adjusted EBITDA under IFRS 16 77,455 30,558

IFRS 16 adjustment

(16,850) (15,416)

Group adjusted EBITDA pre-IFRS 16 60,605 15,142

1 Operating profit in FY2021 includes government grant income of £2.8m (FY2022: nil).

2 IFRS 16 adoption has an impact on EBITDA, with the removal of rent from the calculation. For Group adjusted EBITDA pre-IFRS 16, it is deducted for comparative purposes and

is used by investors as a key measure of the business.

Hollywood Bowl Group plc

Annual report and accounts 2022

Financing

Finance costs decreased to £8.8m in

FY2022 (FY2021: £9.1m) comprising mainly

of implied interest relating to the lease liability

under IFRS 16 of £8.2m. An amount of

£0.2m is associated with the Group bank

borrowing facility.

The Group’s bank borrowing facilities are a

revolving credit facility (RCF) of £25m at a

margin rate of 1.75 per cent above SONIA

and an agreed accordion of £5m. The loan

term runs to the end of December 2024;

and the RCF remains fully undrawn.

Cash flow and liquidity

The liquidity position of the Group remains

strong, with a net cash position of £56.1m

as at 30 September 2022, compared to

£29.9m at 30 September 2021. Detail on

the cash movement in the year is shown

in the table above.

Capital expenditure

During the financial year, the Group invested

net capex of £21.8m. A total of £3.6m was

invested into the refurbishment programme,

with eight UK centres completed including

a rebrand of AMF to Hollywood Bowl

in Shrewsbury, as well as interim spends of

£0.8m on two Canadian centres.

New UK centre capital expenditure was a

net £9.2m. This relates to the three centres

opened in the year (£7.7m) as well as interim

payments totalling £1.5m in relation to Hollywood

Bowl Speke and Puttstars Peterborough,

which opened in early FY2023.

The Group’s strong balance sheet ensures

that it can continue to invest in profitable

growth with plans to open more locations

during FY2023 and beyond.

Despite inflationary pressures, returns on

these refurbishments are expected to

continue to exceed the Group’s hurdle rate

of 33 per cent.

The Group spent £9.3m on maintenance

capital in the UK. This includes £4.1m for the

continued rollout of Pins on Strings technology

across the Group with 15 centres completed

in FY2022, bringing the total to 41 centres;

as well as £1.5m spent on installing further

solar panels, with 22 centres now benefitting

from this technology.

Investments were also made to in-centre

digital displays as well as the Group’s CRM,

website and IT architecture to increase

performance and to continue to improve our

customers’ digital experience.

In light of the rolling refurbishment

programme, maintenance capital, as well as

new centres in the UK and Canada, we

expect capital expenditure to be in the

region of £21m to £23m in FY2023.

Taxation

The Group’s tax charge for the year is £9.2m

arising on the profit before tax generated in

the period.

Earnings

Statutory profit before tax for the year was a

record £46.7m, and 69.2 per cent higher

than FY2019, the last comparable period.

The Group delivered profit after tax of

£37.5m (FY2021: £1.7m and FY2019:

£22.3m) and basic earnings per share was

21.91 pence (FY2021: 1.05 pence and

FY2019: 14.86 pence).

Adjusted profit after tax is £39.4m. This is

calculated to take account of the impact

of the costs associated with the

Teaquinn acquisition.

Cash flow and net debt

FY2022

£’000

FY2021

£’000

Group adjusted EBITDA under IFRS 16 77,455 30,558

Movement in working capital 8,814 6,905

Maintenance capital expenditure (9,323) (5,951)

Taxation (6,616) —

Payment of capital elements of leases (14,450) (9,420)

Adjusted operating cash flow (OCF)

55,881 22,092

Adjusted OCF conversion 72.2% 72.3%

Expansionary capital expenditure

(12,508) (3,631)

Disposal proceeds 2 —

Net bank loan interest paid (104) (1,207)

Lease interest paid (8,452) (7,952)

Debt repayments

— (600)

Free cash flow (FCF)

34,819 8,702

Exceptional items 4,091 —

Acquisition of Teaquinn Holdings Inc (8,099) —

Cash acquired in Teaquinn Holdings Inc 415 —

Debt facility repayment

— (24,900)

(Repayment)/drawdown of RCF

— (4,000)

Dividends paid (5,132) —

Equity placing (net of fees) 30 29,356

Net cash flow 26,124 9,158

1 Adjusted operating cash flow is calculated as Group adjusted EBITDA less working capital, maintenance capital expenditure, taxation and payment of the capital element of

leases. This represents a good measure for the cash generated by the business after taking into account all necessary maintenance capital expenditure to ensure the routine

running of the business. This excludes exceptional items, net interest paid, debt drawdowns and any debt repayments.

2 Expansionary capital expenditure includes refurbishment and new centre capital expenditure.

3 Note 22 to the Financial Statements includes the aggregated amounts debt repayments, debt facility repayment and repayment/drawdown of the RCF.

4 Free cash flow is defined as net cash flow pre exceptional items, cost of acquisitions, debt facility repayment, RCF drawdowns, dividends and equity placing.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Chief Financial Officer’s review continued

Earnings continued

It is calculated as statutory profit after tax,

adding back the Teaquinn acquisition fees

of £1.6m, the non-cash expense of £0.4m

related to earn out consideration on the

Teaquinn acquisition and deducting the

non-cash credit in relation to the Teaquinn

bargain purchase of £39,075.

Dividend and capital allocation policy

The Board has declared a final dividend of

8.53 pence per share, based on an adjusted

profit after tax of £39.4m (adjusted earnings

per share of 23.07 pence).

Given the Group’s strong liquidity position,

the Board has reviewed its capital allocation

policy with the priorities for the use of cash

as follows:

• Capital investment into the existing

centres through an effective maintenance

and refurbishment programme

• Investments into new centre

opportunities, including expansion in both

the UK and Canada

• To pay and grow the ordinary dividend

every year with a payout of 50 per cent of

adjusted profit after tax

• Any excess cash will be available for

additional distribution to shareholders as

the Board deems appropriate, without

impacting on our ability for investment in

the growth of the business.

The Board believes that setting a proforma

net cash

to Group adjusted EBITDA

pre-IFRS 16

ratio target (net cash ratio

target), provides a good guide for the future

allocation of surplus cash within the

business. The Board has set a net cash ratio

target of 0.5 times

and will look for this target

to be achieved by the end of FY2025, as set

out below.

• End of FY2022 0.600X

• End of FY2023 0.570X

• End of FY2024 0.535X

• End of FY2025 0.500X

In line with this strategy, the Board has

proposed a special dividend of 3.0 pence

per share be paid to shareholders alongside

the ordinary dividend of 8.53 pence per

share, bringing the full year dividend to 14.53

pence per share.

Subject to approval from shareholders at

the AGM, the ex-dividend date is 2 February

2023, with a record date of 3 February 2023

and a payment date of 24 February 2023.

Going concern

In assessing the going concern position of

the Group for the Consolidated Financial

Statements for the year ended

30 September 2022, the Directors have

considered the Group’s cash flow, liquidity,

and business activities, as well as the

principal risks identified in the Group’s

Risk Register.

As at 30 September 2022, the Group had

cash balances of £56.1m, no outstanding

loan balances, no COVID-19 concession

deferrals and an undrawn RCF of £25m,

giving an overall liquidity of £81.1m.

The Group has undertaken a review of its

liquidity using a base case and a severe but

plausible downside scenario.

The base case is the Board approved

budget for FY2023 as well as the first three

months of FY2024 which forms part of the

Board approved five-year plan. Under this

scenario there would be positive cash flow,

strong profit performance and all covenants

would be passed. It should also be noted

that the RCF remains undrawn.

The most severe downside scenario stress

tests for reasonably adverse variations in

the economic environment leading to a

deterioration in trading conditions and

performance. Under this severe but plausible

downside scenario, the Group has modelled

revenues dropping by 4 per cent and 5 per

cent for FY2023 and FY2024 respectively,

from the assumed base case and inflation

continues at an even higher rate than in the

base case, specifically around cost of labour.

The model still assumes that investments

into new centres would continue, whilst

refurbishments in the early part of FY2024

would be reduced and the Pins on Strings

would be delayed until FY2025. These are

all mitigating factors that the Group has in its

control. Under this scenario, the Group will

still be profitable and have sufficient liquidity

within its cash position to not draw down the

RCF, with all financial covenants passed.

Taking the above and the principal risks

faced by the Group into consideration,

the Directors are satisfied that the Group

has adequate resources to continue in

operation for the foreseeable future, a

period of at least 12 months from the date

of this report.

Accordingly, the Group continues to adopt

the going concern basis in preparing these

Financial Statements.

Outlook and guidance

We remain in a strong position to continue to

take full advantage of the opportunities we

have both in the UK and Canada. Our entry

into Canada presents us with a significant

opportunity to apply our successful business

model in a similarly fragmented and

underfunded market as the UK was ten

years ago.

With UK electricity usage costs hedged to

the end of FY2024 and labour costs

representing less than 20 per cent of

revenue at centre level, we have the ability

to absorb most inflationary pressures

through the dynamics of our business.

We will continue to provide great value for

money through focused pricing, and we

believe any price increases we may need to

pass on in FY2023 will be minimal. Our capital

deployment programmes remain unaffected.

We believe we are able to achieve our hurdle

rate of 33 per cent return on investment in

the seven refurbishments taking place in

FY2023. As a result of our improved centre

environments, together with the continued

roll out of Pins on Strings, dwell time should

increase further and therefore encourage

higher customer spend.

Laurence Keen

Chief Financial Officer

15 December 2022

1 Proforma net cash is defined as cash and cash

equivalents as per the statement of financial position

less any bank borrowings less any final ordinary

dividends for the financial year

2 Group adjusted EBITDA pre-IFRS 16 is calculated as

shown on page 45 and excluding any impact from

TRR of VAT in current and prior periods

Hollywood Bowl Group plc

Annual report and accounts 2022

Note on alternative performance

measures (APMs)

The Group uses APMs to enable management

and users of the financial statements to

better understand elements of the financial

performance in the period. APMs referenced

earlier in the report are explained as follows.

It should be noted that trading periods for

FY2020 and FY2021 were disrupted due to

a combination of COVID-19 lockdowns and

trading restrictions once open, therefore

comparisons in this financial review use

FY2019 as a base.

Like-for-like (LFL) revenue for FY2022 is

calculated as:

• Total revenues £193.7m, less

• TRR of VAT for prior periods £5.8m, less

• TRR of VAT for FY2022 £3.0m, less

• New centres revenues from FY2019

onwards £12.2m, less

• Teaquinn revenues £6.2m

New centres are included in the LFL revenue

after they complete the calendar anniversary

of their opening date.

LFL comparatives for FY2019 are £129.9m.

Group adjusted EBITDA (earnings before

interest, tax, depreciation and amortisation)

reflects the underlying trade of the overall

business. It is calculated as statutory

operating profit plus depreciation,

amortisation, impairment, loss on disposal

of property, right-of-use assets, plant and

equipment and software and any

exceptional costs or income, and is also

shown pre-IFRS 16 as well as adjusted for

IFRS 16. The reconciliation to operating

profit is set out in this report.

Free cash flow is defined as net cash

flow pre-dividends, exceptional items,

acquisition costs, bank funding and any

equity placing.

Spend per game is defined as UK revenue

in the year (excluding any revenues relating

to TRR of VAT for prior years (£5.8m) and

TRR of VAT for FY2022 (£3.0m)) divided by

the number of bowling games and golf

rounds played in the UK.

Adjusted operation cash flow is calculated

as Group adjusted EBITDA less working

capital, maintenance capital expenditure,

taxation and payment of the capital element

of leases. This represents a good measure

for the cash generated by the business

after taking into account all necessary

maintenance capital expenditure to ensure

the routine running of the business. This

excludes exceptional items, net interest

paid, debt drawdowns and any

debt repayments.

Expansionary capital expenditure

includes all capital on new centres,

refurbishments and rebrands only.

Adjusted profit after tax is calculated as

statutory profit after tax, adding back the

Teaquinn acquisition fees of £1.6m, the

non-cash expense of £0.4m related to the

fair value of the earn out consideration on

the Teaquinn acquisition, as well as deducting

the non-cash credit in relation to the

Teaquinn bargain purchase. This adjusted

profit after tax is also used to calculated

adjusted earnings per share.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview

Having evolved our wider ESG strategy in FY2021, this

year we have embedded sustainability considerations

further in the way we operate and have extended our

targets and stated ambitions in environmental, social

and governance (ESG) areas.

Our business is inherently people focused and has social aims

and responsibility at its heart, with a key focus on employment

and the communities where our centres are located. We also aim

to reduce our environmental impact, both at a local level and in

the context of our contribution to climate change. Underpinning

both these aspects is a robust governance framework that

ensures our operations deliver on our purpose while maximising

our positive impacts and minimising any negative impacts.

Our ESG strategy is based on three pillars:

Safe and inclusive leisure destinations

We bring friends and families together in our welcoming centres where

we prioritise health and safety, a responsible approach to eating and

drinking, accessibility to all and positive local community relations.

Outstanding workplaces

We focus on developing and training our team members, supporting

their wellbeing and maintaining a diverse and inclusive Company

culture in which they can thrive.

Sustainable centres

The centres we operate for playing, working and socialising are

increasingly more energy efficient, low-emission, sustainably

sourced and recycling-oriented places.

We support the recommendations of the Financial Stability

Board’s (FSB) Task Force on Climate-related Financial Disclosures

(TCFD). For the first time this year, we have included the TCFD

framework in our reporting which identifies the financial and

strategic risks and opportunities of different climate-related

scenarios. More information can be found on page 59 to 68.

The following sustainability overview section relates to our UK

operations only, unless otherwise stated. In FY2023 we will be

including our Canadian business within our ESG strategy,

frameworks and reporting.

In FY2023, we are establishing a Corporate Responsibility Committee

that will have responsibility for the governance of sustainability in

our business as well as driving the changes and strategy that will

allow us to set our net zero target, and support a transition to a

decarbonised economy and society.

Hollywood Bowl Group plc

Annual report and accounts 2022

Embedding sustainability

in everything we do

The three pillars of our ESG strategy

Priority issues:

• Health and safety

• Responsible food and beverage

• Accessibility & wellbeing

• Community relations

Supports strategic objectives:

Helps mitigate principal risks:

Food safety and Compliance

Stakeholder value for:

Customers, People,

Communities, Investors

Links to SDGs

Priority issues:

• Talent attraction and retention

• Diversity and inclusion

• Training and development

• Team wellbeing

Supports strategic objectives:

Helps mitigate principal risks:

Employee retention and Compliance

Stakeholder value for:

Customers, People,

Communities, Investors

Links to SDGs

Priority issues:

• Waste management

• Energy efficiency

• Greenhouse gas emissions

• Climate change

Supports strategic objectives:

Helps mitigate principal risks:

Compliance and climate change

Stakeholder value for:

Environment, Customers, People,

Communities, Investors,

Partners & Suppliers

Links to SDGs

Safe and inclusive

leisure destinations

Outstanding

workplaces

Sustainable

centres

Our purpose

Bringing families and friends together for affordable fun and safe, healthy competition

Underpinned by a dynamic Group culture, robust Board governance of ESG

and progressive relationships with suppliers and partners.

Our initiatives, metrics and current and future targets are measured against each of these pillars

and we will continue to update our stakeholders on our progress.

Key to strategy

Delivering like-for-like revenue growth

Actively refurbishing our assets

Developing new centres and acquisitions

Focusing on our people

Leveraging our indoor leisure experience

1 4 2 3

1 2

Hollywood Bowl Group and the SDGs

The UN Sustainable Development Goals (SDGs) are the global blueprint to

achieve a better and more sustainable future for all. The call for action is an

urgent one and we want to play our part.

It is an important framework that we use to help inform our approach and ensure

that our strategy supports broader sustainable development priorities. All the

goals are of the utmost importance but we believe our business is best placed to

contribute to six goals which we have used to align our strategy as shown above.

We will continue to use the SDGs, and the targets and indicators that sit under

the goals, to guide us as we further develop the measurement, structures and

plans that will support our ESG strategy.

Read more on pages 49 and 50 Read more on pages 51 to 54 Read more on pages 55 to 58

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview continuedSustainability overview continued

Sustainability governance and risk management

In recognition of our commitment to sustainability, in FY2023 we are

establishing a Corporate Responsibility Committee that will oversee

the governance of sustainability. The Committee will report directly

to the Board and will be chaired by a Non-Executive Director and

attended by senior representatives from across the Group. The

Committee will hold bi-annual meetings to ensure effective delivery

of our sustainability strategy.

The Board is responsible for managing key sustainability risks that

may impact business strategy. Working with PwC a Climate Risk and

Opportunities Register was developed in September 2022. Climate

change risks that have the potential to impact the Group have been

included within our Group Risk Register, recognising the importance

of this global issue to the long-term sustainability of our business

model. More information about this can be found on page 73.

Measuring the impact we make

We have several targets that guide our sustainability trajectory,

some of which we introduced for the first time in FY2022. These

targets are identified in our progress reports for each pillar on the

following pages. We take these targets very seriously and share here

both where we have achieved our targets, and where there are still

improvements to make.

Our range of targets and ambitions is evolving as we put in place

structures to monitor and report against them, and we expect to

share more extensive reporting against our progress in 2023,

including providing information and targets relating to our Canadian

operation that was acquired in May 2022.

Significance

Impact

Energy efficiency

GHG emissions Waste management

Health and safety

Diversity and inclusion

Board diversity

Responsible supply chains

Business ethics

Climate change

ESG governance

Values and culture

Executive pay

Responsible food and beverage Training and development

Team wellbeing

Community relations

Water use

Accessibility and

affordability

Socioeconomic impact

Biodiversity

Product development

Talent attraction and

retention

Environment

Social Governance

Materiality matrix

Materiality matrix methodology

Our materiality matrix was developed with the support of external consultants who conducted a detailed analysis, drawing on industry

intelligence and macro trends to create a long list of material ESG topics. A risk and opportunity analysis was conducted against each topic

to establish its potential to impact on the business (plotted on the x-axis, ‘Impact’), and its significance to the business and stakeholders, and

prevalence in the market (plotted on the y-axis, ‘Significance’). Our multi-pillar sustainability strategy was developed with these material

issues at its heart.

Hollywood Bowl Group plc

Annual report and accounts 2022

Safe and inclusive

leisure destinations

750,000

Of concessionary discount games bowled

£28,000

Amount raised for charity partner Barnardo’s

48.3%

Of all soft drinks sold are sugar-free

97.0%

Of centres passing food and drink audits

Accessibility, wellbeing and community relations

We provide inclusive and sociable activities that enable families and

friends of all ages and abilities to spend quality time together, in an

environment that is fun and welcoming while actively promoting

wellbeing. In recent years, we have all come to realise the importance

of socialising, especially during COVID-19, when mental and physical

health were at the forefront of everyone’s minds. Our centres provide

opportunities for all customer groups to get involved, and we foster

excellent community relations through concessionary discounts and

local community engagement which includes charity fundraising

events and school partnerships.

The Group continues to support the children’s charity Barnardo’s as

our national charity partner, with team members and Centre Managers

encouraged to raise funds through their own centres and our central

support centre, for this worthy cause.

Progress in FY2022 FY2023 targets

750,000 of concessionary

discount games were played

750,000+ of concessionary

discount games played

We raised £28,000

for Barnardo’s

Raise £40,000 for Barnardo’s

FY2022 highlights

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview continued

Health and safety

The health and safety of our teams and customers is an ongoing

priority, and we continue to demonstrate our commitment to this

area, by measuring and monitoring performance across all centres

and locations throughout the Group. It is critical to business

performance and the experience we offer our customers and

integral to our promise to deliver an outstanding workplace.

We continue to refresh and reinforce our policies and practices, as

well as comply with all safety legislation and act on all reported

incidents. As part of our internal audit reviews, we undertake safety

audits, and any incident reports are reviewed by the Board on a

monthly basis.

Responsible food and beverage

We collaborate with our suppliers to offer healthier alternatives as

part of our range, which might include reducing the salt and sugar

content of the food and beverages we serve. We actively promote

a range of sugar-free soft drinks, with fresh water readily available.

Health and safety is strictly embedded in our daily operations, and

team members are required to have completed food safety and

allergen awareness training.

Our SLT proactively considers the impact of the food and drink

options we offer and is committed to clearly providing customers

with the facts they need, including allergen information, so they can

make fully informed choices.

Our centres are audited regularly, often on an unannounced basis,

by internal food safety auditors or environmental health officers and

we consistently achieve high food ratings.

Progress in FY2022 FY2023 targets

97% of centres passed food and

drink audit

100% of centres passing food

and drink audit

48.3% of all soft drinks sold were

sugar free

50% of all soft drinks sold to be

sugar free

Over 98% of our team in related

roles completed food and safety

and allergen training. To ensure

this is exceeded next year we will

further increase our efforts with

all new team members

100% of team members in

related roles to have completed

food safety and allergen training

within three months of passing

probation period

The health and safety of our teams and

customers is an ongoing priority, and we

continue to demonstrate our commitment

to this area.”

Hollywood Bowl Group plc

Annual report and accounts 2022

Talent attraction and retention

Our team members are the lifeblood of our business and key to our

success. This is why we have worked doubly hard on our people

initiatives this year, so we can continue to attract and retain the best

talent available in a labour market that has become increasingly

competitive. Recruiting and retaining good people continues to be

a challenge for the leisure and entertainment sector – due to its

transitional nature – but we are pleased to report that our turnover

rates are proven to be substantially lower than many of our hospitality

peers. During this reporting period, we have refreshed our renewed

rewards package and improved employee engagement and talent

programmes. Our new employer brand will launch early in FY2023.

Our people have been instrumental to our outstanding performance

in FY2022, facing challenges head on, whether it was supplier or food

delivery shortages, or working to support each other when Omicron-

related sickness absences were at their peak. We have recognised

these efforts through pay increases and generous bonus schemes.

In addition we have provided a one-off cost of living payment to help

team members totalling £0.6m.

Reward and recognition of our team members is an important part

of our strategy to engage and retain great people. It’s also an essential

part of fostering a high-performance, purpose-led culture across the

business. In addition to providing fair pay to all our team members,

we also offer benefits such as free activities and discounted food

and drink when they visit our centres with their friends and family.

Progress in FY2022 FY2023 targets

We were pleased that 40% of

management appointees came

from internal candidates. This

key area of focus is one we are

looking to further improve upon

45% of our management

appointments from

internal candidates

Outstanding

workplaces

7.5%

Increase in salaried team members’ pay in light of

inflationary environment

£0.6m

Total cost of living payment to team members

£5.6m

Paid in bonus to centre teams in recognition of excellence

96.9%

Of our team completed online training and

development modules

4.9

Out of 7 – the average score for wellbeing in our team

engagement survey

One of the UK’s Top 25 Best Big Companies

To Work For in 2022

FY2022 highlights

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Sustainability overview continued

Training and development

Working at Hollywood Bowl Group is more than ‘just a job’ – it is a

high-performance culture, where teams are nurtured through

exceptional training and reward schemes where positive behaviours

are actively encouraged.

Our teams have entered FY2023 stronger than ever, on the back of

industry leading talent development programmes that were

reintroduced post the COVID-19 lockdowns. We now have well over

100 team members enrolled, with 40 per cent of all management

vacancies filled from our internal talent pipeline. We value this

experience as team members progress through the Group, while

also maintaining a healthy balance of new recruits from outside

the Company.

We have expanded these programmes, introducing talent programmes

for our technicians and Contact Centre team for the first time. In

total, 25 new candidates joined our Centre Manager in Training

programme and 75 candidates joined our Assistant Centre Manager

in Training programme.

We recognise and embrace our role in enabling team members to

develop their skills, whether they are entering or returning to the

workplace on a temporary or transitional basis or motivated to

develop a fulfilling a career that allows them to rise up the ranks.

Progress in FY2022 FY2023 targets

5.6% of our team members

participated in development

programmes

Have more than 5% of our team

participating in development

programmes

We achieved above our target

and had 97% of our team

completing online development

modules.

Maintain 97% of our team

completing online

development modules

Team wellbeing

The wellbeing of all teams is of vital importance to us, and we have a

range of established initiatives in place to make this happen. The

importance of wellbeing was highlighted in our recent annual

conference where we held a workshop and all our talent programmes

now include wellbeing modules. We now have three Mental Health

First Aiders, and are training up two more, and we have regular

communications around mental health and wellbeing on Fourth

Engage (our internal social media) to highlight events such as World

Mental Health Day.

We enhanced our Employee Assistance Programme (EAP) in

FY2022, moving provider in May to PAM Assist, which provides a

free support service for mental health, financial, legal or

bereavement issues. A team member can call directly, or we can

make a referral. In addition to this, an app can be downloaded, which

provides information and ideas around wellbeing, with regular news

articles, recipes, workouts, guided meditations, health assessments,

information on cognitive therapies, and much more.

Progress in FY2022 FY2023 targets

We were proud to achieve a

1 star rating in our Best

Companies Team survey which

placed us in the Top 25 of Big UK

Companies To Work For

Maintain a 1 star rating in the

overall Best Companies

Team survey

We achieved a score of 4.9 (out

of 7) in our Team wellbeing

survey which was an increase of

6% year-on-year

Maintain 4.9 (out of 7) in our

Team wellbeing survey

Diversity and inclusion

We actively promote a culture that fosters inclusion, in outstanding

workplaces that are both diverse and welcoming. Difference is

valued, as it is a reflection of the people and communities where we

live and work. We commit to no-one being discriminated against on

the grounds of gender, race, ethnicity, religious belief, political

affiliation, sexual orientation, age or disability. We encourage our

team to celebrate all religious and cultural festivals equally.

Diversity and inclusion are critical to our success, and help us to

reflect the expectations of our customers, while providing customer

experiences that are relevant, accessible and welcoming. We have

identified focus areas to improve and are making changes to the way

we recruit to attract ever greater diversity and more women, and to

ensure that our centres are reflective of the diversity of their own

communities. We are also encouraging wider gender diversity into

senior roles, and we are acting on the issues that prevent team

members from applying for promotions. As a result, we’ve taken

steps to embed more flexibility in the structure of senior roles.

In addition, we’ve continued to develop our employer branding, and

our website is now designed to reach, and appeal to a broad range of

potential talent.

Hollywood Bowl Group plc

Annual report and accounts 2022

Rachael Hayward joined the Group in 2021 as

Regional Support Manager for Outer London.

We caught up with Rachael, who shared insights about our

high-performance culture and how rewards are allocated in

practice. Her feedback describes an exceptional team effort

and high levels of engagement, driven by their combined

efforts to reach the monthly customer satisfaction target,

supported by Centre Managers and Regional Managers.

“The monthly target is clear, and teams are briefed daily on

customers’ experiences, via feedback forms, social media

posts and information posted on our employee engagement

app, Fourth Engage. Whole centre teams work together to

achieve the customer satisfaction target, including those

team members who are not customer facing, such as the

technicians maintaining the bowling lanes, and this makes it

so much easier for us to lift our standards, as the rewards are

fully inclusive.

We also conduct regular Centre and Assistant Manager

listening sessions, female-only listening groups, video

conference updates, leadership team visits to all centres, and

Q&A sessions with the leadership team that are open to all

team members.

We conduct monthly one-to-one meetings as a platform for

meaningful and structured discussion that covers wellbeing,

performance and areas of opportunity. This is an open

format, with a clear and direct feedback loop that covers

performance and any areas for improvement, or any

wellbeing concerns are openly addressed.

Engagement is very high as all team members receive an

extra 50 pence per hour for hours worked during any month

that the target is met. This is successful because the

leadership has worked hard to make sure that targets are fair

and achievable, fostering trust at all levels, which

subsequently fuels the positive energy that drives our

fantastic culture, and customer satisfaction.

Our Centre Managers are equally motivated by a generous

bonus scheme and can receive up to 20 per cent of their

centre’s financial outperformance versus budget, if overall

customer satisfaction scores have also been reached.”

A spotlight on:

performance culture

A spotlight on:

training and development

Scott Moyle joined the Group in 2014.

He has worked in our High Wycombe, Cheltenham and Bristol

centres, developing his career by taking advantage of all the

talent development opportunities on offer. He now works as

Regional Support Manager for London and Kent, and is

responsible for service, team engagement and operational

standards for ten centres.

Scott described his journey as challenging and rewarding in

equal measure. His success has been determined by an

aptitude for sales, operations, food and drink, leadership and

the requirement to be constantly upskilling to keep pace with

the requirements of the business. Being promoted from within

has its advantages, as he knows and understands the

business intimately and support is guaranteed from the SLT

and others, so long as the attitude is flexible and adaptable.

Below is the trajectory of Scott’s journey, and the different

steps of the ladder:

• Almost half of the Group’s Assistant Managers have come

through the Assistant Manager in Training (AMIT)

programme which consists of on-the-job learning, and

managing shifts in the presence of more experienced

managers. Learning modules include HR, presentation

skills, and exposure to financial and commercial activities

with active Regional Managers, so as to gain experience of

working at a more senior level.

• The Centre Manager in Training programme builds on the

AMIT by developing people and project management skills

with off-site training and one on one training sessions with

key individuals within in the business.

• The Senior Leadership Development programme was

established in 2016 and takes Centre Managers to the next

level of seniority. Scott has now been working as a Regional

Support Manager for nearly five years, initially in the Wales

and West region, followed by South Coast, London and Kent.

Team members and managers at all levels have the platform

to move up to the next level. There is a healthy pipeline of

internal and external talent, so the Company always benefits

from a mix of in-house operational, and ‘outside’ experience.

More recently, apprenticeships have been introduced at team

member level, which aims to develop more Assistant Managers

in training.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview continued

Q&A

Q – Can you describe the culture at

Hollywood Bowl Group?

A – Our culture is underpinned by a set of values and a

very clear ambition to be creators of positive energy

in great places to work or play. We encourage our

teams to work together around this mindset, in a

learning environment that is supportive and inclusive.

The Board and executive management team play a

key role in living and shaping a values-based

Company culture. We were delighted to have been

recognised as a Top 25 Big Companies To Work For

in 2022, providing testimony to the importance and

focus we place on creating outstanding workplaces,

which is one of the foundational pillars of our

sustainability strategy.

Q – What does this mean in practice?

A – Team members are encouraged to make quick

decisions and take personal responsibility, following a

set of guiding principles that make Hollywood Bowl

Group a dynamic operation. Team members are

encouraged to make suggestions around new ways of

working, and behavioural ‘pins’ are awarded monthly

by our Chief Operating Officer, Darryl Lewis, to those

who excel.

We had a significant number of challenges in the face

of supplier shortages and peak absences through the

Omicron wave. Our team members have repeatedly

‘stepped up’ and demonstrated their worth and value,

and we have used this exceptional set of

circumstances to reward them for this hard work.

Q – How have you demonstrated commitment

to help team members through the cost of

living crisis?

A – We were pleased to be able to review and improve

team members’ pay and help them during the cost of

living crisis. This year we increased salaried teams’

remuneration by an average of more than seven per

cent and ran generous bonus schemes in recognition

of excellence and outperformance, with more than

£5.6m paid out in the year. We also gave out a

generous cost of living payment totalling £0.6m. We

are acutely aware of the pressures our team face, and

the impact the current economic environment will be

having on families, and we took real steps to help.

Q – What are you most looking forward to in

FY2023?

A – I look forward to continuing our great work across all

centres in the UK and now in Canada as we continue

to deliver on our stakeholder promises. The area of

ESG is moving at an exceptional pace, and these

initiatives will be further embedded in our Group ways

of working. Developing talent from our pipeline is

always so rewarding, and we are excited to build on

the momentum of a really successful year. Nothing or

no one stands still here at Hollywood Bowl Group, as it

is such a dynamic and supportive environment to

work in.

with Melanie Dickinson,

Chief

People Officer

Hollywood Bowl Group plc

Annual report and accounts 2022

Sustainable

centres

Energy efficiency and reducing our usage

Our action plan for reducing the environmental impact of our

business includes increasing onsite generation of renewable

electricity and driving energy use efficiency through our business.

To reduce our usage, we are:

• Driving behaviour change within our teams to reduce electricity usage

• Continuing to roll out more energy efficient air handling plant to

replace old technology plant

• Maintaining our focus with quarterly Corporate Responsibility

Steering Group meetings

• Installing more solar panels on centre roofs with a further ten

planned for FY2023

Measuring Scope 3 emissions and net zero

We are committed to reducing our Scope 1 and 2 GHG emissions

intensity ratio, from a base year of FY2019, by 46 per cent by

FY2025 and to begin measuring our Scope 3 emissions for FY2023.

This will help us to identify a net zero target which will be outlined in

our FY2023 Annual Report.

“Net zero” is defined in this report as the point where Hollywood Bowl

Group would be able to reduce its net GHG emissions to zero.

In the case where it is not feasible to abate scope 1, 2 or 3 emissions

completely, the Group will look to offset the remaining emissions, for

example, through actions such as ecosystem restoration and creation.

32%

Of centres now have solar array installations

77.7%

Of waste was diverted from landfill to recycling

65%

Of centres using energy efficient Pins on Strings

54%

Reduction in emissions intensity ratio (Scope 1 and 2) for

our centres since 2017

60.9

Our energy intensity ratio for Scope 1 and 2 emissions

FY2022 highlights

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview continued

Measuring Scope 3 emissions and net zero

continued

To support our move towards net zero we have set the following

short-term utility targets:

FY2022 performance Targets

60.9 intensity ratio of Scope

1 and 2 emissions

55 intensity ratio of Scope 1 and 2

emissions by the end of 2025

8.2% of our electricity was

generated from onsite

renewables

12% of our electricity to be

generated from onsite renewables

by the end of FY2023

0% of purchased electricity

used was from renewable

sources

100% of purchased electricity from

renewable sources by the end of

FY2023

17 centres had solar

installations taking the total

to 22

10 centres to have solar installations

in by the end FY2023

65% of the UK estate now

using energy efficient Pins on

Strings technology

100% of the UK estate using

energy efficient Pins on Strings

technology by the end of FY2028

Solar

Our programme of solar panel installations is running ahead of

schedule with 22 of our centres now completed or under construction.

More than 30 per cent of our centres actively generate their own

energy. The 22 roof arrays that we currently have produce 4,104 kWp

and a yield of 3,423,947 kWh per year.

We exported 227,602 kWh of electricity back to the grid as a result

of the solar arrays on our roofs in FY2022.

We will continue to negotiate with our landlords if we see a feasible

opportunity to install solar panels. We believe 50 per cent of our

current estate has the potential for solar array installs.

FY2019 FY2020 FY2021 FY2022

Target for

FY2023

Number of solar

array installations

completed 2 nil 3 17 10

Cumulative total 2 2 5 22 32

Greenhouse gas

Greenhouse gas (GHG) emissions for FY2022 have been measured

as required under the Large and Medium-Sized Companies and

Groups (Accounts and Reports) Regulations 2008 as amended in

2013. The GHG Protocol Corporate Accounting and Reporting

Standards (revised edition) and the electricity and gas consumption

data has been provided by Schneider Electric and Total. Conversion

factors are taken from https://www.gov.uk/government/publications/

greenhouse-gas-reporting-conversion-factors-2022.

In May 2022 we purchased Teaquinn and emissions data for these

centres, post purchase to the end of the financial year, is included.

The conversion factors for Canada are taken from Emission Factors

and Reference Values – Canada.ca.

Our Scope 1 emissions

Natural gas, company car (the Group no longer provides ICE

company cars and has introduced an electric vehicle scheme for

regional support team members) and refrigerant gas loss emissions.

This is made up of natural gas and refrigerant gas losses. There are

no reported F gas losses in Canada in the period covered and we do

not have any ICE company cars in the UK or Canada.

Total Scope 1 emissions

Natural gas

tCO

F gas losses

tCO

Total

tCO

UK 537.0 4.5 541.5

Canada 45.2 — 45.2

Total 582.2 4.5 586.7

Hollywood Bowl Group plc

Annual report and accounts 2022

Our Scope 2 emissions

Our total Scope 2 emissions in FY2022 were 3,400.7 tCO

e, made

up of the following:

Electricity

kWh Emissions factor

Total

(tCO

UK 17,857,086 0.19121 3,414.4

Canada 953,709 0.028/0.0078 26.9

Electric vehicles – UK only

Total mileage is 85,895 miles x 0.03341 = 2,869. 75 kgCO

e or

2.9 tCO

Solar export

227,602 kWh’s electricity exported back to the grid as a result of the

solar arrays on our roofs. This equates to a saving of 43.5 tCO

Intensity ratio

tCO

Scope 1 emissions 586.7

Scope 2 emissions 3,400.7

Total Scope 1 and 2 emissions 3,987.4

Intensity ratio (tCO

e per centre) 60.9

Over 99 per cent of all Scope 1 emissions were from natural gas.

This includes heating, hot water and cooking as it is not possible to

accurately determine the percentage from each. 96.4 per cent of

electricity was from UK operations.

Our total electricity and gas usage

Electricity kWh Gas kWh

FY2017 18,581,702 4,384,837

FY2018 18,849,729 5,260,995

FY2019 19,573,573 4,104,855

FY2020 11,560,010 2,830,792

FY2021 12,192,555 1,932,559

FY2022* 18,810,815 3,193,670

* Data includes UK and Canada/ excludes solar generated electricity exported to grid.

Data from centres where the landlord supplies electricity/gas has

been excluded.

Electricity usage

Our commitment to efficiently and ethically use natural resources

is ongoing.

We have reduced our emission ratio for Scope 1 and 2 emissions

by 72.0 or 54.2 per cent for FY2022 compared to FY2017.

Scope 1 Scope 2 Scope 1 + 2 Intensity ratio

FY2017 807.5 6,532.6 7,340.1 132.9

FY2018 967.8 5,335.6 6,303.4 113.7

FY2019 773.6 5,003.0 5,776.6 102.6

FY2020 568.4 2,695.0 3,263.4 55.1

FY2021 560.0 2,588.8 3,148.8 50.8

FY2022 586.7 3,400.7 3,987.4 60.9

FY2020 and FY2021 were impacted by COVID-19 shutdowns.

The original target that we set was to bring the Intensity Ratio down

below 100 and this has now been achieved. The target is now to

bring it down to 55 by the end of FY2025.

Climate change

We understand that climate change is likely to impact our business in

a number of ways. We welcome the framework and recommendations

from the TCFD which are designed to improve and increase corporate

reporting of climate-related information.

Having assessed our climate-related risks and mitigations in greater

depth as part of our ESG strategy, we have integrated these

recommendations into our report for the first time.

More information can be found on pages 59 to 68.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Sustainability overview continued

Waste management and recycling

Recycling the waste we produce is part of our commitment to

mitigate against the environmental impacts of our operations. In

FY2017 we recycled 65.8 per cent of our waste and this has

increased to 77.7 per cent for FY2022. All of our waste is 100 per

cent diverted from landfill.

Our performance in waste reduction and recycling has been

enhanced by behaviour changing incentives including aligning waste

management to team members’ bonus allocations. The initiatives

have supported an excellent performance with nine centres

recycling over 85 per cent of all waste produced; we are now looking

to replicate this level of commitment across our estate. On average

77.7 per cent of our waste in FY2022 was recycled compared to

71.6 per cent in FY2021.

Waste volumes were impacted by the COVID-19 lockdown for

FY2020 and FY2021.

General Glass

Mixed recycling/

organic

FY2017 7,443.72 1,621.44 12,695.88

FY2018 6,770.04 1,652.26 12,978.86

FY2019 7,096.24 1,831.92 12,745.42

FY2020 4,160.00 1,215.12 7,560.74

FY2021 2,536.16 914.40 5,472.76

FY2022 4,517.24 2,106.72 13,606.30

General Recycling Total waste

Recycling

percentage

FY2017 7,443.72 14,317.32 21,761.04 65.8%

FY2018 6,770.04 14,631.12 21,401.16 68.4%

FY2019 7,096.24 14,577.34 21,673.58 67.3%

FY2020 4,160.00 8,775.86 12,935.86 67.8%

FY2021 2,536.16 6,387.16 8,923.32 71.6%

FY2022 4,517.24 15,713.02 20,230.26 77.7%

Waste data is for the UK only. All waste data supplied by Biffa.

This excludes data from centres where the landlord manages the

waste streams.

FY2022 performance Targets

77.7% of waste generated

was recycled

By the end of 2025, 80% of UK

waste generated to be recycled,

with 100 per cent diversion from

landfill

1.17% food and drink wastage

as a percentage of revenue

To ensure we achieve our

target we will be exploring

the areas where food and

drink wastage occurs, to

lower the frequency

By the end of 2025, we aim to have

1% food and drink wastage as a

percentage of revenue

Our performance in waste reduction and

recycling has been enhanced by behaviour

changing incentives including aligning

waste management to team members’

bonus allocations.”

Hollywood Bowl Group plc

Annual report and accounts 2022

Task Force on

Climate-related Financial

Disclosures statement

TCFD

In our FY2021 Annual Report and Accounts, we

recognised that climate change will likely impact our

business in a number of ways. To understand these

impacts, we set out to integrate the TCFD recommendations

to improve and increase our corporate reporting

in FY2022.

In accordance with the LSE Listing Rule 9.8.6R(8), we

present our 2022 TCFD compliance statement and

confirm that we have made climate-related financial

disclosures for the year ended 30 September 2022

which are:

a) consistent with the following TCFD

recommendations and recommended disclosures:

• Governance – (b)

• Strategy – (a), (b) and (c);

• Risk management (a), (b) and (c)

• Metrics and targets (a) and (b)

b) partially consistent with the following

TCFD recommendations and

recommended disclosures:

• Governance (a)

• Metrics and targets (c)

A summary of our TCFD compliance statement is set

out in the following table.

Further details regarding how we have aligned to the

TCFD recommendations are set out in the subsequent

pages and in relevant sections of this Annual Report.

Strategic report

Hollywood Bowl Group plc

Annual report and accounts 2022

Summary of our TCFD compliance statement

TCFD pillar

TCFD recommended

disclosure

Cross-

reference for

the disclosure

in the report

Summary of compliance

response and next steps

Governance

a) Board oversight Page 61 The Group is currently implementing an updated process

and framework for the Board to monitor and oversee

progress against goals and targets to address

climate-related issues

b) Management’s role Page 61 Consistent with TCFD recommendation

Risk management

a) Risk identification and

assessment process

Page 62 Consistent with TCFD recommendation

b) Risk management process Pages 62 and 69 Consistent with TCFD recommendation

c) Integration into overall risk

management

Pages 62 and 69 Consistent with TCFD recommendation

Strategy

a) Climate-related risks and

opportunities

Page 63 to 67 Consistent with TCFD recommendation

b) Impact on the Company’s

businesses, strategy, and

financial planning

Page 63 to 67 Consistent with TCFD recommendation

c) Resilience of the Company’s

strategy

Page 63 to 67 Consistent with TCFD recommendation

Metrics and

targets

a) Climate-related metrics in line

with strategy and risk

management process

Page 68 Consistent with TCFD recommendation

b) Scope 1, 2, (and 3) GHG

metrics and the related risks

Page 64 to 68 Partially compliant with TCFD recommendation

c) Climate-related targets and

performance against targets

Page 68 The Corporate Responsibility Steering Group presented a

suite of metrics and targets in relation to climate risks and

opportunities at the Board meeting in October 2022 which

were approved

This process of updating on performance against these

targets and extending the range of targets will be the

responsibility of the Corporate Responsibility Steering

Group and the Corporate Responsibility Committee

TCFD continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance

Board oversight

The Board has overall responsibility for climate-related matters, and delegates oversight and monitoring responsibilities to the Group Chief

Executive, Stephen Burns. During FY2022, updates from the Corporate Responsibility Steering Group, (which includes members of the

Board), were given to the Board and Audit Committee on climate issue risks and mitigations such as the solar panel install programme.

Recognising climate issues, such as energy consumption and use of renewable energy sources, the Board acknowledged the need for a

more formalised meeting agenda to be put in place. It was agreed at the Board strategy day on 14th September 2022 that ‘climate change’

would be added as a six-month standing agenda item to Board meetings to formalise the oversight process. The first Board meeting with

‘climate change’ as a standing agenda item was held on 21st October 2022, and the Board discussed climate change topics, including

progress against relevant pre-existing goals (e.g. renewable energy sources) and future planned activities and targets. As the Group

continues to progress its climate journey, the Board’s updates will include progress against climate-related goals and metrics including

those identified as part of our climate risk assessment set out in the ‘Strategy’ section of the TCFD disclosure.

The Board gives full and close consideration of ESG factors, including climate, when assessing the impact of decisions, it makes. Examples

of strategic decisions made, in relation to climate, in recent years by the Board include:

• Our programme of solar panel installations across our sites to increase onsite generation of renewable energy. See our ‘Sustainability

overview’ section on pages 46 to 58 for more detail

• Our programme of Pins on Strings bowling equipment installations which reduces the energy consumption associated with providing our

core product

• Recruitment of an in-house Energy Analyst to facilitate future analysis of our Scope 3 emissions which allows us to develop a credible net

zero road map and agreed target year to achieve net zero. We will work with our suppliers, building designers, equipment providers, team

members and other partners to create this road map

• Incorporation of a climate-related target into our Long Term Incentive Plans, relating to the achievement of emissions intensity ratios for

scope 1 and scope 2 emissions. For more detail see our Annual report on remuneration on pages 101 to 113

Priorities for FY2023

• At the September 2022 Board strategy day, the Board agreed to the creation of a new Board sub-committee (the Corporate

Responsibility Committee) in H1 FY2023, which would be responsible for updating the Board on climate issues on a bi-annual basis. This

sub-committee will take over responsibility from the Corporate Responsibility Steering Group at an Executive level, with the Corporate

Responsibility Steering Group taking on a more operational role.

• At the October 2022 Board meeting, it was agreed that Ivan Schofield (Non-Executive Director) would chair the new Corporate

Responsibility Committee. Other committee members will include the Chief Executive Officer, the Chief Marketing and Technology

Officer and the Chief People Officer.

• The Board will consider whether strategic decisions need to be made as a result of climate scenario analysis performed on the most significant

climate risks to the business. This will be discussed at next bi-annual ‘climate change’ agenda item at the Board meeting in April 2023.

• Following the identification of climate-related metrics and targets, progress against climate-related goals and targets will be covered in

the next bi-annual ‘climate change’ agenda item at the Board meeting in April 2023.

• An extensive Board member workshop and training session, delivered by external consultants, is planned in Q2 FY2023 to upskill the

current Board members on climate change.

Management’s role

Responsibility for climate change issues at a management level sits with our Chief Marketing and Technology Officer, Mathew Hart, who

also chairs the Corporate Responsibility Steering Group.

Members of the Corporate Responsibility Steering Group also include the Chief Operating Officer, Chief People Officer, Energy & Safety

Manager and relevant heads of department.

The Corporate Responsibility Steering Group is responsible for the identification, management and reporting of climate-related risks and

opportunities. The Corporate Responsibility Steering Group meets on a quarterly basis to discuss environmental and social strategies and

performance, including climate change, and will update the Corporate Responsibility Committee on a bi-annual basis.

Priorities for FY2023

• As agreed by the Board, a new “Corporate Responsibility Committee” led by Ivan Schofield will be established in H1 FY2023. Once

established, this Committee will take over from the Corporate Responsibility Steering Group for updating the Board and the Audit

Committee on climate-related risks and opportunities.

• Following the acquisition of our Canadian business in May 2022, we will be looking to assess and establish climate targets and a reporting

framework for Canada which will be included in our next Annual Report and Accounts.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Risk management

The Board is ultimately responsible for ensuring that a robust risk management process is in place and that it is being adhered to, including

for climate risk. The significance of climate risk is aligned with other risks, given climate risk is identified and assessed in line with the existing

risk processes and is included in our principal risks register. More information on our risk management process is available in the Risk

management section on pages 69 to 73.

Identifying, assessing and managing climate-related risks and opportunities

In our FY2021 Annual Report and Accounts, we committed to assessing climate-related risks and mitigations in greater depth as part of our

ESG strategy. We have now conducted a detailed climate risk assessment, across our UK business. External experts, PwC, were engaged

to support and assist us with this process, however we retained ownership over the assessment, process and outputs. The following

process was undertaken over the last year:

1. We, assisted by PWC, reviewed our business to generate an initial list of climate-related risks and opportunities across our full UK value

chain that could impact the business. These were aligned to the TCFD risk and opportunity categories.

2. Workshops facilitated by PwC were run with key stakeholders across the business, including representatives from a range of core

business functions. A wide range of perspectives were obtained on climate-related risks and opportunities, including impacts from

historical events as well as assessing potential future trends. These workshops also allowed the opportunity to build awareness of

climate change risks across the business, which will help to further mature our response to TCFD requirements going forward.

3. Based on the workshop outputs, through heat mapping and using our existing risk scoring methodology, the more significant climate

risks were identified and a qualitative assessment was performed to help understand both the business and financial impacts of the

risks and opportunities. The Corporate Responsibility Steering Group and Chief Financial Officer reviewed the outputs of the qualitative

assessments and resulting significant risks. Climate risk was incorporated into relevant risk registers, in line with existing risk management

processes, and mitigation/management activities were considered by the Corporate Responsibility Steering Group and Chief Financial

Officer for the more significant risks.

4. Climate scenario analysis was performed on selected potentially material climate risks and opportunities to assess the potential

quantitative financial impact on the UK business.

Priorities for FY2023

• Now that we have assessed our material climate risks and opportunities in line with our risk management procedures, we will look to

further embed our risk management and monitoring process for climate risks within our risk management framework, and continue to

assess the materiality of climate risks. For example, given the uniqueness of assessing climate risks, we will look to address our existing

probability/impact matrix to ensure this is appropriate for all risks, including climate risks.

Corporate Responsibility Committee

Board of Directors

Corporate Responsibility Steering Group

Operational departments

Audit Committee (Risk)

TCFD continued

Organisation and reporting structure for climate governance

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategy

Climate-related risks and opportunities have the potential to impact our business over the short, medium and long term. In considering our

climate risks and opportunities, we define short, medium and long-term horizons as follows:

• Short term (0 – 5 years): aligns to the Group’s financial planning and modelling horizon

• Medium term (5 – 15 years): represents the interim period between the Group’s financial planning horizon and the longest centre

leases

• Long Term (15+ years): aligns with the longest time frame for the Group’s leasing agreements for properties

We face potential physical risks including extreme weather events as well as transition risks resulting from the transition to a lower carbon

economy including the cost of transitioning products and services to lower emissions options.

Following our climate risk assessment process as outlined in the ‘Risk Management’ section, the following climate risks and opportunities

were identified to be those that had the potential to be material for the business over the short, medium and long term.

Climate-related risks and opportunities

Risk/Opportunity

TCFD

category

Description and potential impact

on the business

Our response/actions we’re

taking/how it is managed

Time

horizon

Changing customer

behaviours

in reaction to

increasingly warmer

summers and

potential resultant

growth of outdoor

leisure market

Metric – revenue

reduction in high

temperature periods

Chronic Based on observed historical trends

within data held by the Group, warmer

weather has the potential to result in

reduced footfall

As the UK begins to experience drier

weather in the spring and summer

months, customer behaviours may

change, spending less time on

indoor leisure

This could lead to a loss in revenue as

footfall decreases, or a reduction in profit

margins if the price of bowling is reduced

to drive footfall

Scenario analysis was conducted to

assess the extent to which changing

customer behaviours, as a result of

changing weather patterns caused by

climate, will impact revenue

It was found that the impacts of this

climate risk were relatively low across

all scenarios

We will continue to monitor this risk going

forward and our annual financial planning

will take these findings into account

Medium

Business

interruption and

damage to assets

due to increased

frequency and

severity of extreme

weather events (e.g.

flooding / extreme

heat)

Metric – proportion

of revenue located

in areas subject

to flooding

Acute While the type and severity of hazards will

vary by location and season, and change

over time, it is expected that the

frequency and severity of events such as

flood events will increase. These extreme

events may impact the Group in three

ways:

1) physical damage to operating sites

which require repair;

2) disruption to business operations due

to temporary closure; and

3) inability of customers to get to

the sites

These events may also have further

financial impacts, for example, via

increased insurance premiums

Scenario analysis was conducted to

assess the extent to which our UK sites

are at risk of business interruption and

damage as a result of extreme events

such as flooding

Overall, it was found that only a low

number of sites were assessed to be at

risk of flooding under a 4°C scenario

These sites will continue to be monitored

and further assessments will be

conducted to explore mitigation options

Furthermore, our wide location base limits

the scale of exposure caused by

localised events

Medium-

long

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

TCFD continued

Risk/Opportunity

TCFD

category

Description and potential impact

on the business

Our response/actions we’re

taking/how it is managed

Time

horizon

Carbon taxes

increasing costs due

to pricing of GHG

emissions being

applied to own

operations and

embodied carbon in

supply chain and

transportation/

distribution

Metric – % of total UK

electricity generated

from on-site

renewables

Target – 12% by end

of FY2023

Metric – % of energy

purchased from

renewable sources

Target - 100% by end

of FY2025

Policy and

Legal

While the scope and level of carbon

pricing to date has had little impact on the

Group, it is possible that future increases

in scope for the UK Emissions Trading

Scheme could impact our operations and

supply chain by:

1) increasing energy and other

operating costs

2) leading the Group to retire assets or

investment to reduce emissions

3) increasing supply chain costs as

carbon prices are passed on

by suppliers

We are addressing our operational

emissions through our investments in

energy efficient equipment, the

installation of solar panels at our sites and

through renewable energy contracts

Regarding emissions embodied within our

supply chain, we plan to undertake

analysis of our Scope 3 emissions as one

of our key activities in FY2023

In addition, we are working with suppliers

to further reduce the emissions of our

supply chain as well as our own operations

Our regular schedule of contract

renewals and reviews allows us the

opportunity to benchmark and adjust

suppliers based on their carbon intensity

if appropriate

Short

Cost of transitioning

operations to net

zero in order to be

compatible with the

UK’s net zero carbon

targets

Metric – Scope 1 and

2 emissions intensity

ratio

Target – 55 by end of

FY2025

Metric – % of goods

for resale supply

chain expenditure

that have a carbon

reduction plan and

net zero target

defined

Target – TBC in

FY2023

Technology The UK’s commitment to reach net zero

emissions by 2050 has several

implications for the Group

Namely, as regulations and standards are

adopted to support this ambition, there

may be direct and indirect impacts on

our operations

These include increased operational

costs associated with upgrading buildings

and assets to incorporate more energy

efficient technology

The Group is committed to operating

sustainably and to finding ways, over time,

to reduce our carbon emissions

Our investment in Pins on Strings

equipment is helping reduce energy usage

In FY2023, we will undertake analysis of

our Scope 3 emissions to allow us to

develop a credible net zero road map and

agreed target year to achieve net zero

We will work with our suppliers, building

designers, equipment providers, team

members and other partners to create

this road map

Key food and drink suppliers already have

carbon reduction targets in place which

are due to be achieved through a range of

measures, including replacing older

vehicles with new, more environmentally-

friendly ones; consolidating networks

through more efficient routes (multi-

temperature, better planning) reducing

mileage and therefore emissions

Medium-

long

Climate-related risks and opportunities continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Risk/Opportunity

TCFD

category

Description and potential impact

on the business

Our response/actions we’re

taking/how it is managed

Time

horizon

Energy sources:

Increased investment

in and use of lower

emission sources of

energy, reducing

exposure to volatility

in fossil fuel and

energy prices, and

future carbon taxes

Metric – % of total UK

electricity generated

from on-site

renewables

Target – 12% by end

of FY2023

Metric – % of energy

purchased from

renewable sources

Target - 100% by end

of FY2025

Energy

Source

As the UK shifts to a low carbon economy

and transitions away from fossil fuels, it is

expected that prices for these energy

sources will increase with the introduction

of carbon taxes and become more volatile

As we continue our investment

programme in solar installations, this is an

opportunity to reduce reliance on fossil

fuels and therefore reduce exposure to

fluctuating energy prices, reducing

operational costs and emissions

We have already installed operational

solar panels at over 30% of our UK sites.

We are working hard to achieve our target

of 50% solar panel installation in our current

estate by the end of FY2025 and 100%

renewable energy by the end of FY2025

As part of our plan to reduce carbon

emissions and energy usage in our

operations, we are committed to investing

in renewable energy solutions, performance

tracking technology and the recruitment

of an in-house Energy Analyst to support

greater accountability and visibility in

our operations

We have also conducted quantitative

scenario analysis to understand how

investment in solar energy generation

on-site and moving to renewable energy

contracts will result in avoided costs of

carbon taxes that would have been incurred

if we continued to rely on external

non-renewably sourced energy companies

Medium

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

TCFD continued

Scenario analysis

Following our initial assessment of climate related risks and opportunities, three were selected for further quantitative assessment via

scenario analysis based on their assessed potential materiality:

• Changing customer behaviours – The potential financial impacts of chronic weather (prolonged shifts in weather patterns as a result of

climate change) on our UK sites

• Business interruption and damage to assets – The potential impact of fluvial and coastal flooding in terms of reduced customer footfall

and site closures

• Energy sources – The potential carbon tax saving across 2022 to 2050 as a result of our strategy to install solar panels and move to

renewable energy suppliers

These climate risks and opportunities were evaluated across a range of climate scenarios to understand how they could evolve under certain

situations, helping us to assess and improve our climate resilience.

Climate scenarios demonstrate a range of possible pathways and emission trajectories, and their impact on global temperature increases

compared to pre-industrial levels. These trajectories are based on the different rates of decarbonisation of the world economy and will

impact how physical and transition risks manifest. Publicly available scenarios, sourced from the Network for Greening the Financial System

(NGFS) and the Intergovernmental Panel on Climate Change (IPCC), were selected for our analysis as outlined below.

Climate Risk/Opportunity Scenarios Data Sources

Transition risk/Opportunity

Energy Sources NGFS scenarios

Scenario 1: Early action

Scenario 2: Late action

Scenario 3: No additional action

IEA

– Carbon intensities

NGFS

– Carbon prices

Physical risk

Business interruption and damage

to assets

IPCC pathways:

Scenario 1: SSP1-2.6 (<2°C)

Scenario 2: SSP2-4.5 (2-3°C)

Scenario 3: SSP5-8.5 (>4°C)

We obtained localised climate data to a 90m

resolution

based on the latest IPCC CMIP6 global climate models,

providing projections for each of our scenarios and time

horizons for flood exposure

Changing customer behaviours World Meteorological Organization

– Temperature, wind

speed and precipitation (historical data)

Climate Analytics

– Temperature, wind speed and

precipitation (scenario data)

1 International Energy Agency (2022), Global Energy and Climate Model, IEA, Paris https://www.iea.org/reports/global-energy-and-climate-model, Licence: CC BY 4.0

2 Network for Greening the Financial System (NGFS) (2021), NGFS Scenario Data Downscaled National Data V2.0, https://www.ngfs.net/ngfs-scenarios-portal

3 World Meteorological Organization (2022), https://public.wmo.int/en

4 Climate Analytics (2022), Climate Impact Explorer, https://climate-impact-explorer.climateanalytics.org

The scenarios were selected due to their prominence within climate change discourse. This enables the selected risks and opportunities to

be assessed in line with scenarios that represent the collective market’s understanding of the range of possible outcomes as a result of the

effects of climate change and society’s response.

Changing customer behaviours

The relative impacts of chronic weather events on revenue were examined for three IPCC scenarios (RCP2.6, RCP 4.5 and RCP 8.5).

A statistical model was developed to identify how weather (wind, temperature and precipitation) has historically impacted daily revenue at

each of the 67 sites was used to forecast relative changes in sales under climate scenarios, compared to a baseline of 2018-2020 for the

time periods 2030 to 2050.

Key assumptions, outputs and sensitivities

• Analysis is based on existing UK sites and does not allow for the addition of sites in the future

• The historical relationship between weather and sales will continue to be observed in the future

• No adjustments were made to revenue during modelling to account for growth or inflation

• Historical sales data was selected to remove any potential impacts of COVID-19

While all chronic weather events, particularly increasing temperatures, were found to result in some changing customer behaviours across all

examined scenarios, the impacts of these changing behaviours on revenue were not found to be significant and no clear seasonal trends

were identified.

Hollywood Bowl Group plc

Annual report and accounts 2022

Scenario analysis continued

Business interruption and damage to assets

Scenario analysis modelled the potential exposure to business interruption and resulting financial impact due to fluvial and coastal flooding

on each of our UK sites.

Key assumptions, outputs and sensitivities

• Analysis is based on existing UK centres

• The historical relationship between weather and sales is assumed to continue

• All sites located on ground floor/basement floors are exposed to both refurbishment and access downtime. Sites located on the first

floor and above are only exposed to access downtime where floodwaters exceed three metres. Property and equipment damage are not

included in this analysis

• Flood defences, including regional flood defences, are assumed to remain unchanged from 2022 until 2050

The analysis found that the potential impact from floods increases over time across all of the scenarios examined. The impacts under RCP 8.5,

as represented in the 95th percentile, were found to be the largest and reflect the most challenging scenario examined. Under this scenario,

our UK sites located in Brighton, Norwich and Basingstoke are the most at risk, with an additional six sites expected to be at risk of flooding

between 2022–2050. The impacts of the potential exposure to flooding was not found to be significant in the context of the overall business.

Energy sources

Scenario analysis was performed to understand the potential carbon tax savings as a result of existing and planned future solar panel

installations, compared to sourcing all electricity from the national grid. Currently, 22 of our UK sites have solar panels installed, with

installations for 10 sites planned by the end FY2023. The potential carbon cost savings resulting from these sites were examined over the

period of 2022-2050 by applying IEA carbon intensities (tCO

/MWh) associated with three different scenarios (‘Early Action’, ‘Late Action’,

and ‘No Additional Action’) and NGFS carbon prices (£/tCO

) to internal energy consumption data.

Key assumptions, outputs and sensitivities

• The average percentage of electrical consumption drawn from solar panels across all installed sites was applied (32.9 per cent)

• Electricity consumption of each site remains static until 2050

• As IEA carbon intensity figures are provided in 5-year increments, a linear interpolation is assumed to provide an annual view

• The analysis assumes the implementation of either new or more stringent carbon prices

on the consumption of fossil fuel-based

electricity from 2023 as outlined below.

5 NGFS carbon prices. All carbon prices are expressed in £2010. IEA carbon prices were converted from USD to GBP using an exchange rate of 1.2658.

Scenario 2030 (£/tCO

) 2040 (£/tCO

) 2050 (£/tCO

)

Early action £122 £186 £568

Late action £0 £198 £747

No additional action £0 £2 £4

Under the most challenging scenario, the NGFS ‘Early Action’ scenario, the aggregate carbon savings realised from the 32 sites between

2023-2050, represent a significant financial impact. However, there also remains a significant exposure to carbon taxes from purchased

electricity during this period. In response, we have put in place the following mitigation; by the end of FY2023, we will purchase 100 per cent

renewable electricity and by the end of FY2025 all of our purchased gas will also be from renewable sources. Therefore, our expected

carbon emissions exposure, and carbon tax exposure, from purchased energy, is zero.

Priorities for FY2023

• Further priorities for FY2023 include advancing data gathering activities for those risks and opportunities that were not able to be

quantitatively assessed via scenario analysis at this stage.

• We will look to re-evaluate our scenario analysis results in response to significant events that may affect business strategy (i.e., in the case

of a major acquisition) as recommended by the TCFD.

• Our climate risk assessment was performed for the UK business. We will look to assess the impacts and materiality of climate related

risks and opportunities across our Canada business in the future, should it become material in size.

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

TCFD continued

Metrics and targets

We have set a range of climate-related metrics and targets in the table below. We are currently in the process of calculating scope 3

emissions, and we will set out our net zero carbon reduction plan in our FY2023 Annual Report and Accounts.

Climate-related metrics

TCFD cross-industry

metric category

Unit of measure Metric Metric target set and

reported?

Linked to identified

climate risks and

opportunities

GHG emissions tCO

e Absolute Scope 1 and

2 emissions in UK

Yes – 4125 by end of

FY2025 (based on 75 UK

centres)

Carbon taxes

GHG emissions tCO

e Absolute Scope 3 emissions No – target expected to

be set and disclosed

in FY2023

Carbon taxes

Transition Risks % % of total electricity

purchased in the UK from

renewable sources

Yes - 100% renewable

purchased electricity in

UK by end of FY2023

Energy sources

Transition risks % % of total UK electricity

generated from onsite

renewable sources

Yes – 12% of total UK

electricity generated from

on-site renewable sources

by end of FY2023

Energy sources

Transition risks % % of total gas purchased

in the UK from

renewable sources

Yes – 100% renewable

gas purchased in UK

by end of FY2025

Energy sources

Transition risks kWh Gas usage in the UK Yes – zero by end

of FY2030

Energy sources

Transition risks Total tCO

e/ Centres UK Average carbon energy

intensity ratio by centre

Yes – 55 by end

of FY2025

Carbon taxes

Cost of transitioning

operations to net zero

Transition risks % % of UK estate using

energy efficient Pins on

Strings technology

Yes – 100% by end

of FY2028

Cost of transitioning

operations to net zero

Physical risks % of annual revenue % of UK revenue located in an

area subject to high risk of

flooding

No Business interruption

and damage to assets

Priorities for FY2023

• The Group will look to develop a net zero target following the assessment of Scope 3 emissions

• The Group will also look to develop several additional metrics to support the monitoring of the identified risks and opportunities including;

the proportion of Group expenditure on goods for resale from suppliers with a defined carbon reduction plan and net zero target (or

equivalent). This will help monitor the cost of transitioning operations to net zero

Hollywood Bowl Group plc

Annual report and accounts 2022

Risk management

Our risk management process

The Board is ultimately responsible for ensuring that a robust risk management process is in place and

that it is being adhered to. The main steps in this process are:

Our approach to risk

The Board and senior management take their responsibility for risk

management and internal controls very seriously, and for reviewing

their effectiveness at least bi-annually. An effective risk management

process balances the risk and rewards as well as being dependent on

the judgement of the likelihood and impact of the risk involved. The

Board has overall responsibility for ensuring there is an effective risk

management process in place and to provide reasonable assurance

that they are fully understood and managed.

When we look at risk, we specifically consider the effects it could have

on our business model, our culture and therefore our ability to deliver

our long-term strategic purpose.

Read more on pages 24 and 25

We consider both short and long-term risks and split them into the

following groups: financial, social, operational, technical, governance

and environmental risks.

Risk appetite

This describes the amount of risk we are willing to tolerate as a

business. We have a higher appetite for risks accompanying a clear

opportunity to deliver on the strategy of the business.

We have a low appetite for, and tolerance of, risks that have a downside

only, particularly when they could adversely impact health and

safety or our values, culture or business model.

Risk management activities

Risks are identified through operational reviews

by senior management; internal audits; control

environments; our whistleblowing helpline;

and independent project analysis.

The internal audit team provides independent

assessment of the operation and effectiveness of

the risk framework and process in centres, including

the effectiveness of the controls, reporting of risks

and reliability of checks by management.

We continually review the organisation’s risk profile

to verify that current and emerging risks have

been identified and considered by each head

of department.

Each risk has been scaled as shown on the risk

heat map.

1 2 3

Financial risks

1 – Economic environment

2 – Covenant breach

3 – Expansion / growth

(NEW)

Operational risks

4 – Core systems

5 – Suppliers

(non-amusements)

6 – Amusement supplier

7 – Management retention

and recruitment

8 – Food safety

Technical risks

9 – GDPR and

cyber security

10 – Targeted IT

threat / attack (NEW)

Regulatory risks

11 – Compliance

12 – Climate change (NEW)

The Executive team

The Executive team reviews each departmental

risk register. Any risks which are deemed to have

a level above our appetite are added to/retained

on the Group risk register (GRR) which provides

an overview of such risks and how they are being

managed. The GRR also includes any risks the

Executive team is managing at a Group level.

The Executive team determines mitigation

plans for review by the Board.

The Board

Challenges and agrees the Group’s key

risks, appetite and mitigation actions at least

twice yearly and uses its findings to finalise

the Group’s principal risks.

The principal and emerging risks are taken

into account in the Board’s consideration of

long-term viability as outlined in the

Viability statement.

Department heads

Each functional area of the Group maintains

an operational risk register, where senior

management identifies and documents the risks

that their department faces in the short term, as

well as the longer term. A review of these risks

is undertaken on at least a bi-annual basis to

compile their department risk register. They

consider the impact each risk could have on the

department and overall business, as well as the

mitigating controls in place. They assess the

likelihood and impact of each risk.

Read more on pages 74 and 75

Likelihood

Impact

4 5 6

3 12

Low

High

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Annual report and accounts 2022

Strategic report

Financial risks

Risk Risk and impact Mitigating factors

Economic

environment

• Change in economic conditions in

particular a recession due to the

after-effects of COVID-19, as well

as inflationary pressures and the

current war in Ukraine

• Adverse economic conditions,

including, but not limited to,

increases in interest rates/

inflation may affect Group results

• A decline in spend on discretionary

leisure activity could negatively

affect all financial as well as

non-financial KPIs

• An economic contraction is likely, impacting consumer confidence and

discretionary income. The Group’s has low customer frequency per annum and

also the lowest price per game of the branded operators. Therefore, whilst it

would suffer in such a recession, the Board is satisfied that the majority of

centre locations are based in high-footfall locations which should better

withstand a recessionary decline

• Along with appropriate financial modelling and available liquidity, a focus on

opening new centres in high-quality locations only with appropriate property

costs, as well as capital contributions, remains key to the Group’s new

centre-opening strategy

• We have an unrelenting focus on service, costs and value, along with electricity

hedged until September 2024. Plans are developed to mitigate many cost

increases, as well as a flexible labour model, if required, in an economic downturn

Covenant

breach

• The banking facility, with Barclays

Plc, has quarterly leverage

covenant tests which are set at a

level the Group is comfortably

forecasting to be within

• Covenant breach could result in a

review of banking arrangements

and potential liquidity issues

• The potential for future pandemic lockdowns has elevated this risk, and financial

resilience has therefore become central to our decision-making and will remain

key for the foreseeable future

• The current RCF is £25m, with a margin of 175bps above SONIA as well as an

accordion of £5m. Net leverage covenants are 1.75x and are tested quarterly.

The facility is currently undrawn

• Group revenue and profit performance since reopening in May 2021 have been

above internal and external forecasts, which has resulted in a net cash position

of £56.1m at the end of FY2022

• Appropriate financial modelling has been undertaken to support the

assessment of the business as a going concern. The Group has headroom on

the current facility with leverage cover within its covenant levels, as shown in the

monthly Board packs. We prepare short-term and long-term cash flow, EBITDA

(pre-IFRS 16) and covenant forecasts to ensure risks are identified early. Tight

controls exist over the approval for capital expenditure and expenses

• The Directors consider that the combination of events required to lower the

profitability of the Group to the point of breaching bank covenants is unlikely

Expansion/

growth

NEW

• Competitive environment for new

centres results in less new Group

centre openings

• New concepts appear more

attractive to landlords

• Higher rents offered by short-term

private groups

• The Group uses multiple agents to seek out opportunities across the UK

• Continued focus with landlords on initial investment as well as refurbishment

and maintenance capital

• Strong financial covenant provides forward-looking landlords with both value

and comfort

• Relaunched property flyer in June 2022, with good success

The Board has identified 12 principal risks which are set out on page 69. These are the risk

which we believe to be the most material to our business model, which could adversely

affect the revenue, profit, cash flow and assets of the Group and operations, which may

prevent the Group from achieving its strategic objectives.

We acknowledge that risks and uncertainties of which we are unaware, or which we

currently believe are immaterial, may have an adverse effect on the Group.

Principal risks

Key to risk change

Increasing Decreasing Unchanged

Hollywood Bowl Group plc

Annual report and accounts 2022

Operational risks

Risk Risk and impact Mitigating factors

Core systems

• Failure in the stability

or availability of

information through IT

systems could affect

Group business and

operations

• Customers not being

able to book through

the website is a bigger

risk given the higher

proportion of online

bookings compared

to prior years

• Inaccuracy of data

could lead to

incorrect business

decisions being made

• All UK core systems (non-cloud based) are backed up to our disaster recovery centre

• The reservation systems, provided by a third party, are hosted by Microsoft Azure Cloud

for added resilience and performance. This also has full business continuity provision and

scalability for peak trading periods. The CRM/CDP system is hosted by a third party

utilising cloud infrastructure with data recovery contingency in place

• The reservations system also has an offline mode, so in-centre customers could still book

but the Customer Contact Centre (CCC) and online booking facility would be down. A

back-up system exists for CCC to take credit card payments offline. A full audit process

exists for offline functionality

• All technology changes which affect core systems are authorised via change control procedures

• The Group undertakes periodic strategic reviews of its core system set-up with

associated market comparisons of available operating systems to ensure that it has the

most appropriate technology in place

Suppliers

(non-

amusements)

• Operational business

failures from key

suppliers (non-IT)

• Unable to provide

customers with a

full experience

• The Group has key UK suppliers in food and drink under contract with tight service level

agreements (SLAs). Alternative suppliers that know our business could be introduced, if

needed, at short notice. Centres hold between 14 and 21 days of food, drink and

amusement products. Regular reviews and updates are held with external partners to

identify any perceived risk and its resolution. This process has been required since

reopening in 2021, with substitute products available in all scenarios. A policy is in place to

ensure the safe procurement of food and drink within allergen controls

• Splitsville uses Xtreme Hospitality (XH), a group buying company, to align itself with tier

one suppliers in all service categories including food and drink. If XH is unable to provide a

service or product, Splitsville is able to source directly itself

Amusement

supplier

• Any disruption which

affects Group

relationship with

amusement suppliers

• Customers would be

unable to utilise a core

offer in the centres

• Regular key supplier meetings between our Head of Amusements, and Namco and

Inspired Gaming. There are half-yearly meetings between the CEO, the CFO and Namco

• Namco is a long-term partner that has a strong UK presence and supports the Group with

trials, initiatives and discovery visits

• Namco also has strong liquidity which should allow for a continued relationship during or

post any consumer recession

• Player 1 is the amusements supplier to Splitsville. Player 1 is a subsidiary Cineplex Inc

which is listed on the Canadian stock market. Quarterly meetings are held with Player 1

Management

retention and

recruitment

• Loss of key personnel

– centre managers

• Lack of direction at

centre level with

effect on customer

experience

• More competitive

recruitment

landscape due to

Brexit and COVID-19

pandemic

• More difficult to

execute business

plans and strategy,

impacting on revenue

and profitability

• The Group runs Centre Manager in Training (CMIT) and Assistant Manager in Training

(AMIT) programmes annually, which identify centre talent and develop team members

ready for these roles. Centre managers in training run centres, with assistance from their

regional support manager as well as experienced centre managers from across the

region, when a vacancy needs to be filled at short notice

• The Group bonus schemes were reviewed for the estate reopening in May 2021, to ensure

they were still a strong recruitment and retention tool. The incentives now benefit all team

members in-centre including hourly and salaried team. The hourly scheme has paid out to

over 64 per cent of Team Members since the start of FY2022

• All 18-21 year olds are paid 20p above NMW/NLW, once they have completed their

probation period

• Wellbeing guides were issued across the business during the pandemic, as well as

frequent Group Zoom Q&A sessions and updates via our team member app, to improve

team engagement

Key to risk change

Increasing Decreasing Unchanged

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Technical risks

Risk Risk and impact Mitigating factors

GDPR and

cyber security

• Data protection or

GDPR breach. Theft

of customer email

addresses and impact

on brand reputation in

the case of a breach

• Risk of cyber-attack/

terrorism could

impact the Group’s

ability to keep trading.

More bookings are

being taken online

currently, which

increases this risk

• The Group adopts a multi-faceted approach to protecting its IT networks through protected

firewalls and secure two-factor authentication passwords, as well as the frequent running of

vulnerability scans to ensure integrity of the firewalls

• A Data Protection Officer has been in position for a number of years and attends external

courses to continue to build knowledge

• All team members have been briefed via online presentations. A training course on GDPR

awareness was created on STARS (online training tool) and all team members have to

complete this before being able to work on shift

• A cyber security partner is in place to handle any cyber security breaches and will work with

the Group on a priority basis – 365x24x7 – if necessary

• Periodic penetration testing is conducted through a third-party cyber security company

• In FY2023 we will be upgrading the IT infrastructure and networks in our Canadian business

to move from centres based operations to centrally hosted and managed services

Targeted IT

threat / attack

NEW

• Website hack

• Increased threat of

targeted hack post

COVID-19 reopening

• Prevent customers

from booking online

• PCI accreditation

• Non-accreditation

can lead to acquiring

bank removing

transaction

processing

• The Group has an externally hosted website by Fortrabbit in a secure infrastructure using

AWS under ISO 27001 and PCI accreditation

• It deploys proactive security on its infrastructure in the form of regular patching and

upgrades as well as penetration testing

• AWS enforces a high level of physical security to safeguard its data centres, with military

grade perimeter controls for example

• The web site and booking site are protected by Cloudflare WAF with Distributed Denial of

Service (DDoS) protection

• There is active protection of the network against a DDoS attack

• A quarterly review meeting is held with the card acquirer, to keep abreast of market

developments and any new technical requirements for PCI and security

• A PCI gap analysis is performed annually to ensure the business infrastructure is in line with

the current published PCI standards. Recommendations from the latest review are being

addressed in a project to select and implement new payment devices, services and

processes to further reduce this risk

Operational risks continued

Risk Risk and impact Mitigating factors

Food safety

• Major food incident

including allergen or

fresh food issues

• Loss of trade and

reputation, potential

closure and litigation

• Food and drink audits are undertaken in all centres based upon learnings of the prior year

and food incidents seen in other companies, as well as for health, safety and legal

compliance. online training, which includes allergen and intolerance issues, is reviewed,

understood and complied with by team members

• Allergen awareness is part of our team member training matrix which needs be

completed before team members can take food or drink orders. Information is regularly

updated and remains a focus for the centres. This was enhanced further in the latest

menu, along with an online allergens list which is available for all customers. A primary

local authority partnership is in place with South Gloucestershire covering health and

safety, as well as food safety

• In conjunction with the supply chain risk the Allergen Control Policy has been reviewed

and updated

• All food menus have an allergen disclaimer

• All food menus have a QR code linking the customer to up-to-date allergen content for

each product, updated through the ‘Nutritics’ system

Principal risks continued

Key to risk change

Increasing Decreasing Unchanged

Hollywood Bowl Group plc

Annual report and accounts 2022

Regulatory risk

Risk Risk and impact Mitigating factors

Compliance

• Failure to adhere to

regulatory

requirements such as

listing rules, taxation,

health and safety,

planning regulations

and other laws

• Potential financial

penalties and

reputational damage

• Expert opinion is sought where relevant. We run regular training and development for

appropriately qualified staff

• The Board has oversight of the management of regulatory risk and ensures that each

member of the Board is aware of their responsibilities

• Compliance documentation for centres to complete for health and safety, and food

safety, is updated and circulated twice per year. Adherence to Company/legal standards

is audited by the internal audit team

Environmental risk

Risk Risk and impact Mitigating factors

Climate change

NEW

• Increasing carbon

taxes

• Business interruption

and damage to assets

• Cost of transitioning

operations to net zero

• Significant progress already made with solar panel installations and transitioning energy

contracts to renewable sources

• Corporate Responsibility Committee created to closely monitor and report on climate

related risks and opportunities

• Extended range of climate related targets created

• TCFD disclosure completed in FY2022 including scenario planning to understand

materiality of risks

• Net zero plan and target being created in FY2023

Key to risk change

Increasing Decreasing Unchanged

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Going concern

In assessing the going concern position of the Group for the consolidated

financial statements for the year ended 30 September 2022, the

Directors have considered the Group’s cash flow, liquidity, and

business activities, as well as the principal risks identified in the GRR.

As at 30 September 2022, the Group had cash balances of £56.1m,

no outstanding loan balances, no COVID-19 concession deferrals

and an undrawn RCF of £25m, giving an overall liquidity of £81.1m.

The Group has undertaken a review of its liquidity using a base case

and a severe but plausible downside scenario.

The base case is the Board approved budget for FY2023 as well as

the first three months of FY2024 which forms part of the Board

approved five-year plan. Under this scenario there would be positive

cash flow, strong profit performance and all covenants would be

passed. It should also be noted that the RCF remains undrawn.

Furthermore, it is assumed that the Group adhere to its capital

allocation policy as outlined on pages 44.

The most severe downside scenario stress tests for reasonably

adverse variations in the economic environment leading to a

deterioration in trading conditions and performance. Under this

severe but plausible downside scenario, the Group has modelled

revenues dropping by four per cent and five per cent for FY2023

and FY2024 respectively from the assumed base case, and inflation

continues at an even higher rate than in the base case, specifically

around cost of labour. The model still assumes that investments into

new centres would continue, whilst refurbishments in the early part

of FY2024 would be reduced and further Pins on Strings installs

would be delayed until FY2025. These are all mitigating factors that

the Group has in its control. Under this scenario, the Group will still

be profitable and have sufficient liquidity within its cash position to

not draw down the RCF, with all financial covenants passed.

Taking the above and the principal risks faced by the Group into

consideration, the Directors are satisfied that the Group has

adequate resources to continue in operation for the foreseeable

future, a period of at least 12 months from the date of this report.

Accordingly, the Group and Parent Company continue to adopt the

going concern basis in preparing these Financial Statements.

Viability statement

In accordance with the 2018 UK Corporate Governance Code, the

Directors have assessed the prospects of the Group over a period

significantly longer than 12 months and have made this assessment

over a five-year period to 30 September 2027. The Directors have

determined that a five-year period, as opposed to the three-year

period previously adopted, is an appropriate period over which to

assess viability, as it aligns with the Group’s investment plans and

gives a greater certainty over the forecasting assumptions used.

The Directors are mindful of the heightened uncertainty driven by

the Russian invasion of Ukraine and the subsequent increase in the

cost of living, and accept that forecasting across this time frame

remains challenging and have, therefore, also focused on understanding

the level of headroom available before the Group reaches a position

of financial stress.

In making this viability statement, the Directors have reviewed

the overall resilience of the Group and have specifically considered

a robust assessment of the impact, likelihood and management

of principal risks facing the Group, as at 30 September 2022 and

looking forward over the next five-year period, including consideration

of those risks that could threaten its business model, future

performance, liquidity or sustainability.

The assessment of viability has specifically considered risks that

could threaten the Group’s day-to-day operations and existence.

This assessment considered how risks could affect the business

now and how they may develop and impact the Group’s financial

forecasts over five years.

The Group’s business model and strategy are central to an

understanding of its prospects, with further details found in

the Strategy section of the Annual Report.

Context

The Group established a base case model of financial performance

over the five-year assessment period and a viability scenario upon

which the Board has made its assessment of the Group’s ongoing

viability, and which reflects prudent expectations of future customer

demand and the successful execution of the Group’s strategic plans.

The Group undertook a review of the previously approved financial

plan and forecasts in light of the uncertainty caused by the increase

in the cost of living and resultant period of potential economic

recession in the UK and Canada. A period of ‘stagflation’ would have

a negative impact on the forecasts included in the base case.

Assessment process

The Directors subsequently made a robust consideration of the

key risks and uncertainties that could impact the future performance

of the Group and the achievement of its strategic objectives, as

discussed on pages 32 to 37 of this Annual Report. Particular regard

was paid to the potential impacts of an economic recession in

FY2023 and FY2024.

The viability scenario also takes into account the principal risks

and uncertainties facing the Group across the five-year period in

order to assess its ability to withstand multiple challenges. The

impacts of an economic recession have been built into the scenario,

but the impact of further one-off events that cannot be reasonably

anticipated has not been included.

Key assumptions

The base case forecast, which is prepared on a prudent basis,

assumes low single-digit LFL revenue declines for FY2023 and

FY2024 compared with FY2022. The process undertaken

considers the Group’s adjusted EBITDA, capital spend, cash flows

and other key financial metrics over the projection period.

The base case assumes no significant change in gross margin

percentage and that dividend payments will continue into FY2023,

in line with the Group’s dividend policy.

The Board considers this scenario to be reasonable, especially given

the performance since the start of the financial year, which has been

trading ahead of the base case forecast.

Going concern and viability statement

Hollywood Bowl Group plc

Annual report and accounts 2022

Assessment of viability

Although the viability scenario reflects the Board’s best estimate

of the future prospects of the Group, the Board has also tested

the potential impact of a severe but plausible downside scenario, by

quantifying the financial impact and overlaying this on the detailed

financial forecasts in place.

This severe but plausible downside scenario includes a reduction in

revenue of four and five percentage points on the base case for FY2023

and FY2024 respectively and an increase in operating costs to

reflect higher inflation. It is then forecasted that revenue will return to

base case forecasts for FY2025, FY2026 and FY2027. The impact

of inflation in FY2023 and FY2024 is a one percentage point increase

in operating costs, with higher labour costs per hour offset partially

by a reduction in the number of hours worked due to lower revenues.

Whilst the assumptions of a severe economic recession in this

scenario is plausible, it does not represent our view of the likely

outturn as the FY2023 base case scenario already includes

assumptions on reduced revenue and increased costs when

compared to FY2022. However, the results of this scenario help

to inform the Directors’ assessment of the viability of the Group.

Viability statement

The Board has a reasonable expectation that the Group will be able

to continue in operation and meet its liabilities as they fall due, retain

sufficient available cash and not breach any covenants under any

drawn facilities over the remaining term of the current facilities.

Non-financial information statement

The Group has complied with the requirements of sections 414CA and 414CB of the Companies Act 2006 by including certain non-financial

information within the Strategic report. The following table constitutes our non-financial information statement, and includes cross

references to where more detailed disclosures of non-financial information can be found.

Reporting requirement Principal locations in this Annual Report Page Summary of relevant policies

Business model Business model 24, 25 An explanation of the Group’s business model is

given on pages 24-25

Principal risks Principal risks and uncertainties 69-73 The Board has a process for considering the

principal risks as outlined on pages 69-73

Non-financial KPIs Strategic report 1-69 The Board approves relevant non-financial KPIs

against which operational performance is

measured. These are disclosed in the Strategic

report

Environmental matters Sustainability overview

TCFD disclosure statement

55-57

59-69

Our environmental strategy is set out on pages

55-69

Employees Chief Executive Officer’s statement

S172 statement/stakeholder engagement

Sustainability overview

Chief People Officer Q&A

Principal risks and uncertainties

18-23

26-28

51-53

Our employee related policies and procedures

which include our privacy notice and all work-

related policies, are available to all employees on

HAPI (our intranet)

Our social sustainability strategy is set out on

pages 46-54

Human rights, anti-corruption

and anti-bribery

Sustainability overview

S172 statement/stakeholder engagement

46-54

26-29

Our Anti-Bribery and Corruption policy and Modern

Slavery policy set out relevant policies and expected

standards. The Group has a zero-tolerance

approach to human rights abuses, bribery and

corruption.

We also have a Whistleblowing policy

Social matters Sustainability overview

S172 statement/stakeholder engagement

46-54

26-29

Our social sustainability strategy is set out on

pages 46-54

Hollywood Bowl Group plc

Annual report and accounts 2022

Strategic report

Chairman’s introduction to governance

The Board continues to promote high

standards of corporate governance,

and keeps our governance framework

under review to ensure that it develops

to meet the needs of the business and

supports the long-term success of

the Group.”

Peter Boddy, Non-Executive Chairman

Read full biography on page 78

FY2022 has been

a significant year

for the Group

Hollywood Bowl Group plc

Annual report and accounts 2022

Dear shareholders,

On behalf of the Board, I am pleased to present our

Corporate governance report for the year ended

30 September 2022. This section of the Annual Report

describes how we have applied the principles of the

Code, and highlights the key activities of the Board and

its Committees in the period.

FY2022 has been a significant year for the Group, with

key decisions made by the Board including our international

expansion through the acquisition of Teaquinn in Canada,

continued investment in our centres and supporting

technology, and the reinstatement of dividends. In making

those decisions, the Board was mindful of both the

impact on stakeholders and likely long-term consequences;

our statement setting out how the Directors have

discharged their duty under s172 of the Companies Act

2006, which includes a description of how the Company

has engaged with its key stakeholders, is set out on

pages 26 to 29 of the Strategic report.

The Board continues to promote high standards of

corporate governance, and keeps our governance

framework under review to ensure that it develops to

meet the needs of the business and supports the

long-term success of the Group. During FY2022, that

development has included:

• a revised approach to reviewing key business risks

with the introduction of a programme of deep dives

into key risk topics (see the Audit Committee report

on page 91 for more detail);

• The continued development of our approach to ESG,

with the approval of our ESG roadmap, the establishment

of an ESG governance framework, and reviewing

climate-related risks and opportunities and the

analysis underlying our TCFD disclosures as set out

on pages 59 to 68;

• Progressing our Board succession plans, in

particular with the appointment of Julia Porter as a

Non-Executive Director and to succeed Claire Tiney

as Chair of our Remuneration Committee.

As a Board, we recognise that it is incumbent on us to

set the tone in terms of the culture and values that we

expect to permeate across the business. Our culture

and values are key drivers of the success of the business,

and we continue to monitor them through direct interaction

with team members and regular reports from the

Executive Team, in particular around team member and

customer engagement, and shareholder, supplier

and other stakeholder relationships. I believe that in

our meetings and interactions with team members,

all of the Directors demonstrate our positive and

high-performance culture.

With the impact of the COVID-19 pandemic having receded,

we have been able to revert to in-person Board

meetings (with our March Board meeting held on site at

our Puttstars centre in Harrow) and the Non-Executive

Directors and I have resumed our programme of centre

visits and days out with management. This allows us to

get a true sense of the experience delivered to customers

in our centres, as well as supporting direct engagement

with team members across the Group. All of the

Non-Executive Directors also attended the Company

conference in September, which was a fantastic event

and a further opportunity to get to know Centre

Managers and all Support team members.

As noted above, we have conducted a successful

Non-Executive Director recruitment process (described

in detail in the Nomination Committee report on page

88) during the year, and we were delighted to welcome

Julia Porter to the Board in September 2022. Julia has

been provided with a tailored induction programme to

get her up to speed with the business (see page 84 for

more detail), and has been working with Claire Tiney

to ensure a seamless handover of Remuneration

Committee Chair responsibilities. In line with our agreed

Board succession plans, Claire will not seek re-election

at the 2023 AGM, and on behalf of the Board I would like

to place on record our thanks for her service to the

Group since our IPO in 2016.

In accordance with corporate governance best practice,

we have for the first time conducted an externally

facilitated Board evaluation process during the year,

with Parsons Talent Consulting engaged for that

purpose. The process and outcomes are described in

detail on pages 84 and 85. We were very pleased that

the feedback received supported our previously held

view that our Board operates effectively, with meetings

conducted in a manner which supports the effective

contribution of all attendees, and constructive challenge

and support from the Non-Executive Directors. As you

will note from the outcomes set out on page 85,

there are a number of areas where we recognise further

improvement/developments can be made and we

intend to take these forward during FY2023. We will

consider during the year the appropriate cycle for

evaluation processes going forwards, but anticipate that

our FY2023 Board evaluation process will be

conducted internally.

Peter Boddy

Non-Executive Chairman

15 December 2022

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Board of Directors

Peter Boddy

Non-Executive Chairman

Appointment

Peter joined the Group as

Non-Executive Chairman

in 2014.

Skills and experience

Peter has extensive

non-executive experience at

board level, including roles at

Thwaites plc (SID and Chair

of Remuneration Committee

2007–2015), Novus Ltd

(Chairman 2015–2018),

Xercise4less (Chairman

2013–2019) and the Harley

Medical Group (Chairman

2012–2019). Previously, he held

the position of CEO or Managing

Director in a number of

successful private equity-

backed leisure sector

companies including Fitness

First UK, Megabowl Group

Limited and Maxinutrition

Limited. Peter has a degree in

economics from De Montfort

University and an MBA from

Warwick Business School.

Top bowling score

220

Stephen Burns

Chief Executive Officer

Appointment

Stephen joined the Group as

Business Development Director

in 2011. He was promoted to

Managing Director in 2012 and

became Chief Executive Officer

in 2014.

Skills and experience

Before joining the Group,

Stephen worked within the

health and fitness industry,

holding various roles within

Cannons Health and Fitness

Limited from 1999. He became

Sales and Client Retention

Director in 2007 upon the

acquisition of Cannons Health

and Fitness Limited by Nuffield

Health, and became Regional

Director in 2009. In 2011,

Stephen was appointed to

the operating board of MWB

Business Exchange, a public

company specialising in

serviced offices, meeting

and conference rooms, and

virtual offices.

Stephen was appointed

Chairman at the Club Company

Limited (operator of UK country

clubs) in 2018.

Top bowling score

189

Laurence Keen

Chief Financial Officer

Appointment

Laurence joined the Group

as Finance Director in 2014.

Skills and experience

Laurence has a first-class

degree in business,

mathematics and statistics

from the London School of

Economics and Political

Science. He qualified as a

chartered accountant in 2000

and has been an ICAEW Fellow

since 2012. Previously, Laurence

was UK Development Director

for Paddy Power from 2012.

He has held senior retail and

finance roles for Debenhams

PLC, Pizza Hut (UK) Limited

and Tesco PLC.

Laurence was appointed

Non-Executive Director at

Tortilla Mexican Grill Plc in 2021.

Top bowling score

191

Melanie Dickinson

Chief People Officer

Appointment

Melanie joined the Group as

Talent Director in October 2012.

Skills and experience

Melanie has over 20 years of

HR experience across the

leisure and hospitality sectors.

Starting her career in retail

operations before moving into

HR, Melanie has held HR roles

at Pizza Express, Holmes Place

Health Clubs and Pizza Hut UK;

as well as obtaining a post

graduate diploma in Personnel

and Development.

Most recently, she headed the

People function at Zizzi

Restaurants, part of the

Gondola group.

Top bowling score

144

Committee key

Audit committee

Nomination committee

Remuneration committee

Committee chair

Hollywood Bowl Group plc

Annual report and accounts 2022

Nick Backhouse

Senior Independent

Non-Executive Director

Appointment

Nick joined the Group as Senior

Independent Non-Executive

Director in June 2016.

Skills and experience

Nick has extensive experience

at board level, including

non-executive roles at Guardian

Media Group plc (2007–2017)

where he was also the Senior

Independent Director, All3Media

(2011–2014) and Marston’s PLC

(2012–2018), and has

experience as an Audit

Committee Chair and member.

He is currently Chairman at the

Giggling Squid Restaurant

Group, the Senior Independent

Director at Loungers plc and a

Non-Executive Director and

chair of the Audit Committee at

Hyve Group plc. In his executive

career, Nick was the Deputy

Chief Executive Officer of the

David Lloyd Leisure Group and

was previously Group Finance

Director of NCP, Chief Financial

Officer of the Laurel Pub

Company and CFO of

Freeserve PLC. Prior to that, he

was a Board Director of Baring

Brothers International. Nick is a

Fellow of the ICAEW and has an

MA in economics from

Cambridge University.

Top bowling score

203

Claire Tiney

Independent

Non Executive Director

Appointment

Claire joined the Group as an

Independent Non-Executive

Director in June 2016.

Skills and experience

Claire has over 20 years’ board

level experience encompassing

executive and non-executive

roles in blue-chip retailing,

property development and the

services sector across the UK

and Western Europe. Claire

spent 20 years as an executive

director in a number of

businesses including

Homeserve plc, Mothercare plc

and WH Smith Group plc. Most

recently, Claire was HR Director

at McArthurGlen Group, the

developer and owner of

designer outlet malls throughout

Europe. Claire was previously

Senior Independent Director at

Topps Tiles and retired from the

board in June 2021 having

served nine years. She is

currently Non-Executive

Director and Chair of the

Remuneration Committee at

Volution Plc. She has an MBA

from Stirling University.

Top bowling score

144

Ivan Schofield

Independent

Non-Executive Director

Appointment

Ivan joined the Group as an

Independent Non-Executive

Director in October 2017.

Skills and experience

Ivan has extensive experience

in the leisure sector in the UK

and across continental Europe.

He held a number of senior roles

for Yum Brands Inc. over 15 years,

notably as Managing Director of

KFC France and Western Europe

and more recently as CEO of

itsu. Prior to this, he held roles at

Unilever and LEK Consulting.

Ivan runs his own executive

coaching and leadership

development business and is

also Non-Executive Director

of Thunderbird Fried Chicken

Limited. Ivan holds a BSc in

economics with econometrics

from the University of Bath, an

MBA from INSEAD and is a

graduate of the Meyler Campbell

Business Coaching Programme.

Top bowling score

165

Julia Porter

Independent

Non-Executive Director

Appointment

Julia joined the Group as an

Independent Non-Executive

Director in September 2022.

Skills and experience

Julia has more than 30 years

experience encompassing

executive and non-executive

roles in advertising, media and

the technology sectors in UK

and globally. She has held

executive director roles in a

number of businesses including

IPC Magazines, Getty Images

and ITV plc. Most recently, Julia

was Director of Consumer

Revenues at Guardian News &

Media where she developed and

delivered their subscriptions

and customer data strategies as

well as a major subscriptions

technology project. Julia is a

Non-Executive Director and

Chair of the Remuneration

Committee at Safestyle Plc.

Previously she has been

Non-Executive Director of

Freeview (the UK’s largest

free to air digital TV platform)

and Origin Housing. She

holds an MBA from London

Business School.

Top bowling score

139

A N R A N R A N R A N R

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Corporate governance report

Hollywood Bowl Group plc

Annual report and accounts 2022

UK Corporate Governance Code – Compliance statement

As a company with a premium listing on the London Stock

Exchange, Hollywood Bowl Group plc is required under the FCA

Listing Rules to comply with the provisions of the UK Governance

Code (the Code), a copy of which can be found on the website of the

Financial Reporting Council, www.frc.org.uk. For the financial year

ended 30 September 2022, and as set out in the following report,

the Company has applied the principles, and complied with all

relevant provisions, of the 2018 version of the Code.

Governance framework and structure

The Board is responsible for promoting the long-term success of the

business for the benefit of shareholders, developing and overseeing

the development of the Group’s strategic aims and objectives

(including monitoring financial and operational performance against

agreed plans and targets), and ensuring an appropriate system of

governance (including a robust system of internal controls and a

sound risk management framework) is in place.

The Group’s business model and strategy (as developed and

approved by the Board) are set out on pages 24 and 25 and pages

32 to 37 respectively, and detail how the Group strategy generates

value in the long term, and our contribution to wider society.

The Board is also responsible for establishing our purpose and

values, and providing leadership in setting the desired culture of the

business and ensuring that this is embedded throughout the Group.

The Board continuously monitors the culture of the Group, through

interactions with team members (during site visits and through

attendance at events such as the Company conference), regular

reports to the Board on team member and stakeholder engagement,

and specific updates on team culture and development from the

Chief Operations Officer and Chief People Officer. The Board

remains satisfied that this approach to monitoring culture is

appropriate and effective, that the key elements of the desired

culture (dynamic, inclusive, positive, fun, high performance) are

embedded across the Group, and that the culture is aligned with

our purpose of bringing families and friends together for affordable

fun and safe, healthy competition.

The Board has formally delegated certain governance responsibilities

to its committees (as outlined in the illustration of our governance

framework below), with those responsibilities set out clearly in the

committees’ terms of reference. The terms of reference and formal

Schedule of Matters Reserved to the Board (which are available to

view on the Group’s website, www.hollywoodbowlgroup.com), as well

as Group policies and procedures which address specific risk areas,

are core elements of the Group’s governance framework. These are

reviewed annually by the Board and Committees to ensure that they

remain appropriate to support effective governance processes.

Matters outside of the Schedule of Matters Reserved or the

Committees’ terms of reference fall within the responsibility and

authority of the CEO, including all executive management matters.

Governance framework

Executive Committee

Composition: Chief Executive Officer, Chief Financial Officer, Chief People Officer, Chief Marketing & Technology Officer, Chief Operations Officer,

President and Managing Director-Canada.

Reporting to the CEO, the Executive Committee is responsible for the day-to-day operations of the Group and implementing the strategy agreed by

the Board. Monitors performance against financial and operational KPIs, and manages risk through the development and implementation of controls,

policies and procedures.

During FY2023, and as indicated in our TCFD statement on page 61, the Board intends to establish a Corporate Responsibility Committee which will

have delegated responsibility for the oversight of the development and monitoring of the Group’s ESG strategy (including climate-related risks and

opportunities). More information on the role and activities of the Corporate Responsibility Committee will be provided in our FY2023 Annual Report.

Audit Committee

Key responsibilities

• Review integrity of annual and interim

financial statements

• Review accounting policies, financial

reporting and regulatory compliance

• Review internal financial controls and

monitor effectiveness of risk management

and internal control systems

• Oversee relationship with external auditor

See Audit Committee report page 91 to 95

Remuneration Committee

Key responsibilities

• Set Remuneration Policy

• Determine Executive Director and senior

management remuneration

• Approve measures and targets for annual

and long-term incentive schemes

• Monitor workforce pay and conditions

Directors’ Remuneration report page 96 to 100

Nominations Committee

Key responsibilities

• Board appointments

• Succession planning

• Promotes diversity and inclusion

• Monitors NED independence and time

commitments

• Reviews size and composition of Board

and Committees

Nomination Committee report page 86 to 90

Board

Key responsibilities:

• Overall leadership of the Group

• Promoting strong corporate governance

• Approving financial statements and

dividend policy

• Set strategy, purpose, values and culture

• Oversight of systems of internal control and

risk management

• Approving, and reviewing performance

against, business plans and budgets

• Approving major contracts & material

capital expenditure

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Individual Board roles and responsibilities

There is a clear division of responsibilities between the Chairman

and Chief Executive Officer. The key responsibilities of members of

the Board are set out below. Biographies of each Director, which

describe the skills and experience he or she brings to the Board,

can be found on pages 78 and 79.

Non-Executive Chairman

Peter Boddy

Peter is responsible for the leadership and overall effectiveness of

the Board and for upholding high standards of corporate governance

throughout the Group and particularly at Board level. In line with the

culture promoted throughout the business, Peter encourages open

debate and discussion in the interaction of the Board, and facilitates

the effective contribution of the Non-Executive Directors.

Chief Executive Officer (CEO)

Stephen Burns

Stephen is responsible for all executive management matters,

including: performance against the Group’s strategy and objectives;

leading the executive leadership team in dealing with the day-to-day

operations of the Group; and ensuring that the culture, values and

standards set by the Board are embedded throughout the organisation.

Senior Independent Director (SID)

Nick Backhouse

Nick provides a valuable sounding board for the Chairman and leads

the Non-Executive Directors’ annual appraisal of the Chairman. Nick

is available to shareholders if they have concerns which are not

resolved through the normal channels of the CEO or Chairman, or

where such contact is inappropriate.

Chief Financial Officer (CFO)

Laurence Keen

Laurence works with the CEO to develop and implement the Group’s

strategic objectives. He is also responsible for the financial performance

of the Group and the Group’s property interests and supports the

CEO in all investor relations activities.

Chief People Officer (CPO)

Melanie Dickinson

Melanie works with the CEO and executive leadership to develop

and implement the Group’s strategic objectives, with a particular

focus on people strategy and team member development. Melanie

is responsible for the Group’s HR function, including pay and reward,

culture, training and team engagement.

Non-Executive Directors

Nick Backhouse, Julia Porter, Claire Tiney and Ivan Schofield

Nick, Julia, Claire and Ivan provide objective and constructive

challenge to management and help to develop proposals on

strategy. They also scrutinise and monitor financial and operational

performance, and support the SLT, drawing on their background and

experience from previous roles.

Executive Committee

Mathew Hart

Chief Marketing and Technology Officer

Top bowling score

151

Mathew joined the Group as Commercial Director in January

2015. He has over 25 years of commercial, marketing,

e-commerce and general management experience across the

travel, leisure and healthcare sectors.

Mathew has held executive positions at Holiday Autos

(Managing Director), Lastminute.com (Group Marketing

Director), Cannons Health Clubs (Group Marketing and

Commercial Director), Nuffield Health (Group Marketing

Director) and Encore Tickets (Group Marketing Director).

Darryl Lewis

Chief Operating Officer

Top bowling score

187

Darryl joined the Group as Regional Director in September

2013. He has over 25 years’ experience in key operational roles

across the leisure sector, including cinemas and theme parks.

Darryl worked in general management, film and content

planning and senior operational support roles in the cinema

industry for 20 years with Showcase Cinemas, Warner Bros,

International Theatres and Vue.

Pat Haggerty

President and Managing Director Canada

Top bowling score

214

Pat joined the Group in May 2022 upon the acquisition of

his business. He has over 30 years of experience in the

bowling industry.

In 2000 Pat became the exclusive Distributor for Brunswick

in Canada and in 2005 he began building and operating his

own bowling centres under the Splitsville brand, growing the

estate to five centres at the time of the acquisition by

Hollywood Bowl Group.

The Board and Executive Committee

The Board and Executive Committee work closely together to

ensure the robust governance of the business and successful

execution of our strategy.

Corporate governance report continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Board independence

The Board consists of eight Directors (including the Chairman), four

of whom are considered to be independent as indicated in the

table below:

Non-Independent

Peter Boddy (Chairman)

Stephen Burns (Chief Executive Officer)

Laurence Keen (Chief Financial Officer)

Melanie Dickinson (Chief People Officer)

(appointed October 2021)

Independent

Nick Backhouse (SID)

Julia Porter (appointed September 2022)

Claire Tiney

Ivan Schofield

Board and Committee attendance

The Board normally meets formally at least nine times per year, with

ad-hoc meetings or calls convened to deal with urgent matters

between formal Board meetings, and did in fact meet on nine

occasions during FY2022, reflecting a return to a more normalised

environment as COVID-19 pandemic-related restrictions were

eased. The impact of the pandemic did continue to be felt however,

and therefore the majority of our meetings during the year were in a

hybrid format allowing individual directors to attend via video

conference where necessary (although our preference remains for

all attendees to meet in person wherever possible). The table below

shows the attendance (in person or by video conference) of each

Director at the formal scheduled meetings of the Board and of the

Committees of which they are a member:

Membership and attendance of Board and Committees

Director Board

Audit

Committee

Remuneration

Committee

Nomination

Committee

Peter Boddy 9/9 N/A N/A 2/2

Stephen Burns* 8/9 N/A N/A N/A

Laurence Keen 9/9 N/A N/A N/A

Melanie Dickinson* 8/9 N/A N/A N/A

Nick Backhouse 9/9 4/4 6/6 2/2

Julia Porter** 1/1 N/A 1/1 N/A

Ivan Schofield 9/9 4/4 6/6 2/2

Claire Tiney 9/9 4/4 6/6 2/2

* Stephen Burns and Melanie Dickinson each missed one Board meeting during the

year due to illness. In both cases, their normal reports were provided to the Board,

and the other attending Executive Directors were briefed on key matters to be discussed.

** Although Julia Porter was appointed as a member of the Audit, Remuneration and

Nominations Committees when she joined the Board on 1 September 2022, Julia was

unable to attend the first meetings of those Committees (held on 9 September 2022)

following her appointment due to prior commitments disclosed to the Company prior

to her being offered the role. We therefore do not believe it is fair or appropriate to

record her as “absent” for those meetings in the table above.

In addition to the Chief Executive and Chief Financial Officer, and in

line with our established practice of all members of the Executive

Committee being invited to attend, the Chief Marketing and

Technology Officer and Chief Operating Officer were present at

Board meetings during the year.

Where Non-Executive Directors are unable to attend a Board or

Committee meeting, they are encouraged to submit any comments

or questions on the matters to be discussed to the Chairman (or

Committee Chair, as appropriate) in advance to ensure that their

views are recorded and taken into account.

All Directors attended a full strategy review session in September

and the Non-Executive Directors remain in regular contact with the

Chairman, whether in face-to-face meetings or by telephone, to

discuss matters relating to the Group without the executives present.

Information and support

Agendas and accompanying papers are distributed to the Board

and Committee members well in advance of each Board or

Committee meeting via an electronic Board paper system for

efficiency and security purposes. These include reports from

Executive Directors, other members of senior management and

external advisers. The Non-Executive Directors are also in regular

contact with the Executive Directors and other senior executives

outside of formal Board meetings.

All Directors have direct access to senior management should they

require additional information on any of the items to be discussed.

The Board and the Audit Committee receive regular and specific

reports to allow the monitoring of the adequacy of the Group’s

systems of internal controls (described in more detail in the Audit

Committee report on pages 94 and 95).

Appointment and election

Each Non-Executive Director is expected to devote sufficient

time to the Group’s affairs to fulfil his or her duties. Their letter of

appointment anticipates that they will need to commit a minimum of

two days per month to the Group, specifying that more time may be

required. This time commitment was reviewed and confirmed as

appropriate by the Nomination Committee during the year, and each

of the Non-Executive Directors has confirmed that they continue to

be able to devote sufficient time to discharge their duties effectively

as a Director of the Company.

The Board is satisfied that each of the Directors continues to

contribute effectively and are committed to their roles. The Board is

therefore pleased to recommend the election of Julia Porter, and the

re-election of all other Directors (with the exception of Claire Tiney

who will step down from the Board at the 2023 AGM) at the Company’s

AGM on 30 January 2023. All of the Directors have a service

agreement or a letter of appointment, with details of their notice

periods and unexpired terms of office set out on page 108.

A formal Non-Executive Director recruitment process was conducted

during the year, and resulted in the appointment of Julia Porter with

effect from 1 September 2022. A detailed summary of the process is

set out in the Nomination Committee report on page 88.

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Activity during the year

The Board approves an annual calendar of agenda items to ensure that all matters are given due consideration and are reviewed at the

appropriate point in the regulatory and financial cycle. The activity of the Board during FY2022 is shown in the table below:

Board agenda for year to 30 September 2022 Oct Dec Jan Mar Apr May Jun Jul Sep

Corporate governance

Directors’ conflicts of interest

Board, Director and Committee performance evaluation

Review Schedule of Matters Reserved to the Board

ESG strategy and updates

Board diversity policy

NED recruitment updates

Board pack contents review

Compliance and risk

Reviewing the principal risks and uncertainties affecting the Group

Risk register and risk heat map

Risk deep dives

Going concern review and approval of long-term Viability statement

Review and approval of Modern Slavery and Human

Trafficking Statement

Review of Gender Pay Gap reporting

Review of Disclosure Policy, Insider List & Share Dealing Code

Group insurances

Operations, customers and suppliers

Reviewing customer experience measures

COVID-19 planning

Utilities review

People

Review results of team engagement survey

Review of team member incentive schemes/employee

assistance programmes

Support centre structure

Employee branding project

Performance

Approval of full-year results, the Annual Report and Accounts,

half-year results, the Notice of Annual General Meeting and dividends

Budget

Review of dividend policy/dividend proposals

Strategy

IT projects update

Brand evolution

Review of progress on strategic projects

Corporate governance report continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Induction

All new Directors appointed to the Board undertake a tailored induction programme, the purpose of which is to help new Directors develop a

sound understanding and awareness of the Group, focusing on its culture, operations and governance structure.

Julia Porter’s induction programme commenced shortly after her appointment to the Board, and, in addition to the provision of relevant

documentation, included a combination of meetings with Executive Committee, senior management and other team members, attendance

at Company events and site visits. Julia’s induction is summarised under key themes below:

Strategy & culture Operations & Company events

Financial reporting

and risk management

Board process and

corporate governance

CEO meeting (covering strategy,

business plan and new business)

Support centre town hall meeting CFO meeting (covering external

auditor relationship, Audit

Committee process, internal

controls, internal audit and

risk management)

Company Secretary meeting

(covering Board procedures,

terms of reference, activity

schedules and governance

policies)

CPO meeting (organisation,

culture and HR policies)

CMIT graduation Head of Finance meeting

(covering non-audit services,

business planning, management

reporting, tax)

CMTO meeting (covering IT and

marketing functions, IR and

communications programme)

Cultural induction Company Conference

Wheel roadshow Centre visits with the COO and

Regional Support Manager

Board strategy day

Performance evaluation

We conduct a formal Board evaluation process each year, including

an assessment of the Board, its Committees and the performance

of individual Directors. In recent years, the Board evaluation has

been in the form of detailed questionnaires (FY2020) and a process

of individual interviews between the Chairman and Board members

and attendees (FY2021). For the FY2022 process, the Board agreed

with the Chairman’s recommendation that the evaluation should be

externally facilitated, recognising the potential benefit of an

independent third party review (particularly given that prior to Julia

Porter’s appointment there had been no changes to our Board

composition since 2017).

Having considered proposals from a number of potential evaluators,

we engaged Parsons Talent Consulting (led by Annabel Parsons) to

facilitate an evaluation of the Board. Although Annabel had

previously provided executive coaching services to Laurence Keen,

the Board agreed that those services would not impact the

independence of the evaluation process.

The external evaluation process is summarised below:

Discovery

• Interviews with Chairman and CEO to identify key areas of culture,

behaviours, process to be reviewed

• Review of governance documentation

• Design questionnaires and interview framework

Data collection

• Questionnaires completed (by Directors and regular Board attendees)

and analysed

• Directors and regular attendees interviewed by Parsons Talent Consulting

• Board meeting observation (October 2022)

Feedback

• Feedback to Chairman

• Feedback to Board meeting (December 2022)

• Discuss findings/recommendations and develop action plan

• Identify development areas for Board and Directors

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Parsons Talent Consulting presented their feedback on the

evaluation to the Board’s meeting on 6 December 2022. Overall the

Board was found to be effective and performing well, with the review

identifying some areas for further consideration to ensure that our

focus and approach continues to evolve in line with the changing

needs of the business and the broader environment (including the

developing governance landscape and investor expectations). We

were pleased to note that the Board had already identified and

begun to take action in a number of specific areas identified for

development (e.g. around succession planning, diversity and risk),

as described elsewhere in this Annual Report.

The Board intends to discuss specific findings in more detail at our

meeting in January 2023 with a view to developing a plan to address

and prioritise agreed areas of focus to ensure any changes in our

approach best serve the needs of the business. These are likely to

include matters such as: reviewing the structure of Board agendas to

ensure we continue to promote the importance of forward looking,

strategic debate; promoting individual Director, and collective Board,

development in topics of increasing importance (such as climate

change, sustainability and ESG more broadly); and continuing our

focus on developing Board and Executive succession plans to

support the future growth of the business, including how we further

diversity in the composition of our Board. We will report on specific

actions identified, and our progress against them, in our 2023

Annual Report

Conflicts of interest and external appointments

In accordance with the Board-approved procedure relating to

Directors’ conflicts of interest, all Directors have confirmed that they

did not have any conflicts of interest with the Group during the year.

Other than Laurence Keen’s appointment as a Non-Executive

Director of Tortilla Mexican Grill plc (disclosed in our FY2021 Annual

Report), none of the Directors took on any new external

appointments during FY2022.

Whistleblowing Policy

The Group has adopted procedures by which employees may, in

confidence, raise concerns relating to possible improprieties in

matters of financial reporting, financial control or any other matter.

The Whistleblowing Policy applies to all employees of the Group,

who are required to confirm that they have read the policy and are

aware of how the procedure operates as part of an ongoing internal

training programme. The Board receives regular updates with

respect to the whistleblowing procedures during the year, with all

incidents reported to the Board having been addressed under

appropriate Group HR policies and procedures.

Stakeholder engagement

Engagement with the workforce

The Chairman and the Non-Executive Directors frequently visit the

Group’s centres, including attending new or refurbished centre

openings, accompanied by regional support managers and centre

management teams. At those centre visits, the Non-Executive

Directors take the opportunity to engage directly with team

members at all levels, allowing them to assess the understanding of

the Group’s culture across the business. Our team members are

encouraged to engage openly with all colleagues, and as a result the

Non-Executive Directors are able to effectively gauge the views of

the workforce.

The Board receives regular presentations from the Chief Operating

Officer on the output and feedback from centre management and

team member listening sessions. The Chairman and Non-Executive

Directors are also invited to attend the annual conference, which

provides further opportunity to engage with team members.

The Board has assessed the various methods by which the

Directors engage with the wider workforce and continues to be of

the view that the combination of the methods described above

ensures that the Board is appropriately informed about, and

understands, workforce views. The Board therefore believes that

this approach appropriately addresses the requirement to engage

with the workforce under provision 5 of the Code and does not

currently intend to adopt one of the three workforce engagement

methods suggested in that provision. The Board will, of course,

continue to keep its stakeholder engagement mechanisms under

review.

Relations with shareholders

As part of its ongoing investor relations programme, the Group aims

to maintain an active dialogue with its shareholders, including

institutional investors, to discuss issues relating to the performance

of the Group. Communicating and engaging with investors means

the Board can express clearly its strategy and performance and

receive regular feedback from investors. It also gives the Board the

opportunity to respond to questions and suggestions.

The Non-Executive Directors are available to discuss any matter

shareholders might wish to raise and to attend meetings with

investors and analysts, as required. Investor relations activity is a

standing item on the Board’s agenda and ensuring a satisfactory

dialogue with shareholders, and receiving reports on the views of

shareholders, is a matter reserved to the Board.

The Company’s AGM will be held on Monday 30 January 2023.

Electronic proxy voting will be available to shareholders through both

our registrar’s website and the CREST service. Voting at the AGM

will be conducted by way of a poll and the results will be announced

through the Regulatory News Service and made available on the

Group’s website.

More information on AGM arrangements is included in the AGM

Notice which will be distributed to shareholders and made available

on the Group’s website.

Activity during the year

The Nomination Committee has met on two occasions during

the year and once since the year end. Committee meetings have

focused on the matters set out in the table below:

Activities of the Committee during the year to 30 September 2022

Board succession

planning

Review of Non-Executive Director

succession planning matrix

Identified need to start process to recruit

Remuneration Committee Chair successor

Reviewed Executive and senior

management succession plans

Board appointments Oversaw search process for new

Non-Executive Director and Remuneration

Committee Chair successor (described

in detail below)

Recommended the appointment of

Julia Porter

Diversity Policy Reviewed and recommended updates

to the Board Diversity Policy

Board and Committee

composition

Review of composition of the Board

Review of Non-Executive

Directors’ independence

Review of time commitment requirements,

including each Director’s external interests

Performance evaluation Review of results from Committee

performance evaluation and discussion

on related actions

Review of the Committee’s terms of reference

Report of the Nomination Committee

Report of the

NominationCommittee

Hollywood Bowl Group plc

Annual report and accounts 2022

Peter Boddy

Nomination Committee Chair

Read full biography on page 78

Nomination Committee

Chair Peter Boddy

Committee members Nick Backhouse

Julia Porter

Claire Tiney

Ivan Schofield

Number of meetings

held in the year 2

1 Appointed as a member of the Committee with effect from 1 September 2022.

Role and responsibilities

The role of the Nomination Committee is set out in its terms

of reference, which were last updated in September 2022

and are available on the Group’s website. The Committee’s

primary purpose is to develop and maintain a formal, rigorous

and transparent procedure for identifying appropriate

candidates for Board appointments and reappointments,

and to make recommendations to the Board.

Specific duties of the Committee include:

• regularly reviewing the structure, size and composition

(including the skills, knowledge, experience and diversity)

of the Board and making recommendations to the Board

with regard to any changes;

• keeping under review the leadership needs of the

organisation, both Executive and Non-Executive, with a

view to ensuring the continued ability of the organisation

to compete effectively in the marketplace; and

• reviewing annually the time commitment required of

Non-Executive Directors.

The Nomination Committee is also responsible for keeping

Board succession plans under review, monitoring

compliance with the Company’s Board Diversity Policy, and

for making recommendations on the composition of the

Board Committees.

Succession planning

As shown in the chart above, a majority of our Non-Executive

Directors (Nick Backhouse, Claire Tiney and I) have served on the

Board for over six years having been appointed in connection with

the Company’s IPO. The Nomination Committee has been conscious

of the need for a managed succession plan to ensure that Nick,

Claire and I do not stand down from the Board at the same time, and

that we have an orderly succession and handover of duties of

Committee Chairs. We have developed a non-executive succession

planning matrix as a tool to support consideration of the timing for

future appointments and to identify key search criteria (including

skills, experience and diversity). The matrix is considered at each

meeting of the Committee, and I maintain a dialogue with all of the

Non-Executives between meetings to ensure we are all aligned with

the plans and timings.

The matrix was discussed at our meeting in November 2021, and in

line with the agreed succession plan, the Committee agreed it would

be appropriate to commence the search for a new Non-Executive

Director, specifically with remuneration committee experience, as a

potential successor to Claire Tiney as Remuneration Committee

Chair. The search process, and subsequent appointment of Julia

Porter, is described in more detail below. We were delighted to

welcome Julia to the Board in September 2022, and her induction

has included a detailed handover process with Claire for the Chair

of Remuneration Committee role which Julia will assume from that

Committee’s first meeting in FY2023. Claire has indicated her

intention to step down from the Board at the 2023 AGM.

The Non-Executive Director succession plan is designed on the

assumption that no Non-Executive Director will serve on the Board

for longer than nine years, but retains flexibility such that tenure

beyond nine years may be accepted if considered to be in the best

interests of the Company at the time, and the overall independence

of the Board is not compromised.

The Committee also reviews Executive and senior management

succession plans, with the aim of ensuring that the Group’s future

leadership will have the qualities necessary to support the delivery

of our strategic objectives. The Executive Team maintains a detailed

succession planning matrix identifying potential internal successors,

and potential gaps in skills and experience which may need to be

addressed through development programmes or external recruitment.

Through the Board’s annual programme of activity, we aim to make

sure that potential executive successors are given opportunities to

meet and present to the Board on their areas of expertise and to

further their development.

Board composition and tenure

Gender Diversity Independence (exc. Chair) NED Tenure (at year end)

Male

Female

Independent

Non-Independent

1 to 3 years

3 to 6 years

6 to 9 years

62+38+M 57+43+M 20+20+60+M

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Appointment of Julia Porter

As noted above, through it’s succession planning process the Committee identified the need to commence a search for a new Non-Executive

Director and Remuneration Committee Chair successor during the year. The table below summarises the process, and key considerations

at each step, in the Non-Executive Director search which ultimately led to the appointment of Julia Porter on 1 September 2022.

Step Key considerations/decisions

Develop role/candidate profile • Remuneration committee experience in a listed company

• Background in marketing

• Digital/customer data experience

• Board gender balance (considering the objectives of the Board Diversity Policy, and aim to maintain and

improve gender balance through Non-Executive Director succession where possible)

Identify and engage external

search agency/service

• Ensuring access to a diverse pool of appropriately experienced candidates, beyond established networks

• Having considered a number of options, the Committee agreed to engage Women on Boards (which is

not an executive search firm, but provides services to support the identification of a diverse pool of

Non-Executive Director candidates) to support the search process. Women on Boards does not have

any other connection with the Company or any individual Directors

Shortlisting candidates

• Women on Boards provided a short list of candidates matching the role/candidate profile

• The Chair and Remuneration Committee Chair reviewed and interviewed shortlisted candidates,

identifying a reduced shortlist of four candidates

• Details on all shortlisted candidates were made available to the Nomination Committee members

Interviews

• The Chair and CEO met the four shortlisted candidates,and recommended a preferred candidate

• Remaining Nomination Committee members interviewed the preferred candidate

Recommendation and

appointment

• Having met and discussed preferred candidates, the members of the Nomination Committee agreed to

recommend to the Board that Julia Porter be appointed

• The Board formally approved Julia Porter’s appointment as a Non-Executive Director and as a member

of the Audit, Remuneration and Nomination Committees, with effect from 1 September 2022

Report of the Nomination Committee continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Diversity

The Committee reviews the Board Diversity Policy on an annual basis and continues to be responsible for monitoring compliance with the

objectives of that Policy. The Policy recognises the benefits of greater diversity, including gender diversity and sets out the Board’s

commitment to ensuring that the Company’s Directors bring a wide range of skills, knowledge, experience, backgrounds and perspectives to

their role. As it is not currently anticipated that the size of the Board will be increased, and therefore all Non-Executive Directors in post at any

one time will also be members of each of the Audit, Remuneration and Nomination Committee, the Policy does not contain any specific

diversity objectives relating to the composition of those committees.

As reported last year, the Policy was amended in the early part of FY2022 to set out (in addition to a requirement that at least two members

of the Board are female) longer-term aspirations to achieve no less than 40 per cent female representation on the Board, and at least one

director being from a non-white ethnic minority background. The policy recognises this balance may not be achieved through our first cycle

of Non-Executive Director succession (i.e. the succession of the Non-Executive Directors appointed at IPO), and that periods of change in

Board composition may result in periods when the desired balance is not met. Progress against that and the other objectives during the year

is set out in the policy is summarised below:

Objective/responsibility Progress/activity in FY2022

Maintain a balance such that:

• At least two members of the Board are female, with a long-term

aspiration to achieve no less than 40 per cent women on the Board

• In the longer-term, at least one director to be from a non-white

ethnic minority background

At least two Directors have been female since Melanie Dickinson’s

appointment to the Board in October 2021. The current proportion

of women on the Board is 38 per cent. This will fall to 29 per cent

when Claire Tiney steps down at the 2023 AGM, but the minimum

two female directors objective will continue to be met. Both the

gender and ethnic diversity objectives will be considered as part of

future Non-Executive recruitment processes in line with our

Non-Executive Director succession planning

In the recruitment process, encourage diversity in the candidates by:

• Only engaging executive search firms that are signatories to the

Executive Search Firms’ Voluntary Code of Conduct

• Ensuring that the search firm engaged is briefed to include an

appropriate emphasis on diversity considerations

• Ensure that Non-Executive Director shortlists include at least

50 per cent female candidates

• Consider candidates who may not have previous Board

experience in executive and Non-Executive Directorship

leadership roles

Women on Boards is not a traditional executive search firm and

therefore is not a signatory to the Voluntary Code of Conduct.

However the Committee felt that Women on Boards was able to

offer the broadest and most diverse pool of candidates.

A suitably detailed briefing was provided to Women on Boards to

ensure that identified candidates met our key criteria. All of the

shortlisted candidates were female (in line with our requirements).

Given the UK Corporate Governance Code requirement that

remuneration committee chairs must have served for at least one

year on a Remuneration Committee, we were not able to consider

candidates with no previous board experience on this occasion

Review regularly the structure, size, and composition of the Board

(including the balance of skills, knowledge, and experience), taking

into account this Policy, and make recommendations to the Board

for any changes

This is an annually recurring item on the Committee’s agenda and

was reviewed by the Committee at its meeting in September 2022

When considering Board succession planning, have regard to the

Board Diversity Policy

The Non-Executive Director succession planning matrix highlights

current diversity statistics on the Board and will continue to be

considered against the Board Diversity Policy

Review the Board Diversity Policy annually, assessing its

effectiveness and recommending any changes to the Board

The Policy was updated as noted above in December 2021 and will

continue to be subject to annual review by the Committee

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Diversity continued

The Committee is aware of the new Listing Rule requirements to

disclose, on a comply explain basis, a statement setting out the

extent to which specific diversity targets have been met, along with

numerical data on the ethnic background and gender identity of the

Board and executive management. These new requirements do not

apply to Hollywood Bowl with respect to FY2022, but appropriate

disclosures will be included (in line with the prescribed format where

appropriate) in our FY2023 annual report. As noted in the table on

page 89, our Board Diversity Policy includes the aspiration to

achieve (in the longer term) the Listing Rule targets relating to female

and ethnic minority representation on the Board. We do not currently

meet the Listing Rule requirement that at least one of the four key

Board roles (Chair, CEO, CFO or Senior Independent Director) be

held by a woman, but this will be considered in the course of our

Non-Executive Director succession planning discussions, and

recruitment processes, going forwards.

Overall gender diversity across the business is good with the

Committee and the Executive team recognising the need to support

the development of women into senior management roles. Diversity

considerations will be a factor of all future Board recruitment

processes in line with the Board Diversity Policy described above.

Annual Review of Board and Committee composition

In accordance with its terms of reference, the Committee reviews

annually the composition of the Board and its Committees, and the

independence of the Non-Executive Directors. The review was

conducted in September 2022, and therefore took account of Julia

Porter’s recent appointment to the Board and each of the Committees.

The Committee is satisfied that each of the Non-Executive Directors

continue to be independent in thought and judgement, and when

assessed against the circumstances likely to impair independence

set out in provision 10 of the Code. Taking account of the continued

independence of the Non-Executive Directors, the Committee is

also satisfied that the composition of the Board and its Committees

remains appropriate, having considered the objectives of the Board

Diversity Policy and the balance of skills, experience and diversity of

thought required for those bodies to operate effectively. All of these

factors will of course continue to be considered through our

succession planning and Board recruitment processes.

Annual evaluation

As described on page 84 the Board evaluation process has been

externally facilitated this year.

In addition to the externally facilitated process, each of the Board

Committees has reviewed its own performance by way of

questionnaires completed by Committee members and other

attendees, with the results discussed at the Committees’ meetings

in December 2022. In general, the evaluation confirmed that the

Nomination Committee operates effectively, with positive

feedback around our approach and Board succession planning.

Peter Boddy

Chair of the Nomination Committee

15 December 2022

Report of the Nomination Committee continued

Hollywood Bowl Group plc

Annual report and accounts 2022

Report of the Audit Committee

Report of the

AuditCommittee

Nick Backhouse

Audit Committee Chair

Read full biography on page 79

Audit Committee

Chair Nick Backhouse

Committee members Julia Porter

Claire Tiney

Ivan Schofield

Number of meetings

held in the year 4

1 Appointed as a member of the Committee with effect from 1 September 2022.

Role and responsibilities

The Audit Committee’s duties and responsibilities are set

out in full in its terms of reference, which were last updated

in September 2022 and are available on the Company’s website.

Specific duties of the Committee include:

• monitoring the integrity of the annual and interim

financial statements;

• keeping under review the internal financial control

systems; and

• overseeing the relationship with the internal and external

audit functions.

Dear shareholders,

On behalf of the Board, I am pleased to present the Audit

Committee report for the year ended 30 September 2022.

As you will have read in the Strategic report, the business has delivered

strong financial performance in FY2022 showing like-for-like

revenue growth on FY2019, which we have agreed is the appropriate

comparator given the impact of the COVID-19 pandemic on our

ability to trade in FY2020 and FY2021. We have benefited from our

focus during FY2021 on strengthening the Company’s cash position

to ensure we were well placed to capitalise on opportunities as the

impact of the pandemic receded, as evidenced in particular by our

successful strategic acquisition of Teaquinn during the year.

The activity of the Committee during FY2022 is described in the

report that follows. Our key role is in monitoring the integrity of

annual and half-year financial statements, and in particular ensuring

that appropriate consideration is given to key accounting

judgements and estimates. In that context, we have reviewed the

accounting treatment for the Teaquinn acquisition, including in

relation to the valuation of the business and property acquired in

Canada. In line with required accounting standards, a full impairment

review has been conducted at the year-end with particular

consideration around the Puttstars and Canadian centres in line with

the key audit matters identified by our external auditor, KPMG.

As noted in the following report, the Committee also reviewed all

correspondence between the Group and the Financial Reporting

Council (FRC) in relation to the FRC’s query following its review of

the FY2021 Annual Report and Accounts.

We conducted our annual review of the effectiveness of the external

audit process during the year as described in more detail on page 95,

and assessed KPMG’s continuing independence. The Committee

continues to be satisfied that KPMG is independent and that the

audit service provided is effective, and has recommended to the

Board that a resolution to reappoint KPMG as our external auditor

be proposed at our 2023 AGM.

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Report of the Audit Committee continued

Other areas covered during the year (which we consider in accordance

with our agreed formal schedule of annual activity) have included a

continued focus on ensuring that internal controls operate effectively,

and are developed and adapted to meet the requirements of the

business. We review the documented internal controls matrix on a

regular basis, and challenge management to gain assurance over its

operation. We have also returned to our usual cycle of updates from

the internal audit function, whose remit has continued to expand to

cover areas such as our Team Member loyalty scheme, staff

expenses and other operational areas.

The Audit Committee has again evaluated its own performance by

way of questionnaires completed by each member of the Committee

and other regular attendees. We discussed the outcome of the evaluation

at our meeting in December 2022, including any points relating to

the Audit Committee that arose from the separate, externally

facilitated, Board evaluation process. I’m pleased to report that the

findings indicate that the Committee continues to operate effectively.

I was delighted to welcome Julia Porter as a member of the Committee

on her appointment as a Non-Executive Director in September.

Other than Julia’s appointment, there were no changes to the

composition of the Committee during the year and we continue to

be comprised wholly of Independent Non-Executive Directors.

We have ensured that internal

controls operate effectively, and are

developed and adapted to meet the

requirements of the business.”

Nick Backhouse, Chair of the Audit Committee

The Board has confirmed that it is satisfied that I have recent and

relevant financial experience as recommended under the Code by

virtue of my qualification as a chartered accountant, my executive

background in finance roles, and my experience as an Audit Committee

Chair and Audit Committee member in other non-executive

positions. As all members of the Committee have experience as

Directors of other companies in the retail and leisure sector, the

Board is also satisfied that the Audit Committee as a whole

continues to have competence relevant to the sector in which

the Group operates.

Nick Backhouse

Chair of the Audit Committee

15 December 2022

Hollywood Bowl Group plc

Annual report and accounts 2022

Meetings and attendees

The Committee’s terms of reference provide that it should meet at least three times per year, and the Committee met on four occasions

during FY2022. The names of the attendees of the Audit Committee meetings are set out in the table on page 91.

The external auditor has the right to attend meetings, and the Chair of the Board, Chief Executive Officer, Chief Financial Officer and Head of

Finance typically attend by invitation. Outside of the formal regular meeting programme, the Audit Committee Chair maintains a dialogue

with key individuals involved in the Group’s governance, including the Chairman, Chief Executive Officer, Chief Financial Officer and the

external audit lead partner.

Activity during the year

The Committee’s activity in FY2022 included the topics set out below:

Activities of the Committee during the year to 30 September 2022 Dec Mar May Sept

Financial statements and reports

Review and recommendation to the Board of full-year results, the Annual Report and Accounts

and half-year results

Going concern assessment

Fair, balanced and understandable assessment

Review of significant accounting policies

Risk register review

External audit

External audit plan and engagement

External auditor reports to the Committee (including full-year reports)

Assessment of external auditor effectiveness

Independence confirmation and review of non-audit services, spend and policy

Internal controls

Annual review of internal audit function requirement

Review of risk management and internal controls

Internal audit reports

Assessment of internal audit effectiveness

Other

Review of results from Committee performance evaluation and discussion of related actions

Review of the Committee’s terms of reference

FRC review letter

TCFD planning and initial assessment of climate risks and opportunities

The key areas of focus of the Committee are discussed in more detail in the rest of this report.

Significant issues considered in relation to the financial statements

Significant issues and accounting judgements are identified by the finance team and the external audit process and are reviewed by the Audit

Committee. The significant issues considered by the Committee in respect of the year ended 30 September 2022 are set out in the table opposite:

Significant issues and judgements How the issues were addressed

Valuation of property, plant and

equipment and right-of-use assets

The Committee reviewed and challenged the calculations and assumptions (including growth rates of

revenue and expenses, and discount rates applied) underlying the trigger tests for impairment of PPE and

ROU assets at the Group’s cash generating units (CGUs). The Committee agreed with management’s

estimates of the recoverable amount of PPE and ROU assets, and that it was appropriate to recognise

an impairment charge of £4.3m (£2.5m for PPE and £1.8m for ROU assets).

Valuation of acquisition related

intangible assets and tangible

assets (property) arising from the

Teaquinn Holdings acquisition

The Committee reviewed the calculation methodology to support the valuation of property and intangible

assets acquired in relation to the Teaquinn acquisition. The Committee was comfortable with the

approach adopted, and agreed with management’s assessment that the valuations adopted were not a

material source of estimation uncertainty as there was no expectation of a material adjustment to the

carrying value in the next financial year.

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Report of the Audit Committee continued

Financial Reporting Council (FRC) letter

In May 2022, Hollywood Bowl Group received a query from the UK

Financial Reporting Council (FRC) following a review of the

September 2021 Annual Report and Accounts. The Committee

reviewed all correspondence between the Group and the FRC, and

also discussed the matters raised with our auditor. This included the

following matters:

1. Presentation of £2,110,000 rent concessions included within

the payment of capital elements of leases in the consolidated

cash flow statement.

Following the FRC review, we believe that it is more appropriate

to recognise the rent concessions within the adjustments to cash

flows from operating activities as an additional disclosure. The

impact of this change is to reduce net cash used in financing by

£2,110,000, and to increase operating profit before working

capital changes by the same amount. There is no adjustment to

the total net change in cash and cash equivalents for the year.

The adjustments are also explained in note 34 to the

Consolidated Financial Statements.

2. Classification of cash flows in relation to the amounts owed

by and to Group companies in the parent Company’s cash

flow statement.

Following the review by the FRC, and in accordance with FRS 102,

we have concluded that it is appropriate to reclassify the

decrease in trade and other payables of £27,574,000 as

financing activities as opposed to their classification in the

September 2021 Annual Report and Accounts as operating

activities.

The FRC’s enquiries, which were limited to a review of the

September 2021 Annual Report and Accounts, are now complete.

The FRC review does not benefit from detailed knowledge of our

business or an understanding of the underlying transactions entered

into, and accordingly the review provides no assurance that the

Annual Report and Accounts is correct in all material respects.

Risk management and internal controls

The Board has overall responsibility for setting the Group’s risk

appetite and ensuring that there is an effective risk management

framework to maintain appropriate levels of risk. The Board has,

however, delegated responsibility for review of the risk management

methodology, and the effectiveness of internal controls, to the Audit

Committee.

The Group’s system of internal controls comprises entity-wide,

high-level controls, controls over business processes and centre-

level controls. Policies and procedures, including clearly defined

levels of delegated authority, have been communicated throughout

the Group. Internal controls have been implemented in respect of

the key operational and financial processes of the business. These

policies are designed to ensure the accuracy and reliability of

financial reporting and govern the preparation of the financial

statements. The Board is ultimately responsible for the Group’s

system of internal controls and risk management and discharges its

duties in this area by:

• holding regular Board meetings to consider the matters reserved

for its consideration;

• receiving regular management reports which provide an

assessment of key risks and controls;

• scheduling annual Board reviews of strategy including reviews of

the material risks and uncertainties (including emerging risks)

facing the business;

• ensuring there is a clear organisational structure with defined

responsibilities and levels of authority;

• ensuring there are documented policies and procedures in place; and

• reviewing regular reports containing detailed information

regarding financial performance, rolling forecasts, actual and

forecast covenant compliance, and financial and non-financial

KPIs.

During FY2022, the Board approved a revised approach to

reviewing key business risks, and established a programme of deep

dives into specific risks being presented at Board meetings

throughout the year. These deep dives assisted in developing a

broader understanding of the risks, any change in risk level, and the

mitigations and controls implemented (and an assessment of their

effectiveness). Specific risks covered by these deep dives in

FY2022 included team member retention, the expansion risk linked

to new centre openings, supply chain and IT security. This revised

approach has proved effective in promoting more effective

discussion and debate around the risks and associated controls, and

has resulted in a number of follow-up actions to improve control

effectiveness as a direct result of challenge from the Non-Executive

Directors.

The process by which the Audit Committee has monitored and

reviewed the effectiveness of the system of internal controls and risk

management during the year has included:

• regularly reviewing the detailed internal controls matrix which

addresses and tracks actions against items such as control

deficiencies identified by KPMG;

• receiving updates from the Group’s internal audit function on

reviews of key processes and controls;

• conducting an annual review of the Group’s control systems and

their effectiveness; and

• reporting and updating the Board on the risk and control culture

within the Group.

Internal audit

The remit of the Group’s internal audit function, which was originally

focused on reviewing compliance with in-centre processes and

controls, has evolved over time and now covers other operational

processes such as supplier onboarding, employee expenses, the

issuance of customer refunds, and any other areas that the Audit

Committee or management identify as being appropriate for review

(often informed by the internal controls matrix). Specific areas

covered in the internal audit function’s reports to the Audit

Committee during FY2022 have included a review of team member

loyalty benefits and expenses (and supporting processes), and

centre-base audits around food hygiene and safety.

With respect to centre audits, the internal audit function performs

regular testing of the detailed processes and controls required to be

applied by centre teams. Internal audit findings are presented to the

relevant Centre Manager, Regional Support Manager, Operations

Director, Chief Operating Officer and the Chief Financial Officer for

review, with a focus on ensuring that centre management and team

members are supported to meet the required standards. Detailed

summaries of centre performance against the required standards

are presented to the Audit Committee twice per year.

Hollywood Bowl Group plc

Annual report and accounts 2022

A member of the internal audit team attends Audit Committee

meetings at least twice per year to provide updates on the activities

of the internal audit function.

As part of its annual programme of activity, the Committee has

reviewed and assessed the internal audit function and has

concluded that the internal audit function continues to operate

effectively. As part of that assessment, the Committee also

considered the other methods by which it receives assurance on

the effectiveness of risk management and internal controls. The

Committee remains satisfied that it receives appropriate assurance

through a combination of the internal audit function’s activities, and

its own review and challenge of the internal control and risk

management systems.

External auditor

The Audit Committee is responsible for overseeing the Group’s

relationship with its external auditor, KPMG. During the year, the

Audit Committee has discharged this responsibility by:

• agreeing the scope of the external audit and negotiating the

remuneration of the external auditor;

• receiving regular reports from the external auditor, including

with regard to audit strategy and year-end audits;

• regularly meeting the external auditor without management

present; and

• assessing the auditor’s independence and the effectiveness

of the external audit process.

External audit effectiveness review

The Committee reviewed the effectiveness of the external audit

process following completion of the FY2021 audit. In accordance

with our established practice, a report was prepared by the finance

team summarising its view of KPMG’s effectiveness based on

interactions during the audit and set out under three headings:

‘Mindset and Culture’; ‘Skills, Character and Knowledge’; and ‘Quality

Control’. The report was discussed at the Committee’s meeting in

March 2022, and in making its assessment the Committee also took

into account its own interactions with the external auditor. The

Committee concluded that the external audit process had been

effective, noting in particular that KPMG continued to demonstrate

an appropriate level of professional scepticism in the audit process,

provided an independent and objective approach. The Committee

also noted improvements in audit processes from the prior year, and

that the audit had been performed in line with the agreed timetable

and with key issues being addressed in an efficient manner.

Non-audit services

The engagement of the external audit firm to provide non-audit

services to the Group can impact on the independence assessment.

The Company has a policy which requires Audit Committee

approval for any non-audit services which exceed £25,000 in value.

The engagement of the external auditor to provide any non-audit

services for less than £25,000 (with the exception of the issuance of

turnover certificates and financial covenant tests, for which authority

is delegated to the Chief Financial Officer to approve where the fee

is less than £5,000 per certificate) must be discussed with the Audit

Committee Chair in advance. All requests to use the external auditor

for non-audit services must be reviewed by the Chief Financial

Officer. The policy recognises that certain non-audit services may

not be carried out by the external auditor.

During the year ended 30 September 2022, KPMG was engaged

to provide permitted non-audit services relating to EBITDA

certification and turnover rent certificates for a fee of £8,000,

representing 2.0 per cent of the total audit fee. The external auditor

is best placed to undertake other accounting, advisory and

consultancy work in view of its knowledge of the business, as well as

confidentiality and cost considerations. This is shown in further

detail in note 7 to the financial statements.

Appointment and tenure

KPMG was first appointed as the Group’s external auditor in 2007.

Stuart Burdass was appointed as the lead audit partner for the

FY2021 audit following the retirement of Peter Selvey (the previous

lead audit partner), with the intention that Matt Radwell would

become lead audit partner to the Group on his appointment as a

KPMG audit partner. Matt is therefore the lead audit partner

for FY2022.

The Audit Committee continues to be satisfied with the scope of the

external auditor’s work and the effectiveness of the external audit

process, and that KPMG continues to be independent and objective.

The Committee is therefore pleased to recommend that KPMG be

reappointed as the Group’s auditor at the 2023 AGM.

During the year, the Committee considered the appropriate timing

for putting the audit out to tender. The Committee is mindful of the

requirement to tender the audit no later than FY2026 and of the

benefits of audit rotation, but given the Committee’s assessment of

KPMG’s performance to date and also the recent rotation of the lead

audit partner, it has concluded that there was no need to conduct an

audit tender at this time.

Nick Backhouse

Chair of the Audit Committee

15 December 2022

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Claire Tiney

Remuneration Committee Chair

Read full biography on page 79

Report of the Remuneration Committee

Report of the

Remuneration Committee

Dear shareholders,

On behalf of the Remuneration Committee, I am pleased to

present the Directors’ Remuneration Report for the year ended

30 September 2022, which will be my last before I step down from

the Board at the AGM on 30 January 2023. It has been a pleasure

to serve on the Company’s Board, and as Chair of the Committee,

since the IPO in 2016, and I am very grateful to my colleagues, and

to our shareholders, for their support with respect to remuneration

matters in that period. I’m delighted that we were able to appoint

Julia Porter as a Non-Executive Director and my successor as

Remuneration Committee Chair, and have enjoyed a comprehensive

handover to her over recent months, ahead of her taking over the

role of Committee Chair in 2023.

We were very pleased that our revised Directors’ Remuneration

Policy (the Policy), which was set out in our 2021 Annual Report,

was approved by shareholders at our 2022 AGM with a very high

percentage of votes cast in favour of the Policy. This report,

prepared in accordance with The Large and Medium-sized

Companies and Groups (Accounts and Reports) (Amendment)

Regulations 2013, The Companies (Directors’ Remuneration Policy

and Directors’ Remuneration Report) Regulations 2019, the FCA

Listing Rules and the Code, sets out how the Policy has been applied

during FY2022. The report consists of:

• my annual statement as the Chair of the Remuneration Committee;

• the Annual report on remuneration, which sets out payments

made to the Directors and details the link between Company

performance and remuneration for FY2022. The Annual report on

remuneration is subject to an advisory shareholder vote at the

2023 AGM; and

• a summary of the Policy, including how the Committee intends to

implement it in 2023.

Hollywood Bowl Group plc

Annual report and accounts 2022

Remuneration Committee

Chair Claire Tiney

Committee members Julia Porter

Nick Backhouse

Ivan Schofield

Number of meetings

held in the year 4

1 Appointed as a member of the Committee with effect from 1 September 2022.

Role and responsibilities

The role of the Remuneration Committee is set out in its

terms of reference, which are available on the Group’s

website. The Committee’s primary purpose is to develop

and determine the Group’s Remuneration Policy for the

Executive Directors, Chairman and senior management.

Specific duties of the Committee include:

• setting the Remuneration Policy for Executive Directors,

Chairman and senior management;

• determining individual pay awards within the terms of the

agreed Policy; and

• ensuring that the Remuneration Policy operates to align

the interests of management with those of shareholders.

The Committee also has responsibility for reviewing pay and

conditions across the Group, and the alignment of

incentives and rewards with culture.

Performance in FY2022 and remuneration outcomes

As detailed in the Strategic report, the Group delivered a very strong

year of financial and operational performance, with like-for-like

revenue growth (versus FY2019) of 28.3 per cent and Group

adjusted EBITDA pre-IFRS 16, of £60.6m. We have successfully

managed post-pandemic recruitment challenges, and are now

benefiting from stronger and more stable centre management

teams, delivering continually strong operational performance, and

meeting our non-financial benchmarks (including overall customer

satisfaction (OSAT) and waste recycling). As set out earlier in this

Annual Report, the Group will be paying a final ordinary dividend of

8.82 pence per share, the highest final ordinary dividend per share

the Group has delivered to shareholders since IPO. We also

expanded into our first international market with the acquisition of

Teaquinn, which includes Canadian ten-pin bowling operator

Splitsville, in May 2022.

Across the wider workforce, we have awarded pay increases to

hourly paid and salaried team members, ensuring that we continue

to offer competitive pay levels aimed at recruiting and retaining key

talent. The average rate of hourly pay increases across the Group

was 8.7 per cent (on a weighted average basis), and for salaried

team members was 7.5 per cent, resulting in an overall average pay

increase for the wider workforce of 7.6 per cent. We also continue to

offer centre management bonus schemes, under which our team

members are incentivised on a similar basis to our senior

management and Executive Directors, and introduced a Company

electric vehicle scheme which operates by way of pre-tax salary

sacrifice with an annual Company contribution. The Group was also

pleased to support its team members with a cost of living payment

in the second half of the year which totalled £0.6m.

The FY2022 bonus opportunity for the Executive Directors was up

to 100 per cent of salary, with 80 per cent based on an adjusted

EBITDA pre-IFRS 16 target, and the remaining 20 per cent split

equally on performance against the non-financial KPIs of overall

customer satisfaction (OSAT) and waste recycling. A detailed breakdown

of the measures is set out on page 101. All targets were met in full,

resulting in a bonus outturn of 100 per cent of salary for each of the

Executive Directors. This is aligned with the rest of the workforce

where very strong financial and operational performance in FY2022

has seen increased bonus out-turns across the Group. This follows

two years of zero bonus being payable to Executive Directors.

Our Executive Directors each received an award under the Long

Term Incentive Plan (LTIP) in February 2020, prior to the share price

fall in March 2020 due to COVID-19, meaning there are no windfall

gain, which vests by reference to the Group EPS performance in

FY2022. Our strong performance in FY2022 resulted in an EPS

out-turn of 21.91 pence per share, outperforming the target for

maximum vesting of 18.49 pence per share, and therefore the

awards will vest in full in February 2023.

The Committee considered the formulaic outcomes for the annual

bonus and LTIP in the context of overall business performance and

the shareholder experience, and in particular took into account the

very strong financial performance, the recommencement of dividend

payments, positive customer engagement, wider workforce pay, and

the successful completion of our strategic acquisition of Teaquinn.

Taking all of this into account, the Committee determined that the

outcomes are appropriate and that no discretion would be applied.

The Committee can confirm that the Remuneration Policy operated

as intended in the year under review.

FY2023 remuneration

Salary and benefits

The Committee reviewed Executive Director salaries during the

year, mindful of the fact that the scope of the role and responsibilities

of our Executive Directors has increased in recent years, particularly

with the international expansion through the Teaquinn acquisition

and the addition of the Puttstars brand in the UK. The Committee

also took into account the performance of the Group, as set out

earlier in this letter, and the performance of the Executive Directors.

Whilst not a primary consideration, the Committee was also mindful

of the fact that the base salary levels for each of our Executive

Directors were around or below lower quartile when compared with

relevant comparator groups. In our discussions, the Committee was

mindful of the need to ensure that any decisions relating to

Executive Director pay were taken in the context of the experience

of our wider workforce. As noted above, the overall average pay

increase for the wider workforce in FY2022 was 7.6 per cent. The

Committee also recognises the need to continue to motivate and

retain our high-performing team of Executive Directors to support

the delivery of our strategy and generation of shareholder value.

Having taken these factors into account, the Committee therefore

approved base salary increases of 7.5 per cent for the CEO and

CPO, and an 8.5 per cent increase for the CFO, recognising his

specific focus on the Canadian business, excellent performance in

the role and the positioning of his salary against the market. The

resulting salaries all remain below the FTSE SmallCap median.

FY2023 bonus

The maximum bonus opportunity for Executive Directors in FY2023

will continue to be 100 per cent of base salary. As in FY2022, bonus

outcomes will be determined based on achievement of a scorecard

of financial and strategic targets, with 80 per cent based on Group

adjusted EBITDA pre-IFRS 16 and 20 per cent based on non-

financial measures. In line with our usual practice, actual targets,

performance against them, and the resulting awards will be

disclosed in the FY2023 Annual Report.

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Report of the Remuneration Committee continued

FY2023 LTIP

Given the increased size and complexity of the business and

performance as set out earlier in this letter, to ensure that total

remuneration packages for the CEO and CFO remain competitive

against the market, and to create further alignment with shareholder

interests, the Committee intends to grant LTIPs to the CEO and CFO

in FY2023 with a maximum opportunity of 150 per cent of salary.

This award level is within the maximum permitted under our

shareholder approved Remuneration Policy. The Committee had

intended to grant awards at 150 per cent of salary in FY2022 to

reflect the strong performance of the business and individuals, but

both the CEO and CFO requested that this was delayed for a year

due to the uncertainty presented by the COVID-19 pandemic. It is

intended that the maximum LTIP opportunity for the CPO will

continue to be 100 per cent of salary. In line with our normal practice,

the awards will vest three years after grant, and will be subject to a

further two-year holding period. The Committee will continue to

ensure that the targets are stretching and that they incentivise the

long-term sustainable success of the Group – the proposed

increase to LTIP award levels will ensure executives are

appropriately rewarded for the delivery of our long-term strategic

objectives – and performance will be assessed in the round to

ensure that the outcomes are fair and a holistic reflection of the

performance achieved by the Group and the Executive Directors.

The total remuneration package remains below the FTSE SmallCap

median level.

The performance measures for the LTIP awards are set out in detail

in the Annual report on remuneration on page 112.

Stakeholder engagement

The Committee is regularly updated on pay and benefits

arrangements for team members across the Group, and takes into

account colleague remuneration as part of its review of executive

remuneration. Engagement with the workforce on remuneration

matters, including to explain how Executive pay is aligned with wider

Company pay policy, is conducted through engagement sessions

led by the CEO and COO and the wider team engagement survey.

I am always happy to engage with shareholders and investors on

remuneration matters, in particular to ensure transparency around

our decision-making on Executive pay. I have been very pleased with

the level of engagement with our significant shareholders during the

course of the year, and the support shown for our proposals.

Annual General Meeting

On behalf of the Board, I would like to thank shareholders for their

continued support. I am always happy to hear from the Company’s

shareholders. You can contact me via the Company Secretary if you

have any questions on this report or more generally in relation to the

Group’s Remuneration Policy.

Claire Tiney

Chair of The Remuneration Committee

15 December 2022

Hollywood Bowl Group plc

Annual report and accounts 2022

As part of its oversight of the application of the Remuneration Policy during the year, the Committee has considered the factors set out in provision 40 of the

Code. In our view, the proposed Policy addresses those factors as set out below:

Factor How addressed

Clarity – remuneration arrangements

should be transparent and promote

effective engagement with shareholders

and the workforce.

We aim to ensure that our remuneration disclosures are clear and transparent.

Remuneration outcomes are set out in a consistent format each year, with detail on

bonus and LTIP performance measures and targets. Our full Remuneration Policy was

set out in our FY2021 Annual Report (which is available on the Company’s website, with

a summary of key points set out on pages 109 to 111 of this report).

Simplicity – remuneration structures

should avoid complexity, and their rationale

and operation should be easy to understand.

Our remuneration structure is comprised of fixed and variable remuneration, with the

performance conditions for variable elements clearly communicated to, and

understood by, participants. The LTIP provides a clear mechanism for aligning

Executive Director and shareholder interests, and the diversity of measures in both the

annual bonus and LTIP scheme allows for clear alignment with our strategic pillars,

rather than reliance solely on earnings-based measures. Non-financial measures within

the annual bonus also ensure our Executive Directors and wider team members are

incentivised based on key operational KPIs across the Group.

Risk – remuneration arrangements should

ensure reputational and other risks from

excessive rewards, and behavioural risks

that can arise from target-based incentive

plans, are identified and mitigated.

The Remuneration Policy and relevant scheme rules provide discretion to the

Committee to reduce award levels, and awards are subject to malus and clawback

decisions. The Committee also has overriding discretion to reduce awards where

out-turns are not a fair and accurate reflection of business performance.

Predictability – the range of possible

values of rewards to individual Directors,

and any other limits or discretions, should

be identified and explained at the time of

approving the policy.

The Remuneration Policy outlines the threshold, target and maximum levels of pay that

Executive Directors can earn in any given year over the three-year life of the approved

Remuneration Policy.

Proportionality – the link between

individual awards, the delivery of strategy,

and the long-term performance of the

Company should be clear. Outcomes

should not reward poor performance.

Variable, performance-related elements represent a significant proportion of the total

remuneration opportunity for our Executive Directors. The Committee considers the

appropriate financial and non-financial performance measures each year to ensure

that there is a clear link to strategy. The Committee is able to exercise discretion to

reduce awards if necessary to ensure that outcomes are a fair and accurate reflection

of holistic business performance.

Alignment to culture – incentive schemes

should drive behaviours consistent with

company purpose, values and strategy.

The Committee seeks to ensure that performance measures under the annual bonus

scheme incentivise behaviours consistent with the Group’s culture, purpose and values.

The LTIP clearly aligns the Executive Directors’ interests with those of shareholders,

ensuring a focus on delivering against strategy to generate long-term value for shareholders.

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Report of the Remuneration Committee continued

The Remuneration Committee met on four occasions during the year and has met three times since the year end, and discussed the topics

set out in the table below:

Activities of the Committee during the year to 30 September 2022 Oct Nov Mar Sep

Review of FY2021 performance and the formulaic bonus outcome, and approval of Directors’ bonuses

for FY2021

Review/approval of Directors’ bonus KPIs/targets for FY2022 and FY2023 pay

Agreeing approach to FY2023 bonus targets

Proposed 2022 LTIP performance targets

Share plan awards and vestings

Review of Directors’ Remuneration Report (including to ensure compliance with the Remuneration

Reporting Regulations)

Consideration of engagement and feedback from shareholders

Consideration of pay and conditions across the Group

Review of 2022 AGM and proxy advisory comments

Review of the Committee’s terms of reference

Discussion of Committee evaluation results

100

Hollywood Bowl Group plc

Annual report and accounts 2022

Annual report on remuneration

Single total figure of remuneration (audited)

Executive Directors (audited)

The table below sets out the single total figure of remuneration and breakdown for each Executive Director in respect of FY2022. Comparative

figures for FY2021 have been provided. Figures provided have been calculated in accordance with the UK disclosure requirements.

Name

Salary

£’000

Benefits

£’000

Pension

£’000

Bonus

£’000

LTIP

£’000

Total

£’000

Total

fixed

pay

£’000

Total

variable

pay

£’000

Stephen Burns

2022 412.3 30.0 20.6 412.3 263.1 1,138.3 462.9 675.4

2021 392.7 2.5 19.6 — — 414.8 414.8 —

Laurence Keen

2022 267.8 27.0 13.4 267.8 170.9 746.9 308.2 438.7

2021 255.0 2.3 12.7 — — 270.0 270.0 —

Melanie Dickinson

2022 151.4 5.5 8.0 160.0 92.2 417.1 164.9 252.2

2021 — — — — — — — —

1 Benefits include private medical insurance, car allowance and electric vehicle salary sacrifice (introduced with effect from 1 October 2021).

2 Melanie Dickinson was appointed as a Director with effect from 21 October 2021. Therefore, only her fixed remuneration from that date is shown in the table above, with the bonus

and LTIP shown at their full value for transparency.

Non-Executive Directors (audited)

The table below sets out the single total figure of remuneration and breakdown for each Non-Executive Director:

2022 2021

Name

Fees

£’000

Taxable

benefits

£’000

Total

£’000

Fees

£’000

Taxable

benefits

£’000

Total

£’000

Peter Boddy – Chairman 135.3 — 135.3 121.6 — 121.6

Nick Backhouse – Senior Independent Director; Chair

– Audit Committee 53.6 — 53.6 48.3 — 48.3

Julia Porter

4.1 — 4.1 — — —

Ivan Schofield 47.8 — 47.8 42.9 — 42.9

Claire Tiney – Chair – Remuneration Committee 48.6 — 48.6 43.6 — 43.6

1 Julia Porter was appointed as a Director with effect from 1 September 2022. Therefore, only her remuneration from that date is shown in the table above.

2 Non-Executive Directors took a 20 per cent pay cut during specific months in FY2021 as the business was in lockdown, hence the increase year-on-year is shown as over 11 per cent.

The actual salary increase between FY2021 and FY2022 was 2 per cent as set out in the FY2021 Annual report on remuneration.

Bonus awards (audited)

Each of the Executive Directors was eligible to earn a bonus in respect of FY2022 of up to 100 per cent of base salary. 80 per cent of the

award was based on an EBITDA pre-IFRS 16 targets, with the remaining 20 per cent split equally between the non-financial key performance

indicators of average OSAT scores for the year, and the percentage of waste sent to recycling. The average OSAT and waste recycling

targets are in line with the wider employee population. Details of the measures, and performance against them, is set out in the table below:

Name Weighting

Performance targets

Actual % vesting

% of max

bonus

opportunity

Threshold

(25% of max)

On target

(50% of max) Maximum

Group adjusted EBITDA pre-IFRS 16 80% £38.99m £41.04m £43.09m £60.6m 100% 80%

Average Group OSAT 10% — — 59% 59.3% 100% 10%

Waste recycling 10% — — 70% 77.7% 100% 10%

Total 100% 100% 100%

Further context on performance in the year is set out in the Annual Statement from the Remuneration Committee Chair.

As a result, total bonuses awarded to the Executive Directors in respect of FY2022 and reflected in the single total figure of remuneration

table above, was £412,335 to Stephen Burns, £267,750 to Laurence Keen and £160,000 to Melanie Dickinson.

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Governance report

Annual report on remuneration continued

Long Term Incentive Plan vesting of 2020 awards

The LTIP values included in the single total figure of remuneration table for 2022 relate to the 2020 LTIP award. Awards with a face value of

100 per cent of salary were granted to the Executive Directors on 6 February 2020 and, following a three-year performance period ending on

30 September 2022, are due to vest on 6 February 2023. The performance targets are set out below:

EPS for the final year of the performance period Vesting

17.26 pence 25%

17.26 pence – 18.49 pence Vesting determined on a straight-line basis

18.49 pence 100%

Actual performance achieved was 21.91 pence (audited); therefore, based on performance at the end of the vesting period, the awards will

vest in full. No discretion was used by the Remuneration Committee, as the outcome is considered appropriate in the context of overall business

performance, further detail of which is set out in the Annual Statement from the Remuneration Committee Chair. The values included in the

single figure table have been calculated based on the average mid-market closing price of a share for each dealing day in the three-month

period to 30 September 2022 (196.2 pence). No amount of the value disclosed in the single figure table above is attributable to share price

appreciation. The actual value that vests, based on the closing price on the vesting date, will be disclosed in next year’s Annual Report.

Long-term incentives awarded in 2022 (audited)

Awards were made under the LTIP scheme on 4 February 2022. The following share awards were granted in the form of nil cost options in

accordance with the Remuneration Policy:

Director Position Basis of award Face value

Number of share

awards granted

Stephen Burns Chief Executive Officer 100% of salary £412,335 164,015

Laurence Keen Chief Financial Officer 100% of salary £267,750 106,503

Melanie Dickinson Chief People Officer 100% of salary £160,000 63,643

A five-day average share price prior to grant of 251.4 pence was used to calculate the number of awards granted.

The following performance targets apply to the FY2022 LTIP awards, and are as disclosed in the 2021 Directors’ Remuneration Report.

Measure Description Weighting Threshold Target

Max

Adjusted EPS

Adjusted EPS for the final year of the

performance period – FY2024

70% 14.65 pence

(25% payout)

15.42 pence

(62.25% payout)

16.19 pence

(100% payout)

Return on centre

invested capital

20% return on all centre invested

capital (refurbs and new centres)

10% N/A 20% return

(100% payout)

N/A

Emissions ratio for

Scope 1 and Scope 2

Intensity ratio (IR) of under 100 10% N/A IR under 100

(100% payout)

N/A

Team member

development

5% of team members progressed

through internal development

programmes

10% N/A 5%

(100% payout)

N/A

1 Adjusted EPS is defined as stated in the Group’s accounts and is subject to such adjustments as the Board, in its discretion, determines are fair and reasonable.

2 Vesting on a straight-line basis between threshold and target, and target and max performance.

Payments to past Directors (audited)

No payments were made to past Directors in the year under review.

Payments for loss of office (audited)

No payments were made for loss of office in the year under review.

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Statement of Directors’ shareholdings and share interests (audited)

The number of shares of the Company in which current Directors had a beneficial interest, and details of long-term incentive interests as at

30 September 2022, are set out in the table below:

Outstanding scheme interests 30 September 2022 Beneficially owned shares

Total of all scheme

interests and

shareholdings at

30 September

2022

Unvested LTIP

interests subject

to performance

conditions

Scheme interests

not subject to

performance

measures

Vested but

unexercised

scheme

interests

Total shares

subject to

outstanding

scheme interests

As at

1 October

2021

As at

30 September

2022

Executive Directors

Stephen Burns

463,829 2,515 105,507 571,851 3,175,049 3,175,049 3,746,900

Laurence Keen

301,187 2,515 71,744 375,446 1,368,348 1,368,348 1,743,794

Melanie Dickinson 168,772 1,898 46,423 217,093 589,591 589,591 806,684

Non-Executive Directors

Peter Boddy

— — — — 874,839 874,839 874,839

Nick Backhouse — — — — 18,784 18,784 18,784

Julia Porter — — — — — — —

Ivan Schofield

— — — — 154,691 166,691 166,691

Claire Tiney — — — — 7,021 7,021 7,021

1 Sharesave awards that have not vested, and deferred bonus shares subject to holding period.

2 LTIP awards that have vested but remain unexercised.

3 Share interests of Stephen Burns, Laurence Keen, Peter Boddy and Ivan Schofield include shares held by their spouses.

Directors’ share ownership guidelines (audited)

Shareholding requirements in operation at the Company are currently 200 per cent of base salary. Executive Directors are required to build

their shareholdings over a five-year period from appointment. Non-Executive Directors are not subject to a shareholding requirement. Upon

departure, individuals will be required to retain 100 per cent of their shareholding requirement (or full actual holding if lower) for a period of

two years post cessation. This post-employment shareholding requirement applies to shares granted under incentives from February 2021.

Director

Shareholding

requirement

(percentage of

salary)

Current

shareholding

(percentage

of salary)

Beneficially

owned shares

held as at

30 September

2020

Shareholding

requirement met?

Stephen Burns 200 1,443% 3,175,049 Ye s

Laurence Keen 200 958% 1,368,348 Yes

Melanie Dickinson 200 690% 589,591 Yes

1 The share price of 187.4 pence as at 30 September 2022 has been used to calculate the current shareholding as a percentage of salary. Unvested LTIP shares and options do not

count towards satisfaction of the shareholding guidelines.

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Governance report

Annual report on remuneration continued

Executive Directors’ share plan interest movements during FY2022

(audited)

The tables below set out the Executive Directors’ interests in deferred shares under the annual bonus plan, and their interests in the LTIP

scheme and the Sharesave scheme.

Awards under the Sharesave scheme are not subject to any performance conditions (other than continued employment on the vesting date).

Deferred shares are not subject to any performance conditions or continued employment. The LTIP awards are subject to performance

conditions as set out in the table on page 102.

Face values for LTIP awards are calculated by multiplying the number of shares granted during FY2022 by the average share price for the

five business days preceding the awards. Face value for the Sharesave scheme is calculated by reference to the exercise price of options

granted in 2022. Deferred shares were acquired on behalf of the Executive Directors by the Group’s broker, Investec, which is provided with

the appropriate post-tax value of the deferred element of bonus awards to effect the acquisition. Whilst legal title was held by the Executive

Directors during the two-year holding period so that dividends were received on them, these shares were unable to be sold.

Date of award

Vesting,

exercise or

release date

No. of shares/

awards held as

at 1 October

2021 Awarded

Exercised/

vested Lapsed

No. of shares/

awards held

as at

30 September

2022

Grant/award

price in pence

(exercise price

for Sharesave)

Face value

of awards

granted

during

FY2022

Stephen Burns

Deferred shares 07/01/2020 07/01/2022 18,312 — 18,312 — — — —

LTIP 27/02/2017 27/02/2020 159,744 — 159,744 — — — —

06/02/2018 06/02/2023 105,507

1, 2

— — — 105,507 — —

06/02/2020 06/02/2023 134,118 — — — 134,118 — —

22/07/2021 22/07/2024 165,696 — — — 165,696 — —

04/02/2022 04/02/2025 — 164,015 — — 164,015 251.4 £412,335

Sharesave 01/02/2019 01/02/2022 2,378 — — 2,378 — — —

05/02/2020 01/02/2023 1,250 — — 1,250 — —

08/02/2022 01/02/2025 — 1,265 — — 1,265 284.5 £3,599

Laurence Keen

Deferred shares 07/01/2020 07/01/2022 11,872 — 11,872 — — — —

LTIP 27/02/2017 27/02/2020 108,626 — 108,626 — — — —

06/02/2018 06/02/2023 71,744

1, 2

— — — 71,744 — —

06/02/2020 06/02/2023 87,090 — — — 87,090 — —

22/07/2021 22/07/2024 107,594 — — — 107,594 — —

04/02/2022 04/04/2025 — 106,503 — — 106,503 251.4 £267,750

Sharesave

01/02/2019 01/02/2022 2,378 — — 2,378 — — —

05/02/2020 01/02/2023 1,250 — — — 1,250 — —

08/02/2022 01/02/2025 — 1,265 — — 1,265 284.5 £3,599

Melanie

Dickinson

LTIP 27/02/2017 27/02/2020 70,287 — 70,287 — — — —

06/02/2018 06/02/2023 46,423

1, 2

— — — 46,423 — —

06/02/2020 06/02/2023 47,028 — — — 47,028 — —

22/07/2021 22/07/2024 58,101 — — — 58,101 — —

04/02/2022 04/02/2025 — 63,643 — — 63,643 251.4 £160,000

Sharesave 01/02/2019 01/02/2022 2,378 — — 2,378 — — —

08/02/2022 01/02/2025 — 1,898 — — 1,898 284.5 £5,400

1 Vested but unexercised.

2 A two-year holding period (from February 2021) applies to these awards, and their release is subject to a requirement to remain in service until 6 February 2023.

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Annual report and accounts 2022

Executive Directors’ share plan interest movements during FY2022 (audited) continued

LTIP awards vest on the basis of adjusted EPS performance measured in the final year of the performance period. Vesting of the awards

made in 2020 and 2021 shown in the table on page 104 will be based on the following adjusted EPS targets (as noted on page 102, the EPS

target for the award made in 2020 has been met, and therefore the awards will vest in full on 6 February 2023):

Award year

Vested level

25% Straight line between 25% and 100% 100%

2020 17.26 pence 17.26 pence – 18.49 pence 18.49 pence

2021 13.91 pence 13.91 pence – 15.37 pence 15.37 pence

The scorecard of targets that apply to the award made in 2022 are shown on page 102.

Chief Executive Officer historical remuneration

The table below sets out the total remuneration delivered to the Chief Executive Officer over the last six years since IPO, valued using the

methodology applied to the single total figure of remuneration. The Remuneration Committee does not believe that the remuneration paid in

earlier years as a private company bears any comparative value to that paid in its time as a public company and, therefore, the Remuneration

Committee has chosen to disclose remuneration only for the six most recent financial years:

Chief Executive Officer 2022 2021 2020 2019 2018 2017

Total single figure (£’000) 1,138.3 414.8 623.2 1,061.1 536.1 514.6

Annual bonus payment level achieved

(percentage of maximum opportunity) 100% 0% 0% 74.3% 68.1% 100%

LTIP vesting level achieved (percentage

of maximum opportunity) 100% 0% 81% 100% N/A N/A

It should be noted that the Company only introduced the LTIP on admission to the London Stock Exchange in 2016.

Performance graph

The graph below shows the total shareholder return (TSR) performance of an investment of £100 in Hollywood Bowl Group plc’s shares from

its listing in September 2016 to the end of the period, compared with £100 invested in the FTSE Small Cap Index over the same period. The

FTSE Small Cap Index was chosen as a comparator because it represents a broad equity market index of which the Company is a constituent.

220

200

180

160

140

120

100

30/09/2016 30/09/2017 30/09/2018 30/09/2019

FTSE Small CapHollywood Bowl

30/09/2020 30/09/2021 30/09/2022

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Annual report and accounts 2022

Governance report

Annual report on remuneration continued

Change in remuneration of Directors compared to Group employees

The table below sets out the percentage change in salary, taxable benefits and annual bonus set out in the single figure of remuneration

tables (on page 101) paid to each Director in respect of FY2021 and FY2022, compared to that of the average change for employees in the

Group as a whole.

% increase in element between FY2020 and FY2021 % increase in element between FY2021 and FY2022

Salary and fees Taxable benefits Annual bonus Salary and fees Taxable benefits Annual bonus

Executive Directors

Stephen Burns 0.2 (9.1) — 5.0 1,100 100

Laurence Keen 0.2 (2.4) — 5.3 1,074 100

Melanie Dickinson N/A N/A N/A N/A N/A N/A

Non-Executive Directors

Peter Boddy (1.6) — — 11.3 N/A N/A

Nick Backhouse (1.6) — — 11.1 N/A N/A

Julia Porter N/A N/A N/A N/A N/A N/A

Ivan Schofield (1.6) — — 11.3 N/A N/A

Claire Tiney (1.6) — — 11.5 N/A N/A

All Group employees

4.2 (2.5) 496.7 10.9 (25.0) 392.4

1 Non-Executive Directors took a 20 per cent pay cut during specific months in FY2021 as the business was in lockdown, hence the increase year-on-year is shown as over 11 per cent.

The actual salary increase between FY2021 and FY2022 was 2 per cent as set out in the FY2021 Annual report on remuneration.

2 Reflects the change in average pay for all Group employees employed in both FY2021 and FY2022.

The increase in Executive Director taxable benefits reflects the introduction of a car allowance and electric vehicle scheme with effect from

1 October 2021, as described in the notes to the single figure table on page 101.

CEO pay ratio

The table below shows the ratio between the single total figure of remuneration of the CEO for FY2022 and the lower quartile, median and

upper quartile pay of UK employees.

Methodology

25th percentile

ratio

50th percentile

ratio

75th percentile

ratio

Year ended 30 September 2022 Option A 68 63 41

Year ended 30 September 2021 Option A 27 25 22

Year ended 30 September 2020 Option A 50 44 38

Total UK employee pay and benefits figures used to calculate the CEO pay ratio

25th

percentile pay

£000

Median

pay

£000

75th

percentile pay

£000

Salary 15.8 17.3 24.6

Total employee pay and benefits 16.7 18.2 27.8

Notes

1. The Group has chosen the Option A methodology to prepare the CEO pay ratio calculation, as this is the most statistically robust method, and is in line with the general preference

of institutional investors.

2. As ratios could be unduly impacted by joiners and leavers who may not participate in all remuneration arrangements in the year of joining and leaving, the Committee has

excluded any employee not employed throughout the financial year.

3. Employee pay data is based on full-time equivalent (FTE) pay for UK employees as at 30 September 2022. For each employee, total pay is calculated in line with the single figure

methodology (i.e. fixed pay accrued during the financial year and the value of performance-based incentive awards vesting in relation to the performance year). Leavers and

joiners are excluded. Employees on maternity or other extended leave are included pro-rata for their FTE salary, benefits and short-term incentives. No other calculation

adjustments or assumptions have been made.

4. CEO pay is per the single total figure of remuneration for 2022, as set out in the table on page 105.

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Annual report and accounts 2022

CEO pay ratio continued

Supporting information for the CEO pay ratio

The calculations used to determine these figures are reflective of the Group’s pay proposition across the workforce, as all pay elements have

been included to ensure equal comparisons. The Committee believes that the pay ratio is consistent with the pay, reward and progression

policies across the Group. The increase in the pay ratio between 2021 and 2022 reflects Company performance, as the CEO’s remuneration

is heavily performance linked.

Relative importance of the spend on pay

The table below sets out the relative importance of the spend on pay in FY2021 and FY2022 compared with other disbursements. All figures

provided are taken from the relevant Company accounts.

Disbursements

from profit in

FY2022

£m

Disbursements

from profit in

FY2021

£m

Percentage

change

Profit distributed by way of dividend 5,132 — 100

Overall spend on pay including Executive Directors 47.8 17.9 167

Shareholder voting at General Meetings

The following table shows the results of the advisory vote on the Directors’ Remuneration Report, and the binding vote on our current

Remuneration Policy, at our AGM held on 28 January 2022:

Approval of the Directors’ Remuneration Report Approval of the Directors’ Remuneration Policy

Total number of votes % of votes cast Total number of votes % of votes cast

For (including discretionary) 144,234,429 97.58 143,669,643 98.09

Against 3,583,749 2.42 2,797,661 1.91

Votes withheld 1,000 N/A 1,351,869 N/A

External board appointments

Where Board approval is given for an Executive Director to accept an outside non-executive directorship, the individual is entitled to retain

any fees received. Stephen Burns is Non-Executive Chairman of Club Company Limited for which he receives an annual fee of £60,000.

Laurence Keen is a Non-Executive Director (and Senior Independent Director and Chair of the Audit Committee) of Tortilla Mexican Grill plc,

for which he receives an annual fee of £40,000.

Service agreements and letters of appointment

Each of the Executive Directors’ service agreements is for a rolling term, and may be terminated by the Company or the Executive Director

by giving six months’ notice.

The Remuneration Committee’s policy for setting notice periods is that a six-month period will apply for Executive Directors. The

Remuneration Committee may, in exceptional circumstances arising on recruitment, allow a longer period, which would in any event reduce

to six months following the first year of employment.

Name Position Date of service agreement

Notice period by Company

(months)

Notice period by Director

(months)

Stephen Burns CEO 24 June 2016 6 6

Laurence Keen CFO 24 June 2016 6 6

Melanie Dickinson CPO 21 October 2021 6 6

The Non-Executive Directors of the Company (including the Chairman) do not have service contracts;, rather they are appointed by letters of

appointment. Their terms are subject to their re-election by the Company’s shareholders at the AGM scheduled to be held on 30 January 2023

and to re-election at any subsequent AGM at which the Non-Executive Directors stand for re-election. In line with our agreed Non-Executive

Director succession plans, Claire Tiney will not seek re-election at the 2023 AGM.

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Governance report

Annual report on remuneration continued

Shareholder voting at General Meetings continued

Service agreements and letters of appointment continued

The details of each Non-Executive Director’s current terms are set out below:

Name Date of appointment Commencement date of current term

Unexpired term as at

16 December 2022

Peter Boddy 13 June 2016 16 September 2022 2 years, 9 months

Nick Backhouse 14 June 2016 14 June 2022 2 years, 6 months

Julia Porter 1 September 2022 1 September 2022 2 years, 9 months

Ivan Schofield 1 October 2017 1 October 2020 10 months

Claire Tiney 14 June 2016 14 June 2022 2 years, 6 months

Composition and terms of reference of the Remuneration Committee

The Board has delegated to the Remuneration Committee, under the agreed terms of reference, responsibility for the Remuneration Policy

and for determining specific remuneration packages for the Chairman, Executive Directors and such other senior employees of the Group as

the Board may determine from time to time. The terms of reference for the Remuneration Committee were reviewed during the year, and are

available on the Company’s website, www.hollywoodbowlgroup.com, and from the Company Secretary at the registered office.

All members of the Remuneration Committee are Non-Executive Directors. The Remuneration Committee receives assistance from the

Chairman, Chief Executive Officer, Chief Financial Officer, Chief People Officer and Company Secretary, who attend meetings by invitation,

except when issues relating to their own remuneration are being discussed. The Remuneration Committee met four times during the year

and attendance is shown in the table on page 82.

Julia Porter will succeed Claire Tiney as Chair of the Committee when Claire steps down from the Board at the 2023 AGM.

108

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Annual report and accounts 2022

Advisers to the Remuneration Committee

During the financial year, the Committee received advice from PwC, who served as remuneration advisers to the Committee up to the 2022

AGM, and Deloitte, who were appointed as remuneration advisers to the Committee from the 2022 AGM onwards. Since their appointment,

Deloitte has advised the Company on all aspects of the Remuneration Policy for the Executive Directors and members of the executive team.

The Remuneration Committee is satisfied that the advice received from both PwC and Deloitte during the year was objective and

independent. Both PwC and Deloitte are members of the Remuneration Consultants Group, with the voluntary code of conduct of that body

designed to ensure that objective and independent advice is given to remuneration committees.

During the year to 30 September 2022, fees of £22,900 were paid to PwC for its advice to the Committee. Deloitte charged £17,500 for

services provided during the year to 30 September 2022.

Other than in its role as remuneration adviser, Deloitte has no other connection with the Company or any individual Directors.

Consideration of conditions elsewhere in the Company

The Remuneration Committee considers pay and employment conditions across the Company when reviewing the remuneration of the

Executive Directors and other senior employees. In particular, the Remuneration Committee considers the range of base pay increases

across the Group, further detail of which is set out in the Remuneration Committee Chair’s letter. The Group was pleased to support its team

members with a cost of living payment in the second half of the year which totalled £0.6m.

The Committee supports the Board’s initiative to ensure employee views and concerns are taken into account in its decision-making and has

a clear understanding of pay and benefits at all team member levels in the Group. This includes decisions relating to the remuneration

arrangements for senior management, the Executive Directors and centre managers.

Consideration of shareholder views

The Remuneration Committee considers shareholder feedback received in relation to the AGM each year and guidance from shareholder

representative bodies more generally.

In formulating the Remuneration Policy, approved by shareholders at the 2022 AGM, the Committee consulted directly with a number of the

Company’s significant shareholders regarding their views on remuneration practices and policies. The Committee has also engaged directly

with significant shareholders to keep them informed of decisions relating to our implementation of the Policy in FY2023 (including in relation

to the Executive Director salary increases, and LTIP award levels).

109

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Annual report and accounts 2022

Governance report

Summary of Remuneration Policy and Implementation in FY2023

The key features of the Directors’ Remuneration Policy approved by shareholders at our 2022 AGM, and the intended implementation of the

Policy in FY2023, are summarised below. The full Policy can be found on the Company’s website, www.hollywoodbowlgroup.com, in the

‘Investors’ section, under ‘Reports and presentations’, in our Annual Report.

Salary

Executive Director salaries

Provides a base level of remuneration to support the recruitment and retention of Executive Directors with the necessary experience and expertise to

deliver the Company’s strategy.

Operation

Reviewed annually. When determining an appropriate level of salary, the Remuneration Committee considers:

• remuneration practices within the Company;

• the performance of the individual Executive Director;

• the individual Executive Director’s experience and responsibilities;

• the general performance of the Company;

• salaries within the ranges paid by companies in the comparator group used for remuneration benchmarking; and

• the economic environment.

Opportunity

Base salaries will be set at an appropriate level with a comparator group of comparable sized companies and will normally increase

with increases made to the wider employee workforce.

Individuals who are recruited or promoted to the Board may, on occasion, have their salaries set below the targeted Policy level until

they become established in their role. In such cases subsequent increases in salary may be higher than the average until the target

positioning is achieved.

Performance metrics

used, weighting and

time period applicable

None

Chairman and Non-Executive Director fees

Provides a level of fees to support recruitment and retention of Non-Executive Directors with the necessary experience to advise and assist with establishing

and monitoring the Company’s strategic objectives.

Operation

Non-Executive Directors are paid a base fee. An additional payment is paid to the Senior Independent Director in respect of the

additional duties of this role. No additional fees are paid to Non-Executive Directors or the Chairman of the Company for the

membership or chairmanship of Committees.

Fees are reviewed annually, based on equivalent roles in an appropriate comparator group used to review salaries paid to the

Executive Directors.

Non-Executive Directors do not participate in any variable remuneration or benefits arrangements.

Opportunity

The base fees for Non-Executive Directors are set with reference to the market rate.

In general, the level of fee increase for the Non-Executive Directors will be set taking account of any change in responsibility and will

take into account the general rise in salaries across the UK workforce.

The Company will pay reasonable expenses incurred by the Chairman and Non-Executive Directors.

Performance metrics

used, weighting and

time period applicable

None

FY2023 implementation

The Executive Director salaries, and Non-Executive Director fees, for FY2023 (effective from 1 October 2022) are set out below.

The rationale for these increases is set out in the Annual Statement from the Remuneration Committee Chair:

Salary

Name 2023 2022

Percentage

change

Stephen Burns £443,260 £412,335 7.5%

Laurence Keen £290,509 £267,750 8.5%

Melanie Dickinson £172,000 £160,000 7.5%

The Board approved the increase of fees for the Non-Executive Directors by 4.8 per cent with effect from 1 October 2022, with this

increase being below the average increase for the wider workforce. The Committee approved an increase to the Chairman’s fee of

4.8 per cent, also with effect from 1 October 2022.

Chairman fee £141,744

Senior Independent Director fee £5,000

Base fee £50,954

Chair of Audit Committee fee No additional fee

Chair of Remuneration Committee fee No additional fee

Annual report on remuneration continued

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Annual report and accounts 2022

Benefits and pension

Benefits

Provides a competitive level of benefits.

Operation

The Executive Directors receive benefits which include, but are not limited to, family private health cover, death in

service life assurance, income protection insurance, car allowance, and travel expenses for business-related travel

(including tax if any).

The Remuneration Committee recognises the need to maintain suitable flexibility in the determination of benefits that

ensure it is able to support the objective of attracting and retaining employees. Accordingly, the Remuneration

Committee would expect to be able to adopt benefits such as relocation expenses, tax equalisation and support in

meeting specific costs incurred by the Directors.

Opportunity

The maximum will be set at the cost of providing the benefits described.

Performance metrics

used, weighting and

time period applicable

None

Pensions

Provides market competitive retirement benefits.

Operation

The Committee retains discretion to provide pension funding in the form of a salary supplement or a direct contribution

to a pension scheme. Any salary supplement would not form part of the salary for the purposes of determining the

extent of participation in the Company’s incentive arrangements.

Opportunity

The current Executive Directors receive pension funding equal to 5 per cent of base salary.

Future incoming Executive Directors will receive pension funding in line with the level received by the wider employee

workforce.

Performance metrics

used, weighting and

time period applicable

None

FY2023 implementation

No changes are proposed to benefits or pension.

111

Hollywood Bowl Group plc

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Governance report

Annual bonus plan

Provides a significant incentive to the Executive Directors linked to achievement in delivering goals that are closely aligned with the

Company’s strategy and the creation of value for shareholders. Provides market competitive retirement benefits.

Operation

The Remuneration Committee will determine the bonus payable after the year-end based on performance against

objectives and targets. Bonus payments per individual will be both proportionate to the overall size of the bonus pot and

each individual’s performance versus their personal objectives.

Annual bonuses are paid part in cash and part in shares deferred for two years. The maximum proportion of an annual

bonus which may be paid in cash is 65 per cent.

It should be noted that the Remuneration Committee has taken the view that due to their considerable shareholdings in

the Company, automatic deferral of annual bonuses into shares is unnecessary for the current Executive Directors. As

such the Remuneration Committee intends to pay annual bonuses to the current Executive Directors in cash, but will

retain the ability to apply an appropriate level of deferral following any material sell down to ensure that shareholding

requirements continue to be met.

On change of control, the Remuneration Committee may pay bonuses on a pro-rata basis measured on performance

up to the date of change of control.

Malus and clawback provisions will apply to enable the Company to recover sums paid or withhold the payment of any

sum in the event of a material misstatement resulting in an adjustment to the audited consolidated accounts of the

Company or action or conduct which, in the reasonable opinion of the Board, amounts to employee misbehaviour, fraud

or gross misconduct.

Opportunity

The maximum bonus opportunity is 100 per cent of base salary.

Performance metrics

used, weighting and

time period applicable

The annual bonus outcomes will be determined based on achievement of a scorecard of financial and strategic targets,

with at least half of the bonus being based on financial performance.

The Remuneration Committee retains discretion in exceptional circumstances to change performance measures and

targets and the weightings attached to performance measures part-way through a performance year if there is a

significant and material event which causes the Remuneration Committee to believe that the original measures,

weightings and targets are no longer appropriate. Discretion may also be exercised in cases where the Remuneration

Committee believes that the bonus outcomes are not a fair and accurate reflection of business performance.

The Remuneration Committee considers that the detailed performance targets used for the annual bonus awards are

commercially sensitive and that disclosing precise targets for the annual bonus plan in advance would not be in

shareholder interests. Actual targets, performance achieved, and awards made will be disclosed at the end of the

performance period so that shareholders can fully assess the basis for any payouts under the annual bonus plan.

FY2023 implementation

The maximum bonus opportunity for the Executive Directors will remain at 100 per cent of salary. Annual bonus outcomes will again be

based on a scorecard of financial and non-financial performance targets which are aligned to the business strategy. The agreed

measures and weightings for the FY2023 annual bonus are as follows:

Metric Weighting

Group adjusted EBITDA pre-IFRS 16 80%

Average Group Overall Blended Index (OBI) 10%

Waste recycling 10%

The Remuneration Committee considers that the detailed performance targets for the FY2023 annual bonus awards are

commercially sensitive and that disclosing precise targets for the annual bonus plan in advance would not be in shareholder interests.

Actual targets, performance against them, and the resulting awards will be disclosed in the FY2023 Annual Report so that

shareholders can fully assess the basis for any payouts under the annual bonus plan. OBI is a blend of customer service metrics which

reflect the customer experience in the centres.

Annual report on remuneration continued

112

Hollywood Bowl Group plc

Annual report and accounts 2022

Long Term Incentive Plan (LTIP)

Incentivises the Executive Directors to maximise total shareholder returns by successfully delivering the Company’s long-term objectives

and to share in the resulting increase in total shareholder value.

Operation

Awards are granted annually in the form of nil-cost options or conditional awards of shares. These will vest at the end

of a three-year period subject to:

• the Executive Directors’ continued employment at the date of vesting; and

• satisfaction of the performance conditions.

A further two-year holding period will apply post-vesting.

The Remuneration Committee may award dividend equivalents on awards to the extent that these vest.

Malus and clawback provisions will apply to enable the Company to recover sums paid or withhold the payment of any

sum in the event of a material misstatement resulting in an adjustment to the audited consolidated accounts of the

Company or action or conduct which, in the reasonable opinion of the Board, amounts to employee misbehaviour,

fraud or gross misconduct.

Opportunity

Award maximum of 150 per cent of base salary.

Performance metrics

used, weighting and

time period applicable

The majority of awards will be subject to financial performance targets, with the balance based on strategic metrics.

The Remuneration Committee retains discretion in exceptional circumstances to change performance measures and

targets, and the weightings attached to performance measures, part-way through a performance period if there is a

significant and material event which causes the Remuneration Committee to believe the original measures, weightings

and targets are no longer appropriate.

Discretion may also be exercised in cases where the Remuneration Committee believes that the vesting outcome is not

a fair and accurate reflection of business performance.

FY2023 implementation

Awards will be made in FY2023 under the LTIP. The LTIP awards for the Executive Directors will be as follows, with further context

provided in the Annual Statement from the Remuneration Committee Chair:

• CEO 150 per cent of salary;

• CFO 150 per cent of salary; and

• CPO 100 per cent of salary.

These awards will vest three years after grant and will be subject to a further two-year holding period.

The following performance targets will apply to the FY2023 LTIP awards:

Measure Description Weighting Threshold Target Max

Adjusted EPS

1, 2

Adjusted EPS for the final year of the

performance period – FY2025

70% 18.11 pence

(25% payout)

19.06 pence

(62.5% payout)

20.01 pence

(100% payout)

Return on centre invested

capital

20% return on all centre invested

capital (refurbs and new centres)

10% 18% return

(50% payout)

20% return

(75% payout)

22% return

(100% payout)

Emissions ratio for Scope 1

and Scope 2

Intensity ratio (IR) of under 100 10% IR at 58

(50% payout)

IR at 55

(75% payout)

IR at 50

(100% payout)

Team member development

5% of team members progressed

through internal development

programmes

10% 4%

(50% payout)

(75% payout)

(100% payout)

1 Adjusted EPS is defined as stated in the Group’s accounts and is subject to such adjustments as the Board, in its discretion, determines are fair and reasonable.

2 Vesting on a straight-line basis between threshold and target, and target and max performance.

The Committee deems these targets to be stretching and took into account the business plan, analyst consensus forecasts and the

wider economic environment when setting the targets. The Adjusted EPS targets have progressed since the FY22 grant (with a

threshold target of 18.11p being above the maximum target set last year) and we have moved from ‘cliff-vesting’ to a threshold to

maximum range of vesting for the other measures so that additional stretch can be built into those and also reducing the total pay-out

for target performance.

On behalf of the Board

Claire Tiney

Chair of the Remuneration Committee

15 December 2022

113

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Directors’ report

The Directors present their report for the year ended 30 September 2022.

Additional information which is incorporated by reference into this Directors’ Report, including information required in accordance with the

Companies Act 2006 and Listing Rule 9.8.4R can be located as follows:

Disclosure Location

Future business developments Strategic report – pages 2 to 45

Greenhouse gas emissions Sustainability – pages 56 and 57

People, culture and employee engagement Sustainability – pages 51 to 53

Financial risk management objectives and policies (including hedging

policy and use of financial instruments)

Note 31 to the Financial Statements – pages 154 and 155

Exposure to price risk, credit risk, liquidity risk and cash flow risk Details can be found on pages 70 to 75 of the Strategic report

and note 31 to the Financial Statements

Statement of compliance with the 2018 UK Corporate Governance

Code

Corporate governance report – page 80

Details of long-term incentive schemes Annual report on remuneration – pages 101 to 113

Directors’ responsibilities statement Page 117

Directors’ interests Details can be found on pages 103 and 104 of the Annual report

on remuneration

s172 Statement Details can be found on pages 26 to 29 of the Strategic report

Stakeholder engagement in key decisions Details can be found on pages 26 to 29

Directors

The Directors of the Company who held office during the year are:

Peter Boddy (Chairman)

Stephen Burns (Chief Executive Officer)

Laurence Keen (Chief Financial Officer)

Melanie Dickinson (Chief People Officer) (appointed 21 October 2021)

Nick Backhouse (Senior Independent Director)

Julia Porter (Non-Executive Director) (appointed 1 September 2022)

Ivan Schofield (Non-Executive Director)

Claire Tiney (Non-Executive Director)

The roles and biographies of the Directors in office as at the date of this report are set out on pages 78 and 79. There have been no changes

to the Directors between the year-end and the date of this report. The appointment and replacement of Directors is governed by the

Company’s Articles of Association (as detailed below), the UK Corporate Governance Code and the Companies Act 2006.

Articles of Association

The rules governing the appointment and replacement of Directors are set out in the Company’s Articles of Association. The Articles of

Association may be amended by a special resolution of the Company’s shareholders. A copy of the Articles of Association can be found on

the Company’s website: www.hollywoodbowlgroup.com/investors/corporate-governance.

Results and dividend

The results for the year are set out in the consolidated income statement on page 127. The Directors recommend the payment of a final ordinary

dividend of 8.53 pence per share and a special dividend of 3.0 pence per share, on 24 February 2023 (with a record date of 3 February 2023)

subject to approval at the AGM on 30 January 2023.

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Hollywood Bowl Group plc

Annual report and accounts 2022

Share capital

Details of the Company’s share capital, including changes during the year, are set out in note 24 to the Financial Statements. As at

30 September 2022, the Company’s share capital consisted of 171,070,790 ordinary shares of one pence each.

Ordinary shareholders are entitled to receive notice of, and to attend and speak at, any general meeting of the Company. On a show of hands,

every shareholder present in person or by proxy (or being a corporation represented by a duly authorised representative) shall have one vote,

and on a poll every shareholder who is present in person or by proxy shall have one vote for every share of which he or she is the holder. The

Notice of Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies.

Other than the general provisions of the Articles of Association (and prevailing legislation), there are no specific restrictions on the size of a

holding or on the transfer of the ordinary shares.

The Directors are not aware of any agreements between holders of the Company’s shares that may result in the restriction of the transfer of

securities or of voting rights. No shareholder holds securities carrying any special rights or control over the Company’s share capital. Shares

held by the Company’s Employee Benefit Trust rank pari passu with the shares in issue and have no special rights, but voting rights and rights

of acceptance of any offer relating to the shares rest with the plan’s Trustees and are not exercisable by employees. The Trustees have

waived their right to receive dividends on shares held by the Company. As at 30 September 2022, 7,696 shares were held for the employee

share plan purposes.

Authority for the Company to purchase its own shares

Subject to authorisation by shareholder resolution, the Company may purchase its own shares in accordance with the Companies Act 2006.

Any shares which have been bought back may be held as treasury shares or cancelled immediately upon completion of the purchase.

At the Company’s AGM held on 28 January 2022, the Company was generally and unconditionally authorised by its shareholders to make

market purchases (within the meaning of section 693 of the Companies Act 2006) of up to a maximum of 17,063,118 of its ordinary shares.

The Company has not repurchased any of its ordinary shares under this authority, which is due to expire at the AGM to be held on 30 January 2023,

and accordingly has an unexpired authority to purchase up to 17,063,118 ordinary shares with a nominal value of £170,631.00.

Directors’ interests

The number of ordinary shares of the Company in which the Directors were beneficially interested as at 30 September 2022 are set out in

the Annual Report on Remuneration on page 103.

Directors’ indemnities

The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for Directors and officers of the

Company and the Group in respect of liabilities they may incur in the discharge of their duties or in the exercise of their powers.

Directors’ and officers’ liability insurance

Directors’ and officers’ liability insurance cover is maintained by the Company and is in place in respect of all the Company’s Directors at the

date of this report. The Company reviews its level of cover on an annual basis.

Compensation for loss of office

The Company does not have any agreements with any Executive Director or employee that would provide compensation for loss of office or

employment resulting from a takeover except that provisions of the Company share schemes may cause options and awards outstanding

under such schemes to vest on a takeover. Further information is provided in our Directors’ Remuneration Policy approved by shareholders

at the 2022 AGM, and can be found on page 78 of our FY2021 Annual Report, which is available on our website.

Significant interests

The table below shows the interests in shares (whether directly or indirectly held) notified to the Company in accordance with the Disclosure Guidance

and Transparency Rules as at 30 September 2022 and 15 December 2022 (being the latest practicable date prior to publication of the Annual Report):

At 30 September 2022 At 15 December 2022

Name of shareholder

Number of ordinary

shares of 1 pence

each held

Percentage of

total voting rights held

Number of ordinary

shares of 1 pence

each held

Percentage of

total voting rights held

Aggregate of abrdn plc affiliated investment

management entities with delegated voting rights on

behalf of multiple managed portfolios 23,896,770 13.97% 23,896,770 13.97%

Slater Investments Limited 9,897,058 5.79% 9,897,058 5.79%

Schroders plc 9,092,419 5.32% 9,092,419 5.32%

Ameriprise Financial, Inc. and its group (Columbia

Threadneedle) 8,611,524 5.03% 8,611,524 5.03%

JP Morgan Asset Management Holdings Inc. 8,602,007 5.03% 8,602,007 5.03%

Invesco Ltd 8,532,674 4.98% 8,532,674 4.98%

AXA Investment Managers 8,515,529 4.98% 8,515,529 4.98%

115

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Employee involvement and policy regarding disabled persons

The Group actively encourages employee involvement and consultation and places emphasis on keeping its employees informed of the

Group’s activities and financial performance by such means as employee briefings and publication (via the Group’s intranet) to all staff of

relevant information and corporate announcements. The Group also publishes a weekly staff bulletin. Regular updates on team member

engagement activity are provided to the Board by the Chief Executive Officer, Chief People Officer and Chief Operating Officer. These

include feedback from regular team member engagement sessions, operational training and induction sessions. Further information about

employees, including how they are incentivised, can be found in the Sustainability section on pages 51 and 52.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In

the event of a member of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that

appropriate training is arranged. It is the policy of the Group that the training, career development and promotion of a disabled member of

staff should, as far as possible, be identical to that of other employees.

Branches outside the UK

The Company has six centres outside the UK, in Canada.

Political donations

The Company did not make any political donations during the year.

Change of control – significant agreements

There are a number of agreements that may take effect after, or terminate upon, a change of control of the Company, such as commercial

contracts, bank loan agreements and property lease arrangements. None of these are considered to be significant in terms of their likely

impact on the business as a whole.

Audit information

Each of the Directors at the date of the approval of this report confirms that:

• so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and

• the Director has taken all the reasonable steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant

audit information and to establish that the Company’s auditor is aware of the information.

The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

Auditors

KPMG has indicated its willingness to continue in office and a resolution seeking to re-appoint KPMG will be proposed at the forthcoming AGM.

Annual General Meeting

The 2023 AGM of the Company will be held on 30 January 2023 at 9.30am. The notice convening the meeting, together with details of the

business to be considered and explanatory notes for each resolution, will be published separately and will be available on the Company’s

website and distributed to shareholders who have elected to receive hard copies of shareholder information.

The Strategic report on pages 2 to 75, the Corporate governance report on pages 76 to 117 and this Directors’ Report have been drawn up

and presented in accordance with, and in reliance upon, applicable English company law, and any liability of the Directors in connection with

these reports shall be subject to the limitations and restrictions provided by such law.

By order of the Board

Laurence Keen

Chief Financial Officer

15 December 2022

Directors’ report continued

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Hollywood Bowl Group plc

Annual report and accounts 2022

Statement of Directors’ responsibilities

The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with

applicable law and regulations.

Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law they

are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable

law and have elected to prepare the parent Company financial statements in accordance with UK accounting standards and applicable law,

including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the

state of affairs of the Group and parent Company and of the Group’s profit or loss for that period. In preparing each of the Group and parent

Company financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable, relevant, reliable and prudent;

• for the Group Financial Statements, state whether they have been prepared in accordance with UK-adopted international accounting standards;

• for the Parent Company Financial Statements, state whether applicable UK accounting standards have been followed, subject to any

material departures disclosed and explained in the Parent Company Financial Statements;

• assess the Group and Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

• use the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations,

or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s

transactions, and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure

that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and

have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent

and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic report, Directors’ report, Directors’

remuneration report and corporate governance statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s

website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

In accordance with Disclosure Guidance and Transparency Rule 4.1.14R, the financial statements will form part of the annual financial report

prepared using the single electronic reporting format under the TD ESEF Regulation. The auditor’s report on these financial statements

provides no assurance over the ESEF format.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

• the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets,

liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

• the Strategic report includes a fair review of the development and performance of the business and the position of the issuer and the

undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information

necessary for shareholders to assess the Group’s position and performance, business model and strategy.

By order of the Board

Stephen Burns Laurence Keen

Chief Executive Officer Chief Financial Officer

15 December 2022 15 December 2022

117

Hollywood Bowl Group plc

Annual report and accounts 2022

Governance report

Financial statements

119 Independent auditor’s report

127 Consolidated income statement and statement

of comprehensive income

128 Consolidated statement of financial position

129 Consolidated statement of changes in equity

130 Consolidated statement of cash flows

131 Notes to the financial statements

157 Company statement of financial position

158 Company statement of changes in equity

158 Company statement of cash flows

159 Notes to the Company financial statements

165 Company information

118

Hollywood Bowl Group plc

Annual report and accounts 2022

Independent auditor’s report

To the members of Hollywood Bowl Group plc

1. Our opinion is unmodified

We have audited the financial statements of Hollywood Bowl Group

plc (“the Company”) for the year ended 30 September 2022 which

comprise the Consolidated Income Statement and Statement of

Comprehensive Income, Consolidated Statement of Financial

Position, Consolidated Statement of Changes in Equity, Consolidated

Statement of Cash Flows, Company Statement of Financial Position,

Company Statement of Changes in Equity, Company Statement of

Cash Flows, and the related notes, including the accounting policies

in note 2.

In our opinion:

• the financial statements give a true and fair view of the state of the

Group’s and of the parent Company’s affairs as at 30 September 2022

and of the Group’s profit for the year then ended;

• the Group financial statements have been properly prepared in

accordance with UK-adopted international accounting standards;

• the parent Company financial statements have been properly

prepared in accordance with UK accounting standards, including

FRS 102,

The Financial Reporting Standard applicable in the UK

and Republic of Ireland

; and

• the financial statements have been prepared in accordance with

the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards

on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities

are described below. We believe that the audit evidence we have

obtained is a sufficient and appropriate basis for our opinion. Our

audit opinion is consistent with our report to the audit committee.

We were first appointed as auditor by the directors on 2 June 2016.

The period of total uninterrupted engagement is for the seven

financial years ended 30 September 2022. We have fulfilled our

ethical responsibilities under, and we remain independent of the

Group in accordance with, UK ethical requirements including the

FRC Ethical Standard as applied to listed public interest entities.

No non-audit services prohibited by that standard were provided.

Overview

Materiality: £2m (2021: £0.635m)

Group financial statements

as a whole

4.3% of adjusted profit before tax

(2021: 4.3% of 5 year average

profit before tax)

Coverage 98% (2021: 100%) of group profit

before tax

Key audit matters vs 2021

Recurring risks Valuation of property, plant

and equipment and right of

use assets relating to the

golfing centres

Recoverability of parent

company investment in

subsidiaries / amounts due

from group entities

Event driven New: Valuation of acquisition-

related intangible assets and

tangible assets (property)

associated with the Teaquinn

Canada acquisition

2. Key audit matters: our assessment of risks of material

misstatement

Key audit matters are those matters that, in our professional

judgement, were of most significance in the audit of the financial

statements and include the most significant assessed risks of

material misstatement (whether or not due to fraud) identified by us,

including those which had the greatest effect on: the overall audit

strategy; the allocation of resources in the audit; and directing the

efforts of the engagement team. We summarise below the key audit

matters, in decreasing order of audit significance, in arriving at our

audit opinion above, together with our key audit procedures to

address those matters and, as required for public interest entities,

our results from those procedures. These matters were addressed,

and our results are based on procedures undertaken, in the context

of, and solely for the purpose of, our audit of the financial statements

as a whole, and in forming our opinion thereon, and consequently are

incidental to that opinion, and we do not provide a separate opinion

on these matters.

Financial statements

119

Hollywood Bowl Group plc

Annual report and accounts 2022

Independent auditor’s report continued

To the members of Hollywood Bowl Group plc

2. Key audit matters: our assessment of risks of material misstatement continued

The risk Our response

Valuation of property, plant and

equipment and right of use assets

relating to the golfing centres

Included within £216m (2021: £181m)

Included within impairment charge:

£2.5m for property, plant and equipment

(2021: £0.3m) and £1.8m for right of use

assets (2021: £0.6m)

Refer to page 93 (Audit Committee

Report), pages 135 and 136 (accounting

policy) and pages 144 and 145

(financial disclosures).

Forecast based valuation:

The Group has significant property, plant and

equipment (PPE), and right of use assets held

on its consolidated balance sheet.

The estimated recoverable amount is

subjective due to the inherent uncertainty

involved in forecasting and discounting future

cash flows. The key assumptions used in the

value in use (“VIU”) calculations for estimating

the recoverable amount are expected revenues

and costs in the short-term cash flow forecasts,

the long-term growth rate and the discount rate.

The golfing centres have performed below

budget for the year and future economic

forecasts, characterised by high consumer

price inflation and erosion of real disposable

incomes, increases this risk further.

The effect of these matters is that, as part of

our risk assessment for audit planning purposes,

we determined that the VIU of the golfing centres

had a high degree of estimation uncertainty,

with a potential range of reasonable outcomes

greater than our materiality for the financial

statements as a whole.

We performed the detailed tests below rather

than seek to rely on any of the group’s controls

because our knowledge of the design of these

controls indicated that we would not be able to

obtain the required evidence to support reliance

on controls.

Our procedures included:

• Assessing principles: We evaluated whether

the inputs used in the Group’s assessment of

impairment indicators were suitable, through

discussions with management, our own

knowledge of the business and market,

inspection of Board minutes and other

management information.

• Re-performance: We re-performed the

calculations that management performed for

the initial trigger test in determining the VIU of

each cash generating unit and compared data

used in the model against source information,

when applicable.

• Our experience: For the golfing centres where

indications of impairment existed, we evaluated

the assumptions used in the forecasts and

plans by management, in particular those

relating to EBITDA growth for the centres.

We also challenged management as to the

achievability of their forecasts and business

plan, taking into account the historical

accuracy of previous forecasts, wider market

factors (such as market expectation of the

Group’s performance) and other specific

evidence to support the assumptions.

• Benchmarking assumptions: We compared

management’s assumptions to externally

derived data in relation to key inputs such as

projected economic growth, cost inflation and

discount rates.

• Sensitivity analysis: We performed sensitivity

analysis to stress test the assumptions

noted above.

• Assessing disclosures: We also assessed

whether the Group’s disclosures about the

sensitivity of the outcome of the impairment

assessment to changes in key assumptions

reflected the risks inherent in the carrying

amount of PPE and right of use assets in its

golfing centre cash generating units.

Our results

We found the resulting estimate of the recoverable

amount of PPE and right of use assets in the

golfing centre cash generating units to be

acceptable (2021: acceptable).

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Hollywood Bowl Group plc

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2. Key audit matters: our assessment of risks of material misstatement continued

The risk Our response

Valuation of acquisition-related

intangible assets and tangible assets

(property) associated with the

Teaquinn Canada acquisition

Acquisition-related intangible assets:

£4.2m, Tangible assets (property): £8.5m

Refer to page 93 (Audit Committee

Report), page 135 (accounting policy)

and pages 155 and 156 (financial

disclosures).

Forecast-based valuation:

During the year, the Group acquired 100% of

the issued share capital of Teaquinn Holdings Inc,

in Canada, for fair value of consideration of

£10.1m.

The determination of the fair value estimate

for the valuation of the separately identifiable,

acquisition-related intangible assets and

freehold property involves subjective estimates

or uncertainties, which requires special audit

consideration because of the likelihood and

potential magnitude of misstatements relating

to the valuation of intangible and tangible assets.

Accounting for the transaction involves estimating

the fair value, at acquisition date, of the assets,

including the identification and valuation,

where appropriate, of intangible and tangible

assets. This is a particularly complex and

challenging area and requires skilled expertise

in making these determinations and thus

results in a heightened risk of error in determining

the fair value of the intangible and tangible

assets (property).

The effect of these matters is that, as part of

our risk assessment for audit planning purposes,

we determined that the measurement of

identified intangible and tangible assets had a

high degree of estimation uncertainty, with a

potential range of reasonable outcomes

greater than our materiality for the financial

statements as a whole.

We performed the detailed tests below rather

than seek to rely on any of the group’s controls

because our knowledge of the design of these

controls indicated that we would not be able to

obtain the required evidence to support reliance

on controls.

Our procedures included:

• Inspection: We inspected the purchase

agreement for the transaction and assessed

the consideration amount for this transaction,

including the deferred consideration arising,

and assessed the amount recognised as a

post-acquisition remuneration expense.

• Assessing the assumptions: With assistance

from our corporate finance and real estate

valuation specialists, we assessed the valuation

of the intangible and tangible assets acquired

and challenged the appropriateness of key

assumptions and the appropriateness of any

cashflow forecasts used in calculating the fair

value of the intangibles identified by

management.

• Sensitivity analysis: We performed sensitivity

analysis on the key assumptions within the

cash flow forecasts used to support the

intangibles recognised. This included

sensitising the cash flow forecasts in the

model. We critically assessed the extent to

which a change in these assumptions both

individually or in aggregate would result in a

an adjustment to fair values and considered

the likelihood of such events occurring.

• Assessing transparency: Assessing whether

the group’s disclosures in relation to the acquisition

and associated balances are appropriate.

Our results

We found the acquisition accounting in respect

of the acquisition of Teaquinn Holdings Inc to

be acceptable.

Financial statements

121

Hollywood Bowl Group plc

Annual report and accounts 2022

Independent auditor’s report continued

To the members of Hollywood Bowl Group plc

2. Key audit matters: our assessment of risks of material misstatement continued

The risk Our response

Recoverability of parent

company’s investment in

subsidiaries/amounts due from

group entities

£135m (2021: £124m)

Refer to page 159 (accounting policy)

and pages 161 and 162 (financial

disclosures).

Low Risk – High value:

The carrying amount of the parent company

investments in subsidiaries and amounts due

from group entities represent 74% (2021: 91%)

of the parent company’s total assets. Their

recoverability is not at a high risk of significant

misstatement or subject to significant judgement.

However due to their materiality in the context

of the parent company financial statements,

this is considered to be the area that had the

greatest effect on our overall parent

company audit

We performed the detailed tests below rather

than seek to rely on any of the group’s controls

because our knowledge of the design of these

controls indicated that we would not be able to

obtain the required evidence to support reliance

on controls.

Our procedures included:

• Historical comparisons : We assessed the

reasonableness of budgets by considering the

historical accuracy of the previous forecasts;

• Benchmarking assumptions; We compared

the discount rate and growth rate assumptions

to externally derived and historical data, as

well as our own assessments in relation to key

inputs;

• Sensitivity analysis: We performed

breakeven analysis of the key assumptions

noted above to assess whether a reasonably

possible change in these assumptions could

trigger an impairment charge; and

• Comparing valuations: We compared the

sum of the discounted cashflows to the Group

market capitalisation to assess the

reasonableness of those cashflows.

Our results

We found the Group’s assessment of the

recoverability of the parent company’s investment

in subsidiaries and amounts due from group

entities to be acceptable (2021: acceptable).

We continue to perform procedures over valuation of the property, plant and equipment and right of use assets in the bowling centres,

however, taking into consideration the financial performance of the bowling centres in the year and an assessment of the headroom in the

models, we have not assessed this as one of the most significant risks in our current year audit and, therefore, it is not separately identified in

our report this year.

3. Our application of materiality and an overview of the scope of our audit

Materiality for the Group financial statements as a whole was set at

£2m, determined with reference to a benchmark of profit before tax

adjusted for the items described below, of £46.9m, of which it

represents 4.3% (2021: £0.635m determined with reference to

average profit before tax over the last five years, of which it

represents 4.3%). The items we adjusted for in 2022 were the

impairment of property, plant and equipment and right of use assets

disclosed in notes 13 and 14 respectively, acquisition-related costs

and the post-acquisition remuneration expenses disclosed in note

33, and the one-off income associated with the VAT reclaim relating

to the prior year disclosed in note 6.

Materiality for the parent Company financial statements as a whole

was set at £1m (2021: £0.550m, determined with reference to a

benchmark of parent company total assets (2021: parent company

total assets) of which it represents 0.5% (2021: 0.4%).

In line with our audit methodology, our procedures on individual

account balances and disclosures were performed to a lower

threshold, performance materiality, so as to reduce to an acceptable

level the risk that individually immaterial misstatements in individual

account balances add up to a material amount across the financial

statements as a whole.

Performance materiality was set at 75% (2021: 75%) of materiality

for the financial statements as a whole, which equates to £1.5m

(2021: £0.475m) for the group and £0.75m (2021 : £0.413m) for the

parent company. We applied this percentage in our determination of

performance materiality because we did not identify any factors

indicating an elevated level of risk.

We agreed to report to the Audit Committee any corrected or

uncorrected identified misstatements exceeding £100,000

(2021: £31,750), in addition to other identified misstatements that

warranted reporting on qualitative grounds.

Of the group’s 16 reporting components (2021: 5) we subjected 2 to

full scope audits for group purposes and 1 to specific risk-focused

audit procedures, as the latter was not individually financially

significant enough to require a full scope audit for group purposes,

but did present specific individual risks that needed to be addressed

(2021: 2 to full scope audits for group purposes and 1 to specified

risk-focused audit procedures).

The components within the scope of our work accounted for the

percentages illustrated opposite.

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3. Our application of materiality and an overview of the

scope of our audit continued

The remaining 3% (2021: 0%) of total group revenue, 2% (2021: 0%)

of total profits and losses that made up Group profit before tax and

4% (2021: 0%) of total group assets is represented by 13 (2021: 2)

reporting components, none of which individually represented more

than 2% (2021: 0%) of any of total group revenue, total profits and

losses that made up Group profit before tax or total group assets.

For these components, we performed analysis at an aggregated

group level to re-examine our assessment that there were no

significant risks of material misstatement within these.

The work on all components (2021: all components) was performed

by the Group team, including the audit of the parent company. The

Group team performed procedures on the items excluded from

Group adjusted profit before tax. The scope of the audit work

performed was predominately substantive as we placed limited

reliance upon the Group’s internal control over financial reporting.

4. The impact of climate change on our audit

In planning our audit, we have considered the potential impact of

risks arising from climate change on the Group’s business and its

financial statements. The Group has set out its ambition for reducing

the environmental impact of its operations, including increasing on

site generation of renewable electricity and driving energy use

efficiency throughout its operations. Further information is provided

in the Group’s Sustainability Overview on pages 46 to 58 and the

Task Force and Climate-related Financial Disclosure Statement on

pages 59 to 68.

Climate change risks could have an impact on the Group’s business

and operations, including changing customer behaviours, business

interruption, increasing costs of carbon taxes, transitioning to

reduced energy usage and changing energy sources.

As part of our audit, we have made enquiries of management to

understand the potential impact of climate change risk on the

Group’s financial statements and the Group’s preparedness for this.

We have performed a risk assessment of how the impact of climate

change may affect the financial statements and our audit. There was

no significant impact of this on our key audit matters. Based on the

procedures performed, we did not identify any significant risk of

climate change having a material impact on the Group’s accounting

estimates in this period.

We have also read the Group’s disclosures of climate related

information in the front half of the annual report, as set out on pages

46 to 68. We have not been engaged to provide assurance over the

accuracy of these disclosures.

5. Going concern

The directors have prepared the financial statements on the going

concern basis as they do not intend to liquidate the Group or the

parent Company or to cease their operations, and as they have

concluded that the parent Group’s and the parents Company’s

financial position means that this is realistic. They have also

concluded that there are no material uncertainties that could have

cast significant doubt over their ability to continue as a going

concern for at least a year from the date of approval of the financial

statements (“the going concern period”).

97+3+M

96+4+M

89+9+2+M

100+M

77+23+M

95+5+M

Full scope for group audit purposes 2022

Specified risk-focused audit procedures 2022

Full scope for group audit purposes 2021

Specified risk-focused audit procedures 2021

Residual components

Adjusted group profit

before tax

£47.0m (2021: 5 year average

profit before tax of £14.9m)

Group materiality

£2m (2021: £0.635m)

£100,000

Misstatements reported to the audit

committee (2021: £31,750)

£2m

Whole financial statements materiality

(2021: £0.635m)

£1.5m

Whole financial statements

performance materiality (2021: £0.475m)

£1.8m

Range of materiality at 3

components (£0.5m - £1.8m)

(2021: £0.22m - £0.57m)

Group revenue

97%

(2021: 100%)

Group profit before tax

98%

(2021: 100%)

Group total assets

96%

(2021: 100%)

Normalised PBT

Group materiality

100

Financial statements

123

Hollywood Bowl Group plc

Annual report and accounts 2022

Independent auditor’s report continued

To the members of Hollywood Bowl Group plc

5. Going concern continued

We used our knowledge of the Group, its industry, and the general

economic environment to identify the inherent risks to its business

model and analysed how those risks might affect the Group’s and

parent Company’s financial resources or ability to continue operations

over the going concern period. The risk that we considered most

likely to adversely affect the Group’s and parent Company’s

available financial resources is the demand for the Group’s services

being adversely impacted by current economic forecasts,

characterised by high consumer price inflation and the potential

consequent erosion of real disposable incomes.

We considered whether these risks could plausibly affect the

liquidity in the going concern period by assessing the Directors’

sensitivities over the level of available financial resources indicated

by the Group’s financial forecasts taking account of severe, but

plausible adverse effects that could arise from these risks

individually and collectively.

Our procedures also included:

• Critically assessing assumptions in the downside scenarios

relevant to liquidity, in particular in relation to profitability by

comparing to historical performance, assessing the financial

performance of the group during the current year, considering the

potential effects of the current economic environment, and our

knowledge of the entity and the sector in which it operates.

• Assessing whether downside scenarios applied mutually

consistent assumptions in aggregate, using our assessment of the

possible range of each key assumption and our knowledge of

inter-dependencies.

We considered whether the going concern disclosure in note 2 to the

financial statements gives a full and accurate description of the

Directors’ assessment of going concern, including the identified risks

and, dependencies, and related sensitivities.

Our conclusions based on this work:

• we consider that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate;

• we have not identified, and concur with the directors’ assessment

that there is not, a material uncertainty related to events or

conditions that, individually or collectively, may cast significant

doubt on the Group’s or parent Company’s ability to continue as a

going concern for the going concern period;

• we have nothing material to add or draw attention to in relation to

the directors’ statement in note 2 to the financial statements on

the use of the going concern basis of accounting with no material

uncertainties that may cast significant doubt over the Group and

parent Company’s use of that basis for the going concern period,

and we found the going concern disclosure in note 2 to be

acceptable; and

• the related statement under the Listing Rules set out on page 80

is materially consistent with the financial statements and our

audit knowledge.

However, as we cannot predict all future events or conditions and as

subsequent events may result in outcomes that are inconsistent with

judgements that were reasonable at the time they were made, the

above conclusions are not a guarantee that the Group or the parent

Company will continue in operation.

6. Fraud and breaches of laws and regulations – ability

to detect

Identifying and responding to risks of material misstatement

due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”)

we assessed events or conditions that could indicate an incentive or

pressure to commit fraud or provide an opportunity to commit fraud.

Our risk assessment procedures included:

• Enquiring of directors, the audit committee, internal audit and

inspection of policy documentation as to the Group and the

parent Company’s high-level policies and procedures to prevent

and detect fraud, including the internal audit function, and the

Group and the parent Company’s channel for “whistleblowing”,

as well as whether they have knowledge of any actual, suspected

or alleged fraud.

• Reading Board minutes.

• Considering remuneration incentive schemes and performance

targets for management including the EPS target for management

remuneration under the Long Term Investment Plan scheme.

• Using analytical procedures to identify any unusual or

unexpected relationships.

We communicated identified fraud risks throughout the audit team

and remained alert to any indications of fraud throughout the audit.

As required by auditing standards, and taking into account possible

pressures to meet profit targets, we perform procedures to address

the risk of management override of controls, in particular the risk

that Group and component management may be in a position to

make inappropriate accounting entries and the risk of bias in

accounting estimates and judgements such as assumptions used in

impairment testing. On this audit we do not believe there is a fraud

risk related to revenue recognition because of the limited

opportunity due to the high correlation to cash.

We also identified a fraud risk related to the valuation of property,

plant and equipment and right of use assets relating to the golfing

centres, in response to possible pressures to present an optimistic

outlook for the Group.

We also performed procedures including:

• Identifying journal entries and other adjustments to test for all full

scope components based on risk criteria and comparing the

identified entries to supporting documentation. These included

journals posted to unusual accounts.

• Assessing significant accounting estimates for bias.

Identifying and responding to risks of material misstatement

due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be

expected to have a material effect on the financial statements from

our general commercial and sector experience and through discussion

with the directors and other management (as required by auditing

standards), and discussed with the directors and other management

the policies and procedures regarding compliance with laws

and regulations.

We communicated identified laws and regulations throughout our

team and remained alert to any indications of non-compliance

throughout the audit.

The potential effect of these laws and regulations on the financial

statements varies considerably.

124

Hollywood Bowl Group plc

Annual report and accounts 2022

6. Fraud and breaches of laws and regulations – ability to

detect continued

Identifying and responding to risks of material misstatement

due to non-compliance with laws and regulations continued

Firstly, the Group is subject to laws and regulations that directly

affect the financial statements including financial reporting

legislation (including related companies legislation), distributable

profits legislation and taxation legislation and we assessed the

extent of compliance with these laws and regulations as part of our

procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations

where the consequences of non-compliance could have a material

effect on amounts or disclosures in the financial statements, for

instance through the imposition of fines or litigation. We identified

the following areas as those most likely to have such an effect: data

protection, health and safety and employment law recognising the

nature of the Group’s activities. Auditing standards limit the required

audit procedures to identify non-compliance with these laws and

regulations to enquiry of the directors and inspection of regulatory

and legal correspondence, if any.

Therefore if a breach of operational regulations is not disclosed to us

or evident from relevant correspondence, an audit will not detect

that breach.

We discussed with the audit committee other matters related to

actual or suspected fraud, for which disclosure is not necessary, and

considered any implications for our audit.

Context of the ability of the audit to detect fraud or breaches of

law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable

risk that we may not have detected some material misstatements in

the financial statements, even though we have properly planned and

performed our audit in accordance with auditing standards. For

example, the further removed non-compliance with laws and

regulations is from the events and transactions reflected in the

financial statements, the less likely the inherently limited procedures

required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of

non-detection of fraud, as these may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal

controls. Our audit procedures are designed to detect material

misstatement. We are not responsible for preventing non-compliance

or fraud and cannot be expected to detect non-compliance with all

laws and regulations.

7. We have nothing to report on the other information in

the Annual Report

The directors are responsible for the other information presented in

the Annual Report together with the financial statements. Our opinion

on the financial statements does not cover the other information

and, accordingly, we do not express an audit opinion or, except as

explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so,

consider whether, based on our financial statements audit work, the

information therein is materially misstated or inconsistent with the

financial statements or our audit knowledge. Based solely on that

work we have not identified material misstatements in the

other information.

7. We have nothing to report on the other information in

the Annual Report continued

Strategic report and directors’ report

Based solely on our work on the other information:

• we have not identified material misstatements in the strategic

report and the directors’ report;

• in our opinion the information given in those reports for the

financial year is consistent with the financial statements; and

• in our opinion those reports have been prepared in accordance

with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be

audited has been properly prepared in accordance with the

Companies Act 2006.

Disclosures of emerging and principal risks and longer-term

viability

We are required to perform procedures to identify whether there is a

material inconsistency between the directors’ disclosures in respect

of emerging and principal risks and the viability statement, and the

financial statements and our audit knowledge.

Based on those procedures, we have nothing material to add or

draw attention to in relation to:

• the directors’ confirmation within the viability statement on page 74

that they have carried out a robust assessment of the emerging

and principal risks facing the Group, including those that would

threaten its business model, future performance, solvency

and liquidity;

• the Principal Risks disclosures describing these risks and how

emerging risks are identified, and explaining how they are being

managed and mitigated; and

• the directors’ explanation in the viability statement of how they

have assessed the prospects of the Group, over what period they

have done so and why they considered that period to be

appropriate, and their statement as to whether they have a

reasonable expectation that the Group will be able to continue in

operation and meet its liabilities as they fall due over the period of

their assessment, including any related disclosures drawing

attention to any necessary qualifications or assumptions.

We are also required to review the viability statement, set out on

page 74 under the Listing Rules. Based on the above procedures, we

have concluded that the above disclosures are materially consistent

with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only

the knowledge acquired during our financial statements audit. As we

cannot predict all future events or conditions and as subsequent

events may result in outcomes that are inconsistent with judgements

that were reasonable at the time they were made, the absence of

anything to report on these statements is not a guarantee as to the

Group’s and parent Company’s longer-term viability.

Corporate governance disclosures

We are required to perform procedures to identify whether there is a

material inconsistency between the directors’ corporate governance

disclosures and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the

following is materially consistent with the financial statements and

our audit knowledge:

Financial statements

125

Hollywood Bowl Group plc

Annual report and accounts 2022

7. We have nothing to report on the other information in

the Annual Report continued

Corporate governance disclosures continued

• the directors’ statement that they consider that the annual report

and financial statements taken as a whole is fair, balanced and

understandable, and provides the information necessary for

shareholders to assess the Group’s position and performance,

business model and strategy;

• the section of the annual report describing the work of the Audit

Committee, including the significant issues that the audit committee

considered in relation to the financial statements, and how these

issues were addressed; and

• the section of the annual report that describes the review of the

effectiveness of the Group’s risk management and internal

control systems.

We are required to review the part of the Corporate Governance

Statement relating to the Group’s compliance with the provisions of

the UK Corporate Governance Code specified by the Listing Rules

for our review, and to report to you if a corporate governance statement

has not been prepared by the Company. We have nothing to report

in these respects.

Based solely on our work on the other information described above:

• with respect to the Corporate Governance Statement disclosures

about internal control and risk management systems in relation to

financial reporting processes and about share capital structures:

• we have not identified material misstatements therein; and

• the information therein is consistent with the financial

statements; and

• in our opinion, the Corporate Governance Statement has been

prepared in accordance with relevant rule of the Disclosure Guidance

and Transparency Rules of the Financial Conduct Authority.

8. We have nothing to report on the other matters on

which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if,

in our opinion:

• adequate accounting records have not been kept by the parent

Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the parent Company financial statements and the part of the

Directors’ Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are

not made; or

• we have not received all the information and explanations we

require for our audit.

We have nothing to report in these respects.

9. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 117, the

directors are responsible for: the preparation of the financial

statements including being satisfied that they give a true and fair

view; such internal control as they determine is necessary to enable

the preparation of financial statements that are free from material

misstatement, whether due to fraud or error; assessing the Group

and parent Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern; and using

the going concern basis of accounting unless they either intend to

liquidate the Group or the parent Company or to cease operations,

or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether

the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue our opinion in an auditor’s

report. Reasonable assurance is a high level of assurance, but does

not guarantee that an audit conducted in accordance with ISAs (UK)

will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered

material if, individually or in aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the

basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s

website at www.frc.org.uk/auditorsresponsibilities.

The Company is required to include these financial statements in an

annual financial report prepared using the single electronic reporting

format specified in the TD ESEF Regulation. This auditor’s report

provides no assurance over whether the annual financial report has

been prepared in accordance with that format.

10. The purpose of our audit work and to whom we owe

our responsibilities

This report is made solely to the Company’s members, as a body, in

accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the

Company’s members those matters we are required to state to them

in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone

other than the Company and the Company’s members, as a body,

for our audit work, for this report, or for the opinions we have formed.

Matthew Radwell (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

58 Clarendon Road,

Watford,

WD17 1DE.

15 December 2022

Independent auditor’s report continued

To the members of Hollywood Bowl Group plc

126

Hollywood Bowl Group plc

Annual report and accounts 2022

Consolidated income statement and statement of comprehensive income

Year ending 30 September 2022

Before exceptional

Exceptional

items

items (note 6)

Total

30 September

2022

2021

Note

£’000

Revenue 3 187,949 5,792 193,741 71,878

Cost of sales (29,392) — (29,392) (10,257)

Gross profit 158,557 5,792 164,349 61,621

Other income

4 — — — 2,814

Gain on bargain purchase

33 — 39 39 —

Administrative expenses 7 (106,796) (2,143) (108,939) (54,855)

Operating profit 51,761 3,688 55,449 9,580

Financeincome1012—12—

Finance expenses 10 (8,774) (22) (8,796) (9,118)

Profitbeforetax42,9993,66646,665462

Tax (charge)/credit 11 (8,135) (1,079) (9,214) 1,266

Profitfortheyearattributabletoequityshareholders34,8642,58737,4511,728

Other comprehensive income

Retranslation gain of foreign currency denominated operations 411 — 411 —

Total comprehensive income for the year attributable to equity

shareholders 35,275 2,587 37,862 1,728

Basicearningspershare(pence)1221.911.05

Diluted earnings per share (pence) 12 21.78 1.04

The accompanying notes on pages 131 to 156 form an integral part of these Financial Statements.

Hollywood Bowl Group plc

Annual report and accounts 2022

127

Financial statements

Consolidated statement of financial position

As at 30 September 2022

Note

30 September

2022

£’000

30 September

2021

£’000

ASSETS

Non-current assets

Property, plant and equipment 13 68,641 49,036

Right-of-use assets 14 147,455 132,342

Goodwill and intangible assets 15 81,794 77,948

Deferred tax asset 23 1,647 6,290

299,537 265,616

Current assets

Cash and cash equivalents 17 56,066 29,942

Trade and other receivables 18 5,130 3,300

Corporation tax receivable 271 650

Inventories 19 2,148 1,461

63,615 35,353

Total assets 363,152 300,969

LIABILITIES

Current liabilities

Trade and other payables 20 28,681 18,142

Lease liabilities 14 11,557 13,811

40,238 31,953

Non-current liabilities

Other payables 20 3,000 565

Lease liabilities 14 176,812 160,129

Provisions 21 4,682 3,635

184,494 164,329

Total liabilities 224,732 196,282

NET ASSETS 138,420 104,687

Equity attributable to shareholders

Share capital 24 1,711 1,706

Share premium 25 39,716 39,691

Merger reserve 25 (49,897) (49,897)

Foreign currency translation reserve 25 411 —

Retained earnings 25 146,479 113,187

TOTAL EQUITY 138,420 104,687

The accompanying notes on pages 131 to 156 form an integral part of these Financial Statements.

These Financial Statements were approved by the Board of Directors on 15 December 2022.

Signed on behalf of the Board by:

Laurence Keen

Chief Financial Officer

Company registration number 10229630

128

Hollywood Bowl Group plc

Annual report and accounts 2022

Consolidated statement of changes in equity

For the year ended 30 September 2022

capital

£’000

premium

£’000

Merger

reserve

£’000

Foreign currency

translation reserve

£’000

Retained

earnings

£’000

Total

£’000

Equity at 30 September 2020 1,575 10,466 (49,897) — 111,350 73,494

Shares issued during the year 131 29,225 — — — 29,356

Share-based payments (note 29) — — — — 16 16

Deferred tax on share-based payments — — — — 93 93

Profit for the year — — — — 1,728 1,728

Equity at 30 September 2021 1,706 39,691 (49,897) — 113,187 104,687

Shares issued during the year 5 25 — — — 30

Dividends paid — — — — (5,132) (5,132)

Share-based payments (note 29) — — — — 944 944

Deferred tax on share-based payments — — — — 29 29

Retranslation of foreign currency

denominated operations — — — 411 — 411

Profit for the year — — — — 37,451 37,451

Equity at 30 September 2022 1,711 39,716 (49,897) 411 146,479 138,420

The accompanying notes on pages 131 to 156 form an integral part of these Financial Statements.

Financial statements

129

Hollywood Bowl Group plc

Annual report and accounts 2022

Consolidated statement of cash flows

For the year ended 30 September 2022

Note

30 September

2022

£’000

Restated

30 September

2021

£’000

Cash flows from operating activities

Profit before tax 46,665 462

Adjusted by:

Depreciation of property, plant and equipment (PPE) 13 8,721 7,740

Depreciation of right-of-use (ROU) assets 14 12,010 11,882

Amortisation of intangible assets 15 624 477

Impairment of PPE and ROU assets 13, 14 4,321 850

Net interest expense 10 8,784 9,118

Loss on disposal of property, plant and equipment and software 18 29

COVID-19 rent concessions

14 — (2,110)

Gain on bargain purchase 33 (39) —

Share-based payments 29 944 16

Operating profit before working capital changes 82,048 28,464

Increase in inventories (423) (121)

Increase in trade and other receivables (1,248) (1,446)

Increase in payables and provisions 9,983 8,456

Cash inflow generated from operations 90,360 35,353

Interest received 12 —

Income tax paid – corporation tax (6,616) —

Bank interest paid (115) (1,207)

Lease interest paid (8,452) (7,952)

Net cash inflow from operating activities 75,189 26,194

Cash flows from investing activities

Acquisition of subsidiaries 33 (8,099) —

Subsidiary cash acquired 33 415 —

Purchase of property, plant and equipment (21,653) (9,330)

Purchase of intangible assets (178) (252)

Sale of assets 2 —

Net cash used in investing activities (29,513) (9,582)

Cash flows from financing activities

Repayment of bank loan — (29,500)

Payment of capital elements of leases (14,450) (7,310)

Issue of shares 30 29,356

Dividends paid (5,132) —

Net cash used in financing activities (19,552) (7,454)

Net change in cash and cash equivalents for the year 26,124 9,158

Cash and cash equivalents at the beginning of the year 29,942 20,784

Cash and cash equivalents at the end of the year 17 56,066 29,942

1 Following the FRC’s corporate reporting review of the Group’s Annual Report and Accounts to 30 September 2021, £2,110,000 of COVID-19 rent concessions disclosed as

payment of capital elements of leases under cash flows from financing activities in the 2021 financial statements have been restated as adjustments to cash flows from operating

activities within the 2021 comparative above. The effect of this change is a decrease of £2,110,000 in net cash used in financing activities and a decrease in net cash inflow from

operating activities. There is no impact to the net change in cash and cash equivalents for the year. See note 34 ‘Cash flow information’.

The accompanying notes on pages 131 to 156 form an integral part of these Financial Statements.

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131

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements

For the year ended 30 September 2022

1. General information

Hollywood Bowl Group plc (together with its subsidiaries, ‘the Group’) is a public limited company whose shares are publicly traded on the

London Stock Exchange and is incorporated and domiciled in England and Wales. The registered office of the Parent Company is Focus 31,

West Wing, Cleveland Road, Hemel Hempstead, HP2 7BW, United Kingdom. The registered company number is 10229630. A list of the

Company’s subsidiaries is presented in note 16.

On 24 May 2022, the Company acquired Teaquinn Holdings Inc. (Teaquinn). Teaquinn comprises of Splitsville, an operator of ten-pin bowling

centres and Striker Bowling Solutions, a supplier and installer of bowling equipment, based in Canada. Teaquinn is consolidated in Hollywood

Bowl Group plc’s Financial Statements with effect from 24 May 2022.

The Group’s principal activities are that of the operation of ten-pin bowling and mini-golf centres, and a supplier and installer of bowling

equipment as well as the development of new centres and other associated activities.

The Directors of the Group are responsible for the consolidated Financial Statements, which comprise the Financial Statements of the

Company and its subsidiaries as at 30 September 2022.

2. Accounting policies

The principal accounting policies applied in the consolidated Financial Statements are set out below. These accounting policies have been

applied consistently to all periods presented in these consolidated Financial Statements. The financial information presented is as at and for

the financial years ended 30 September 2022 and 30 September 2021.

Statement of compliance

The consolidated Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards and the

requirements of the Companies Act 2006. The functional currency of entities in the Group are Pounds Sterling and Canadian Dollars. The

consolidated Financial Statements are presented in Pounds Sterling and all values are rounded to the nearest thousand, except where

otherwise indicated.

Basis of preparation

The consolidated Financial Statements have been prepared on a going concern basis under the historical cost convention, except for fair

value items on acquisition (see note 33).

The Company has elected to prepare its Financial Statements in accordance with FRS 102, the Financial Reporting Standard applicable in

the UK and Republic of Ireland. On publishing the Parent Company Financial Statements here together with the Group Financial Statements,

the Company has taken advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and

statement of comprehensive income and related notes that form a part of these approved Financial Statements.

Judgements made by the Directors, in the application of these accounting policies, that have significant effect on the Financial Statements

and estimates with a significant risk of material adjustment in the next year are discussed on page 140.

Basis of consolidation

The consolidated financial information incorporates the Financial Statements of the Company and all of its subsidiary undertakings.

The Financial Statements of all Group companies are adjusted, where necessary, to ensure the use of consistent accounting policies.

Acquisitions are accounted for under the acquisition method from the date control passes to the Group. On acquisition, the assets, liabilities

and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over

the fair values of the identifiable net assets acquired is recognised as goodwill, or a gain on bargain purchase if the fair values of the

identifiable net assets are below the cost of acquisition. Intragroup balances and any unrealised gains and losses or income and expenses

arising from intragoup transactions are eliminated in preparing the consolidated financial statements.

The results of Teaquinn are included from the date of acquisition on 24 May 2022.

Earnings per share

The calculation of earnings per ordinary share is based on earnings after tax and the weighted average number of ordinary shares in issue

during the year.

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive

potential ordinary shares. The Group has two types of dilutive potential ordinary shares, being those unvested shares granted under the

Long Term Incentive Plans and Save-As-You-Earn plans.

Financial statements

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

2. Accounting policies continued

Standards issued not yet effective

At the date of authorisation of this financial information, certain new standards, amendments and interpretations to existing standards

applicable to the Group have been published but are not yet effective, and have not been adopted early by the Group. These are listed below:

Standard/interpretation Content

Applicable for financial

years beginning on/after

IAS 1 Classification of

liabilities as current or

non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to

specify the requirements for classifying liabilities as current or non-current.

1 October 2023

IAS 1 Presentation of

financial statements and

IFRS Practice Statement 2

making materiality

judgements-disclosure of

accounting policies

The amendments change the requirements in IAS 1 with regard to disclosure of

accounting policies. The amendments replace all instances of the term ‘significant

accounting policies’ with ‘material accounting policy information’.

1 October 2023

IAS 8 Definition of

accounting estimates

The amendments replace the definition of a change in accounting estimates with a new

definition of accounting estimates. Under the new definition, accounting estimates are

‘monetary amounts in financial statements that are subject to measurement uncertainty’.

1 October 2023

IAS 12 Deferred tax

related to assets and

liabilities arising from a

single transaction

The amendments introduce a further exception from the initial recognition exemption.

Under the amendments, an entity does not apply the initial recognition exemption for

transactions that give rise to equal taxable and deductible temporary differences.

Following the amendments to IAS 12, an entity is required to recognise the related

deferred tax asset and liability.

1 October 2023

IFRS 17 Insurance

contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive

new accounting standard for insurance contracts covering recognition and measurement,

presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance

Contracts (IFRS 4) that was issued in 2005.

1 October 2023

Annual improvements

to IFRS Standards

2018–2020

The annual improvements include amendments to four Standards: IFRS 1 First-time

adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments,

IFRS 16 Leases, and IAS 41 Agriculture.

1 October 2022

IFRS 3 Reference to the

conceptual framework

In May 2020, the IASB issued amendments to IFRS 3 Business Combinations – Reference

to the Conceptual Framework.

1 October 2022

IAS 16 Property, plant and

equipment: proceeds

before intended use

In May 2020, the IASB issued property, plant and equipment: proceeds before intended

use, which prohibits entities deducting from the cost of an item of property, plant and

equipment any proceeds from selling items produced while bringing that asset to the

location and condition necessary for it to be capable of operating in the manner intended

by management.

1 October 2022

IAS 37 Provisions,

contingent liabilities and

contingent assets

In May 2020, the IASB issued amendments to specify which costs a company includes

when assessing whether a contract will be loss making.

1 October 2022

None of the above amendments are expected to have a material impact on the Group.

Going concern

In assessing the going concern position of the Group for the Consolidated Financial Statements for the year ended 30 September 2022, the

Directors have considered the Group’s cash flow, liquidity, and business activities, as well as the principal risks identified in the Groups Risk

As at 30 September 2022, the Group had cash balances of £56.1m, no outstanding loan balances, no COVID-19 concession deferrals and an

undrawn RCF of £25m, giving an overall liquidity of £81.1m.

The Group has undertaken a review of its liquidity using a base case and a severe but plausible downside scenario.

The base case is the Board approved budget for FY2023 as well as the first three months of FY2024 which forms part of the Board approved

five-year plan. Under this scenario there would be positive cash flow, strong profit performance and all covenants would be passed. It should

also be noted that the RCF remains undrawn. Furthermore, it is assumed that the Group adhere to its capital allocation policy as outlined on

pages 44.

The most severe downside scenario stress tests for reasonably adverse variations in the economic environment leading to a deterioration in

trading conditions and performance.

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2. Accounting policies continued

Going concern continued

Under this severe but plausible downside scenario, the Group has modelled revenues dropping by circa 4 and 5 per cent from the assumed

base case for FY2023 and FY2024 respectively and inflation continues at an even higher rate than in the base case, specifically around cost

of labour.

The model still assumes that investments into new centres would continue, whilst refurbishments in the early part of FY2024 would be

reduced and further Pins on Strings installs would be delayed until FY2025. These are all mitigating factors that the Group has in its control.

Under this scenario, the Group will still be profitable and have sufficient liquidity within its cash position to not draw down the RCF, with all

financial covenants passed.

Taking the above and the principal risks faced by the Group into consideration, the Directors are satisfied that the Group has adequate

resources to continue in operation for the foreseeable future, a period of at least 12 months from the date of this report.

Accordingly, the Group continues to adopt the going concern basis in preparing these Financial Statements.

In preparing the financial statements management has considered the impact of climate change, taking into account the relevant disclosures

in the Strategic report, including those made in accordance with the recommendations of the Task Force on Climate-related Financial

Disclosure.

The expected environmental impact of climate change on the business has been modelled. The current available information and

assessment did not identify any risks that would require the useful economic lives of assets to be reduced in the year or identify the need for

impairment that would impact the carrying values of such assets or have any other impact on the financial statements. The impact

assessments will be continuously updated to reflect the latest available information on the impact of climate change.

Revenue

Revenue from customers is the total amount receivable by the Group for goods and services supplied, excluding VAT and discounts,

and excludes amounts collected on behalf of third parties. The Group’s performance obligations in respect of individual revenue streams are

outlined below.

Revenue arising from bowling and mini-golf is recognised when the customer actually plays, with deposits paid in advance being held on the

balance sheet until that time and then recognised as income.

Revenue for food and drink is recognised when the product has been transferred to the buyer at the point of sale, which is generally when

payment is received.

Revenue for amusements is recognised when the customer plays the amusement machine.

Revenue from customers is disaggregated by major product and service lines, being bowling, food and drink, amusements, mini golf,

installation of bowling equipment and other. Disaggregated revenue from contracts with customers is disclosed in note 3 on page 141.

Given the nature of the Group’s revenue streams, recognition of revenue is not considered to be a significant area of judgement. Revenue

from installation of bowling equipment contracts is recognised using the percentage of completion method as the contract activity is being

performed. This is not considered to be material revenue for the Group and is not therefore a significant area of judgement.

Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-makers.

The chief operating decision-makers have been identified as the management team including the Chief Executive Officer and Chief

Financial Officer.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses.

The Board considers that the Group’s activity constitutes two operating and two reporting segments, being the provision of ten-pin bowling

and mini-golf centres in the United Kingdom and Canada, as defined under IFRS 8. Management review the performance of the Group by

reference to total results against budget.

The total profit measures are operating profit and profit after tax for the period, both disclosed on the face of the consolidated income

statement and statement of comprehensive income. No differences exist between the basis of preparation of the performance measures

used by management and the figures in the Group’s financial information, as adjusted where appropriate.

Employee benefits

(i) Short-term benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated

services are rendered by employees of the Group.

(ii) Defined contribution plans

The Group operates a defined contribution pension scheme for employees. The assets of the scheme are held separately from those of the

Group. The annual contributions payable are charged to the income statement. The Group also contributes to the personal pension plans of

the Directors.

Financial statements

134

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

2. Accounting policies continued

Employee benefits continued

(iii) Share-based payments

The Group operates equity-settled share-based payment plans for its employees, under which the employees are granted equity

instruments of Hollywood Bowl Group plc. The fair value of services received in exchange for the equity instruments is determined by

reference to the fair value of the instruments granted at grant date. The fair value of the instruments includes any market performance

conditions and non-vesting conditions. The expense is recognised over the vesting period of the award taking into account any non-market

performance and service conditions.

The cost of equity-settled transactions is recognised together with a corresponding increase in equity, over the period in which

the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award.

(iv) Save-As-You-Earn plans

The Group operates two equity-settled SAYE plans. The fair value is calculated at the grant date using the Black-Scholes pricing model.

The resulting cost is charged to the Group income statement over the vesting period. The value of the charge is adjusted to reflect expected

and actual levels of vesting.

Leases

The Group as lessee

The Group assesses whether a contract is, or contains, a lease, at inception of the contract. The Group recognises a right-of-use asset and a

corresponding lease liability with respect to all lease arrangements in which it is the lessee from the date at which the leased asset becomes

available for use by the Group, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value

assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease

unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement

of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, less any lease incentives received.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

The lease term is the non-cancellable period for which the lessee has the right to use an underlying asset plus periods covered by an extension

option if an extension is reasonably certain. The majority of property leases are covered by the Landlord and Tenant Act 1985 (LTA) which gives

the right to extend the lease beyond the termination date. The Group expects to extend the property leases covered by the LTA. This extension

period is not included within the lease term as a termination date cannot be determined as the Group are not reasonably certain to extend the

lease given the contractual rights of the landlord under certain circumstances.

Lease liabilities are measured at the present value of lease payments to be made over the lease term. The lease payments include fixed

payments (including in-substance fixed payments) less any lease incentives receivable and variable lease payments that depend on an index

or a rate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or

condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because

the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to

reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if

there is a modification, a change in the lease term or a change in the lease payments (e.g. changes to future payments resulting from a change

in an index or rate used to determine such lease payments).

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as

described in the ‘impairment’ policy.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated

non-lease components as a single arrangement. The Group has not used this practical expedient. For contracts that contain a lease component

and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component

on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Short-term leases and leases of low-value assets

The Group applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (i.e. those leases that

have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of

low-value assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term

leases and leases of low-value assets are recognised as expense on a straight-line basis over the lease term.

Amendments to IFRS 16: COVID-19 Related Rent Concessions

On 28 May 2020, the IASB issued COVID-19-Related Rent Concessions – amendment to IFRS 16 Leases. The amendments provide relief

to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the

COVID-19 pandemic. As a practical expedient, a lessee may elect not to assess whether a COVID-19-related rent concession from a lessor

is a lease modification. A lessee that makes this election accounts for any change in lease payments resulting from the COVID-19-related

rent concession the same way it would account for the change under IFRS 16, if the change were not a lease modification. The practical

expedient was adopted by the Group and the impact on the consolidated Financial Statements is outlined in note 14.

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Annual report and accounts 2022

2. Accounting policies continued

Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to

settle that obligation. Provisions are measured at the best estimate of the expenditure required to settle the obligation at the end of the reporting

period, and are discounted to present value where the effect is material.

Dilapidation provision

A provision will be recorded, if as lessee, the Group has a commitment to make good the property at the end of the lease, which would be for

the cost of returning the leased property to its original state. Changes to the dilapidation provision are recorded in property, plant and equipment.

Property, plant and equipment

Freehold land and building assets were included at fair value on the acquisition of Teaquinn. Subsequent additions are recorded at cost less

accumulated depreciation and impairment charges. Freehold land is not depreciated.

All other property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item,

less accumulated depreciation and impairment losses.

Depreciation is provided to write off the cost of all property, plant and equipment evenly over their expected useful lives, calculated at the

following rates:

Freehold property over 50 years

Leasehold property lesser of lease period and 25 years

Lanes and Pins on Strings over 30–40 years

Plant and machinery and

fixtures, fittings and equipment over 3–25 years

Pinspotters up to 10 years

The carrying value of the property, plant and equipment is compared to the higher of value-in-use and the fair value less costs to sell. If the

carrying value exceeds the higher of the value-in-use and fair value less the costs to sell the asset, then the asset is impaired and its value

reduced by recognising an impairment provision. New centre landlord contributions are offset against leasehold property expenditure where

the related assets remain the property of the landlord. Refurbishment costs are included within plant and machinery and fixtures, fittings and

equipment and are depreciated over the relevant useful economic life.

Residual values, remaining useful economic lives and depreciation periods and methods are reviewed annually and adjusted if appropriate.

Assets under construction represents the construction of centres and are included in property, plant and equipment. No depreciation is

provided on assets under construction until the asset is available for use.

Goodwill and intangible assets

Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair

value of the assets and liabilities acquired. Negative goodwill is recognised in the consolidated income statement immediately as a gain on

bargain purchase. Positive goodwill is capitalised and stated at cost less any impairment losses. Impairment tests on the carrying value of

goodwill are undertaken:

• at the end of the first full financial period following acquisition and at the end of every subsequent financial period; and

• in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.

Software which is not an integral part of hardware assets is stated at historic cost, including expenditure that is directly attributable to the

acquired item, less accumulated amortisation and impairment losses.

Other intangible assets include assets acquired in a business combination and are capitalised at fair value at the date of acquisition. Following

initial recognition, finite life intangible assets are amortised on a straight-line basis over their estimated useful lives, with the expense charged

to the income statement through administrative expenses.

Amortisation is provided to write off the cost of all intangible assets, except for goodwill, evenly over their expected useful lives, calculated at

the following rates:

Software over 3 years

Customer relationships over 10–15 years

Brand names over 5–20 years

Trademark over 20 years

The amortisation charge is recognised in administrative expenses in the income statement.

Cash and cash equivalents

Cash and cash equivalents includes cash held at centres, short-term deposits with banks and other financial institutions, and credit card

payments received within 72 hours.

Financial statements

136

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

2. Accounting policies continued

Inventories

Inventories are carried at the lower of cost or net realisable value. Net realisable value is calculated based on the revenue from sale in the

normal course of business less any costs to sell. Due allowance is made for obsolete and slow-moving items.

Impairment

(i) Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) on financial assets measured at amortised cost. The financial assets

comprises trade and other receivables.These are always measured at an amount equal to lifetime ECL as these relate to trade and other

receivables and a simplified approach can be adopted. The maximum period considered when estimating ECLs is the maximum contractual

period over which the Group is exposed to credit risk. There is limited exposure to ECLs due to the business model.

ECLs are a probability weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the

difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

ECLs are discounted at the effective interest rate of the financial asset.

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of

recovery. This is generally the case when the Group determines that the debtor does not have the assets or sources of income that could

generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject

to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

(ii) Impairment of non-financial assets

The carrying values of goodwill and intangible assets are reviewed at the end of each reporting period for impairment. Impairment is

measured by comparing the carrying values of the assets with their recoverable amounts.

The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value-in-use, which is measured by

reference to discounted future cash flows. These assets are grouped together into Cash Generating Units to assess impairment. A sensitivity

analysis is also performed (see note 15). An impairment loss is recognised in the income statement immediately.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a

subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the

extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss

been recognised. The reversal is recognised in the income statement immediately.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that

it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other

comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively

enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial

position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects

neither accounting nor taxable profit; and

• investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the

difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which

the asset can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date

and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the

deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

• the same taxable Group company; or

• different entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the

liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled

or recovered.

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Annual report and accounts 2022

2. Accounting policies continued

Equity

The following describes the nature and purpose of each reserve within equity:

• share capital: the nominal value of equity shares;

• share premium account: proceeds received in excess of the nominal value of shares issued, net of any transaction costs;

• retained earnings: all other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere;

• merger reserve: represents the excess over nominal value of the fair value consideration for the business combination which arose during

the Company’s IPO listing. This was satisfied by the issue of shares in accordance with s612 of the Companies Act 2006; and

• foreign currency translation reserve: retranslation gains and losses of foreign currency denominated operations.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Recognition and initial measurement

Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised

when the Group becomes a party to the contractual provisions of the instrument.

On initial recognition, a financial asset is classified as measured at amortised cost, fair value through other comprehensive income (FVOCI)

or fair value through profit or loss (FVTPL). A financial liability is classified as measured at either amortised cost or FVTPL.

(ii) Classification and subsequent measurement

Financial assets

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing

financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in

the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are ‘solely payments of principal and interest’ (SPPI) on the principal

amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

All financial assets not measured at amortised cost or FVOCI are measured at FVTPL, irrespective of the business model. On initial

recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised

cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: business model assessment

The Group’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows.

The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in

order to collect contractual cash flows, while financial assets classified and measured at FVOCI are held within a business model with the

objective of both holding to collect contractual cash flows and selling.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets: assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as

consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period

of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the

instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of

contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

• contingent events that would change the amount or timing of cash flows;

• terms that may adjust the contractual coupon rate, including variable rate features;

• prepayment and extension features; and

• terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).

Financial statements

138

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

2. Accounting policies continued

Financial instruments continued

(ii) Classification and subsequent measurement continued

Financial assets: subsequent measurement and gains and losses

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend

income, are recognised in profit or loss.

Financial assets

at amortised cost

These assets are subsequently measured at amortised cost using the effective interest rate (EIR) method.

The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and

impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

The Group’s financial assets at amortised cost include trade receivables.

Debt instruments

at FVOCI

These assets are subsequently measured at fair value. Interest income, calculated using the effective interest method,

foreign exchange revaluation and impairment losses or reversals are recognised in profit or loss and computed in the

same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in

OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

Financial liabilities: classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as FVTPL if it is classified as held

for trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net

gains and losses, including any interest expense, are recognised in profit or loss. All other financial liabilities are recognised initially at their fair

value and subsequently measured at amortised cost using the effective interest method.

(iii) Derecognition

Financial assets

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the

rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial

asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not

retain control of the financial asset.

Financial liabilities

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also

derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which

case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any

non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

(iv) Offsetting

Financial assets and financial liabilities are offset and the net position presented in the statement of financial position when, and only when,

the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the

asset and settle the liability simultaneously.

Foreign currency transactions

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary economic

environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Pounds Sterling,

which is the ultimate Parent Company’s functional currency.

(ii) Transactions and balances

Transactions in foreign currencies are translated into the functional currency at the exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date.

Exchange gains and losses are included within administrative expenses in the income statement.

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyper-inflationary economy) that have a

functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities are translated at the closing rate at the balance sheet date;

• income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates

(unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case

income and expenses are translated at the dates of the transactions), and

• all resulting exchange differences are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign

operation and translated at the closing rate.

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2. Accounting policies continued

Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be

complied with. Where the income relates to a distinct identifiable expense, the income is offset against the relevant expense e.g. income

received under the Coronavirus Job Retention Scheme has been offset against staff costs in administrative expenses. Where an expense is

not distinctly identifiable or the income relates to multiple expenses, the income is recognised within other income.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate

financial support to the Group with no future related costs are recognised as other income in the consolidated income statement in the

period in which they become receivable.

Exceptional items and other adjustments

Exceptional items and other adjustments are those that in management’s judgement need to be disclosed by virtue of their size, nature

and incidence, in order to draw the attention of the reader and to show the underlying business performance of the Group more accurately.

Such items are included within the income statement caption to which they relate and are separately disclosed on the face of the

consolidated income statement and in the notes to the consolidated Financial Statements.

Adjusted measures

The Group uses a number of non-Generally Accepted Accounting Principles (non-GAAP) financial measures in addition to those reported

in accordance with IFRS. The Directors believe that these non-GAAP measures, listed below, are important when assessing the underlying

financial and operating performance of the Group by investors and shareholders. These non-GAAP measures comprise of like-for-like

revenue growth, adjusted profit after tax, adjusted earnings per share, net debt, Group operating cash flow, Group adjusted EBITDA and

Group adjusted EBITDA margin.

A reconciliation between key adjusted and statutory measures, as well as notes on alternative performance measures, is provided in the

Chief Financial Officer’s review on pages 41 to 45. This also details the impact of exceptional and other adjusted items when comparing to the

non-GAAP financial measures in addition to those reported in accordance with IFRS.

Summary of critical accounting estimates and judgements

The preparation of the consolidated Group Financial Statements requires management to make judgements, estimates and assumptions in

applying the Group’s accounting policies to determine the reported amounts of assets, liabilities, income and expenditure. Actual results may

differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis, with revisions applied prospectively.

Judgements made by the Directors in the application of these accounting policies that have a significant effect on the consolidated Group

Financial Statements are discussed below.

Critical accounting judgements

Dilapidation provision

A provision is made for future expected dilapidation costs on the opening of leasehold properties not covered by the LTA and is expected to

be utilised on lease expiry. This also includes properties covered by the LTA where we may not extend the lease, after consideration of the

long-term trading and viability of the centre. Properties covered by the LTA provide security of tenure and we intend to occupy these

premises indefinitely until the landlord serves notice that the centre is to be redeveloped. As such, no charge for dilapidations can be

imposed and no dilapidation provision is considered necessary as the outflow of economic benefit is not considered to be probable.

Key sources of estimation uncertainty

The key estimates are discussed below:

Property, plant and equipment and right-of-use asset impairment reviews

Plant and equipment and right-of-use assets are reviewed for impairment when there is an indication that the assets might be impaired by

comparing the carrying value of the assets with their recoverable amounts. The recoverable amount of an asset or a CGU is typically

determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates.

The key assumptions in the value-in-use calculations include growth rates of revenue and expenses, and discount rates. The carrying value

of property, plant and equipment and right-of-use assets have been assessed to reasonable possible changes in key assumptions and these

would not lead to a material impairment.

Further information in respect of the Group’s property, plant and equipment and right-of-use assets is included in notes 13 and 14 respectively.

Other estimates

The acquisition of Teaquinn Holdings Inc. has been accounted for using the acquisition method under IFRS 3. The identifiable assets, liabilities and

contingent liabilities are recognised at their fair value at date of acquisition (note 33). The fair value of the net assets identified were determined with

assistance from independent experts using professional valuation techniques appropriate to the individual category of asset or liability. Calculating

the fair values of net assets, notably the fair values of contingent consideration, freehold property and intangible assets identified as part of the

purchase price allocation, involves estimation and consequently the fair value exercise is recorded as an other accounting estimate. The

depreciation and amortisation charge is sensitive to the value of the freehold property and intangible asset values, so a higher or lower fair value

calculation would lead to a change in the depreciation and amortisation charge in the period following acquisition. These estimates are not

considered key sources of estimation uncertainty as a material adjustment to the carrying value is not expected in the following financial year.

Financial statements

140

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

3. Segmental reporting

Management consider that the Group consists of 2 operating segments, as it operates within the UK and Canada (30 September 2021: UK

only, no exceptional income). No single customer provides more than ten per cent of the Group’s revenue. Within these two operating

segment there are multiple revenue streams which consist of the following:

Before exceptional

income UK

30 September

2022

£’000

Exceptional income

UK (note 6)

30 September

2022

£’000

Total UK

30 September

2022

£’000

Canada

30 September

2022

£’000

Total

30 September

2022

£’000

30 September

2021

£’000

Bowling 86,409 5,792 92,201 2,253 94,454 34,769

Food and drink 46,660 — 46,660 1,067 47,727 17,396

Amusements 46,510 — 46,510 773 47,283 18,625

Mini-golf 1,973 — 1,973 — 1,973 1,076

Installation of bowling equipment — — — 2,040 2,040 —

Other 176 — 176 88 264 12

181,728 5,792 187,520 6,221 193,741 71,878

The UK operating segment includes the Hollywood Bowl, AMF Bowling and Puttstars brands. The Canada operating segment includes the

Splitsville and Striker Bowling Solutions brands.

Year ended 30 September 2022

£’000

Canada

£’000

Total

£’000

Revenue 187,520 6,221 193,741

Group adjusted EBITDA as defined in note 5 76,289 1,166 77,455

Operating profit 54,673 776 55,449

Finance income — 12 12

Finance expense 8,541 255 8,796

Depreciation and amortisation 20,965 390 21,355

Impairment of PPE and ROU assets 4,321 — 4,321

Profit before tax 46,132 533 46,665

Non-current asset additions – Property, plant and equipment 21,750 322 22,072

Non-current asset additions – Intangible assets 108 70 178

Total assets 339,194 25,492 364,686

Total liabilities 208,549 17,717 226,266

4. Other income

30 September

2022

£’000

30 September

2021

£’000

Government grant for the purpose of immediate financial support — 2,814

No government grants were received in FY2022. In FY2021, £2,814,000 were received as part of a government initiative to provide

immediate financial support for businesses that were forced to close as a result of trading restrictions due to the COVID-19 pandemic.

5. Reconciliation of operating profit to Group adjusted EBITDA

30 September

2022

£’000

30 September

2021

£’000

Operating profit 55,449 9,580

Depreciation of property, plant and equipment (note 13) 8,721 7,740

Depreciation of right-of-use assets (note 14) 12,010 11,882

Amortisation of intangible assets (note 15) 624 477

Impairment of property, plant and equipment (note 13) 2,535 299

Impairment of right-of-use assets (note 14) 1,786 551

Loss on disposal of property, plant and equipment, right-of-use assets and software (notes 13–15) 18 29

Exceptional items (note 6) (3,688) —

Group adjusted EBITDA 77,455 30,558

Group adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) reflects the underlying trade of the overall business.

It is calculated as operating profit plus depreciation, amortisation, impairment losses, loss on disposal of property, plant and equipment,

right-of-use assets and software and exceptional items. Operating profit in FY2021 includes government grant income of £2,814,000.

Management use Group adjusted EBITDA as a key performance measure of the business and it is considered by management to be a

measure investors look at to reflect the underlying business.

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6. Exceptional items

Exceptional items are disclosed separately in the Financial Statements where the Directors consider it necessary to do so to provide further

understanding of the financial performance of the Group. They are material items or expenses that have been shown separately due to, in the

Directors judgement, their significance, one-off nature or amount:

Exceptional items:

30 September

2022

30 September

2021

VAT rebate

5,792 —

Administrative expenses

(144) —

Acquisition fees

(1,557) —

Gain on bargain purchase

39 —

Contingent consideration

(464) —

Exceptional items before tax (3,666) —

Tax charge (1,079) —

Exceptional items after tax (2,587) —

1 During the year, HMRC conducted a review of its policy position on the reduced rate of VAT for leisure and hospitality and the extent to which it applies to bowling. Following its review, HMRC now

accepts that leisure bowling should fall within the scope of the temporary reduced rate of VAT for leisure and hospitality, as a similar activity to those listed in Group 16 of schedule 7A of the VAT

Act 1994. As a result, the Group made a retrospective claim for overpaid output VAT for the period 15 July 2020 to 30 September 2021 totalling £5,792,000, included within bowling revenue.

2 Expenses associated with the VAT rebate, relating to additional turnover rent, profit share due to landlords and also professional fees, which are included within administrative expenses.

3 Legal and professional fees relating to the acquisition of Teaquinn during the year (note 33).

4 Gain on bargain purchase in relation to the acquisition of Teaquinn during the year (note 33).

5 Contingent consideration of £442,000 in administrative expenses and £22,000 of interest expense in relation to the acquisition of Teaquinn during the year (note 33).

7. Expenses and auditor’s remuneration

Included in profit from operations are the following:

30 September

2022

£’000

30 September

2021

£’000

Amortisation of intangible assets 624 477

Depreciation of property, plant and equipment 8,721 7,740

Depreciation of right-of-use assets 12,010 11,882

Impairment of property, plant and equipment 2,535 299

Impairment of right-of-use assets 1,786 551

Operating leases 57 43

Loss on disposal of property, plant and equipment, right-of-use assets and software 18 29

Exceptional items (note 6) (3,666) —

Loss on foreign exchange 154 16

Auditor’s remuneration:

– Fees payable for audit of these Financial Statements 317 228

Fees payable for other services:

– Audit of subsidiaries 66 82

– Other services 16 11

399 321

8. Staff numbers and costs

The average number of employees (including Directors) during the year was as follows:

30 September

2022

30 September

2021

Directors 7 6

Administration 91 58

Operations 2,432 1,723

Total staff 2,530 1,787

Financial statements

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

8. Staff numbers and costs continued

The cost of employees (including Directors) during the year was as follows:

30 September

2022

£’000

30 September

2021

£’000

Wages and salaries 42,808 15,853

Social security costs 3,600 1,648

Pension costs 475 336

Share-based payments (note 29) 944 16

Total staff cost 47,827 17,853

FY2022 wages and salaries includes £442,000 of contingent consideration in relation to the acquisition of Teaquinn (note 33).

FY2021 wages and salaries includes £8,287,000 of Coronavirus Job Retention Scheme government grant received.

9. Remuneration of Directors and key management personnel

A) Directors’ emoluments

The Directors’ emoluments and benefits were as follows:

30 September

2022

£’000

30 September

2021

£’000

Salaries and bonuses 2,004 909

Pension contributions 41 32

Share-based payments (note 29) 691 (38)

Total 2,736 903

1 This includes three (FY2021: two) Executive Directors and four (FY2021: four) Non-Executive Directors.

The aggregate of emoluments of the highest paid Director was £1,211,000 (FY2021: £392,000) and Company pension contributions of

£21,000 (FY2021: £20,000) were made to a defined contribution scheme on their behalf. More detail is on page 101 of the Annual report.

B) Key management personnel

The Directors and the senior managers of the Group are considered to be the key management personnel of the Group.

The remuneration of all key management (including Directors) was as follows:

30 September

2022

£’000

30 September

2021

£’000

Salaries and bonuses 2,673 1,312

Pension contributions 58 51

Share-based payments (note 29) 940 (9)

Total 3,671 1,354

10. Finance income and expenses

30 September

2022

£’000

30 September

2021

£’000

Interest on bank deposits 12 —

Finance income 12 —

Interest on bank borrowings 199 1,155

Other interest 2 3

Finance costs on lease liabilities 8,452 7,952

Unwinding of discount on contingent consideration (note 33) 46 —

Unwinding of discount on provisions 97 8

Finance expense 8,796 9,118

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Annual report and accounts 2022

11. Taxation

30 September

2022

£’000

30 September

2021

£’000

The tax expense/(credit) is as follows:

– UK corporation tax 6,436 (384)

– Adjustment in respect of prior years 10 20

– Foreign tax suffered 250 —

– Effects of foreign exchange 3 —

Total current tax 6,699 (364)

Deferred tax:

Origination and reversal of temporary differences 2,431 287

Effect of changes in tax rates 95 (1,202)

Adjustment in respect of prior years (11) 13

Total deferred tax 2,515 (902)

Total tax expense/(credit) 9,214 (1,266)

Factors affecting current tax credit:

The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK of 19 per cent (30 September 2021:

19 per cent). The differences are explained below:

30 September

2022

£’000

30 September

2021

£’000

Profit excluding taxation 46,665 462

Tax using the UK corporation tax rate of 19% (2021: 19%) 8,866 88

Change in tax rate on deferred tax balances 95 (1,202)

Non-deductible expenses 388 22

Non-deductible acquisition related exceptional costs 296 —

Effects of overseas tax rates 66 —

Effects of capital allowances super deduction (577) (137)

Share-based payments 81 (69)

Adjustment in respect of prior years (1) 32

Total tax expense/(credit) included in profit or loss 9,214 (1,266)

The Group’s standard tax rate for the year ended 30 September 2022 was 19 per cent (30 September 2021: 19 per cent).

At Budget March 2021, the government confirmed that the corporation tax main rate would remain at 19 per cent and increase to 25 per cent

from 1 April 2023. As such, the rate used to calculate the deferred tax balances has increased from 19 per cent to a blended rate up to 25 per

cent depending on when the deferred tax balance will be released.

12. Earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of Hollywood Bowl Group plc by the weighted

average number of shares outstanding during the year.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of

all dilutive potential ordinary shares. During the years ended 30 September 2022 and 30 September 2021, the Group had potentially dilutive

ordinary shares in the form of unvested shares pursuant to LTIPs and SAYE schemes (note 29).

30 September

2022

30 September

2021

Basic and diluted

Profit for the year after tax (£’000) 37,451 1,728

Basic weighted average number of shares in issue for the period (number) 170,949,286 164,607,791

Adjustment for share awards 963,218 859,432

Diluted weighted average number of shares 171,912,504 165,467,223

Basic earnings per share (pence) 21.91 1.05

Diluted earnings per share (pence) 21.78 1.04

Financial statements

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

13. Property, plant and equipment

Freehold

property

£’000

Long leasehold

property

£’000

Short leasehold

property

£’000

Lanes and

pinspotters

£’000

Plant and

machinery,

fixtures and

fittings

Total

£’000

Cost

At 1 October 2020 — 1,240 28,652 12,269 36,157 78,318

Additions — — 1,435 1,489 6,406 9,330

Disposals — — (424) (448) (406) (1,278)

At 30 September 2021 — 1,240 29,663 13,310 42,157 86,370

Additions — — 8,127 5,238 8,707 22,072

Acquisition of Teaquinn Holdings Inc. (note 33)

7,061 — 872 284 237 8,454

Disposals — — (24) (796) (595) (1,415)

Effects of movement in foreign exchange 345 — 48 14 12 419

At 30 September 2022 7,406 1,240 38,686 18,050 50,518 115,900

Accumulated depreciation

At 1 October 2020 — 292 11,011 4,347 14,448 30,098

Depreciation charge

— 48 2,773 694 4,225 7,740

Impairment charge — — — — 299 299

Disposals — — (38) (428) (337) (803)

At 30 September 2021 — 340 13,746 4,613 18,635 37,334

Depreciation charge 24 48 3,047 706 4,896 8,721

Impairment charge — — 2,088 — 447 2,535

Disposals — — (24) (785) (522) (1,331)

At 30 September 2022 24 388 18,857 4,534 23,456 47,259

Net book value

At 30 September 2022 7,382 852 19,829 13,516 27,062 68,641

At 30 September 2021 — 900 15,917 8,697 23,522 49,036

Plant and machinery, fixtures and fittings includes £2,916,000 (30 September 2021: £2,162,000) of assets in the course of construction,

relating to the development of new centres.

Impairment

Impairment testing is carried out at the CGU level on an annual basis at the balance sheet date, or more frequently if events or changes

in circumstances indicate that the carrying value may be impaired. A CGU is the smallest identifiable group of assets that generates cash

inflows that are largely independent of the cash inflows from other assets or groups of assets. Each individual centre is considered to be a CGU.

An initial impairment test was performed on all seventy three centres assessing for indicators of impairment. A detailed impairment test

based on a base case was then performed on nine centres, where the excess of value-in-use over the carrying value calculation was sensitive

to changes in the key assumptions.

Property, plant and equipment and right-of-use assets for nine centres have been tested for impairment by comparing the carrying value

of each CGU with its recoverable amount determined from value-in-use calculations using cash flow projections based on financial budgets

approved by the Board covering a five-year period. This base case assumes all centres remain open during FY2023, and the financial years

thereafter, and there are no further trading restrictions associated with the COVID-19 pandemic.

The key assumptions used in the value-in-use calculations are the potential adverse variations in the economic environment leading to a

deterioration in trading conditions and performance during FY2023 and FY2024. Cash flows beyond this two-year period are included in the

Board-approved five-year plan and assume a recovery in the economy and the performance of our centres. The other assumptions used in

the value-in-use calculations were:

2022 2021

Discount rate (pre-tax) 16.0% 12.7%

Growth rate (beyond three years) 2.5% 2.5%

Discount rates reflect current market assessments of the time value of money and the risks specific to the industry. This is the benchmark

used by management to assess operating performance and to evaluate future capital investment proposals. These discount rates are

derived from the Group’s weighted average cost of capital. Changes in the discount rates over the years are calculated with reference to

latest market assumptions for the risk-free rate, equity risk premium and the cost of debt. These discount rates were impacted by the

volatility in the debt markets at the time of calculation, 30 September 2022.

Detailed impairment testing resulted in the recognition of an impairment charge in the year of £2,535,000 (FY2021: £299,000) against

property, plant and equipment assets and £1,786,000 (FY2021: £551,000) against right-of-use assets for three UK centres (note 14).

Following the recognition of the impairment charge, the carrying value of property, plant and equipment is £3,456,000 and right-of-use

assets is £3,151,000 for these three UK centres (note 14).

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Annual report and accounts 2022

13. Property, plant and equipment continued

Sensitivity to changes in assumptions

The estimate of the recoverable amounts for six centres affords reasonable headroom over the carrying value of the property, plant and

equipment and right-of-use asset, and an impairment charge of £2,535,000 for three centres under the base case. Management have

sensitised the key assumptions in the impairment tests of these nine centres under the base case.

A reduction in revenue of four and five percentage points down on the base case for FY2023 and FY2024 respectively and a three

percentage point increase in operating costs on the base case for FY2023 and FY2024 to reflect higher inflation, would not cause the

carrying value to exceed its recoverable amount for these six centres. Therefore, management believe that any reasonable possible changes

in the key assumptions would not result in an impairment charge. A further impairment of £400,000 would arise under this sensitised case in

relation to three centres where we have already recognised an impairment charge in the year.

14. Leases

Group as a lessee

The Group has lease contracts for property and amusement machines used in its operations. The Group’s obligations under its leases are

secured by the lessor’s title to the leased assets. The Group is restricted from assigning and subleasing the leased assets. There are ten

(FY2021: eight) lease contracts that include variable lease payments in the form of revenue-based rent top-ups.

The Group also has certain leases of equipment with lease terms of 12 months or less and leases of office equipment with low value.

The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

Set out below are the carrying amounts of right-of-use assets recognised and the movements during the year:

Right-of-use assets

Property

£’000

Amusement

machines

£’000

Total

£’000

Cost

At 1 October 2020 139,699 7,662 147,361

Lease additions 2,581 587 3,168

Lease surrenders — (140) (140)

Lease modifications 6,442 — 6,442

At 30 September 2021 148,722 8,109 156,831

Lease additions 7,805 3,462 11,267

Acquisition of Teaquinn Holdings Inc. (note 33) 11,510 — 11,510

Lease surrenders — (332) (332)

Lease modifications 5,640 — 5,640

Effects of movement in foreign exchange 583 — 583

At 30 September 2022 174,260 11,239 185,499

Accumulated depreciation

At 1 October 2020 9,742 2,443 12,185

Depreciation charge 9,339 2,543 11,882

Impairment charge 551 — 551

Lease surrenders — (129) (129)

At 30 September 2021 19,632 4,857 24,489

Depreciation charge 9,846 2,164 12,010

Impairment charge 1,786 — 1,786

Lease surrenders — (241) (241)

At 30 September 2022 31,264 6,780 38,044

Net book value

At 30 September 2022 142,996 4,459 147,455

At 30 September 2021 129,090 3,252 132,342

Financial statements

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

14. Leases continued

Group as a lessee continued

Set out below are the carrying amounts of lease liabilities and the movements during the year:

Lease liabilities

Property

£’000

Amusement

machines

£’000

Total

£’000

At 1 October 2020 167,100 6,704 173,804

Lease additions 2,581 587 3,168

Accretion of interest 7,836 116 7,952

Lease modifications 6,442 (11) 6,431

Payments

(15,429) (1,986) (17,415)

At 30 September 2021 168,530 5,410 173,940

Lease additions 7,805 3,462 11,267

Acquisition of Teaquinn Holdings Inc. (note 33) 11,510 — 11,510

Accretion of interest 8,354 98 8,452

Lease modifications 5,640 (157) 5,483

Payments

(19,873) (2,994) (22,867)

Effects of movement in foreign exchange 584 — 584

At 30 September 2022 182,550 5,819 188,369

Current 9,027 2,530 11,557

Non-current 173,523 3,289 176,812

At 30 September 2022 182,550 5,819 188,369

Current 11,644 2,167 13,811

Non-current 156,886 3,243 160,129

At 30 September 2021 168,530 5,410 173,940

1 In FY2021, as a result of COVID-19 rent concessions, £991,000 of property payments and £745,000 of amusement machine payments noted above were deferred during the year

and are netted off the payments. A further £2,110,000 of rent savings were taken to profit or loss as a credit to variable lease payments within administrative expenses.

2 In FY2022, £35,000 (FY2021: £43,000) of rent payments were part of the working capital movements in the year.

The maturity analysis of the future undiscounted payments due under the above lease liabilities is disclosed in note 31.

The following are the amounts recognised in profit or loss:

2022

£’000

2021

£’000

Depreciation expense of right-of-use assets 12,010 11,882

Impairment charge of right-of-use assets 1,786 551

Interest expense on lease liabilities 8,452 7,952

Expense relating to leases of low-value assets (included in administrative expenses) 57 43

Variable lease payments (included in administrative expenses) 788 581

COVID-19 rent savings (included in administrative expenses) — (2,110)

Total amount recognised in profit or loss 23,093 18,899

The Group has contingent lease contracts for ten (FY2021: eight) sites. There is a revenue-based rent top-up on these sites. Variable lease

payments include revenue-based rent top-ups at ten (FY2021: six) centres totalling £716,000 (FY2021: £320,000). It is anticipated that

top-ups totalling £737,000 will be payable in the year to 30 September 2023 based on current expectations.

Impairment testing is carried out as outlined in note 13. Detailed impairment testing resulted in the recognition of an impairment charge in the

year of £1,786,000 (FY2021: £551,000) against right-of-use assets for three UK centres (FY2021: one UK centre).

147

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15. Goodwill and intangible assets

Goodwill

£’000

Brands

£’000

Trademark

£’000

Customer

relationships

£’000

Software

£’000

Total

£’000

Cost

At 1 October 2020 75,034 3,360 798 — 1,860 81,052

Additions — — — — 252 252

At 30 September 2021 75,034 3,360 798 — 2,112 81,304

Additions 70 — — — 108 178

Acquisition of Teaquinn Holdings Inc. (note 33)

90 3,888 — 314 — 4,292

At 30 September 2022 75,194 7,248 798 314 2,220 85,774

Accumulated amortisation

At 1 October 2020 — 1,020 316 — 1,543 2,879

Amortisation charge — 168 50 — 259 477

At 30 September 2021 — 1,188 366 — 1,802 3,356

Amortisation charge — 335 50 8 231 624

At 30 September 2022 — 1,523 416 8 2,033 3,980

Net book value

At 30 September 2022 75,194 5,725 382 306 187 81,794

At 30 September 2021 75,034 2,172 432 — 310 77,948

1 This relates to the Hollywood Bowl, Splitsville and Striker Bowling Solutions brands.

2 This relates to the Hollywood Bowl trademark only.

Impairment testing is carried out at the CGU level on an annual basis. A CGU is the smallest identifiable group of assets that generates cash

inflows that are largely independent of the cash inflows from other assets or groups of assets. Each individual centre is considered to be a

CGU. However, for the purposes of testing goodwill for impairment, it is acceptable under IAS 36 to group CGUs, in order to reflect the level

at which goodwill is monitored by management. The UK Group is considered to be the CGU, for the purposes of goodwill impairment testing,

on the basis that the goodwill relates mainly to the UK operating segment.

The recoverable amount of the CGU is determined based on a value-in-use calculation using cash flow projections based on financial

budgets approved by the Board covering a five-year period. This base case assumes all centres remain open during FY2023, and the

financial years thereafter, and there are no further trading restrictions associated with the COVID-19 pandemic.

Cash flows beyond this period are extrapolated using the estimated growth rates stated in the key assumptions. The key assumptions used

in the value-in-use calculations are:

2022 2021

Discount rate (pre-tax) 16.0% 12.7%

Growth rate (beyond three years) 2.5% 2.5%

Discount rates reflect current market assessments of the time value of money and the risks specific to the industry. This is the benchmark

used by management to assess operating performance and to evaluate future capital investment proposals. These discount rates are

derived from the Group’s weighted average cost of capital. Changes in the discount rates over the years are calculated with reference to

latest market assumptions for the risk-free rate, equity risk premium and the cost of debt.

Sensitivity to changes in assumptions

Management has sensitised the key assumptions in the impairment tests of the CGU under the base case scenario.

The key assumptions used and sensitised were forecast growth rates and the discount rates, which were selected as they are the key

variable elements of the value-in-use calculation. The combined effect of a reduction in revenue of 4.4 percentage points on the base case

for FY2023 and FY2024, an increase in the discount rate applied to the cash flows of the CGU of one per cent and a reduction of one per

cent in the growth rate (beyond five years), would reduce the headroom by £57.3m. This scenario would not cause the carrying value to

exceed its recoverable amount. Therefore, management believes that any reasonable possible change in the key assumptions would not

result in an impairment charge.

Financial statements

148

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Notes to the financial statements continued

For the year ended 30 September 2022

16. Investment in subsidiaries

Hollywood Bowl Group plc’s operating subsidiaries as at 30 September 2022 are as follows:

Name

Company

number Principal activity Country of incorporation

Percentage

of ordinary

shares owned

Direct holdings

Kanyeco Limited

1, 2

09164276 Investment holding England and Wales 100%

Hollywood Bowl EBT Limited

1, 2

10246573 Dormant England and Wales 100%

Teaquinn Holdings Inc.

1, 4

725118608 Investment holding Canada 100%

Indirect holdings

Kendallco Limited

1, 2

09176418 Investment holding England and Wales 100%

The Original Bowling Company Limited

05163827 Ten-pin bowling England and Wales 100%

Original Bowling Company (NI) Limited

NI679991 Dormant Northern Ireland 100%

AMF Bowling (Eastleigh) Limited

06998390 Dormant England and Wales 100%

MABLE Entertainment Limited

01094660 Dormant England and Wales 100%

Milton Keynes Entertainment Limited

01807080 Dormant England and Wales 100%

Bowlplex Limited

01250332 Dormant England and Wales 100%

Bowlplex European Leisure Limited

05539281 Dormant England and Wales 100%

Wessex Support Services Limited

01513727 Dormant England and Wales 100%

Wessex Superbowl (Germany) Limited

03253033 Dormant England and Wales 100%

Bowlplex Properties Limited

05506380 Dormant England and Wales 100%

Xtreme Bowling Entertainment Corporation

840672380 Ten-pin bowling Canada 100%

2434335 Ontario Inc.

4,5

836991794 Ten-pin bowling Canada 100%

2208176 Ontario Ltd.

4,5

803494491 Ten-pin bowling Canada 100%

2863586 Ontario Inc.

4,5

779941806 Ten-pin bowling Canada 100%

2470232 Ontario Inc.

4,5

819879529 Ten-pin bowling Canada 100%

Splitsville Entertainment Ltd

4, 5

819960279 Ten-pin bowling Canada 100%

2434332 Ontario Inc.

4, 5

833235385 Ten-pin bowling Canada 100%

Striker Installations Inc.

853701399 Ten-pin bowling installations Canada 100%

Striker Bowling Solutions Inc.

889559019 Ten-pin bowling installations Canada 100%

1 These subsidiaries are controlled and consolidated by the Group and the Directors have taken the exemption from having an audit of their financial statements for the year ended

30 September 2022. This exemption is taken in accordance with Section 479A of the Companies Act 2006.

2 The registered office of these subsidiaries is Focus 31, West Wing, Cleveland Road, Hemel Hempstead, Hertfordshire, HP2 7BW.

3 The registered office of this subsidiary is Cleaver Fulton Rankin, 50 Bedford Street, Belfast, BT2 7FW, Northern Ireland.

4 These subsidiaries are controlled and consolidated by the Group. The registered office of these subsidiaries is 505 Iroquois Shore Road, Suite 9, Oakville, Ontario, L6H 2R3, Canada.

5 On 1 October 2022, these subsidiaries were dissolved and incorporated into Xtreme Bowling Entertainment Corporation as part of a group restructure.

17. Cash and cash equivalents

A) Reconciliation of cash and cash equivalents at the end of the reporting period

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

30 September

2022

£’000

30 September

2021

£’000

Cash at bank and in hand 56,066 29,942

B) Changes in liabilities arising from financing activities

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.

Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s

consolidated cash flow statement as cash flows from financing activities.

1 Oct 2021

£’000

Financing

cash flows

£’000

Lease additions,

modifications and

disposals

£’000

Accruals and

prepayments

£’000

Foreign

exchange

£’000

Interest

expense

£’000

Interest

paid

£’000

30 Sept

2022

£’000

Loans and borrowings

(note 22) — — — (84) — 199 (115) —

Lease liabilities (note 14) 173,940 (14,450) 28,260 35 584 8,452 (8,452) 188,369

Total liabilities from

financing activities 173,940 (14,450) 28,260 (49) 584 8,651 (8,567) 188,369

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17. Cash and cash equivalents continued

B) Changes in liabilities arising from financing activities continued

1 Oct 2020

£’000

Financing cash

flows

£’000

Lease additions,

modifications

and disposals

£’000

Accruals and

prepayments

£’000

Foreign

exchange

£’000

Interest

expense

£’000

Interest paid

£’000

30 Sept 2021

£’000

Loans and borrowings

(note 22) 29,038 (29,500) — 514 — 1,155 (1,207) —

Lease liabilities (note 14) 173,804 (7,310) 7,489 (43) — 7,952 (7,952) 173,940

Total liabilities from

financing activities 202,842 (36,810) 7,489 471 — 9,107 (9,159) 173,940

18. Trade and other receivables

30 September

2022

£’000

30 September

2021

£’000

Trade receivables 836 611

Other receivables 245 89

Prepayments 4,049 2,600

5,130 3,300

Trade receivables have an ECL against them that is immaterial. There were no overdue receivables at the end of either year.

19. Inventories

30 September

2022

£’000

30 September

2021

£’000

Goods for resale 2,148 1,461

Goods bought for resale recognised as a cost of sale amounted to £18,700,000 (2021: £6,207,000).

20. Trade and other payables

30 September

2022

£’000

30 September

2021

£’000

Current

Trade payables 5,306 5,121

Other payables 1,310 1,131

Accruals and deferred income 17,000 7,421

Taxation and social security 5,065 4,469

Total trade and other payables 28,681 18,142

30 September

2022

£’000

30 September

2021

£’000

Non-current

Other payables 3,000 565

Accruals and deferred income includes a staff bonus accrual of £7,758,000 (30 September 2021: £1,405,000) and deferred consideration

of £164,000 (30 September 2021: £nil) in relation to the acquisition of Teaquinn Holdings Inc. Deferred income includes £983,000

(30 September 2021: £746,000) of customer deposits received in advance and £160,000 relating to bowling equipment installations, all of

which is recognised in the income statement during the following financial year.

Non-current other payables includes £464,000 (30 September 2021: £nil) of contingent consideration and £1,841,000 (30 September 2021:

£nil) of deferred consideration in respect of the acquisition of Teaquinn Holdings Inc. (note 33). The additional consideration to be paid is

contingent on the future financial performance of Teaquinn Holdings Inc in FY2025 or FY2026. This is based on a multiple of 9.2x Teaquinn’s

EBITDA pre-IFRS 16 in the financial period of settlement and is capped at CAD 17m. The contingent consideration has been accounted for

as post acquisition employee remuneration in accordance with IFRS 3 paragraph B55 and recognised over the duration of the employment

contract to FY2026. The present value of the contingent consideration has been discounted using a WACC of 13 per cent. There is a range

of possible outcomes for the value of the contingent consideration based on Teaquinn forecasted EBITDA pre-IFRS 16 and the year of

payment. This ranges from a payment (undiscounted) in FY2025 of £6,000,000 (undiscounted) to a payment in FY2026 of £9,015,000

(undiscounted), using the FY2022 year-end exchange rate. The fair value of the contingent consideration will be re-assessed at every

financial reporting date, with changes recognised in the income statement.

Financial statements

150

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

21. Provisions

30 September

2022

£’000

30 September

2021

£’000

Lease dilapidations provision 4,682 3,635

The dilapidations provision relates to potential rectification costs expected should the Group vacate its retail locations. There are no onerous

leases within the estate. The movements in the dilapidations provision are summarised below:

Dilapidations

£’000

As at 30 September 2020 3,903

Change in discount rate

(461)

Provided during the year 185

Unwind of discounted amount 8

As at 30 September 2021 3,635

Change in discount rate

(480)

Provided during the year 1,430

Unwind of discounted amount 97

As at 30 September 2022 4,682

1 There was an increase in the discount rate from 1.22 per cent at 30 September 2021 to 4.40 per cent at 30 September 2022 (FY2021: an increase in the discount rate from 0.25

per cent at 30 September 2020 to 1.22 per cent at 30 September 2021), used in preparing the dilapidations provision for the year ended 30 September 2022. This resulted in a

decrease in the provision of £480,000 (FY2021: a decrease of £461,000), and will unwind over the term of the property leases.

A provision is made for future expected dilapidation costs on the opening of leasehold properties not covered by the Landlord and Tenant Act

1985 (LTA), and is expected to be utilised on lease expiry. This also includes properties covered by the LTA where we may not extend the lease,

after consideration of the long-term trading and viability of the centre. The provision in the year relates to three new centres (FY2021: one new

centre). Properties covered by the LTA provide security of tenure and we intend to occupy these premises indefinitely until the landlord serves

notice that the centre is to be redeveloped. As such, no charge for dilapidations can be imposed and no dilapidation provision is considered

necessary as the outflow of economic benefit on these centres is not considered to be probable.

It is not anticipated that the provision will be utilised within the foreseeable future as there are no sites currently earmarked for closure

that have a dilapidations provision.

22. Loans and borrowings

30 September

2022

£’000

30 September

2021

£’000

Loans and borrowings brought forward — 29,038

Repayment during the year — (29,500)

Drawdown during the year — —

Issue costs — —

Amortisation of issue costs — 462

Loans and borrowings carried forward — —

On 29 September 2021, the Group repaid and cancelled its borrowing facilities with Lloyds Bank plc, and on the same day entered into a new

£25m revolving credit facility (RCF) with Barclays Bank plc.

The RCF has a termination date of 31 December 2024. Interest is charged on any drawn balance based on the reference rate (SONIA), plus a

margin of 1.75 per cent.

A commitment fee equal to 35 per cent of the drawn margin is payable on the undrawn facility balance. The commitment fee rate as at

30 September 2022 and 30 September 2021 was therefore 0.6125 per cent.

Issue costs of £135,000 were paid to Barclays Bank plc on commencement of the RCF. These costs are being amortised over the term of the

facility and are included within prepayments (note 18).

The terms of the Barclays Bank plc facility include the following Group financial covenants:

(i) For the 7-month period ending 31 December 2021, the ratio of total net debt to Group adjusted EBITDA pre-IFRS 16 shall not exceed 1.75:1.

(ii) For the 12-month period ending on each reference date, commencing 31 March 2022 and each quarter thereafter, the ratio of total net

debt to Group adjusted EBITDA pre-IFRS 16 shall not exceed 1.75:1.

The Group operated within the covenants during the year and the previous year.

151

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Annual report and accounts 2022

23. Deferred tax assets and liabilities

30 September

2022

£’000

30 September

2021

£’000

Deferred tax assets and liabilities

Deferred tax assets 7,050 7,809

Deferred tax liabilities (5,403) (1,519)

1,647 6,290

30 September

2022

£’000

30 September

2021

£’000

Reconciliation of deferred tax balances

Balance at the beginning of the year 6,290 5,295

Deferred tax credit for the year – in profit or loss (2,543) 915

Deferred tax credit for the year – in equity (29) 93

On acquisition of Teaquinn (note 33) (2,040) —

Effects of foreign exchange (43) —

Adjustment in respect of prior years 12 (13)

Balance at the end of the year 1,647 6,290

The components of deferred tax are:

30 September

2022

£’000

30 September

2021

£’000

Deferred tax assets

Fixed assets 6,314 6,706

Trading losses — 439

Other temporary differences 736 664

7,050 7,809

Deferred tax liabilities

Property, plant and equipment (3,694) (721)

Intangible assets (1,709) (798)

(5,403) (1,519)

Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to the periods when the assets are realised or

liabilities settled, based on tax rates enacted or substantively enacted at 30 September 2022.

24. Share capital

30 September 2022 30 September 2021

Shares £’000 Shares £’000

Ordinary shares of £0.01 each 171,070,790 1,711 170,631,183 1,706

The share capital of the Group is represented by the share capital of the Parent Company, Hollywood Bowl Group plc.

During the year 428,113 ordinary shares of £0.01 each were issued under the Group’s LTIP scheme (note 29).

In addition, 11,494 ordinary shares of £0.01 each were issued under the Group’s SAYE scheme at an exercise price of £2.27 each.

The premium of £25,000 is recorded in the share premium account.

The ordinary shares are entitled to dividends.

25. Reserves

Share premium

The amount subscribed for share capital in excess of nominal value.

Retained earnings

The accumulated net profits and losses of the Group.

Merger reserve

The merger reserve represents the excess over nominal value of the fair value consideration for the business combination which arose

during the Company’s IPO listing; this was satisfied by the issue of shares in accordance with Section 612 of the Companies Act 2006.

Foreign currency translation reserve

The foreign currency translation reserve represents the retranslation gains and losses of foreign currency denominated operations.

Financial statements

152

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

26. Lease commitments

The Group had total commitments under non-cancellable operating leases set out below:

30 September

2022

Other

£’000

30 September

2021

Other

£’000

Within 1 year 57 57

In 2 to 5 years 115 172

172 229

These operating leases are not included as IFRS 16 assets as the Group applies the low-value assets recognition exemption to leases of

office equipment.

27. Capital commitments

As at 30 September 2022, the Group had entered into contracts to fit out new and refurbish existing sites and to complete the installation of

solar panels on 21 sites for £4,728,000 (2021: £3,041,000). These commitments are expected to be settled in the year to 30 September 2023.

28. Related party transactions

30 September 2022 and 30 September 2021

During the year, and the previous year, there were no transactions with related parties.

29. Share-based payments

Long-term employee incentive costs

The Group operates LTIPs for certain key management. In accordance with IFRS 2 Share-based payment, the values of the awards are

measured at fair value at the date of grant. The exercise price of the LTIPs is equal to the market price of the underlying shares on the date of

grant. The fair value is determined based on the exercise price and number of shares granted, and is written off on a straight-line basis over

the vesting period, based on management’s estimate of the number of shares that will eventually vest.

A summary of the movement in the LTIPs is outlined below:

Scheme name Year of grant

Method of

settlement

accounting

Outstanding at

1 October

2021

Granted

during

the year

Lapsed/

cancelled

during the year

Exercised

during

the year

Outstanding at

30 September

2022

Exercisable at

30 September

2022

LTIP 2017 2017 Equity 428,113 — — (428,113) — —

LTIP 2018 2018 Equity 282,760 — — — 282,760 282,760

LTIP 2020 2020 Equity 358,809 — — — 358,809 —

LTIP 2021 2021 Equity 452,993 — — — 452,993 —

LTIP 2022 2022 Equity — 463,436 — — 463,436 —

In accordance with the LTIP schemes outlined in the Group’s Remuneration Policy, the vesting of these awards is conditional upon

the achievement of an EPS target set at the time of grant, measured at the end of a three-year period ending 30 September 2019,

30 September 2020, 30 September 2022, 30 September 2023 and 30 September 2024, and the Executive Directors’ continued

employment at the date of vesting. The LTIP 2022 also has performance targets based on return on centre invested capital, emissions ratio

for Scope 1 and Scope 2 and team member development. Further details on LTIP 2022 are available on the Hollywood Bowl Group corporate

website at www.hollywoodbowlgroup.com/investors/regulatory-news dated 7 February 2022.

The awards will vest based on the following adjusted EPS targets:

LTIP 2020 LTIP 2021 LTIP 2022 Vesting

17.26 13.91 14.65 25%

17.26–18.49 13.91–15.37 14.65 – 16.19 Vesting determined on a straight-line basis

18.49 15.37 16.19 100%

During the year ended 30 September 2022, 463,436 (30 September 2021: 452,993) share awards were granted under the LTIP. For all LTIPs,

the Group recognised a charge of £939,812 (30 September 2021: credit of £8,753) and related employer National Insurance of £129,694

(30 September 2021: credit of £1,208).

During the year ended 30 September 2022, 428,113 (30 September 2021: nil) share awards were exercised under LTIP 2017 and a total of

428,113 shares were issued pursuant to an existing block listing in order to satisfy the exercise of the nil-cost options (see note 24).

The following assumptions were used to determine the fair value of the LTIPs granted:

Financial year LTIP granted 2022 2021 2020

Share price at date of grant 2.514 2.370 2.928

Discount rate/dividend yield 3% 3% 3%

The shares are dilutive for the purposes of calculating diluted earnings per share.

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Annual report and accounts 2022

29. Share-based payments continued

Save-As-You-Earn (SAYE) schemes

The Group currently operates three SAYE schemes, available to all employees of the Group. The SAYEs permit the grant to employees of

options in respect of ordinary shares linked to a bank SAYE contract for a term of three years with contributions from employees of an amount

between £5 and £500 per month. During the year, a new SAYE scheme (SAYE 2022) was launched with 115 employees taking up 158,778

options with an exercise date of 1 February 2025 and an exercise price of £2.845, being equal to the market price of the shares on the date

of grant. In the prior year, no new SAYE scheme was launched. The options vest if the employee remains in employment by the Group on the

exercise date; otherwise, the options lapse on the date the employee leaves. The options are exercisable for a period of six months from the

date of vesting. Employees can opt to leave the SAYE at any time, at which point their options will lapse.

The shares are dilutive for the purposes of calculating diluted earnings per share.

In accordance with IFRS 2 Share-based payment, the values of the awards are measured at fair value at the date of the grant. The fair value is

expensed on a straight-line basis over the vesting period, based on management’s estimate of the number of shares that will eventually vest.

The fair value at grant date is estimated using a Black-Scholes pricing model, taking into account the terms and conditions upon which the

options were granted. The contractual life of each option granted is three years. The fair value of options granted during the years ended

30 September 2022, 30 September 2020 and 30 September 2019 was estimated on the date of grant using the following assumptions:

SAYE

2022

SAYE

2020

SAYE

2019

Exercise price £2.845 £2.880 £2.270

Dividend yield 3.0% 3.0% 3.0%

Expected volatility 34.4% 56.1% 32.1%

Risk-free interest rate 1.10% 0.00% 0.28%

Life of option 3 years 3 years 3 years

Anticipated number of options to vest 50% 31% 13%

The expected volatility is based on the annualised standard deviation of the continuously compounded rates of return on the share over a

period of time. A summary of the movement in the SAYEs is outlined below:

Scheme name Year of award

Outstanding at

1 October 2021

Granted during

the year

Lapsed/cancelled

during the year

Exercised during

the year

Outstanding at

30 September 2022

Exercisable at

30 September 2022

SAYE 2019 2019 42,545 — (29,942) 11,494 1,109 1,109

SAYE 2020 2020 50,395 — (14,186) — 36,209 —

SAYE 2022 2022 — 158,778 (34,279) — 124,499 —

The assessed fair value of the options granted during the year ended 30 September 2022 was £0.55 (30 September 2021: £nil).

For the year ended 30 September 2022, the Group has recognised £3,813 of share-based payment charge in the income statement

(30 September 2021: £25,230).

During the year, the SAYE 2019 scheme became exercisable and 11,494 (30 September 2021: SAYE 2018 and 87,703) ordinary shares of

£0.01 each were issued at an exercise price of £2.27 (30 September 2021: £2.06) each (see note 24). The weighted average share price at

the date of exercise relating to the share options exercised in the year was £2.63 (30 September 2021: £2.37).

The weighted average remaining contractual life of share options outstanding at 30 September 2022 was 690 days (30 September 2021: 322 days).

30. Financial instruments

Fair value hierarchy

IFRS 7 requires fair value measurements to be recognised using a fair value hierarchy that reflects the significance of the inputs used in the

value measurements:

Level 1: inputs are quoted prices in active markets.

Level 2: a valuation that uses observable inputs for the asset or liability other than quoted prices in active markets.

Level 3: a valuation using unobservable inputs (i.e. a valuation technique).

There were no transfers between levels throughout the periods under review.

Fair value

All financial assets held at the balance sheet date, which comprise trade and other receivables and cash and cash equivalents, are classified

as financial assets held at amortised cost. All financial liabilities, which comprise trade and other payables and borrowings, are classified as

financial liabilities held at amortised cost. The following table shows the fair value of financial assets and financial liabilities within the Group at

the balance sheet date. The fair value of all financial assets and liabilities are categorised as Level 2.

Financial statements

154

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

30. Financial instruments continued

Fair value continued

30 September

2022

£’000

30 September

2021

£’000

Financial assets – measured at amortised cost

Cash and cash equivalents 56,066 29,942

Trade and other receivables 1,081 700

Financial liabilities – measured at amortised cost

Trade and other payables 26,616 14,238

There is no difference between the carrying value and fair value of any of the above financial assets and financial liabilities.

31. Financial risk management

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (fair value interest rate and price risk).

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise

this risk the Group endeavours to deal only with companies which are demonstrably creditworthy. In addition, a significant proportion of revenue

results from cash transactions. The aggregate financial exposure is continuously monitored. The maximum exposure to credit risk is the value of the

outstanding amount of trade receivables. Management does not consider that there is any concentration of risk within either trade or other receivables.

The Group held cash and cash equivalents with banks which are rated AA- to AA+ of £53,862,000 at 30 September 2022

(30 September 2021: £27,885,000).

The Group considers that its cash and cash equivalents have low credit risk based on the external credit ratings of the counterparties.

Trade receivables have not been impaired as any ECL is deemed to be insignificant.

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing

liquidity is to ensure, as far as is possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and

stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

Cash flow and fair value interest rate risk

The Group’s borrowings are variable rate bank loans. The Directors monitor the Group’s funding requirements and external debt markets

to ensure that the Group’s borrowings are appropriate to its requirements in terms of quantum, rate and duration.

The Group currently holds cash balances to provide funding for normal trading activity. The Group also has access to both short-term

and long-term borrowings to finance individual projects. Trade and other payables are monitored as part of normal management routine.

The table below summarises the maturity profile of the Group’s financial liabilities:

Within 1 year

£’000

1 to 2 years

£’000

2 to 5 years

£’000

5 to 10 years

£’000

More than

10 years

£’000

Total

£’000

2022

Trade and other payables 22,544 361 3,224 934 3,163 30,226

Lease liabilities 19,461 18,355 51,514 75,934 91,593 256,857

42,005 18,716 54,738 76,868 94,756 287,083

2021

Trade and other payables 12,877 339 226 — — 13,442

Lease liabilities 21,590 17,587 47,995 71,817 93,022 252,011

34,467 17,926 48,221 71,817 93,022 265,453

Capital risk management

The Group’s capital management objectives are:

(i) to ensure the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits

for other stakeholders; and

(ii) to provide an adequate return to shareholders by pricing products and services commensurate with the level of risk.

To meet these objectives, the Group reviews the budgets and forecasts on a regular basis to ensure there is sufficient capital to meet

the needs of the Group through to profitability and positive cash flow.

The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity. All working

capital requirements are financed from existing cash resources and borrowings.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s

income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk

exposures within acceptable parameters, while optimising the return on risk.

155

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31. Financial risk management continued

Foreign currency risk

Operating across two territories increases the Group’s exposure to currency risk. Wherever possible, overseas operations will fund their

day-to-day working capital requirements in local currency with cash generated from operations, naturally hedging the currency risk exposure

to the Group. Management will continually monitor the level of currency risk exposure, and consider hedging where appropriate. Currently the

Group considers the currency risk on consolidation of the assets and liabilities of its foreign entities to be of low materiality.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest

rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligations with

floating interest rates.

The Group manages its interest rate risk by entering into interest rate derivatives when it is considered appropriate to do so by management.

At 30 September 2022 and 30 September 2021, none of the Group’s borrowings were at fixed rates of interest.

The effect on the profit after tax of a notional one per cent movement in SONIA is as follows:

2022

£’000

2021

£’000

Increase in interest rate of 1% — (225)

Decrease in interest rate of 1% — 22

32. Dividends paid and proposed

30 September

2022

£’000

30 September

2021

£’000

The following dividends were declared and paid by the Group:

Interim dividend year ended 30 September 2022 – 3.00 pence per ordinary share 5,132 —

Proposed for the approval by shareholders at AGM (not recognised as a liability at 30 September 2022):

Final dividend year ended 30 September 2022 – 8.53 pence per ordinary share 14,598 —

Special dividend year ended 30 September 2022 – 3.00 pence per ordinary share 5,132 —

33. Acquisition of Teaquinn Holdings Inc.

On 24 May 2022, the Company acquired 100% of the issued share capital and voting rights of Teaquinn Holdings Inc., the holding company

of Splitsville and Striker Bowling Solutions, based in Canada. Splitsville is an operator of ten-pin bowling centres and Striker Bowling Solutions,

a supplier and installer of bowling equipment. The purpose of the acquisition was to grow the Group’s core ten-pin bowling business by

expanding into a new geographical region.

Teaquinn is consolidated in Hollywood Bowl Group plc’s financial statements with effect from the completion of the acquisition on 24 May 2022.

The details of the business combination are as follows (stated at acquisition date fair values):

£’000

Fair value of consideration transferred

Amount settled in cash 10,080

Recognised amounts of identifiable net assets

Property, plant and equipment 8,454

Right-of-use assets 11,510

Intangible assets 4,292

Other non-current assets 6

Inventories 265

Trade and other receivables 631

Cash and cash equivalents 415

Current tax liability (425)

Trade and other payables (1,479)

Lease liabilities (11,510)

Deferred tax liabilities (2,040)

Identifiable net assets 10,119

Gain on bargain purchase 39

Consideration for equity settled in cash 10,080

Cash and cash equivalents acquired (415)

Net cash outflow on acquisition 9,665

Acquisition costs paid charged to expenses 1,557

Net cash paid relation to the acquisition 11,222

Financial statements

156

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Annual report and accounts 2022

Notes to the financial statements continued

For the year ended 30 September 2022

33. Acquisition of Teaquinn Holdings Inc. continued

The fair value of the consideration transferred of £10,080,000 includes the fair value of deferred consideration of £164,000 and £1,817,000,

included within current and non-current liabilities respectively at 30 September 2022, which is expected to be settled in FY2023 and

FY2026 respectively.

In addition to the net cash outflow on acquisition, contingent consideration of £464,000 accrued as at the balance sheet date has been

recognised in administrative expenses in the year. The contingent consideration has been accounted for as post acquisition employee

remuneration in accordance with IFRS 3 paragraph B55 as this is contractually linked to ongoing employment and business performance.

The consideration is therefore recognised in line with IAS 19 Employee benefits and accrued over the period in which the related services are

received. This amount is included within non-current liabilities at 30 September 2022, and is expected to be settled in FY2026 for a total of

£8,360,000 (undiscounted) using the FY2022 year-end exchange rate. The contingent consideration is to be paid based on a multiple of

9.2x Teaquinn’s EBITDA pre-IFRS 16 in the financial period of settlement and is capped at CAD 17m. The present value of the contingent

consideration has been discounted using a WACC of 13 per cent. There is a range of possible outcomes for the value of the contingent

consideration based on Teaquinn forecasted EBITDA pre-IFRS 16 and the year of payment. This ranges from a payment (undiscounted) in

FY2025 of £6,000,000 (undiscounted) to a payment in FY2026 of £9,015,000 (undiscounted), using the FY2022 year-end exchange rate.

The remaining amounts of the contingent consideration are to be recognised in administrative expenses and accrued throughout the

post-acquisition period until the expected settlement in FY2026.

The gain on bargain purchase arose as a result of the contingent consideration aspect of the acquisition price relating to post acquisition

employee remuneration as opposed to forming part of the purchase consideration. The gain on bargain purchase is disclosed as a separate

line item in the consolidated income statement.

Acquisition related costs of £1,557,000 are not included as part of the consideration transferred and have been recognised as an expense in

the consolidated income statement within administrative expenses.

The fair value of the identifiable intangible assets acquired includes £3,770,000 and £118,000 in relation to the Splitsville and Striker Bowling

Solutions brand names respectively, and £314,000 in relation to customer relationships. The brand names have been valued using the relief

from royalty method and customer relationships have been valued using the multi-period excess earnings method.

The fair value of property, plant and equipment includes freehold land and buildings of £7,061,000, an uplift of £5,504,000 on the carrying

value prior to the acquisition. The fair value adjustment is based on the open market value using the direct comparison approach of two

properties that were valued by third party experts in accordance with the Canadian Uniform Standards of Professional Appraisal Practice as

developed by the Standards Board of the Appraisal Institute of Canada.

The fair value of right-of-use assets and lease liabilities were measured as the present value of the remaining lease payments, in accordance

with the Group’s policy on page 135.

The fair value and gross contractual amounts receivable of trade and other receivables acquired as part of the business combination

amounted to £618,000. At the acquisition date the Group’s best estimate of the contractual cash flows expected not to be collected

amounted to £nil.

In the period since acquisition to 30 September 2022, the Group recognised £6,221,000 of revenue and £383,000 of profit after tax in

relation to the acquired business. Had the acquisition occurred on 1 October 2021, the contribution of Teaquinn to the Group’s revenue would

have been £12,795,000 and the contribution to the Group’s profit before tax for the period would have been £2,187,000.

34. Cash flow information

Restatement of comparative cash flow information

Following the FRC’s corporate reporting review of the Group’s Annual Report and Accounts to 30 September 2021 it was felt that, with

respect to the comparative for that period, it would be more appropriate for the £2,110,000 in rent concessions to be presented within the

adjustments to cash flows from operating activities, and not within the payment of capital leases as originally disclosed.

As a result of this review, the comparative consolidated cash flow statement has been restated as follows:

Year ended 30 September 2021

Previously

reported

£’000

Restatement

£’000

Restated

£’000

Cash flow statement line item

Operating profit before working capital changes 30,574 (2,110) 28,464

Net cash inflow from operating activities 28,304 (2,110) 26,194

Payment of capital elements of leases (9,420) 2,110 (7,310)

Net cash used in financing activities (9,564) 2,110 (7,454)

There is no adjustment to the net change in cash and cash equivalents for the year.

The FRC’s enquiries, which were limited to a review of the September 2021 Annual Report and Accounts, are now complete. The FRC review

does not benefit from detailed knowledge of our business or an understanding of the underlying transactions entered into, and accordingly

the review provides no assurance that the Annual Report and Accounts are correct in all material respects.

157

Hollywood Bowl Group plc

Annual report and accounts 2022

Note

30 September

2022

£’000

30 September

2021

£’000

ASSETS

Non-current assets

Investments 5 61,125 50,672

Trade and other receivables 8 74,190 72,934

Deferred tax asset 7 343 —

135,658 123,606

Current assets

Cash and cash equivalents 6 44,912 10,959

Deferred tax asset 7 — 514

Trade and other receivables 8 256 257

45,168 11,730

Total assets 180,826 135,336

LIABILITIES

Current liabilities

Trade and other payables 9 77,266 24,719

77,266 24,719

Non-current liabilities

Other payables 9 2,305 —

2,305 —

Total liabilities 79,571 24,719

NET ASSETS 101,255 110,617

Equity attributable to shareholders

Share capital 10 1,711 1,706

Share premium 10 39,716 39,691

Retained earnings 59,828 69,220

TOTAL EQUITY 101,255 110,617

These financial statements were approved by the Board of Directors on 15 December 2022.

The accompanying notes on pages 159 to 164 form an integral part of these financial statements.

Signed on behalf of the Board

Laurence Keen

Chief Financial Officer

Company registration number: 10229630

Company statement of financial position

As at 30 September 2022

Financial statements

Company statement of changes in equity

For the year ended 30 September 2022

capital

£’000

premium

£’000

Retained

earnings

£’000

Total

£’000

Equity as at 30 September 2020 1,575 10,466 70,007 82,048

Shares issued during the year 131 29,225 — 29,356

Share-based payments (note 5, 11) — — (9) (9)

Total comprehensive loss for the year — — (778) (778)

Equity as at 30 September 2021 1,706 39,691 69,220 110,617

Shares issued during the year 5 25 — 30

Share-based payments (note 5, 11) — — 940 940

Dividends paid — — (5,132) (5,132)

Total comprehensive loss for the year — — (5,200) (5,200)

Equity as at 30 September 2022 1,711 39,716 59,828 101,255

The accompanying notes on pages 159 to 164 form an integral part of these financial statements.

Company statement of cash flows

For the year ended 30 September 2022

30 September

2022

£’000

Restated

30 September

2021

£’000

Cash flows from operating activities

Loss before tax (5,030) (1,118)

Adjusted by:

Net interest expense 453 —

Share-based payments (note 11) 567 (38)

Operating loss before working capital changes (4,010) (1,156)

Increase in trade and other receivables (1,295) (175)

Increase in trade and other payables 1,059 204

Cash inflow/(outflow) generated from operations (4,246) (1,127)

Bank interest paid (115) —

Net cash outflow from operating activities (4,361) (1,127)

Cash flows from investing activities

Acquisition of subsidiaries (8,099) —

Net cash used in investing activities (8,099) —

Cash flows from financing activities

Issue of shares 30 29,356

Dividends paid (5,132) —

Repayment of loan from subsidiary — (27,574)

Loan from subsidiary 51,515 —

Net cash flows used in financing activities 46,413 1,782

Net change in cash and cash equivalents for the year 33,953 655

Cash and cash equivalents at the beginning of the year 10,959 10,304

Cash and cash equivalents at the end of the year 44,912 10,959

1 Following the FRC’s corporate reporting review of the Group’s Annual Report and Accounts to 30 September 2021 we have concluded that with respect to the comparative

for that period it is appropriate to reclassify the decrease in trade and other payables of £27,574,000 as financing activities and not within operating activities, as this relates to

movements in finance related amounts owed by and to Group companies. The effect of this change is a decrease of £27,574,000 in net cash outflow from operating activities

and a decrease in net cash flows used in financing activities. There is no impact to the net change in cash and cash equivalents for the year. See note 14 ‘cash flow information’

on page 164.

The accompanying notes on pages 159 to 164 form an integral part of these financial statements.

158

Hollywood Bowl Group plc

Annual report and accounts 2022

159

Hollywood Bowl Group plc

Annual report and accounts 2022

Notes to the Company financial statements

1. General information

Hollywood Bowl Group plc is a public limited company which is listed on the London Stock Exchange and is domiciled and incorporated in

the United Kingdom under the Companies Act 2006. The Company was incorporated on 13 June 2016, registered number 10229630.

On 24 May 2022, the Company acquired Teaquinn Holdings Inc. (Teaquinn). Teaquinn comprises of Splitsville, an operator of ten-pin bowling

centres and Striker Bowling Solutions, a B2B supplier and installer of bowling equipment, based in Canada.

2. Summary of significant accounting policies

A summary of the significant accounting policies is set out below; these have been consistently applied throughout the period.

Basis of preparation

The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Financial Reporting Standard

applicable in the UK and Republic of Ireland (FRS 102) as issued in August 2014. The amendments to FRS 102 issued in July 2015 and

effective immediately have been applied. The functional and presentational currency of the Company is Pounds Sterling. The financial

statements are presented in Pounds Sterling and all values are rounded to the nearest thousand, except where otherwise indicated.

The financial statements have been prepared on a going concern basis under the historical cost convention.

The financial information presented is at and for the years ended 30 September 2022 and 30 September 2021.

As the consolidated financial statements of the Company include the equivalent disclosures, the Company has taken the exemptions under

FRS 102 available in respect of the following disclosures:

• certain disclosures required by FRS 102.26 Share-based payment; and

• certain disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect

of financial instruments not falling within the fair value accounting rules of paragraph 36(4) of Schedule 1.

As permitted by Section 408 of the Companies Act 2006, an entity income statement and statement of comprehensive income are not

included as part of the published consolidated financial statements of Hollywood Bowl Group plc. The loss for the financial period dealt with

in the financial statements of the Parent Company is £5,200,000 (2021: loss £778,000).

Investments in subsidiaries

Investments in subsidiary undertakings are initially recorded at cost, being the fair value of the consideration paid. Subsequently investments

are reviewed for impairment on an individual basis annually or if events or changes in circumstances indicate that the carrying value may not

be fully recoverable with any impairment charged to the income statement.

Receivables due from subsidiary undertakings

Amounts owed by subsidiaries are classified and recorded at amortised cost and reduced by allowances for ECLs. Estimated future credit

losses are first recorded on initial recognition of a receivable and are based on estimated probability of default. Individual balances are

written off when management deems them not to be collectible.

Employee benefits

Share-based payments

The Company operates an equity-settled share-based payment plan for its Directors, under which the Directors are granted equity

instruments of Hollywood Bowl Group plc. The fair value of services received in exchange for the equity instruments is determined by

reference to the fair value of the instruments granted at grant date. The fair value of the instruments includes any market performance

conditions and non-vesting conditions.

The expense is recognised over the vesting period of the award taking into account any non-market performance and service conditions.

The cost of equity-settled transactions is recognised together with a corresponding increase in equity, over the period in which the

performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award.

Financial instruments

The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments together with the disclosure

and presentation requirements of sections 11 and 12 of FRS 102.

Cash and cash equivalents

Cash and cash equivalents includes cash held in short-term deposits with UK banks.

Foreign currency transactions

Transactions in foreign currencies are translated into the functional currency at the exchange rate at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the

reporting date. Exchange gains and losses are included within administrative expenses in the income statement.

Financial statements

Notes to the Company financial statements continued

2. Summary of significant accounting policies continued

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent

that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other

comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively

enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred taxation

Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different

from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences

between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances

have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the

foreseeable future and the reporting entity is able to control the reversal of the timing difference.

Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are

disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.

Deferred tax is provided in respect of the additional tax that will be paid or avoided on differences between the amount at which an asset

(other than goodwill) or liability is recognised in a business combination and the corresponding amount that can be deducted or assessed for

tax. Goodwill is adjusted by the amount of such deferred tax.

Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or

substantively enacted at the balance sheet date. Deferred tax balances are not discounted.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against

the reversal of deferred tax liabilities or other future taxable profits.

3. Directors’ remuneration

The Company has no employees other than the Directors.

The Directors’ emoluments and benefits were as follows:

30 September

2022

£’000

30 September

2021

£’000

Salaries and bonuses 1,407 909

Pension contributions 34 32

Share-based payments (note 11) 567 (38)

Total 2,008 903

1 This includes three (FY2021: two) Executive Directors and four (FY2021: four) Non-Executive Directors.

The aggregate of emoluments of the highest paid Director was £1,211,000 (FY2021: £392,000) and Company pension contributions of

£21,000 (FY2021: £20,000) were made to a defined contribution scheme on their behalf.

4. Taxation

30 September

2022

£’000

30 September

2021

£’000

The tax expense/(credit) is as follows:

– UK corporation tax — —

Total current tax — —

Deferred tax:

Origination and reversal of temporary differences (443) 259

Effect of changes in tax rates 272 82

Total deferred tax (171) 341

Total tax (expense)/credit (171) 341

160

Hollywood Bowl Group plc

Annual report and accounts 2022

161

Hollywood Bowl Group plc

Annual report and accounts 2022

4. Taxation continued

Factors affecting current credit

The tax assessed on the loss for the period is different to the standard rate of corporation tax in the UK of 19 per cent (30 September 2021:

19 per cent). The differences are explained below:

30 September

2022

£’000

30 September

2021

£’000

Loss excluding taxation (5,030) (1,118)

Tax using the UK corporation tax rate of 19% (2021: 19%) (956) (212)

Change in tax rate on deferred tax balances 70 (82)

Share-based payments — (47)

Non-deductible expenses 255 —

Group relief 802 —

Total tax expense/(credit) included in profit or loss 171 (341)

The Group’s standard tax rate for the year ended 30 September 2022 was 19 per cent (30 September 2021: 19 per cent).

In the March 2021 Budget, the government confirmed that the corporation tax main rate would remain at 19 per cent and increase to 25 per

cent from 1 April 2023. As such, the rate used to calculate the deferred tax balances as at 30 September 2022 and 30 September 2021 have

increased from 19 per cent to a blended rate up to 25 per cent depending on when the deferred tax balance will be released.

5. Investments

Investments in subsidiary undertakings are as follows:

30 September

2022

£’000

30 September

2021

£’000

At the beginning of the year 50,672 50,644

Additions 10,453 28

At the end of the year 61,125 50,672

Details of the investments in subsidiary undertakings are outlined in note 16 to the consolidated financial statements.

On 24 May 2022, the Company acquired 100 per cent of Teaquinn. Further details on the acquisition can be found in note 33 on pages 155

to 156 of the consolidated financial statements.

6. Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise the following:

30 September

2022

£’000

30 September

2021

£’000

Cash and cash equivalents 44,912 10,959

7. Deferred tax asset

30 September

2022

£’000

30 September

2021

£’000

Deferred tax asset

Deferred taxation asset 343 514

343 514

30 September

2022

£’000

30 September

2021

£’000

Reconciliation of deferred tax balances

Balance at beginning of year 514 173

Deferred tax (charge)/credit for the year (171) 341

Balance at end of year 343 514

Financial statements

7. Deferred tax asset continued

The components of deferred tax are:

30 September

2022

£’000

30 September

2021

£’000

Deferred tax asset

Temporary differences 343 223

Trading losses — 291

343 514

The Group will shortly be implementing a policy in relation to the payment for tax losses surrendered between Group companies under the

Group relief provisions. The Company has therefore recognised a deferred tax asset in respect of its accumulated tax losses on the basis it

expects to receive economic benefits in the form of payments for amounts surrendered as Group relief in future accounting periods.

8. Trade and other receivables

Current

30 September

2022

£’000

30 September

2021

£’000

Other receivables 66 88

Prepayments 190 169

256 257

Non-current

30 September

2022

£’000

30 September

2021

£’000

Amounts owed by Group companies 74,190 72,934

Amounts owed by and to Group companies are non-interest bearing and are repayable on demand.

9. Trade and other payables

Current

30 September

2022

£’000

30 September

2021

£’000

Amounts owed to Group companies 75,286 23,873

Trade and other payables 538 488

Accruals and deferred income 1,442 358

77,266 24,719

Non-current

30 September

2022

£’000

30 September

2021

£’000

Other payables 2,305 —

Non-current other payables includes £1,841,000 (30 September 2021: £nil) of deferred consideration and £464,000 (30 September 2021:

£nil) of contingent consideration as a result of the acquisition of Teaquinn Holdings Inc. (see note 33 of the consolidated financial

statements).

10. Share capital

30 September 2022 30 September 2021

Shares £’000 Shares £’000

Allotted, called up and fully paid

Ordinary shares of £0.01 each

171,070,790

1,711

170,631,183

1,706

During the year 428,113 ordinary shares of £0.01 each were issued under the Group’s LTIP scheme (note 29 of the consolidated financial statements).

In addition, 11,494 ordinary shares of £0.01 each were issued under the Group’s SAYE scheme at an exercise price of £2.27 each. The premium of

£25,000 is recorded in the share premium account.

The ordinary shares are entitled to dividends.

Notes to the Company financial statements continued

162

Hollywood Bowl Group plc

Annual report and accounts 2022

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Hollywood Bowl Group plc

Annual report and accounts 2022

11. Share-based payments

Long-term employee incentive costs

The Company operates LTIPs for the Directors. n accordance with IFRS 2 Share-based payment, the values of the awards are measured at

fair value at the date of grant. The exercise price of the LTIPs is equal to the market price of the underlying shares on the date of grant. The

fair value is determined based on the exercise price and number of shares granted, and is written off on a straight-line basis over the vesting

period, based on management’s estimate of the number of shares that will eventually vest.

A summary of the movement in the LTIPs is outlined below:

Scheme name Year of grant

Method of

settlement

accounting

Outstanding at

1 October

2021

Granted

during

the year

Lapsed/cancelled

during the year

Exercised

during the year

Outstanding at

30 September

2022

Exercisable at

30 September

2022

LTIP 2017 2017 Equity 268,370 — — (268,370) — —

LTIP 2018 2018 Equity 177,252 — — — 177,252 177,252

LTIP 2020 2020 Equity 221,208 — — — 221,208 —

LTIP 2021 2021 Equity 273,290 — — — 273,290 —

LTIP 2022 2022 Equity — 270,518 — — 270,518 —

In accordance with the LTIP schemes outlined in the Group’s Remuneration Policy, the vesting of these awards is conditional upon the achievement

of an EPS target set at the time of grant, measured at the end of a three-year period ending 30 September 2019, 30 September 2020,

30 September 2022, 30 September 2023 and 30 September 2024, and the Executive Directors’ continued employment at the date of

vesting. The LTIP 2022 also has performance targets based on return on centre invested capital, emissions ratio for Scope 1 and Scope 2

and team member development. Further details on LTIP 2022 are available on the Hollywood Bowl Group corporate website at www.

hollywoodbowlgroup.com/investors/regulatory-news dated 7 February 2022.

The awards will vest based on the following adjusted EPS targets:

LTIP 2020 LTIP 2021 LTIP 2022 Vesting

17.26 13.91 14.65 25%

17.26 –18.49 13.91–15.37 14.65–16.19 Vesting determined on a straight-line basis

18.49 15.37 16.19 100%

During the year ended 30 September 2022, 270,518 (30 September 2021: 273,290) share awards were granted under the LTIPs. For all LTIPs,

the Company recognised a charge of £567,148 (30 September 2021: credit of £37,588) and related employer National Insurance charge of

£78,266 (30 September 2021: credit of £5,187).

The following assumptions were used to determine the fair value of the LTIPs granted:

Financial year LTIP granted 2022 2021 2020

Share price at date of grant 2.514 2.370 2.928

Discount rate/dividend yield 3% 3% 3%

12. Loans and borrowings

On 29 September 2021, the Group repaid and cancelled its borrowing facilities with Lloyds Bank plc, and on the same day entered into a

new £25m revolving credit facility (RCF) with Barclays Bank plc. The outstanding balance at 30 September 2022 and 30 September 2021

was £nil.

The RCF has a termination date of 31 December 2024. Interest is charged on any drawn balance based on the reference rate (SONIA),

plus a margin of 1.75 per cent.

A commitment fee equal to 35 per cent of the drawn margin is payable on the undrawn facility balance. The commitment fee rate as at 30

September 2022 and 30 September 2021 was therefore 0.6125 per cent.

Issue costs of £135,000 were paid to Barclays Bank plc on commencement of the RCF. These costs are being amortised over the term of

the facility and are included within prepayments (note 8).

The terms of the Barclays Bank plc facility include the following Group financial covenants:

(i) For the 7-month period ending 31 December 2021, the ratio of total net debt to adjusted EBITDA pre-IFRS 16 shall not exceed 1.75:1.

(ii) For the 12-month period ending on each reference date, commencing 31 March 2022 and each quarter thereafter, the ratio of total net

debt to adjusted EBITDA pre-IFRS 16 shall not exceed 1.75:1.

The Group operated within the covenants during the year and the previous year.

Financial statements

Notes to the Company financial statements continued

13. Guarantee

The Company has given a guarantee over certain subsidiaries under Section 479A of the Companies Act 2006 such that the financial statements

of these subsidiaries for the year ended 30 September 2022 will be exempt from audit (note 16 of the consolidated financial statements).

14. Cash flow information

Restatement of comparative cash flow information

Following the FRC’s corporate reporting review of the Group’s Annual Report and Accounts to 30 September 2021, we have concluded that

with respect to the comparative for that period it is appropriate to reclassify the decrease in amounts owed to Group companies within trade

and other payables of £27,574,000 as financing activities and not within operating activities, as this relates to movements in finance related

amounts owed by and to Group companies. The impact of the reclassification on the cash outflow from operations and net cash outflow from

operating activities is a reduction from £28,701,000 to £1,127,000. The impact on net cash flows used in financing activities is a reduction

from £29,356,000 to £1,782,000.

As a result of this review, the comparative consolidated cash flow statement has been restated as follows:

Year ended 30 September 2021

Previously

reported

£’000

Restatement

£’000

Restated

£’000

Cash flow statement line item

Decrease in trade and other payables (27,370) 27,574 204

Net cash outflow generated from operations (28,701) 27,574 (1,127)

Decrease in trade and other payables — (27,574) (27,574)

Net cash flows used in financing activities 29,356 (27,574) 1,782

There is no adjustment to the net change in cash and cash equivalents for the year.

The FRC’s enquiries, which were limited to a review of the September 2021 Annual Report and Accounts, are now complete. The FRC review

does not benefit from detailed knowledge of our business or an understanding of the underlying transactions entered into, and accordingly

the review provides no assurance that the Annual Report and Accounts are correct in all material respects.

164

Hollywood Bowl Group plc

Annual report and accounts 2022