REG - XP Factory PLC - Interim Results
27/09/2023 07:00
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RNS Number : 7413N XP Factory PLC 27 September 2023
27 September 2023
XP Factory plc
("XP Factory", the "Company" or the "Group")
Interim Results
XP Factory plc (AIM: XPF), one of the UK's pre-eminent experiential leisure
businesses operating the Escape Hunt® and Boom Battle Bar® brands, is
pleased to announce its unaudited interim results for the six months ended 30
June 2023 ("H1 2023").
Half year ended 30 June 2023 (£'000) Half year ended 30 June 2022 (£'000) Change
Revenue 18,694 8,120 +130%
Gross Profit 11,697 5,096 +128%
Site level EBITDA(1) 5,042 2,183 +131%
Pre IFRS 16 Adjusted EBITDA(1) 1,049 275 +281%
Adjusted EBITDA 2,356 1,070 +120%
Loss per share (pence) (1.58) (2.20)
FINANCIAL HIGHLIGHTS
· Group revenue increased 130% to £18.7m (H1 2022: £8.1m) demonstrating the
significant growth in scale:
- Escape Hunt® owner operated site revenue increased 41% to £6.1m
(H1 2022: £4.3m)
- Boom Battle Bar® ("Boom") owner operated revenue increased 416% to
£11.3m (H1 2022: £2.2m)
· Gross margin maintained at 62.1% (H1 2022: 62.8%)
· Pre IFRS 16 Group Adjusted EBITDA(1) profit of £1.05m (H1 2022: £0.28m)
· Site level pre IFRS 16 EBITDA profit of £5.0m (H1 2022: profit £2.2m)
· Cash at 30 June 2023 of £3.7m (31 Dec 2022: £3.2m)
OPERATING HIGHLIGHTS
· Double digit like-for-like(2) sales growth delivered across both
owner-operated brands:
o Boom: up 19.6% in the 26 weeks to 2 July 2023
o Escape Hunt® : up 20.4% in the 26 weeks to 2 July 2023
· Boom franchise sites in Chelmsford and Ealing acquired in June 2023
· Boom owner operated site level EBITDA margins 19% in sites trading over 12
months and 11% overall (H1 2022: loss 33%)
· Escape Hunt® owner operated site level EBITDA margins 40% (H1 2022: 40%)
continue to exceed internal targets
(1) Earnings before interest, tax, depreciation and amortization, calculated
before pre-opening losses, exceptional items, and other non-cash items. A
full reconciliation to operating loss is provided below in the text of the
announcement.
(2) Comparatives adjusted for VAT benefit in 2022.
POST PERIOD-END HIGHLIGHTS
· Group performance in July and August 2023 rebounded strongly after the
typically quieter May and June period
· First international Boom site opened in Dubai on 21 July and is performing
well
· New Boom site in Canterbury due to open on 29 September 2023 and in Southend
on 14 October 2023
· Boom consumer ratings significantly outperforming peers and the industry
· New Escape Hunt® site opened in Woking on 17 July 2023 with strong early
performance
· All UK Escape Hunt® owner operated sites operating for more than a year
awarded 'Traveller's Choice Awards' by Tripadvisor®
· Owner operated estate now comprises 24 Escape Hunt® sites and 15 Boom sites
· Franchise estate now comprises 23 Escape Hunt® sites and 14 Boom sites
· Record pre-bookings for corporate sales provides confidence underpinning
expectations for full year
· Group's financial year end moved to 31 March
Richard Harpham, Chief Executive of XP Factory, commented: "We are delighted
to have delivered such transformational growth compared to the same period in
2022, driven by the aggressive rollout of Boom Battle Bar. The performance in
Escape Hunt® has been outstanding and we are delighted to see the young Boom
business continue to mature with ongoing improvements to its operating
metrics. Performance since the end of June 2023 has been encouraging with
both Boom and Escape Hunt® delivering strong like for like growth over the
summer months. Experiential leisure has displayed robust demand despite the
current economic environment and our strategy to drive profitable growth and
take market share continues to progress. Whilst mindful of ongoing short-term
pressures on consumers and the second half weighting of the industry, we
remain optimistic for the performance of both businesses over the short and
medium term and expect to report full year numbers in line with market
expectations."
Enquiries
XP Factory plc +44 (0) 20 7846 3322
Richard Harpham (Chief Executive Officer)
Graham Bird (Chief Financial Officer)
Kam Bansil (Investor Relations)
Singer Capital Markets - NOMAD and Broker +44 (0) 20 7496 3000
Peter Steel
Alaina Wong
James Fischer
IFC Advisory - Financial PR +44 (0) 20 3934 6630
Graham Herring
Florence Chandler
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® Boom Battle Bar® is a fast-growing network of
owner-operated and franchised sites in the UK that combine competitive
socialising activities with themed cocktails, drinks and street food in a high
energy 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/ (https://xpfactory.com/) )
CHIEF EXECUTIVE'S REPORT
INTRODUCTION
The six-month period to 30 June 2023 represents the results of a transformed
business, illustrated by the significant growth in all our key financial and
operating metrics. The rapid expansion of our Boom Battle Bar® estate
during 2022, and in particular the second half of 2022, saw the Group start
2023 with a footprint of 27 Boom Battle Bar® sites, of which 11 were owner
operated, and 46 Escape Hunt® sites, of which 23 were owner operated. By
comparison, we started 2022 with only nine Boom sites, of which two were
owner-operated, and 41 Escape Hunt® sites, of which 18 were owner-operated.
Following the rapid expansion in 2022, focus in the first half of 2023 has
been on optimising the performance within these new sites. In a number of
cases, we have identified value adding changes that can be made through
incremental capital expenditure which is expected to generate a rapid
return. We have also re-assessed a number of the systems and operating
procedures in sites with a view to increasing efficiency, accountability and
providing better performance information. Within Escape Hunt®, we have
re-invested in a number of sites by adding additional rooms. The early
results of these efforts are being seen in the ongoing improvements in gross
margins and other operating metrics in line with an expected maturity curve as
well through strong like for like sales growth.
The experiential leisure sector continues to demonstrate robust structural
growth, well ahead of more conventional leisure offerings. Both Boom and
Escape Hunt® concepts continue to achieve above industry average return
metrics with a strong focus on ROCE and margins in particular. Our older
formats continue to experience strong LFL growth, demonstrating the resilience
and longevity of our model and the ability to deliver strong returns over
time. Whilst we will continue to actively manage our existing estate and will
continue to add new sites in both formats, our strategic focus over the short
term will remain on similar improvement and optimisation opportunities as we
aim to create a robust platform to support the longer-term aspirations for
significant further site expansion both in the UK and abroad.
BOOM BATTLE BARS
Owner operated
The Boom owner operated business delivered turnover of £11.3m, a 416%
increase over the same period in 2022 (H1 2022: £2.2m). Like for like
growth in the 26 weeks to 2 July 2023 was 19.6%. Performance was ahead of
expectations over the first quarter and April, although the seasonally quieter
periods in May and June 2023 were exacerbated somewhat by hotter weather and
train strikes. Pleasingly, performance in July and August 2023 saw an
acceleration with like for like growth for the 8 weeks to 27 August at 27%.
We have made significant progress in a number of areas within the Boom
owner-operated estate. At the start of the year, we invested in our
corporate sales capability. As a result, we have seen the average order
value for B2B sales grow 30% compared to the same period in 2022. Whilst we
have significantly more inventory to sell with the expanded estate, it has
nevertheless been extremely satisfying to see corporate bookings grow six-fold
in the period to 30 June 2023. Bookings have continued to increase month on
month since the period end, with Christmas bookings already well-advanced
underpinning confidence in the expected performance for the rest of the year.
Our marketing team has been active with a number of initiatives focused on
specific events and also in partnership with our suppliers promoting a range
of activities. These initiatives have been successful both in generating new
revenue and in building our brand. We have also continued to evolve our
offering and develop our drinks and food menus.
Evidence of progress within the operations of Boom can be seen in the
improving gross margin (after variable labour costs), which rose to 54% from
45% in the comparable prior period. It has been encouraging to see site
level EBITDA margins reach 19% in sites open for 12 months, and given the
seasonal nature of hospitality businesses, we would hope to see this improve
through H2 with enhanced sales leverage. Importantly, we are seeing underlying
improvements as sites progress through their expected maturity curves. On
our internal EBITDA return on net capital invested metric, the first three
owner operated sites which we have each been operating for more than 15
months, have generated a return of 42% in the 12 months to August 2023.
Whilst no new sites were opened in the period, the team has been active on
three new sites. Our first international Boom site opened in Dubai on 21
July 2023 and performance to date has been encouraging. Dubai provides an
excellent opportunity for us to develop our international capability as we
develop and optimise the support structures that can be provided from within
the UK which will assist future international expansion accordingly. Further
sites are due to open in Canterbury on 29 September 2023 and in Southend in
mid- October.
The team remains resolutely focused on customer experience, so it is pleasing
to see Boom's overall ratings consistently ahead of its peers and the industry
as a whole. Boom achieved an overall customer satisfaction score of 97%,
ahead of the 94% achieved by the competitive socialising industry as a whole,
and significantly ahead of the broader leisure industry rating of 87%.
As at the date of approval of these interim results, the Group had 15 owner
operated Boom sites, including the international site in Dubai.
Franchise
Boom franchise activities delivered unaudited revenue of £1.1m and EBITDA of
£1.1m in the six months ended 30 June 2022. (H1 2022, revenue £1.4m and
EBITDA of £0.9m). The prior period included £0.8m of revenue associated with
the sale of a franchise venue, offset by £0.5m cost of sale. Hence the
underlying growth of franchise fees was 83%. This was largely due to the
number of franchise sites opened during 2022.
In June 2023, we opportunistically bought back the franchise sites operating
in Chelmsford and Ealing with the acquisition funded by vendor loans. We
expect the acquisition to deliver a highly attractive cash on cash return and
we are likely to do similar deals in the future where the opportunity arises
and the risk adjusted returns match the returns we can make from opening new
sites.
Today our Boom franchise estate comprises 14 sites. We have no new franchise
sites currently in build or in the advanced pipeline but are working with a
number of existing and new potential franchisees to support future growth.
Escape HUNT®
Owner operated
The Escape Hunt® owner operated business delivered £6.1m of revenue, a 41%
increase over the same period in 2022 (H1 2022: £4.3m). Like for like growth
in the 26 weeks to 2 July 2023 was 20.4%. Within this, the original seven
Escape Hunt® sites opened in 2018 delivered like for like growth of 15.1%, a
pleasing result given they are still playing the same games installed at
launch. The Board believes the strong like for like performances provide
evidence of the attractions and enduring nature of the Escape Hunt® business
and underpin the high return on capital thesis on which the concept has been
developed. Corporate sales have also grown, with average order values for
group bookings rising 31% compared to the same period in 2022 and the sales
team delivering 29% growth in corporate sales in the first six months of the
year. Corporate and block-booked sales represented approximately 5% of total
sales within Escape Hunt® in H1 2023, with scope to grow significantly.
Site level EBITDA margins continued to exceed 40% during the period, despite
meaningful wage increases which took effect over the first half of the year.
We have been careful to maintain pricing in the face of considerable
pressures on the consumer, such that the strong growth has been delivered
largely through increased utilisation. On our internal EBITDA return on net
capital invested metric, the UK sites opened before June 2022 have delivered a
40% return over the 12 months to August 2023.
Escape Hunt® continues to enjoy excellent consumer ratings, achieving a 97%
customer satisfaction rating and all eligible Escape Hunt® sites in the UK
again received the TripAdvisor Traveller's Choice ® award in 2023, a
performance significantly ahead of the industry as a whole.
Franchise
The Escape Hunt® franchise business returned to growth and delivered
revenue of £282k, up 17% on the same period in 2022 (H1 2022: £241k). The
international franchise estate pre-dates the UK owner operated estate with
many of the games at franchise sites having been in operation for five years
or more. As with our older owner operated sites, this performance provides
further evidence of the longevity and resilience of the business.
STRATEGY
Overview
Following our recent expansion, the group is the largest escape room and
competitive socialising operator in the UK. This is a fast growing and
resilient niche of the leisure sector, with our sites benefiting from industry
leading unit economics with further improvement potential. Our experience to
date demonstrates the opportunity to expand in the UK and logic for taking our
proven concept overseas with reduced execution risk. Our strategy to deliver
profitable growth is supported by a clear focus on the strength and longevity
of returns on capital employed available, with accelerated payback periods
following initial investment.
Continued execution of our strategic priorities
Our strategic priorities remain as set out previously and we have continued to
make progress in each of these areas during the period:
1. Maximise the UK footprint by rolling out each brand, either through
direct investment into owner operated sites or through franchise arrangements
Following the aggressive roll-out in 2022, we have consciously moderated the
pace of roll out to ensure we optimise the performance and operations within
the enlarged estate. Since the period end, we have opened a new Escape
Hunt® site in Woking, and new Boom sites are due to open in Canterbury on 29
September 2023, and Southend in mid-October 2023.
2. Accelerate growth in international territories, ultimately through
franchise
We opened our first international Boom Battle Bar® in Dubai and are actively
exploring possibilities in other territories. In the short term, however,
our focus will remain the UK with the aim of developing a robust, defensible
business capable of international franchise.
3. Continue to develop new products and markets which facilitate the
growth of B2B sales
We put significant investment into our B2B sales capability at the start of
the year with both Boom and Escape Hunt® benefitting from strong growth in
corporate sales revenue. Escape Hunt® has also developed a new range of
outdoor experiences which are being rolled out across the estate providing
additional sales potential and catering to new customers.
4. Integrate the businesses, exploit synergies where possible and
develop an infrastructure that supports scale and future growth
As mentioned previously, this final objective has taken a greater degree of
importance in the period under review as we aim to optimise the performance of
the existing business and create a platform that is defensible, attractive to
larger scale franchisees and capable of supporting a significantly larger
business.
Current position and longer-term opportunity
The group is now beginning to see the benefits of our enhanced scale providing
the foundations for improved efficiency and expanding our competitive
advantage. By design, our model is capital efficient, with rapid payback and
high return on investment, as well as being eminently scalable with an
objective to achieve accelerated market share, superior returns and deliver a
consistent customer experience. We aim to continue to receive industry
leading satisfaction scores. Our key strengths are as follows:
· Modular formats - standardised lay-outs and automated games
· Growing data-sets, learning what does and does not work - all
accelerating timescales for sites to reach maturity
· Increasingly trusted brand with strong customer review scores and
industry recognition
· Cost advantages of room build through modular off-site
construction with fit-out completed on site
· Favourable rent conditions with frequent landlord incentives
provided on new builds
· Scaling of supplier relationships with the prospect of margin
enhancement
The above factors are all helping to improve unit economics, with the
potential for enhanced returns into the future. Areas of further potential
opportunity include upgrading our games offering in existing sites, widening
our food choice, harnessing data insights to a greater extent to optimise site
layouts and game offering and using technology to enhance customer experience.
In summary, the experiential leisure industry has proven to be exceptionally
robust despite the current pressures on the consumer. However, it remains in
its infancy in terms of the wider leisure opportunity in the UK. Competitive
socialising participation is growing quickly at 13% p.a. and the Group is
ideally positioned to benefit from these structural growth trends. In the
short-term, we are seeking to optimise the pace of site roll-out at the pace
at which we are able to generate capital. We remain vigilant of evolving
trends and continue to actively manage our existing estate as well as
evaluating new opportunities to drive profitable growth. We have recently
invested in capability to analyse data from our sites more thoroughly, both to
improve existing sites and to identify the optimal locations for new sites.
Initial analysis supports our expectation that in the longer-term, we see an
opportunity to scale the business considerably domestically and
internationally, with a market opportunity of +50 Escape Hunt® and +100 Boom
Battle Bar® sites in the UK alone.
Internationally, our Dubai site has opened ahead of expectations and we see a
significant opportunity in time to roll out our proven concept overseas with
reduced execution risk.
FINANCIAL REVIEW
Financial performance
Unaudited Group revenue in the six months to 30 June 2023 was £18.7m, an
increase of 130% over the same period in 2022. The increase reflects the
significant site expansion undertaken in 2022 together with strong like for
like growth. Escape Hunt® owner-operated revenue grew 41% to £6.1m,
reflecting the addition of turnover from new sites opened in H2 2022 in
Edinburgh, Bournemouth and London Oxford Street, together with 20% like for
like growth from the existing estate. Boom owner operated revenue grew 416%,
reflecting like for like growth of 19.6% and the growth of the owner operated
estate from 2 sites in January 2022 to 13 as at 30 June 2023.
Group adjusted EBITDA before IFRS16 grew strongly from £275k to £1.049m and
to £2.356m (H1 2022: £1.07m) after IFRS 16 adjustments.
Six months ended June 2023 Six months ended June 2022
£'000 £'000
Adjusted EBITDA - pre IFRS 16 1,049 275
IFRS 16 adjustments 1,307 795
Adjusted EBITDA post IFRS 16 2,356 1,070
Amortisation of intangibles (393) (455)
Depreciation (2,936) (1,720)
Rent credits recognised - 25
Loss on disposal of tangible assets (19) (156)
Profit on closure/modification of leases - 105
Branch closure costs and other exceptional costs (49) (288)
Branch pre-opening costs (188) (881)
Provision against loan to franchisee 0 (21)
Foreign currency gains / (losses) 7 44
Fair value movement on contingent consideration (312)
IFRS 9 provision for guarantee losses 7 (57)
Share-based payment expense (42) (34)
Operating loss (1,569) (2,368)
£188k of expenditure in the period related to pre-opening costs, largely for
the new Boom sites in Dubai and Canterbury, as well as the new Escape Hunt®
site in Woking. The £312k fair value movement arose on the final settlement
of contingent consideration through the issue of 23.9m shares to MFT Capital
Ltd and reflects the difference between the market value of the expected share
issue as at 31 December 2022 and actual value on the date on which they were
issued.
At a site level, Escape Hunt® owner operated segment continued to perform
strongly, delivering site-level EBITDA of £2.4m at a margin of 40%. Within
the Boom Battle Bar® owner operated segment, gross margins (inclusive of
variable labour) improved strongly to 54% from 45% in the same period in 2022.
The underlying site level EBITDA margins achieved (11%) reflect the
seasonality in Boom's business but more significantly were diluted by the
expected losses/lower margins generated from more recently opened sites with
19% EBITDA delivered by the more mature sites. It is nonetheless encouraging
to see improvements continuing to be made in aggregate as the individual sites
progress through their expected maturity curves.
H1 2023 Escape Hunt® Escape Hunt® Boom Boom H1 2023
Owned Franchise Owned Franchise Unallocated £'000
Sales 6,063 282 11,260 1,089 - 18,694
Gross profit 4,240 282 6,086 1,089 - 11,697
Pre IFRS 16 Adjusted site level EBITDA 2,437 282 1,234 1,089 - 5,042
Site level EBITDA margin 40% 100% 11% 100% 27%
Centrally incurred costs (718) (54) (632) (21) (2,567) (3,993)
Pre-IFRS Adjusted EBITDA 1,718 228 602 1,068 (2,567) 1,049
IFRS adjustments (net of pre-opening) 276 - 1,031 - - 1,307
Post IFRS 16 Adjusted EBITDA 1,995 228 1,634 1,068 (2,567) 2,356
H1 2022 Escape Hunt® Escape Hunt® Boom Boom H1 2022
Owned Franchise Owned Franchise Unallocated £'000
Sales 4,313 241 2,183 1,384 - 8,121
Gross profit 2,956 241 992 907 - 5,097
Pre IFRS 16 Adjusted site level EBITDA 1,741 241 (729) 930 - 2,183
Site level EBITDA margin 40% 100% -33% 67% - 27%
Centrally incurred costs (770) - (16) (8) (1,114) (1,908)
Pre-IFRS Adjusted EBITDA 971 241 (745) 922 (1,114) 275
IFRS adjustments (net of pre-opening) 230 - 565 - - 795
Post IFRS 16 Adjusted EBITDA 1,201 241 (180) 922 (1,114) 1,070
Central costs of £2.6m reflect the full year effects of growth in 2022 to
support the larger estate, covering operations, marketing, finance and other
support functions. There has also been an impact from inflation as salaries
and other central costs have risen in line with market rates.
Interest costs of £115k reflect the additional fit out and vendor finance
utilised.
Unaudited Group operating loss was £1.6m (2022: £2.4m) leading to a
reduction in the loss per share from 2.2p to 1.58p.
Cashflow
The Group generated £3.4m of cash from operations (H1 2022: £0.8m). £2.8m
was invested in plant and equipment and intangibles. This comprised total
investment of £1.8m within Boom owner-operated sites and £1.0m investment in
Escape Hunt® owner operated sites. Within Boom, £0.9m was invested in new
sites in Dubai, Canterbury and Southend, £0.8m was directed to existing sites
to make improvements to the original plans as management believes this
expenditure will produce attractive returns, whilst £0.1m reflected
maintenance capex. Within Escape Hunt®, £0.45m was invested in the new site
in Woking with a further £0.25m being invested in extending existing sites
through the addition of new rooms, and £0.2m represented maintenance capex.
£600k was paid for the second deferred consideration instalment for the
acquisition of Boom Cardiff (shown within movements in provisions). The
final instalment of €50k together with accrued interest was paid on the
vendor loan relating to the acquisition of the Escape Hunt® master franchise
in France and Belgium. The acquisitions of Boom Chelmsford and Boom Ealing
were funded by vendor loans such that the acquisitions led to a modest inflow
of cash on completion as the Group received the benefit of existing cash
balances totalling £84k.
Rental payments, classified under IFRS16 as capital and interest payments
totalled £1.03m, whilst £115k was paid in interest on fit out finance and
other loans.
The Group has utilised various funding facilities during the period,
comprising either vendor finance related to the acquisition of Chelmsford and
Ealing, or fit-out finance supporting the capital expenditure programme. In
total, £1.4m of new loans were raised, and £0.5m of repayments were made.
Cash at 30 June 2023 was £3.7m (30 Jun 2022: £5.2m; 31 Dec 2022: £3.2m).
Financial position
Movements on the balance sheet largely reflect the capital investment and
related funding undertaken during the period. Fixed assets increased in
aggregate by £4.0m, reflecting £2.8m of internal capex, £1.1m of fixed
asset additions from the acquisitions of Chelmsford and Ealing Boom franchise
sites, £1.5m of additional right of use assets from leases in Dubai and
Southend as well as the acquisitions of Boom Chelmsford and Boom Ealing,
offset by associated depreciation. The increase in right of use assets,
which is stated net of landlord incentives, is offset by an increase in lease
liabilities.
Current assets remained stable at £7.3m, masking an underlying reduction in
franchisee debtors which was offset by an increase in prepayments and other
debtors.
The reduction in short term provisions from £5.0m to £0.4m reflects the
settlement of the Boom contingent consideration in June 2023.
As mentioned above, the Group has utilised various forms of funding to finance
the ongoing expansion of the estate both through building new sites and the
buy-back of franchise sites in Chelmsford and Ealing.
Net assets as at 30 June 2023 stood at £23.6m (31 December 2022: £21.6m).
Group net cash / net debt was £nil (31 Dec 2022: net cash £0.8m).
As announced on 4 August 2023, the Company's year-end has been moved to 31
March. As a result of the change, the Group's current financial year will
comprise 15 months from 1 January 2023 to 31 March 2024. Following these
unaudited interim results for the six months to 30 June 2023, the Board
intends to report as follows, in each case with appropriate comparatives:
• Unaudited interim results for the twelve months
to 31 December 2023 - publication by 31 March 2024
• Audited final results for the fifteen months to
31 March 2024 - publication by 30 September 2024
• Unaudited interim results for the six months to
30 September 2024 - publication by 31 December 2024
POST PERIOD END TRADING AND OUTLOOK
Trading bounced back strongly in July after the seasonally quieter months of
May and June. The resilient performance continued throughout the summer.
Like for like growth within the Boom owner operated estate was 25% and within
the Escape Hunt® owner operated estate was 23% in the nine weeks to 3
September 2023. Margins within Boom saw further, steady improvements and
Escape Hunt® has continued to operate at margins in line with those achieved
in the first six months of the year. Whilst remaining alert to the ongoing
pressures on consumers, cost pressures in the business and the seasonal
significance of the end of the year, strong corporate sales and ongoing
operational improvements provide confidence of an outcome for the full year in
line with current market expectations.
Richard Harpham
Chief Executive Officer
27 September 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE CONDENSED INTERIM REPORT AND CONDENSED FINANCIAL STATEMENTS
The directors confirm that the condensed consolidated interim financial
information has been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', and that the Interim Report
includes a fair review of the information required by DTR 4.2.7R and DTR
4.2.8R, namely:
· an indication of important events that have occurred during the first six
months and their impact on the condensed consolidated interim financial
information, and a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
· material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last Annual Report.
The directors of XP Factory plc are listed on page 28 of this report. A list
of current directors is maintained on the Company's web site:
https://www.xpfactory.com/investors/key-people
By order of the Board
Richard Rose
Non-Executive Chairman
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six months ended Six months ended
30 June 2023 30 June 2022
Note Unaudited Unaudited
£'000 £'000
Continuing operations
Revenue 18,694 8,120
Cost of sales (6,997) (3,024)
Gross profit 11,697 5,096
Other income 40 128
Administrative expenses (13,306) (7,592)
Operating loss (1,569) (2,368)
Adjusted EBITDA 2,356 1,070
Amortisation of intangibles (393) (455)
Depreciation (2,936) (1,720)
Rent credits recognised - 25
Loss on disposal of tangible assets (19) (156)
Profit on closure/modification of leases - 105
Branch closure costs and other exceptional costs (49) (288)
Branch pre-opening costs (188) (881)
Provision against loan to franchisee - (21)
Foreign currency gains / (losses) 7 44
Fair value movement on contingent consideration (312) -
IFRS 9 provision for guarantee losses 7 (57)
Share-based payment expense (42) (34)
Operating loss (1,569) (2,368)
Interest received 73 13
Interest expense (115) (583)
Lease finance charges 13 (828) (367)
Loss before taxation (2,439) (3,305)
Taxation 7 47 56
Loss after taxation (2,392) (3,249)
Other comprehensive income:
Items that may or will be reclassified to profit or loss:
Exchange differences on translation of foreign operations (46) (120)
Total comprehensive loss (2,438) (3,369)
Loss attributable to:
Equity holders of XP Factory plc (2,392) (3,249)
(2,392) (3,249)
Total comprehensive loss attributable to:
Equity holders of XP Factory plc (2,438) (3,369)
(2,438) (3,369)
Loss per share attributable to equity holders: (1.58) (2.20)
Basic (Pence) 6 (1.58) (2.20)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
As at As at
20122012 20122012
30 June 31 December
2022 2022
Note Unaudited Audited
£'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 8 14,576 12,753
Right-of-use assets 9 19,302 17,842
Intangible assets 10 23,370 22,696
Finance lease receivable 9 1,318 1,273
Rent deposits 59 61
58,625 54,625
Current assets
Inventories 320 323
Trade receivables 9656 1,934
Other receivables and prepayments 2,684 1,839
v
Stocks and work in progress 3,189
Cash and bank balances 3,682
7651 7,285
TOTAL ASSETS 66,276 61,910
LIABILITIES
Current liabilities
Trade payables 2,846 1,837
Contract liabilities 1,929 1,029
Loans 14 1,599 1,057
Lease liabilities 13 3,406 1,073
Other payables and accruals 5,351 5,259
Provisions 12 364 4,970
15,495 15,215 15,225
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
(continued)
As at As at
30 June 31 December
2022 2022
Note Unaudited Audited
£'000 £'000
Non-current liabilities
Contract liabilities 31 455
Provisions 12 481 413
Loans 14 2,076 423
Deferred tax liability 785 832
Lease liabilities 13 23,780 22,965
-
27,153 25,088
TOTAL LIABILITIES 42,344 40,313
NET ASSETS 23,627 21,597
EQUITY
Capital and reserves attributable to equity holders of XP Factory plc
Share capital 15 2,182 1,883
Share premium account 48,832 44,705
Merger relief reserve 4,756 4,756
Accumulated losses (32,703) (30,312)
Currency translation reserve 233 279
Capital redemption reserve 46 46
Share-based payment reserve 281 240
TOTAL EQUITY 23,627 21,597
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium account Merger relief reserve Currency translation reserve Capital redemption reserve Share-based payment reserve Accumulated losses Total
Convertible loan note reserve
Six months ended £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
30 June
2023
£'000
Balance as at 1,883 44,705 4,756 279 46 240 - (30,312) 21,597
1 January 2023
Loss for the period - - - - - - - (2,392) (2,392)
Other comprehensive income - - - (46) - - - - (46)
Total comprehensive loss - - - (46) - - - (2,392) (2,438)
Issue of shares 299 4,127 - - - - - - 4,426
Share issue costs - - - - - - - - -
Share-based payment charge - - - - - 42 - - 42
Transactions with owners 299 4,127 - - - 42 - - 4,468
Balance as at 30 June 2023 2,182 48,832 4,756 233 46 281 - (32,703) 23,627
Six months ended £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
30 June
2022
Balance as at 1,825 44,366 4,756 (83) 46 158 68 (29,317) 21,819
1 January 2022
Loss for the period - - - - - - - (3,249) (3,249)
Other comprehensive income - - - (120) - - - - (120)
Total comprehensive loss - - - (120) - - - (3,249) (3,369)
Issue of shares 55 338 - - - - (68) - 325
Share issue costs - - - - - - - - -
Share-based payment charge - - - - - 35 - - 35
Transactions with owners 55 338 - - - 35 (68) - 359
Balance as at 30 June 2022 1,880 44,704 4,756 (203) 46 193 - (32,566) 18,810
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six months ended Six months ended
30 June 2023 30 June 2022
Unaudited Unaudited
Cash flows from operating activities Note £'000 £'000
Loss before income tax (2,439) (3,305)
Adjustments:
Depreciation of property, plant and equipment 8 2,008 1,127
Depreciation of right-of-use assets 9 928 589
Amortisation of intangible assets 10 393 455
Fair Value movement on contingent consideration 313 -
Provision against non-current assets - 21
Loss on write-off of property, plant and equipment 18 156
Share-based payment expense 40 34
Foreign currency movements 5 (172)
Lease interest charges 12 828 367
Rent concessions received 12 - (25)
Profit on closure/modification of leases - (105)
Profit on early redemption of Convertible Loan notes - (8)
Interest expense / (income) 42 570
Operating cash flow before working capital changes 2,136 (296)
Decrease in trade and other receivables 825 1,094
Increase in stock and WIP 31 343
Increase in trade and other payables 398 439
Increase in provisions (424) (393)
Increase / (decrease) in deferred income 452 (433)
Cash generated / (used) in operations 3,418 754
Income taxes paid - -
Net cash generated / (used) in operating activities 3,418 754
Cash flows from investing activities
Purchase of property, plant and equipment 8 (2,735) (3,323)
Disposal of property, plant and equipment - -
Purchase of intangibles 10 (101) (90)
Receipt of deposits - 22
Movement in Loans advanced to franchisees - 32
Acquisition of subsidiary, net of cash acquired 84 -
Interest received 28 21
Net cash used in investing activities (2,724) (3,338)
Cash flows from financing activities
Proceeds from issue of ordinary shares 13 - -
Interest payments (115)
Finance lease interest payments 12 (522) (362)
Finance lease capital payments 12 (513)
Movements on loans 958 (167)
(
Net cash generated / (used) from financing activities (192) (529)
Net increase / (decrease) in cash and bank balances 502 (3,113)
Cash and cash equivalents at beginning of period 3,189 8,225
Exchange rate changes on cash held in foreign currencies (9) 51
Cash and cash equivalents at end of period 3,682 5,163
NOTES TO THE UNAUDITED INTERIM REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2022
1. General information
The Company was incorporated in England on 17 May 2016 under the name of
Dorcaster Limited with registered number 10184316 as a private company with
limited liability under the Companies Act 2006. The Company was re-registered
as a public company on 13 June 2016 and changed its name to Dorcaster Plc on
13 June 2016. On 8 July 2016, the Company's shares were admitted to AIM.
Until its acquisition of Experiential Ventures Limited on 2 May 2017, the
Company was an investing company (as defined in the AIM Rules for Companies)
and did not trade.
On 2 May 2017, the Company ceased to be an investing company on the completion
of the acquisition of the entire issued share capital of Experiential Ventures
Limited. Experiential Ventures Limited was the holding company of the Escape
Hunt® Group, the activities of which related solely to franchise.
On 2 May 2017, the Company's name was changed to Escape Hunt® plc and became
the holding company of the enlarged Escape Hunt® Group. Thereafter the group
established the Escape Hunt® owner operated business which operates through a
UK subsidiary. All of the Escape Hunt® franchise activity was subsequently
transferred to a UK subsidiary. On 22 November 2021, the Company acquired BBB
Franchise Limited, together with its subsidiaries operating collectively as
Boom Battle Bars. At the same time, the Group took steps to change its name
to XP Factory Plc with the change taking effect on 3 December 2021.
XP Factory Plc 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 Company's registered office is Ground Floor and Basement Level, 70-88
Oxford Street, London, England, W1D 1BS.
The consolidated interim financial information represents the unaudited
consolidated results of the Company and its subsidiaries, (together referred
to as "the Group"). The Consolidated Interim Financial Statements are
presented in Pounds Sterling, which is the currency of the primary economic
environment in which the Company operates.
2. Basis of preparation
These interim consolidated financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting. They do not include all
disclosures that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the 2022 annual report. The
statutory financial statements for the year ended 31 December 2022 were
prepared in accordance with International Financial Reporting Standards in
accordance with the requirements of the Companies Act 2006. The auditors
reported on those financial statements; their Audit Report was unqualified.
The interim financial information is unaudited and does not constitute
statutory accounts as defined in the Companies Act 2006.
The interim financial information was approved and authorised for issue by the
Board of Directors on 27 September 2023.
3. Going concern
The financial statements have been prepared on a going concern basis which
contemplates the continuity of normal business activities and the realisation
of assets and the settlement of liabilities in the ordinary course of
business.
The directors have assessed the Group's ability to continue in operational
existence for the foreseeable future in accordance with the Financial
Reporting Council's Guidance on the going concern basis of accounting and
reporting on solvency and liquidity risks issued in April 2016.
The Board has prepared detailed cashflow forecasts covering a forty five-month
period from the reporting date. The forecasts take into account the Group's
plans to continue to expand the network of both Boom Battle Bar® and Escape
Hunt® sites through organic growth. The forecasts consider downside
scenarios reflecting the potential impact of an economic slowdown, delays in
the roll out of sites and inflationary pressures. Based on the assumptions
contained in the scenarios considered and taking into account mitigating
actions that could be taken in the event of adverse circumstances, the
directors consider there are reasonable grounds to believe that the Group will
be able to pay its debts as and when they become due and payable, as well as
to fund the Group's future operating expenses. The going concern basis
preparation is therefore considered to be appropriate in preparing these
financial statements.
4. Significant accounting policies
The Company has applied the same accounting policies, presentation, methods of
computation, significant judgements and the key sources of estimation of
uncertainties in its interim consolidated financial statements as in its
audited financial statements for the year ended 31 December 2022, which have
been prepared in accordance with International Financial Reporting Standards
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006.
5. Segment information
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the group of
executive directors and the chief executive officer who make strategic
decisions.
Management considers that the Group has four operating segments. Revenues are
reviewed based on the nature of the services provided under each of the Escape
Hunt® and Boom Battle Bar® brands as follows:
1. The Escape Hunt® franchise business, comprising 23 sites, where
all franchised branches are operating under effectively the same model;
2. The Escape Hunt® owner-operated branch business, which as at 30
June 2023 consisted of 20 Escape Hunt® sites in the UK, one in Dubai, one
in Paris and one in Brussels;
3. The Boom Battle Bar® franchise business, comprising 14 sites,
where all franchised branches operate under the same model within the Boom
Battle Bar® brand; and
4. The Boom Battle Bar® owner-operated business, which as at 30 June
2022 comprised 13 Boom Battle Bar® sites in the.
The Group operates on a global basis. As at 30 June 2023, the Company had
active Escape Hunt® franchisees in 10 countries. The Company does not
presently analyse or measure the performance of the franchising business into
geographic regions or by type of revenue, since this does not provide
meaningful analysis to managing the business.
Escape Hunt® Owner Escape Hunt® Franchise Unallocated Total
operated Boom Owner operated Boom Franchise
Six months ended 30 June 2023 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 6,063 282 11,260 1,089 - 18,694
Cost of sales (1,823) - (5,174) - - (6,997)
Gross profit 4,240 282 6,086 1,089 - 11,697
Site level operating costs (1,950) - (5,016) - - (6,966) (6,966)
Other income 29 - 4 - - 7 40
IFRS 16 Adjustment 349 - 1,031 - - 1,380
IFRS 16 Adjustment - pre-opening - - 12 12
Site level EBITDA 2,668 282 2,117 1,089 7 6,163
Centrally incurred overheads (752) (48) (644) (22) (2,937) (4,403)
Depreciation and amortisation (1,340) (68) (1,628) (184) (108) (3,329)
Operating profit / (loss) 574 166 (155) 883 (3,037) (1,569)
Adjusted EBITDA 1,995 228 1,634 1,068 (2,569) 2,356
Depreciation and amortisation (1,117) (68) (924) (184) (108) (2,401)
Depreciation of right-of-use assets (224) - (704) (928)
Exceptional professional and branch closures (34) - - (1) (14) (49)
Pre-opening costs (45) - (143) (188)
Provision against guarantee losses - - - 7 7
Fair Value Adjustment on Contingent consideration - - - - (312) (312)
Loss on disposal of assets - - (19) - (19)
Foreign currency gains - 6 1 - - 7
Share-based payment expenses - - - (42) (42)
Operating profit 574 166 (155) 883 (3,037) (1,569)
Interest income - - - 73 73
Interest expense - - - - (115) (115)
Finance lease charges (142) - (686) - - (828)
Profit/(loss) from operations before tax 1,150 166 (318) 883 (4,319) (2,439)
Taxation 1 46 47
Profit / (loss) for the period 1,150 167 (318) 929 (4,319) (2,392)
Other information:
Non-current assets 6,308 140 28,526 4,420 19,231 58,625
Escape Hunt® Owner Escape Hunt® Franchise Unallocated Total
operated Boom Owner operated Boom Franchise
Six months ended 30 June 2022 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 4,313 241 2,183 1,383 - 8,120
Cost of sales (1,355) - (1,192) (477) - (3,024)
Gross profit 2,958 241 991 906 - 5,096
Site level operating costs (1,289) - (1,720) - - (3,009)
Other income 72 - - 24 32 129
IFRS 16 profit on modification of lease 105
IFRS 16 Adjustment 230 - 565 - - 900
Site level EBITDA 2,076 241 (164) 931 32 3,116
Centrally incurred overheads (953) - (837) (72) (1,446) (3,308)
Depreciation and amortisation (1,300) (57) (593) (219) (7) (2,176)
Operating profit / (loss) (177) 184 (1,594) 640 (1,421) (2,368)
Adjusted EBITDA 1,201 241 (180) 923 (1,115) 1,070
Depreciation and amortisation (1,128) (57) (175) (219) (7) (1,586)
Depreciation of right-of-use assets (171) - (418) - - (589)
Exceptional professional and branch closures - - - - (288) (288)
Profit on closure / modification of leases 105 - - - - 105
Pre-opening costs (52) - (821) (7) - (880)
Provision against loan to franchisee - - - - (21) (21)
Provision against guarantee losses - - - (57) - (57)
Fair Value Adjustment on Contingent consideration - - - - - -
Loss on disposal of assets (157) - - - - (157)
Foreign currency gains - - - - 44 44
Rent credits recognised in year 25 - - - - 25
Share-based payment expenses - - - - (34) (34)
Operating profit (177) 184 (1,594) 640 (1,421) (2,368)
Interest income
Interest expense - - - - (570) (570)
Finance lease charges (338) - (29) - - (367)
Profit/(loss) from operations before tax (515) 184 (1,623) 640 (1,991) (3,305)
Taxation - - - - 56 56
Profit / (loss) for the period (515) 184 (1,623) 640 (1,935) (3,249)
Other information:
Non-current assets 7,613 474 18,019 3,944 17,669 47,719
6. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity
holders by the weighted average number of ordinary shares in issue during the
period. Diluted loss per share is not presented as the potential issue of
ordinary shares from the exercise of options are anti-dilutive.
Six months Six months
ended ended
30 June 30 June
2023 2022
Unaudited Unaudited
£ £
Loss after tax (£000) (2,392) (3,249)
Weighted average number of shares:
- Basic and diluted 151,161,896 147,780,320
Loss per share (pence)
- Basic and diluted 1.58 2.20
7. Taxation
The tax charge is based on the expected effective tax rate for the year. The
Group estimates it has tax losses of approximately £24.5m as at 30 June 2023
(31 Dec 2022: £22.4m) which, subject to agreement with taxation authorities,
would be available to carry forward against future profits. The estimated tax
value of such losses amounts to approximately £6.1m (31 Dec 2022: £5.6m).
8. Property, plant and equipment
Leasehold property Office equipment Computers
Furniture and fixtures Games Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 December 2022 13,190 51 325 1,609 6,761 21,936
Additions arising from purchases 1,076 21 54 819 767 2,737
Disposals - - (2) (68) - (70)
Additions arising from acquisition 980 9 5 - 143 1,137
Conversion differences (28) (2) (1) (11) (6) (48)
As at 30 June 2023 15,218 79 381 2,349 7,665 25,692
Accumulated depreciation
At 31 December 2022 (4,167) (50) (147) (527) (4,292) (9,183)
Depreciation charge (918) - (41) (131) (918) (2,008)
Disposals - - 1 52 - 53
Additions arising from acquisitions - - (1) - (8) (9)
Conversion differences 25 1 2 1 2 31
As at 30 June 2023 (5,060) (49) (186) (606) (5,215) (11,116)
Carrying amounts
At 31 December 2022 9,023 1 178 1,082 2,469 12,753
t 30 June 2023 10,158 30 195 1,743 2,450 14,576
9. Right-of-use assets
As at As at
30 June 31 Dec
2023 2022
£'000 £'000
Land and buildings - right-of-use asset cost b/f 20,484 8,920
Closures / leases ended for renegotiation during the period - (411)
Additions during the year, including through acquisition 3,353 15,018
Lease incentives (965) (2,914)
Less: Accumulated depreciation b/f (2,642) (1,318)
Depreciation charged for the period (928) (1,463)
Net book value 19,302 17,842
The additions of in the period relate to new leases signed. The Group leases
land and buildings for its offices and escape room venues under agreements of
between five to fifteen years with, in some cases, options to extend. The
leases have various escalation clauses. On renewal, the terms of the leases
are renegotiated.
During 2022 the Group entered into a lease on a premises in Bournemouth where
a portion of the property is sub-let to a Boom franchisee. The total value
of the master lease is recognised within lease liabilities whilst the
underlease has been recognised as a finance lease receivable.
Year ended Year ended
Finance lease receivable 30 June 31 Dec
2023 2022
£'000 £'000
Balance at beginning of period 1,273 -
Additions during the year - 1,234
Interest charged 45 39
Payments received -
Balance at end of period 1,318 1,273
10. Intangible assets
Goodwill Trademarks and patents Intellectual property Internally generated IP Franchise agreements App Quest Portal Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 December 2022 19,640 86 10,195 1,864 4,623 100 377 36,885
Additions - - - 53 - - 48 101
Disposals - - - - - - - -
Additions arising from acquisition 778 - 74 - - - - 852
Re-analysis from acquisitions 112 - - - - - - 112
Conversion differences - - - - - - - -
As at 30 June 2023 20,530 86 10,269 1,917 4,623 100 425 37,950
Accumulated amortisation
At 31 December 2022 (1,393) (72) (10,195) (971) (1,143) (100) (315) (14,189)
Amortisation - (7) - (124) (247) - (15) (393)
Disposals - - - - - - - -
Additions arising from acquisitions - - - - - - - -
Conversion Differences - - - - - - 2 2
At 30 June 2023 (1,393) (80) (10,195) (1,095) (1,390) (100) (327) (14,580)
Carrying amounts
At 31 December 2022 18,247 14 - 893 3,480 - 62 22,696
At 30 June 2023 19,137 6 74 822 3,233 - 98 23,370
11. Business Combination
Acquisition of BBB Chelmsford Ltd and BBB Ealing Limited
On 8 June 2023 XP Factory Plc acquired 100% of the equity interest in BBB
Chelmsford Limtied, and 100% of the equity interest in BBB Ealing Limited from
the same seller and thereby obtaining control of both entities. BBB Chelmsford
Ltd runs a Boom Battle Bar® site situated in Chelmsford. BBB Ealing Ltd runs
a Boom Battle Bar® site in Ealing and previously operated as franchise sites.
The total purchase consideration is subject to potential adjustment based on a
completion accounts process, with any adjustment being accounted for through
varying the vendor loan amount. The vendor loan carries interest at 5% and
is being paid off in twenty four equal monthly instalments. The balance
payable as at 30 June 2023 was £288.2k, which is based on an initial
assessment of the completion accounts balances. The Completion accounts are
due to be finalized on or before 24 November 2023.
The details of the business combination and the allocation of the estimated
fair value of the consideration are as follows:
BBB Chelmsford Ltd BBB Ealing Ltd Total
£'000 £'000 £'000
Fair value of consideration transferred
Amounts settled in cash 78 7 85
Vendor loan 288 15 303
Total purchase consideration 366 22 388
BBB Chelmsford Ltd Book Value Fair Value Adjustment £'000 Fair Value £'000
£'000
Assets and liabilities recognised as a result of the acquisition
Cash 98 - 98
Other receivables and deposits 67 - 67
Property, plant and equipment 630 - 630
Intangible assets 37 37
Right of use assets - 917 917
Trade payables (64) - (64)
Inventory 15 15
Lease liabilities - (1,077) (1,077)
Loans (531) - (531)
Other payables (250) 160 (250)
Net identifiable assets acquired 2 - 2
Goodwill arising on consolidation - 364 364
Total 364 366
There were no trade receivables present in the company as at the date of
acquisition.
The excess of the total consideration over the net identifiable assets
acquired of £364k has been analysed and it has all been recognised as
goodwill. This goodwill is primarily related to growth expectations, expected
future profitability and the expertise and experience of BBB Chelmsord's
workforce. Goodwill has been allocated to the owner operated segment and is
not expected to be deductible for tax purposes.
BBB Chelmsford Ltd contributed revenues of £95k and a net loss of 29k in the
period between acquisition and 30 June 2023.
BBB Ealing Ltd Book Value Fair Value Adjustment £'000 Fair Value £'000
£'000
Assets and liabilities recognised as a result of the acquisition
Cash 70 - 70
Other receivables and deposits 172 - 172
Property, plant and equipment 499 - 499
Intangible assets 37 37
Right of use assets - 1,177 1,177
Trade payables (384) - (384)
Inventory 12 12
Lease liabilities - (1,483) (1,483)
Loans (426) - (426)
Other payables (373) 306 (373)
Net identifiable assets acquired (392) - (392)
Goodwill arising on consolidation - 415 415
Total 415 22
There were no trade receivables present in the company as at the date of
acquisition.
The excess of the total consideration over the net identifiable assets
acquired of £415k has been analysed and it has all been recognised as
goodwill. This goodwill is primarily related to growth expectations, expected
future profitability and the expertise and experience of BBB Ealing's
workforce. Goodwill has been allocated to the owner operated segment and is
not expected to be deductible for tax purposes.
BBB Ealing Ltd contributed revenues of £76k and a net loss of 28k in the
period between acquisition and 30 June 2023.
12. Provisions
As at As at 31 Dec 2022
30 June 20223
£'000 £'000
Provision for contingent consideration - 4,113
Provision for deferred consideration 364 857
Dilapidations provisions 394 314
Provision for financial guarantee contracts 87 94
Other provisions - 5
Provisions at end of period 845 5,383
Due within one year 364 4,970
Due after more than one year 481 413
845 5,383
The movement on provisions in the period can be analysed as follows:
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 £'000
Balance at beginning of period 5,383 9,885
Reduction in deferred consideration (605) (380)
Increase in deferred consdideration 112
Movement in dilapidations provision 80 54
IFRS 9 Provision for lease guarantees (7) 57
Finance cost recognised on contingent consideration - 586
Settlement of contingent consideration (4,113) -
Movement in other provisions (5) 1
Provisions at end of period 845 10,203
13. Lease liabilities
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 £'000
In respect of right-of-use assets
Balance at beginning of period 24,040 8,405
Closures / leases ended for renegotiation during the period - (508)
Additions during the period 3,353 11,819
Interest Incurred 828 367
Repayments during the period (1,035) (363)
Rent concessions received - (25)
Reallocated from accruals and trade payables -
Lease liabilities at end of period 27,186 19,695
As at As at
30 June 30 Dec
2022 2021
£'000 £'000
Maturity
< 1month 926 76
1 - 3 months 1,789 119
3 - 12 months 691 878
Non-current 23,780 22,965
Total lease liabilities 27,186 24,039
14. Loans and loan notes
As at As at
30 June 31 December
2023 2022
£'000 £'000
Amounts due within one year
Vendor loans and loan notes 1,000 472
Fit out finance 492 361
Bank and other borrowings 107 224
1,599 1,057
Amounts due in more than one year:
Vendor loans and loan notes 650 -
Fit out finance 878 333
Bank and other borrowings 548 90
As at end of period / year 2,076 423
Total at end of period / year 3,675 1,480
On 22 November 2021, the Company issued £360,000 vendor loan notes to MFT
Capital Limited as part of the consideration for the acquisition of Boom
Battle Bars ("Boom Notes"). The Boom Notes are unsecured and carry interest
at 5 per cent per annum. During 2022, the redemption date for the Boom Notes
was extended to the second anniversary of the transaction in connection with
the acquisition of Boom Battle Bar® Cardiff Limited. The acquisition of Boom
East Limited (Boom Norwich) also utilised vendor financing, of which £8k was
outstanding at 30 June 2023.
On 8 June 2023, the Group acquired BBB Chelmsford Limited and BBB Ealing Ltd
more details of which are set out in note 11. Both companies had founder
loans which have been taken on as part of the acquisitions. In addition, the
purchases were funded by further vendor loans. Total loans outstanding to
the vendors recorded at 30 June 2023 were £1,281k. The final loan amount
due is subject to potential change following a completion accounts process.
The Group has utilised asset backed fit-out finance and has used an unsecured
loan to fund fit outs in certain Boom and Escape Hunt® locations, has a
number of small bank loans in certain subsidiaries, and uses a loan facility
to spread the cost of insurance over the year. The total fit-out finance
outstanding as at 30 June 2023 was £1,370k. Bank and other loans totaled
£655k.
15. Share capital
Six months Year
ended ended
30 June 31 December
2023 2022
Unaudited Audited
£'000 £'000
As at beginning of period / year
- 150,633,180 (2022: 146,005,098)
Ordinary shares of 1.25 pence each 1,883 1,825
Issued during the period / year 299
- 23,924,420 Ordinary shares (2022: 4,628,082 Ordinary Shares) 58
As at end of period / year 2,182
- 174,557,600 (2021: 150,633,180)
Ordinary shares of 1.25 pence each 1,883
During the six months ended 30 June 2023 the Company issued 23,924,420 to MFT
Capital Limited in relation to the deferred earn-out consideration for the
acquisition of Boom Battle Bars, as described in the announcement on 3
November 2021.
Share option and incentive plans
XP Factory plc Enterprise Management Incentive Plan
On 15 July 2020, the Company established the XP Factory plc Enterprise
Management Incentive Plan ("2020 EMI Plan"). The 2020 EMI Plan is an HMRC
approved plan which allows for the issue of "qualifying options" for the
purposes of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003
("Schedule 5"), subject to the limits specified from time to time in paragraph
7 of Schedule 5, and also for the issue of non qualifying options.
It is the Board's intention to make awards under the 2020 EMI Plan to attract
and retain senior employees. The 2020 EMI Plan is available to employees
whose committed time is at least 25 hours per week or 75% of his or her
"working time" and who is not precluded from such participation by paragraph
28 of Schedule 5 (no material interest). The 2020 EMI Plan will expire on
the 10th anniversary of its formation.
The Company has made three awards to date as set out in the table below. The
options are exercisable at their relevant exercise prices and vest in three
equal tranches on each of the first, second and third anniversary of the
grants, subject to the employee not having left employment other than as a
Good Leaver. The number of options that vest are subject to a performance
condition based on the Company's share price. This will be tested in the
period up to each vesting date and again between the third and fourth
anniversaries of awards. If the Company's share price at testing equals the
first vesting price, one third of the vested options will be exercisable. If
the Company's share price at testing equals the second vesting price, 90 per
cent of the vested options will be exercisable. If the Company's share price
at testing equals or exceeds the third vesting price, 100% of the vested
options will be exercisable. The proportion of vested options exercisable for
share prices between the first and second vesting prices will scale
proportionately from one third to 90 per cent. Similarly, the proportion of
options exercisable for share prices between the second and third vesting
prices will scale proportionately from 90 per cent to 100 per cent.
The options will all vest in the case of a takeover. If the takeover price
is at or below the exercise price, no options will be exercisable. If the
takeover price is greater than or equal to the second vesting price, 100 per
cent of the options will be exercisable. The proportion of options
exercisable between the first and second vesting prices will scale
proportionately from nil to 100 per cent.
If not exercised, the options will expire on the fifth anniversary of award.
Options exercised will be settled by the issue of ordinary shares in the
Company.
Awards #1 #2 #3
Date of award 15-Jul-20 18-Nov-21 23-Nov-21
Date of expiry 15-Jul-25 18-Nov-26 23-Nov-26
Exercise price 7.5p 35.0p 35.0p
Qualifying awards - number of shares under option 13,333,332 700,001 533,334
Non-qualifying awards - number of shares under option 2,400,000 0 0
First vesting price 11.25p 43.75p 43.75p
Second vesting price 18.75p 61.25p 61.25p
Third vesting price 25.00p 70.00p 70.00p
Proportion of awards vesting at first vesting price 33.33% 33.33% 33.33%
Proportion of awards vesting at second vesting price 90.00% 90.00% 90.00%
Proportion of awards vesting at third vesting price 100% 100% 100%
Options vested 15,733,734 - -
As at 30 June 2023, 16,700,000 options were outstanding under the 2020 EMI
Plan (31 Dec 2022: 16,700,000) exercisable at the prices shown above. No
options were exercised during the period, and no options expired or had
lapsed. As at 30 June 2023 15,733,734 options had vested.
The sum of £34,278 has been recognised as a share-based payment and charged
to the profit and loss during the period (6 months ended 30 Jun 2022:
£34,268). The fair value of the options granted during the period has been
calculated using the Black & Scholes formula with the following key
assumptions:
Table 2
Awards #1 #2 #3
Exercise price 7.5p 35.0p 35.0p
Volatility 34.60% 31% 31%
Share price at date of award 7.375p 33.50p 32.00p
Option exercise date 15-Jul-24 18-Nov-25 23-Nov-25
Risk free rate -0.05% 1.55% 1.55%
The performance conditions were taken into account as follows:
The value of the options have then been adjusted to take account of the
performance hurdles by assuming a lognormal distribution of share price
returns, based on an expected return on the date of issue. This results in
the mean expected return calculated using a lognormal distribution equaling
the implied market return on the date of issue validating that the expected
return relative to the volatility is proportionately correct. This was then
used to calculate an implied probability of the performance hurdles being
achieved within the four year window and the Black & Scholes derived
option value was adjusted accordingly.
Time based vesting: It has been assumed that there is between a 90% and 95%
probability of all share option holders for each award remaining in each
consecutive year thereafter.
The weighted average remaining contractual life of the options outstanding at
30 June 2023 is 28.9 months (31 Dec 2022: 31.7 months).
An option-holder has no voting or dividend rights in the Company before the
exercise of a share option.
Escape Hunt® Employee Share Incentive Scheme
In November 2020, the Company established the Escape Hunt® Share Incentive
Plan ("SIP").
The SIP has been adopted to promote and support the principles of wider share
ownership amongst all the Company's employees. The Plan is available to all
eligible employees, including Escape Hunt® 's executive directors, and
invites individuals to elect to purchase ordinary shares of 1.25p each in the
Company via the SIP trustee using monthly salary deductions. Shares are be
purchased monthly by the SIP trustee on behalf of the participating employees
at the prevailing market price. Individual elections can be as little as
£10 per month, but may not, in aggregate, exceed £1,800 per employee in any
one tax year. The Ordinary Shares acquired in this manner are referred to as
"Partnership Shares" and, for each Partnership Share purchased, participants
are awarded one further Ordinary Share, known as a "Matching Share", at nil
cost.
Matching Shares must normally be held in the SIP for a minimum holding period
of 3 years and, other than in certain exceptional circumstances, will be
forfeited if, during that period, the participant in question ceases
employment or withdraws their corresponding Partnership Shares from the Plan.
In the six months to 30 June 2023 74,701 matching shares were awarded through
the scheme (H1 2022: 46,919). A charge of £6.9k has been recognised through
the profit and loss account. (H1 2022: nil)
16. Key management personnel compensation
Six months Six months
ended ended
30 June 30 June
2023 2022
Unaudited Unaudited
£'000 £'000
Salaries and benefits (including directors) 433 427
Share-based payments 29 20
Social security costs 74 56
Other post-employment benefits 9 22
Less amounts capitalised (41) (7)
Total 504 518
Related party transactions
During the period under review, the Directors are not aware of any significant
transactions with related parties (six months ended 30 June 2022: nil).
17. Subsequent Events
There are no material subsequent events requiring disclosure.
COMPANY INFORMATION
Directors
Richard Rose, Independent Non-Executive Chairman
Richard Harpham, Chief Executive Officer
Graham Bird, Chief Financial Officer
Martin Shuker, Non Executive Director
Philip Shepherd, Non Executive Director
Company Secretary
Joanne Briscoe
Company number
10184316
Registered address
Boom Battle Bar® Oxford Street
Ground Floor and Basement Level, 70-88 Oxford Street
London, England
W1D 1BS
Independent auditors
HW Fisher LLP
Acre House
11-15 William Rd
London
NW1 3ER
Nominated adviser and broker
Singer Capital Markets Advisory LLP
One Bartholomew Lane
London
EC2N 2AX
Registrars
Link Market Services Limited
29 Wellington Street
Leeds
LS1 4DL
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