AnnuAl RepoRt And Accounts 2022

53 WeeKs to 1 JAnuARY 2023

DElivering

value and

growt h

CONTENTS

WELCOME TO EXCELLENCE

IN ENTERTAINMENT

TEN ENTERTAINMENT GROUP PLC OPERATES

49 HIGH-QUALITY SOCIAL ENTERTAINMENT

CENTRES THROUGHOUT THE UK

STRATEGIC REPORT

2 Highlights 2022

3 At a Glance

4 Chairman’s Statement

5 Chief Executive’s Statement and Operating Review

9 Market Overview

10 Business Model

12 Our Strategy

13 Strategic Priorities

17 Strategy in Action

18 Key Performance Indicators (‘KPIs’)

20 Report from the Environmental, Social

and Governance (‘ESG’) Committee

30 Section 172

33 Financial Review

39 Risk Management

41 Principal Risks and Uncertainties

43 Long-Term Viability Statement

CORPORATE GOVERNANCE

45 Chairman’s Introduction to Governance

46 Board of Directors and Executive Committee

48 Corporate Governance Report

52 Nomination Committee Report

54 Audit Committee Report

57 Directors’ Remuneration Report

59 Remuneration – At a Glance

60 Directors’ Remuneration Policy

64 Annual Report on Remuneration

72 Directors’ Report

75 Statement of Directors’ Responsibilities in

Respect of the Financial Statements

FINANCIAL STATEMENTS

76 Independent Auditors’ Report

81 Consolidated Statement of Comprehensive Income

82 Consolidated and Company Statements of Financial Position

83 Consolidated and Company Statements of Cash Flows

84 Consolidated and Company Statements of Changes in Equity

85 Statement of Accounting Policies

92 Notes to the Financial Statements

108 Directors, Company Secretary and Advisers

“WE HAVE TAKEN THE

CUSTOMER EXPERIENCE

ANOTHER STEP FORWARDS.

OUR TEAMS HAVE WORKED

TIRELESSLY TO DELIVER THIS

RECORD PERFORMANCE”

GRAHAM BLACKWELL,

CHIEF EXECUTIVE OFFICER

Ten Entertainment Group plc Annual Report and Accounts 2022

+39.8%

Like-for-like sales growth versus 2019, the

last full year of trading pre Covid-19

£39.6M

Group adjusted EBITDA after rental costs,

+68.2% vs FY19

10P PER SHARE

Dividend reinstated for FY22

+5.5%

Like-for-like sales growth versus 2021 for

the 33 weeks post reopening

£26.1M

Adjusted profit before tax,

+84.1% vs FY19

29.3P

Adjusted EPS

£27.2M

Full year free cash flow

£10.1M

Bank net cash, first time in Group history

ending the year with nil bank debt

£20M

of strategic capital investment in six

refurbishments, fivebowling upgrades

and two new centres

HIGHLIGHTS 2022

BREAKING RECORDS

VALUE FOR MONEY DRIVING

CONSISTENT GROWTH

◆ Total sales 50.6% higher than pre-pandemic

◆ Average price per game lower than in 2019

◆ Value driving footfall growth of over 40%

STRONG BALANCE SHEET

SUPPORTING INVESTMENT

◆ Over £20m of strategic capital invested

◆ Two new centres and 11 refurbishments

◆ Fully repaid bank debt and Covid-19 deferrals

RESPONSIBLE STEWARDSHIP

FOR SUSTAINABLE GROWTH

◆ Pay rise delivered early supporting lowest paid

◆ Scope 1 and 2 Net Zero commitment by 2030

◆ Over £2m in bonuses to share success

FOCUSED CUSTOMER

PROPOSITION FOR THE FUTURE

◆ World’s first bowling loyalty app

◆ Pipeline of new UK centres

◆ Over eight million customers and growing

STRONG SALES GROWTH DELIVERS APROFITABLE YEAR SUSTAINED CASH GENERATION

FINANCIAL HIGHLIGHTS

53 WEEKS TO 1 JANUARY 2023*

* See note 2 to the Financial Statements, for the definition of these Alternative Performance Measures (APMs).

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

44%

28%

◆ Bowling

◆ Other

entertainment

activities

◆ Food and drink

THE GROUP’S

REVENUE MIX IN 2022

AT A GLANCE

BUILDING GROWTH

EVERYWHERE

UNIVERSAL APPEAL

◆ Value for money

◆ Fun for all ages

◆ Entertaining environment

SUCCESSFUL MODEL

◆ Cash generative with robust balance sheet

◆ Well invested estate welcomes customers

◆ High margins reduce impact of inflation

STRONG TRACK RECORD

◆ Total sales +50.6% vs pre Covid-19

◆ Group Adj PBT CAGR of 15.0% since 2017

◆ High-returning investment strategy

SIGNIFICANT OPPORTUNITY

◆ Room for expansion in UKmarket

◆ Favourable property market

◆ Consumer trend towards experiences

CENTRES ACROSS THE UK

1.4M SQFT

OF FAMILY ENTERTAINMENT SPACE

1,170

BOWLING LANES

1,700

EMPLOYEES

>1,900

AMUSEMENT MACHINES

373

POOL TABLES

KARAOKE ROOMS

ESCAPE ROOMS

LASER TAG ARENAS

SOFT PLAY AREAS

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

Progress

in all areas

CHAIRMAN’S STATEMENT

“A REMARKABLE

YEAR OF

GROWTH”

ADAM BELLAMY

CHAIRMAN

We started this year with optimism, aiming to

consolidate and build upon the gains made in

2021, but the outcome this year surpassed even

our initial best expectations with a business

that is more profitable than ever.

I have been very encouraged by how well the business has navigated the

challenges of cost price inflation. We were determined to minimise the

impact of rising prices, and I am pleased that we have not passed on

inflation to our customers in our bowling prices. We have worked hard to

reduce our costs and deliver operational efficiencies.

We are focused on providing great value-for-money social entertainment

for groups of all ages to get together and enjoy each other’s company.

Thisis a consumer need that is perhaps more relevant today than ever

before and we have been delighted to welcome a record number of

customers thisyear.

While the macro-economic landscape looks challenging for the year ahead,

I am confident that we have a business model, customer proposition and

pricing strategy that is well suited to the environment. We offer affordable

entertainment that people of all ages can enjoy together, and we have a

pricing structure and range of activities to suit every family budget. That is

why we see our Group growing faster than almost any other business in

leisure and hospitality.

2022 HAS BEEN A REMARKABLE YEAR OF GROWTH

FOR TEN ENTERTAINMENT GROUP, ESTABLISHING

A NEW BENCHMARK FOR WHAT WE CAN ACHIEVE.

£10.1M

Cash at year

end FY22

8 MILLION

Customers in 2022

Our strategy is proving highly successful at delivering growth in sales and

profit. Our Executive team’s focus on disciplined capital allocation generates

strong returns. We focus on the key drivers of growth and have continued

to invest in the customer proposition with a significant refurbishment

programme and new centre openings.

We welcomed two new centres to the Group in 2022 and have already

opened a new centre in Crewe in February 2023 bringing our total to 49 UK

centres. We have a solid pipeline for growth and expect to open at least

four new centres this year. Despite this significant investment programme,

we ended the year without any bank debt and the Board recommends a

final dividend of 7p per share which together with the interim dividend paid

in October 2022, will total 10p for the year as a whole.

Our people are the most critical part of delivering great service to our

customers. Our excellent performance has enabled us to share the rewards

of success with our teams. More importantly, we acted decisively in

October to bring forward our hourly paid colleagues’ annual pay increase

by six months. This meant that our lowest paid team members received

an average of 9% pay increase to help them manage the winter period.

2022 has been a year of significant development in our corporate

governance. The Board has dedicated considerable time to evaluating

the risks that we all face due to climate change and we have developed our

strategy to minimise our impact on the climate and to insulate the business

from future risks. We have established an ESG Committee to oversee the

implementation of our sustainability strategy. This Committee is chaired

by Sangita Shah who joined the Board as an independent Non-Executive

Director in the second half of 2022 bringing a wealth of experience in

governance and sustainability. Our Board team has great diversity of talent

and knowledge, allowing it to navigate the complexity of delivering

consistent growth in a challenging market. Our Board is 57% independent

(50% excluding the Chair) with our Executive Directors having over 50 years

of combined experience in leisure and retail.

Our business has transformed over the past three years. We are better

invested, with higher quality centres. We have a wholly redesigned digital

ecosystem that combines targeted CRM tools, a bespoke loyalty and

rewards app and the latest in digital bowling technology. Our value-for-

money proposition is better than ever before. This transformation is

reflected in the scale and profitability of the Group. Since 2019 we have

grown our sales by over 50% and nearly doubled our profits. We ended the

year with a healthy net cash position. Whatever the future holds in 2023,

we are in a stronger position than ever to navigate the challenges ahead.

2023 has started well, with demand remaining robust in the first ten weeks

of the year. We have clear plans in place to mitigate the impact of inflation

and are determined to continue to offer our customers great value for

money. While it is difficult to predict what will happen for the balance of the

year, I am confident that the strength of the Group is such that it will be

able to continue to deliver excellent returns for its shareholders.

ADAM BELLAMY

CHAIRMAN

21 MARCH 2023

+5.5%

Like-for-like

growth vs FY21

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

CHIEF EXECUTIVE’S STATEMENT AND OPERATING REVIEW

A record

breaking year

“OUR TEAMS WORK

TIRELESSLY TO DELIVER

HIGH-QUALITY SOCIAL

ENTERTAINMENT”

GRAHAM BLACKWELL

CHIEF EXECUTIVE OFFICER

2022 has consolidated TEG’s position as

aleading business in the UK leisure and

hospitality sector. In our first undisrupted

financial year since FY19 we have increased

oursales by 50.6% and our Group adjusted

profit before tax by 84.1%. This is a business

that is bigger, better, stronger, and more

resilient than it was prior to the pandemic.

VALUE-FOR-MONEY SOCIAL

ENTERTAINMENT DRIVING RECORD

SALES AND PROFIT DELIVERY

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

CHIEF EXECUTIVE’S STATEMENT AND OPERATING REVIEW CONTINUED

During FY22 we built upon the sales growth that we experienced in H2 FY21

and have delivered a year of record sales at £126.7m. Our like-for-like sales

were +39.8% higher than in FY19. More importantly, we continued to grow

in FY22 compared to the post-Covid-19 boom in sales of FY21. For the 33

weeks comparative against reopening on 17 May 2021, our like-for-like sales

for FY22 were a further +5.5% up. This growth was principally driven by

additional footfall and an increase in ancillary sales, with little reliance

onprice increases. In fact, we have reduced our average realised price

forbowling since FY19, focusing on leveraging our value-for-money

proposition to grow footfall.

Cost pressures in FY22 have been well documented in the media and the

Group was not immune to these. However, with our energy prices over

90% fixed until September 2024, long-term rental agreements with our

landlords in place, and a business model that is reliant on our underlying

fixed asset base, we have been impacted less than many. Where we have

seen inflationary pressures, in wages, consumables, and food and drink, we

have worked hard to generate operational cost efficiencies to offset those

pressures and have chosen not to pass those rises on to our customers.

FY22 has also been a remarkable year of delivery for our strategy. We have

invested over £20m in our business to continue to give our customers the

best possible social entertainment experience. During the year, we have

undertaken six major refurbishments; completed the roll out of Pins &

Strings and our scoring systems; refreshed the lanes and bowling

experience in five centres; brought two new centres into the Group;

anddeveloped the pipeline of sites to add at least four further new

centresin FY23.

A highly profitable year of growth is a great achievement, but it must be

delivered in a sustainable way. During FY22 we have paid particular focus

tosupporting our amazing colleagues as well as developing a new climate

strategy which targets delivering Net Zero on scopes 1 & 2 emissions by

2030. We have paid over £2m in bonuses to ensure that our management

and site-based teams can share in our success. We have also kept a close

eye on base wages and salaries to ensure that our people are well equipped

to deal with the challenges of the current high levels of inflation. Our

strategy has been developed to ensure that not only do we minimise our

impact on the climate but also that we are well prepared to deal with

someof the consequences of changes in weather patterns in the UK.

FY22 has been a year of significant turmoil and change in the broader

political and economic landscape. TEG has focused on the elements that

we can control: great customer service; a fun and social environment for

allages; unrivalled value for money; exciting games and activities; and a

friendly welcome. We have been rewarded with over eight million visitors

this year, trusting us to give all an amazing venue to have fun, be

entertained and reconnect socially with each other.

Another step forward in sales

FY22 is the first full financial year of trading since FY19. We knew that the

pent-up demand after reopening in the summer of 2021 and the benefit of

UK staycations was going to make FY21 a tough act to follow. However, we

knew that we had evolved and refocused our operation, to create a more

attractive customer proposition than ever before.

Total sales of £126.7m in FY22 is a Group record and is 50.6% higher than

FY19. Like-for-like sales growth compared to FY19 is +39.8% with a further

3.5% growth from the 53rd week of trading and 7.3% growth from the new

centres built since 2019. Compared to FY21, like-for-like growth is +5.5%.

Wewere pleased to continue the sales momentum and take a further

stepforward in FY22.

The +50.6% sales growth was principally delivered through higher footfall

of +41.7%, a combination of more new customers and existing customers

visiting more frequently and a 53rd trading week in the year. 8.9%pts of the

growth derived from an increase in revenue per head (‘RPH’). Our strategy

toincrease the number of activities as well as improving our food and

beverage offering has meant that customers tend to spend longer with us

when they visit and participate in more activities. Average realised price per

game for bowling reduced to £5.13 in FY22 compared to £5.21 in FY19. This

modest reduction of (1.5%) is a function of holding our headline prices at

2019 levels, with increased participation in deals and promotions. This

strategic choice was targeted at maintaining our excellent value-for-money

proposition in order to maintain momentum in footfall growth. This means

that on average a family of four bowled at Tenpin for just over £20; excellent

value in comparison to the majority of alternative entertainment options.

In the first 10 weeks of FY23 sales have continued to grow. Although we

arelapping an exceptional performance in FY22 we have still delivered

totalsales growth of 7.6%. On a like-for-like basis the growth is 2.7%.

Wehave been encouraged by this performance in these first weeks of the

year, but it is still early in the year and we remain focused on ensuring we

continue to deliver an excellent experience for our customers.

We are confident in our strategy and our broad customer appeal and

believe that sales will remain resilient despite the economic conditions.

Weexpect the year to deliver modest sales growth in FY23 and are

confident that we can manage our cost base to ensure that sales at this

level will deliver profitable growth.

A leap forward in profit

A sustained level of sales growth delivered across the whole UK estate has

led to a significant step forward in profit. Only around 50% of the total

costbase is directly variable with volume. This means that with such

pronounced footfall growth we have been able to generate operational

efficiencies to offset the impact of cost inflation. The result is that Group

adjusted profit before tax has taken a significant leap forward to £26.1m,

+84.1% compared to FY19.

Using Group Adjusted EBITDA after rental costs, a measure which is broadly

equivalent to the old IAS 17 EBITDA measure, the business delivered £39.6m

in FY22 which is 68.2% better than in FY19 and is a ratio of 31% of sales. Pre

Covid-19 the Group was operating at an EBITDA to sales ratio of c.28% which

shows a significant progression despite the impact of inflation.

A strong and stable cash position

Our profit delivery has enabled us to focus on our strategic priorities,

building new centres and investing in our existing estate to drive growth.

We reinstated dividend payments in 2022 with an interim dividend in

October of 3p per share and we are recommending a final dividend of

7pper share to be paid at the end of May. Our cash priorities have always

beenclear. We aim to balance our self-funded investment programme with

returning money to our shareholders through a progressive dividend policy.

We are pleased that even with our accelerated strategic investment

programme, we have turned a modest net debt of (£2.5m) at the end of

FY21 into a net cash balance of +£10.1m at the end of FY22. This means

that we now have a secure cash position to insulate the business against

potential risk or allow us to act swiftly and decisively should major

opportunities arise.

First-class customer experience

2022 has been a year where we have continued to focus on delivering

thevery best customer experience in leisure and hospitality in the UK.

Ourpriorities have been on value for money, variety of games, high-quality

ancillary products, and great customer service.

Our customers depend on us to deliver great-value entertainment. That is

why we held our prices at 2019 levels, which has meant that our relative

value against other leisure and hospitality offerings is better than ever.

During the summer of 2022 we were invited to Downing Street as part of a

government task force focused on helping hard-pressed families make their

money go further in the summer holidays. In support of this initiative, our

summer deal for kids, available during the summer holidays, was just £5 for

children for a game of bowling and a burger meal. We think that this was

probably one of the most attractive leisure propositions available anywhere

in the UK. We will continue to offer our customers greatpriced deals that

suit them.

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

CHIEF EXECUTIVE’S STATEMENT AND OPERATING REVIEW CONTINUED

Each of our 49 UK centres has bowling at its heart, ranging from 14 to

32lanes. Bowling is a well-established pastime and has been drawing

customers for decades. Our fresh and modern centres broaden the appeal

to customers of all ages. 44% of our total sales in FY22 were from bowling,

down from 47% in FY19 as we continue to diversify our portfolio of

activities. Laser tag revenue has almost doubled in FY22 compared to

FY19thanks to adding additional arena space and upgrading the experience

in our existing arenas. We now have 32 escape rooms across 12 Tenpin

centres and the Houdini’s Escape joint venture has more than doubled

insize compared to FY21.

We serve traditional bowling food that suits the social aspects of eating on

the lanes and we have broadened our range to now include vegan options

and pizzas, making our food offer even more attractive. We serve cocktails

in many of our higher footfall centres and have introduced high-quality

coffee throughout the estate. Our food and drink is competitively priced

which means that a typical visit to Tenpin, with bowling, food, drink and

some additional games on the arcade or pool will cost a customer less

thanthey would expect to pay for just a meal at a typical casual dining

restaurant. Our focus on great value for money has created price stability

for our customers in a market beset by significant inflation.

Digitally enabled

Our fully integrated digital systems have enabled us to deliver a first-class

enhanced customer experience in 2022. The use of technology starts at

thepoint that we first engage with customers online and extends right

through to providing best-in-class experience on the bowling lanes.

Our customer database now includes over one million contactable

customers. Digital marketing based on careful customer segmentation has

allowed us to be more targeted with our deals and customer

communications. As a result, we have seen a welcome balance of new and

returning customers inFY22, helping build like-for-like footfall growth of

over 30% compared toFY19.

Once in our centres, we have used technology to help enhance the

customer experience. Customers continue to use our web-based food and

drink ordering to help them enjoy uninterrupted bowling and games. Each

of our centres now has the latest scoring technology allowing customers to

personalise their scoring screens and interface with our brand-new bespoke

loyalty and rewards app.

The introduction of the app takes the customers’ experience to another

level. They can now maintain a record of their scores as well as earn

rewards and treats from purchases they make. The app incorporates

augmented reality games in centre as well as fully integrating with

ourfoodand drink ordering and our booking engine.

In high-quality centres

A core part of delivering a great customer experience is to ensure that

customers have warm, welcoming and high-quality centres in which to

enjoy their time together. Continued investment and improvement in our

estate is a fundamental part of delivering sales and footfall growth and to

ensure that our customers return again and again.

During FY22 we fully recovered our cash position and have fully paid all our

obligations from the Covid-19 closures. As a result, we were able to

accelerate the investment in refurbishing our centres. In the year we invested

almost £5m in six full-scale centre refurbishments, transforming the

customer proposition to drive growth. We invested over £1.0m in

refurbishing the bowling product in a further five centres. Bowling is our core

product, and it is essential that we maintain the quality of the lane surface,

ball returns and gutters to give the best possible bowling experience.

The two years of uncertainty as a result of Covid-19 meant that we were

focused on cash conservation in 2020 and 2021. As a result, we did create a

backlog of essential maintenance which we have been able to address in

FY22. During the year we invested over £4.9m in maintenance capital

projects. This included a complete overhaul of the heating and ventilation

in 12 centres, ensuring that our customers and colleagues benefited from a

better environment throughout the year.

Our centre refurbishment programmes are bespoke for each centre

depending on the availability of space and local customer needs. Each

transformation focuses on three key strategic objectives: increasing sales

density; enhancing customer experience; and improving the cost profile

and sustainability of profit delivery. For example, in FY22 in Dudley we were

able to add six additional lanes to expand the capacity of the centre while

upgrading the high-performing soft play area through use of a mezzanine

floor construction.

In total during FY22 we have added 10 karaoke rooms, 10 escape rooms,

and 10 new bowling lanes all within the existing footprint of the centres.

Since FY19 the business has released 12k square foot of additional trading

floor space, all of which increases the overall sales density of our centres.

An expanding estate

We have an estate of 49 social entertainment centres across the UK ranging

from 14.7k square feet to 52.9k square feet, providing a broad array of social

entertainment activities to over eight million customers. We are confident

that there is significant opportunity for growth within the UK either by

taking on space in towns that have no bowling presence such as Crewe or

by adding bowling lane capacity to towns and cities that already have

bowling offering but not at sufficient capacity to serve the population such

as in Milton Keynes. Our target is to add around four new centres per year

to our estateand we believe there is sufficient runway for growth.

In FY22 we added two new centres to the estate through an acquisition

inHarlow in May and through a brand-new centre in Walsall which made

use of repurposed retail space. In addition, we commenced work on a

newcentre in Crewe, which opened in February 2023. Work is under way

atMilton Keynes and in Dundee, with both centres expected to open by

theend of H1 FY23.

Harlow was already trading as an existing bowling centre but had suffered

from a significant lack of investment over many years. Harlow is a town

with a population of around 90,000 but also with a catchment from several

close-by Hertfordshire and Essex villages. It is well located in the town

centre and is one of the few local leisure destinations in the area. By

investing in a significant refurbishment, we turned a tired and unwelcoming

centre into a state-of-the-art bowling and social entertainment venue

which is welcoming to families and young adults. We have been delighted

to have already more than doubled the sales and footfall from this centre

and are confident that it will continue to make significant returns well

above30% ROI.

Walsall was an opportunity to take on redundant retail space at an attractive

rent on a thriving retail park in the town centre. Our site was previously

occupied by Mothercare and Peacocks and was vacated as a result of those

retailers’ demise. The landlord saw an opportunity to secure the long-term

future of their property by partnering with the Group. We can provide

significant footfall and growth for their retail park and our covenant gives

them a long-term reliable income stream. We are delighted with the initial

trading, which has exceeded our expectations and is providing excellent

investment returns.

We have several more properties where we are close to finalising legal

agreements and fully expect to strengthen the pipeline as we progress

through the year.

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

Sustainable development

Our business has grown significantly during FY22, building on a highly

successful FY21 where we emerged from the pandemic with great

strength. During the year we have developed our sustainability strategy

andhave focused on supporting our key stakeholders as they navigate

thedifficulties in the broader economic landscape.

We formed a Board ESG Committee in 2022 which has helped to bring

together the many positive steps being taken across the Group. We have

identified that although the Group is a relatively low carbon intensity, with

only 1,740g of CO

per customer visit, there is still much we can do to

reduce our footprint and move to Net Zero on scope 1 & 2 emissions by

2030. The four principal areas of focus in terms of our carbon footprint

areour site energy usage; our food and drink supply chain; our waste;

andour new building and refurbishment programme.

We continue to focus on energy reduction across our centres. We have

now completed the roll out of our modern and efficient pinsetters which

has resulted in an 8% reduction in energy usage per site. We are now

focusing on low-energy LED lighting throughout our centres. We are

planning to utilise the roofs of our centres for micro generation from

solararrays which should provide up to 30% of the energy usage of a site.

We plan to install at least six solar arrays during FY23. We have combined

these significant actions with a policy to purchase 100% renewable

energysupplies.

Our food and drink supply chain is an area where we have made good

progress in FY22. We have introduced more plant-based options to give

ourcustomers choice but we expect in the short to medium term that this

will remain a minority of the food consumed in our centres. We are actively

working with our suppliers to select the products that balance cost, waste

and carbon, and have made it clear that future purchasing decisions will

balance all three needs. We are confident that our suppliers can reduce

their carbon impact but in the meantime we have made our entire menu

carbon neutral through the purchase of REDD++ carbon credits. This

investment in long-term carbon sequestration will offset our food and drink

in the short term while we consider ways to reduce the overall impact.

Waste in our centres will be a core focus during FY23. Although we utilise

100% recyclable packaging for our food, we know that we can do better

toimprove our recycling rates. We are targeting a minimum 50% increase

inrecycling rates in FY23 through site-based incentives and customer

communications as well as making it easier than ever for our customers

torecycle.

We have focused on our teams’ wellbeing and financial security during

2022. In difficult times it is important to provide the right support to our

colleagues. The successful financial results means that we have paid over

£2m in bonuses to our people to reward excellent service and performance.

These bonuses have rewarded colleagues throughout the organisation and

not just the senior management teams. We also decided to bring forward

the April 2023 wage increase by six months for our hourly paid team

members to ensure that our people were supported during the difficult

costof living pressures of the winter.

Outlook

FY23 has started well, with like-for-like sales in the 10 weeks to 12 March

being +2.7% compared to FY22. We are pleased with this continued sales

growth, and are cautiously optimistic for the year ahead. We are confident

that we have a fantastic customer proposition and will continue to focus

onproviding the best value-for-money social experience in the market.

However, we are mindful of the strain on our customers’ finances and will

not be complacent in assuming that the success of the past two years will

automatically continue.

Our target is to maintain modest like-for-like growth, supplemented with our

pipeline of new centres throughout 2023. We have already opened Crewe in

February and are under construction in Milton Keynes and in Dundee. We

fully expect to add more centres to our estate as the year progresses.

We expect cost pressures to persist, but we are confident that we are

operationally well set up to mitigate them where we can without

compromising the value for money that we offer our customers.

Our strategy is delivering great results and we will continue to invest in our

priorities of maintaining the quality of our product, growing our estate, and

developing our digital footprint. We will manage our cash spend to ensure

that we allocate capital to these high-returning projects while returning a

dividend to our shareholders and maintaining a cash surplus.

Our record performance in FY22 will be a very tough act to follow, but

wedeliver a great experience and value for our customers and have

theright teams in place to maximise the potential of the business. We will

continue to focus on value to drive growth and to invest inthe experience

to ensure that our customers continue to visit us throughout 2023.

GRAHAM BLACKWELL

CHIEF EXECUTIVE OFFICER

21 MARCH 2023

CHIEF EXECUTIVE’S STATEMENT AND OPERATING REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

A Winning Formula

MARKET OVERVIEW

EXPERIENTIAL LEISURE

◆ Competitive socialising is a growth sector

◆ Bowling accessible and enjoyable for all

◆ Range of activities to increase frequency ofvisit

◆ Food and drink tailored to enjoy with games

FAVOURABLE MARKET

◆ UK market undersaturated with only c.340 centres

◆ Recently vacated retail space ideal to convert

◆ Consumers prioritising experiences over purchases

◆ Exposure to supply chain challenges relatively low

COMPETITIVE ADVANTAGE

◆ Established social entertainment offering

◆ Well-invested estate gives best customer experience

◆ High-margin model helps protect from inflation

◆ Labour model gives operating efficiencies in growth

◆ Partnerships with suppliers keep costs low

◆ Digital reach and engagement strongest in sector

A POSITIVE OUTLOOK

◆ Nearly two years of growth since reopening

◆ Relative value for money strengthened in market

◆ Affordable treats remain a priority for consumers

◆ Value-for-money creates resilience even in downturn

◆ Tight cost controls creating profitable growth

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

OUR BUSINESS MODEL

HOW WE ROLL

LEVERAGING OUR COMPETITIVE ADVANTAGE...

A SUCCESSFUL MODEL DEDICATED PEOPLE

Our experience is known and

trusted in the market, with

a broad appeal to families,

students, work colleagues

andgroups of friends.

Our talented colleagues

create the fun and

entertaining environments

that ensure our customers

have a great time and our

business thrives.

NATIONAL UK

COVERAGE

STRATEGIC

PARTNERSHIPS

Our well-invested estate

of 49centres across the

UK offers a wide range of

entertainment and a high-

quality customer experience.

Strategic partners deliver

the experience, including the

latest in bowling and gaming

technology and a tailored food

and drink while you play.

INNOVATION EXPERIENCE

Technology drives growth

through the most modern

bowling equipment, latest

video games and a fully

integrated digital ecosystem.

Bowling is the original

competitive social activity and

our experienced leadership

team know what it takes to

entertain our customers.

Our core bowling proposition is supplemented by a

wide range of activities and great value food and drink.

HOW WE DELIVER GROWTH ANDMOMENTUM

OPERATIONAL

EFFECTIVENESS

◆ Benefits of increasing scale

◆ Highly attractive landlord

model results in low rent

◆ High-margin

economics

STRONG

CASH GENERATION

◆ Highly cash

generative model

◆ Long-term trend of

sales growth

◆ Disciplined capital

allocation

HIGH

MARGIN ECONOMICS

◆ Strong improvement in

profitability since 2019

◆ Cost efficiencies offsetting

the impact of inflation

◆ Property and central

costs down

HIGH

INVESTMENT RETURNS

◆ Proven model of sales

driving investment

◆ Investment returns >30%

◆ PBT CAGR of 15%

since 2017

THE VALUE WE CREATE FOR STAKEHOLDERS

CUSTOMERS SUPPLIERS

We offer our customers a

broad range of entertainment

options at great value, creating

a memorable and enjoyable

experience every time they

visit one of our centres.

We work with suppliers to

ensure a mutually beneficial

working relationship. We

expect our suppliers to

work within ourethical

tradingpolicy.

PEOPLE PARTNERS

We invest in rewarding,

training and supporting our

employees to reach their

potential and enable them to

deliver a first-class customer

experience.

We have strong long-term

relationships with a core set of

critical business partners who

help us create a competitive

advantage and deliver a best-

in-class customer experience.

INVESTORS ENVIRONMENT

The Board governs the

business in the best interests

of investors by delivering

consistent returns through a

proven strategy forgrowth.

We know our business can

have a wider impact beyond

our direct stakeholders and

we work to ensure we are

having a positive impact on

local communities.

UNDERPINNED BY:

Our culture

andvalues

Robust risk

management

A focus on

sustainability

High

standards

See page 12

formore

See page 39

formore

See page 20

formore

See page 17

formore

FINANCIALSGOVERNANCESTRATEGIC REPORT

Ten Entertainment Group plc Annual Report and Accounts 2022

OUR BUSINESS MODEL CONTINUED

best-in-class

cust omer proposit ion

Competitive socialising is at the heart of the experience. Bowling is one of the most established and popular forms of experiential

leisure in the UK. Our centres promote a friendly rivalry, which is enjoyable for all generations of families and friends.

CENTRE

ACTIVITIES

FOOD AND DRINK

◆ A range tailored to enjoy

while you bowl

◆ Increasing variety of

plant-based options

◆ Leading value for money

◆ Sky Sports/BT Sport/Prime

available in all centres

28%

of sales from food and drink

KARAOKE/LASER TAG

◆ Destination for 18-30s

◆ Increased online reach

◆ 97% laser tag sales growth

since 2019

◆ Drives repeat visits

◆ Refurbishments deliver

+30% ROI

53%

of the estate offers one or both

Tenpin sites with escape rooms

ARCADE/POOL

◆ Boosts spend per head –

25% of revenue

◆ Increased dwell time

◆ Impulse purchase

◆ Strategic partnership

◆ Blend of traditional and

modern arcade games

>2,300

machines and pool tables

BOWLING

◆ Value for money –

average £5.13 per game

◆ Entertainment for

all generations

◆ Reusable assets

◆ Fixed cost of sales

44%

bowling % of total revenue

ESCAPE ROOMS

◆ Sector-leading gameplay

◆ Drives supplementary food

and bar revenue

◆ Space efficient in centre

◆ Broadens appeal

◆ Increases frequency of visit

FINANCIALSGOVERNANCESTRATEGIC REPORT

Ten Entertainment Group plc Annual Report and Accounts 2022

PLAYING TO WIN

OUR STRATEGY

OUR

PURPOSE

We inspire our teams and

partners to innovate and deliver

the best incustomer experience.

Fun, technology and

entertainment forevery player.

Our purpose drives and shapes all

of our decisions and priorities.

OUR

CULTURE

Our purpose drives and shapes

allof our decisions and priorities.

We engage with, listen to

andvalue feedback from our

customers and teams. We are

continually learning to build an

amazing experience for all.

We develop and reward our

people to focus on results

anddrive for excellence

inentertainment.

Our culture unites our people

andinspires them to deliver

onour purpose and vision.

OUR STRATEGIC

PRIORITIES

1. A first-class customer experience…

see page 13

2. ... digitally enabled…

see page 14

3. ... in high-quality centres…

see page 15

4. ... with increasing UK coverage.

see page 16

Monitoring and maintaining

our culture is a vital part of

our strategy.

FINANCIALSGOVERNANCESTRATEGIC REPORT

Ten Entertainment Group plc Annual Report and Accounts 2022

1. A FIRST-CLASS

CUSTOMER EXPERIENCE

STRATEGIC PRIORITIES

OUR INVESTMENT HAS BEEN TARGETED

TODELIVERAMEMORABLE CUSTOMER

EXPERIENCEFROMEVERY VISIT:

◆ Diversification of experience to maximise space –

Houdini escape rooms; karaoke; laser tag and more

◆ Affordable pricing for everyone

◆ Service-focused employee incentives to drive high

performance across all centres

◆ Simplified menu tailored to be enjoyed while playing

WHY IT IS IMPORTANT

Giving our customers a great value

entertainment experience every time:

◆ Value for money drives loyalty

◆ Increased revenue per head (‘RPH’)

◆ Variety of games drives new customers

◆ Great service leads to repeat visits

◆ Entertainment with broad appeal

ACHIEVEMENTS IN THE YEAR

We have added more games

andvalue than ever before:

◆ 10 new escape rooms

◆ Bespoke local pricing to suit markets

◆ Over £2m in bonuses to reward success

◆ Held bowling prices at 2019 levels

◆ Doubled revenue from ancillary offerings

£5.13

AVERAGE PRICE PERGAME

41.7%

INCREASE IN FOOTFALL

VS 2019

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

2. DIGITALLY

ENABLED

STRATEGIC PRIORITIES CONTINUED

OUR INVESTMENT HAS

BEENTARGETEDTOIMPROVE

DIGITALCAPABILITIES:

◆ Modern bowling technology integrated to new web platform

◆ Newly developed CRM system enabling targeted deals

◆ Significantly strengthened social media engagement

◆ At table or lane food and drink ordering

WHY IT IS IMPORTANT

Connecting our customers digitally

increases their loyalty and frequency:

◆ Generate growth from new customers

◆ More engagement with customers

◆ Drive additional experiences online

◆ Reward loyalty to encourage return visits

◆ Targeted offers relevant to customers

ACHIEVEMENTS IN THE YEAR

We have delivered

customerbenefitswith:

◆ 59% of bowling sales booked online

◆ Enhanced security to protect customers

◆ Enhanced database segmentation

◆ Continued growth in TikTok presence

◆ Expanding use of influencers

◆ Launched loyalty and reward app

59%

OF BOWLING BOOKED

ONLINE

>1M

CONTACTABLE

CUSTOMERS

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

3. IN HIGH-QUALITY

CENTRES

OUR CAPITAL INVESTMENT PROGRAMME

INTHE EXISTING ESTATE IS FOCUSED

ONTHEFOLLOWINGKEYAREAS:

◆ Refurbishing our centres – targeted investment to keep centres

modern with best-in-class entertainmentexperience

◆ Catch up maintenance – ensuring all centres are maintained

to a high standard and any pandemic shortfalls are caught up

◆ Best-in-class bowling – using latest bowling technology such

across theestate to give a lower cost base and

an improved experience for our customers

WHY IT IS IMPORTANT

A well-invested estate is a proven way to

maintain customer satisfaction:

◆ Growth in like-for-like sales

◆ Cost-saving opportunities and efficiencies

◆ A modern and contemporary environment

◆ Investment in low-energy solutions

◆ Competing across leisure and hospitality

ACHIEVEMENTS IN THE YEAR

Continuing to provide a vibrant and modern

bowling experience:

◆ Like-for-like growth vs FY21 of +5.5%

◆ Sector leading sales growth

◆ Six major refurbishments

◆ Five bowling equipment refurbishments

◆ Scoring system update programme completed

STRATEGIC PRIORITIES CONTINUED

£8.5M

STRATEGIC INVESTMENTIN

THEEXISTING ESTATE

FULL SITE

REFURBISHMENTS

IN FY22

>30%

RETURN ON INVESTMENT

+6.5%

GROWTH VS 2019

FROM NEW CENTRES

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

4. WITH INCREASING

UK COVERAGE

OUR PIPELINE COMPRISES EXISTING

BOWLINGCENTREACQUISITIONS

ANDNEWBUILDOPPORTUNITIES:

◆ Acquire bowling centres – driving significant uplifts through

implementation of sector-leading processes and experience

◆ Develop new centres – converting brownfield sites into

entertainment centres including selected city centre locations

◆ Grow the pipeline – identify new opportunities in existing

leisure orretailsites

WHY IT IS IMPORTANT

Our winning model still has scope

toexpand throughout the UK:

◆ Growth in total sales and profit

◆ Reaches more customers

◆ Excellent results from new centres

◆ Geared for growth

◆ Optimising new centres for local markets

ACHIEVEMENTS IN THE YEAR

A significantly expanded pipeline

with two centres added in 2022:

◆ A new-build centre in Walsall

◆ Harlow acquired and refurbished

◆ New-build Crewe opened in Feb 2023

◆ Dundee & Milton Keynes in development

◆ Pipeline continues to grow

STRATEGIC PRIORITIES CONTINUED

12.5M

POPULATION WITHIN TENPIN CATCHMENTS

ADDITIONAL SITES

SINCE 2017

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

A New generat ion

of Bowling cent re

STRATEGY IN ACTION

THE NEXT GENERATION OF BOWLING CENTRE: WALSALL

In September, the Group opened a revolutionary new bowling concept.

REVITALISING RETAIL SPACE

Walsall is the next generation of social

entertainment offering. The site is a 32.5k

sq ft, former Mothercare and Peacocks, that

has beentransformed into far more than

just a bowling centre, it’s a best-in-class

entertainmentexperience.

LATEST TECHNOLOGY

New style lane seating and booths, complete

with LED strip lights, create a 21st century look,

while enabling improved energy efficiency.

Thenew lanes give every group privacy from

their neighbours and their own individual

bowlingexperience.

SOCIAL ENTERTAINMENT

The centre offers a range of seating and

environment, from intimate booths to

Instagrammable décor, making it ideal for

largesocial groups or family fun.

MAXIMISING SALES DENSITY

As with all of our recent refurbishments, the

centre is designed with an efficient customer

journey in mind. We have optimised selling

spacethroughout.

Walsall offers a large arcade, vibrant pool area,

two private karaoke rooms, a fully immersive

laser tag arena and three exciting escape rooms.

The first six months of trade have exceeded

expectations and we are delighted that this is

already one of our top 10 sites in terms of sales

per square foot, showing the benefit of designing

a modern centre from scratch.

Crewe opened in Q1 FY23 and construction is

already under way in Milton Keynes and Dundee,

both of which will be open in the middle of

this year. We expect these sites will deliver the

positive reception from customers we have

experienced in Walsall.

“PROUD TO BRING

TENPIN’S UNIQUE ENTERTAINMENT

TO WALSALL”

STUART INGLES

WALSALL GENERAL MANAGER

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

MEASURING OUR PERFORMANCE

KEY PERFORMANCE INDICATORS (‘KPIS’)

TOTAL SALES LIKE-FOR-LIKE SALESGROWTH ADJUSTED EPS NUMBER OF CENTRES BANK NET (DEBT)/CASH

£126.7M

5.5% 29.3P 48 £10.1M

2022 £126.7m

2021

£67.5m

2020

£36.3m

2019

£84.1m

2018

£76.4m

2022

2021

2020

2019

2018

29.0%

(17.4%)

5.5%

8.0%

2.7%

2022

2021

2020

2019

2018

29.3p

(23.2p)

19.3p

16.6p

5.9p

2022

2021

2020

2019

2018

2022

2021

2020

2019

2018

£10.1m

(£12.6m)

(£2.5m)

(£4.1m)

(£4.2m)

Definition and how we performed

Total sales is the primary driver of the

Group’s profitability and long-term value

creation. The Group reported total sales

growth of +50.6% versus FY19, the last full

year of sales pre Covid-19. Consistent

growth allows the Group to continue the

roll out of new sites and reinvestment in

theexisting estate through refurbishments.

Definition and how we performed

This is a critical measure of underlying

growth in the business. The Group

reported a +5.5% increase in like-for-like

sales versus 2021 for the post-reopening

period. This is significant as H2 FY21 was

arecord-breaking period for the Group

which has subsequently been beaten.

Consistent like-for-like sales growth

demonstrates the success of the growth

strategy. It allows the Group to defray its

fixed costs over a broader sales base which

enables growth in profitability.

Definition and how we performed

The Group’s basic earnings per share is a

reflection of the underlying growth being

delivered to shareholders. EPS was at a

record level in FY22, highlighting the strong

investment case presented by the Group.

Definition and how we performed

Increasing UK coverage is a key measure of

the Group’s growth strategy. During the

Covid-19 closure period, the Group focused

on conserving cash but we are now once

again focused on estate expansion.

Twocentres opened in the year, with an

expectation of a further four to open

in2023.

Definition and how we performed

The Group’s bank net cash is £10.1m (2021:

Debt (£2.5m)) an increase of £12.6m. This

is the first time the Group has been net

cash positive since the IPO. Bank net

cashcomprises gross bank borrowings of

£nil (2021: £14.0m) with cash and cash

equivalents of £10.1m (2021: £11.5m).

Strong profit performance in FY22 has led

to no net debt providing a strong base for

investment in 2023.

Target and link to strategy:

Total sales are driven by improving the

revenue from our existing estate, through

driving repeat customers and development

of offering, with the strong revenue from

new sites. Our new site in Walsall is in

thetop 10 sales for the Group, while the

acquisition in Harlow has doubled the sales

that the previous owners were achieving

from the same space. This shows the value

created from our proposition.

Target and link to strategy:

Like-for-like sales is driven by investing

innew products, growing ancillary sales,

improving service, enhancing our digital

integration and ensuring that the core

bowling product is well invested across all

of our centres. Focus on the four pillars

ofthe strategy will generate like-for-like

salesgrowth.

Target and link to strategy:

Delivering strong EPS gives investors

confidence in the Group’s long-term

strategy, allowing for the continued

investment in new sites and the

refurbishment programme.

Target and link to strategy:

By increasing the number of centres in

theestate, the Group is able to attract

customers in new market segments.

Newsites are targeted at generating

anROIof >30%, allowing for strong

shareholder returns.

Target and link to strategy:

Targeting bank net cash between £5m –

£10m allows the Group to fund its

strategicgrowth plans, pay dividends

toshareholders and manage risk with

aliquidity buffer.

The Group’s performance and results during the period can be seen across many metrics and KPIs that are reviewed by the Group to understand our operational

and financial performance. Please see note 2 to the Financial Statements for the reconciliation of APMs.

STRATEGIC OBJECTIVES

– A FIRST-CLASS

CUSTOMEREXPERIENCE

– DIGITALLY ENABLED

– IN HIGH-QUALITY CENTRES

– WITH INCREASING UKCOVERAGE

GROWTH DRIVERS

– MORE CUSTOMERS

– VISITING MORE OFTEN

– WITH HIGHER SPEND

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

MEASURING OUR PERFORMANCE

EBITDA/CENTRE REVENUE PER HEAD (‘RPH’) FOOTFALL

£0.83M £15.52 8.2M

2022

2021

2020

2019

2018

£0.83m

£0.32m

£0.52m

£0.48m

£0.17m

2022

2021

2020

2019

2018

£15.52

£15.10

£13.99

£14.60

£14.76

2022

2021

2020

2019

2018

8.2m

4.5m

2.6m

5.8m

5.3m

Definition and how we performed

EBITDA per centre takes the total Group

adjusted EBITDA and then adjusts for

thetotal rent cost. This creates a broadly

consistent measure with IAS 17 EBITDA

(reported from 2017–2020). This allows

theGroup to track the underlying cash-

generating profitability of the estate. The

calculation takes into account the number

of sites trading at year end. Growing

EBITDA per centre at a similar rate to sales

shows the steps taken to offset inflationary

cost pressures are proving successful.

Definition and how we performed

RPH is the average revenue by customer

per visit. This is the total revenue per

centre divided by the footfall. RPH has

increased by 2.8% since last year and

increased by 6.3% compared to pre

Covid-19 levels in 2019. This reflects

customers’ increased spend onfood,

drinkandincreased engagement in

ancillary activities.

Definition and how we performed

Footfall is the measure of the number of

unique bowling sessions played. This is

acrucial measure of overall customer

demand and is carefully managed by

centreto ensure that bowling capacity and

footfall are balanced to optimise revenues.

Total footfall was over eight million

customers in 2022, over two million more

than the previous Grouprecord.

Target and link to strategy:

We operate large centres that have

thespace to offer a wide variety of

entertainment for our customers. Each

centre has a fixed cost base which we work

hard to optimise. We tailor the customer

offering to ensure that we deliver sales and

profit density from each centre in order to

continue to deliver strong financial returns.

Target and link to strategy:

Investment in a first-class customer

experience is aimed at increasing the

dwelltime and offering more products to

customers to encourage them to spend

more. Being digitally enabled enhances

theoverall customer journey and ease of

ordering additional services such as food

and beverage whilst maintaining high-

quality centres encourages customers

toincrease their dwell time.

Target and link to strategy:

Due to our fixed bowling asset base, driving

higher footfall allows us to better utilise our

assets, driving revenue. Higher footfall

subsequently drives ancillary spend.

KEY PERFORMANCE INDICATORS (‘KPIS’) CONTINUED

STRATEGIC OBJECTIVES

– A FIRST-CLASS

CUSTOMEREXPERIENCE

– DIGITALLY ENABLED

– IN HIGH-QUALITY CENTRES

– WITH INCREASING UKCOVERAGE

GROWTH DRIVERS

– MORE CUSTOMERS

– VISITING MORE OFTEN

– WITH HIGHER SPEND

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

STRIKING THE

RIGHT BALANCE

REPORT FROM THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) COMMITTEE

OUR APPROACH

The Group is committed to balancing our environmental, social and

governance impacts to demonstrate our responsible business approach for

all stakeholders.

The Board regularly reviews the Group’s ESG performance and sets out in

this section our goals and performance during the year.

In FY22 the Board established an ESG Committee chaired by Sangita Shah,

an independent Non-Executive Director with considerable experience inthe

field. The Committee seeks to review and deploy best practice in guiding

the Group’s Focus and Goals.

OUR FOCUS

1. ENVIRONMENTAL

We have developed our strategy to deliver Net Zero for scopes 1 and 2

emissions by 2030 and our Task Force on Climate Related Financial

Disclosures “TCFD” section sets out the strategy for the Group to deal with

the key risks identified. Principal focus areas are direct energy usage; food

and drink supply chain; waste management; and our building footprint.

2. SOCIAL

We are committed to taking care of our people, providing safe and fun

working environments. We are committed to fair pay and recruitment,

embracing diversity and inclusion throughout the Group.

3. GOVERNANCE

Our Board decision making focuses on the long-term needs of our

shareholders. We have clear and robust policies in place to meet and

exceed our obligations under the Corporate Governance Code and we

rigorously review our practices to ensure we treat stakeholders with

respectand dignity.

OUR GOALS

We fully endorse the UN Sustainable Development Goals (‘SDGs’) and use

its framework to guide our policy and decision making. We consider the

following goals to be where the Group can have most impact and have

highlighted in this section where relevant.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

REPORT FROM THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) COMMITTEE CONTINUED

SCOPE BREAKDOWN (LOCATION-BASED)

Emission Type kWh CO

e tonnes (Location-Based)

Previous Year

(2021)

Current Year

(2022) Var. %

Previous Year

(2021)

Current Year

(2022) Var. %

Scope 1: Operation of Facilities — — — — 560.5 —

Scope 1: Combustion 1,201,837 2,662,918 121.6% 220.9 489.1 121.4%

Total Scope 1 1,201,837 2,662,918 121.6% 220.9 1,049.6 375.1%

Scope 2: Purchased Energy 10,472,520 16,197,022 54.7% 2,223.6 3,132.2 40.9%

Total Scope 2 10,472,520 16,197,022 54.7% 2,223.6 3,132.2 40.9%

Scope 3: Indirect Energy Use 427,860 722,157 68.8% 102.9 179.6 74.5%

Total Scope 3 427,860 722,157 68.8% 102.9 179.6 74.5%

Total 12,102,217 19,582,097 61.8% 2,547.4 4,361.4 71.2%

GREENHOUSE GAS EMISSIONS INTENSITY RATIOS

Total Footprint (Scope 1, Scope 2 and Scope 3) (Location-Based) – CO

e tonnes

Previous Year

(2021)

Current Year

(2022)

Year on Year

Variance

Number of Centres 46 48 4.3%

Intensity Ratio (tCO

e/Centre) 55.38 90.86 64.1%

INTENSITY RATIO REVIEW (LOCATION-BASED)

Intensity Ratio Trend Review

2020

Previous Year

(2021)

Current Year

(2022)

Intensity Ratio 44.7 55.38 102.67

Difference — 10.68 47.29

Variance % — 23.9% 85.4%

SECR REQUIREMENTS

1. environmental

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

REPORT FROM THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) COMMITTEE CONTINUED

DUAL REPORTING METHODOLOGY

Emission Type CO

e tonnes (Dual Reporting Methodology)

Location-Based

Market-Based

(Supplier Specific) Var. %

Scope 1: Operation of Facilities 560.5 560.5 0%

Scope 1: Combustion 489.1 489.1 0%

Total Scope 1 1,049.6 1,049.6 0%

Scope 2: Purchased Energy 3,132.2 96.6 (96.9%)

Total Scope 2 3,132.2 96.6 (96.9%)

Scope 3: Indirect Energy Use 179.6 179.6 0%

Total Scope 3 179.6 179.6 0%

Total 4,361.4 1,325.8 (69.6%)

SECR NOTES & EXCLUSIONS

Notes

◆ Our methodology has been based on the principles of the Greenhouse Gas Protocol, taking account of the 2015

amendment which sets out a ‘dual reporting’ methodology for the reporting of Scope 2 emissions. In the ‘Total

Footprint’ summary above, purchased electricity is reported on a location-based method.

◆ We have reported on all the measured emissions sources required in The Companies (Directors’ Report) and

Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, except where stated.

◆ The period of our report is 27/12/2021-01/01/2023.

◆ This includes limited emissions under Scope 1 and 2 (gas & fuel used in transport; purchased electricity), except

where stated, and limited emissions under Scope 3 (fuel used in personal/hire cars for business purposes).

◆ Energy use and emissions figures relate to our UK operations (including offshore energy and emissions) only,

except where stated.

◆ Conversion factors for UK electricity (location-based methodology), gas and other emissions are those published

by the Department for Environment, Food and Rural Affairs for 2022-23.

◆ Conversion factors for renewable electricity (market-based methodology) are published at

https://energy.drax.com/support/fuel-mix-disclosure/

◆ F-Gas consumption now included within scope 1 reporting.

◆ Electricity and Gas has been pro-rated to cover the 27/12/2021-01/01/2023 period to match the financial year.

Exclusions

◆ There are no known exclusions.

ENERGY EFFICIENCY ACTIONS

In the period covered by the report, Ten Entertainment Group has continued

to procure a 100% renewable electricity contract with Drax power; 97% of all

purchased electricity is now 100% renewable. In addition, the following

energy-saving measures have been implemented during this period:

Replaced a gas fired water immersion with an alternative electric boiler.

Replaced an immersion heater element and installed a new

unvented cylinder to ensure efficient activity.

A continued replacement of new compressors in seven sites

to improve current efficiency. Equipment upgrades have

also been made following recent centre refurbishments,

including the purchase of efficient pizza ovens

and crushed ice flakers to support the cocktail

machine installations. With regards to lighting

controls and upgrades, there has been

a continued transition to LED lighting

from fluorescent tube for over-lane

lighting in nine centres which are

also computer-controlled,

and front of house LED

lighting in four centres.

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

TASK FORCE ON CLIMATE-RELATED FINANCIAL

DISCLOSURES (‘TCFD’)

CLIMATE-RELATED DISCLOSURES

In accordance with the LSE Linsting Rule 9.8.6R(8) we present our 2022 TCFD compliance statement and confirm

that we have made climate-related financial disclusrs for the year ended 1 January 2023. Disclosure of the actual

and potential impacts of climate-related risks and opportunities on an organisation is fundamental to understanding

how the business strategy may be influenced. Climate-related issues can affect several important aspects of an

organisation’s financial performance and position, both now and in the future.

The Task Force provides recommendations for climate-related financial disclosures structured around four

thematicareas:

1. Governance

2. Strategy

3. Risk Management

4. Metrics & Targets

The four overarching recommendations are supported by 11 specific recommended disclosures focusing on

assessing climate-related risks and opportunities. Ten Entertainment Group and its Board recognise the importance

of adopting the TCFD recommendations and reports climate-related information consistent with this framework to

ensure high-quality and decision-useful disclosures. This enables users to understand the impact of climate change

on our Group and the wider community and environment.

GOVERNANCE

The governance disclosure considers an organisation’s governance around climate-related risks and opportunities.

The strategic oversight of climate change is owned by the Board.

The Group’s day-to-day governance of climate change is overseen by the ESG committee which was established in

2022. Sangita Shah, an independent Non-Executive Director of the Group was recruited to the Boardwith significant

experience of delivering against a sustainability and governance agenda and is Chair of the Committee. Two other

independent Non-Executive Directors and an Executive Director (the CFO and Company Secretary) are also

members of the Committee.

Climate change is covered within the remit of the ESG Committee under four working themes:

1. Operational carbon

2. Value chain

3. Climate change and business strategy

4. Engagement and accountability

The ESG Committee reports on its activities to the Board.

BOARD OVERSIGHT

The Group considers climate change to be a significant board-level strategic issue.

Overall responsibility for climate-related risks and opportunities sits with the Board. As part of our activities

toaddress risk, climate change is a standing Board agenda item included within the Sustainability update.

Climate-related financial issues form part of Sustainability, which the Board will review and take action as required

on risk management policies and business planning.

The Board has undertaken carbon literacy training in the last 12 months to enhance its understanding in this area

and has had active discussions throughout 2022 to identify its risks and opportunities and to formulate a

sustainability strategy.

MANAGEMENT’S ROLE

At management level, the climate change agenda is managed as part of the delivery of our sustainability strategy

which is a core pillar of our overall business strategy. As part of this, our actions in relation to climate change are

driven by our Net Zero strategy (formulated in 2022 and currently being finalised). This sets out clear goals, metrics

and targets to operationalise our approach.

Each year we will incorporate a detailed review of climate-related issues and performance as part of our planning

cycle to assess progress and actions and to ensure that our ‘net zero’ programme is fit for purpose in delivering

forthe business and all of its stakeholders.

We retain a specialist consultant on an ongoing basis who provides any specific technical advice that is required

inrelation to climate-related risk, in respect of mitigation, adaption and transition.

NEXT STEPS

We are committed to transparency in our governance approach and the Board’s oversight of climate-related risks

and opportunities. Management are committed to developing and executing our strategy on an ongoing basis in

line with the TCFD recommendations. We will continue to engage at all levels of the business to consider how we

can integrate best practice into our internal governance structure and processes.

STRATEGY

The strategy disclosure looks at the actual and potential impacts of climate-related risks and opportunities on the

organisation’s businesses, strategy, and financial planning.

We acknowledge that climate-related risks and opportunities have an impact on our business. We are therefore

implementing a clear strategy to respond to that. Our focus is on:

◆ Mitigation of our impact, by reducing our emissions

◆ Managing any transition or physical risks in relation to adaptation.

We have made considerable progress in 2022 in reviewing the business risks and formulating an action plan to

reduce our climate-related impacts. We are currently finalising our Net Zero strategy, providing a clear framework

ofhow we manage our climate-related risks and opportunities.

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STRATEGIC REPORT GOVERNANCE FINANCIALS

EMISSIONS REDUCTION STRATEGY

As part of our Net Zero strategy, we are adopting six key principles to guide our approach:

1. Make sustainability central to everything we do with a sustainability mindset throughout the business

2. Take proactive action by implementing changes to our business to reduce our impact on the environment

3. Engage with and report to our key stakeholders

4. Become efficient by design (including buildings)

5. Renew our approach and use technology where required to address the sustainability challenge

6. Rebalance our impact (through carbon offsetting) where other actions taken are not sufficient

We have three headline commitments in relation to emissions reduction:

◆ We will align our strategy with the latest climate science as guided by the Science Based Targets initiative (SBTi)

◆ We intend to become Net Zero for our scope 1 and 2 emissions by 2030

◆ We intend for our scope 3 emissions to align to Net Zero by 2050 (as this is the date for UK society set by the

Government) and we believe that this will provide us the right framework for managing our transition to Net Zero

and support our reputation by aligning with best practice.

These are reinforced by resource level targets, which are further detailed in the metrics and targets section.

Our most significant climate-related risks and opportunities identified from our process are below, along with

thekey actions we are taking.

Customer demand / product policy

Top risks Top opportunities Key actions

Changing low carbon consumer

behaviours towards sustainable

food and drink alternatives

Development of supply chain

standards

Full carbon neutral menu

Changing low carbon product policy

regarding carbon labelling

Development of products with lower

lifecycle emissions

Engagement to set standards

around carbon reduction in the

supply chain

Offsetting and insetting (collaborative

investment to reduce our supply

chain emissions)

Confirming our commitment to

NetZero by 2050

Physical

Top risks Top opportunities Key actions

Changes in rainfall patterns;

increased flood risk and changing

customer demand during peak

times as seasons shift

Investment in climate resilient

buildings/reducing operating costs

Review climate risk for every site,

identify opportunities for

renewables and flood risk

Increasing temperatures and

droughts resulting in potentially

decreased demand for indoor

activities and increased need

forcooling

Create an environment where we

maximise yield in favourable

conditions and manage variable

costs such as operating and labour

coststo a minimum during low

footfall periods

Net Zero buildings target, whole

lifeapproach

Our reputation

Top risks Top opportunities Key actions

Changing consumer behaviour Supporting consumers in their

transition with a sustainable leisure

offering

Adoption of our NetZero strategy,

confirming our commitment to

NetZero

Attractiveness to stakeholders as

investors demand action on

climatechange

Our action on climate change

increases attractiveness to

investorsand customers

Recycling and waste reduction

initiatives

Whilst all organisations will have a significant impact from the costs of the transition to Net Zero (both directly and

indirectly) we believe that we can control or mitigate costs well through our Net Zero strategy.

With regards to the three scenarios that we consider in this risk assessment, these are summarised as follows:

Scenario Early Late BAU

Description Smooth transition to <2°C Disruptive transition to <2°C No acceleration of action >3°C

Overview Transition to a carbon-neutral

economy starts early and the

increase in global

temperatures stays well below

2°C, in line with the Paris

Agreement.

Global climate goal of keeping

temperatures well below 2°C

is met but the transition is

delayed and must be more

severe to compensate for

thelate start.

Where no policy action

beyond that which has already

been announced is delivered,

resulting in above 3°C of

warming. Therefore, the

transition is insufficient for the

world to meet its climate goal.

Outcomes of

our analysis

We experience a high level of

impact from transition risks

inthis scenario, with higher

levels of policy and legislation

impacting the business in the

short to medium term. The

physical risks are least extreme

which mitigates medium to

long-term challenges in our

supply chain.

Physical risks under this

scenario are higher than the

smooth transition as there are

significant differences in the

impact on the environment,

impacting our supply chain

more severely. The transition

risks are high and disruptive

and are likely to have a

material impact because of

the paceand nature of the

interventions required.

Whilst we experience much

more limited transition risks in

this scenario, the physical risks

are much more severe. This

has significant impacts on our

supply chain in the medium

tolong term as the world will

have to adjust to much more

significant change and

environmental damage from

the impacts of the global

temperature rise and the

consequent effects on

ourclimate.

Assumptions There is early and decisive

action to reduce global

emissions in a gradual way,

with clearly signposted

government policies

implemented relatively

smoothly.

To compensate for the

delayed start a deeper

adjustment is required,

asevidenced in a steeper

increase in global carbon

prices in a late attempt to

meet the climate target.

Under this scenario, physical

risks rise more quickly than in

the early policy action scenario

and transition risks are severe.

This scenario tests the

organisation’s resilience

toboth chronic changes in

weather (e.g. rising sea levels),

as well as more frequent and

extreme weather events (e.g.

flash floods). Therefore, under

this scenario, there are limited

transition risks, but physical

risks are significant.

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IDENTIFYING AND ASSESSING RISK

Each business area is responsible for identifying and managing current

andemerging risks, including regulatory risks in an annual review. Risks are

reported to the management team and senior executives and principal risks

are recorded and regularly reviewed by the Board.

We use the We Mean Business Coalition Risk and Opportunity Taxonomy

toensure that all potential climate risk areas are considered; not all are

relevant to Ten Entertainment Group, but the reasons for those deemed

soare detailed in our Climate Resilience Risk and Opportunity Register.

Non climate-related business risks are scored Red, Amber or Green (‘RAG’)

based on a multiplier of likelihood of occurrence, the potential financial

impact and the control environment in place to mitigate the risk. Climate-

related risks have been RAG scored based on the likelihood of occurrence

and the significance of impact in both unmitigated and mitigated

circumstances. The Board is currently assessing the feasibility of

integratingclimate risk identification and assessment into the same

scoringmethodology as the other business risks. This will help the Board

todetermine their relative significance and help in the decision-making

process. In order to do this an assessment of the financial impact of

eachrisk needs to be made.

Current and emerging risks are identified with consideration to the short

term, 5 years. Looking longer-term we have also undertaken scenario

analysis for the identified climate-related risks for the short term (5 years),

medium term (5-15 years) and long term (15+ years) under three different

climate transition scenarios.

Our business risk taxonomy includes seven risk categories which climate

relatedrisks are categorised into upon identification: Business Interruption,

Commercial Sensitivity, Financial Loss, Regulatory Risk, Reputational Risk,

Strategic and Cyber Risk.

Principal risks are assessed for risk appetite in line with the overall Business

Risk methodology which has five classifications: Averse, Minimalist,

Cautious, Open and Hungry.

The overarching risk appetite is guided by the principle that the Board will

not allow a risk tolerance to adversely impact in any of four key areas: the

four core strategic priorities; the Group’s financial returns; business

reputation; and breach of regulations.

MANAGING RISK

The Board are responsible for making risk management decisions based

onthe below information.

1. TEG determine materiality based on the of likelihood of occurrence,

thepotential financial impact and the control environment in place

tomitigate the risk. Climate risks are yet to have the financial impact

assessment completed but currently have a RAG rating based on

likelihood of occurrence and significance of impact under the current

mitigations in place as described in Disclosure A.

2. The top five risks are then analysed for future change based on three

climate scenarios (detailed in the table to the right), over short (5 years),

medium (5-15 years) and long (15+ years) term and given a RAG rating

for each scenario and timescale.

3. If the risk is deemed a Principal Risk in the context of other business

risks, the risk appetite for each risk can then be assessed using TEG’s

existing classifications and principles as detailed under Disclosure A.

4. Depending on the determination in the above steps the decision to take

actions to mitigate further, transfer, accept or control the risk is made.

INTEGRATING RISK

Climate-related risks have, to date, been assessed as a project, separate

tothe overall risk management structure but with a view to subsequent

integration. The following steps need to be undertaken to align the process

for identifying, assessing and managing climate-related risks:

1. Assess the financial impact of the identified climate risks –

Responsibility: Within each business area.

2. Integrate the RAG rating assessment of the climate risks into the

overallrisk management structure, based on a multiplier of likelihood of

occurrence, the potential financial impact and the control environment

in place to mitigate the risk – Responsibility: Within each business area.

3. Determine if any climate risks are Principal Risks in the context of other

business risks, and if so determine the Risk Appetite and Tolerance for

them – Responsibility: Board.

4. Agree the further actions to be taken for each risk; mitigate

further,transfer, accept or control the risk – Responsibility: Board

5. Agree any further mitigation actions to be taken and the responsibility

for these – Responsibility: ESG Committee.

6. Ensure the regular annual review of climate-related risks is completed by

relevant business areas alongside the other business risks that they are

responsible for identifying, managing and monitoring, so that the

integration of climate risk becomes business as usual.

RISK MANAGEMENT

The risk management disclosure looks at the processes used to identify, assess and manage climate-related risks.

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METRICS AND TARGETS

The metrics and targets disclosure looks at the metrics and targets used

toassess and manage relevant climate-related risks and opportunities.

METRICS USED

Our operational management of climate-related risk is measured through

the below metrics.

◆ Energy efficiency (kWh per m

building floor area) to measure the

effectiveness of our energy conservation

◆ Renewables/PPA (% renewables/% self-generated) to measure our

transition to renewable energy

◆ Waste targets (% recycled/landfill avoidance) to measure the

effectiveness of our approach to waste management

◆ Food and drink menu (kgCO

e per cover) to measure the effectiveness

of our decarbonisation of our menu (39% of our carbon footprint)

◆ Supply chain engagement targets (% of suppliers engaged) to measure

the engagement of our supply chain in managing our climate risks/

opportunities

GREENHOUSE GAS EMISSIONS

Emissions data in respect of the 2022 reporting period, based on

operational control, are disclosed as follows:

Scope /

Category tCO

tCO

(Market)

% of Total

(Market)

tCO

(Location)

% of Total

(Location)

Combustion

– Buildings

1,034.20 7.28% 1,034.20 6.00%

Combustion

– Vehicles

15.4 0.11% 15.4 0.09%

Scope 1 1,049.60 7.39% 1,049.60 6.09%

Electricity 96.6 0.68% 3,132.20 18.17%

Scope 2 96.6 0.68% 3,132.20 18.17%

Purchased goods

andservices

7,115.60 50.09% 7,115.60 41.27%

Capital goods 2,475.40 17.43% 2,475.40 14.36%

Fuel and energy

-relatedactivities

1,577.80 11.11% 1,577.80 9.15%

Waste generated

inoperations

422 2.97% 422 2.45%

Business travel 1,468.10 10.34% 1,468.10 8.52%

Scope 3 13,058.90 91.94% 13,058.90 75.75%

Total 14,205.10 100.00% 17,240.70 100.00%

(Location) refers to location-based reporting; (Market) refers to market-

based reporting. Both definitions are in line with the Greenhouse Gas

Protocol. All stated variances are of our location-based emissions.

GREENHOUSE GAS EMISSIONS INTENSITY RATIO:

Total Footprint

(Scope 1, Scope 2 and Scope 3) – CO

e tonnes

Previous Year

(2020-21)

Current Year

(2021-22)

Year on Year

Variance

Total (tCO

e) 6,445.8 14,205.3 +120.4%

Intensity Ratio

(tCO

e/Customers)

0.00144 0.00174 +20.7%

Emission reporting notes

◆ Our methodology has been based on the principals of the Greenhouse

Gas Protocol, taking account of the 2015 amendment which sets out

a‘dual reporting’ methodology for the reporting of scope 2 emissions.

Inthe ‘Total Footprint’ summary above, purchased electricity is reported

on a market based method.

◆ We have reported on all material emissions within our Operational

Control as defined within the Greenhouse Gas Protocol.

◆ The period of our report is 27/12/21-01/01/23.

◆ This report includes emissions under scope 1 and 2, except where

stated, and includes emissions from scope 3 sources relating to

business travel, purchased good and services, capital goods, employee

commuting, fuel- and energy-related activities, water and waste.

◆ All material emissions have been included within this disclosure.

◆ Conversion factors for UK electricity (location-based methodology),

gasand other emissions are those published by the Department for

Environment, Food and Rural Affairs for 2022-23.

◆ Conversion factors for UK electricity (market-based methodology)

arepublished on the fuel mix disclosures on each supplier’s website.

Statement of exclusions

There are no known exclusions.

Energy efficiency action

Energy efficiency improvements are a core focus for the Group to reduce

itsclimate impact.

During 2022 the Group completed its programme of installation of

energy-efficient pinsetters. This project has reduced energy consumption

per centre (on an underlying steady volume basis) by 8%.

The Group’s focus is now on the installation of energy-efficient LED lighting

throughout its centres. This programme is aligned to the refurbishment and

new build programme.

During 2022 the Group has replaced over 20% of the estate’s heating

andcooling systems with more modern and energy-efficient systems,

withparticular focus on reducing the gas boilers within the Group.

OUR TARGETS

Our Net Zero strategy will work towards the below targets:

1. We intend to become Net Zero for our scope 1 and 2 emissions by 2030

2. We intend for our scope 3 emissions to align to Net Zero by 2050

NEXT STEPS

We will continue to drive forward to deliver significant carbon reductions.

We are on track for all of the decarbonisation targets (shown above) and

willcontinue to reduce our impact on the environment across all three

emission scopes in line with climate science.

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TAKING CARE OF OUR PEOPLE

Our dedicated team of over 1,700 people has

contributed enormously to the success of FY22.

Ithasbeen extremely welcome to have a full year

uninterrupted by Covid-19 closures andthis has

meantwe have been able to focus on performance-

based rewards, helping our people to share in the

Group’ssuccess.

We have invested heavily in our processes and policies

to ensure that they represent best practice in the

industry to support and protect our teams. Our fully

digital training and on-boarding tools continue to

develop and evolve, giving our workforce everything

they need to be successful.

We were delighted to welcome the members of the

Harlow team to our business under a TUPE transfer,

and we rapidly assimilated those team members into

more effective ways of working, giving them access to

better pay, more benefits and a clearer career

development pathway.

Communication is key to managing a fast-moving

multi-site business, and we are very pleased to

continue to be at the forefront of Yapster’s

development. This gives our teams all the tools they

need to understand what is going on in the business

and allows them to communicate at all levels.

During FY22 we were acutely aware of the impact of

the cost-of-living crisis, particularly on our hourly paid

colleagues. We brought forward our increase in hourly

pay by six months, making the increase in October

2022 rather than April 2023. This helped 87% of our

workforce to manage an otherwise difficult winter. We

also continued our performance-based rewards, and in

2022 have paid out over £2.0m in bonus payments to

help our teams share in the Group’s success.

CULTURE AND VALUES

Our people are at the heart of everything we do and

our success is dependent on them. As our growth

continues, the happiness and wellbeing of our

employees is key. We will continue to focus on

employee engagement, to enhance our culture and

deliver our long-term goals.

We had our Company-wide Tenpin Cup football

tournament. This was the first opportunity for

colleagues across the estate to get together since we

reopened post Covid-19. Every centre in the estate was

represented, with hundreds of players getting together

at Star City Goals for a day of competition which

culminated in the team from Camberley and

Bexleyheath winning the ladies’ tournament and Leeds

winning the men’s. Alongside the friendly rivalry on the

day, ourcolleagues raised over £1,200 for Macmillan

Cancer Support.

MENTAL AND PHYSICAL WELLBEING

Towards the end of 2022, we launched our Menopause

Policy. This was supported by a menopause awareness

video and a menopause support group. This is a

drop-in session for those experiencing menopause

andwant to share their story, get advice from others

orfor colleagues who want to find out more about the

menopause and how to support their team members.

We believe that supporting those facing very real

mental and physical challenges at this time in their lives

is crucial to being a responsible and caring employer.

To augment existing support systems and benefits, we

added free counselling from the Licensed Trade Charity

for all our employees. This is in addition to our

Employee Assistance Programme, a full range of mind

and body benefits via Medicash and even more via

Tenpin Treats. The vast array of discounts offered by

Tenpin Treats has been especially helpful during the

current cost-of-living crisis.

LEADERS OF THE FUTURE

The Group is passionate about internal personal

development. With a Chief Executive Officer who started

on the shop floor more than 30 years ago andhas

progressed through the business to the very highest

level, this is a company that passionately believes in

developing its internal talent. Our Operations Director

has been with the business for over 15 years, starting as

a centre manager, and the regional management team

has over 80 years of combined Tenpin experience.

Building a programme for the leaders of thefuture is

fundamental to the Group’s success.

A new management induction process was launched to

ensure new managers are fully trained and supported

through this crucial period of employment. Part of this

process is weekly check-ins with their nominated

Regional Trainer, to ensure the new manager feels

fullysupported and has the best chance of success.

Inaddition, we launched a team member induction

tosupport our hourly paid team members.

One of our real headline successes in 2022 was our

Training Champions programme. The Training Champions

are long-term team members or Unit Supervisors who

are multi-skilled and passionate about training. They

take responsibility for team member onboarding and

induction at site level, re-training of team when required,

keep a focus on the customer journey and have regular

check-ins with the team. We have an ongoing support

process for our Training Champions to support and

develop them further, thus improving the skills of our

team and delivering a better customer experience.

We designed a leadership programme for General

Managers. The programme will be launched in January

2023 and will run over the course of 12 months with a

range of activities to achieve a blended approach.

Wehave created two further management development

programmes to support more junior managers to

progress within the business. These programmes

areextensive and designed to deliver competent,

motivated managers who love to run our businesses.

We continue to build a pipeline of strong junior

managers making sure that we are building the

leadership of the future.

DIVERSITY AND INCLUSION

Diversity and inclusion is central to operating our

business. As a leisure business that welcomes over

8million customers each year, it is important that our

centre teams represent the communities that they

serve. Tenpin is a welcoming and inclusive environment

for everyone.

The Group’s policy on diversity is that no individual

should be discriminated against on the grounds of race,

colour, ethnicity, nationality, religious belief, political

affiliation, sexual orientation, gender, gender identity,

age or disability.

The Board recognises the benefits of diversity,

including gender diversity across the organisation.

Board appointments are made on merit while ensuring

that there is an appropriate balance of skills and

experience available to lead the business. The Board

currently consists of 42.8% (three) female and57.2%

(four) male Board members while the totalGroup

headcount is split as below:

Female Male Total

Board 3 4 7

Exec + Direct Reports 19 16 35

Managers 125 113 238

Staff 854 608 1,462

Total 1,001 741 1,742

As at 8 March 2023

2. SOCIAL

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

GENDER PAY GAP

We are confident that as we continue to progress

towards a gender-balanced workforce, our gender pay

gap will continue to reduce.

There are a number of steps we are taking to improve

our gender balance that we expect to positively impact

our gender pay gap, including:

OUR PEOPLE

◆ Reviewing our partnerships to attract a diverse and

exciting workforce

◆ Using our networks to share our people’s stories and

ideas, celebrate differences and showcase our

amazing talent

◆ Through the use of technology and gamification,

enabling remote learning and virtual networking

◆ Introducing a job evaluation scheme and grading

structure

OUR LEADERS

◆ Ensuring our people leaders feel enabled to support

and develop a diverse and flexible workforce through

the creation of tools, support and guidance

◆ We truly believe that getting the best from our

people means equipping our leaders with the right

skills and support to enable this

We recognise that there is still a lot more to be done,

and we will continue to shape a more diverse and

inclusive culture at TEG. Full details of the latest Gender

Pay Gap report can be found on our website.

CUSTOMERS

We believe that our provision of affordable

entertainment that crosses the generations and brings

family and friends together has a positive influence on

the communities that we serve. Our centres are fun

forall ages to enjoy and we strive to ensure that our

customers have a safe environment in which to

socialise with friends and family.

In the summer of 2022 we were invited to Downing

Street to help support the government in making

summer holiday activities affordable and accessible

toall. The result was that throughout the summer

holidays we entertained our junior customers for £5 fora

game of bowling and a burger and fries. That wasa price

accessible to a very broad range of the UK population.

Throughout the year, bowling at Tenpin is an affordable

experience with an average realised price per game of

only £5.13 representing genuine value for money.

Our centres provide drink and food as part of the

experience, and we understand the focus on diet

andwellbeing. We are passionate about our food and

strive to always provide the best quality food to our

customers. We are focused on making progressive

changes going forward to meet changing customer

expectations, including continuing to review our

meat-free offering. We continue to work with our

suppliers to reduce the amount of sugar and salt in the

products we use and ensure all our products are from

sustainable sources and that we have a range of

healthier options available. We communicate regularly

with regulatory bodies, local councils and our suppliers

to ensure that we have an appropriate mix of gaming

machines in terms of content and quality and age

appropriateness.

COMMUNITIES

The Group supported Rays of Sunshine, MIND and

Macmillan in 2022. Our annual Tenpin Relay raised over

£1,100, which was split between Rays of Sunshine and

MIND. We also raised over £1,300 for Macmillan Cancer

Support at our annual football tournament. Money was

also raised for various other charities including Children

in Need, Lions Clubs and Tommy’s Charity by individual

team members at a locallevel.

In 2023, we will be creating a charity committee and

raising money for Macmillan Cancer Support. Macmillan

provides physical, financial and emotional support and

we believe this practical support is vital to coping with

cancer at a fundamental level. We will focus on the

following:

◆ Awareness

We will raise awareness within our teams to drive

fundraising activity both locally and centrally. We will do

this via the charity committee and our internal

communications platform.

◆ Events

We will continue to support established annual events,

such as our Tenpin Relay and Football tournament,

both of which are very popular. We will also encourage

individual and local fundraising events whether for

Macmillan or other charities.

HEALTH AND SAFETY

The health and safety of everyone who enters our

centres is of upmost importance to the Board. Our

colleagues and suppliers deserve to work in an

environment that ensures they return home at the end

of the day healthy and our customers expect to have fun

in centres that maintain the highest standards in safety.

The Group has a Health and Safety Committee that

meets on a regular basis, with business sections

represented, to ensure consistency across the Group.

This Committee is supported by independent health

and safety experts, who are on top of all the latest

requirements.

The Committee then reports into the Board, with any

issues or improvements required being discussed

during Board meetings, where health and safety is a

standing agenda item.

REPORT FROM THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) COMMITTEE CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

BOARD DECISION MAKING

In compliance with Section 172 of the Companies Act 2006 (‘s.172’), the Board of Directors, both individually

andtogether, act in a way that they consider, in good faith, would be most likely to promote the success of the

Company for the benefit of its stakeholders. The Board has designated Julie Sneddon, Senior Independent

Non-Executive Director, as a key point of engagement with the workforce. See stakeholder engagement on

page32.

RESPECT AND DIGNITY

The Group respects and supports the dignity, wellbeing and human rights of our employees, customers, supply

chain and communities in which we operate, and is committed to ensuring that everyone working throughout our

operations and within our supply chain is treated with dignity and respect.

We have a zero tolerance approach to modern slavery of any kind and are committed to acting ethically and with

integrity in all our business dealings and relationships. Full details of both our Human Rights policy and latest

Modern Slavery statement can be found at www.tegplc.co.uk

We operate an independent whistleblowing hotline, with modern anonymous digital as well as telephone access.

There were no whistleblowing incidents reported in 2022.

INFORMATION SECURITY

The Group and the Board take information security matters very seriously. The Board is updated at each meeting on

information security and has conducted a detailed information review during 2022. There have been no significant

information security or data breaches during 2022orthe previous three years.

The Group is vigilant in its approach to threat management and uses internal processes and outside agencies to

ensure that its threat awareness and protection is up to date. We treat our customers’ data with respect and do not

share or sell information to third parties other than those agencies weuse to help us with our communications

strategy. During 2022 we significantly upweighted our website cookies policy and continue to develop and monitor

our IT security.

FAIR TAX POLICY

The Group is committed to fair and transparent tax practices, and compliance with all applicable tax laws, rules and

regulations, without exception. The Group aims to achieve an optimal tax position for the Group, which does not

mean the lowest tax result possible in the short term, but rather the optimal tax result, considering sustainability

and continuity of the positions taken over the longer term. The Group does not (and will not) enter into artificial

arrangements in order to avoid taxation or to defeat the stated purpose of the tax legislation,nor does it (nor will it)

undertake aggressive tax planning. The Group’s tax policy is available ontheTen Entertainment Group plc website.

NON-FINANCIAL INFORMATION STATEMENT

We comply with the Non-Financial Reporting requirements contained in sections 414C (11) of the Companies Act

2006. The below table, and information it refers to, is intended to help stakeholders understand our position on key

non-financial matters and navigate to where further detail can be found in this report.

Requirement Policies Additional information

Environment Environment statement and

Health and Safety policy

Environmental and greenhouse gas emission disclosures

onpages 21 to 26 and health & safety on page 56

Employees Diversity, gender pay gap,

Health & Wellbeing Strategy

See pages 27 to 28 of Environmental, Social and Governance

Human rights Slavery and Human Trafficking

statement, Whistleblowing

policy, Data Protection policy

Slavery and Human Traffickingstatement on page 29,

whistleblowing onpage 56, Data Protection policy

onpage56

Principal risks Risk Register Risk Management and InternalControl statement onpage

55, Principal risks on pages 41 to 42

Business model Our business model and strategy are described onpages 10

and 12 to 16

Non-financial key

performance

indicators

Our non-financial KPIs are explained on page 18 to 19

Anti-corruption

and anti-bribery

Bribery Act policy and

auditservices

Page 56 for Internal and External Audit services andBribery

and Anti-Corruption policy

REPORT FROM THE ENVIRONMENTAL, SOCIAL AND GOVERNANCE (‘ESG’) COMMITTEE CONTINUED

3. GOVERNANCE

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

PRINCIPAL BOARD DECISIONS

SECTION 172

The Board believes that balancing the interests of stakeholders with our corporate purpose and the

desiretomaintain high standards of ethical conduct is embedded in the way we do business.

As required by section 172 of theUK Companies Act 2006, the Directors

have acted to promote the success of theGroup for the benefit of its

stakeholders. In meeting this responsibility during the year, the

Directors have had regard, amongst other matters, to:

◆ the likely consequences of any decisions in the long term

◆ the interests of the Group’s employees

◆ the need to foster the Group’s key relationships

◆ the impact of operations on the community and environment

◆ the Group’s reputation for high standards of business conduct

◆ the need to act fairly and responsibly

◆ the current economic and political climate

“THE BOARD WORKS TO EMBED HIGH

STANDARDS OF ETHICAL CONDUCT IN THE WAY WE

DO BUSINESS. WE CONSISTENTLY ENGAGE WITH OUR

STAKEHOLDERS TO ENSURE WE MEET THEIR NEEDS”

JULIE SNEDDON,

SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

SECTION 172 CONTINUED

Decision Stakeholder considerations Impact on long-term sustainability

Acceleration of our pipeline and investment – Despite

the ongoing economic uncertainty, the Board has

remained committed toinvesting in the refurbishment

of our centres and expanding our estate, investing over

£20m in FY22

Investors – The Board considered that the valuecreated from successfully improving and expanding our estate will

maximise shareholder returns with the proven model of growth delivering return on investment of over 30%.

Our Customers – The Board wanted to continue to develop exciting and diverse entertainment centres for our

customers to enjoy and concluded that well-invested centres are the best way to continue to enjoy growth in footfall.

Our Environment – Investment in our centres includes key energy-saving initiatives such as new pinsetters, low-

energy lighting, efficient heating and cooling systems and modern insulation.

Our Suppliers – The Group has a track record of growth when it invests in the business which is to the benefit of our

key suppliers and partners. We commit to long-term relationships with our business partners and when we grow our

centres we maintain our commitment to them.

A decision to continue investing in the estate despite

economic uncertainty means that 11 centres were

refurbished in 2022 alongside two new centres added

to the estate.

Continued growth in the business has increased

profitability and cashflow, thereby freeing up further

funds for investment and growth in the future.

Despite the investment of over £20m of strategic

capital expenditure, the Group ended the year with nil

bank debt and over £10m of available cash.

The Board plans to continue withself-funded and

sustainable investment in a more profitable business.

Reinstatement of dividend – The Board took the

decision to reinstate a dividend in September in

response to a sustained return to strong trading

Investors – The Board aims to maximise total shareholder returns with a balance of reinvestment in the business and

returning a dividend to shareholders to generate consistent returns on investment. Returning a proportion of profit

toshareholders also ensures a disciplined approach to capital allocation for investment.

Our Customers – The Board determined that thepayment of a dividend would not impact the ability to invest in the

estate or continuing to provide great customer experience.

Our People – The Board determined that reinstatement of a dividend was affordable andposed no risk to the

long-term future of the business, thereby maintaining job security. In addition, the Group has increased the bonuses

payable to team members as part of a strategy to ensure that all stakeholders share in the Group’s success.

The paying of a dividend provides the market with a

strong indicator of long-term financial viability.

This instils confidence and makes the shares a more

attractive investment proposition for potential

investors, increasing the price and value for the

existingshareholders.

Maintaining prices at 2019 levels – The Group has

chosen to remain committed to holding bowling prices

at 2019 levels in spite of high inflation being seen in the

economy. The average realised price of a game of

bowling in FY22 was £5.13 which is slightly lower than

inFY19.

Our Customers – The Group understands that customers are being faced with price inflation and has taken the

decision to improve our valueproposition by remaining an affordable entertainment venue for friends and families

tosocialise. This helps maintain and grow footfall.

Investors – The Board believes that by maintaining our value proposition and focusing on driving footfall to generate

revenue growth, the Group will be in a better position to weather the economic headwinds, protecting the value for

shareholders.

Our Suppliers – Keeping our base value proposition and driving footfall results in greaterancillary revenue, driving

volume for oursuppliers. We work hard with our suppliers to keep costs down, giving them the opportunity to also

benefit from the increased footfall.

Our Colleagues – Ensuring our centres are busy with customers results in the ability to continue to ensure that shifts

are well staffed to ensure that we have sufficent people to welcome and entertain our customers. During 2022 our

colleague numbers grew to a record 1,700 as a result of the footfall growth.

Customers come to our centres because they want

value-for-moneyentertainment.

As our primary assets are fixed, the Group is focused on

maximising theutilisation of our assets and maximising

our capacity and sales density.

The Board believes that by maintaining value and

customer goodwill, they are more likely to have repeat

visits, improving theuseof our asset base.

Bringing forward hourly pay ahead of National

Minimum Wage (‘NMW’) increases – almost 90% of

colleagues are paid on an hourly rate that is linked to

the National Minimum Wage. This usually increases

every year in April, but growing inflationary pressures

led the Board to conclude that the 2023 increase should

be brought forward by six months to October 2022. The

Board will continue to monitor pay rates to ensure that

they are adequate to support our people.

Our Shareholders – The Board manages the business for long-term sustainable profit growth and it was deemed that

staff retention, morale and customer service are all enhanced by ensuring that our people are well supported

financially through difficult times.

Our Customers – In order to continue to provide a high-quality customer experience we need to ensure that our

people are motivated to deliver the best possible customer service.

Our Colleagues – The Board appreciates that cost-of-living challenges are affecting all our team members and made

the decision to pull forward projected 70p NMW increases to October. When the Government decided that the April

2023 increase would actually be 92p, the Board agreed to increase to this level from December 2022 to help our team

members navigate their own cost increases.

We are better able to recruit and retain people and

provide a great service to our customers. As a result,

we continue to enjoy footfall and sales growth that is

sufficient topay for the increased cost base.

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

SECTION 172 CONTINUED

Strategic priorities: 1A first-class customer experience, 2Digitally enabled, 3In high-quality centres, 4With increasing UK coverage.

The below sets out who we consider to be our key stakeholders, what their interests are, some key engagement areas in 2022, and examples of how our stakeholders’ interests influence the way we do business.

OUR INVESTORS OUR PEOPLE OUR CUSTOMERS OUR SUPPLIERS &PARTNERS OUR ENVIRONMENT

Our investors are the shareholders who

have invested their capital into a business

that delivers consistent returns through

aproven strategy for growth.

Our employees are the dedicated

peoplewho create the fun, entertaining

environments, to ensure our customers

have a great time and that our business

thrives.

Customers are at the heart of what we do.

We offer social entertainment for a wide

range of ages and groups looking for a

variety of entertainment activities at great

value for money in a safe environment.

Our strategic partners help us provide the

latest in bowling and gaming technology,

aswell as developing our food and drink

offering. We work closely with our

partners to keep our entertainment

experience fresh and relevant.

The wider community and environment

are impacted by the business decisions we

take and we work to integrate into the

communities in which we operate.

WHY WE ENGAGE

We meet regularly with current and

prospective shareholders to assist them

inunderstanding the business so they can

make informed decisions, and so that we

canunderstand what they expect from us.

Great customer experiences start with great

employees. We engage regularly with our

team, to understand their opinions and to

train and develop their skills. We aim to

provide a consistent and open culture

across the Group, to attract and retain great

talent, aligning these with the purpose,

values and strategy set by the Board.

We listen to our customers’ feedback so we

can continually improve their experiences in

our centres. We are continually developing

our products, to remain relevant and to

appeal to more customers.

We have strong relationships with our

suppliers to ensure that our objectives are

aligned in delivering a great service to our

customers at great value for money. We

work with suppliers to develop innovations

in gaming and customer experience.

Our business can havea wider impact

beyond our direct stakeholders, and we

want to ensure that we arehaving a positive

impact on local communities and

minimising any environmental impacts.

HOW WE ENGAGE

We communicate with our shareholders by:

◆ Annual General Meeting

◆ Investor roadshows for results

announcements

◆ Hybrid of face-to-face and virtual

◆ Majority of investors prefer video calls

◆ Full content of updates on website

◆ Committee Chairs for specialist areas

We engaged with our employees through:

◆ Yapster, our mobile messaging app

◆ Access to discounts through Tenpin Treats

◆ ‘Talent Talk’ appraisals

◆ Succession and development planning

◆ Epic Ideas programme to improve service

◆ Confidential tools to escalate concerns

◆ Workforce engagement at Board level

◆ Clear reward and incentive programme

We connected with our customers through:

◆ Social media with >220k followers

◆ Targeted emails to highlight discounts

◆ Regular feedback to assure high standards

◆ Meet and greet at the entrance

◆ Smooth integrated booking process

◆ Competitions and prizes

◆ Bespoke loyalty and rewards app

We work with our partners by:

◆ Creating long-term partnerships

◆ Sharing plans to provide security of supply

◆ Setting clear ethical trading stance

◆ Making timely payments and acting fairly

◆ Meeting regularly to align expectations

◆ Acting in partnership to resolve problems

◆ Working together to drive innovation

We support our community by:

◆ Engagement with local interest groups

◆ 100% of purchased energy is renewable

◆ Investment in energy-saving technologies

◆ Charitable partnerships

◆ Customer waste recycling engagement

◆ Local pricing approach

◆ Formation of an ESG Committee

92%

OF THE SHARE REGISTER MET WITH

MANAGEMENT DURING 2022

53%

OF MANAGEMENT ARE FEMALE

>1M

CONTACTABLE CUSTOMERS IN DATABASE

>400

SUPPLIERS PAID IN FY22

2030

PLAN TO DELIVER NET ZERO FOR SCOPE 1

AND 2 EMISSIONS

Link to strategy:

2, 3, 4

Link to strategy:

1, 2, 3

Link to strategy:

2, 3

Link to strategy:

1, 2, 3, 4

Link to strategy:

1, 3, 4

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

FINANCIAL REVIEW

FINANCIAL

REVIEW

Following the Group’s return to profitability

after the pandemic, TEG has delivered its best

ever financial year with record-breaking sales,

profit and cash and an adjusted earnings per

share of 29.3p which is 52.0% higher than in

FY19. The Group is in rude financial health

andis well placed to continue to invest

todeliver profitable sales growth.

SALES GROWTH DELIVERING

RECORD LEVELS OF PROFITABILITY

AND CASHFLOW

“STRONG CUSTOMER

DEMAND FOR OUR

VALUE-FOR-MONEY

OFFER HAS DRIVEN

SALES AND PROFIT

GROWTH”

ANTONY SMITH

CHIEF FINANCIAL OFFICER

£26.1M

GROUP ADJUSTED

PROFITBEFORE TAX

29.3P

ADJUSTED EARNINGS

PER SHARE

£27.2M

OF FREE

CASH FLOW

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

£000

FY22

53 weeks to

1 January

2023

FY21

52 weeks to

26 December

2021

FY19

52 weeks to

29 December

2019

Movement vs

FY19

Revenue 126,673 67,521 84,122 42,551

Cost of goods sold

(18,145) (9,4 46) (10,387) (7,75 8)

Gross Margin

108,528 58,075 73,735 34,793

GP% 85.7% 86.0% 87.7% (2.0%pts)

Total operating costs (41,207) (22,141) (28,923) (12,284)

Centrally allocated overheads (6,109) (2,214) (3,155) (2,954)

Support office (8,477) (6,661) (6,157) (2,320)

Group adjusted EBITDA 52,735 27,059 35,500 17,235

Less property rent costs (13,105) (12,436) (11,932) (1,173)

Group adjusted EBITDA after rental costs

39,630 14,623 23,568 16,062

Add back property rental costs 13,105 12,436 n/a n/a

Depreciation and interest on Right of Use

PropertyAssets (16,468) (14,495) n/a n/a

Depreciation and amortisation (8,941) (8,413) (7,379) (1,562)

Net interest (524) (504) (788) 264

Loss on disposal of assets (271) (442) (932) 661

Loss on Joint venture (310) — — (310)

Amortisation of acquisition intangibles (120) (130) (293) 173

Group adjusted profit before tax

26,101 3,075 14,176 11,925

Impairment reversal 631 1,124 — 631

Exceptional items 7,263 238 (2,381) 9,644

Profit before tax 33,995 4,437 11,795 22,200

Taxation (7,399) (432) (2,758) (4,641)

Of which: taxation attributable to Group

adjustedprofit (6,019) (387) (2,836) (3,183)

Profit after tax 26,596 4,005 9,037 17,559

Earnings per share

Basic earnings per share 38.9p 5.9p 13.9p 25.0p

Adjusted basic earnings per share

29.3p 5.9p 19.3p 10.0p

Full-year dividend 10.0p — 3.7p 6.3p

1 Cost of goods sold and gross margin are presented on the basis as analysed by management. The cost of sales as reflected in

the statement of comprehensive income consists of direct bar, food, vending, amusements, gaming machine related costs,

PDQ machine costs and staff costs. Cost of goods sold excludes staff costs but security and machine licence costs incurred

by the centres are included. Deducting cost of goods sold from revenue gives gross margin which varies to the gross profit

as reported in the Consolidated Statement of Income. This is how cost of goods sold and gross margin are reported by the

business monthly and at centre level as labour costs are judged as material and thus reported separately within operating costs.

Please see Note 2, Alternative Performance Measures which reconciles these two measures.

2 These are non-IFRS measures used by the Group in understanding its underlying earnings. Group adjusted EBITDA after rental

costs consists of earnings before interest, taxation, depreciation, amortisation costs, rental costs, exceptional items, impairment

reversal, loss on Joint venture and profit or loss on disposal of assets. Group adjusted profit before tax is defined as profit

before exceptional items, impairment reversal and tax. Adjusted basic earnings per share represent earnings per share based

on adjusted profit after tax. Like-for-like sales are a measure of growth of sales adjusted for new or divested sites and adjusting

foracomparable time period particularly in relation to whether a centre was forced to close due to Covid-19 regulations.

Since reopening in May 2021, we have consistently

delivered sales and profit growth ahead of expectations

and have built on these foundations to drive sales

growth throughout FY22. Our focus on value for money

for customers and making operating efficiencies as we

increase our footfall has ensured that this sales growth

has been profitable. Despite inflationary pressures,

sales growth of 50.6% compared to FY19 has delivered

growth in Group adjusted PBT of 84.1%.

This profit performance has meant that the Group

hasbeen highly cash generative in the year. We have

aclear capital allocation strategy that prioritises

financial security; investment in growth; and generating

shareholder returns. As a result, for the first time in the

Group’s history we have ended the financial year with

anet cash position with no drawings on our banking

facility. This has been delivered while still investing

over£20m in our strategic growth programme and

reinstating dividend payments to our shareholders.

Finding the right comparative for the Group’s

performance is challenging because of the disruption

inFY20 and FY21 as a result of the Covid-19 closures.

Ourlast full and uninterrupted financial year was FY19.

Therefore, we will continue to use FY19 as a

comparative for our FY22 results in this review.

However, there have been significant changes to our

business, our market and the economic landscape

since FY19 and as such we will also use FY21

comparatives to help the reader understand our

financial performance as fully as possible. Throughout

this Financial Review we will indicate which comparison

we are using, and will include FY22, FY21 and FY19 in

our data tables.

FINANCIAL REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

SALES PERFORMANCE

2021 sales 2022 sales

Like-for-like sales H1 (6 weeks) H2 FY H1 H2 FY

Growth vs 2019 22.5% 30.3% 29.0% 46.0% 34.2% 39.8%

Growth vs 2021 N/A N/A N/A 19.0% 3.2% 5.5%

Compared to FY21: Sales growth has been the principal driver of profit growth in FY22. We were very pleased to

deliver continued sales progression in FY22 compared to our exceptional FY21. We ended the year with total sales

growth of +87.6%, but over a 53-week period rather than the 32 traded in FY21. Like-for-like sales growth was +5.5%

reflecting continued progression from a very strong FY21. There was a modest slowdown in growth over the third

quarter of 2022 which was a combination of the extreme heatwave during 2022 and the unique circumstances of

the post-Covid-19 bounce during the summer of 2021 in the comparative.

Compared to FY19: Total sales of £126.7m were +50.6% higher than in FY19, the last full year of comparable

trading. On a like-for-like basis sales were 39.8% ahead of FY19. Since FY19 the Group has added three new centres

to the estate in Manchester Printworks, Harlow and Walsall and these are all trading well.

We attribute our sector-leading growth trend to three principal factors:

1. We have seen a fundamental consumer shift in favour of social entertainment and leisure.

2. We have invested significantly in providing a sector-leading customer experience.

3. We have made a significant shift in our value-for-money proposition.

As an example of our excellent value-for-money proposition, the average realised price of a game of bowling in 2022

was £5.13 including VAT which is 1.5% lower than in 2019 despite the compound rate of inflation being in excess of

20% over this time. While many retailers and leisure operators have been passing on inflation, we have been making

our business model more efficient to keep our prices low. The result is that our relative value position in the sector

has significantly improved.

GROSS MARGIN

Compared to FY21: Gross Margin, which is total sales less Cost of Goods Sold but excluding labour costs, was

85.7% compared to 86.0% in FY21. This modest decline of (0.3%pts) reflects inflationary pressures in food and

drink that we have chosen to not fully pass on to our customers in order to maintain our value-for-money

proposition.

Compared to FY19: Gross Margin is (2.0%pts) lower than in FY19. We have continued to add to the customer

experience during FY22. Activities such as karaoke and laser tag have more than doubled in size since FY19, albeit

from a small base, and the growth in our machine income has been stronger than the underlying bowling growth.

We have also been highly successful at increasing the participation in food and drink while customers play. The

result is that bowling now represents 44% of sales compared to 47% of sales in FY19. The(2.0%pts) margin

reduction is a function of that shift in sales mix, where growth in food and drink and other amusements has

outpaced growth in bowling. We are happy with this trend because typically the growth in theseareas is a function

of customers participating in additional activities and is incremental and cash positive eventhough it is slightly

margin dilutive.

We will continue to develop the success of our non-bowling product offering and are confident that the

underlyingbusiness growth will ensure that gross profit in absolute terms will remain healthy as the Group

continues to expand.

OPERATING COSTS

Compared to FY21: Total operating costs in FY22 were £41.2m. This is £19.1m more than in FY21 but much of that

is a function of the Group being closed for the first 20 weeks of 2021 until mid May.

Compared to FY19: A more appropriate comparison is the operating costs in FY19 which were £28.9m. This means

that FY22 saw a £12.3m increase in costs, a growth of 42.5%. This level of growth is significant but must be

considered in the context of three years’ inflationary pressures, three new centres open, and footfall growth of 41.7%.

At a constant ratio assuming a linear relationship, the footfall growth of 41.7% applied to FY19 operating costs

would be expected to grow from £28.9m to a theoretical £41.0m. Over the same period, the underlying rate of

inflation has been around 20%. Applying that inflation rate to the volume adjusted theoretical cost of £41.0m

takesthe expected operating costs to £49.2m. Actual operating costs for FY22 were £41.2m representing

an£8.0mefficiency saving against the theoretical expected operating cost.

Efficiency savings have been achieved with a clear focus on three main areas:

1. Volume efficiencies mean that not all costs are variable with volume and so increases can be maintained at a

lower rate than footfall growth.

2. Supplier relationships mean that we can work in partnership to reduce the level of inflation in our cost base as

our suppliers also take the benefit of our growth and success.

3. Operational effectiveness means that we are consistently improving our operating procedures to reduce waste

and help serve our customers more efficiently.

The combination of these factors has kept our costs under control and allowed the sales growth to be translated

into even stronger growth in profit.

CENTRAL COSTS

Compared to FY21: Central costs in FY22 were £14.6m comprising the PLC costs, support office and centrally

allocated functions providing essential services to the business such as marketing, IT, property management, and

regional support teams. Due to the closures in FY21, last year’s cost was £8.9m. However, the Covid-19 closures

and government support measures makes a year-on-year comparison difficult.

Compared to FY19: This is the last full year of trading and is a more representative comparative of Central costs.

Central Costs in FY19 were £9.3m. The increase over three years is £5.3m and can be attributed to three years worth

of inflationary pressures across wages, services and materials, estimated to be £1.9m based on approximately 20%

inflation over the period, as well as an increased level of strategic investment and Group growth.

During FY22 the Group has recognised colleagues across the Group with significant success bonuses totalling over

£2.0m. In addition, the Executive team have delivered results far in excess of their maximum targets and the

Remuneration Committee has allocated a bonus provision accordingly.

The Group has increased its activity in marketing, IT, property, operations and ESG. During FY22 the Group has

developed the world’s first bespoke loyalty app, has fully rolled out the latest bowling scoring technology and has

continued to grow its customer database and reach on social media. We have delivered 11 refurbishments,

developed three new bowling centres and significantly increased our customer experience. We invested in

developing our sustainability strategy and continue to work to lower our carbon footprint. These developments

have all been made possible thanks to larger and more specialised teams.

Finally, the significant inflationary pressures are particularly prevalent in the labour and services that comprise the

central costs. Professional fees are rising at a faster rate than the base level of inflation in many areas, and the ability

to attract and retain talent is crucial to a thriving business.

Despite these pressures, we have worked hard to ensure these central costs have delivered value for money, and

this cost base as a ratio to sales remains at just above 11%, as it was in FY19.

FINANCIAL REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

GROUP ADJUSTED EBITDA AFTER RENTAL COSTS

Group adjusted EBITDA after rental costs is a measure used internally as it considers the cash impact ofthe rent

paid to landlords to ensure that centres are producing the appropriate cash flow to make an adequate level of

return. This measure is broadly equivalent to the old IAS 17 basis of recording rental costs.

Compared to FY21: The Group was only open for 32 of the 52 weeks of trading in FY21 and therefore the £14.6m

ofEBITDA delivered is not fully representative of a full year’s trading period. Because of the costs experienced

during the closure period it is not possible to produce an accurate reflection of like-for-like EBITDA and therefore

theGroup considers FY19 to be the most appropriate comparative.

Compared to FY19: FY22 saw record levels of Group Adjusted EBITDA delivered at £39.6m. This is 68.2% higher

than in FY19. Thegrowth in Group Adjusted EBITDA is a function of the operational gearing generated from the

increased sales volume. As described above, costs are growing, but not as fast as sales due to the efficiencies of

scale more than offsetting theinflationary pressures. Property rent for example was £11.9m in FY19 and has grown

to £13.1m in FY22, an increase of only 10%. This is despite an increase of three additional bowling centres and the

impact of inflation.

DEPRECIATION, AMORTISATION AND CAPITAL EXPENDITURE

Compared to FY19: There is no suitable comparative for depreciation and amortisation in FY19 due to the FY20

adoption of IFRS 16.

Compared to FY21: This section will focus on FY21 as the comparative measure. Because Covid-19 closures had no

impact on depreciation policy, the comparative will remain a helpful one. Total depreciation on Right of Use (‘ROU’)

increased to £16.5m compared to £14.5m in FY21. This increase reflects the addition of Harlow and Walsall as full

trading centres but also the addition of Crewe in the final quarter of the year as the centre was under construction

thereby attracting depreciation and lease costs under IFRS 16 even though the centre didn’t open until February 2023.

As we have described in previous years, the relatively early tenure of the average weighted lease expiry means that

IFRS 16 creates a profit compression because the leases are less than halfway through. As a result, the total cost of

depreciation and interest on our ROU assets is £3.4m higher than the cash rental costs incurred.

Other depreciation in the year was £8.9m, a 6.3% increase on FY21 as the Group continues to invest in its high

returning strategic programme.

Maintenance capital spend in FY22 increased significantly to £4.9m from £0.9m in FY21. Strong cash flow has

provided the headroom to recommence investment in the estate. A further £8.5m was spent in FY22 on the

existing estate on strategic refurbishments, taking the total existing estate investment to £13.4m. In the medium

term we expect to spend the annual depreciation charge (FY22: £8.9m) on existing estate investments in the form

of maintenance and refurbishments. In FY22 existing estate investment was £13.4m. During FY22 we invested an

additional £4.5m in the estate as catch-up spend from the Covid-19 period where we were focused on cash

conservation. Over the past three financial years, FY20 – FY22 the total existing estate investment has been £3.9m,

£7.1m and £13.4m respectively. This total investment of £24.4m over that period is consistent with £25.3m

depreciation charge over the same period.

£6.9m was invested in new centres in FY22 with the acquisition and refurbishment of Harlow, the build and opening

of Walsall and a significant amount of the investment in Crewe which opened in February 2023. In addition, the

Group invested £5.0m in the purchase of the freehold of a property where an existing leased centre which was very

profitable was vulnerable to redevelopment at the expiry of the lease. While the Group’s strategy principally remains

to take long leaseholds, we will continue to view freehold opportunities as they arise and assess them on an

appropriate returns basis.

FINANCE COSTS AND BANKING ARRANGEMENTS

£000

53 weeks to

1 January

2023

52 weeks to

26 December

2021

Interest on bank debt (334) (391)

Amortisation of bank financing costs (168) (124)

Lease interest charges (6,682) (5,481)

Other finance income/(costs) (22) 10

Net interest (7,206) (5,986)

Net interest increased to £7.2m in the year, with the cost of the bank financing remaining flat but with an increase in

the lease interest charges from the three additional property leases.

The Group has a £25m RCF in place with its long-term banking partner RBS. This facility expires in April 2024 and is

currently undrawn. The Group will be considering its financing needs in due course when the facility comes up for

renewal but given that the Group is in a net cash position, an early renewal is not a business priority.

In 2022 the Group repaid its £14m CLBILS term loan facility as it was no longer considered necessary for the Group’s

needs. Other than an acceleration of financing cost amortisation, there was no early repayment penalty for doing so.

GROUP ADJUSTED PROFIT BEFORE TAX

Compared to FY21: Group adjusted PBT was £26.1m for FY22, a £23.0m increase from FY21. However, in FY21 we

were only open for 62% of the year and were very pleased to have still exited the year with a profit. Given that FY22

was open for 100% of the year, we consider FY19 to be a better comparative.

Compared to FY19: Group adjusted PBT was 84.1% higher than in FY19. PBT as a % of sales is 20.6% and the

additional sales of £42.6m compared to FY19 have translated to an additional PBT of £11.9m. This drop through

rateof sales to profit of 28.0% is testament to the tight cost control and relentless focus on profitable sales growth

that has characterised FY22.

IMPAIRMENT AND EXCEPTIONAL ITEMS

Analysis of the Group’s assets, including the Right of Use Property Assets, resulted in a recognition of a net reversal

of £0.6m in FY22. This has principally arisen as a result of reassessing the individual site cashflows now that the

pandemic has passed.

More significantly, the Group has recognised exceptional profit of £7.3m. This relates to recoveries of monies from

HMRC in respect of VAT. The majority of this was in relation to the recognition by HMRC that bowling was subject

tothe reduced rate of VAT introduced by the Treasury to support the hospitality and leisure sector. The balance

ofVAT recoveries related to an historic claim.

These elements have been removed from the Group adjusted PBT to show a truer representation of the in-year

profit generated from trading in the current year.

PROFIT AFTER TAX

The Group generated a profit after tax of £26.6m. Basic earnings per share were 38.9p and adjusted earnings per

share were 29.3p which is 52.0% higher than in FY19.

FINANCIAL REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

DIVIDENDS

The Board recommenced the dividend in FY22 having fully discharged its obligations under the CLBILS facility which

was fully repaid in July. An interim dividend of 3p per share was paid in October 2022 following the announcement

of the half year results.

The Group is now recommending a final dividend in respect of FY22 of a further 7p per share taking the total

dividend to 10p per share. Should this be approved by shareholders at the AGM it is expected to be paid in

June2023.

The Group is confident of its financial security. We ended FY22 with net cash of £10.1m and no drawings on the

available £25m RCF facility. We have delivered this restored financial stability while continuing to invest in

expandingand developing our business with over £20m of strategic capital deployed in the year.

BALANCE SHEET

£000

1 January

2023

26 December

2021 Movement

Assets

Goodwill and other intangible assets 29,875 29,939 (64)

Property, plant and equipment 57,198 39,530 17,668

Deferred tax asset — 4,374 (4,374)

Right-of-use assets 171,651 167,324 4,327

Inventories 1,493 1,226 267

Trade and other receivables 4,667 5,426 (759)

Cash and cash equivalents 10,086 11,511 (1,425)

274,970 259,330 15,640

Liabilities

Lease liabilities (200,402) (195,662) (4,740)

Bank borrowings — (13,832) 13,832

Trade and other payables and provisions (14,142) (13,503) (639)

Other liabilities (1,282) (2,270) 988

(215,826) (225,267) 9,441

Net assets 59,144 34,063 25,081

NET DEBT ANALYSIS

£000

1 January

2023

26 December

2021 Movement

Closing cash and cash equivalents 10,086 11,511 (1,425)

Bank loans — (14,000) 14,000

Bank net cash/(debt) 10,086 (2,489) 12,575

Leases – machines and other (4,291) (5,613) 1,322

Leases – property (196,111) (190,049) (6,062)

Total net debt (190,316) (198,151) 7,835

TRADING CASH FLOW

£000

53 weeks to

1 January

2023

52 weeks to

26 December

2021 Movement

Cash flows from operating activities

Group adjusted EBITDA 52,735 27,059 25,676

Maintenance capital

(4,943) (910) (4,033)

Movement in working capital

1,688 718 970

Lease and taxation payments

(22,305) (13,579) (8,726)

Free cash flow

27,175 13,288 13,887

Dividends paid (2,055) — (2,055)

Cash flow available for investment and financing activities 25,120 13,288 11,832

Strategic investments

Existing estate (8,465) (3,363) (5,102)

Estate expansion (6,882) (56) (6,826)

Freehold purchase (5,000) — (5,000)

Exceptionals and share-based payments 7,802 248 7,554

Repayment of debt (14,000) (6,000) (8,000)

Cash (outflow)/inflow after investment and financing activities (1,425) 4,117 (5,542)

Opening cash and cash equivalents 11,511 7, 394 4,117

Cash and cash equivalents – end of period 10,086 11,511 (1,425)

1 The movement in working capital is the balance from the “Changes in working capital” section of Note 19 in the notes to the

financial statements.

2 This is calculated from the statement of cash flows being the corporation tax paid, finance costs paid and finance lease

principalpayments.

3 Free cash flow – This is cash generated from operations less measures judged as maintenance capital, finance lease and finance

costs payments, taxation payments or receipts, advance payments to capital suppliers, loans to Joint ventures and non-cash

share-based payments. Please see Note 2, Alternative Performance Measures which reconciles these two measures.

4 These two lines relate to the spend on capital projects and are reconciled to cash outflows from investing activities in Note 2,

Alternative Performance Measures.

ACCOUNTING STANDARDS AND USE OF NON-GAAP MEASURES

The Group has prepared its consolidated financial statements based on UK-adopted International Accounting

Standards with the requirements of the Companies Act 2006, for the 53 weeks ended 1 January 2023 (FY22).

Thebasis for preparation is outlined in the accounting policies to the financial statements on page 85.

The Group uses certain measures that it believes provide additional useful information on its underlying

performance. These measures are applied consistently, but as they are not defined under GAAP they may not

bedirectly comparable with other companies’ adjusted measures. The non-GAAP measures are outlined in Note 2

to the financial statements on page 93.

FINANCIAL REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

NOTE ON ALTERNATIVE PERFORMANCE MEASURES

The Group uses a number of alternative profit measures (‘APM’s) in the disclosure of its results. It should be noted

that due to the disrupted nature of 2020 and 2021, the Group has used 2019 as a baseline comparator for some

performance measures in order to be able to compare the business against a pre-Covid-19 trading period.

Adjusted Gross Margin This measurement is the total sales less directly attributable costs of sales such

as cost of goods sold, transaction costs and licence costs for leased

amusement machines. Management do not consider it helpful to include

labour costs in the gross margin because although these costs do vary to some

extent with volume, the relationship is not linear and as such, any swings in

volume are likely to create artificial fluctuations in the margin rate. Site labour

costs are therefore included in operating expenses. The reconciliation to gross

margin is included in Note 2 to the financial statements.

Group adjusted EBITDA This measurement is earnings before interest, taxation, depreciation,

amortisation, exceptional items, loss on Joint venture, impairment and profit

or loss on disposal of assets. This has been done to show the underlying

trading performance of the Group which these other costs or income can

distort. The reconciliation to operating profit is included in Note 2 to the

financial statements.

Group adjusted EBITDA

afterrental costs

This is earnings before interest, taxation, depreciation, amortisation, exceptional

items, loss on Joint venture, impairment and profit or loss on disposal of

assets, less a deduction for the cash cost of rent. This measure is to reflect the

underlying earnings after the transition to IFRS 16 Leases. The reconciliation to

operating profit is included in Note 2.

EBITDA operating margin This is the Group adjusted EBITDA after rental costs divided by sales,

expressed as a percentage.

Cost of goods sold and gross

margin

The cost of sales as reflected in the statement of comprehensive income

consistsof direct bar, food, vending, amusements, gaming machine related

costs,PDQ machine costs and staff costs. Cost of goods sold excludes staff

costsbut security and machine licence costs incurred by the centres are included.

Deducting cost of goods sold from revenue gives the gross margin. This is how

cost of goods sold and gross margin are reported by the business monthly and

atcentre level as labour costs are judged as material and thus reported separately

with operating costs. The reconciliation is included in Note 2.

Operating profit/(loss)

beforeexceptional items

This is operating profit/(loss) before exceptional items and impairment

reversal/(charge).

Group adjusted profit/(loss)

before tax

This consists of the profit before tax adjusted for items judged as exceptional

and relating to impairment reversal/(charge).

Adjusted underlying profit

aftertax and adjusted

earningsper share

This consists of the profit after tax adjusted for exceptional items and

impairment reversal/(charge) and is used to determine the adjusted earnings

per share. The reconciliation of this number to profit after tax is included under

Note 8 to the financial statements.

Exceptional items These are those significant cost or income items which management judges

to be one-off in nature and are not expected to continue to be incurred as part

of the regular trading performance of the business. The separate reporting of

these per Note 5 helps to provide a better indication of underlying performance.

Like-for-like sales These are a measure of growth of sales adjusted for new or divested sites over

a comparable trading period.

Bank net debt This is bank borrowings less cash and cash equivalents as per the statement

offinancial position.

Free cash flow This is cash generated from operations less maintenance capital, advances to

suppliers for capital projects, finance lease payments, taxation payments or

receipts, advance payments to capital suppliers, loans to Joint ventures and

non-cash share-based payments. This is reconciled in Note 2.

These APMs are used as they provide the user with additional information that helps them to interpret the results

using measures that the Board considers relevant and helpful. These measures are additional and are not intended

to replace or detract from the full financial statements included herein.

It should be noted that like-for-like sales refer to sales in centres that were open and trading in both comparative

periods. The measure excludes new centres that were not in place in the prior year, but also excludes periods where

existing centres were in an enforced closure period in the current period due to Covid-19 restrictions.

The Strategic Report was approved by the Board and signed on its behalf by:

GRAHAM BLACKWELL ANTONY SMITH

CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

21 MARCH 2023 21 MARCH 2023

FINANCIAL REVIEW CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

OUR APPROACH TO

RISK MANAGEMENT

The risk appetite of the Group is considered in light of the principal risks and their impact on the ability of the Group

to meet its strategic priorities.

The Board recognises the importance of a strong risk management culture from the top. An agreed risk appetite

and risk management approach cascades down the Group to the teams in our centres. This ensures shared

attitudes, values and standards that shape behaviours within our agreed risk framework.

All our people and centres are responsible for the management of risk, with the ultimate accountability residing

with the Board. Our strategic priorities are underpinned by our great team and are self-funded by the cashflows

generated by the business. The Board is committed to managing and mitigating the risks associated with operating

its business and continues to incorporate consideration of these into how the Group manages its relationships with

its customers, suppliers, employees and investors.

The following principles guide the Group’s overarching appetite for risk and determines how risks are managed:

◆ Operating model – The business seeks to generate returns in line with an open risk appetite but with strong

riskmanagement capability to curb any unnecessary risk in pursing the four strategic priorities.

◆ Financial returns and position – The Group aims to deliver sustainable earnings while growing the returns to

shareholders through the measured pursuit of its strategic priorities. The Group has a cautious approach to debt

and uses cash generated from operating activities to fund its strategic investments.

◆ Business practice – The Group has zero tolerance for any of its people knowingly engaging in any business,

activity or association where foreseeable reputational risk or damage has not been considered and/or mitigated.

◆ Regulations – The business has no appetite for deliberately or knowingly causing detriment to its stakeholders

or incurring a breach of the letter or spirit of the law and regulatory requirements that apply to the business.

The Group recognises that the effective management of risk is key in achieving its strategic objectives and has

continued to identify and assess risks that could impact sustainable growth in the year under review.

The Board is responsible for the Company’s risk management and internal control systems which have been in

place for the year under review and up to the date of approval of the Annual Report and Financial Statements.

Current and emerging risks are identified by business area, with each area responsible for managing that risk,

implementing appropriate controls and mitigating actions in the short term and monitoring the longer-term

impacts and reporting on it to the management team and senior Executives. Each risk has been rated on a multiplier

basis assessed by the likelihood of occurrence, the potential financial impact and the control environment in place

to mitigate the risk. Principal risks are recorded in the Group’s risk register and regularly reviewed, evaluated and

reported on to the Board.

The approach to understanding the risk exposure of the Group involves reviewing each area of the business

annually and using the methodology to assist in measuring, documenting and monitoring its risks within all areas of

its operations. This approach to risk management helps ensure that risk management and mitigation is considered

at all levels of the business.

The environment in which we operate is constantly evolving; new risks arise and the potential likelihood and impact

of known risks may change. The risks included in this section represent a snapshot of what the Board believes are

the principal risks and not an exhaustive list of all risks the Group faces.

The full annual review process of the effectiveness of the Company’s risk management and internal control systems

captures changes in these risks and also changes in thedirection of travel of any given risk. The Directors have

carried out a robust assessment of the principal and emerging risks facing the Group, including those that would

threaten its business model and future strategy. Thus the Board confirms that:

◆ There is an ongoing process for identifying, evaluating and managing the principal risks faced by the Group.

◆ There is a process for identifying emerging risks and considering appropriate mitigating actions.

◆ Systems were in place for the year 2022 and up to the date of approval of this Report and financial statements.

◆ Risks and processes and mitigating actions are regularly reviewed by the Board.

◆ Systems accord with guidance to Audit Committees issued by the Financial Reporting Council dated April2016.

IDENTIFY

RISK

REGULARLY

REVIEW &

EVALUATE

UPDATE

RISK

FRAMEWORK

ASSESS RISK

& IMPACT

CREATE

MITIGATION

STRATEGY

SENIOR

EXECUTIVES

BUSINESS

AREA

MANAGEMENT

TEAM

BOARD

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

INTERNAL CONTROL

The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness.

Thebelowsummarises the Group’s system:

BOARD

◆ Collective responsibility for internal control.

◆ Approval of key policies and procedures.

◆ Control framework setting out responsibilities.

◆ Monitors performance.

SENIOR MANAGEMENT TEAM

◆ Responsible for operating within the control framework.

◆ Reviews and monitors compliance with policies and procedures.

◆ Recommends changes to controls/policies where needed.

◆ Monitors performance.

AUDIT COMMITTEE

◆ Oversees effectiveness of internal control process.

◆ Receives reports from external auditor.

◆ Approves independent internal audit programme.

◆ Receives reports generated through the internal audit programme.

INTERNAL AUDIT

◆ Provides assurance to the Audit Committee through independent reviews of agreed risk areas.

Controls and process in preparing the Annual Report and Financial Statements

The Group has established internal control and risk management systems in relation to the process for preparing

the Group’s consolidated financial statements of which the key features are:

◆ Management regularly monitors and considers developments in accounting regulations and best practice in

financial reporting and, where appropriate, reflects developments in the consolidated financial statements.

Theexternal auditor also keeps the Audit Committee appraised of these developments.

◆ The Audit Committee and the Board review the draft consolidated financial statements. The Audit Committee

receives reports from management and the external auditor on significant judgements, changes in accounting

policies, changes in accounting estimates and other pertinent matters relating to the consolidated financial

statements, and provides robust and independent challenge to management where appropriate.

◆ The full-year financial statements are subject to external audit and the half-year financial statements for 2022

werereviewed by the external auditor.

RISK HEAT MAP

High

Medium

Low

Low Medium High

Likelihood

Impact

1 Economic climate

2 Operational

3 Regulatory changes

4 Business interruption

5 Major supplier failure

6 Operational – allergens

7 Climate risk

RISK KEY:

Increased risk

No change

Decreased risk

RISK MANAGEMENT CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

PRINCIPAL RISKS AND UNCERTAINTIES

PRINCIPAL RISKS

The business faces a number of risks on an ongoing basis. The Board confirms that it has carried out a robust

assessment of the principal risksfacing the Group, including emerging risks, and those that would threaten its

business model, future performance, solvency or liquidity.

ECONOMIC CLIMATE

Likelihood:

Potential impact:

Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

◆ Change in economic conditions,

in particular recession or

political uncertainty

◆ Increases in interest rates

andinflation

◆ Significant increases in

utilitycosts

◆ A decrease in consumer

disposable income and

consequent reduction in

cosumer spending

◆ A prolonged period of

uncertainty due to the war

inUkraine

> Impact on sales and ability to

deliver growth plans thus affecting

all strategic priorities. Impact on

the cost base which impacts

profitability.

Strategic context

TEG’s Tenpin bowling business is

based exclusively in the UK and

sois exposed to UK economic

conditions and consumer

confidence.

As a leisure activity, bowling may

be affected by the general level of

consumer spending on leisure and

the potential longer-term impacts

on the economy of the war

inUkraine.

Mitigation

The Board believes that, as a

relatively low frequency and low

cost activity, bowling is well

positioned to withstand an

economic downturn.

The Group continually reviews its

product offer, its value proposition,

and the quality of its estate to

improve the customer experience.

In particular the Board strives to

keep prices competitive and deliver

value-for-money to its customers.

Inflation has a relatively low impact

on bowling as the equipment is in

place and therefore the activity has

a low incremental cost of sale.

The business has a long-term

contract with its electricity prices

set until October 2024.

OPERATIONAL

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3

Nature of risk

◆ Deterioration of assets

overtime

◆ Ageing of the estate

◆ Loss of key personnel

> Impact on sales, costs and

customer experience.

Strategic context

The Group’s centres have high

footfall and high usage, in particular

at peak times. There is a risk that

without the right level of ongoing

investment the quality of the

customer experience declines,

impacting the customer experience

and likelihood of return visits.

Mitigation

The Group generates cash from

itsoperating activities and ensures

enough cash is prioritised for an

ongoing maintenance and

refurbishment programme.

The Group has an ongoing

investment programme to ensure

that centres are modern, safe and

welcoming environments for our

customers.

The Group has a management

development programme in place

to provide a pipeline of future

Centre Managers, familiar with

theTenpin business model.

REGULATORY CHANGES

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

New, changed or reinterpreted

laws and regulations adversely

impact the business.

Failure of the business toobtain or

retain required regulatory approvals

or licences.

> Impact on sales, costs

andreputation.

Strategic context

The regulatory environment is

continually evolving. Introduction

and development of regulations

around GDPR, changes to

sentencing tariffs and calculations

and constant updates to legislation

around competition, bribery,

climate and carbon reporting and

sustainability, modern slavery,

money laundering, consumer

protection and taxation.

The Group operates licensed

premises for the sale of food,

alcohol and gaming.

All these impact our strategic

objectives and could result in brand

and reputational loss, along with

litigation, revocation of licences,

inability to acquire sites or build

sites and fines leading to

financialloss.

Mitigation

The Group has a high level of

training and support to ensure it

meets the very highest standards

for licensed premises.

Health & Safety meetings are held

by senior management monthly

tounderstand incidents and to

ensure compliance with or to

update policies.

The digital ecosystem is constantly

reviewed and evolved to ensure full

compliance with the GDPR

regulatory environment.

Policies andprocedures are in place

to protect customer data.

Where required external specialist

advice is used to assess, scope and

plan our responses to changes in

legislation or changes and

developments to our business that

are impacted by the legislative

framework.

STRATEGIC PRIORITIES: RISK KEY:

1 A first-class customer experience High

Increased risk

2 Digitally enabled Medium No change

3 In high-quality centres Low Decreased risk

4 With increasing UK coverage

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

BUSINESS INTERRUPTION

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

◆ Risk of cyber-attack/terrorism

◆ Failure or unavailability of

operational and/or IT

infrastructure

◆ Supply chain risks for

unavailability of product

> Impact on sales, costs

andreputation.

Strategic context

A major incident could impact the

Group’s ability to keep trading.

Supply chains providing food and

drink for sale to customers are

essential to continue to provide a

good customer experience.

Bookings are generally placed

online and the digital infrastructure

is essential to providing the

bowling experience for our

customers.

Mitigation

Strong Cyber-security systems are

in placeto ensure that customer

data is protected and systems can

continue to operate.

Regular IT security tests are carried

out to ensure that breaches are

protected against and business

interruption insurance is in place to

mitigate any financial losses.

Sites have the ability to operate on

a standalone basis should the IT

network be compromised.

Supply chains are protected

through stockholding and backup

suppliers in place.

Our call centre can operate to

replace onine bookings in the even

of a website failure.

MAJOR SUPPLIER FAILURE

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

Sudden failure of key supplier or

significant reduction in access

tokey products supplied to

theGroup.

> Impact on sales, costs and

customer experience.

> Increased risk to utility suppliers

due to ongoing supply and price

pressures.

Strategic context

The Group has a number of key

suppliers that provide its bowling

equipment, gaming machines,

food and beverage products and its

electricity and gas.

Sudden failure of these suppliers or

limited access to the products they

supply, could impact the Group’s

ability to offer its customers the

level of experience they expect.

Mitigation

Regular meetings are held between

the Chief Executive Officer and the

Group’s key suppliers to discuss

both operational issues and future

growth plans. The Group works

with market-leading suppliers in

these fields.

The Group maintains Service Level

Agreements (‘SLAs’) with its food

and beverage suppliers and, whilst

failure may lead to short-term

disruption, alternative suppliers

could be introduced at

shortnotice.

Long-term contracts are held with

these suppliers to maintain the

best prices possible. This has been

particularly important with the

electricity prices fixed until 2024

at2021 prices.

OPERATIONAL – ALLERGENS

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

Incidents related to allergies to

food products offered, especially

when there are changes to

themenu.

> Impact on sales, costs and

reputation.

Strategic context

There have been a number of

high-profile incidents in the leisure

industry related to allergens in food

products. The incidents have arisen

due to inadequate awareness,

communication and display of

allergen items included in menus.

Mitigation

The Health & Safety adviser

reviews all menus and menu

changes for allergen-related

products and wording included

onthe menus to reflect these

items before they are released.

Allergen awareness is part of the

training programme and online

allergen lists and information are

provided for public access on all

centres’ websites.

CLIMATE RISK

Likelihood: Potential impact: Change:

Link to strategy: 1, 2, 3, 4

Nature of risk

Significant changes to the climate

such as drought, flood, heatwaves,

excessive snow and ice as well as

the introduction of new climate

regulations.

> Impact on sales, costs and

reputation.

Strategic context

Significant changes to the climate

such as:

◆ Long periods of hot, dry

weather could directly lead to

reduced footfall at centres and

higher costs of cooling and

indirectly to food shortages and

cost increases

◆ Flooding can lead to damage

atcentres

◆ Long periods of cold weather

including snow and ice could

impact access to the centres

aswell as the cost of heating

Significant changes to climate

related regulations will lead to:

◆ increased costs of compliance

◆ potential reputational risk for

non-compliance

◆ financial cost of fines for

non-compliance

Mitigation

The business has engaged with

athird-party consultant to assist

with the understanding of the

associated climate risks, its

strategy and objectives and

ensuring compliance with

regulations and disclosure

requirements.

Insurance policies are maintained

to manage the business

interruption risk from flooding

oraccess restrictions.

PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

LONG-TERM VIABILITY STATEMENT

VIABILITY STATEMENT

As explained on page 10 in the business model and on pages 12 to 16, the strategy revolves around the four key

pillars, being:

◆ “a first-class customer experience”

◆ “digitally enabled”

◆ “in high-quality centres” and

◆ “with increasing UK coverage”

The successful delivery of these pillars will drive the business forward and ensure it is a viable entity. The

development and review of the strategic plan is thus an important process and a key task of the Board.

The Board meets annually to discuss the strategy of the Group, and this year met in June to discuss and agree the

plan for the next three years. The strategy day included:

◆ an investor and competitor landscape overview from the joint brokers, Liberum LLP;

◆ a review of the expansion of the key pillars into four critical areas and the actions for growth in each of the pillars;

◆ an overview of the strategy and expansion plans by Houdini’s;

◆ a presentation, by an external consultant, of the Group’s customer data and how marketing intelligence can

focus this; and

◆ a review of the three-year financials driven by the planned developments and growth opportunities discussed in

the above.

After the approval of the Strategic Plan, this then formed the base for the detailed review of FY23 and the

development of the FY23 budget that was approved by the Board in November.

GOING CONCERN

In assessing the going concern position of the Group and Company for the Annual Report and the financial

statements for the year ended 1 January 2023, the Group has considered a base case scenario and a severe but

plausible downside scenario. In modelling these scenarios, the Group has considered its liquidity, cash balances,

refinancing position, business activities and its principal risks.

BASE CASE

The Group’s bank financing facility expires in April 2024 and the intention is to renew this in 2023. As the renewal

has not happened at the time of the signing of this Annual Report, the performance beyond the current expiry date

in 2024 has been reflected in the base case. The Group is cash positive, the RCF remains undrawn throughout the

period with all covenants being passed.

The base case consists of the Group’s FY23 budget plus the 2024 forecast from its Strategic Plan. This case was

prepared with the following key assumptions reflected:

◆ Like-for-like sales growth versus FY22

◆ Labour inflation and the increases from the National Living Wage are included

◆ Cost inflation is reflected in the operating and administrative costs

◆ Site acquisitions and new builds are reflected in the trade and in the cashflows

◆ Increased levels of capital spend are reflected in the cashflows to maintain and refurbish the sites

◆ The Group pays out a final and interim dividend

DOWNSIDE CASE

The downside case takes the base case and flexes the assumptions for severe but plausible impacts. These are

summarised as follows:

◆ 2023 revenues are reduced by 10% on a like-for-like basis against FY22. 2024 revenues are reduced by a further

10% against the 2023 downside. Returns from refurbishments in 2023 and 2024 and returns from one new site

in 2024, are removed.

◆ All variable and fixed costs from the base case are increased by a further inflationary 10% across the board.

◆ Mitigation on variable costs as cost of sales, labour and operating costs are included as these can be controlled

by the Group.

The scenario reflects the payment of a final and interim dividend but this has been reduced versus the base case as

these are at Group discretion. The investment in new centres remains with the removal of just one in 2024. The

refurbishment programme spend is also halted in 2023 and 2024. Investments in new centres and refurbishments

are under the Group’s control and could be used for further mitigating action if needed. All the mitigating actions

taken allow the Group to remain cash positive and the RCF undrawn, throughout the period. The Group remains

profitable and all covenants are passed with significant headroom.

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.

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

LONG-TERM VIABILITY STATEMENT CONTINUED

VIABILITY STATEMENT

In accordance with the 2018 UK Corporate Governance Code, the Directors have assessed the prospects of the

Group over a three-year period to 31 December 2025. The Directors believe this period to be appropriate because:

◆ the Group’s strategic planning encompasses this period;

◆ senior management are remunerated via its share performance scheme over this period; and

◆ it is typically a reasonable period over which the impact of key risks can be assessed for a business of this size in

the leisure sector.

In making this viability statement, the Directors have reviewed the strength and resilience of the Group and have

specifically considered:

◆ The Group’s current financial performance from sales growth and cost management to its flow through to Group

adjusted profit before tax, Group Adjusted EBITDA, cash flow, liquidity bank net cash/(debt) and covenant results.

◆ The availability of its current banking facilities and the covenants in place.

◆ The business model, in particular, the strategy towards expansion.

◆ A robust assessment of the impact, likelihood and management of principal risks facing the Group, including

consideration of those risks that could threaten its business model, future performance, solvency, liquidity or

sustainability. The assessment of viability has specifically considered risks that could threaten the Group’s

day-to-day operations and longer-term existence.

The assessment considered how risks could affect the business now and how they may develop with the financial

analysis and forecasts showing financial position, performance, cash flow and covenant requirements, over the next

three-year period.

THE GROUP’S BASE CASE

The base case model reflects a robust consideration of the principal risks and uncertainties that could impact the

future performance of the Group and the achievement of its strategic objectives, as discussed on pages 41-42 of

this Annual Report. The base case viability scenario takes into account all of the principal risks and uncertainties

facing the Group across the three-year period in order to assess the Group’s ability to withstand multiple challenges.

The base case forecast starts with the FY23 and FY24 period that is the same as that built for the going concern

analysis as described on page 43. The process undertaken considers the Group’s adjusted EBITDA, capital spend,

cash flows, liquidity, bank covenants and other key financial metrics over the projected period. The forecast expands

from FY24 into FY25, with the following assumptions:

◆ mid-range single-digit like-for-like sales growth, plus growth for the acquisition of sites and returns from

refurbishment plans;

◆ no significant change in gross margin percentage with employee numbers, maintenance and other operating

costs, which being variable, are flexed in line with sales. High single-digit inflationary increases are made

throughout these costs lines in FY23, due to the current economic environment but this decreases to lower

single-digit increases for FY24 and FY25;

◆ fixed costs, in particular rent are kept at levels based on contractual increases, with fixed labour such as those

included in central and support, including mid-single-digit inflationary increases;

◆ maintenance capital expenditure levels follow the trajectory of revenue while investment and expansionary

capital levels are discretionary and follow the levels of cash generation; and

◆ the dividend policy reflects payments each year with steady growth.

The Group is profitable, improves its liquidity and does not use any bank financing over the three-year period in this

base case.

VIABILITY ASSESSMENT

Although the base case 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 range of downside assumptions, by quantifying the financial

impact and overlaying this on the detailed financial forecasts in place. The downside scenario is summarised

asfollows:

◆ Like-for-like sales decline – The scenario is based on the sales projections not being as expected in the base

case, instead a worst case scenario of the going concern base case for FY23 with -10% like-for-like decline per

annum for FY24 and FY25. Returns from all refurbishments and returns from the new centres in 2024 and 2025

are removed.

◆ Inflationary cost pressures – Increasing inflationary pressures on all costs beyond what is reflected in the base

case. All cost lines are increased by a further 10% from the base case, in each year as it is plausible that the

economic deterioration and cost-of-living crisis could stretch on longer than expected. The energy costs are

uplifted by 300% for the last quarter of 2024 when the current energy contract expires, and for the whole of

2025 assuming energy prices have not normalised by then.

The mitigating actions taken in this downside scenario include halting all refurbishment spend plans from the

second half of 2023 until the end of 2025 and halting all new site spend and dividend payments for 2024 and 2025,

all of which are under the Group’s discretion. With these mitigating actions, the Group remains liquid, does not

need to draw on its banking facility and passes all covenant calculations.

While the assumptions we have applied in this scenario are plausible, they do not represent the Board’s view of the

likely outturn. However, the results of the 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.

The viability statement was approved by the Board and signed on its behalf by:

ANTONY SMITH

CHIEF FINANCIAL OFFICER

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

STRATEGIC REPORT GOVERNANCE FINANCIALS

DEAR SHAREHOLDERS

The financial year has been very successful for the Group despite the extremely

challenging external political and economic backdrop. There has been a tight labour

market, inflationary pressures, rising energy costs, increasing interest rates, global

supply chain disruption and the warin Ukraine. All of these factors make the Board’s

governance and oversight moreimportant than ever to ensure the long-term stability

of the business.

The Board and management have focused on delivering excellence in entertainment for

our customers and profitable and sustainable growth for shareholders. We have

delivered an exceptional financial performance, with record sales and profit. Bank debt

has been reduced to nil, with no outstanding liabilities from the pandemic closures.

The Group has reinstated payment of the dividend while expanding the estate,

investing in the existing centres and delivering value to all stakeholders. I would like to

thank my Board colleagues, the Executives, and all of the team at Ten Entertainment

Group for their commitment and support over the year.

I was pleased to welcome Sangita Shah to the Board in November as an independent

Non-Executive Director. Sangita brings a wealth of experience in both executive and

non-executive senior leadership roles and as a board member of the Quoted Companies

Alliance, specialising in ESG policy and diversity. She has been appointed Chair of our

newly formed ESG Committee and her experience will provide excellent support as

weprogress towards Net Zero.

KEY GOVERNANCE DEVELOPMENTS DURING

THEREPORTINGPERIOD

The Board adopted the UK Corporate Governance Code 2018 (the ‘Code’) in FY21 as it

applies to smaller companies (i.e. those below the FTSE 350).

At the beginning of the year, as detailed in last year’s Annual Report, the Board was

not fully compliant with Provision 11 of the Code, with only 40% of Directors

excluding the Chairman being Non-Executive Directors whom the Board considers to

be independent.

We continuously review our Governance and compliance and in 2022 have taken

further steps to strengthen our compliance with the Code.

◆ Appointment of a fourth independent Non-Executive Director to ensure that more

than half of the Board are independent

◆ Undertaking a Board effectiveness review to ensure that the Board is operating

well, with an appropriate balance of contributions

The appointment of an additional independent Non-Executive Director means that

the Board was compliant with Provision 11 from 1st November onwards. The Board

considers that it has complied fully in 2022 with all other provisions of the Code.

ACTIVITIES IN 2022

The Board met eight times in 2022 and the key focus areas involved:

◆ Annual review of the Group’s strategic plan.

◆ Capital investment and allocation strategy, including new centres and the

refurbishment of existing centres.

◆ Key commercial operations of the group. This includes areas such as pricing policy,

sales density improvement and the development of our digital strategy.

◆ Cash management and repayment of the CLBILS loan facility.

◆ Development of our ESG strategy and formation of an ESG sub-committee of the

Board, which will help develop our route map to Net Zero.

◆ The Group’s dividend policy and decision to reinstate the dividend during 2022.

◆ Board oversight and review of the independence of all Non-Executive Directors.

The appointment of an additional independent Non-Executive Director

during2022.

BOARD ACTIVITY IN 2023

In 2023, the Board has met three times with the focus on understanding

theunderlying business performance and releasing investment capital without

compromising the security of our long-term liquidity.

The ongoing economic landscape means that performance continues to be closely

monitored to ensure that the Group is well placed to react to a downturn in

performance. Plans are in place to manage costs, investment and capital allocation

toensure that the Group retains a strong balance sheet and cash position.

The Board is increasing its focus on execution of its strategy to deliver NetZero.

ADAM BELLAMY

CHAIRMAN

21 MARCH 2023

CHAIRMAN’S INTRODUCTION TO GOVERNANCE

“A CLEAR FOCUS

ON SUSTAINABLE

GROWTH IN OUR

SOCIAL ENTERTAINMENT

CENTRES”

ADAM BELLAMY

CHAIRMAN

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Committee membership key:

Audit Committee

Nomination Committee

Remuneration Committee

ESG Committee

Chair

BOARD OF DIRECTORS AND EXECUTIVE COMMITTEE

ADAM BELLAMY

INDEPENDENT

NON-EXECUTIVECHAIRMAN

GRAHAM BLACKWELL

CHIEF EXECUTIVE OFFICER

ANTONY SMITH

CHIEF FINANCIAL OFFICER

Appointed to the Board November 2018

Adam is a highly experienced finance

professional who has worked in a wide range

of consumer-facing growth businesses.

Heiscurrently a non-executive director at

Loungers plc, In The Style Group plc and

Gymfinity Kids Limited. He is also chair of

theaudit committee at Loungers and In

TheStyle. Adam was previously Chief

Financial Officer and then a non-executive

director at Pure Gym Limited, prior to which

he was Finance Director at Atmosphere Bars

& Clubs Limited and finance director at D&D

London Limited. Earlier in his career, he held

various finance positions at Whitbread,

House of Fraser and Granada Group.

Appointed to the Board March 2017

Graham has over 30 years’ experience in

thebowling industry. He has served on the

Ten Entertainment Board since the IPO in

2017. He was appointed Chief Executive

Officer in September 2020 to steer the

business through the pandemic and lead

thestrategy for recovery.

Graham’s experience of operating bowling

centres is second to none, having run

bowling centres himself and served as

Operations Director and Chief Commercial

Officer, all within our business.

Graham has been a long-standing member of

the Tenpin Bowling Proprietors’ Association

(‘TBPA’) and is widely regarded in the UK as

aleading expert in the industry.

Appointed to the Board April 2019

Antony is a member of the Chartered

Institute of Management Accountants

(‘CIMA’). He qualified in industry working

across a variety of sectors in roles spanning

Financial Control, Strategic Management

andReporting and Planning.

He was Finance Director of Wickes, the DIY

retailer, overseeing a strategic transformation

programme to refurbish the retail estate and

grow the online sales of the business.

Prior to his six years at Wickes, Antony spent

ten years at RHM plc and Premier Foods plc

as Director of Finance for Hovis and latterly

ina central role overseeing a significant

refinancing programme.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Committee membership key:

Audit Committee

Nomination Committee

Remuneration Committee

ESG Committee

Chair

E E E

JULIE SNEDDON

SENIOR INDEPENDENT

NON-EXECUTIVEDIRECTOR

LAURA MAY

INDEPENDENT

NON-EXECUTIVEDIRECTOR

SANGITA SHAH

INDEPENDENT

NON-EXECUTIVEDIRECTOR

CHRISTOPHER MILLS

NON-EXECUTIVE DIRECTOR

Appointed to the Board March 2017

Julie has over 20 years’ experience in

seniorexecutive roles with the Walt Disney

Company, including most recently as

Executive Vice President of Disney Stores

Worldwide which carried responsibility for

over 330 stores across North America,

Europe and Japan.

Julie has led multiple strategic business

development and organisation

transformation change initiatives for

Disneywith a focus on retail,brand

development and digitaltransformation.

Appointed to the Board May 2021

Laura is a fellow of the Institute of

CharteredAccountants in England and

Walesand qualified with Deloitte before

gaining considerable financial leadership

experience across a range of industries.

Laura is currently Director of Treasury at

PureGym, the UK’s largest gym operator,

where she hasworked for the past nine

yearsand has played a key role in their

substantial growth. Her financial expertise

and experience in the consumer leisure

sector areinvaluable in helping TEG deliver

itsgrowthstrategy.

Appointed to the Board November 2022

Sangita is non-exec Chair of AIM traded

Kinovo plc and RA plc, Senior Independent

Director of Inspired plc and Forward

Industries Inc (Nasdaq). She is a board

member of the Quoted Companies Alliance

(QCA) and serves on a number of private

boards as an investor.

Sangita has extensive experience in corporate

finance, journalism and senior consultancy.

She has held a number of senior roles within

blue chip organisations, including Unilever,

Mars, Ernst & Young and KPMG, was a former

board director of Swindon Town FC and a

past President of theChartered Institute of

Journalists. She has consulted to a number of

organisations that include HM Cabinet Office,

HSBC and other blue chip companies.

Appointed to the Board March 2017

Christopher is a director and the sole

shareholder of Harwood Capital

Management Limited which is a

designated corporate member and

thecontroller of Harwood. Harwood

CapitalManagement Group was formed

in2011by Christopher on his acquisition

ofHarwood from J O Hambro Capital

Management Group Limited.

He is also the Chief Executive Officer and

director of NASCIT (a UK-listed investment

trust), anda director and investment

manager of Oryx.

Christopher has a long and successful

investing track record and is a non-

executive director of a number of both

public and private companies.

BOARD OF DIRECTORS AND EXECUTIVE COMMITTEE CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Board Governance

GOVERNANCE STRUCTURE

The Company’s governance structure is designed

suchthat the Board focuses on providing experienced

leadership to the Group.

The Board sets the Group’s strategy, monitors

performance and ensures that appropriate financial

andhuman resources are in place for the Company

tomeet its objectives.

The Board is also responsible for taking the lead in

setting and embedding the Company’s culture, value

and standards, and for ensuring that appropriate

systems, procedures and controls are in place to

support the effective assessment and management

ofrisk and thesafeguarding of shareholder interests.

The Board operates in accordance with the Company’s

Articles of Association (‘Articles’) and has established

Audit, Remuneration, Nomination and ESG Committees

to assist it in discharging its responsibilities.

Each Committee has its own written terms of

reference. Certain matters are specifically reserved

fordecision by the Board and documented in a

writtenschedule.

BOARD DECISION MAKING

As part of its decision making, the Board considers the

interests of all of its stakeholders and evaluates the

consequences of its decisions in the long term.

Each year, the Board reviews the strategic plan in detail

to ensure that it remains appropriate.

The Directors review and approve the Business

Plan and Budget for the forthcoming year in

detail. The Board considers a wide range of

information on behalf of stakeholder groups, such

as environmental impact, community assessment,

employee and shareholder feedback to ensure

that the plans can be executed effectively.

To help reduce risk as part of decision making, the

Audit and Risk Committee reviews all risksthat the

Company faces, which are not limited tothose

disclosed as principal risks in this report.

BOARD MEETINGS AND PROCESS

The Board formally met on eight occasions during the

financial year.

Key matters discussed included financial security and

liquidity which focused on maximising returns for

shareholders, including the decisions to repay the

£14.0m CLBILS facility; recommencing the dividend

programme including approving the payment of the

first interim dividend since the pandemic; approving

new sites to the pipeline; approving the new ESG

Committee; reviewing the pricing structure and

proposals keeping in mind inflation and the Group’s

current strong footfall; as wellas strategic planning

forthe future into 2023 andbeyond.

Meetings were conducted by a mixture of video

conference call and face-to-face. All Board members

attended all meetings and Committees that they were

scheduled to attend.

The Board has met on a further three occasions to

datein FY23, with key matters discussed including

theapproval of the 2022 Annual Report and Financial

Statements; a review of the first quarter of trading; and

the first ESG Committee meeting.

The Board intends to meet formally at least six

timesayear, with ad hoc meetings called as and

whencircumstances require it.

The Board has approved an annual calendar ofagenda

items, with relevant matters scheduled for

consideration at the appropriate point in the regulatory

and financial cycle.

In addition, the Board will meet at least once a year to

discuss strategy, including a full strategic review of the

business operations and the development of the

Group’s strategic plan.

CORPORATE GOVERNANCE REPORT

The schedule of matters reserved for the Board includes:

Strategy and management

◆ Leadership of the Company, setting

values and standards

◆ Developing, approving and overseeing

the strategic aims and objectives

◆ Oversight of Group operations

andperformance

Strategy and management

◆ Ensuring maintenance of

sound internal control and risk

management systems, and

assessing their effectiveness

◆ Approving Group risk

appetitestatements

◆ Approving the sustainability

strategy and goals

Strategy and management

◆ Review of the Group’s overall

governance arrangements

◆ Determining the independence of

Directors

◆ Considering the views

ofshareholders

◆ Authorising any conflicts

ofinterest

Structure and capital

◆ Major changes to corporate structure,

including acquisitions and disposals

◆ Major changes to capital structure,

including approval of Group treasury

policy and arrangements

Board membership

◆ Changes to the structure, size

and composition of the Board

◆ Ensuring adequate

successionplanning

Other

◆ Approval and monitoring of the

Share Dealing Code

◆ Approval of political donations

Financial reporting and controls

◆ Approval of annual and half-year

financial statements

◆ Approval of dividend policy, including

recommendation of final dividend

◆ Approval of significant changes in

accounting policy

Committees

◆ Nomination Committee

◆ Audit Committee

◆ Remuneration Committee

◆ ESG Committee

All Directors are expected to attend all meetings of the Board and any Committees of which they are members, and

to devote sufficient time to fulfil their duties as Directors.

Each Non-Executive Director has committed to the Company that they are able to allocate sufficient time to the

Company to discharge their responsibilities effectively. This has been demonstrated by the 100% attendance record

of the Board.

Any additional board appointments Non-Executive Directors are contemplating are discussed with the Chairman in

advance, including the likely time commitment and whether these could in any way constitute a conflict of interest.

These matters are formally reviewed by the Board on an annual basis.

As stated in the Articles of Association and per the Code, all members of the Board will be offering themselves for

re-election at the Company’s Annual General Meeting (‘AGM’) on 4 May 2023.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

KEY BOARD ROLES, RESPONSIBILITIES AND COMMITTEES

BOARD MEMBERSHIP

The Board currently comprises the Chairman, the Chief Executive Officer, the Chief Financial Officer, a Senior Independent Director and three Non-Executive Directors. The names and biographical details of the serving Directors and the

offices held by them can be found on pages 46 to 47. We believe that the Board is of sufficient size that the requirements of the business and good governance can be met and normal succession challenges managed, but is not so large

as to be unwieldy.

Chairman

The role of the Chairman is:

◆ providing leadership to and ensuring the effectiveness of the Board;

◆ ensuring that agendas emphasise strategic, rather than routine, issues,

and that the Directors receive accurate and clear information well ahead

of when a decision is required;

◆ promoting a culture of openness and constructive debate, and facilitating

an effective contribution by the Non-Executive Directors;

◆ arranging informal meetings of the Directors, including meetings of the

Non-Executive Directors;

◆ ensuring effective communication by the Group with its shareholders;

◆ arranging for the Chairs of the Committees to be available to answer

questions at the AGM and for all Directors to attend; and

◆ taking the lead in providing a properly constructed, full, formal and

tailored induction programme and ongoing development for new

Directors.

Chief Executive Officer

The role of the Chief Executive Officer is:

◆ leading the development of the Group’s strategic direction andobjectives;

◆ identifying and executing acquisitions and disposals and leading

geographic diversification initiatives;

◆ reviewing the Group’s organisational structure and recommending

changes as appropriate;

◆ identifying and executing new business opportunities;

◆ overseeing risk management and internal control;

◆ managing the Group’s risk profile, including the health and safety

performance of the Group;

◆ implementing the decisions of the Board and its Committees;

◆ building and maintaining an effective Group leadership team; and

◆ ensuring the Chairman and the Board are alerted to forthcoming

complex, contentious or sensitive issues affecting the Group.

Chief Financial Officer and Company Secretary

The role of the Chief Financial Officer is:

◆ overseeing the strategic planning cycle to plan capital allocation and

investment decision making;

◆ ensuring the business is adequately funded to meet its needs

andobligations;

◆ communicating with current and potential investors;

◆ providing business information, KPIs and insight into running and

improving the business;

◆ key relationship management with critical professional partners;

◆ keeping accurate financial records and controls;

◆ providing IT and property operational support to the business.

The role of the Company Secretary is:

◆ keeping accurate records of Board meetings and decisions;

◆ providing legal and compliance expertise;

◆ ensuring compliance with relevant regulations and codes.

Senior Independent Director (‘SID’)

The role of the SID is:

◆ meeting regularly with the independent Non-Executive Directors;

◆ providing a sounding board for the Chairman and acting as an

intermediary for other Directors;

◆ being available to shareholders if they have concerns which contact

through the normal channels of Chairman or Chief Executive Officer has

failed to address or would be inappropriate; and

◆ holding annual meetings with Non-Executive Directors without the

Chairman present.

Non-Executive Directors

The role of the Non-Executive Director is:

◆ providing contribution to the Board by way of critical review;

◆ bringing independence, impartiality, experience, specialist knowledge and

a different perspective to the Board;

◆ providing guidance on matters of concern and strategy;

◆ overseeing risk management and internal control;

◆ protecting shareholder and stakeholder interests;

◆ constructively challenging the Executive Directors and monitoring

Executive performance;

◆ supporting the Executive team in shaping and delivering the strategic

goals of the business;

◆ optimising shareholder return and protection of shareholder assets; and

◆ ensuring the Board is able to work together effectively and make

maximum use of its time.

Committee Chairs

The role of the Chairs of the Board Committees are:

◆ providing leadership to their respective Committees;

◆ ensuring all members have an input into the Committee agenda;

◆ engaging stakeholders to provide diverse input into Committee matters;

◆ ensuring the Committees are advised with the appropriate external

expertise and input to discharge their responsibilities;

◆ delivering the remit of the Committee terms of reference;

◆ reporting to the Board on Committee progress and matters; and

◆ recommending actions and decisions to the Board for approval.

CORPORATE GOVERNANCE REPORT CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Board independence

The Board has considered the

independence of the current

Directors as below:

EXECUTIVE DIRECTORS

Graham Blackwell

Chief Executive Officer

Antony Smith

Chief Financial Officer

INDEPENDENT DIRECTORS

Adam Bellamy

Non-Executive Chairman

Julie Sneddon

Senior Independent Director

Laura May

Non-Executive Director

Sangita Shah

Non-Executive Director

DIRECTOR

Christopher Mills

Non-Executive Director

Nomination Committee Audit Committee Remuneration Committee ESG Committee

Chair

Adam Bellamy

Members

Julie Sneddon;

LauraMay;

Sangita Shah

(from1November);

Christopher Mills

Chair

Laura May

Members

Julie Sneddon;

SangitaShah

(from1November)

Chair

Julie Sneddon

Members

Adam Bellamy;

LauraMay;

SangitaShah

(from1November)

Chair

Sangita Shah

Members

Antony Smith;

Julie Sneddon;

LauraMay

The Nomination Committee oversees the

recruitment of the Directors and senior

management, and advises on matters

relating to the Board’s membership and

Committee appointments, including

reviewing succession plans. The Nomination

Committee also regularly reviews and

monitors the overall skills and experience

ofthe Board.

The Nomination Committee met twice

during the year and will normally meet at

least twice annually.

The Audit Committee assists the Board

in discharging its responsibilities for the

integrity of the financial statements,

reviewing the internal control environment

and risk management systems, managing the

relationship with the external auditors and

monitoring the effectiveness and objectivity

of the external and internal auditors.

The Audit Committee met three times during

the year and willnormally meet not fewer

than three times a year at theappropriate

reporting and audit cycle.

The Remuneration Committee determines

the terms and conditions of employment,

remuneration and rewards of the Executive

Directors, the Chairman and the leadership

teams. The Remuneration Committee aims

to offer an appropriate balance of fixed and

performance-related, immediate and

deferred remuneration, but without

overpaying or creating the risk of rewards for

failure. The Remuneration Committee met

four times during the year and will normally

meet at least twice annually.

The ESG Committee oversees the

development of the Group’s sustainability

strategy. The Committee brings a selection

of Non-Executive Directors and Executive

Directors to ensure that it is delivering

against its sustainability agenda to consider

the wellbeing of its people and suppliers, the

wider community and to minimise its impact

on the environment.

The Committee was newly established as a

Board Committee in 2022, building on and

consolidating several workstreams already in

place in the Group.

2022 SUMMARY

The principal focus of the Committee during

the year was to select another Non-Executive

Director to join and chair the ESG Committee

as the Group continues to develop its

Sustainability Strategy.

2022 SUMMARY

In the first half of the year, the Committee’s

main focus was on the approval of the FY21

Annual Report published in March 2022,

including a review of the two significant risk

areas being going concern and impairment. It

was agreed that there was no material

uncertainty that would cast doubt on the

Group continuing as a going concern and

that due to the significant improvement in

trade, there was an impairment reversal. In

the second half of the year, the Committee

approved the Interim Statement published in

September 2022, approved the 2022 internal

audit reviews and 2023 programme, reviewed

the Principal Risks and Uncertainties and

approved the latest ‘RiskAppetite Statement’.

2022 SUMMARY

The Committee focused on approving the

achievement of the 2021 Annual Bonus Plan

as explained in further detail under the

Remuneration report and approving the 2022

Annual Bonus Plan including the setting of

new challenging financial and strategic

targets for the Executive Directors.

The vesting of long-term incentive awards in

FY22 were approved where achieved and the

granting of new long-term incentive awards

for FY22 were awarded in March 2022.

2022 SUMMARY

Work on the Group’s sustainability strategy

has been ongoing throughout the year with

support from external experts. The resulting

strategy has been reviewed and ratified by

the ESG Committee, with a clear plan to

deliver Net Zero by 2030 for Scopes

1&2emissions.

The Committee has also incorporated the

existing charitable activities and has reviewed

the corporate governance processes

andpolicies.

CORPORATE GOVERNANCE REPORT CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Board Effectiveness

The Chairman, with the support of the Company Secretary, reviews the formal and tailored induction programme

developed for any new Directors joining the Board, and that the development and ongoing training needs of

individual Directors and the Board as a whole are reviewed and agreed at least annually. The Company Secretary will

ensure that the Board is briefed on forthcoming legal and regulatory developments, as well as developments in

corporate governance best practice.

The Board will focus on the following key areas to ensure its effectiveness:

◆ Recruitment: A formal, rigorous and transparent procedure for the appointment ofnew Directors to the Board,

overseen by the Nomination Committee. For each appointment, the Board will develop an objective brief,

summarising the role and the skills and experience required and use an appropriate executive search firm with

proven expertise in the relevant field. Before confirming an appointment, the Board will check whether the

preferred individual can commit to the time expected by the appointment.

◆ Tools and training: All newly appointed Directors will have a tailored, formal induction process on joining the

Board, including the opportunity to meet major shareholders. The aim is to ensure that they understand the

Company and its business model, strategy, drivers of value in the business and key risks, and that they

understand the legal and regulatory environment in which the Company operates. Directors are expected to

update and refresh their skills and knowledge on an ongoing basis, and to continue to build their familiarity with

the Company and its business throughout their tenure.

◆ Quality information provision: Board meetings are informed by detailed information provided in advance of the

meetings to allow time for review and scrutiny. This information is prepared by experts both within and external

to the business and checked for quality and accuracy by senior members of the leadership team. Where

appropriate, information is presented to the Board by the appropriate experts in the field. All Board meetings are

fully minuted to ensure that there is a clear record of the discussions that have taken place to inform the

decision, making process.

◆ Clear decision making: the Board has clearly demarcated responsibilities for decision making and uses a

delegated authority framework to ensure that all levels of the business are clear on the scope of their authority.

Decisions at Board level are made using analysis provided by the Excutive Management and the rationale and

decisions are clearly documented in the Board minutes.

◆ Conflicts of interest: Directors have a statutory duty to avoid actual or potential conflicts of interest. Any

Director who becomes aware that he or she is in a situation which does or could create a conflict of interest, or

has an interest in an existing or proposed transaction in which the Company also has an interest, is required to

notify the Board in writing as soon as possible. The interests of new Directors are reviewed during the

recruitment process and authorised (if appropriate) by the Board at the time of their appointment. No Director

had a material interest in any contract of significance in relation to the Company’s business at any time during

the year or to the date of this report.

RELATIONSHIP AND COMMUNICATION WITH SHAREHOLDERS

We maintain a dialogue with shareholders throughout the year as part of an ongoing investor relations programme.

The Chief Executive Officer and the Chief Financial Officer routinely engage with analysts, institutional and retail

shareholders and potential investors. Results and presentations are clearly posted on our corporate website to

ensure broad access to all potential or existing investors.

Our aim is to ensure that there are strong relationships through which we can understand our investors’ views on

material issues. The Board is regularly updated in Investor Relations matters, particularly where there are issues of

concern, and the Company’s brokers provide independent feedback from investors.

All brokers’ research notes are circulated to the Board to help maintain an understanding of market perceptions of

the Company. The Chairman and Senior Independent Director are always happy to make themselves available for

investor discussions as required.

The AGM is an opportunity to communicate with all shareholders. The Chairs of all Board Committees attend the AGM

and are available to answer questions. An explanatory circular containing the notice of meeting is sent to shareholders

at least 23 days beforehand, with separate votes being offered on each substantive issue. To encourage shareholders

to participate in the AGM process, the Company will offer electronic proxy voting through both our registrar’s

website and, for CREST members, the CREST service. Voting will be conducted by way of a poll and the results will be

announced through the Regulatory News Service and made available on the Company’s website.

CORPORATE GOVERNANCE REPORT CONTINUED

FY22 MEETING ATTENDANCE

Director Independence

Main

Board

Audit

Committee

Nomination

Committee

Remuneration

Committee

Graham Blackwell Exec 8/8

Antony Smith Exec 8/8

Adam Bellamy (Chair) I 8/8 2/2 4/4

Julie Sneddon (SID) I 8/8 3/3 2/2 4/4

Laura May I 8/8 3/3 2/2 4/4

Sangita Shah

I 1/1

Christopher Mills NI 8/8 3/3

Key: NI – Non-Independent I – Independent Exec – Executive Director

1 Sangita Shah was appointed to the Board as an Independent Non-Executive Director with effect from 1 November 2022.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Number of meetings

held in the year:

ADAM BELLAMY

CHAIR

ANNUAL STATEMENT BY THE NOMINATION COMMITTEE CHAIR

I am pleased to present my report of the Committee for a year where there hasbeen

stability in the Board which has been further strengthened with the appointment of

anew independent Non-Executive Director. This appointment enhances the overall

Board independence. With little change in Board membership, the Committee was

able to focus on internal succession planning, Board effectiveness and to consider the

best way to enhance the Board’s focus on sustainability and the wider ESG agenda.

The Committee decided to address this challenge with the recruitment of a new

Non-Executive Board member who could bring a skill set in this area. We were

pleased to welcome Sangita Shah to the Boardin November 2022 and she was

appointed Chair of the newly formed ESGCommittee.

COMMITTEE ACTIVITY

The Committee carried out a wide-ranging search to recruit an additional Non-

Executive Director. This was a planned appointment to bring a majority of

Independent Non-Executives to theBoard and to help the Board set up an ESG

Committee. Sangita Shah joined the Group on 1 November 2022 as a Non-Executive

Director whom the Board considers to be independent. Sangita is a member of the

Chartered Institute of Management Accountants and a fellow of the Chartered

Institute of Journalists. She is a Board member of the Quoted Companies Alliance,

specialising in ESG policy and diversity and inclusion, with great experience

developing sustainability strategies that will help evolve our progress towards

NetZero.

Other key activities carried out in the year by the Committee consisted of the annual

reviews of Board succession and of the Board’s effectiveness over the past year.

Nomination Committee activities at the meetings

heldduring the year ending 1 January 2023 February October

Appointments

Interviews and appointment of Non-Executive Director

◆

Board effectiveness review

Review of the effectiveness of the full Board

◆

Review of reporting requirements for the year

◆

Succession planning

Executive and senior management team structure

◆

Succession planning

◆

BOARD SUCCESSION

We actively manage our Board succession plan, to ensure that our Board has an

appropriate and diverse range of skills to enable us to deliver our strategy for the

benefit of all of our stakeholders. We are a small and cohesive Board, and take care

toensure that all new members of our Board are aligned to our culture and share

ourvalues, whatever their skills and background. Our Board induction process,

undertaken by all new members upon appointment, is an important way to get our

new Board members up to speed and valued by our new Non-Executive Directors.

Wehave a formal plan for how Board membership should develop which aims to

balance continuity of service with a regular refreshment of skills and experience

needed to deliver our evolving strategy. We regularly review the balance of skills on

the Board as a whole, taking account of the future needs of the business, and the

knowledge, experience, length of service and performance of the Directors.

BOARD AND DIRECTOR EFFECTIVENESS

Each Director receives a formal evaluation of their performance during the year, which

is conducted by the Chairman. In addition, the CEO discusses with the Non-Executive

Directors the performance of individuals of the Executive team and any changes that

he proposes to make to this team. Whilst this activity does not take place formally

within the meetings of the Nomination Committee, it does form part of its work in

overseeing Executive team development and succession process, and the pipeline

oftalent available for succession to the Board.

The performance of our Board and the Committees is evaluated by the Nomination

Committee. A confidential Board Effectiveness Review Questionnaire was completed

and from the results, it was concluded that the Board is functioning well with a

strongteam dynamic, the appropriate composition, has a breadth and depth of

complementary skills and experience, and that there is a strong trust between the

Non-Executive Directors andthe Executive Directors in the running of the Group.

DIVERSITY

We fully support diversity as an important contribution to good quality decision

making and innovative thinking. Diversity has many dimensions, and we particularly

value diversity of thought, which in turn is assisted by diversity of background and

experience, as well as of gender and ethnicity. We already have on our Board a

diversity of gender, skills, ethnicity, experience, personality, and cognitive approach.

Site-based teams are diverse with an even split of males and females in management

positions. We continue to review how we can further broaden our approach,

encouraging diversity and inclusion throughout the Board and the business.

NOMINATION COMMITTEE REPORT

Meetings and attendance

Member Meetings Attendance

Adam Bellamy (Chair) 2

◆◆

Laura May 2

◆◆

Christopher Mills 2

◆◆

Sangita Shah

(joined1 November 2022)

—

Julie Sneddon 2

◆◆

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

NOMINATION COMMITTEE REPORT CONTINUED

CULTURE AND VALUES

Preservation of our culture as a social entertainment business has always been a

priority, which stems from the values instilled by the Board. Our culture is brought

tolife through our shared values and business principles which the Board monitors

through Board reports and agenda items, engagement with employees, and visits

tocentres. Our culture and values are an important part of what we look for in new

candidates to join our Board, so that they may promote and engage with the

development of these aspects throughout the business. It is important that they

arealigned with our values, so that they can be role models for all our employees

andstakeholders.

TENURE AND RE-ELECTION OF DIRECTORS

The Nomination Committee considers the length of service of Board members at

least annually. The tenure of the Directors at the date of this report is set out below:

Member Appointment Current term Next renewal Board role

Adam

Bellamy

1 November

2018

4 years Annually at AGM Chairman and

Nomination Chair

Graham

Blackwell

15 March 2017 6 years Annually at AGM CEO

Antony

Smith

1 April 2019 3 years Annually at AGM CFO and Secretary

Julie

Sneddon

22 March 2017 6 years Annually at AGM Remuneration Chair

and Senior

Independent

Director

Laura

May

6 May 2021 1 year Annually at AGM Audit Chair

Sangita

Shah

1 November

2022

- Annually at AGM ESG Chair

Christopher

Mills

15 March 2017 6 years Annually at AGM Non-Executive

Director

In accordance with the UK Corporate Governance Code, all continuing Directors will

seek re-election at the 2023 AGM, and as now required by the Listing Rules, the

Non-Executives will be subject to an additional vote by shareholders independent of

Harwood Capital LLP.

Approved by the Board on 21 March 2023

ADAM BELLAMY

CHAIR OF THE NOMINATION COMMITTEE

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Number of meetings

held in the year:

Audit Committee activities at the meetings held during the year ending 1 January 2023 March September November

Financial statements and new accounting standards

Review of the 2022 interim announcement and the Financial Statements and Annual Report for 2021

◆ ◆

Review of significant accounting policies and estimates in the year, in particular the impairment release

◆ ◆

Going concern and viability statement assessment

◆ ◆

Fair, balanced and understandable assessment

◆

Annual review of the tax strategy and approving the treasury policy

◆

Risk management and internal control

Risk register, risk mapping, risk appetite, principal risks and uncertainties assessment

◆ ◆

Review of internal audit function, requirements and internal audit reports

◆ ◆ ◆

Annual evaluation of the Committee’s effectiveness

◆

External auditors

External audit engagement, plan, budget and independence review

◆

Review of interim and full-year audit reports and findings

◆ ◆

Assessment of external audit effectiveness

◆ ◆

ANNUAL STATEMENT BY THE AUDIT COMMITTEE CHAIR

I am pleased to present my report as Audit Committee Chair for the year ended 1

January 2023 and the activities that have been carried out by the Committee during

ayear where there has been economic challenges and political uncertainty, but from

out of which the business has seen record performances.

I congratulate the Executive Directors on a fantastic set of results for 2022, especially

on the backdrop of a year plagued by industry-wide international supply disruption,

the continuing uncertainty brought about by the war in Ukraine followed on by more

national issues as soaring inflation and interest rates, an energy crisis and a constantly

changing political landscape. Through all this, the Group has produced record sales

and profit levels, paid off its bank debt, reintroduced the dividend programme,

including paying a 3p interim dividend and declaring a 7p final dividend, all while

remaining focused on good internal controls and risk management.

The Committee met three times during this financial year and has met once since the

year end. During these meetings the Committee has ensured it has carried out the

annual activities required to cover its key responsibilities around compliance with the

Code and other legal and regulatory requirements, financial reporting, including

accounting standards, risk management, internal controls and the external audit process.

A risk mapping exercise was carried out in the year to help identify areas where further

controls or mitigating actions were required, as part of the Committee’s focus on the

risk management process. The Group’s risk appetite was reviewed again in light of the

economic challenges as well as the Group’s strong performance to ensure that the

business was taking advantage of opportunities to help deliver on the strategy.

Theprincipal risks and uncertainties of the Group were reviewed in line with its

appetite and considered acceptable.

The operational internal audit team carried out at least four audits during the year for

each site. The internal audit team also carried out a delegation of authority review to

ensure transactions, invoices, employment contracts, supplier agreements and

property leases were being appropriately approved. An external third party was also

used to carry out a cyber security review to ensure that all appropriate controls such

as firewalls, patches, upgrades, two-factor authentication and training programmes

are in place to protect the business from the increasing risk of cyber breaches.

The Committee, on behalf of the Board, has completed a review of the Group’s going

concern position and long-term viability statement and approved the liquidity review

using a base case and a severe but plausible downside scenario. The Committee is

satisfied that the Group has adequate resources to continue in operation for the

foreseeable future.

Regulators and shareholders continue to focus on the content and quality of narrative

disclosures in the annual report on environmental, social and governance matters,

particularly climate change. The Board has reviewed the expanded disclosures around

TCFD as reflected in the annual report.

The below is a summary of the key matters reviewed by the Committee during

the period:

AUDIT COMMITTEE REPORT

LAURA MAY

CHAIR

Meetings and attendance

Member Meetings Attendance

Adam Bellamy*

Laura May (Chair) 3

◆◆◆

Graham Blackwell*

Christopher Mills*

Sangita Shah

(joined1 November 2022)

—

Antony Smith*

Julie Sneddon 3

◆◆◆

* Invitation only

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

AUDIT COMMITTEE MEMBERSHIP

The Chief Executive Officer, Chief Financial Officer, Christopher Mills as a

non-independent Non-Executive Director and Adam Bellamy as Chairman

of the Board usually attend meetings by invitation. In addition,

representatives of PwC for external audit matters attend by invitation.

The Board considers that I have recent and relevant financial experience

tochair the Committee, by virtue of my professional qualification and my

financial expertise and experience in the consumer leisure sector. Members

of the Committee can also demonstrate a breadth of experience across the

retail and leisure sector through their current and previous roles – please

see the Directors’ biographies on pages 46-47.

SIGNIFICANT ACCOUNTING ISSUES AND JUDGEMENTS

RELATING TO THE FINANCIAL STATEMENTS

Within its terms of reference, the Committee monitors the integrity of the

annual and interim reports, including a review of the significant financial

reporting issues and judgements contained in them. The Audit

Committee’s review of the Annual Report for the period ended 1 January

2023 and the 2022 interim financial statements focused on the following

areas of significance:

◆ Reviewing the impairment assessments of the values of property, plant

and equipment, right-of-use assets and goodwill for the Group. This

included the factors considered in determining the cash flows, spend on

solar projects as part of climate risk and the rate used to discount those

cash flows which resulted in an impairment reversal in the period.

Further detail of the impairment assessments can be found in Notes 10

and 13 to the financial statements.

◆ Reviewing the going concern and long-term viability statement

assessments including agreeing the base case and severe but plausible

downside scenarios used to determine the Group’s liquidity.

◆ The Committee also considered a paper prepared by the external

auditors, which included significant reporting and accounting matters.

The Audit Committee, following confirmations from management and the

external auditors, satisfied itself as to the reasonableness and consistency

of these assumptions when compared to prior years.

REVIEW OF NARRATIVE REPORTING

Last year, the Committee reviewed the enhancements made to the

financial review disclosures and other parts of the annual report to address

the findings of the Financial Reporting Council (‘FRC’) in a letter around

alternative performance measures (‘APMs’). This year, the APMs used were

considered appropriate and there has been focus on the TCFD reporting. A

third party consultant was engaged to help management review and assess

existing climate change risks and to identify areas of development,

specifically to cover the physical climate risk to our supply chain, a more

robust analysis against climate scenarios and a quantitative assessment of

the impact of climate change, together with a set of appropriate metrics.

FAIR, BALANCED, UNDERSTANDABLE AND

COMPREHENSIVEREPORTING

At the request of the Board, the Committee also considered whether the

Annual Report and financial statements as a whole are ‘fair, balanced and

understandable’. Factors considered included:

◆ Does the narrative of the Business Review and Financial Review fairly

reflect the performance of the Group over the period reported on?

◆ Are the narrative sections consistent with each other, and with the

financial statements?

◆ Is the connection between strategy and remuneration clearly described?

◆ Can readers easily identify key events that happened during the year?

◆ Is the language and tone of voice used commensurate with the spirit of

‘fair, balanced and understandable’?

◆ Are the APMs used by the Group appropriate and described in sufficient

detail to reconcile to statutory disclosures?

Committee members received the draft Annual Report and Accounts in

advance and had the opportunity to make comments in advance of the

formal meeting at which the report was tabled for approval.

Following its review, the Committee confirmed to the Board that in its view

the 2022 Annual Report was ‘fair, balanced and understandable’ and

provided the information necessary for our shareholders to assess the

Company’s position, performance, business model and strategy.

RISK MANAGEMENT AND INTERNAL CONTROL

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 effectiveness of

internal control to the Audit Committee.

The Group’s system of internal control comprises entity-wide, high-level

controls, functional controls over business processes and individual

site-level controls. Policies and procedures, including clearly defined levels

of delegated authority, have been communicated across the Group. Internal

controls have been implemented in respect of the key operational and

financial processes which exist within 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;

◆ 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.

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:

◆ reviews of the Group’s risk mapping, the Risk Appetite statement and

risk register;

◆ reviewing emerging risks which in this year included the impact of delays

in deliveries on a nationwide basis;

◆ reviewing climate risks part of the TCFD reporting during the year;

◆ reviewing the system of financial and accounting controls, and

considering the view of the external auditor in relation to the

effectiveness of such controls;

◆ receiving regular reports and updates on incidents and risks throughout

the Company; and

◆ reporting to the Board on the risk and control culture within the Group.

The Audit Committee has not identified, nor been made aware of, any

significant failings or weaknesses in the risk management and internal

control systems and is satisfied that the systems continue to work

effectively. The Audit Committee also confirms that it has complied with

the provisions of the Competition and Markets Authority’s Order for the

financial year under review and that it will continue to challenge

management to further improve risk identification, evaluation and

management processes across the Group.

INTERNAL AUDITORS

BDO UK LLP (‘BDO’) were appointed to support our internal audit function at

the end of FY17, when they commenced their first review. Their audit reviews

are supplementary to the operational loss prevention and process audits,

which are completed by three internal team members with each centre

visited to perform process audits at least once per quarter. The Committee

has discussed and concluded that the best option for the Group is to

continue to blend the use of BDO for the more complex internal reviews

while using the internal team for reviews which their skills encompass.

The results from these audits are discussed with the Chief Financial Officer

and presented to the Audit Committee. The Committee will review the

effectiveness of the outsourced and internal resources on an ongoing basis

and has concluded that the internal audit function has been effective during

the year. During FY22, the BDO review that covered the Group’s approach

to fraud risk, laws and regulations was completed and reported in March

2022, with the findings and recommendations being implemented during

2022. A cyber security review was carried out by a specialist third party

penetration testing company. The results of this review were reported to

the Board in February 2023, with the findings and recommendations to be

carried out in 2023.

AUDIT COMMITTEE REPORT CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

HEALTH & SAFETY AND INCIDENT MANAGEMENT

The Company operates an incident management policy at site level,

recording incidents relating to health & safety, accidents, criminal activity,

food standards, pest control and others. These incidents are sent out to

senior management for review and the Chief Financial Officer escalates any

significant incidents to the Audit Committee as necessary. Health & Safety

meetings are held by senior management monthly to understand incidents

and to ensure compliance with or to update policies. These are attended by

a risk adviser from our insurance brokers to provide the Company with a

professional level of advice.

WHISTLEBLOWING

The Company has established procedures for employees to raise concerns,

in confidence, relating to matters of financial reporting, financial control or

other matters. The whistleblowing policy is applicable for all employees,

who are made aware of the policy on joining the Company and are

reminded of its availability through online portals and posters. The

Whistleblowing facility is provided on Yapster, where employees can raise

concerns confidentially using our dedicated communications app, offering

people more access to reporting incidents of concern. The reports can only

be accessed, collated and sent on by a third party company. They email a

link to the report monthly, for review by the Chief Executive Officer who will

report on to the Board. No incidents were reported during FY22.

BRIBERY, FRAUD AND ANTI-CORRUPTION

The Group has procedures in place to ensure compliance with the Bribery

Act 2011 and other relevant legislation, including a bribery policy that has

been reviewed and signed up to by all employees. Executive Board

members with authority to place significant contract orders have received

anti-bribery training and all Board Directors acknowledge any conflicts of

interest as part of each Board meeting held. The Group also reviewed

supplier terms and conditions for Bribery Act and tax evasion clauses, and

all payments to third parties must be supported by a valid invoice and

segregated duties are in place in the finance team for approval and

payment. Formal procedures are implemented for signing off gifts and

hospitality accepted by employees.

CYBER SECURITY AND DATA PROTECTION

Cyber and data security remains one of the most important risk areas,

being one of the Board’s principal risks, as outlined in the ‘Risks and

Uncertainties’ section on pages 41-42 of this Annual Report. The resource

and capability of the Information Security function was increased during the

year, and the programme to improve our controls and practices in this area

has continued. This has included improved network segmentation,

penetration testing and a thorough review and reinforcement of our IT

business continuity plans. Given the continuing external risks, this area was

subject to an internal audit by a third party cyber security specialist review

in 2022, and cyber security remains a standing agenda item at all

Committee meetings. The Committee was satisfied that there is an

acceptable level of risk management in place.

EXTERNAL AUDITORS

The report and financial statements were audited by

PricewaterhouseCoopers LLP (‘PwC’) who were appointed in 2017 after the

IPO, since then no audit tender has been carried out. The PwC partner,

Craig Skelton, attends all Committee meetings and thus attended the

meetings in March, September and November 2022. The Committee Chair

also met privately with the auditors before each meeting and the rest of the

Committee have the opportunity to do so if they wish.

The Audit Committee has reviewed the independence, objectivity and

effectiveness of the external auditors and considers that PwC continues to

possess the skills and experience required to fulfil their duties effectively

and efficiently. The Audit Committee’s review of the effectiveness of PwC

as the external auditors is based on:

◆ discussions with the senior finance team around the level of

understanding demonstrated by the audit team;

◆ the robustness of the audit around challenge to management and

findings on areas that required judgement;

◆ the quality of audit work, reporting and advice given to the Audit

Committee; and

◆ reports published by the FRC.

The conclusion was that the audit had been effective and carried out with

the necessary objectivity and challenges to demonstrate independence and

that no significant issues had been highlighted; this was endorsed by the

Committee.

It is the Committee’s responsibility to make recommendations to the Board in

relation to the appointment, reappointment and removal of the external

auditors, and to agree the audit fee. In November 2022, the external auditors

presented their strategy for the 2022 audit to the Committee. The Committee

reviewed and agreed with the external auditor’s assessment of risk. The

Committee also reviewed and agreed the audit approach and the approach to

assessing materiality for the Group. The fee proposed by PwC for the

statutory audit of the Group and Company financial statements and the audit

of Group subsidiaries pursuant to legislation was reviewed and agreed.

Considering the review of the 2022 audit and the proposed plan and fee,

the Committee agreed that PwC be reappointed as auditor for the 2022

audit for the fee proposed. A resolution by the Directors to agree their

remuneration and to reappoint PwC as auditor for the 2023 audit will be put

to shareholders at the AGM.

The Committee is aware that the use of audit firms for non-audit work is a

sensitive issue for investors and corporate governance analysts, as it could

potentially give rise to a conflict of interest and jeopardise the

independence of the audit process. Following the issue of the EU Audit

Directive in June 2016, we review any non-audit work to ensure fees for

non-audit services provided by the statutory auditors in any year do not

exceed 70% of the average fees for the Group statutory audit in the years

and that they do not perform any non-audit services, including the majority

of tax work, internal audit, corporate finance, involvement in management

activities or the provision of financial information. The external auditors

may not be engaged to provide any non-audit services without the

agreement of the Audit Committee Chair either. We believe that this

approach is still relevant and safeguards auditor independence and

objectivity effectively.

PwC have confirmed that in their professional judgement they are

independent within the meaning of regulatory and professional

requirements, and that the objectivity of the audit engagement partner and

audit staff is not impaired.

During the period, we paid PricewaterhouseCoopers LLP £40,000 for their

review of the interim financial statements (considered to be a non-audit

service). No other non-audit services were provided by the external auditor.

Fees paid to PricewaterhouseCoopers LLP for audit work were £310,000.

Our auditors rotation policy is that we will tender the audit at least once

every ten years and we will change auditor at least every 20 years. We will

invite at least one firm outside the ‘Big Four’ to participate in any audit

tender process. This is in line with the current EU Audit Directive. The latest

date for the next tender will therefore be for the 2027 audit, but may occur

sooner at the Committee’s discretion. The Committee concurs that a

competitive tender is in the best interests of shareholders.

ANNUAL EVALUATION

The Committee continues to improve the risk, control and governance

infrastructures, and will continue to work with the management team and

the Board to ensure processes operate effectively to support the delivery of

the Group’s strategy. There has been one change to the composition of the

Committee with Sangita Shah joining as a member. As a whole, the Board

has confirmed it believes the members have the competence that is relevant

to the sector in which the Group operates, and the Chair of the Committee

has the relevant financial experience to run the Audit Committee.

LAUR A MAY

CHAIR OF THE AUDIT COMMITTEE

21 MARCH 2023

AUDIT COMMITTEE REPORT CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Number of meetings

held in the year:

JULIE SNEDDON

CHAIR

COMMITTEE ACTIVITIES

Remuneration policy

The Remuneration Committee met on four occasions in FY22 and has met twice since the year end. The activities completed by the Committee in 2022 were as follows:

February March May November

Bonuses, awards and vesting review

Review of FY21 performance and bonus outturn

◆ ◆

Approval of Directors’ bonus KPIs/targets for FY22 and FY22 fixed pay

◆ ◆

Proposed 2022 LTIP performance targets

◆ ◆

Review of FY22 bonus performance and FY23 fixed pay

◆

Share plan awards and vestings

◆

Remuneration policy and operation review

Review of Policy and operation of Policy

◆

Governance and reporting

Review of Directors’ Remuneration Report (including to ensure compliance with the Remuneration

Reporting Regulations)

◆

Review of expected FCA Board diversity requirements

◆

DIRECTORS’ REMUNERATION REPORT

Meetings and attendance

Member Meetings Attendance

Julie Sneddon (chair) 4

◆ ◆◆◆

Adam Bellamy 4

◆◆◆◆

Laura May 4

◆◆◆◆

Christopher Mills 4

◆◆◆◆

Sangita Shah

(joined1 November 2022)

0 —

ANNUAL STATEMENT BY THE REMUNERATION COMMITTEE CHAIR

I am pleased to present this Remuneration Report after the delivery of a record

yearled by our Executive Directors with the support and hard work of all of Ten

Entertainment’s employees. Despite disruption and uncertainty from the wider

economic environment and emerging from an incredibly difficult two years as a result

of the Covid-19 pandemic, the business generated record sales growth, profitability

and free cashflow.

The Executive Directors also made excellent strategic progress during the year,

increasing the number of sites, completing numerous refurbishments and capital

programmes and expanding the scope of our digital strategy. All of this has helped

drive the business forward and delivered an outstanding set of results as well as

positioning the business for further growth and allowing us to reintroduce the

dividend programme (3p interim dividend paid and 7p final dividend declared). This is

the context within which the Committee has considered remuneration outcomes for

FY22 and the approach for FY23.

I held discussions with a number of shareholders in April 2022, in advance of the

AGM, to discuss the Remuneration Report and the Committee’s approach to the FY21

Annual Bonus Plan pay-out. These discussions were very helpful both in enabling me

to explain our approach to remuneration both for FY21 and more generally to receive

insightful feedback from shareholders. As the Committee prepares for the triennial

vote on our Directors’ Remuneration Policy at our 2024 AGM and reviews the current

Policy, I will reach out to investors again to seek their feedback on our proposals.

REMUNERATION OUTCOMES FOR FY22

A high proportion of the Executive Directors’ remuneration is in performance-related

variable pay, to incentivise and reward strong performance and align Director interests

with those of our shareholders. Due to the outstanding performance of the Group

over the last year, this has resulted in a higher variable pay-out.

Annual Bonus Plan

The bonus plan was based on 70% of the pay-out relating to financial metrics and

30% paid out on strategic objectives. The outstanding financial performance of the

Group has resulted in the maximum Group Adjusted Profit Before Tax and Free

Cashflow metrics being achieved.

The Committee has assessed exceptional achievement across our demanding

strategic objectives resulting in a total of 30% of bonus available under this element.

Further details about the targets set for the annual bonus and performance against

them can be found on page 64 of this report.

As a result, the formulaic outcome of the bonus is 100% of maximum for both our

CEO (£310,000) and CFO (£260,000).

The bonus will be paid in cash with 25% of the bonus in excess of target being paid in

shares and held for a minimum of two years, ensuring the Executive Directors with

LTIP vestings continue to build their shareholding in the business, aligning them to

long-term performance and shareholders’ interests.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REMUNERATION REPORT CONTINUED

Vesting of 2020 Long Term Incentive Awards

As explained in our 2020 Remuneration Report, our long-term incentive

grants for FY20 were delayed due to the difficulty in forecasting and setting

targets as a result of the Covid-19 pandemic. Award levels were unchanged

from the prior year at 150% of salary and although our share price was

impacted by the pandemic in the early part of 2020, awards were not made

until 30 November 2020 with no scale back considered necessary with our

share price being within 20% of the grant price for the prior year’s award.

The Committee has reviewed again the share price at which the LTIP grants

were made and remains comfortable that there are no ‘windfall gains’ that

require the Committee to consider a scale back of the vesting level.

The 2020 LTIP award is based on EPS targets (50%), relative TSR (50%) and

a share price underpin which must be achieved for any part of the award to

vest. The maximum EPS target has been reached and this part of the award

is expected to vest in full. The TSR and share price underpin elements are

not tested until the third anniversary of grant in November 2023. Based on

our current analysis, it is anticipated that the TSR element will also vest in

full. Actual vesting will be disclosed in the 2023 Remuneration Report.

2022 ISSUE OF LONG-TERM INCENTIVE AWARDS

Long-term incentive awards were granted for FY22 in March 2022 with

award levels unchanged from FY21 at 150% of salary and the performance

conditions continuing to be based 50% on adjusted EPS and 50% on

relative TSR. The targets were disclosed in our 2021 Remuneration

Reportand can be found on page 66 of this Report.

OPERATION OF POLICY FOR FY23

Base salary and fees

The Committee has considered carefully the salaries and overall

remuneration packages of the Executive Directors in the context of salary

increases for FY23. Our CEO and CFO have worked as a hugely successful

team, navigating through the Covid-19 pandemic and cost of living crisis,

delivering tremendous growth for shareholders. The Committee is focused

on ensuring they are rewarded fairly and appropriately and incentivised to

deliver further growth and returns for shareholders.

The Committee understands that with the cost of living crisis, there is a

concern about increasing levels of executive remuneration. We believe our

approach is moderate and reasonable and has noted as part of its

deliberations, the approach that the business has taken over the wider

workforce salary increases. The approach of the management team,

supported by the Board, has been to look after the most vulnerable lower

paid workers. All salaried employees have been awarded a salary increase of

£2,300. This provides an average increase of 5.8% and up to 10% for our

lowest paid employees. Our approach to salary increases also takes into

account the fact that our more senior employees, who will have received a

lower percentage of salary increase, will receive an annual bonus payment

for FY22, which is aligned to the outturn of the Executive Directors.

In setting the CEO and CFO salary increases, the Committee, in

consultation with the Executive Directors, has determined that both

Executives will receive a salary increase of £2,300 this year to mirror the

salaried workforce approach.

The Non-Executive Directors’ fees have not changed since the Group was

listed on the stock exchange in 2017, and the planned 3% increase in 2020

was delayed due to the Covid-19 pandemic. The fees are set by the Chairman

of the Board, CEO, and CFO, and the Chairman’s fee is agreed upon by the

Remuneration Committee. The Chairman fee and the Non-Executive Director

fees will increase by £2,300 in line with the Executive Directors and salaried

workforce, which on average is a 1.8% increase.

Annual Bonus Plan

Maximum bonus opportunity will remain at 100% of salary and

willcontinue to be based 70% on financial metrics and 30% on

strategicobjectives.

The financial metrics will continue to be based on Group Adjusted Profit

Before Tax (‘PBT’) and Free Cashflow, focusing the Executive Directors on

the overall profitability and cash generation of the Group.

The 30% of the bonus determined by strategic milestones will focus on

estate development, refurbishment plans and achievement of ESG targets.

Further details of the strategic objectives and the financial targets, as

wellas performance against them will be set out in the FY23

RemunerationReport.

Long Term Incentive Plan

Maximum bonus opportunity will remain at 150% of salary and will be

based 50% on relative TSR and 50% on EPS. The targets are set out in the

Annual Report on Remuneration.

CONCLUSION

The Committee is delighted with business performance for FY22 and

believes that the remuneration outcomes for the Executive Directors are

clearly aligned to this. Noting that the 2020 LTIP award is not due to vest

until November 2023 and that the vesting level is dependent on TSR to

thatdate and a share price underpin, it is comfortable that the formulaic

outcome of the incentives based on performance to 1 January 2023

appropriately reflect Group performance as well as individual contribution

and that no discretion to adjust is necessary.

The Committee is comfortable that the policy has operated as intended

and that no change is required to the policy.

I very much hope that you will support the shareholder resolution on

myAnnual Statement and the Annual Report on Remuneration at our

forthcoming Annual General Meeting on 4 May 2023. In the meantime,

should you have any questions, I am contactable via the Company Secretary.

JULIE SNEDDON

CHAIR OF THE REMUNERATION COMMITTEE

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

REMUNERATION – AT A GLANCE

2022 ANNUAL BONUS OUTCOME

Metric Weighting Outcome (of element) Payout % of total award

Group Adjusted EBITDA 70% 100% 70%

Strategic objectives 30% 100% 30%

2020 LTIP OUTCOME

Metric Weighting Outcome (of element) Payout % of total award

EPS 50% 100% 50%

Relative TSR 50% 100% 50% estimated vesting*

Share price underpin **

* Performance period runs from date of grant for TSR and ends 30 November 2023. This is the estimated payout based on the performance at 31 January 2023.

** No award or part of an award may vest unless the average share price of the Company calculated over a three-month period ending on the vesting date exceeds the share

price on the date of grant.

REMUNERATION FOR FY23

Policy element G Blackwell (CEO) A Smith (CFO)

Base salary for FY23 (£2,300 increase) £312,300 £262,300

Pension 3% of base salary 3% of base salary

Annual bonus maximum opportunity 100% of base salary 100% of base salary

Annual bonus metrics 70% financial metrics – split equally between achievement of Group Adjusted Profit Before Tax and

Free Cash Flow 30% strategic objectives – split equally between set targets.

The Committee retains discretion to adjust the bonus that is payable if it considers the formulaic

outcome (for both the financial and non-financial element) is not appropriate in the context of the

underlying performance of the Company, investor experience or employee reward outcome.

Amount paid for threshold performance 20% of maximum 20% of maximum

Amount paid for target performance 50% of maximum 50% of maximum

Payment of bonus in shares 25% of annual bonus in excess of target (after tax) is paid in Company shares that are held for two

years and remain subject to clawback.

LTIP Award 150% of base salary 150% of base salary

LTIP metrics 50% relative TSR and 50% EPS targets.

The Committee retains discretion to adjust the LTIP vesting if it considers the formulaic outcome

notappropriate.

Payment for threshold performance 25% of maximum 25% of maximum

Performance & post-vesting holding periods 3 years and 2 years respectively 3 years and 2 years respectively

Shareholding requirement 200% of base salary to be met within 5 years from FY21. Post employment 100% of salary for 1 year.

Shareholding as % of salary at FY22 year-end 66% 84%

Actual Remuneration 2022

£1,400

£1,200

£600

£400

£200

£0

£800

£1,000

£1,197k

£1,011k

CEO – Actual FY22

■

Fixed Pay

■

Variable Pay

CFO – Actual FY22

26%26%

74%

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REMUNERATION POLICY

This part of the Directors’ Remuneration Report setsout the Remuneration

Policy for the Company Directors and has been prepared in accordance

with Schedule 8 of The Large and Medium-sized Companies and Groups

(Accounts and Reports) Regulations 2008, the Large and Medium-sized

Companies and Groups (Accounts and Reports) (Amendment) Regulations

2013, the Companies (Miscellaneous Reporting) Regulations 2018 and the

Companies (Directors’ Remuneration Policy and Directors’ Remuneration

Report) Regulations 2019 (the ‘Regulations’).

POLICY SUMMARY

The Remuneration Committee determines the Policy for the Executive

Directors and the Chairman for the current and future years. The

Committee considers that a successful policy needs to be sufficiently

flexible to take account of changes in both the business environment and

remuneration best practice. The policy is designed to provide remuneration

packages that will:

◆ align the interests of the Executive Directors and senior management

with those of shareholders;

◆ provide competitive remuneration that will both motivate and retain the

Group’s current key employees and attract high-quality individuals to join

the Group;

◆ encourage and support a high-performance culture;

◆ reward delivery of the Group’s business plan and key strategic goals;

◆ set appropriate performance conditions in line with the agreed risk

profile of the business; and

◆ whilst the Committee does not consult directly with employees on

Executive Directors’ remuneration, the Committee does receive updates

regarding remuneration for employees across the Group. This is

considered when determining the remuneration for the Directors.

Consistent with the remuneration strategy, the Remuneration Committee

agreed a remuneration policy for the Executive Directors and Senior

Managers whereby:

◆ salaries will be set at competitive, but not excessive, levels compared to

peers and other companies of an equivalent size and complexity, and are

commensurate to the individual’s performance and responsibility;

◆ performance-related pay, based on stretching targets, forms a

significant part of remuneration packages and offers the potential for

competitive levels of total pay if targets are delivered; and

◆ there is an appropriate balance between short and longer-term

performance targets linked to delivery of the Group’s strategic plan.

The Remuneration Committee oversees the implementation of this policy

and seeks to ensure that the Executive Directors are fairly rewarded for

theGroup’s performance over both the short and long term, and that it

continues to support and reward the Executive Directors to achieve the

business strategy both operationally and over the longerterm.

ThePolicyisreviewed annually by the Committee, to ensure that

changesare not required prior to the triennial shareholder vote. When

theCommittee determines that changes are required it will formulate

proposals as appropriate and depending on the change required to consult

with its shareholders about the amendments. Shareholder feedback is then

taken into consideration in finalising the Policy changes.

The Policy and its implementation are consistent with the six factors set

out in Provision 40 of the Code:

◆ Clarity – our Policy is well understood by Management and has been

clearly explained to our shareholders;

◆ Simplicity – the Committee is mindful of the need to avoid overly

complex remuneration structures which can be misunderstood and

deliver unintended outcomes. Our policy is set out clearly and we have

avoided the use of complex incentive structures, and pension policy is

aligned throughout the organisation;

◆ Risk – our Remuneration Policy is designed to ensure that inappropriate

risk-taking is discouraged through the use of long-term performance

measurement, holding periods, shareholding requirements and malus

and clawback provisions;

◆ Predictability – our incentive plans are subject to individual caps on

maximum bonus opportunity and LTIP award levels and include

discretion if incentive outcomes are not appropriate;

◆ Proportionality – there is a clear link between individual awards, delivery

of strategy and our long-term performance. In addition, the significant

role played by incentive/’at-risk’ pay and the presence of malus and

clawback provisions ensures that poor performance is not rewarded; and

◆ Alignment to culture – our executive pay policies and operation

of policyare fully aligned to Ten Entertainment’s culture, including

through the use of metrics in the incentive plans which align to the

Company strategy.

ENGAGING WITH SHAREHOLDERS

The Committee welcomes dialogue with shareholders and seeks the views

of its major investors and investor bodies when considering significant

changes to the Directors’ Remuneration Policy and its operation. Any views

and feedback from our shareholders is considered by the Committee as

part of its annual review of Policy and operation. The Committee also

considers shareholder feedback received in relation to the Directors’

Remuneration Report each year following the AGM. Detail about specific

engagement with shareholders in determining the Policy and its operation

from year to year is set out in the Annual Statement and the Annual Report

on Remuneration.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REMUNERATION POLICY CONTINUED

REMUNERATION OF EXECUTIVE DIRECTORS

The following table summarises each element of the Executive Directors’ remuneration package, the Policy for how these are operated and their link to the Company’s strategy.

Element of pay Purpose and link to strategy Operation Maximum opportunity Performance metrics

Base salary Reflects the value of the individual and

their role. Takes account of

experience, skills and personal

contribution to Group strategy. Set at

a level to facilitate recruitment and

retention of suitably experienced

executives.

Base salaries will be reviewed annually. The Remuneration Committee will

consider the performance of the Group and the individual, the Executive

Director’s experience and changes in responsibility or scope of the role, as well

as pay practices in relevant comparators of a broadly similar size and complexity

(with due account taken of both market capitalisation and turnover).

There is no prescribed annual increase. The Committee

is guided by the wider workforce increases, but may also

need to recognise increases in certain circumstances,

such as assumed additional responsibility, or an increase

in the scope or size of the role.

Takes into account the

performance and personal

contribution of the individual

and performance of

theCompany.

Annual bonus plan Rewards performance against specific

near-term goals which are consistent

with the strategic direction of

thebusiness.

Acquisition of shares with bonus

facilitates share ownership and

alignsthe interests of executives

andshareholders.

Clawback and acquisition of shares

discourage excessive risk-taking and

encourage a long-term view.

Performance is assessed by the Committee over a one-year period against the

audited results of the Company, where relevant.

25% of any bonus in excess of target is paid in the Company’s shares and has a

two-year holding period which continues post cessation of employment (with

Committee discretion in exceptional circumstances to vary).

The Committee retains discretion to adjust the bonus that is payable if it

considers the formulaic outcome (for both the financial and non-financial

element) is not appropriate in the context of the underlying performance of the

Company, investor experience or employee reward outcome.

Clawback and malus may be applied to all of the bonus (cash and share

element), in the event of:

(i) material misstatement of the Company’s financial statements;

(ii) an error in the computation of a bonus amount;

(iii) termination of service for gross misconduct;

(iv) reputational damage, corporate failure; or

(v) failure of risk management.

A bonus of up to a maximum of 100% of salary can be

awarded depending on the achievement of financial and

strategic targets.

Not more than 20% of the maximum bonus opportunity

will be paid for threshold performance and 50% of

maximum for target performance.

The Committee will select the

most appropriate metrics for

the annual bonus to support

the business strategy.

The majority of the annual

bonus will be based on

financialmetrics.

Financial metrics are scaled

with a threshold and maximum

target achievement which is set

by the Committee at the

beginning of the year, taking

into account the Group’s

budget, economic environment

and business outlook.

In relation to non-financial

individual/strategic targets, the

structure of the target will vary

based on the nature of the

target set and it will not always

be practicable to set targets

using a graduated scale.

Vesting may therefore take

place in full if specific criteria

are met in full.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REMUNERATION POLICY CONTINUED

Element of pay Purpose and link to strategy Operation Maximum opportunity Performance metrics

Long-term incentive

awards

Aims to incentivise and reward

long-term, sustainable growth and

returns to shareholders.

Facilitates share ownership

therebyproviding alignment

withshareholders.

The LTIP awards are structured as nil-cost options, granted annually with

awardsvesting on the third anniversary of award subject to achievement of

performance conditions measured over three years.

Vested awards granted from 2021 are subject to a holding period of two years

(subject to the right to sell sufficient shares to cover tax charges arising on

vesting) which continues post cessation of employment (the Committee has

discretion to vary this in exceptional circumstances).

The Committee retains discretion to adjust the level of vesting under the LTIP if

it considers the formulaic outcome is not appropriate in the context of the

underlying performance of the Company, investor experience or employee

reward outcome.

Clawback may be applied, in the event of: (i) material misstatement of the

Company’s financial statements; (ii) an error in the computation of a bonus

amount; (iii) termination of service for gross misconduct; (iv) reputational

damage; (v) corporate failure; or (vi) failure of risk management.

The normal award level is 150% of base salary

butamaximum opportunity of 200% of

salarycanbeapproved by the Committee

inexceptionalcircumstances.

25% of the award vests for threshold performance.

The Committee will select the

most appropriate financial

metrics to support the

Company’s medium to

long-term strategy.

Benefits To remain competitive in the

marketplace, and to ensure minimal

disruption to the business.

The Executive Directors are entitled to receive benefits which include, but are

not limited to, family private health cover, death in service life assurance and

reimbursement of travel expenses for any business-related travel, including any

tax thereon grossed up, where appropriate.

There is no prescribed maximum. The value of the

benefit is determined by the cost to the Company.

Not performance-related.

Pension To facilitate retirement planning. Payment is made either into a pension scheme, or paid as cash to the individual

in lieu.

Maximum contribution is the same as the workforce,

currently 3% of salary per annum.

Not performance-related.

Policy for Chairman and Non-Executive Directors’ fees

Chairman and

Non-Executive

Directors’ fees

To pay appropriately for high-

qualityand experienced Chairman

andDirectors.

The Chairman and Non-Executive Directors are paid a basic annual fee.

Supplemental fees may be paid for additional responsibilities and activities,

including but not limited to, a multi-Committee Chairman and the Senior

Independent Director.

The Chairman’s fee is inclusive of all of his responsibilities.

There is no prescribed maximum fee or maximum

increase. Fees are set at a level to reflect the amount of

time and level of involvement required in order to carry

out their duties as members of the Board and its

Committees. There may be a need to recognise

increases in certain circumstances, such as assumed

additional responsibility (for example, taking on the

Chairmanship of a Committee or a temporary role or

increase in time commitment or responsibility) or an

increase in the scope or size of the role. Reasonable

expenses incurred by the Non-Executive Directors in

carrying out their duties will be reimbursed, including

any tax thereon grossed up, where appropriate.

Not performance-related.

PERFORMANCE METRICS

Performance metrics for the annual bonus and LTIP are reviewed and set annually by the Committee and are aligned to the Group’s strategy. Stretching targets are set taking into account internal plans and external market expectations

for the Company, economic and business outlook. Achievement of the threshold target results in lower levels of rewards and the maximum target reflects significant out-performance.

POLICY ON REMUNERATION FOR EMPLOYEES

The remuneration policy for all employees is determined in line with best practice and aims to ensure that the Company is able to attract and retain the best people. This principle is followed in the development of our Directors’

Remuneration Policy. The key difference between the Policy and the wider Group’s policy is that the Executive Directors’ packages (and the senior management team to a lesser extent) are weighted more to variable pay for those

employees identified as having the greatest potential to influence Group-level performance.

REMUNERATION OF EXECUTIVE DIRECTORS continued

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REMUNERATION POLICY CONTINUED

COMMITTEE DISCRETIONS IN RESPECT OF ANNUAL BONUS

PLAN AND LTIP POLICY

The Committee will operate the Annual Bonus Plan and LTIP according to

the rules of each respective plan and consistent with normal market

practice and the Listing Rules of the London Stock Exchange, including

flexibility in a number of aspects as detailed below but always within the

shareholder approved Policy (albeit with quantum and performance targets

restricted to the descriptions detailed above):

◆ When to make awards and payments

◆ How to determine the size of an award, a payment, or when and how

much of an award should vest

◆ How to deal with a change of control or restructuring of the Group

◆ Whether a Director is a ‘good’ or a ‘bad’ leaver for incentive plan

purposes and whether and what proportion of awards vest at the time of

leaving or at the original vesting date(s)

◆ How and whether an award may be adjusted in certain circumstances

(e.g. for a rights issue, a corporate restructuring or for special dividends)

◆ What the weighting, measures and targets should be for the Annual

Bonus Plan and LTIP from year to year

The Committee also retains the discretion within the Policy to adjust targets

and/or set different measures and alter weightings for the Annual Bonus

Plan, and for the LTIP if events happen that cause it to determine that the

metrics are unable to fulfil their originally intended purpose, provided the

new metrics are not materially less difficult to satisfy. Any adjustments will be

fully disclosed in the following year’s Annual Report on Remuneration.

The Committee also has the discretion to amend the Policy for minor or

administrative matters where it would, in the opinion of the Committee, be

disproportionate to seek shareholder approval.

All historic awards that were granted under any current or previous share

schemes operated by the Company, but remain outstanding, detailed on

page 66, remain eligible to vest based on their original award terms.

SHAREHOLDING REQUIREMENTS

To provide alignment between shareholders and Directors, the Executive

Directors are required to build up a holding of shares in the Company of

200% of salary over a period of five years.

The post-cessation of employment shareholding policy requires the

Executive Directors to retain shares from FY21 and future annual bonus and

LTIP awards equal to 100% of salary for one year post cessation. Annual

bonus and LTIP holding periods also continue post cessation of

employment. In exceptional circumstances the Committee has the

discretion to adjust these requirements.

SERVICE AGREEMENTS AND PAYMENTS FOR LOSS OF OFFICE

OF EXECUTIVE DIRECTORS

Each of the Executive Directors has entered into a service agreement with

the Company. The policy is that each Executive Director’s service

agreement should be of indefinite duration, subject to termination by the

Company or the individual on six months’ notice. The service agreements

of all Executive Directors comply with this policy. The contracts contain a

payment in lieu of notice clause which is limited to base salary only and

there is no loss of office payment due. These service contracts are available

for inspection at the Group’s registered office.

Any share-based entitlements granted to an Executive Director under the

Company’s share plans will be determined based on the relevant plan rules.

The default treatment under the LTIP is that any outstanding awards lapse

on cessation of employment. However, in certain prescribed circumstances,

such as death, ill-health, disability, redundancy, retirement or other

circumstances, at the discretion of the Committee ‘good leaver’ status may

be applied. For good leavers, awards from 2021 will normally vest on the

original vesting date, subject to the satisfaction of the relevant performance

conditions tested at the end of the performance period and reduced

pro-rata to reflect the proportion of the three-year period actually served

(and awards granted prior to 2021 will normally vest on cessation with

Committee discretion to vest at the normal time). However, the Committee

has discretion in exceptional circumstances to determine that awards vest

at an earlier date and/or to disapply time pro-rating. Except in exceptional

circumstances, the post-vesting holding period continues to apply post

cessation of employment. On a change of control, LTIP awards will vest

with performance being determined at that time and awards will be

pro-rated to the date of the change of control. The Committee retains

discretion to reduce the proration including to zero.

Pro-rata bonus may be paid to ‘good leavers’ for the period of active service

based on performance tested at the usual time. In all cases, performance

targets would apply.

Annual bonus shares are owned from the day of acquisition, and are not

forfeited on cessation of employment. The holding period (except in

exceptional circumstances) continues post cessation and clawback applies.

Legal fees, or a contribution towards them, in connection with any

settlement agreement and other reasonable relevant costs associated with

termination including outplacement consultancy fees may be paid if this is

considered appropriate. The Company may also make a statutory payment

and a payment to settle any claim or potential claim in relation to the

termination of employment.

RECRUITMENT POLICY

The remuneration package for a new Executive Director (including those

promoted internally) would be set in accordance with the terms of the

Company’s prevailing approved Remuneration Policy at the time of

appointment, with annual bonus maximum opportunity of 100% of salary

and LTIP award level maximum 200% of salary.

The Committee may, in exceptional circumstances, grant an award under a

different structure in order to facilitate the buyout of outstanding awards

held by an individual on recruitment. Any buyout award would be limited to

what the Committee considers to be a fair estimate of the value of awards

foregone when leaving the former employer and will be structured, to the

extent possible, to take into account other key terms (such as vesting

schedule, delivery vehicle and performance targets) of the awards which

are being replaced.

For an internal Executive Director appointment, any variable pay element

awarded in respect of the prior role may be allowed to pay out according to

its terms, adjusted as relevant to take into account the appointment. In

addition, any other ongoing remuneration obligations existing prior to

appointment may continue. For external and internal appointments, the

Committee may agree that the Company will meet certain relocation and

other incidental expenses as appropriate.

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.

CHAIRMAN AND NON-EXECUTIVE DIRECTORS

The Non-Executive Directors are engaged for fixed terms. The Chairman

has a notice period of three months and the Non-Executive Directors have

a notice period of one month. These appointments are subject to the

Company’s Articles of Association. All Directors submit themselves for

re-election at the Annual General Meeting in accordance with the UK

Corporate Governance Code.

STATEMENT OF CONDITIONS ELSEWHERE IN THE GROUP

The Committee considers pay and employment conditions across the

Company when reviewing the remuneration of the Executive Directors and

other senior employees. In particular, the Committee considers the range

of base pay increases across the Group when reviewing Executive Director

salary increases.

The Committee supports the Board’s initiative to implement a robust

framework for employee engagement and regular communication, and is

building its understanding of pay and benefits at all team member levels in

the Group. During 2022, engagement with our employees has continued as

a focus on their health and wellbeing. The Committee does not currently

engage with employees to explain the alignment of Executive remuneration

to the wider workforce but will consider this during 2023 now the Group

has returned to more normal trading levels. The Committee did not consult

with employees in determining this Policy. The Company does not use

remuneration comparison measurements except to refer to market pay

data where relevant.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

ANNUAL REPORT ON REMUNERATION

STATEMENT OF SHAREHOLDER VOTING AT THE AGM

The following table shows the results of the votes cast by proxy on the

Directors’ Remuneration Report at the Annual General Meeting held on

4May 2022 and the Directors’ Remuneration Policy at the Annual General

Meeting held on 5 May 2021:

Approval of Directors’

Remuneration Report

Approval of Directors’

Remuneration Policy

Company

Total

number

of votes

% of

votes

cast

Total

number

of votes

% of

votes

cast

For 51,974,834 83.08% 51,884,293 82.77%

Against 10,584,787 16.92% 10,800,270 17.23%

Total votes cast 62,559,621 62,684,563

Withheld — 1,138

ENGAGEMENT WITH SHAREHOLDERS

As noted in the “Annual Statement by the Remuneration Committee

Chair”,the Chair engaged with shareholders in April 2022 regarding the

Remuneration Report and the Committee’s approach to determining the

FY21 Annual Bonus Plan pay-out. With the triennial shareholder vote on the

Remuneration Policy due at the 2024 AGM, the Chair will be engaging again

with shareholders during 2024 to seek their feedback on any proposed

changes to the Remuneration Policy and operation of policy for FY24.

DETERMINING EXECUTIVE DIRECTOR REMUNERATION

The Committee considers the appropriateness of the Executive Directors’

remuneration, not only in the context of overall business performance and

environmental, governance and social matters, but also in the context of

wider workforce pay conditions (taking into account workforce policies and

practices as well as the ratio of CEO pay to all-employee pay) and the external

market including peer reviews, to ensure that it is fair and appropriate for the

role, experience of the individual, responsibilities and performance delivered.

Further, the Committee is comfortable, in reviewing the remuneration for

2022, that as explained in the Remuneration Committee Chair’s Annual

Statement, there has been an appropriate link between reward and

performance and that the Policy has operated asintended.

SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED)

The table below sets out the single total figure of remuneration and breakdown for each Director in respect of FY22 and FY21.

Salary/Fees Benefits Pension Total fixedpay Bonus LTIP

Total variable

pay

Total

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

2022

£000

2021

£000

Graham

Blackwell 310 310 — — 9 9 319 319 310 279 568 157 878 436 1,197 755

Antony

Smith 260 260 5 1 10 10 275 271 260 234 476 170 736 404 1,011 675

Adam

Bellamy 110 93 — — — — 110 93 — — — — — — 110 93

Julie

Sneddon 50 50 — — — — 50 50 — — — — — — 50 50

Laura

May 50 33 — — — — 50 33 — — — — — — 50 33

Sangita

Shah 8 — — — — — 8 — — — — — — — 8 —

Christopher

Mills 50 50 — — — — 50 50 — — — — — — 50 50

Total 838 796 5 1 19 19 862 816 570 513 1,044 327 1,614 840 2,476 1,656

1 The LTIP awards that vested in 2021 vested at a share price of £2.55 and a total value of £157k for the CEO and £170k for the CFO and is reflected in the table. This was higher

than the estimated vesting level and three-month average vesting share price disclosed in the prior year’s report. For 2022, the share price on the date of grant of the 2020

LTIP award that will vest in 2023 was £1.99 compared to a share price assumed for the vesting value of £2.43 being the three-month average share price to 1 January 2023 and

reflecting a share price increase of £0.44. This is an estimate of the vesting value, with actual performance of the TSR element being determined in November 2023.

Neither of the two Executive Directors serve on the Board as Executive or Non-Executive Directors of listed or non-listed external companies not related to

the Group, nor have they received remuneration for work from other companies not related to the Group.

ANNUAL BONUS FY22

The FY22 bonus structure provided for a maximum opportunity at 100% of salary and continued to be weighted based on 70% on financial metrics and 30%

on strategic objectives. The performance payment ranges were set taking into account the level of stretch in the targets set and are summarised as follows:

Objective Threshold Target Maximum

Group Adjusted Profit Before Tax 7.0% 17.5% 35%

Free cash flow 7.0% 17.5% 35%

Financial metrics 14.0% 35.0% 70.0%

Estate management & development 3.0% 7. 5% 15%

Development of bespoke app 7.5%

ESG strategy creation and TCFD reporting 7.5%

Strategic objectives 6.0% 15.0% 30.0%

Total bonus pay-out 20.0% 50.0% 100.0%

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

ANNUAL REPORT ON REMUNERATION CONTINUED

Financial metrics

The two financial metrics chosen which combine equally to the 70% pay-out weighting were set and achieved

asfollows:

Threshold Target Maximum Actual

Opportunity

payable

Group Adjusted PBT £14.4m £18.4m £22.4m £26.1m 35% maximum

Free cash flow £16.8m £21.8m £24.8m £27.2m 35% maximum

Bonus pay out % 14.0% 35.0% 70.0% 70% maximum

CEO and CFO strategic objectives

Performance against the strategic objectives is set out below:

Strategic objectives Threshold Target Maximum Scoring

Opportunity

payable

Estate Management &

Development 11 13 15 15 15% of maximum

Development of

bespoke App See below Achieved 7.5% of maximum

ESG strategy creation

and TCFD reporting See below Achieved 7.5% of maximum

Bonus pay-out % 6% 15% 30% 30% of maximum

Estate Management & Development – The Committee determined that it is appropriate to review and score the

elements of the bonus relating to estate management and development together, taking into account that the

elements competed with each other for capital expenditure and management resources.

The Committee also considered the Executive achievement based on ongoing discussions with the Board

throughout the year concerning the agreed imperative of project delivery quality on all refurbishments and new

sites, and delays outside of the Executive team’s control with site acquisitions and new builds in the pipeline (such

as planning permissions and licensing consents for Crewe and Milton Keynes). These delays would have meant that

15 new sites/refurbishment projects would have been completed and hence maximum bonus pay-out be awarded.

In respect of site acquisitions and new builds, the Committee noted the site acquisition at Harlow and subsequent

opening in record time and the new-build opening at Walsall. In addition, the business completed a number of

significant capital projects, including the development and installation of new scoring systems and synthetic lane

overlays, all delivered in tandem with the full refurbishment programme.

Development of bespoke App – Development and delivery of the Tenpin App was a key digital strategic priority for

the business in 2022 as was set as a strategic objective. The target would either be achieved or not and being a key

priority, was given maximum pay-out. This objective was achieved and the 7.5% pay-out was awarded.

ESG strategy creation and TCFD reporting – Management was required to develop and deliver to the Board, a fully

developed ESG strategy including the development and setting up of systems and processes to ensure information

gathering and measurement for forward-looking target setting and disclosure. The target would either be achieved

or not and being a significant new requirement, was given maximum pay-out. This objective was achieved and the

7.5% pay-out was awarded.

FY22 Annual Bonus achievement

Payable as:

Director Basic Achievement Bonus In cash In shares

Graham Blackwell £310,000 100% £310,000 £271,250 £38,750

Antony Smith £260,000 100% £260,000 £227,500 £32,500

£570,000 £570,000 £498,750 £71,250

The Remuneration Policy provides that 25% of the bonus paid over target will be paid in shares subject to a

two-year holding period.

LTIPS GRANTED IN 2022

On 30 March 2022 the Executive Directors were granted LTIP of 150% of salary each as summarised:

Director Position

Number

of shares

subject to

award

Share price

on date of

grant

Face value

of awards

granted

Percentage

vesting at

threshold

performance

Performance

period

Graham

Blackwell

Chief

Executive

Officer 178,161 261p £465,000 25%

3 years to FY24

for EPS

Antony

Smith

Chief

Financial

Officer 149,425 261p £390,000 25%

3 years from date

of grant for TSR

Total awards

granted 327,586

The vesting of awards is determined as to 50% by earnings per share targets and 50% by total shareholder return.

(1) EPS CONDITION

The earnings per share (‘EPS’) condition will be calculated on the results for the year to 29 December 2024 (‘FY24’)

and will apply to 50% of the total number of share awards granted. The proportion of the awards vesting for the EPS

proportion will be based on the following adjusted EPS targets in FY24:

FY24 EPS Percentage of award that vests

Less than 20.50p 0%

20.50p 12.5%

20.50p–23.50p 12.5%–50%

More than 23.50p 50%

Straight-line vesting in between threshold and maximum.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

(2) TSR CONDITION

The total shareholder return (‘TSR’) of the Company will be measured over the period from the date of grant to the

third anniversary of the date of grant relative to a comparator group of companies (set out in the following table)

and this will apply to the remaining 50% of the award.

Young & Co.’s Brewery Restaurant Group Loungers

Marston’s Hollywood Bowl Everyman Media

Fuller Smith & Turner The Gym Group City Pub Group

The Fulham Shore

The extent to which the award will vest in accordance with the TSR condition is tabled as follows:

TSR performance against Comparator Group Companies Percentage of award that vests

Below Median 0%

Median 12.5%

Between Median and Median plus 10% per annum Between 12.5% and 50% on a straight-line basis

Median plus 10% per annum and above 50%

To the extent that any performance condition is not met, the relevant part of the award will lapse. There is no

retesting of performance. Furthermore, the Committee has the discretion to adjust the level of vesting if in all the

circumstances it does not consider it to be appropriate.

PERFORMANCE SHARE PLAN (‘PSP’) (AUDITED)

LTIP awards are granted as nil-cost options. The below table reflects the outstanding Executive Directors’ interests

in LTIPs.

Date of

award

Vesting

date

Awards

as at 26

December

2021 Awarded Exercised

Lapsed

in year*

Awards

as at

1 January

2022

Grant

price

Face

value

of 2022

awards

Antony

Smith 17/05/2019 17/05/2022 133,333 — (66,667) (66,666) — — —

30/11/2020 30/11/2023 195,489 — — — 195,489 £1.99 £389,023

15/10/2021 14/10/2024 144,981 — — — 144,981 £2.74 £397,24 8

30/03/2022 30/03/2025 — 149,425 — — 149,425 £2.61 £390,000

Graham

Blackwell 17/05/2019 17/05/2022 123,333 — (61,667) (61,666) — — —

30/11/2020 30/11/2023 233,083 — — — 233,083 £1.99 £463,835

15/10/2021 14/10/2024 172,862 — — — 172,862 £2.74 £473,642

30/03/2022 30/03/2025 — 178,161 — — 178,161 £2.61 £465,000

* These awards lapsed following review of the relevant performance conditions by the Committee in 2022.

FINAL VESTING OUTCOME FOR LTIPS GRANTED IN 2019

The 2019 LTIPs vested on 17 May 2022. As reflected in the FY21 Annual Report, the EPS targets were not achieved

but the TSR target was expected to be achieved, and the expected value based on expected vesting was estimated

and reported at £69k for the CEO and £74k for the CFO. On 18 May 2022, Graham Blackwell and Antony Smith’s

options vested. The TSR element, which was 50% of the total award, vested in full as set out below. The underpin

for these awards which required the average three-month share price to vesting to exceed the share price on

grantof £2.25 was achieved with an average share price to vesting of £2.51.

Date of

award

Vesting

date

Performance

measure

Awards

as at 26

December

2021

Performance

targets

Actual

performance

Number

awards

vesting

Actual

price on

vesting

Value of

award

Graham

Blackwell 17/05/2019 17/05/2022 EPS 61,666

25.7p to

27.3p 2.7p

vesting — —

TSR 61,667

Median to

upper

quartile*

Above

upper

quartile 61,667 £2.55 £157,251

Antony

Smith 17/05/2019 17/05/2022 EPS 66,666

25.7p to

27.3p 2.7p

vesting — —

TSR 66,667

Median to

upper

quartile*

Above

upper

quartile 66,667 £2.55 £170,001

* The peer group set out below applies to the 2019 LTIP award. A new peer group has been used for awards from 2020 going forward.

Britvic Goals Soccer Pets at Home

Cineworld Hollywood Bowl Group Photo-me

Easy Hotels Pendragon Revolution Bars

Fuller Smith & Turner The Gym Group STV Group

LTIPS GRANTED IN 2020 WITH PERFORMANCE PERIOD ENDING IN FY22

On 30 November 2020, LTIP awards were granted to Graham Blackwell and Antony Smith. The awards were all

granted at a face value of 150% of salary based on a share price of £1.99. The vesting of awards is conditional upon

the achievement of two performance conditions, being EPS which applies to 50% of the award and is measured

over three financial years to FY22 and TSR which applies to the other 50% measured to the third anniversary of the

date of grant.

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

(1) EPS CONDITION

The proportion of the awards vesting for the EPS proportion are based on the following adjusted EPS targets in FY22:

2020 scheme EPS target in FY22

Percentage of

award that vests

Less than 17.0p 0%

17.0p 12.5%

17.0p–23.0p 12.5%–50%

More than 23.0p 50%

The maximum target for adjusted EPS was set at 23.0p. The actual performance was an adjusted EPS of 29.3p

(audited); therefore the whole EPS part of the award will vest.

(2) TSR CONDITION

The TSR will be calculated against the following comparator group of companies over the last 30 days of the

performance period to determine if the performance condition has been met.

Young & Co.’s Brewery Restaurant Group Loungers

Marston’s Hollywood Bowl Everyman Media

Fuller Smith & Turner The Gym Group City Pub Group

The Fulham Shore

The extent to which the award will vest in accordance with the TSR condition is tabled as follows:

TSR performance against Comparator Group Companies Percentage of award that vests

Below Median 0%

Median 12.5%

Between Median and Median plus 10% per annum Between 12.5% and 50% on a straight-line basis

Median plus 10% per annum and above 50%

Based on an assessment of the Company TSR performance against the comparator group to 31 January 2023,

100% of the award is expected to vest. Actual vesting will be determined at the end of the performance period and

will be set out in the 2023 Remuneration Report.

The below table summarises the 2020 scheme awards, performance measures, targets and performance and the

expected value of the awards as explained before. For awards to vest the average share price for the three months

prior to vesting must exceed the share price on the date of grant of £1.99.

Date of

award

Vesting

date

Performance

measure

Awards

as at 1

January

2023

Performance

targets

Actual

performance

Number

of awards

vesting

Three-

month

average

price

Value of

Award

Graham

Blackwell

30/11/2020 30/11/2023 EPS 116,541

As per

above 29.3p 116,541 £2.43 £283,195

TSR 116,542

As per

above 100% 116,542 £2.43 £283,197

Antony

Smith

30/11/2020 30/11/2023 EPS 97,744

As per

above 29.3p 97,744 £2.43 £237,518

TSR 97,745

As per

above 100% 97,745 £2.43 £237,520

PERFORMANCE CONDITIONS FOR FY21 LTIP AWARD

The performance conditions for the LTIP awards granted on 15 October 2021 are set out below.

EPS CONDITION

The award is based on 50% of adjusted earnings per share (‘EPS’) targets as set out below and measured in FY23:

2021 scheme Percentage of award that vests

Less than 17.5p 0%

17.5p 12.5%

17.5p–20.5p 12.5%–50%

More than 20.5p 50%

Straight-line vesting in between threshold and maximum.

TSR CONDITION

The other 50% of the award is based on relative TSR which will be calculated against the same comparator group

set out for the 2020 award for the one month ending on the third anniversary of the date of grant. The extent to

which the award would vest in accordance with the TSR condition is tabled as follows:

TSR performance against Comparator Group Companies Percentage of award that vests

Below Median 0%

Median 12.5%

Between Median and Median plus 10% per annum Between 12.5% and 50% on a straight-line basis

Median plus 10% per annum and above 50%

The TSR peer group is the same group that applies to the FY20 and FY22 awards as set out above.

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

OPERATION OF REMUNERATION POLICY IN 2023

EXECUTIVE DIRECTORS’ SALARIES

Chief Executive Officer: £312,300

Chief Financial Officer: £262,300

The salaries were increased by £2,300 for 2023.

NON-EXECUTIVE DIRECTORS’ FEES

The fees for the Non-Executive Chairman and Non-Executive Directors have been increased for 2023 by £2,300.

2023 2022

Non-Executive Chairman £112,300 £110,000

Non-Executive Directors £52,300 £50,000

Senior Independent Director £5,000 £5,000

BENEFITS AND PENSION

Benefits remain in line with those provided in FY22.

ANNUAL BONUS PLAN

The Executive Directors’ maximum annual bonus opportunity remains at 100% of salary and continues to be

based70% on financial metrics and 30% on strategic objectives. The Remuneration Committee considers that the

detailed performance targets for the FY23 annual bonus plan are commercially sensitive and that disclosing the

specific targets in advance would not be in shareholder interests. The set targets, the actual performance achieved,

and the awards made will be disclosed in the FY23 Remuneration Report so that shareholders can fully assess the

basis for any payouts under the annual bonus plan. A high level review of the metrics is summarised below:

◆ Financial metrics – the two financial metrics set are Group Adjusted Profit Before Tax and Free Cashflow as per

prior year. Both measures have equal weighting.

◆ Strategic objectives – Strategic objectives have been set in respect of Estate Management & Development and

achievement of ESG targets.

PERFORMANCE SHARE AWARDS

It is the Committee’s intention to grant the Executive Directors performance share awards at the same level as

FY22, 150% of salary, although award levels will be confirmed at the time of grant taking into account the prevailing

share price. Awards will continue to be based as to 50% on EPS and 50% TSR.

Set out in the table below are the TSR and EPS targets for the awards.

2023 scheme Percentage of award that vests

Less than 36.0p 0%

36.0p 12.5%

36.0p to 42.0p 12.5%–50%

More than 42.0p 50%

TSR CONDITION

The other 50% of the award is based on relative TSR which will be calculated against the same comparator group

set out for the 2022 award for the one month ending on the third anniversary of the date of grant. The extent to

which the award would vest in accordance with the TSR condition is tabled as follows:

TSR performance against Comparator Group Companies Percentage of award that vests

Below Median 0%

Median 12.5%

Between Median and Median plus 10% per annum Between 12.5% and 50% on a straight-line basis

Median plus 10% per annum and above 50%

PAYMENT UNDER DIFFERENT PERFORMANCE SCENARIOS

Under the Directors’ Remuneration Reporting Regulations, we are required to show a bar-chart indicating the level

of remuneration which would be received by the Executive Directors in 2022 under different payment scenarios.

The charts provide an illustration of the proportion of total remuneration made up of each component of

remuneration and the value of each component. The assumptions noted for target performance in the graphs

following are provided for illustration purposes only. Three scenarios have been illustrated for each Executive

Director:

CEO – £000

Fixed Pay

Target Pay

Maximum Pay (incl share price growth)

Maximum Pay (excl share price growth)

100%

47%

26%

31%

22%

24%

29%

31%

33% 17%

40%

£322

£687

£1,263

£1,052

■

Fixed

■

Short-term incentives (annual bonus)

■

LTIPs

■

LTIP with 50% share price growth

Fixed

Short-term

incentives

(annual bonus) LTIPs

LTIPs with

50% share

price growth

Fixed pay £322

Target pay £687 22% 31%

Maximum pay (excl share price growth) £1,052 29% 40%

Maximum pay (incl share price growth) £1,263 24% 33% 17%

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

CFO – £000

Fixed Pay

Target Pay

Maximum Pay (incl share price growth)

Maximum Pay (excl share price growth)

100%

47%

26%

31%

22%

24%

29%

31%

33% 17%

40%

£277

£584

£1,067

£890

■

Fixed

■

Short-term incentives (annual bonus)

■

LTIPs

■

LTIP with 50% share price growth

Fixed

Short-term

incentives

(annual bonus) LTIPs

LTIPs with

50% share

price growth

Fixed pay £277

Target pay £584 22% 31%

Maximum pay (excl share price growth) £890 29% 40%

Maximum pay (incl share price growth) £1,067 24% 33% 17%

◆ Fixed pay – consists of salary, benefits and pension contributions

◆ Target pay – is fixed pay plus 50% of annual bonus (50% of salary) and 50% of LTIP award (75% of salary)

◆ Maximum pay – is fixed remuneration, 100% annual bonus (100% of salary) and 100% of the LTIP award (150%

of salary for the CEO and CFO) with 50% of share price growth for the LTIP award also illustrated

COMPARISON OF OVERALL PERFORMANCE

The below table reflects the performance of an investment in £100 in the Group against the same investment in the

FTSE All Share on a monthly basis since the date of listing in April 2017 until the financial year ended on 1 January

2023. The FTSE All Share has been chosen as the comparator index as the Company has been a constituent of the

index since listing.

TEG Share Price performance versus FTSE All Share

CHIEF EXECUTIVE OFFICER HISTORIC REMUNERATION

The table below sets out the total remuneration delivered to the Chief Executive Officer since the Company listed.

Year

Chief Executive Officer

single figure of total

remuneration

£000

Annual bonus payout

against maximum

opportunity

Long-term incentive vesting

rates against maximum

opportunity

2022 1,197 100% 100%

2021* 755 90% 50%

2020 371 0% 21.9%

2019 349 9% N/A

2018 330 0% N/A

2017 206 0% N/A

* The 2021 amount has changed from £668k to £755k as the actual value of the LTIPs that vested was £87k higher, with the full

50% of the TSR condition vesting.

2022 LTIP vesting is based on the full 50% for the EPS condition vesting and assumptions on likely vesting of TSR

element. Actual vesting percentage will be set out in the 2023 Remuneration Report.

CHIEF EXECUTIVE OFFICER TO EMPLOYEE RATIOS

Year 25th percentile 50th percentile 75th percentile

2022 91 65 63

2021 52 38 36

2020 58 31 20

230.0

190.0

150.0

110.0

70.0

18.4.2018

18.12.2022

18.6.2018

18.10.2018

18.12.2018

18.2.2019

18.4.2019

18.6.2019

18.8.2019

18.10.2019

18.12.2019

18.2.2020

18.4.2020

18.6.2020

18.8.2020

18.10.2020

18.12.2020

18.2.2021

18.4.2021

18.6.2021

18.8.2021

18.10.2021

18.12.2021

18.2.2022

18.4.2022

18.6.2022

18.8.2022

18.10.2022

18.8.2018

TEG.L ASX.L

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Total UK employee pay and benefits figures used to calculate the 2022 CEO pay ratio is set out in the table below:

£000 CEO 25th percentile 50th percentile 75th percentile

Salary 310 13 18 18

Total pay 1,197 13 18 19

The table above sets out the CEO pay ratio for 2020 to 2022. The ratios have been calculated in accordance with

Option A, as this is the most accurate method of calculation. The CEO pay is per the single total figure of

remuneration for 2022. The pay for the CEO is compared to the pay of our UK employees at the 25th, 50th and

75thpercentile, calculated based on full-time equivalent base pay data as at 1 January 2023. 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 whole financial

year.Employees on maternity are included pro-rata for their FTE salary, benefits and short-term incentives.

No other calculation adjustments or assumptions have been made. There is an increase in the ratio at the 50th

and75th percentiles from 2021 to 2022 because the CEO has received an annual bonus as have other eligible

employees, and an estimated LTIP vesting that is higher than in 2021 with the CEO’s variable pay potential being

higher than other eligible employees reflecting his role in the business and balance between fixed and variable pay.

The Remuneration Committee is satisfied the median pay ratio is consistent with the pay, reward and progression

policies of the Company’s employees.

The relative importance of remuneration in relation to other significant uses of the Group’s cash is set out below:

change

1 January

2023

£000

26 December

2021

£000

Total staff costs 57.0% 28,588 18,208

Dividends paid 100% 2,055 —

PERCENTAGE CHANGE IN DIRECTORS’ REMUNERATION

Average percentage change

2021-2022

Average percentage change

2020-2021

Average percentage change

2019-2020

Salary Benefits

Annual

Bonus Salary Benefits

Annual

Bonus Salary Benefits

Annual

Bonus

Adam Bellamy

17.9% 0.0% 0.0% 82.4% 0.0% 0.0% 1.7% 0.0% 0.0%

Graham Blackwell 0.0% 0.0% 11.1% 41.6% 0.0% 100.0% 20.9% 100.0% (100.0%)

Antony Smith 0.0% 351.0% 11.1% 22.1% 0.0% 100.0% 34.9% 111.7% (100.0%)

Julie Sneddon 0.0% 0.0% 0.0% 4.2% 0.0% 0.0% (3.3%) 0.0% 0.0%

Laura May

50.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Sangita Shah

100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Christopher Mills 0.0% 0.0% 0.0% 4.2% 0.0% 0.0% (3.3%) 0.0% 0.0%

Average

employees 29.0% 54.2% 31.8% 22.9% 17.2% 100.0% (5.5%) (15.0%) (100.0%)

1 Adam Bellamy was appointed as Chairman on 6 May 2021 and a full year at his new fee reflects the increase.

2 Laura May was appointed on 6 May 2021 and a full year reflects the increase.

3 Sangita Shah was appointed on 1 November 2022 and no prior year reflects the increase.

PAYMENTS TO PAST DIRECTORS/PAYMENTS FOR LOSS OF OFFICE (AUDITED)

There were no Director resignations in the year and there have been no payments to past Directors for loss

ofoffice.

STATEMENT OF DIRECTORS’ SHAREHOLDINGS AND SHARE INTERESTS AS AT 1 JANUARY

2023 (AUDITED)

The number of shares of the Company in which Directors, and their connected persons, had a beneficial interest

and details of long-term incentive interests as at 1 January 2023 are set out in the table below:

Director

Shares held at

1 January 2023

Unvested LTIP interests with

performance conditions

Graham Blackwell 80,225 584,106

Antony Smith 86,180 489,895

Christopher Mills

10,796,727 —

Julie Sneddon 80,000 —

Adam Bellamy 40,000 —

Laura May — —

Sangita Shah — —

1 The number of ordinary shares shown as held by Christopher Mills includes ordinary shares held by certain funds of which

Harwood Capital LLP is the discretionary fund manager.

Christopher Mills disposed of 14,227 shares in January 2023, but there have been no further changes in these

holdings since then until the date this report has been approved.

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

SHAREHOLDING REQUIREMENT

The Executive Directors are required to build up a shareholding equivalent to 200% of base salary over five years

from the later of date of appointment and the approval of the new policy. The shareholding requirement has not yet

been met by either Executive Director but will increase in FY23 as 25% of the FY22 annual bonus in excess of target

is paid out in shares along with the 2020 LTIP award of shares.

Director

Number of shares held

at 1January 2023

Shares held

as a % of salary

Graham Blackwell 80,225 66

Antony Smith 86,180 84

1. Calculated on basis of three-month average share price to 1 January 2023, using salaries at 1 January 2023.

ADVISERS TO THE REMUNERATION COMMITTEE

Korn Ferry have continued to provide independent advice to the Remuneration Committee, providing advice to the

Committee as required. Korn Ferry does not provide any other services to the Company, and the Committee is

comfortable that its advice is independent and objective. Fees incurred in respect of advice provided to the

Committee by Korn Ferry during the year amounted to £12,226.

The Remuneration Report was approved by the Board and signed on its behalf by:

JULIE SNEDDON

CHAIR OF THE REMUNERATION COMMITTEE

22 MARCH 2023

ANNUAL REPORT ON REMUNERATION CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REPORT

The Directors have pleasure in presenting their report and the audited financial statements for the Group for the

53weeks ended 1 January 2023.

Ten Entertainment Group plc (the ‘Company’ or the ‘parent company’) is a public limited company. The

consolidated financial statements of the Company for the 53-week period ended 1 January 2023 comprise the

Company and its subsidiaries (together referred to as the ‘Group’).

Additional information which is incorporated by reference into this Directors’ Report, including information required

in accordance with the Companies Act 2006 and the Listing Rule 9.8.4R of the UK Financial Conduct Authority’s

Listing Rules, and which includes information on future business developments, can be located as follows:

◆ the Group’s Strategic Report is set out on pages 2 to 44;

◆ future business developments on page 4 and pages 5 to 8;

◆ the Chairman’s statement on page 4;

◆ the Chief Executive Officer’s statement on pages 5 to 8;

◆ a description of the business structure, model and strategy on pages 10 to 16;

◆ the key performance indicators on pages 18 to 19;

◆ the discussion of risk management, uncertainties and the longer-term viability statement on pages 39 to 44;

◆ the Financial Review on pages 33 to 38;

◆ the ESG Report on pages 20 to 29, including details of greenhouse gas emissions;

◆ details of long-term incentive schemes included in the Remuneration Report on pages 57 to 71; and

◆ the Statement of Directors’ responsibilities on page 75

Together, this information is intended to provide a fair, balanced and understandable analysis of the development

and performance of the Group’s business during the year, and its position at the end of the year, its strategy, likely

developments and any principal risks and uncertainties associated with the Group’s business.

Details of the Group’s policy on addressing financial risks and details about financial instruments are shown in

Note23 to the Group financial statements on pages 103 to 104. The sections of the Annual Report dealing with

corporate governance, the reports of the Nomination Committee and Audit Committee and the Directors’

Remuneration Report set out on pages 52 to 71 inclusive are hereby incorporated by reference into this Directors’

Report. The Directors’ remuneration is tabled by Director by category on page 64. For the purposes of compliance

with the Disclosure Guidance and Transparency Rules (‘DTR’) 4.1.5R(2) and DTR 4.1.8R, the required content of the

‘Management Report’ can be found in the Strategic Report and Directors’ Report, including the sections of the

financial statements and Annual Report incorporated by reference.

STAKEHOLDER ENGAGEMENT

Details of how the Directors have engaged with employees and other stakeholders, and had regard to the interests

of employees and the need to foster the Company’s business relationships with suppliers, customers and others,

and the effect of that regard, including on the principal decisions taken by the Company during the financial year,

are set out in the statement regarding s172(1) of the Companies Act 2006 on pages 30 to 32.

DIRECTORS

The Directors of the Company who were in office during the year and up to the date of signing the financial

statements are:

Directors

Graham Blackwell

Antony Smith

Adam Bellamy

Laura May

Christopher Mills

Julie Sneddon

Sangita Shah Joined 1 November 2022

The roles and biographies of the Directors as at the date of this report are set out on page 46 to 47. The

appointment and replacement of Directors is governed by the Articles of the Company, the UK Corporate

Governance Code, the Companies Act 2006 and related legislation. Subject to the Articles of Association,

theCompanies Act 2006 and any directions given by special resolution, the business of the Company is

managedby the Board, which may exercise all the powers of the Company.

DIRECTORS’ INTERESTS

The number of ordinary shares of the Company in which the Directors were beneficially interested as at 1 January

2023 are set out in the Directors’ Remuneration Report on page 70.

Other than these ordinary shares acquired, there have not been any changes in the interests of the Directors,

including share options and awards, in the share capital of the Company between the year end and 21 March 2023.

None of the Directors have a beneficial interest in the shares of any subsidiary. In line with the Companies Act 2006,

the Board has clear procedures for Directors to formally disclose any actual or potential conflicts to the whole Board

for authorisation as necessary. All new conflicts are required to be disclosed as and when they arise. There is an

annual review of conflicts disclosed and authorisations given. The register of Directors’ conflicts is maintained by

the Company Secretary.

DIRECTORS’ INDEMNITIES

The Company’s Articles 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.

The Directors are all covered by a Directors’ and Officers’ liability insurance policy maintained by the Company with

a qualifying third-party indemnity insurance company which was in force during the financial year and also at the

date of approval of the financial statements.

RESULTS AND DIVIDEND

The results for the year are set out in the consolidated statement of comprehensive income on page 81 and

discussed in greater detail in the Financial Review on pages 33 to 38. The Directors recommend the payment of a

final ordinary dividend of 7p per ordinary share (2021: Did not recommend).

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REPORT CONTINUED

AMENDMENT TO THE COMPANY’S ARTICLES OF ASSOCIATION

The Company may alter its Articles of Association by special resolution passed at a general meeting of shareholders.

SHARE CAPITAL

As at 1 January 2023, the Company’s authorised share capital was £684,961 (2021: £683,678) divided into a single

class of 68,496,118 (2021: 68,367,784) ordinary shares of 1p each. Details of the Company’s share capital, including

changes during the year being the allotment of shares after the exercise of share options in May 2022, are set out in

Note 18 to the financial statements.

All issued ordinary shares are fully paid up. The ordinary shares are listed on the London Stock Exchange and can be

held in certificated or uncertificated form. Holders of ordinary shares are entitled to attend and speak at general

meetings of the Company, to appoint one or more proxies and, if they are corporations, corporate representatives

who are entitled to attend general meetings and to exercise voting rights. On a show of hands at a general meeting

of the Company, every holder of ordinary shares present in person or by proxy and entitled to vote shall have one

vote, unless the proxy is appointed by more than one shareholder and has been instructed by one or more

shareholders to vote for the resolution and by one or more shareholders to vote against the resolution, in which

case the proxy has one vote for and one vote against. This reflects the position in the Shareholders’ Rights

Regulations 2009 which amended the Companies Act 2006. On a poll, every member present in person or by proxy

and entitled to vote shall have one vote for every ordinary share held. None of the ordinary shares carry any special

voting rights with regard to control of the Company.

The Articles specify deadlines for exercising voting rights and appointing a proxy or proxies to vote in relation to

resolutions to be passed at the AGM. The relevant proxy votes are counted and the number for, against or withheld in

relation to each resolution are announced at the AGM and published on the Company’s website after the meeting.

There are no restrictions on the transfer of ordinary shares in the Company other than certain restrictions that may

be imposed from time to time by the Articles, law or regulation and pursuant to the Listing Rules whereby certain

Directors, officers and employees require approval to deal in ordinary shares of the Company. The Group is not

aware of any other agreements between holders of securities that may result in restrictions on the transfer of

ordinary shares.

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 Act. Any shares which have been bought back may be held as treasury shares or cancelled immediately upon

completion of the purchase.

Immediately prior to, but conditional upon Admission, the Company was generally and unconditionally authorised

to make market purchases (within the meaning of Section 693(4) of the Companies Act) of its shares provided that

in doing so it could not purchase more than 3,418,389 shares in aggregate, pays not less than 1p (excluding

expenses) per share and pays a price per share that is not more (excluding expenses) per share than the higher of:

◆ 105% of the average of the middle market quotations for a share as derived from the London Stock Exchange

Daily Official List for the five business days immediately before the day on which it purchases that share; and

◆ The amount equal to the higher of the price of the last independent trade of an ordinary share and the highest

current independent bid for an ordinary share as derived from the London Stock Exchange trading services SETS.

This authority shall expire at the conclusion of the next AGM of the Company or within 15 months from the date of

passing of the resolution (whichever is the earlier), but the Company may, if it agrees to purchase shares under this

authority before it expires, complete the purchase wholly or partly after this authority expires. The Company has

not repurchased any of its ordinary shares under this authority.

EMPLOYMENT POLICIES

The Group is committed to the principle of equal opportunity in employment. The Group recruits and selects

applicants for employment based solely on a person’s qualifications and suitability for the position, whilst bearing in

mind equality and diversity. It is the Group’s policy to recruit the most capable person available for each position.

The Group recognises the need to treat all employees honestly and fairly. The Group is committed to ensuring that

its employees feel respected and valued and are able to fulfil their potential and recognises that the success of the

business relies on their skill and dedication.

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the

applicant concerned. In the event of members of staff becoming disabled, efforts are 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 disabled persons should as far as possible be identical with that

of other employees.

The Group attaches importance to good communications and relations with employees. Information that is or may

be relevant to employees in the performance of their duties is circulated to them on a regular basis, or immediately

if it requires their immediate attention. There is regular consultation with employees through meetings or other

lines of communication, so that their views are known and can be taken into account in making decisions on

matters that will or may affect them. Employee participation in their bowling venue’s performance is encouraged

through various bonus and incentive schemes, and there is regular communication with all employees on the

performance of their bowling venue or central function and on the financial and economic factors affecting the

overall performance of the Group.

For more information on the Company’s employment practices, please see pages 27 to 28, and for the policy on

remuneration and loss of office payments, please see pages 60 to 63.

SUBSTANTIAL SHAREHOLDINGS

As at 1 January 2023, the Company had been notified, in accordance with the FCA’s Disclosure Guidance and

Transparency Rules, of the following holdings of voting rights attaching to the Company’s shares:

Shareholder

Number

of shares

% of total voting

rights as at

1January2023

North Atlantic Smaller Companies Investment Trust plc* 10,000,000 14.60%

Gresham House Asset Management 8,386,648 12.24%

Slater Investments 8,320,053 12.15%

Fidelity International 6,832,144 9.97%

Fidelity Management & Research 6,818,911 9.96%

BlackRock, Inc. 6,233,812 9.10%

Otus Capital Management 5,814,287 8.49%

Chelverton Asset Management 2,650,000 3.87%

Allianz Global Investors 2,568,345 3.75%

* These are funds managed by Harwood Capital LLP.

There have been no further notifications of any changes to these interests between 1 January 2023 and

21March2023.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

DIRECTORS’ REPORT CONTINUED

AGM

The notice convening the AGM to be held on 4 May 2023 at 6 Stratton Street, London, W1J 8LD, is contained in

aseparate shareholder circular. Full details of all resolutions to be proposed are provided in that document. The

Directors consider that all of the resolutions set out in the Notice of AGM are in the best interests of the Company

and its shareholders as a whole. The Directors will be voting in favour of them and unanimously recommend that

shareholders vote in favour of each of them.

SIGNIFICANT AGREEMENTS AND CHANGE OF CONTROL PROVISIONS

The Group judges that the only significant agreements in relation to its business are its Group banking arrangements

with the Royal Bank of Scotland plc and gaming machines contracts with Bandai Namco Europe Limited.

The Group’s gaming machines contracts do not terminate on a change of control. The Group does not have

agreements with any Director or employee that would provide compensation for loss of office or employment

resulting from a takeover, except that provisions of the Group’s Performance Share Plan may cause options and

awards granted to Directors to vest on a change of control.

The Group’s banking arrangements do contain change of control provisions which, if triggered, could limit future

utilisations, require the repayment of existing utilisations or lead to a renegotiation of terms.

RELATIONSHIP AGREEMENT

In accordance with the disclosures required by LR 9.8.4 sub-paragraph (14), the Group is required to make a

statement about any agreements entered in accordance with LR 9.2.2A. On 12 April 2017, the Company, the

Harwood Shareholders, Harwood (as the discretionary investment manager of the Harwood Shareholders), and

Numis (as Sole Sponsor and Financial Adviser) entered into a relationship agreement, the principal purpose of which

is to ensure that the Company is capable of carrying on business independently at all times.

Under the terms of the relationship agreement, the Harwood Shareholders each undertake (and undertake to

procure that each of their associates shall procure insofar as they are able to do so) that:

◆ any transaction, arrangement or contract entered into between the Harwood Shareholders (or any of the

Harwood Shareholders’ associates or their nominees) and the Company will be conducted on an arm’s length

basis and normal commercial terms; and

◆ amongst other things, neither the Harwood Shareholders nor any of their associates or nominees: (i) will take

any action that would have the effect of preventing the Company from complying with its obligations under the

Listing Rules; or (ii) will propose or procure the proposal of a shareholder resolution which is intended or appears

to be intended to circumvent the proper application of the Listing Rules.

Harwood, as the discretionary investment manager of Oryx and Harwood Capital Nominees, has also undertaken to

procure that Oryx and Harwood Capital Nominees will comply with the undertakings listed above.

The relationship agreement will continue in effect until the earlier of the aggregate voting rights of the Harwood

Shareholders (whether held directly or indirectly through the Harwood Shareholders’ associates and/or their

nominees) are less than 10% or the shares are no longer admitted to the premium listing segment of the Official

List and to trading on the Main Market of the London Stock Exchange.

The Company confirms that it has complied with its obligations under the Relationship Agreement during the

financial year under review, and that so far as it is aware, all other parties to that agreement have complied with it.

POLITICAL DONATIONS

The Company made no political donations in the year.

KEY PERFORMANCE INDICATORS (‘KPIS’)

Details of the Group’s KPIs can be found on pages 18 to 19.

INDEPENDENT AUDITORS

PwC have signified their willingness to continue in office as auditors to the Company, and the Group is satisfied that

PwC are independent and there are adequate safeguards in place to safeguard their objectivity.

DIRECTORS’ STATEMENT OF DISCLOSURE OF INFORMATION TO AUDITORS

Having made the requisite enquiries, the Directors in office at the date of these financial statements and Annual

Report have each confirmed that, so far as they are aware, there is no relevant audit information of which the

Group’s and Company’s auditors are unaware and each Director has taken all the steps he/she ought to have taken

as a Director to make himself/herself aware of any relevant audit information and to establish that the Group’s and

Company’s auditors are aware of that information.

GOING CONCERN

The financial statements are prepared on a going concern basis, which the Directors believe to be appropriate

based on the review carried out and explained in the Long Term Viability Statement on pages 43 to 44.

CAUTIONARY STATEMENT

These financial statements and Annual Report contain forward-looking statements. These forward-looking

statements are not guarantees of future performance; rather, they are based on current views and assumptions as

at the date of these financial statements and Annual Report and are made by the Directors in good faith based on

the information available to them at the time of their approval of this report. These statements should be treated

with caution due to the inherent risks and uncertainties underlying any such forward-looking information. The

Group undertakes no obligation to update these forward-looking statements.

By order of the Board

ANTONY SMITH

COMPANY SECRETARY

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with

applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the

Directors have prepared the Group and the Company financial statements in accordance with UK-adopted

international accounting standards. Under company law, 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 Company and of

the profit or loss of the Group for that period. In preparing the financial statements, the Directors are required to:

◆ select suitable accounting policies and then apply them consistently;

◆ state whether applicable UK-adopted international accounting standards have been followed, subject to any

material departures disclosed and explained in the financial statements;

◆ make judgements and accounting estimates that are reasonable and prudent; and

◆ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group

and Company will continue in business.

The Directors are also responsible for safeguarding the assets of the Group and Company, and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the

Group and Company’s transactions, and disclose with reasonable accuracy at any time the financial position of the

Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration

Report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the

United Kingdom governing the preparation and dissemination of financial statements may differ from legislation

in other jurisdictions.

DIRECTORS’ CONFIRMATIONS

The Directors 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 and Company’s

position and performance, business model and strategy. Each of the Directors, whose names and functions are

listed in the Corporate Governance Report, confirm that, to the best of their knowledge:

◆ the Group and Company financial statements, which have been prepared in accordance with UK-adopted

international accounting standards, give a true and fair view of the assets, liabilities and financial position of the

Group and Company, and of the profit of the Group; and

◆ the Directors’ Report includes a fair review of the development and performance of the business and the

position of the Group and Company, together with a description of the principal risks and uncertainties that

itfaces.

In the case of each Director in office at the date the Directors’ Report is approved:

◆ so far as the Director is aware, there is no relevant audit information of which the Group and Company’s auditors

are unaware; and

◆ they have taken all the steps that they ought to have taken as a Director in order to make themselves aware of any

relevant audit information and to establish that the Group and Company’s auditors are aware of that information.

By order of the Board

GRAHAM BLACKWELL

CHIEF EXECUTIVE OFFICER

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Report on the audit of the financial statements

Opinion

In our opinion, Ten Entertainment Group plc’s Group financial statements and Company financial statements (the

“financial statements”):

◆ give a true and fair view of the state of the Group’s and of the Company’s affairs as at 1 January 2023 and of the

Group’s profit and the Group’s and Company’s cash flows for the 53 week period then ended;

◆ have been properly prepared in accordance with UK-adopted international accounting standards as applied in

accordance with the provisions of the Companies Act 2006; and

◆ have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Accounts 2022 (the “Annual

Report”), which comprise: the Consolidated and Company Statements of Financial Position as at 1 January 2023;

the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Cash Flows,

and the Consolidated and Company Statements of Changes in Equity for the period then ended; the Statement of

Accounting Policies; and the notes to the financial statements.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable

law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the

financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Independence

We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest

entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard

were not provided.

Other than those disclosed in Note 5, we have provided no non-audit services to the Company or its controlled

undertakings in the period under audit.

Our audit approach

Context

Ten Entertainment Group plc operates under one main component, Tenpin Limited, which is a UK based company.

There are thirteen other UK based subsidiaries, of which two are small trading entities, two are holding entities and

the remaining are dormant entities.

Overview

Audit scope

◆ We performed a full scope audit over Tenpin Limited, Quattroleisure Limited and the Company, whilst

performing audit procedures over specific balances within certain other statutory entities based on their overall

size and values of their specific financial statement line items. Our audit scoping gave us coverage of 97% of

Group’s revenue and 96% of Group’s adjusted profit before tax.

Key audit matters

◆ Goodwill and site asset impairment (Group)

◆ Carrying value of investments (Company)

Materiality

◆ Overall Group materiality: £1,280,000 (2021: £652,000) based on 5% of the Group’s adjusted profit before tax.

◆ Overall Company materiality: £398,000 (2021: £438,000) based on 1% of the total assets.

◆ Performance materiality: £960,000 (2021: £489,000) (Group) and £298,500 (2021: £328,500) (Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the

financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the

audit of the financial statements of the current period and include the most significant assessed risks of material

misstatement (whether or not due to fraud) identified by the auditors, 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. These matters, and any comments we make on the results of our procedures thereon, were addressed in

the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

INDEPENDENT AUDITORS’ REPORT

to the members of Ten Entertainment Group plc

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Carrying value of investments (Company) is a new key audit matter this year. Otherwise, the key audit matters

below are consistent with last year.

Key audit matter How our audit addressed the key audit matter

Goodwill and site asset impairment (Group)

Refer to notes 10, 13 and 14 of the financial

statements

At 1 January 2023 the Group had goodwill of

£29.7m (2021: £29.4m) and site assets comprising

right of use assets of £171.7m (2021: £167.3m)

and property, plant and equipment of £57.2m

(2021:£39.5m).

The Group operates in the leisure market and is

exposed to fluctuations in consumer discretionary

spending as well as the wider economy.

As required by accounting standards, as at

1 January 2023, management performed an

impairment assessment for goodwill and at the

same time identified indicators of an impairment

reversal for site assets and as a result undertook

a full assessment to determine the recoverable

amount for site assets.

Management considers each site to be a

cash-generating unit (CGU) and performed

the impairment assessment using discounted

cash flows. We focussed on this area as the

determination of whether an impairment charge

was necessary involved significant estimates

about the future results of each site and the

weighted average cost of capital used to discount

these forecasts. Management’s impairment

assessment also takes into account the impact of

climate change.

Goodwill is not allocated to individual CGUs

as management considers that the synergies

arising from each acquisition benefit the Group

as a whole rather than individual sites and

management monitors goodwill in aggregate

for internal purposes. Therefore, for goodwill

impairment testing, the CGUs are aggregated into

a single group.

We obtained management’s models for determining the

recoverable amount as at 1 January 2023 and checked the

mathematical accuracy and integrity.

We agreed management’s forecast to the latest Board

approved strategic plan. We considered a number of external

market forecasts and analyst reports assessing UK economic

and industry growth as this is a key driver of revenue and

EBITDA growth.

We evaluated the key assumptions within the forecasts. We

have also reviewed the cost assumptions for reasonableness

by comparing with current market data available. Where

management’s assumptions varied from these forecasts, we

appraised the rationale, primarily due to the specific nature

of the bowling industry.

We also challenged the extent to which the impact of

climate change risk identified by management in its TCFD

scenario analysis and the Group’s net zero commitment

were consistent with the assumptions within the impairment

assessment. We also performed sensitivity analysis to

ascertain whether downward adjustments to the forecast

assumptions would result in a material impairment.

We assessed the historical accuracy of the forecasts used

in the Group’s impairment model by considering actual

performance against prior year forecasts and budgets, to

evaluate management’s forecasting capabilities. We also

reviewed the performance of the Group since year-end by

comparing it with management’s budgets.

We used our internal experts to determine a weighted

average cost of capital for the Group and concluded that

the cost of capital determined by management was within

a reasonable range. We checked that the long term growth

rate is in line with current expectations for UK long term

growth. We have also re-performed the sensitivity analysis

disclosed within the financial statements and agree with the

figures presented.

INDEPENDENT AUDITORS’ REPORT CONTINUED

to the members of Ten Entertainment Group plc

Key audit matter How our audit addressed the key audit matter

Management’s assessment of the site portfolio

as detailed above is used to form the basis of

the goodwill impairment review and is therefore

subject to the same assumptions as the site

impairment review above.

We evaluated the appropriateness of allocating goodwill to

a single group of CGUs. We considered the rationale for the

acquisitions, level of integration with the rest of the Group

and the nature of synergies derived. We also confirmed

this is the way in which management monitors goodwill by

reviewing management’s internal reporting.

We were satisfied that synergies benefited the Group as a

whole and therefore the allocation of goodwill to a single

group of CGUs was appropriate.

We considered the net asset value of the Group’s assets

compared to its market capitalisation which gives an

indication of the overall value of the Group. The market

capitalisation was in excess of the net asset value.

We recalculated the impairment reversal ensuring that the

computation was in line with the accounting standards.

We reviewed the disclosures given in notes 10, 13 and 14 for

completeness and consistency.

Carrying value of investments (Company)

Refer to note 12 of the financial statements.

The Company holds investments in subsidiaries

amounting to £38.9m at 1 January 2023

(2021:£38.9m).

Investments in subsidiaries are accounted for

at cost less provision for impairment in the

Company balance sheet. Investments are tested

for impairment if impairment indicators exist. If

such indicators exist, the recoverable amounts of

investments in subsidiaries are estimated in order

to determine the extent of the impairment loss, if

any. Any such impairment loss is recognised in the

profit and loss account.

The impairment assessment was identified as a

key audit matter given the size of the underlying

investment carrying values in the Company

accounts at 1 January 2023. The assessment

requires the application of management

judgement, particularly in determining whether

any impairment indicators have arisen that

trigger the need for an impairment assessment

and in assessing whether the carrying value

of each investment can be supported by its

recoverableamount.

We evaluated management’s assessment of whether any

indicators of impairment existed by comparing the carrying

values of investments in subsidiaries to the net assets of the

underlying subsidiaries at 1 January 2023 and noted that the

carrying values of the investments were recoverable based

on the net assets of the subsidiaries.

We have also compared the Group’s market capitalisation as

at 1 January 2023 to the carrying value of assets, and noted

significant notional headroom of £194m.

Based on the procedures performed, we concur with

management that there are no indicators of impairment in

respect of investment in subsidiaries.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the

financial statements as a whole, taking into account the structure of the Group and the Company, the accounting

processes and controls, and the industry in which they operate.

The Ten Entertainment Group plc operates across the UK under one main component, Tenpin Limited, which

contributes 95% of the Group’s revenue and 87% of the Group’s adjusted profit before tax. Tenpin Limited is a UK

company. There are thirteen other UK based subsidiaries, of which two are small trading entities, two are holding

entities and the remaining are dormant entities.

We performed a full scope audit over Tenpin Limited, Quattroleisure Limited and the Company, whilst performing

audit procedures over specific balances within certain other statutory entities based on their overall size and values

of their specific financial statement line items. All audit work was performed by the Group engagement team.

Our audit scoping gave us coverage of 97% of Group’s revenue and 96% of Group’s adjusted profit before tax.

The impact of climate risk on our audit

As part of our audit we made enquiries of management to understand the process management’s risk assessment

of the impact of climate change. Management has sought advice from external climate change experts.

In addition to enquiries with management, we also reviewed the presentations to management from their

expert which set out their assessment of climate change risk to the Group and the impact, if any, on the financial

statements and impairmenttesting.

In responding to the risk identified, we specifically considered how climate change risk would impact the

assumptions made in the forecasts prepared by management used in their assessment of the carrying value of

goodwill and site assets.

Our procedures in relation to the assessment of the carrying value of goodwill and site assets are described in the

key audit matters section above.

We also considered the consistency of the disclosures in relation to climate change within the Annual Report with

the financial statements and our knowledge obtained from our audit.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for

materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the

nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and

in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as awhole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Financial statements – Group Financial statements – Company

Overall

materiality

£1,280,000 (2021: £652,000). £398,000 (2021: £438,000).

How we

determined it

5% of the Group's adjusted profit beforetax. 1% of the total assets

Rationale for

benchmark

applied

Profit before tax is a primary measure used by shareholders

in assessing the performance of the Group and is a generally

accepted auditing benchmark. By adjusting the profit before

tax for non recurring exceptional items, this provides us with

a consistent year on year basis in line with a measure which

users rely on for determining materiality based on trading

performance.

Total assets is deemed an

appropriate benchmark given

this is a non-trading entity which

predominantly holds investments

in subsidiaries.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall

Group materiality. The range of materiality allocated across components was £68,000 and £1,200,000. Certain

components were audited to a local statutory audit materiality that was also less than our overall Group materiality.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate

of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance

materiality in determining the scope of our audit and the nature and extent of our testing of account balances,

classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality

was 75% (26 December 2021: 75%) of overall materiality, amounting to £960,000 (2021: £489,000) for the Group

financial statements and £298,500 (2021: £328,500) for the Company financial statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements, risk

assessment and aggregation risk and the effectiveness of controls – and concluded that an amount in the middle of

our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our

audit above £64,000 (Group audit) (2021: £32,600) and £19,900 (Company audit) (2021: £21,900) as well as

misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going

concern basis of accounting included:

◆ Understanding of the mechanics and key inputs into management’s detailed base case and severe but plausible

downside case scenario models and holding discussions with management to obtain an understanding of the

trading performance and future outlook for the business;

◆ Agreeing management’s cash flow projections to the latest Board approved forecasts, assessing how the

forecasts have been compiled and assessing the accuracy of management’s forecasts;

◆ Evaluating the key assumptions within the forecasts;

◆ Considering the severe but plausible downside case scenario that management had applied and their likelihood

and whether more severe sensitivities could apply and the associated impact on available liquidity;

◆ Assessing management’s stress testing and whether this appropriately considered the principal risks facing the

business and the likelihood of events arising that could erode liquidity within the forecast period;

◆ Assessing the performance of the Group since year-end and comparing it with the Board approved cash

flowforecasts;

◆ Obtaining and reviewing the banking agreements setting out the Group’s covenants to understand the facilities

and financing arrangements in place and identify and confirm the applicable covenants; and

◆ Reviewing the disclosures within the financial statements and validating that it accurately described

management’s going concern considerations.

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability

to continue as a going concern for a period of at least twelve months from when the financial statements are

authorised for issue.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate.

INDEPENDENT AUDITORS’ REPORT CONTINUED

to the members of Ten Entertainment Group plc

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Conclusions relating to going concern continued

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the

Group’s and the Company’s ability to continue as a going concern.

In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about

whether the directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and

our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial

statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to

the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent

material inconsistency or material misstatement, we are required to perform procedures to conclude whether there

is a material misstatement of the financial statements or a material misstatement of the other information. If, based

on the work we have performed, we conclude that there is a material misstatement of this other information, we

are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by

the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain

opinions and matters as described below.

Strategic report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic

report and Directors’ Report for the period ended 1 January 2023 is consistent with the financial statements and has

been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the

course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report.

INDEPENDENT AUDITORS’ REPORT CONTINUED

to the members of Ten Entertainment Group plc

Directors’ Remuneration

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

Corporate governance statement

The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability

and that part of the corporate governance statement relating to the Company’s compliance with the provisions

of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the

corporate governance statement as other information are described in the Reporting on other information section

of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the

corporate governance statement is materially consistent with the financial statements and our knowledge obtained

during the audit, and we have nothing material to add or draw attention to in relation to:

◆ The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

◆ The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify

emerging risks and an explanation of how these are being managed or mitigated;

◆ The directors’ statement in the financial statements about whether they considered it appropriate to adopt the

going concern basis of accounting in preparing them, and their identification of any material uncertainties to the

Group’s and Company’s ability to continue to do so over a period of at least twelve months from the date of

approval of the financial statements;

◆ The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this

assessment covers and why the period is appropriate; and

◆ The directors’ statement as to whether they have a reasonable expectation that the Company will be able to

continue in operation and meet its liabilities as they fall due over the period of its assessment, including any

related disclosures drawing attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the Group and Company was

substantially less in scope than an audit and only consisted of making inquiries and considering the directors’

process supporting their statement; checking that the statement is in alignment with the relevant provisions of the

UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements

and our knowledge and understanding of the Group and Company and their environment obtained in the course of

the audit.

In addition, based on the work undertaken as part of our audit, we have concluded that each of the following

elements of the corporate governance statement is materially consistent with the financial statements and our

knowledge obtained during the audit:

◆ The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and

understandable, and provides the information necessary for the members to assess the Group’s and Company’s

position, performance, business model and strategy;

◆ The section of the Annual Report that describes the review of effectiveness of risk management and internal

control systems; and

◆ The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the

Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code

specified under the Listing Rules for review by the auditors.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the

preparation of the financial statements in accordance with the applicable framework and for being satisfied that

they give a true and fair view. The directors are also 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.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the 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 the directors either intend to liquidate the Group or the Company or to

cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

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 an auditors’ report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a 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 the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in

line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including

fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance

with laws and regulations related to employment law, health and safety regulations, GDPR and Listing Rules of the

Financial Conduct Authority (FCA), and we considered the extent to which non-compliance might have a material

effect on the financial statements. We also considered those laws and regulations that have a direct impact on

the financial statements such as the Companies Act 2006 and the UK tax legislation. We evaluated management’s

incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of

controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate

financial results and potential management bias in accounting estimates. Audit procedures performed by the

engagement team included:

◆ Discussions with the Chief Financial Officer, Financial Controller, and the Audit Committee, including

consideration of known or suspected instances of non-compliance with laws and regulations and fraud;

◆ Assessment of matters reported on the Group’s whistleblowing system and results of management’s

investigation of such matters;

◆ Identifying and testing the validity of journal entries, in particular any journal entries posted with unusual account

combinations;

◆ Challenging assumptions made by management in its significant accounting estimates, in particular in relation

to the assessment of the impairment of goodwill and site assets (see related key audit matter above)

◆ Reviewing disclosures for accounting estimates; and

◆ Reviewing minutes of Board meetings.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of

instances of non-compliance with laws and regulations that are not closely related to events and transactions

reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher

than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,

forgery or intentional misrepresentations, or through collusion.

INDEPENDENT AUDITORS’ REPORT CONTINUED

to the members of Ten Entertainment Group plc

Our audit testing might include testing complete populations of certain transactions and balances, possibly using

data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than

testing complete populations. We will often seek to target particular items for testing based on their size or risk

characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population

from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website

at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the Company’s members as a body in

accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving

these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is

shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

◆ we have not obtained all the information and explanations we require for our audit; or

◆ adequate accounting records have not been kept by the Company, or returns adequate for our audit have not

been received from branches not visited by us; or

◆ certain disclosures of directors’ remuneration specified by law are not made; or

◆ the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in

agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the Audit Committee, we were appointed by the members on 12 April 2017 to

audit the financial statements for the year ended 31 December 2017 and subsequent financial periods. The period

of total uninterrupted engagement is 6 years, covering the years ended 31 December 2017 to 1 January 2023.

Other matter

In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R,

these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage

Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF

RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using

the single electronic format specified in the ESEF RTS.

CRAIG SKELTON (SENIOR STATUTORY AUDITOR)

FOR AND ON BEHALF OF PRICEWATERHOUSECOOPERS LLP

CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS

LONDON

21 MARCH 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Note

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Revenue 1 126 , 67 3 6 7, 5 2 1

Cost of sales (4 0 ,9 1 5) (2 2 , 5 11)

Gross profit 85 ,758 45,010

Administrative expenses (5 2 ,14 1) (3 5 ,94 9)

Exceptional income 5 7, 2 6 3 2 38

Reversal of impairment 5 631 1 ,12 4

Operating profit 41, 511 10 ,42 3

Loss on share of joint venture (310) —

Finance costs 4 (7, 2 0 6) (5 ,9 8 6)

Profit before taxation 3 3 ,9 9 5 4,437

Taxation 7 (7, 3 9 9) (4 3 2)

Profit and total comprehensive income for the period 26, 596 4 ,00 5

Earnings per share

Basic earnings per share 8 38.86p 5.86p

Diluted earnings per share 8 38 . 5 7p 5.84p

The accompanying statements of accounting policies and notes on pages 85 to 107 are an integral part of these financial statements.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Group Company

Note

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Assets

Non–current assets

Goodwill 10 2 9, 74 0 2 9, 3 5 0 — —

Intangible assets 10 13 5 27 9 — —

Investments in joint venture 11 — 3 10 — 310

Investments 12 — — 38,915 38,915

Property, plant and equipment 13 5 7, 1 9 8 3 9, 5 3 0 — —

Right-of-use assets 14 17 1, 6 51 1 6 7, 3 2 4 — —

Deferred tax asset 22 — 4 , 3 74 — —

258,724 2 41 ,1 67 38,915 39,225

Current assets

Inventories 15 1, 493 1, 2 26 — —

Trade and other receivables 16 4 , 6 67 5 ,42 6 620 209

Corporation tax receivable 1,02 2 10 — —

Cash and cash equivalents 17 10, 08 6 11 , 5 11 298 4,424

1 7, 2 6 8 1 8 ,17 3 918 4,633

Liabilities

Current liabilities

Bank borrowings and leases 20 (10, 4 4 8) (1 6 , 6 61) — —

Trade and other payables 21 (1 5 ,1 6 4) (13 , 5 13) (1,221) (3,089)

(2 5 , 612) (3 0 ,1 74) (1,221) (3,089)

Net current liabilities (8, 3 4 4) (12,0 01) (303) 1,544

Non-current liabilities

Bank borrowings and leases 20 (18 9,9 5 4) (192,833) — —

Deferred tax liability 22 (1, 2 82) (2, 270) — —

(1 91,236) (1 9 5 ,1 0 3) — —

Net assets 5 9,1 4 4 34,063 38,612 40,769

Equity

Share capital 18 685 684 685 684

Share premium 4,84 4 4,84 4 4,844 4,844

Merger reserve 6 ,1 7 1 6 ,1 7 1 — —

Share-based payment reserve 1,03 7 498 1,037 498

Retained earnings 46, 407 2 1, 8 6 6 32,046 34,743

Total equity 5 9,1 4 4 34,063 38,612 40,769

The accompanying statement of accounting policies and notes on pages 85 to 107 are an integral part of these financial statements. The Group has taken the s408 exemption to not show the Company income statement separately.

TheCompany has reported a loss of £0.6m for the period. The financial statements on pages 81 to 107 were authorised for issue by the Board of Directors on 21March 2023 and were signed on its behalf by:

GRAHAM BLACKWELL ANTONY SMITH

CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER

COMPANY NUMBER: 10672501

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

AS AT 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Group Note

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Cash flows generated from operating activities

Cash generated from operations 19 61 ,9 6 3 3 0, 827

Corporation tax (paid)/received (5 ,02 4) 2,292

Finance costs paid (7, 0 1 3) (5,8 6 8)

Net cash generated from operating activities 4 9,9 2 6 2 7, 2 5 1

Cash flows used in investing activities

Purchase of property, plant and equipment (23,366) (7,1 0 8)

Purchase of site by Tenpin Limited (45 4) —

Purchase of software (40) (24)

Loan to Joint venture (1,2 0 3) —

Net cash used in investing activities (25,063) (7,1 3 2)

Cash flows used in financing activities

Lease principal payments (1 0,233) (10 ,0 02)

Dividends paid (2,0 5 5) —

Drawdown of bank borrowings — 22 ,000

Repayment of bank borrowings (14, 0 00) (2 8, 000)

Net cash used in financing activities (26 ,2 8 8) (16 , 0 02)

Net (decrease)/increase in cash and cash equivalents (1, 42 5) 4 ,11 7

Cash and cash equivalents – beginning of period 11, 511 7, 3 9 4

Cash and cash equivalents – end of period 17 10, 08 6 11 , 5 11

Company Note

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Cash flows used in operating activities

Cash used in operations 19 (4,126) (153)

Net cash used in operating activities (4,126) (153)

Cash flows generated from financing activities

Dividends received 2,055 —

Dividends paid (2,055) —

Net cash generated from financing activities — —

Net decrease in cash and cash equivalents (4,126) (153)

Cash and cash equivalents – beginning of period 4,424 4,577

Cash and cash equivalents – end of period 17 298 4,424

The accompanying statement of accounting policies and notes on pages 85 to 107 are an integral part of these financial statements.

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Group

capital

£000

premium

£000

Share-based

payment

reserve

£000

Merger

reserve

£000

Retained

earnings

£000

Total

equity

£000

Balance at 27 December 2020 683 4,84 4 250 6 ,1 7 1 1 7, 8 61 29 ,809

Share-based payment charge (note 26) — — 24 8 — — 24 8

Issue of shares net of transaction costs 1 — — — — 1

Profit for the period and total comprehensive income — — — — 4,0 0 5 4,0 0 5

Balance at 26 December 2021 684 4,84 4 49 8 6 ,17 1 2 1,8 6 6 34,063

Share-based payment charge (Note 26) — — 539 — — 5 39

Issue of shares net of transaction costs 1 — — — — 1

Dividends paid — — — — (2 ,0 55) (2 ,0 55)

Profit for the period and total comprehensive income — — — — 26 ,596 26, 596

Balance at 1 January 2023 685 4,8 4 4 1,0 37 6 ,1 7 1 46,4 07 5 9,14 4

Company

capital

£000

premium

£000

Share-based

payment

reserve

£000

Merger

reserve

£000

Retained

earnings

£000

Total

equity

£000

Balance at 27 December 2020 683 4,844 250 — 36,781 42,558

Share-based payment charge (note 26) — — 248 — — 248

Issue of shares net of transaction costs 1 — — — — 1

Loss for the period — — — — (2,038) (2,038)

Balance at 26 December 2021 684 4,844 498 — 34,743 40,769

Share-based payment charge (Note 26) — — 539 — — 539

Issue of shares net of transaction costs 1 — — — — 1

Dividends paid — — — — (2,055) (2,055)

Loss for the period — — — — (642) (642)

Balance at 1 January 2023 685 4,844 1,037 — 32,046 38,612

The accompanying statement of accounting policies and notes on pages 85 to 107 are an integral part of these financial statements.

CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

STATEMENT OF ACCOUNTING POLICIES

Authorisation of consolidated financial statements and statement of compliance with IFRS

The consolidated financial statements for Ten Entertainment Group plc (the ‘Company’) for the 53-week period

ended 1 January 2023 were authorised for issue by the Board of Directors on 21 March 2023, and the balance sheet

was signed on the Board’s behalf by Graham Blackwell and Antony Smith.

The consolidated financial statements comprise the Company and its subsidiaries (together referred to as

the ‘Group’). The Company is a public limited company, limited by shares, incorporated and domiciled in the

United Kingdom and registered in England and Wales. The consolidated financial statements have been prepared in

accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act

2006 as applicable to companies reporting under those standards. The principal accounting policies adopted by the

Group and Company are set out below.

General information

The Company’s ordinary shares are traded on the London Stock Exchange. The address of the registered office

is Aragon House, University Way, Cranfield Technology Park, Cranfield, Bedford MK43 0EQ. The consolidated

financial statements of the Group for the 53-week period ended 1 January 2023 comprise the Company and its

subsidiaries (together referred to as the ‘Group’). The principal activity of the Group comprises the operation of

tenpin bowling centres.

Basis of preparation

These consolidated financial statements have been prepared in accordance with UK-adopted International

Accounting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting

under those standards.

The accounting policies which follow set out those policies which apply in preparing the financial statements for the

53 weeks ended 1 January 2023 and have been applied consistently, to all periods presented in these consolidated

financial statements. The Group and the Company financial statements are presented in Sterling and all values are

rounded to the nearest thousand pounds (£000) except when otherwise indicated. The financial statements are

prepared using the historical cost basis. On publishing the Company financial statements here together with the

Group financial statements, the Company is taking advantage of the exemption in Section 408 of the Companies

Act 2006 not to present its individual statement of comprehensive income and related notes that form a part of

these approved financial statements.

Changes in accounting policy and disclosures

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 explained below:

Standard/interpretation Content Date applicable

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. The amendments are not

expected to have a material impact on the Group.

1 January 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 January 2023

IAS 8 Definition of

accounting estimates

The amendments replace the definition of a change in

accounting estimates with a definition of accounting

estimates. Under the new definition, accounting estimates

are, “monetary amounts in financial statements that are

subject to measurement uncertainty”.

1 January 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 January 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 January 2023

Lease Liability in a

Sale and Leaseback

Amendments to IFRS 16

In September 2022 the IASB amended IFRS 16 to add

subsequent measurement requirements for sale and

leaseback transactions that satisfy the requirements in IFRS

15 to be accounted for as a sale. The amendments require

a seller/lessee to subsequently measure lease liabilities

arising from a leaseback in a way that it does not recognise

any amount of the gain or loss that relates to the right of use

itretains.

1 January 2024

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Changes in accounting policy and disclosures continued

Standard/interpretation Content Date applicable

Non-current Liabilities

with Covenants

Amendments to IAS 1

In October 2022, the IASB issued amendments to: a) improve

the current liabilities with covenants. The IASB made the

information an entity provides about liabilities arising from

loan arrangements for which an entity’s right to defer

settlement of those liabilities for at least twelve months after

the reporting period is subject to the entity complying with

conditions specified in the loan arrangement (liabilities with

covenants; and b) respond to stakeholders’ concerns about

the outcomes of applying the amendments in Classification

of Liabilities as Current or Non-current issued in 2020. The

2020 amendments were criticised because: (i) they could

result in an entity classifying a liability as current even if, at

the end of the reporting period (reporting date), the entity

has no contractual obligation to settle the liability at that

date or within twelve months; (ii) they took no account of the

design of covenants negotiated to reflect an entity’s required

financial position or performance at specified dates, such as

when a loan arrangement specifies different covenants at

different dates to reflect the expected effects of seasonality

or the entity’s future performance; and (iii) they were unclear

about how an entity would assess, at the reporting date,

whether it would have complied with covenants that are not

based on an entity’s financial position or performance (non-

financial covenants) and covenants based on cumulative

financial performance or cash flows for a period extending

beyond the reporting period (financial performance

covenants).

1 January 2024

None of the above amendments are expected to have a material impact on the Group.

Basis of consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls

an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and

has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from

the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

All intercompany balances and transactions and any unrealised gains on transactions between Group companies

areeliminated.

On acquisition of a subsidiary, all of the identifiable acquired assets (including intangible assets), liabilities and

contingent liabilities are recorded at their fair values, reflecting their condition on the date control passes. The cost

of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred

or assumed. The excess of the cost of the acquisition over the fair value of the Group’s share of the identifiable

net assets acquired is recorded as goodwill. All accounting policies are applied consistently throughout the

Groupcompanies.

Going concern

In assessing the going concern position of the Group and Company for the Annual Report and the financial

statements for the year ended 1 January 2023, the Group has considered a base case scenario and a severe but

plausible downside scenario. In modelling these scenarios, the Group has considered its liquidity, cash balances,

refinancing position, business activities and its principal risks.

Base case

The Group’s bank financing facility expires in April 2024 and the intention is to renew this in 2023. As the renewal

has not happened at the time of the signing of this Annual Report, the performance beyond the current expiry date

in 2024 has been reflected in the base case. The Group is cash positive, the RCF remains undrawn throughout the

period with all covenants being passed. The base case is the Group’s FY23 budget plus the 2024 forecast from its

Strategic Plan. This case was preparedwith the following key assumptions reflected:

◆ Like-for-like sales growth versus FY22

◆ Labour inflation and the increases from the National Living Wage are included

◆ Cost inflation is reflected in the operating and administrative costs

◆ Site acquisitions and new builds are reflected in the trade and in the cashflows

◆ Increased levels of capital spend are reflected in the cashflows to maintain and refurbish the sites

◆ The Group pays out a final and interim dividend

Downside case

The downside case takes the base case and flexes the assumptions for severe but plausible impacts. These are

summarised as follows:

◆ 2023 revenues are reduced by 10% on a like-for-like basis against FY22. 2024 revenues are reduced by a further

10% against the 2023 downside. Returns from refurbishments in 2023 and 2024 and returns from one new site

in 2024, are removed.

◆ All variable and fixed costs from the base case are increased by a further inflationary 10% across the board.

◆ Mitigation on variable costs as cost of sales, labour and operating costs are included as these can be controlled

by the Group.

The scenario reflects the payment of a final and interim dividend but this has been reduced versus the base case

as these are at Group discretion. The investment in new centres remains with the removal of just one in 2024. The

refurbishment programme spend is also halted in 2023 and 2024. Investments in new centres and refurbishments

are under the Group’s control and could be used for further mitigating action if needed. All the mitigating actions

taken, allow the Group to remain cash positive and the RCF undrawn, throughout the period. The Group remains

profitable and all covenants are passed with significant headroom.

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.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Use of judgements and estimates

The preparation of financial statements requires the use of accounting estimates and requires management to

exercise judgement in the process of applying the Group’s accounting policies.

Accounting estimates are based on historical experience and various other factors, including expectations of future

events that are believed to be reasonable under the circumstances, the results of which form the basis of making

the judgements about the carrying values of assets and liabilities that are not readily available from other sources.

Actual results may differ from these estimates and the estimates and underlying assumptions are reviewed on an

ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if

the revision affects only that period or in the period of the revision and future periods if the revision affects both

the current and future periods. The following assets and liabilities or areas have been affected by these estimates

andjudgements:

Judgement: Joint ventures

Where the Group collaborates with other entities on contracts and agreements, a judgement is made of the nature

of the relationship that arises from those contracts and agreements and the level of control that each party can

exercise over the transactions that arise. Where there is joint control (as described by IFRS 11), the arrangement is

classified as a joint arrangement and accounted for using the equity method (for joint ventures). The Group’s joint

ventures are disclosed in Note 11.

Under the equity method of accounting, interests in joint ventures are initially recognised at cost and adjusted

thereafter to recognise the Group’s share of profits or losses and movements in other comprehensive income. When

the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture, the Group does not

recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture.

Unrealised losses arising on transactions between the Group and its joint ventures are eliminated unless the

transaction provides evidence of an impairment of the asset transferred. The Group funds its joint ventures

through loans from Tenpin Limited which are secured and incur interest at a market rate. The Directors review the

recoverability of investments and loans for impairment annually.

Judgement: Non-GAAP performance measures

The Group has identified certain measures that it believes will assist in the understanding of the performance of the

business. The measures are not defined under IFRS and they may not be directly comparable with other companies’

adjusted measures. The non-IFRS measures are not intended to be a substitute for an IFRS performance measure

but the business has included them as it considers them to be important comparables and key measures used

within the business for assessing performance. These financial statements make reference to the following non-

IFRS measures:

Group adjusted EBITDA – This measurement is earnings before interest, taxation, depreciation, amortisation,

exceptional items, impairment, loss on Joint venture and profit or loss on disposal of assets. This has been done

to show the underlying trading performance of the Group which these other costs or income can distort. The

reconciliation to operating profit is included in Note 2.

Group adjusted EBITDA after rental costs – This measurement is earnings before interest, taxation, depreciation,

amortisation, exceptional items, impairment and profit or loss on disposal of assets, loss on Joint venture, less a

deduction for the cash cost of rent. The reconciliation to operating profit is included in Note 2.

EBITDA operating margin – This is the Group adjusted EBITDA after rental costs divided by sales, expressed as

apercentage.

Cost of goods sold and gross margin – The cost of sales as reflected in the statement of comprehensive income

consists of direct bar, food, vending, amusements, gaming machine related costs, PDQ machine costs and staff

costs. Cost of goods sold excludes staff costs but security and machine licence costs incurred by the centres are

included. Deducting cost of goods sold from revenue gives the gross margin. This is how cost of goods sold and

gross margin are reported by the business monthly and at centre level as labour costs are judged as material and

thus reported separately with operating costs. The reconciliation is included in Note 2.

Operating profit before exceptional items – This is operating profit before exceptional items and impairment reversal.

Group adjusted profit before tax – This consists of the profit before tax adjusted for items judged as exceptional

and relating to impairment reversals.

Adjusted underlying profit after tax and adjusted earnings per share – This consists of the profit after tax adjusted

for exceptional items and impairment reversals and is used to determine the adjusted earnings per share. The

reconciliation of this number to profit after tax is included under Note 8.

Exceptional items – These items are those significant cost or income items which management judges to be

one-off in nature and are not excepted to continue to be incurred as part of the regular trading performance of the

business. The separate reporting of these per Note 5 helps to provide a better indication of underlying performance.

Like-for-like sales – These are a measure of growth of sales adjusted for new or divested sites over a comparable

trading period.

Bank net cash/(debt) – This measure is made up of bank borrowings less cash and cash equivalents as per the

statement of financial position.

Free cash flow – This is cash generated from operations less maintenance capital as reflected in the financial review,

finance costs, finance lease payments, taxation payments or receipts, advance payments to capital suppliers, loans

to Joint ventures and non-cash share-based payments. This is reconciled in note 2.

Maintenance capital, existing estate, estate expansion and freehold purchase outflow – As reconciled in note 2,

cash used in investing activities consists of maintenance capital, spend on the existing estate, estate expansion and

the purchase of a freehold, which totals the cash outflows from capital projects.

Estimate: Intangible assets, right-of-use assets and property, plant and equipment

These assets are affected by impairment assessments and estimates of value in use and residual value. The

calculation of value in use is based on pre-tax cash flow projections from the financial forecast approved by the

Board covering a three-year period. Cash flows beyond this three-year period are extrapolated over the life of

the lease relating to that centre at the estimated long-term growth rate. The pre-tax discount rate applied to the

cash flow projections approximates the Group’s weighted average cost of capital, adjusted only to reflect the

way in which the market would assess the specific risks associated with the estimated cash flows of the bowling

businesses and to exclude any risks that are not relevant to estimated cash flows of the bowling businesses, or

for which they have already been adjusted. The effect of varying the key assumptions in the goodwill and tangible

property, plant and equipment impairment calculations is presented in Note 13.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Use of judgements and estimates continued

Estimate: Deferred tax

Estimation is required of temporary differences between the carrying amount of assets and liabilities and their tax

base. Deferred tax liabilities are recognised for all taxable temporary differences but, where deductible temporary

differences exist, management’s judgement is required as to whether a deferred tax asset should be recognised

based on the availability of future taxable profits. The deferred tax assets actually recoverable may differ from the

amounts recognised if actual taxable profits differ from management’s estimates. The sensitivity to this estimation

is shown in Note 22 which reflects the amounts that could be recognised as deferred tax assets.

Estimate: Incremental borrowing rate

The calculation of lease liabilities requires the Group to determine an incremental borrowing rate (‘IBR’) to discount

future minimum lease payments. Judgement is applied in determining the components of the IBR used for each

lease, including the movement in risk-free rates, the Group’s borrowing margin and any lease-specific adjustments.

The applicable IBR for each lease varies between 2.1% and 6.4%, depending on its length of term. To determine the

incremental borrowing rate, the Group where possible, uses recent third-party financing received by the Group as

a starting point otherwise it has obtained borrowing rates from its lender for a range of maturity terms. The same

approach has been used for modifications and new leases during the year where a borrowing rate range of between

6.11% and 6.43% has been used depending on the length of the lease extension. The IBR is a significant area of

estimation, as the Group obtained a range of borrowing rates for differing terms to determine a range of rates for

the modifications and new leases in the year. A 1% increase in all of these rates would decrease the value of the

right-of-use asset on modification or addition of the new leases by £1.4m, while a 1% decrease in the rates would

increase the value by £1.6m.

Leases

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.

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. The lease liability and the right of use asset are subsequently remeasured whenever:

– The lease term has changed, in which case the lease liability is remeasured by discounting the revised lease

payments using a revised discount rate.

– The lease payments change due to changes in an index or rate or a change in expected payment under a

guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease

payments using the initial discount rate.

– A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the

lease liability is remeasured by discounting the revised lease payments using a revised discount rate.

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 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.

Revenue

Revenue is accounted for by identifying the contract with a customer and the particular performance obligations

in that contract. The Group’s performance obligations represent the total amounts earned from customers from

bowling, food, beverage, machines and amusements, together with any other goods and services delivered in the

normal course of business, net of VAT. The transaction price is a fixed price set for the goods and services ordered

by the customer and payment of the transaction price is due immediately upon the customer booking the goods or

services at the centre or call centre, or on the website. The Group is not obliged to provide refunds or returns but

all refunds are provided at 100% of the original transaction price paid for the goods or services by the customer.

Revenue for food and drink is recognised when the performance obligation, being the transfer of the products

to the buyer in exchange for consideration, is completed. Revenue arising from bowling is recognised when the

performance obligation of the customer actually playing is completed. Deposits paid in advance are held on the

balance sheet until that time and then recognised as income. Revenue for amusements and machines is recognised

when the cash is collected from the amusement machine. The Group sells bundles whereby bowling is offered

with food and drink at a discounted price versus if they were sold individually. In accordance with IFRS 15 Revenue

from Contracts with Customers, the discount is allocated amongst the products in the bundle based on each

product’s standalone selling price as a proportion of the sum of the total standalone selling prices of all the products

in the bundle. Given the nature of the Group’s revenue streams, recognition of revenue is not considered to be a

significant area of judgement.

Deferred income

Advance bookings paid for by customers are recognised as deposits and held on the balance sheets as deferred

income until the customer redeems their booking which becomes ‘paid and played’. It is then transferred from the

balance sheet and recognised as revenue in the statement of comprehensive income.

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. When the grant relates to an expense item, it is recognised as income

on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed.

The Coronavirus Job Retention Scheme (‘CJRS’) grant is recognised against staff costs within administrative

expenses and the local council Lockdown grants are recognised separately within administrative expenses in the

Consolidated Income Statement.

The CJRS grant is recognised against cost of sales and staff costs within administrative expenses in the

Consolidated Income Statement.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Intangible assets

Goodwill

Goodwill represents the excess of the cost of the acquisition of a subsidiary or business combination over the fair

value of the Group’s share of the identifiable net assets acquired. Goodwill is carried at cost less impairment, and is

tested annually for impairment, or earlier if circumstances indicate that impairment may have occurred. Excess of

acquirer’s interest in the net fair value of acquiree’s identifiable assets, liabilities and contingent liabilities over cost

arising on acquisition is recognised immediately in the statement of comprehensive income.

Goodwill is not allocated to individual cash-generating units (‘CGUs’) as the Group considers that the synergies arising

from each acquisition benefit the Group as a whole, rather than individual centres and monitors goodwill in aggregate

for internal purposes. Therefore, for goodwill impairment testing, the CGUs are aggregated into a singlegroup.

Software

Software costs are capitalised and amortised over their estimated useful lives of up to three years on a straight-line

basis. All software has been purchased and generated externally.

Fair valued intangibles on acquisition

Customer lists

Customer lists are recognised at fair value on acquisition of subsidiaries and are amortised over the years from

which their expected benefits are determined to be recognised in the income statement to nil over a five-year

period with the rate of amortisation decreasing.

Favourable leases

Favourable leases are recognised at fair value on acquisition of subsidiaries and are amortised over the period of the

lease on a straight-line basis.

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and any impairment in value with

property, plant and equipment acquired in a business combination recognised at their fair value. Cost of assets

includes acquisition costs net of VAT, as well as other directly attributable costs in bringing the asset into a working

condition. Depreciation is calculated so as to write off the cost, less estimated residual value, of each asset on a

straight-line basis over its expected useful economic life. The principal useful lives used for this purpose are as follows:

Fixed furnishings The lower of the length of the lease or their estimated useful lives

Freehold land and buildings 40 years

Fixtures, fittings and equipment Between 3 and 40 years

Amusement machines 4 years

Assets in the course of construction are not depreciated until they are brought into use. As required by IAS 16,

property, plant and equipment’s expected useful life and residual values are reviewed annually. Residual value is

calculated based upon prices prevailing at the date of acquisition.

Impairment of non-financial assets

At each reporting date, all financial and non-financial assets are considered for evidence of impairment. If there is an

indication of impairment, the Group carries out an impairment test by measuring the asset’s recoverable amount,

which is the higher of the fair value less costs to sell and the value in use. If this recoverable amount is below the

carrying value, an impairment loss is recognised in the statement of comprehensive income and the asset is written

down to the recoverable amount.

In assessing value in use, the estimated future cash flows arising from the use of the asset are discounted to their

present value using a discount rate which reflects current market assessments of the time value of money and

the risks specific to the asset. Impairment of the Group’s property, plant and equipment and right of use assets

is assessed at the cash-generating unit (‘CGU’) level being a bowling centre, with goodwill allocated at Company

level and impairment tested for goodwill at Company level. Impairment losses are charged to the statement of

comprehensive income in the period in which they are identified and are allocated first to goodwill then to carrying

amounts of other assets at the CGU level.

Reversals of impairment

An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is

reversed when there is an indication that the impairment loss may no longer exist and there has been a change

in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent

that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of

depreciation or amortisation, if no impairment loss had been recognised.

Property disposals

Disposals of properties and any resultant gain or loss on disposal are recognised in the statement of comprehensive

income once all conditions of the sale contract become unconditional.

Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying

asset is available for use). 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, initial direct costs incurred, and lease payments made at or before the

commencement date less any lease incentives received. Right-of-use assets are related to the property leases and

are depreciated on a straight-line basis over the lease term.

Leases

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,

except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value

assets (such as tablets and personal computers, small items of office furniture and telephones). 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.

Business combinations

The purchase of a company or bowling centre, being a group of inputs and processes capable of generating profits,

is accounted for as a business combination. Business combinations are accounted for using the acquisition method

of accounting. The consideration for a business combination is measured at fair value on the date of acquisition

with the assets acquired and liabilities incurred measured at fair value on exchange. Goodwill is recognised as the

surplus of the consideration over the fair value of the net assets acquired and is accounted for as per the accounting

policy on goodwill. Transaction costs that the Group incurs in connection with business combinations are expensed

as incurred. Management judgements are made in the measurement of fair values to the net assets acquired in a

business combination, in particular the customer lists, inventories and property, plant and equipment acquired.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is calculated as cost of purchase on a first in,

first out basis based on normal levels of activity. Net realisable value is based on estimated selling price, less further

costs expected to be incurred to completion and disposal which is the same method used to fair value the inventory

on a business combination. Provision is made for obsolete, slow-moving or defective items where appropriate.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Financial instruments

Financial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes party to the

contractual rights and obligations of the instrument.

Initial recognition and subsequent measurement

Financial assets

All financial assets are initially recognised at fair value less transaction costs and then can be subsequently

measured at amortised cost or fair value.

Trade and other receivables

Trade receivables are measured at fair value at initial recognition, do not carry any interest and are subsequently

measured at amortised cost using the effective interest rate method. Other receivables are subsequently measured

at amortised cost using the effective interest rate method and any interest income is recognised in profit and loss.

Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement. Allowances

for doubtful debts are recognised based on management’s expectation of losses, without regard to whether an

impairment trigger has occurred or not (an ‘expected credit loss’ model under IFRS 9).

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits with an original maturity of three months or less

and cash in transit, including transactions paid by credit card which are in transit and have yet to be remitted to

the Group’s bank account by the merchant providers. Bank overdrafts that are repayable on demand and form an

integral part of the Group’s cash management are included as a component of cash and cash equivalents.

Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements

entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after

deducting all of its liabilities.

Interest-bearing bank borrowings

Interest-bearing borrowings are recognised initially at fair value with attributable debt issue costs capitalised.

Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference

between cost and redemption value being recognised in the statement of comprehensive income over the period

of the borrowings on an effective interest basis.

Debt issue costs

Issue costs of debt such as bank arrangement fees and legal fees incurred in arranging debt are capitalised under

non-current other receivables and are amortised in the statement of comprehensive income on an effective interest

ratemethod.

Trade and other payables

Trade and other payables are initially recognised at fair value and subsequently held at amortised cost using the

effective interest rate method.

Derecognition of financial assets and financial liabilities

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.

Impairment

The Group recognises loss allowances for expected credit losses (‘ECLs’) on financial assets measured at amortised

cost. These are always measured at an amount equal to 12 months ECL. The maximum period considered

when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. When

determining whether there is default or the credit risk of a financial asset has increased significantly since initial

recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant

and available without undue cost or effort. This includes both qualitative and quantitative information and analysis,

based on the Group’s historical experience and informed credit assessment and forward-looking information. This

same information is used to determine if financial instruments have low credit risk upon initial recognition. 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.

Pension costs

The Group operates a defined contribution pension plan. The Group pays contributions to privately administered

pension insurance plans on a mandatory basis. The Company has no further payment obligations once the

contributions have been paid. The contributions are recognised as employee benefit expense when they are

due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future

payments is available.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as the result of a past

event and it is both probable that an outflow of resources will be required to settle the obligation and the amount

of the obligation can be reliably estimated. Where the Group expects to be reimbursed for an outflow of resources

associated with a provision, for example under an insurance contract, the expected reimbursement is recognised

as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money

is material, provisions are calculated by discounting the expected future cash flows at a pre-tax rate that reflects

current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where discounting is used, the increase in the provision due to the unwinding of the discount over time is charged

to finance costs in the statement of comprehensive income.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

Tax

The tax charge comprises current tax payable and deferred tax. The current tax charge represents an estimate of

the tax payable in respect of the Group’s taxable profits and is based on an interpretation of existing tax laws.

As required by IAS 12 (revised), the Group provides deferred income tax using the balance sheet liability method

on all temporary differences between the tax bases of assets and liabilities and their carrying values at the balance

sheet date. Deferred income tax assets and liabilities so recognised are determined using the tax rates and laws that

have been enacted or substantively enacted by the balance sheet date and are based on the expected manner of

realisation or settlement of the carrying amount of the assets or liabilities.

Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be

available against which the temporary differences can be utilised. Deferred tax is not recognised in respect of the

initial recognition of an asset or liability acquired in a transaction which is not a business combination and at the

time of the transaction does not affect accounting or taxable profits.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax

assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes

levied by the same taxation authority on either the taxable entity or different taxable entities where there is an

intention to settle the balances on a net basis.

Segment reporting

The Group’s segments (distinguishable components of the Group that are engaged either in providing products or

services) are its tenpin bowling operations and its central management. The Group wholly operates within the UK.

The Group has identified the Board of Directors as the Chief Operating Decision Maker (‘CODM’).

Share capital

Ordinary shares are classified as equity. Share premium arises on the excess between the fair value of the shares

issued and the par value of the shares issued and the existing shares issued have none. Incremental costs

directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, against

sharepremium.

Share-based payments

Performance Share Plans (‘PSPs’) for the Executive Directors are accounted for in accordance with IFRS 2 Share-

Based Payments. The value of the awards is measured at fair value at the date of the grant and recognised as an

expense. The total amount expensed is determined by reference to the fair value of the awards granted, including

any market performance conditions. The cost of the 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 Directors become fully entitled to the award.

STATEMENT OF ACCOUNTING POLICIES CONTINUED

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

NOTES TO THE FINANCIAL STATEMENTS

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

1 Segment reporting

Segmental information is presented in respect of the Group’s business segments. Strategic decisions are made

by the Board based on information presented in respect of these segments. There are no differences in the

measurement of segment profit or loss, assets and liabilities for each segment.

The Group comprises the following segments:

Tenpin Limited – Tenpin Limited (including its subsidiaries Tenpin Five Limited and Quattroleisure Limited) is a

leading tenpin bowling operator in the UK. All revenue is derived from activities conducted in the UK.

Central – comprises central management, including company secretarial work and the Board of Directors’ and

general head office assets and costs. The segment results for the 53-week period ended 1 January 2023 and 52-

week period ended 26 December 2021 are used by the Board for strategic decision making, and a reconciliation of

those results to the reported profit in the Consolidated Statement of Comprehensive Income, and the segment

assets are as follows:

Tenpin

Limited

£000

Central

£000

Group

£000

For the 53-week period ended 1 January 2023

Segment revenue – external 126,673 — 126,673

Bowling 55,729 — 55,729

Food and drink 35,327 — 35,327

Machines and amusements 30,475 — 30,475

Other 5,142 — 5,142

Group Adjusted EBITDA after rental costs (Note 2) 42,024 (2,394) 39,630

Segment assets as at 1 January 2023 271,213 4,779 275,992

Segment liabilities as at 1 January 2023 (211,485) (5,363) (216,848)

Reconciliation of adjusted EBITDA to reported operating profit

Group adjusted EBITDA after rental costs (Note 2) 42,024 (2,394) 39,630

Amortisation and depreciation of intangibles, property, plant and

equipment and right-of-use assets (18,727) — (18,727)

Loss on disposals of assets (271) — (271)

Amortisation of fair value items (120) — (120)

Net impairment reversal 631 — 631

Exceptional income (Note 5) 7,263 — 7,263

Add back rental cost 13,105 — 13,105

Operating profit 43,905 (2,394) 41,511

Loss on Joint venture — (310) —

Finance costs (Note 4) (6,709) (497) (7,206)

Profit before taxation 37,196 (3,201) 33,995

Tenpin

Limited

£000

Central

£000

Group

£000

For the 52-week period ended 26 December 2021

Segment revenue – external 67,521 — 67,521

Bowling 29,776 — 29,776

Food and drink 19,094 — 19,094

Machines and amusements 16,280 — 16,280

Other 2,371 — 2,371

Group Adjusted EBITDA after rental costs (Note 2) 16,654 (2,031) 14,623

Segment assets as at 26 December 2021 253,612 5,728 259,340

Segment liabilities as at 26 December 2021 (221,677) (3,600) (225,277)

Reconciliation of adjusted EBITDA to reported operating profit

Group adjusted EBITDA after rental costs (Note 2) 16,654 (2,031) 14,623

Amortisation and depreciation of intangibles, property, plant and

equipment and right-of-use assets (17,426) — (17,426)

Loss on disposals of assets (442) — (442)

Amortisation of fair value items (130) — (130)

Impairment reversal 1,124 — 1,124

Exceptional income (Note 5) 238 — 238

Add back rental cost 12,436 — 12,436

Operating profit 12,454 (2,031) 10,423

Finance costs (Note 4) (5,476) (510) (5,986)

Profit before taxation 6,978 (2,541) 4,437

All assets have been allocated to segments.

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

2 Alternative performance measures – non-GAAP measures

The Group has identified certain measures that it believes will assist in the understanding of the performance

of the business. The measures are not defined under IFRS and they may not be directly comparable with other

companies’ adjusted measures. The non-IFRS measures are not intended to be a substitute for an IFRS performance

measure but the business has included them as it considers them to be important comparables and key measures

used within the business for assessing performance. These financial statements make reference to the following

non-IFRS measures:

Group adjusted EBITDA – This measurement is earnings before interest, taxation, depreciation, amortisation,

exceptional items, impairment, loss on Joint venture and profit or loss on disposal of assets.

Group adjusted EBITDA after rental costs – This measurement is earnings before interest, taxation, depreciation,

amortisation, exceptional items, impairment, loss on Joint venture and profit or loss on disposal of assets, less a

deduction for the cash cost of rent. This has been done to show the underlying trading performance of the Group

which these other costs or income can distort.

Reconciliation of operating profit to Group adjusted EBITDA and Group adjusted

EBITDA after rental costs

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Group adjusted EBITDA 52,735 27,059

Rental cost (13,105) (12,436)

Group adjusted EBITDA after rental costs 39,630 14,623

Add back rental cost 13,105 12,436

Amortisation of fair valued items on acquisition (113) (149)

Amortisation of software (105) (131)

Loss on disposals (271) (442)

Depreciation of property, plant and equipment and right-of-use assets (18,629) (17,276)

Operating profit before exceptional items 33,617 9,061

Impairment reversal 631 1,124

Exceptional items – other 7,263 238

Operating profit 41,511 10,423

Cost of goods sold and gross margin – The cost of sales as reflected in the statement of comprehensive income

consists of direct bar, food, vending, amusements, gaming machine related costs, PDQ machine costs and staff

costs. Cost of goods sold excludes staff costs but security and machine licence costs incurred by the centres are

included. Deducting cost of goods sold from revenue gives the gross margin. This is how cost of goods sold and

gross margin are reported by the business monthly and at centre level as labour costs are judged as material and

thus reported separately within operating costs.

Reconciliation of costs of sales

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Cost of goods sold per the financial review (18,145) (9,4 46)

Site labour costs (23,739) (13,547)

Machine licence and security costs in administrative expenses 969 482

Costs of sales per the statement of comprehensive income (40,915) (22,511)

Adjusted profit before tax – This consists of the profit before tax adjusted for items judged as exceptional and

relating to impairment.

Adjusted underlying profit after tax and adjusted earnings per share – This consists of the profit after tax

adjustedfor exceptional items and impairment provisions and as used to determine the adjusted earnings per

share. A judgement has been made to reflect these measures so they are more comparable by excluding one-off

items. The reconciliation of this number to profit after tax is included under Note 8.

Exceptional costs – These items are those significant cost or income items which management judges to be

one-off in nature and are not expected to continue to be incurred as part of the regular trading performance of the

business. The separate reporting of these per Note 5 helps to provide a better indication of underlying performance.

Like-for-like sales – These are a measure of growth of sales adjusted for new or divested sites over a comparable

trading period.

Bank net cash/(debt) – This measure is made up of bank borrowings less cash and cash equivalents as per the

statement of financial position.

Free cash flow – This is cash generated from operations less maintenance capital as reflected in the finance review,

finance costs, finance lease payments, taxation payments or receipts, advance payments to capital suppliers, loans

to Joint ventures and non-cash share-based payments. This is reconciled below:

Reconciliation of free cash flow

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Cash generated from operations 61,963 30,827

Maintenance capital (4,943) (910)

Finance lease, finance costs and taxation payments (22,270) (13,578)

Exceptional income & non-cash share-based payments charge (7,802) (248)

Movement in advance payments to capital suppliers 1,431 (2,803)

Loan to Joint venture (1,204) —

Free cash flow per the financial review 27,175 13,288

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

2 Alternative performance measures – non-GAAP measures continued

Maintenance capital, existing estate, estate expansion and freehold purchase outflow – This is cash used in

investing activities as reconciled below:

Reconciliation of capital investment outflows to cash used in investing activities

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Cash used in investing activities (25,063) (7,132)

Analysed as follows:

Maintenance capital (4,943) (910)

Existing estate (8,465) (3,363)

Estate expansion (6,882) (56)

Freehold purchase (5,000) —

Movement in advance payments to capital suppliers 1,431 (2,803)

Loan to Joint venture (1,204) —

Cash outflows for capital projects (25,063) (7,132)

3 Staff costs and numbers

Staff costs – Group

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Wages and salaries 25,821 16,515

Social security costs 1,906 1,267

Other pension costs 322 178

Share-based payments (Note 26) 539 248

28,588 18,208

Staff costs included within costs of sales are £22,761k (2021: £13,072k). The balance of staff costs is recorded within

administrative expenses. The 2021 staff costs are net of CJRS which amount to £3,507k with nil in 2022. Details of

Directors’ remuneration are set out in the Directors’ Remuneration Report on page 64. No Directors have accrued

any retirement benefits and Directors that resigned during the year received no compensation for loss of office.

The highest paid Director for the 53-week period ended 1 January 2023 received remuneration of £1,197k (2021:

£667k). The 2019 LTIP scheme vested in 2022 and 128,334 awards were exercised at a market value of £327k. All key

management positions are held by Executive Directors of Ten Entertainment Group plc and, accordingly, no further

disclosure of key management remuneration is deemed necessary.

The average monthly number of persons employed (including Executive Directors) during the period, analysed by

category, was as follows:

Staff numbers – Group

53 weeks to

1 January

2023

Number

52 weeks to

26 December

2021

Number

Site staff 1,449 1,275

Administration 65 58

Unit management 159 157

1,673 1,490

Staff costs – Company

53 weeks to

1 January

2023

£000

53 weeks to

26 December

2021

£000

Wages and salaries 913 967

Social security costs 98 88

Other pension costs 14 15

Share-based payments (Note 26) 539 248

1,564 1,318

Staff numbers – Company Number Number

Administration (including Executive Directors) 7 6

4 Finance costs

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Interest on bank loans and overdrafts

334 391

Amortisation of debt issuance costs

168 124

Lease interest

6,682 5,481

Other

22 (10)

Finance costs

7,206 5,986

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

5 Profit before taxation

The following items have been included in arriving at profit before taxation:

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Staff costs (Note 3) 28,588 18,208

Consumables charged to cost of sales 3,086 1,460

Depreciation of property, plant and equipment (Note 13) 6,945 6,130

Depreciation of right-of-use assets (Note 14) 11,685 11,166

Amortisation of software (Note 10) 105 131

Amortisation of fair valued intangibles on acquisition (Note 10) 79 90

Loss on disposal of assets 271 442

Net impairment reversal (631) (1,124)

Government grants received (excluding CJRS) — (1,354)

CJRS grants received — (3,507)

Loss on Joint venture (Note 11) 310 —

Variable lease rentals payable – property 298 61

Share-based payments (Note 26) 539 248

Repairs on property, plant and equipment 3,289 1,891

Exceptional items

HMRC VAT claims received and provision for updated HMRC VAT guidance (7,263) (238)

Auditors’ remuneration

Fees payable to the Company’s auditors for the Company and

Consolidatedfinancialstatements 70 58

Audit of the Company’s subsidiaries 240 135

Audit-related assurance services 40 37

350 230

6 Results attributable to Ten Entertainment Group plc

The financial statements of the Company, Ten Entertainment Group plc, were approved by the Board of Directors

on 21 March 2023. The result for the financial year dealt with in the financial statements of Ten Entertainment Group

plc was a loss of £642k (2021: £2,038k). As permitted by Section 408 of the Companies Act 2006, no separate

statement of comprehensive income is presented in respect of the Company.

7 Ta xation

Recognised in the consolidated statement of comprehensive income:

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Current tax

Tax on profits for the year 4,013 —

Deferred tax (Note 22)

Origination and reversal of temporary differences 3,386 1,036

Effect of changes in tax rates — (248)

Adjustment in respect of prior years — (356)

Tax charge in statement of comprehensive income 7,399 432

The tax on the Group’s profit before tax differs (2021: differs) from the theoretical amount that would arise using the

standard rate of tax in the UK of 19% (2021: 19%). The differences are explained below:

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Profit before taxation 33,995 4,437

Tax using the UK corporation tax rate of 19% (2021: 19%) 6,459 843

Expenses not deductible 943 353

Change in tax rates on deferred tax balances — (248)

Adjustment in respect of prior years (52) 107

Permanent differences 211 (30)

(Use) of tax losses/loss carry back (162) (593)

Tax charge 7,399 432

On 24 May 2021, the Government confirmed that the corporation tax main rate would remain at 19% and increase

to 25% from 1 April 2023. As such, the rate used to calculate the deferred tax balances as at 1January 2023 is a

blended rate up to 25% depending on when the deferred tax balance will be released.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

8 Earnings per share

Basic earnings per share for each period is calculated by dividing the earnings attributable to ordinary shareholders

by the weighted average number of ordinary shares in issue during the period. The total shares in issue at the end of

the 53-week period were 68,496,118 (2021: 68,367,784).

The Company has 509,325 potentially issuable shares (2021: 274,005), all of which relate to share options issued to

Directors of the Company. Diluted earnings per share amounts are calculated by dividing profit for the year and total

comprehensive income attributable to equity holders of the Company by the weighted average number of ordinary

shares outstanding during the year together with the dilutive number of ordinary shares.

Adjusted basic earnings per share has been calculated in order to compare earnings per share year-on-year and to

aid future comparisons. Earnings has been adjusted to exclude exceptional expenses/(income), impairment reversal

and other one-off costs (and any associated impact on the taxation charge). Adjusted diluted earnings per share

is calculated by applying the same adjustments to earnings as described in relation to adjusted earnings per share

divided by the weighted average number of ordinary shares outstanding during the year adjusted by the effect of

the outstanding share options.

Basic and diluted

53 weeks to

1 January

2023

52 weeks to

26 December

2021

Profit after tax (£000) 26,596 4,005

Basic weighted average number of shares in issue 68,447,949 68,358,261

Adjustment for share awards (number) 509,325 274,005

Diluted weighted average number of shares in issue 68,957,274 68,632,266

Basic earnings per share (pence) 38.86p 5.86p

Diluted earnings per share (pence) 38.57p 5.84p

Below is the calculation of the adjusted earnings per share:

Adjusted earnings per share

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Profit after tax 26,596 4,005

Net impairment reversal (631) (1,124)

Exceptional income (7,263) (238)

Tax impact on above adjustments 1,380 45

Adjusted underlying profit after tax 20,082 2,688

Adjusted profit after tax 20,082 2,688

Basic weighted average number of shares in issue 68,447,949 68,358,261

Adjusted basic earnings per share (pence) 29.34p 5.93p

Adjusted diluted earnings per share (pence) 29.12p 5.90p

9 Business combination – Harlow

On 15 May 2022, Tenpin Limited entered an Asset Purchase Agreement and acquired the assets and trade of the

Harlow bowling site from Harlow Bowl Limited for £454k.

The table below summarises the consideration paid for the acquisition, the fair value of the assets acquired and the

liabilities assumed on the date of the acquisition.

The following analyses the purchase consideration: 

Consideration as at 15 May 2022 £000

Cash consideration paid 454

Identifiable assets acquired and liabilities assumed

Inventory 6

Property, plant and equipment 59

Deferred tax asset 1

Other assets and liabilities, net (2)

Total identifiable net assets 64

Goodwill 390

Total 454

Acquisition-related costs of £88k have been charged to administrative expenses in the consolidated statement of

comprehensive income for the 53-week period ended 1 January 2023.

Property, plant and equipment acquired did not include the bowling lanes and equipment which is retained by

the landlord, which would normally make up the bulk of the cost of a site. The acquired equipment, furniture and

fittings on site is bespoke, without a marketplace to easily attain fair values from. The fair value of the acquired

property, plant and equipment has thus been based on the net book value of these assets at the time of sale to the

Group, being their cost when acquired less accumulated depreciation up to the date of sale.

A deferred tax asset of £1k was recognised on the fair values of assets acquired versus their tax basis. As part of

the due diligence, the sales and profit numbers prior to acquisition from the seller’s management accounts were

reviewed. As not all of the information was provided they are not disclosed here to provide a guide to potential

full-year performance. Since the date of the business combination the site generated £620k of sales and made

EBITDA of £82k which has been included in the statement of comprehensive income. The goodwill is made up of

the expected benefits to arise from Tenpinisation of the site’s operations and processes under the management of

the Tenpin brand. None of the goodwill is expected to be deductible for tax purposes.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

10 Goodwill and intangible assets

Group

Fair valued

intangibles

acquisition

£000

Goodwill

£000

Software

£000

Total

£000

Cost

At 27 December 2020 2,938 29,350 1,301 33,589

Additions — — 24 24

At 26 December 2021 2,938 29,350 1,325 33,613

Additions — 390 40 430

Disposals — — (34) (34)

At 1 January 2023 2,938 29,740 1,331 34,009

Accumulated amortisation and impairment losses

At 27 December 2020 2,677 — 1,086 3,763

Charge for the period – amortisation 90 — 131 221

At 26 December 2021 2,767 — 1,217 3,984

Charge for the period – amortisation 79 — 105 184

Disposals — — (34) (34)

At 1 January 2023 2,846 — 1,288 4,134

Net book value

At 1 January 2023 92 29,740 43 29,875

At 26 December 2021 171 29,350 108 29,629

At 27 December 2020 261 29,350 215 29,826

Impairment testing is carried out at the cash-generating unit (‘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 whole Group is considered to be one group of CGUs, for the purposes of

goodwill impairment testing, on the basis of the level at which goodwill is monitored by management and historical

allocation of goodwill upon acquisition. The overall process for testing impairment follows the same methodology

as detailed in Note 13 for property, plant and equipment. As part of the business combination accounting for the

acquisition of Essenden Limited in 2015, the fair value of customer lists, rebate contracts and the Tenpin Limited

website was recognised and have been fully amortised over the period for which the benefits were expected to be

recognised. The remaining value is for the lease acquired at the Worcester centre which was significantly below

market value and was fair valued and accounted for on acquisition in 2016 and is being amortised until the end of

the lease. The amortisation charged on the above intangible assets is included in other administrative expenses in

the statement of comprehensive income. Bank borrowings are secured on property, plant and equipment for the

value of £25,000k (2021: £39,000k).

11 Investments in joint venture

Group and Company £000

At 27 December 2020 310

Acquisitions and disposals —

At 26 December 2021 310

Share of post-tax losses in Joint venture (310)

At 1 January 2023 —

Company

Country of

incorporation

Ownership

interest %

Principal

activity

Houdini’s Escape Room Experience Limited (Registered address:

Aragon House, University Way, Cranfield Technology Park, MK43

0EQ) UK 50% Leisure

In December 2019, the Company entered into a Share Purchase Agreement and acquired 50% of the share capital

of Houdini’s Escape Room Experience Limited (‘Houdini’s’) for £300k. The Company also entered into a joint venture

agreement to determine the arrangements around the selection of Directors, dividend policy, premises use,

provision of services, put and call option arrangements and deadlock procedures.

Tenpin Limited and Houdini’s also entered into a £2,500k loan facility agreement whereby Houdini’s can borrow

money from Tenpin Limited over a three-year period to fund the building of escape rooms on their premises.

£1,801k has been borrowed as at 1 January 2023. The loans will incur a market rate of interest and have been

secured by a Debenture Agreement that the two parties entered into. As the purpose of the joint venture is to

fund and build escape rooms there is a restriction in the agreement around the payment of dividends by Houdini’s.

Houdini’s had 35 rooms open at the end of FY22, of which 25 are operated out of nine tenpin centres.

12 Investments

Company

Subsidiaries’

£000

At 27 December 2020 38,915

Acquisitions and disposals —

At 26 December 2021 38,915

Acquisitions and disposals —

At 1 January 2023 38,915

The Directors believe that the carrying value of the investments is supported by the underlying net assets of the

business and the future profits that will be generated by the Group.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

12 Investments continued

Group investments

The Company has investments in the following subsidiary undertakings, which affected the results and net assets

of the Group:

Parent

Country of

registration

Percentage of

shares held

Companies owned directly by Ten Entertainment Group plc

TEG Holdings Limited England & Wales 100%

Companies owned indirectly by Ten Entertainment Group plc

Tenpin Limited TEG Holdings Limited England & Wales 100%

Indoor Bowling Equity Limited TEG Holdings Limited England & Wales 100%

Indoor Bowling Acquisitions Limited Indoor Bowling Equity Limited England & Wales 100%

Essenden Limited Indoor Bowling Acquisitions Limited England & Wales 100%

Georgica Limited Essenden Limited England & Wales 100%

Georgica Holdings Limited Georgica Limited England & Wales 100%

Tenpin Five Limited Tenpin Limited England & Wales 100%

Tenpin One Limited Tenpin Limited England & Wales 100%

Georgica (Lewisham) Limited Georgica Holdings Limited England & Wales 100%

GNU 5 Limited Georgica Holdings Limited England & Wales 100%

Tenpin (Sunderland) Limited Tenpin Limited England & Wales 100%

Quattroleisure Limited Tenpin Limited England & Wales 100%

Tenpin (Halifax) Limited Tenpin Limited England & Wales 100%

Ten Entertainment Group plc and all its Group companies have their registered office at Aragon House, University

Way, Cranfield Technology Park, Cranfield, Bedford MK43 0EQ.

Tenpin Five Limited and Tenpin One Limited are claiming exemption from the audit and the preparation of financial

statements in accordance with Section 479A of the Companies Act 2006. A parent guarantee will be issued for

the liabilities of these companies which only consist of intercompany loans with the parent company and thus the

guarantee is not expected to be called upon.

13 Property, plant and equipment

Group

Land and

buildings

£000

Fixed

furnishings

£000

Amusement

machines

£000

Fixtures,

fittings and

equipment

£000

Total

£000

Cost

At 27 December 2020 — 11,368 1,401 49,099 61,868

Additions — — 35 4,270 4,305

Disposals — (263) — (1,282) (1,545)

At 26 December 2021 — 11,105 1,436 52,087 64,628

Additions 5,000 1,142 459 18,259 24,860

Disposals — — — (2,186) (2,186)

At 1 January 2023 5,000 12,247 1,895 68,160 87,302

Accumulated depreciation

andimpairment

At 27 December 2020 — 3,806 1,159 15,450 20,415

Charge for the period — 1,016 101 5,013 6,130

Impairment reversal — — — (264) (264)

Disposals – depreciation — (114) — (1,069) (1,183)

At 26 December 2021 — 4,708 1,260 19,130 25,098

Charge for the period — 994 141 5,810 6,945

Impairment reversal — — — (175) (175)

Disposals — — — (1,764) (1,764)

At 1 January 2023 — 5,702 1,401 23,001 30,104

Net book value

At 1 January 2023 5,000 6,545 494 45,159 57,198

At 26 December 2021 — 6,397 176 32,957 39,530

At 27 December 2020 — 7,562 242 33,649 41,453

Property, plant and equipment and right-of-use assets are reviewed for impairment on an annual basis. The

recoverable amount of each CGU (each of the 48 (2021: 46) centres open as at the period end has been treated

as a CGU) has been calculated as the higher of its value in use and its fair value less cost to sell. The calculation of

value in use is based on pre-tax cash flow projections from the financial forecasts approved by the Board covering

a three-year period. Cash flows beyond this three-year period are extrapolated over the life of the lease relating to

thatcentre.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

13 Property, plant and equipment continued

The key assumptions of the value in use calculation are:

1 January

2023

26 December

2021

Period on which management-approved forecasts are based 3 years 3 years

Long-term growth rate applied beyond approved forecast period 2% 2%

Pre-tax discount rate 13.25% 12.01%

The pre-tax discount rate applied to the cash flow projections approximates the Group’s weighted average cost of

capital (‘WACC’), adjusted only to reflect the way in which the market would assess the specific risks associated

with the estimated cash flows of the bowling businesses and to exclude any risks that are not relevant to estimated

cash flows of the bowling businesses, or for which they have already been adjusted. This pre-tax discount rate has

been benchmarked against the discount rates applied by other companies in the leisure sector. The future cash

flows have also been adjusted to account for climate related risks, with outflows factored in for the purchase of

solar panels to go up at sites to help achieve Net Zero targets. The impairment review this year has resulted in an

impairment reversal of £1,087k against the £2,522k of impairment charged in 2020. The reversal has been allocated

as £912k to right of use assets and £175k for property, plant and equipment in the same proportions that the

impairments arose. The reversal has arisen due to the improved performance of the sites since reopening and thus

the improvement of the short-term forecasts in the review compared to prior year, when the impairment resulted.

The key assumptions to which the calculation is sensitive remain the growth rate that is expected of each centre

and the pre-tax discount rate. If the discount rate applied in the calculations is increased by 1%, there is no change

to the impairment release but there would be an impairment charge of £116k (2021: £1,292k). If the long-term

growth rate applied is changed to 1%, there is no change to the impairment release but there would be an

impairment charge of £48k (2021: £701k). If the trading performance were to significantly reduce in line with the

downside case in the going concern section for 2023, the impairment reversal would reduce by £747k and the

impairment charge of £3,669k arises.

For the calculation of fair value less cost to sell, management has assumed that each Tenpin Limited business could

be sold for a multiple of 5x EBITDA (2021: 5x EBITDA).

The depreciation and impairment charges and reversal are recognised in administrative expenses in the statement

of comprehensive income. Bank borrowings are secured on all assets of the Group for the value of £25,000k (2021:

£39,000k) including property, plant and equipment.

14 Right-of-use assets

Group

Property

£000

Amusement

machines

and other

£000

Total

£000

Cost

At 27 December 2020 163,514 10,823 174,337

Lease additions — 442 442

Disposals — (166) (166)

Modification of leases 20,067 — 20,067

At 26 December 2021 183,581 11,099 194,680

Lease additions 9,547 1,768 11,315

Disposals — (383) (383)

Modification of leases 3,793 — 3,793

At 1 January 2023 196,921 12,484 209,405

Accumulated depreciation and impairment

At 27 December 2020 10,720 6,472 17,192

Charge for the period 9,013 2,153 11,166

Impairment reversal (860) — (860)

Disposals – depreciation — (142) (142)

At 26 December 2021 18,873 8,483 27, 356

Charge for the period 9,786 1,899 11,685

Impairment reversal (912) — (912)

Disposals – depreciation — (375) (375)

At 1 January 2023 27,747 10,007 37,754

Net book value

At 1 January 2023 169,174 2,477 171,651

At 26 December 2021 164,708 2,616 167,324

At 27 December 2020 152,794 4,351 157,145

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

FINANCIALSGOVERNANCESTRATEGIC REPORT

15 Inventories

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Goods held for resale 1,493 1,226 — —

The cost of inventories recognised as an expense and included in cost of sales amounted to £11,548k (2021:

£5,758k). There is a provision of £61k (2021: £80k) for obsolete shoes. These are included in the figures above. Bank

borrowings for the value of £25,000k (2021: £39,000k) are secured on all assets of the Group including inventory.

16 Trade and other receivables

Current receivables

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Trade receivables 118 374 — —

Amounts owed by subsidiary undertakings

(Note24) — — 611 205

Accrued income 107 114 — —

Advance payments to supplier 1,372 2,803 — —

Other receivables 1,453 844 — —

Prepayments 1,617 1,291 9 4

4,667 5,426 620 209

There is a provision of £300k (2021: £300k) for trade receivables that are beyond their due date and a provision of

£135k (2021: £135k) against other receivables that may not be recoverable. Included in other receivables is a loan to

Houdini’s for £1,801k, (2021: £600k) which is charged interest at the effective interest rate agreed at the time of the

loan. The loans mature at the end of 2024.

17 Cash and cash equivalents

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Cash and cash equivalents 10,086 11,511 298 4,424

18 Share capital

Group and Company

2023 2021

Shares £000 Shares £000

68,367,784 (2021: 68,346,970) ordinary shares

of£0.01 each at the beginning of the year 68,367,784 684 68,346,970 683

Issue of share capital during the period 128,334 1 20,814 1

Ordinary shares of £0.01 each at the end

oftheyear 68,496,118 685 68,367,784 684

As at 1 January 2023, the Company’s authorised share capital was £684,961 (2021: £683,678) divided into a single

class of 68,496,118 (2021: 68,367,784) ordinary shares of 1p each. All issued ordinary shares are fully paid up. The

share capital of the Group is represented by the share capital of the Company, Ten Entertainment Group plc, which

was incorporated on 15 March 2017. The shares confer on each holder the right to attend, speak and vote at all the

meetings of the Company with one vote per ordinary share on a poll or written resolution.

19 Cash generated from operations

Cash flows from operating activities

Group Company

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

Profit/(loss) for the period 26,596 4,005 (2,696) (2,038)

Adjustments for:

Tax 7,399 432 — —

Finance costs 7,206 5,986 — 6

Non-cash one-off income (239) (238) — —

Non-cash share-based payments charge/(credit) 539 248 539 248

Loss on disposal of assets 271 442 — —

Share of loss in Joint venture 310 — 310 —

Amortisation of intangible assets 184 221 — —

Depreciation of property, plant and equipment 6,945 6,130 — —

Depreciation of right of use assets 11,685 11,166 — —

Impairment reversal (631) (1,124) — —

Changes in working capital:

Increase in inventories (267) (720) — —

Decrease/(increase) in trade and other receivables 77 (955) (411) (146)

Increase/(decrease) in trade and other payables 1,888 5,234 (1,868) 1,777

Cash generated from/(used in) operations 61,963 30,827 (4,126) (153)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

100

FINANCIALSGOVERNANCESTRATEGIC REPORT

20 Bank borrowings and lease liabilities

Current liabilities

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Bank loans — 4,666 — —

Leases – Machines/other 2,728 3,223 — —

Leases – Properties 7,720 8,941 — —

Capitalised financing costs — (169) — —

10,448 16,661 — —

In September 2019, the Group entered into a £25,000k facility with the Royal Bank of Scotland plc (‘RBS’) for three

years. This facility consists of a committed £25,000k facility split into a £23,000k revolving credit facility and a

£2,000k overdraft facility. In January 2021, the Group entered into a £14,000k CLBILS term loan facility with RBS for

three years until January 2024. The CLBILS facility was fully repaid during 2022. During the year, the Group extended

the expiry date of the £25,000k facility until April 2024. The interest rates for the facilities are tabled further on.

Non-current liabilities

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Bank loans — 9,334 — —

Leases – Machines/other 1,560 2,390 — —

Leases – Property 188,394 181,108 — —

189,954 192,832 — —

Bank borrowings are repayable as follows:

Bank loans

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Within one year — 4,666 — —

Between one and two years — 4,667 — —

Between two and five years — 4,667 — —

— 14,000 — —

The RCF and overdraft have not been drawn down at the end of FY22, with the £14,000k CLBILS term loan facility

being fully repaid during the year which cannot be reborrowed.

Available borrowings are as follows:

Group Currency Interest rates Maturity

Total available

£000

Total drawn

£000

Revolving credit facility GBP LIBOR + 1.80% Apr-2024 23,000 —

Bank overdraft GBP LIBOR + 1.80% Apr-2024 2,000 —

Total borrowings 25,000 —

The payment profile of minimum lease payments under Leases is as follows:

Net Group

Property leases Machines and other leases Total

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Within one year 7,720 8,941 2,728 3,223 10,448 12,164

Between one and

twoyears 7,349 7,126 764 1,956 8,113 9,082

Between two and

fiveyears 24,015 23,552 799 434 24,814 23,986

After five years 157,027 150,430 — — 157,027 150,430

196,111 190,049 4,291 5,613 200,402 195,662

Gross

Property leases Machines and other leases Total

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Within one year 14,388 15,169 2,779 3,241 17,167 18,410

Between one and

twoyears 13,799 13,069 794 1,967 14,593 15,036

Between two and

fiveyears 41,757 39,842 815 440 42,572 40,282

After five years 205,936 197,2 36 — — 205,936 197,2 36

275,880 265,316 4,388 5,648 280,268 270,964

Future finance charges

on leases (79,769) (75,267) (97) (35) (79,866) (75,302)

Present value of lease

liabilities 196,111 190,049 4,291 5,613 200,402 195,662

Leases are in place for all 48 centres (2021: 46) at a value of £196,060k (2021: 190,049k), amusement machines

from Bandai Namco Europe Limited with a value of £4,089k (2021: £5,297k) and coffee machines acquired with a

value of £202k (2021: £316k).

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

101

FINANCIALSGOVERNANCESTRATEGIC REPORT

20 Bank borrowings and lease liabilities continued

Analysis of statutory net debt

Net cash/(debt) as analysed by the Group consists of cash and cash equivalents less bank loans and amounts to

£10,086k (2021: (£2,489k)). Statutory net debt as analysed below includes leases.

Cash

and cash

equivalents

£000

Bank

loans and

overdrafts

£000

Net cash

excluding

notes and

leases

£000

Leases

£000

Statutory

net debt

£000

Balance at 27 December 2020 7,394 (20,000) (12,606) (185,146) (197,752)

Changes from financing cash flows 4,117 6,000 10,117 10,006 20,123

Lease modifications in the year — — (20,067) (20,067)

Lease acquisitions — — — (455) (455)

Balance at 26 December 2021 11,511 (14,000) (2,489) (195,662) (198,151)

Changes from financing cash flows (1,425) 14,000 12,575 10,388 22,963

Lease modifications in the year — — — (3,793) (3,793)

Lease acquisitions — — — (11,335) (11,335)

Balance at 1 January 2023 10,086 — 10,086 (200,402) (190,316)

21 Trade and other payables and other non-current liabilities

Trade and other payables

Group Company

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Trade payables 1,330 2,381 — —

Amounts owed to subsidiary undertakings

(Note24) — — 827 2,794

Social security and other taxes 2,587 3,327 — —

Other payables 4,567 3,287 — —

Accruals 6,680 4,518 394 295

15,164 13,513 1,221 3,089

22 Deferred tax

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

1 January

2023

£000

26 December

2021

£000

Property, plant and

equipment — — (5,435) (2,184) (5,435) (2,184)

Tax losses 757 764 — — 757 764

Fair value on business

combination — — (33) (86) (33) (86)

Other 3,429 3,610 — — 3,429 3,610

Total 4,186 4,374 (5,468) (2,270) (1,282) 2,104

A deferred tax asset of £757k is recognised on taxable losses to the extent that there will be probable future taxable

income against which the loss can be utilised. It is expected the Group will continue to be profitable and so a

deferred tax asset has been provided for on the Group companies, losses generated in the year. The deferred tax

asset of £3,429k recognised on the impairment loss was accounted for on adoption of IFRS 16 as the impairment is

being utilised against future taxable profits generated by Tenpin Limited.

Movement in deferred tax during the 53-week period ended 1 January 2023:

27 December

2021

£000

Recognised

in income

statement

£000

Taxation

paid

£000

1 January

2023

£000

Property, plant and equipment (2,184) (3,251) — (5,435)

Tax losses 764 (7) — 757

Fair value on business combination (86) 53 — (33)

Other 3,610 (181) — 3,429

Total deferred tax 2,104 (3,386) — (1,282)

Current income tax 10 (4,013) 5,025 1,022

Total taxation 2,114 (7,399) 5,025 (260)

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

102

FINANCIALSGOVERNANCESTRATEGIC REPORT

22 Deferred tax continued

Movement in deferred tax during the 52-week period ended 26 December 2021:

28 December

2020

£000

Recognised

in income

statement

£000

Taxation

paid

£000

26 December

2021

£000

Property, plant and equipment (1,426) (758) — (2,184)

Tax losses 1,132 (368) — 764

Fair value on business combination (156) 70 — (86)

Other 2,986 624 — 3,610

Total deferred tax 2,536 (432) — 2,104

Current income tax 2,302 — (2,292) 10

Total taxation 4,838 (432) (2,292) 2,114

The Group has carry-forward tax losses of an estimated £21,383k (2021: £21,383k) on which no deferred tax has

been recognised. Of these, £12,202k (2021: £12,202k) are held by Essenden Limited, £8,728k (2021: £8,728k) are

held by Georgica Limited and £452k (2021: £42k) are held by Indoor Bowling Acquisitions Limited. The losses in

the Group companies have not been recognised as these are historic brought-forward losses and these companies

are not currently generating profits for which these losses can be utilised. The potential deferred tax asset not

recognised is £5,346k (2021: £5,346k). There are £3,851k (2021: £3,851k) of capital losses from disposals of the

historic CVA sites on which no deferred tax asset has been recognised as Tenpin Limited is not expected to generate

profit from the disposal of sites which these losses could be utilised against. The potential unrecognised deferred

tax asset on this would amount to £962k (2021: £962k).

23 Financial instruments

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.

The Group’s principal financial instruments comprise bank loans, cash and short-term deposits and are held in

Sterling. The purpose of these financial instruments is to provide finance for the Group’s operations. The Group

has various other financial instruments, such as trade receivables, trade payables and leases that arise directly from

its operations. All the Group’s financial instruments are denominated in Pounds Sterling. The carrying value of all

the Group’s financial instruments approximates fair value, and they are classified as financial assets and financial

liabilities measured at amortised cost.

The following tables show the fair value of financial assets and financial liabilities within the Group at the balance

sheet date. The carrying value of all financial assets was materially equal to their fair value and hence there has been

no impairment. The carrying amounts of trade and other payables are considered to be the same as their fair values,

due to their short-term nature. Due to the short-term nature of the current receivables, their carrying amount is

considered to be the same as their fair value.

Financial instruments by category

Group

Financial assets

1 January

2023

£000

26 December

2021

£000

Financial assets – measured at amortised cost

Trade and other receivables 1,679 1,332

Cash and cash equivalents 10,086 11,511

11,765 12,843

Group

Financial liabilities at

amortised cost

1 January

2023

£000

26 December

2021

£000

Financial liabilities – measured at amortised cost

Borrowings excluding leases — 13,831

Leases 200,351 195,662

Trade and other payables 12,587 10,187

212,938 219,680

Maturity analysis of financial liabilities

Group

1 January 2023 26 December 2021

Bank

loans

£000

Leases

£000

Trade

and other

payables

£000

Total

£000

Bank

loans

£000

Leases

£000

Trade

and other

payables

£000

Total

£000

Within one year — 10,448 12,587 23,035 4,497 12,164 10,187 26,848

Between one and two

years — 8,113 — 8,113 4,667 9,082 — 13,749

Between two and five

years — 24,814 — 24,814 4,667 23,986 — 28,653

After five years — 157,027 — 157,027 — 150,430 — 150,430

— 200,402 12,587 212,989 13,831 195,662 10,187 219,680

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

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FINANCIALSGOVERNANCESTRATEGIC REPORT

23 Financial instruments continued

Financial risk management

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. The Group holds no currency-denominated assets or liabilities, nor does it hold investments in shares

of third-party companies that would pose a market risk.

Cash flow and fair value interest rate risk

The Group borrows in Sterling at floating rates of interest. The interest rate profile of the Group’s financial liabilities

gross of debt issue costs was as follows:

Interest rate risk profile of financial liabilities

1 January

2023

£000

26 December

2021

£000

Floating rate financial liabilities — 14,000

Leases 200,402 195,662

200,402 209,662

Cash flow interest rate risk derives from the Group’s floating rate financial liabilities, being its bank debt and

overdraft facility, which are linked to SONIA plus a margin of 1.80%. The Group has no fair value interest rate risk.

In managing interest rate risk, the Group aims to reduce the impact of short-term fluctuations on the Group’s

earnings. Over the longer term, however, sustained changes in interest rates would have an impact on the Group’s

earnings. A 1% increase in the current interest rate charged on the bank loans would decrease earnings by £nil

(2021: £0.1m).

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 only to deal 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.

As almost all of the Group’s sales are for cash, the Group is exposed to minimal credit risk. The trade and other

receivables mainly relate to rebate income or vouchers sold and are from companies with strong credit histories and

good credit ratings. A balance of £0.5m has been made to provide for other receivables that may have an expected

credit loss, and a further £0.1m provision made against a deposit with a landlord with whom rent negotiations

are being carried out. The majority of prepayments are for service charges, business rates and insurances which

are to companies with strong credit histories and for less than six months in advance, and thus pose a low risk of

becoming impaired, and thus no provision has been made.

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. The Group’s cash position and cash flow forecasts are reviewed by management

on a daily basis, with the objective to ensure the Group has sufficient funds available to finance its business strategy.

The current bank facilities consist of a £25.0m RCF and overdraft facility which was not drawn at the year end.

The risk is measured by comparing the bank debt in use to the total facility available which shows that £25.0m of

the facility is still available for use. The Group also had £10.1m in cash reserves at the year end, available for use and

which adds to the headroom buffer. The total risk would be if the entire facility were unavailable for use if the Group

were to default on its banking agreement by not meeting its agreed covenants. The Consolidated Statement of

Financial Position shows that the Group has a net current liability position. The facilities are available to the Group

until April 2024, after being extended with the Royal Bank of Scotland plc during 2022.

Credit quality of financial assets

Group

1 January

2023

£000

26 December

2021

£000

Cash at bank and short-term bank deposits

‘A’ rated 9,046 10,375

Other cash-related balances 1,040 1,136

Total cash and cash equivalents 10,086 11,511

Capital risk management

The Group’s capital management objectives are to ensure the Group’s ability to continue as a going concern and

to provide an adequate return to shareholders by pricing products and services commensurate with the level of

risk. The Group paid the 2022 interim dividend of 3.0p, after reinstating the dividend policy, with a total of £2,055k

paid in cash to shareholders in October 2022. A final dividend of 7.0p has been recommended for FY22. The Group

monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the

face of the Consolidated Statement of Financial Position.

1 January

2023

£000

26 December

2021

£000

Total equity 59,144 34,063

Cash and cash equivalents (Note 17) (10,086) (11,511)

Capital 49,058 22,552

Total financing 49,058 22,552

Leases (Note 20) 200,402 195,662

Bank borrowings (Note 20) — 14,000

Overall financing 249,460 232,214

Capital to overall financing ratio 19.7% 9.7%

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

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FINANCIALSGOVERNANCESTRATEGIC REPORT

24 Related party transactions

Transactions with key management personnel

The Executive and Non-Executive Directors are deemed to be key management personnel of the Company. It is the

Board which has responsibility for planning, directing and controlling the activities of the Company. There were no

material transactions or balances between the Company and its key management personnel or members of their

close family. At the end of the period, key management personnel did not owe the Company any amounts. The

compensation of key management personnel is summarised in Note 3 to the consolidated financial statements.

The remuneration of the Directors of Ten Entertainment Group plc is set out in detail in the Directors’ Remuneration

Report, commencing on page 57 with a table of their remuneration for the period on page 64.

Transactions with other related parties

During the period the Group entered into transactions, in the ordinary course of business, with related parties.

Transactions entered into, and trading balances outstanding with related parties, are as follows:

Sales from

transactions

with related

party

£000

Expenses

from

transactions

with related

party

£000

Loans to

related party

£000

Amounts

outstanding

with related

party

£000

Related party

27 December 2020 — 12 166 237

Houdini’s Escape Room Experience Limited 233 — 421 899

Source BioScience — 1 — —

26 December 2021 233 1 421 899

Houdini’s Escape Room Experience Limited 44 — 1,158 1,801

1 January 2023 44 — 1,158 1,801

Sales and purchases between related parties are made at normal market prices. Outstanding balances with

Houdini’s are partially secured and charged interest and are due at the end of 2024.

All intercompany transactions and balances have been eliminated on consolidation. The intercompany balances

and transactions incurred by the Company relate to loans received to provide funding for the Company to pay its

operating costs as a plc:

1 January

2023

£000

26 December

2021

£000

Essenden Limited (170) (25)

Tenpin Limited (441) 2,794

TEG Holdings Limited 827 (180)

216 2,589

25 Commitments

The Group has committed to pay an additional £0.3m to a supplier for the purchase of equipment in 2023, being the

remaining balance on spend it has already incurred and accounted for in these financial statements.

26 Performance Share Plan

The Company operates a Performance Share Plan (‘PSP’) for its Executive Directors. In accordance with IFRS 2

Share-based Payments, the value of the awards is measured at fair value at the date of the grant. The fair value

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. In accordance with the PSP scheme announced on 30 March 2022 (‘the 2022

scheme’), the vesting of these awards is conditional upon the achievement of two performance conditions which

will be measured following the announcement of results for the year to 29December 2024 (‘FY24’).

The first performance condition applying to the awards will be based on earnings per share of the Company (‘EPS’)

and will apply to 50% of the total number of share awards granted.

The second performance condition will be based on total shareholder return (‘TSR’) of the Company over the period

from the date of grant to the announcement of results for FY24 relative to a comparator group of companies and

will apply to the remaining 50% of share awards granted.

The assumptions used in the calculation of share-based payments are as follows:

◆ an expected term for awards granted under the PSP as being three years from the date of grant on the basis that

these are nil-cost awards, and therefore we assume that participants will exercise their options as soon as

possible to benefit from full shareholder rights (e.g. voting and sale rights);

◆ the risk-free rate has been based on the implied yield of zero-coupon UK Government bonds (‘UK Strips’), with a

remaining term equal to the expected term;

◆ expected dividend yield is 3.59%; and

◆ the expected volatility is based on historical daily data over a term commensurate with the expected life of

theawards.

The models and model inputs are as follows:

EPS condition with

2-year holding period

TSR condition with

2-year holding period

Model used for valuation Monte Carlo and

Finnerty

Black Scholes and

Finnerty

Share price at valuation date (£) 2.655 2.655

Exercise price (£) £0.1 £0.1

Risk-free rate 1.41% n/a

Expected dividend yield 3.59% 3.59%

Life of option 3 years 3 years

Expected volatility 47.69% n/a

Fair value of one share (£) 1.78 1.54

During the period ended 1 January 2023, 327,586 (2021: 317,843) share awards were granted under the PSP, nil

(2021: nil) share awards were forfeited, 128,332 (2021: 74,335) lapsed and 128,334 (2021: 20,814) were exercised.

For the exercised awards, these were settled by the allotment of ordinary shares in the Company. For the year, the

Company recognised a net charge of £539,333) (2021: £248,304). The schemes are equity-settled share-based

payments and the remaining contractual life of the 2021 scheme share options at the period end is one year and

ten months, while the 2020 scheme share options’ remaining contractual life is ten months, and the 2019, 2018 and

2017 scheme share options have been exercised or lapsed.

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

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105

FINANCIALSGOVERNANCESTRATEGIC REPORT

26 Performance Share Plan continued

The following table splits the awards that were granted, exercised, lapsed and forfeited by the Executive Directors:

Director Position

Number of share

awards granted

Grants as at 31 December 2018 401,028

Granted in the year:

Duncan Garrood Chief Executive Officer 200,000

Antony Smith Chief Financial Officer 133,333

Graham Blackwell Chief Commercial Officer 123,333

Forfeited in the year due to resignation:

None —

Grants as at 29 December 2019 857,694

Granted in the year:

Antony Smith Chief Financial Officer 195,489

Graham Blackwell Chief Executive Officer 233,083

Forfeited in the year due to resignation:

Duncan Garrood Chief Executive Officer (311,940)

Exercised in the year:

Graham Blackwell Chief Executive Officer (96,970)

Lapsed in the year:

Graham Blackwell Chief Executive Officer (96,970)

Total as at 27 December 2020 780,386

Granted in the year:

Antony Smith Chief Financial Officer 144,981

Graham Blackwell Chief Executive Officer 172,862

Exercised in the year:

Graham Blackwell Chief Executive Officer (20,814)

Lapsed in the year:

Graham Blackwell Chief Executive Officer (74,334)

Total as at 26 December 2021 1,003,081

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Director Position

Number of share

awards granted

Granted in the year:

Antony Smith Chief Financial Officer 149,425

Graham Blackwell Chief Executive Officer 178,161

Exercised in the year: 

Graham Blackwell Chief Executive Officer (61,667)

Antony Smith Chief Financial Officer (66,667)

Lapsed in the year: 

Antony Smith Chief Financial Officer (66,666)

Graham Blackwell Chief Executive Officer (61,666)

Total as at 1 January 2023 1,074,001

Split as:

2020 scheme 428,572

2021 scheme 317,8 43

2022 scheme 327,586

Total as at 1 January 2023 1,074,001

As reflected in the Directors’ Remuneration Report, of the 428,572 awards from the 2020 scheme that are

exercisable in 2022, it is expected that 100% of the award will vest and at an average share price for the last three

months of the 1 January 2023 financial year, giving a fair value of £1,044,429. In accordance with the PSP 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 1 January 2023 for the 2020

scheme, 31 December 2023 for the 2021 scheme and 29 December 2024 for the 2022 scheme, and the Executive

Directors’ continued employment at the date of vesting. The awards will vest based on the following adjusted

EPStargets:

Adjusted EPS in the final year of the performance period (pence)

2022 scheme 2021 scheme 2020 scheme Vesting

20.50p 17.50p 17.00p 12.5%

20.50p – 23.50p 17.50p – 20.50p 17.00p – 23.00p 12.5% – 50%

More than 23.50p More than 20.50p More than 23.00p 50%

Ten Entertainment Group plc Annual Report and Accounts 2022

106

FINANCIALSGOVERNANCESTRATEGIC REPORT

27 Dividends paid and proposed

The following dividends were declared and proposed:

1 January

2023

£000

26 December

2021

£000

The following dividends were declared and paid by the Group:

Interim dividend declared and paid by Directors for year ended 1 January 2023 –

3.0p, 26 December 2021 – nil 2,055 —

The below relates to final dividends proposed:

Final dividend year ended 1 January 2023 – 7.0p per ordinary share, 26 December

2021 – nil per ordinary share 4,795 —

The Company received a dividend of £2,054,884 (2021: £nil) from its subsidiary TEG Holdings Limited. No dividends

have been proposed before the date of approval of these financial statements.

28 Post-balance sheet events

At the time of signing the Annual Report and Financial Statements the Group had entered into a lease for a property

in Milton Keynes in February 2023 with a right of use asset and lease liability value of £4,423k and a lease in Dundee

from February 2023 with a right of use asset and lease liability value of £5,867k. No further leases had been agreed

nor any new centre acquistions made.

Unaudited five-year record

53 weeks to

1 January

2023

£000

52 weeks to

26 December

2021

£000

52 weeks to

27 December

2020

£000

52 weeks to

29 December

2019

£000

52 weeks to

29 December

2018

£000

52 weeks to

1 January

2017

£000

Sales 126,673 67,521 36,269 84,122 76,350 71,040

Cost of sales (40,915) (22,511) (14,095) (24,930) (22,423) (21,478)

Gross profit 85,758 45,010 22,174 59,192 53,927 49,562

Administrative and

other (costs)/income (44,557) (34,587) (38,025) (46,609) (42,565) (39,640)

Operating profit/(loss) 41,201 10,423 (15,851) 12,583 11,362 9,922

Finance charges (7,206) (5,986) (5,815) (788) (693) (2,630)

Profit/(loss) before

taxation 33,995 4,437 (21,666) 11,795 10,669 7,292

Taxation (7,399) (432) 3,919 (2,758) (2,527) (2,111)

Profit/(loss) after

taxation 26,596 4,005 (17,747) 9,037 8,142 5,181

NOTES TO THE FINANCIAL STATEMENTS CONTINUED

FOR THE 53-WEEK PERIOD ENDED 1 JANUARY 2023

Ten Entertainment Group plc Annual Report and Accounts 2022

107

FINANCIALSGOVERNANCESTRATEGIC REPORT

Directors: Graham Blackwell

Antony Smith

Adam Bellamy

Julie Sneddon

Laura May

Sangita Shah

Christopher Mills

Company Secretary: Antony Smith

Registered Office: Aragon House

University Way

Cranfield Technology Park

Cranfield

Bedford, MK43 0EQ

Solicitors: Shoosmiths LLP

No.1 Bow Churchyard

London, EC4M 9DQ

Independent auditors: PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

1 Embankment Place

London, WC2N 6RH

Registrars: Computershare Investor Services Plc

120 London Wall

London, EC2Y 5ET

Brokers: Peel Hunt LLP

100 Liverpool Street

London, EC2M 2AT

Liberum Capital

Ropemaker Place, 12th Floor

25 Ropemaker Street

London, EC2Y 9LY

Company number: 10672501

Country of registration: England and Wales (United Kingdom)

DIRECTORS, COMPANY SECRETARY AND ADVISERS

Ten Entertainment Group plc Annual Report and Accounts 2022

108

Aragon House

University Way

Cranfield Technology Park

Cranfield

Bedford, MK43 0EQ

Ten Entertainment Group plc Annual Report and Accounts 2022