Ten-pin bowling and family entertainment group Ten Entertainment (TEG:AIM) beat sales and profit expectations for the year ended 26 December 2021 as it benefitted from demand for what it called ‘competitive socialising’.
The strong momentum has continued into the new financial year with like-for-like sales in the 12 weeks to 20 March up 41.7% compared with pre-pandemic trading.
Since reopening in May 2021, the company said 96% of the estate has delivered a record weekly sales figure.
Consequently, the group anticipates 2022 will deliver a record year of profitability, ahead of current market expectations. The positive surprise lifted the shares 6% higher to 262.8p.
EARNINGS UPGRADES
Liberum leisure analyst Anna Barnfather has increased her 2022 pre-tax profit forecast by 36% to £19.6 million and raised her price target to 360p.
Barnfather commented: ‘Longer term growth is supported by an improved customer experience from investment in marketing, CRM, innovation, and refurbishments alongside four new openings per year.’
Douglas Jack at Peel Hunt upped his 2022 pre-tax profit forecast by 32% to £19 million and increased his price target from 350p to 400p.
STRONG REBOUND
Full-year revenues jumped 86% to £67.5 million and were just 20% below 2019 despite sites only being open for 62% of the year.
The company moved back into profit, generating £3.1 million at the pre-tax level for the full year compared with losses of £19.1 million in 2020.
A more meaningful comparison is the second half of 2021 with 2019, and on this measure pre-tax profit jumped 94% to £13.8 million.
Full year revenues per head increased 7.9% to £15.10 reflecting overall engagement in the broad range of activities open to customers.
Bowling still represents around 44% of revenues but accelerated growth in other revenue streams helped to optimise sales density.
GROWTH PLANS
The company has a healthy pipeline of new sites and will open four in 2022 taking the total number of sites to 50. The focus is on quality locations at ‘affordable long-term rental deals’.
Average property cost across the estate is £11.22 per square foot which means the company can invest while continuing to drive long-term returns on investment of over 30% in new sites.
The company generated free cash flow of £16.1 million and finished the year with net debt of £2.5 million, below pre-pandemic levels despite spending £6.3 million on strategic capital investment.
The firm plans to pay back £14 million of government Covid-19 loans in 2022 which will enable a resumption of dividends.
