TIDMXPF
RNS Number : 7414N
XP Factory PLC
25 January 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED
UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014
WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL)
ACT 2018, AS AMED. ON PUBLICATION OF THIS ANNOUNCEMENT, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
25 January 2023
XP Factory Plc
("XP Factory", the "Company" or the "Group")
Trading Update
"Transformational year of growth - Group revenue tripled"
XP Factory, one of the UK's pre-eminent experiential leisure
businesses operating the Escape Hunt and Boom Battle Bar brands, is
pleased to provide an update on trading for the year to 31 December
2022.
Highlights:
-- A transformational year of growth:
o Strategic target of 27 open Boom Battle Bar sites achieved
by year end - 11 owner-operated and 16 franchised
o 5 new owner-operated Escape Hunts opened, taking the
total to 23 (plus 23 franchised)
o Group revenue of GBP21.9m was more than 300% of 2021
(2021: GBP7.0m)
o Escape Hunt owner operated revenue of GBP9.9m was 64%
ahead of 2021
o Boom Battle Bar owner-operated revenue of GBP8.8m in
its inaugural year
-- Profitability being delivered in line with expectations:
o Escape Hunt EBITDA margins in excess of 35% in the
year are driving a return on capital(1) in excess of
35% per annum
o Boom Battle Bar owner operated margins being delivered
in line with anticipated maturity curve, supporting
case for strong return on capital from sites
o Group Pre IFRS 16 Adjusted EBITDA(2) expected to be
c.GBP2.6m, in line with expectations (2021 GBP0.1m)
-- Strategic milestones being delivered:
o Owner operated estate bolstered with Norwich Boom Battle
Bar acquisition already paid back and Boom Battle Bar
Cardiff continuing to perform strongly
o The Board estimate annualised run-rate revenues from
the current business of circa GBP33m
o Fit-out funding facility of GBP3.3m agreed to support
additional site growth in Boom Battle Bar in 2023
o Cash at year end of GBP3.2m
o Substantial majority of Boom Battle Bar earnout likely
to be achieved
[1] Calculated as site level EBITDA divided by the total capex
at sites, net of landlord contributions
2 Adjusted EBITDA calculated before IFRS16 Adjustments, before
restructuring and exceptional costs and before pre-opening
costs.
Trading
2022 represented a transformational year in which the Board set
ambitious targets to grow our newly acquired Boom Battle Bar
business whilst continuing to grow Escape Hunt. The targets set for
new site roll outs were achieved and today the Group has critical
mass in both its Escape Hunt and Boom Battle Bar networks.
Escape Hunt
Sales for the Escape Hunt owner operated network rose 64 per
cent to GBP9.9m for the year achieving record levels of sales in
the final quarter, and in particular in December 2022,
notwithstanding the 15 per cent VAT reduction in the 2021
comparatives. Whilst H1 of 2021 was impacted by site closures
during Covid, the growth in H2 2022 reflects 14.0 per cent
underlying like for like growth(3) .
Margins in Escape Hunt have continued to surpass internal
benchmarks, with the site level EBITDA margin expected to be in
excess of 35 per cent for the full year. The like for like EBITDA
growth from the owner operated estate in H2, after normalising for
the VAT reduction received in 2021, is expected to be approximately
53%. This generated an annualised cash return(4) on invested
capital for the Escape Hunt UK owner operated estate of c.35 per
cent. The Escape Hunt Franchise network similarly experienced an
improved H2 compared to 2021.
Boom Battle Bar
2022 represented a 'maiden year' for Boom Battle Bar as we built
the foundations of a significant network. 26 Boom Battle Bar sites
were open and trading throughout December 2022, compared to only
six in 2021. The 27(th) site, operated as a franchise site, opened
on 28(th) December 2022.
Turnover from the Boom Battle Bar owner operated estate was
approximately GBP8.8m and royalty revenue from the franchise estate
was approximately GBP1.5m. Notwithstanding the impact of train
strikes which affected the London sites on the strike days in
particular, December performance gives us significant cause for
optimism. Notably, our flagship site in Oxford Street, London. The
site opened on 27 November 2022 and performance to date has been
very encouraging with the site recording the highest weekly sales
of any site in the network in only its third week of operation. New
sites are not expected to be profitable on day one, as operational
performance in new sites gradually improves over time and revenue
builds through awareness. The older sites in our owner operated
portfolio are now delivering consistent margins within the range
the Board had previously expected, whilst newer sites are tracking
in line with an expected maturity curve. The Board therefore remain
confident that the return on capital metrics from our owner
operated Boom Battle Bar estate will be highly attractive and
likely to be in excess of the excellent levels achieved in Escape
Hunt, once landlord contributions are taken into account. We have
recently agreed terms on a fit-out funding facility of GBP3.3m to
support additional site growth in Boom Battle Bar in 2023. The
facility is granted on a site by site basis and provides extended
credit over a 48 month period directly from the fit-out supplier at
5 per cent over base rates.
Both acquisitions made during the year have performed very well.
The Norwich site, acquired in August 2022, has already fully paid
back the cost of acquisition on a cash basis, whilst the Cardiff
site, acquired in September 2022, remains a profitable, high
turnover site which is expected to payback the full acquisition
price within two to three years. In the 16 weeks between the date
of acquisition and the end of the year, Cardiff delivered 12.5 per
cent like for like sales growth.
The turnover achieved within the Boom Battle Bar owner operated
and franchise estate, together with the successful expansion to 27
sites during the year is expected to result in a substantial
majority of the 25m earnout shares being issued to the vendors. The
final earnout will be determined through the audit process, with
the number of shares to be issued fixed and not impacted by share
price movements. There is no cash consideration payable in respect
of the earnout. Details of the earnout were set out in the Circular
sent to shareholders dated 4 November 2021.
The timing of site openings, together with the seasonal
importance of October to December, meant that the Group's
performance in 2022 was heavily skewed towards the last few weeks
of the year and highly sensitive to any changes in opening dates.
The increased mix of sites towards owner-operated (11 actual vs 6
budgeted) paradoxically has a short-term adverse impact on
profitability as we lose the benefit of up-front franchise fees and
have to account for operating losses in the early weeks and months
of operation while the businesses mature. However, despite this,
and despite December's train strikes having an estimated adverse
impact of approximately GBP0.35m on EBITDA, the Group still expects
to report an Adjusted EBITDA(5) , before IFRS 16, in line with
expectations, at approximately GBP2.6m. Cash balances at the
year-end were GBP3.2m.
Commenting, Richard Harpham, Chief Executive of XP Factory plc
said "2022 has been a transformational year. We are delighted to
have achieved our target of having 27 Boom Battle Bar sites open by
the end of 2022 together with the further expansion of our Escape
Hunt network. The platform that this combined estate sets up for
the Group forms the basis for a profitable and cash generative
group with very attractive return on capital metrics in future and
provides options for us to deliver significant growth for all our
stakeholders. In the current climate, we believe that our focus on
providing value for money and a highly differentiated social
experience resonates strongly."
3 After normalising for the VAT benefit in 2021
4 Calculated as site level EBITDA divided by the total capex at
sites, net of landlord contributions
(5) Adjusted EBITDA calculated before IFRS16 Adjustments, before
restructuring and exceptional costs and before pre-opening
costs.
Enquiries:
XP Factory Plc
https://www.xpfactory.com/
Richard Harpham (Chief Executive
Officer)
Graham Bird (Chief Financial
Officer)
Kam Bansil (Investor Relations) +44 (0) 20 7846 3322
Shore Capital, NOMAD and Broker
https://www.shorecap.co.uk/
Tom Griffiths/David Coaten (Corporate
Advisory) +44 (0) 20 7408 4050
IFC Advisory - Financial PR
https://www.investor-focus.co.uk/
Graham Herring
Florence Chandler +44 (0) 20 3934 6630
Notes to Editors:
About XP Factory plc
The XP Factory Group is one of the UK's pre-eminent experiential
leisure businesses which currently operates two fast growing
leisure brands. Escape Hunt is a global leader in providing
escape-the-room experiences delivered through a network of
owner-operated sites in the UK, an international network of
franchised outlets in five continents, and through digitally
delivered games which can be played remotely.
Boom Battle Bar is a fast-growing network of owner-operated and
franchise sites in the UK that combine competitive socialising
activities with themed cocktails, drinks and street food in a high
energy, fun setting. Activities include a range of games such as
augmented reality darts, Bavarian axe throwing, 'crazier golf',
shuffleboard and others. The Group's products enjoy premium
customer ratings and cater for leisure or teambuilding, in small
groups or large, and are suitable for consumers, businesses and
other organisations. The Company has a strategy to expand the
network in the UK and internationally, creating high quality games
and experiences delivered through multiple formats and which can
incorporate branded IP content. ( https://xpfactory.com/ )
Facebook: EscapeHuntUK BoomBattleBar
Twitter: @EscapeHuntUK @boombattlebar
Instagram: @escapehuntuk @boombattlebar
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END
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