REG - XP Factory PLC - Interim Results
04/12/2024 07:00
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RNS Number : 6601O XP Factory PLC 04 December 2024
4 December 2024
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
September 2024 ("H1 FY2025").
H1 FY2025 (£m) H1 2023(1) (£m) Change
Revenue 24.9 18.7 +33.2%
Gross Profit 15.6 11.7 +33.6%
Pre IFRS 16 Site level EBITDA 5.6 5.0 +11.3%
Pre IFRS 16 Group Adjusted EBITDA(1) 1.5 1.1 +30.5%
Post IFRS16 Group Adjusted EBITDA(1) 3.2 2.4 +34.7%
Free cash generation(3) 2.1 2.2 -7.4%
FINANCIAL HIGHLIGHTS
· Group revenue increased 33.2% to £24.9m (H1 2023: £18.7m)
- Escape Hunt owner operated site revenue increased 7% to £6.5m (H1
2023: £6.1m)
- Boom Battle Bar ("Boom") owner operated revenue increased 56% to
£17.6m (H1 2023: £11.3m)
· Gross margin maintained at 62.8% (H1 2023: 62.6%)
· Pre IFRS 16 Group Adjusted EBITDA(2) profit increased 30.5% to of £1.5m (H1
2023: £1.1m)
· Pre IFRS16 site level EBITDA up 11% to £5.6m (H1 2023: £5.0m)
· Free cash generation(3) of £2.1m (H1 2023: £2.2m)
· £3.6m invested in growth capex, and £0.3m in maintenance capex
· Cash balance at 30 September 2024 of £1.9m (31 March 2024 £3.9m)
· Net debt at 30 September 2024 of £1.3m (31 March 2024: £0.0m)
OPERATING HIGHLIGHTS
· Continued underlying positive like-for-like growth in both brands ahead of the
industry and against strong comparators in the prior year.
o Boom: up 4.4% in the 26 weeks to 29 September 2024 (5.6% excluding the two
weeks of riots)
o Escape Hunt : up 3.0% in the 26 weeks to 29 September 2024 (5.7% excluding the
weeks of the Euros and the riots)
o Group: up 4.0% in the 26 weeks to 29 September 2024 (5.6% excluding impacted
weeks)
· Three Boom franchise sites - in Aldgate, Wandsworth and Bournemouth - acquired
May and June 2024
· Boom owner operated site level EBITDA margins increased to 11.8% (H1 2023:
11.0%)
· Escape Hunt owner operated site level EBITDA margins improved to 42.0% (H1
2023: 40.2%)
· New Escape Hunt opened in Worcester in September 2024
( )
(1) H1 2023 interim results previously published were for the six months to 30
June 2023.
(2) Earnings before interest, tax, depreciation and amortization, calculated
before pre-opening losses, exceptional items, and other non-cash items. 2023
comparative restated
(3) Cash generated from operations, after IFRS16 lease payments, interest and
tax, before capital expenditure
( )
POST PERIOD-END HIGHLIGHTS
· £10m revolving credit facility with Barclays formalised providing funding to
accelerate growth
· Group Like-for-like sales up 2.0% in the 9 weeks to 1 Dec 2024 against strong
comparators
· Escape Hunt Glasgow opened in October 2024
· Escape Hunt Cambridge and Boom Cambridge opening on 6 December 2024
· Boom Southampton and Boom Ipswich bought back in November 2024
· Mitigation plans in place to offset impact of UK Budget without need for
significant price increases
· £1m annualised central cost savings implemented with £0.5m benefit in
current financial year
· Balance sheet being restructured to allow future share buy-backs and dividends
ANNOUNCEMENT OF MEDIUM TERM GROWTH TARGETS
· Plan to increase sales by 50% and double Pre IFRS 16 Adjusted EBITDA by March
2028
o Revenue target of £90m with run-rate of £100m
o Pre IFRS 16 Group Adjusted EBITDA target of £13m, with run-rate 15% Group
EBITDA margins
o Growth plans funded by cash generation and debt facility targeting average
Debt:EBITDA ratios of c.1.0x (Pre IFRS 16)
Richard Harpham, Chief Executive of XP Factory, commented: "I am delighted to
report on another period of positive, cash generative growth in the six months
to 30 September 2024, with Group revenue increasing by 33.2% compared to our
first half in 2023. This performance reflects continued volume-driven
like-for-like growth across both of our brands, ahead of industry levels.
Consumer sentiment weakened in the summer and ahead of the UK Budget,
softening first half performance and, whilst we are encouraged by strong early
indicators for the all-important festive season, with corporate pre-bookings
significantly ahead of 2023, we remain laser focused on maximising the
Christmas trade that is so important in delivering the full year's results.
This is a testament to the strength of our offering, the loyalty of our
customer base, and the hard work of our teams.
"We have also achieved important milestones to support our expansion goals.
The completion of a £10m revolving credit facility with Barclays provides us
with the financial ability to execute our clear plan to double Group EBITDA
over the next four years. In addition, we are planning a balance sheet
re-organisation to enable share buy-backs and to create capacity for dividend
payments in future, should we deem it appropriate. With a solid foundation
in place, we remain confident in our ability to deliver sustainable growth and
significant long-term value creation."
XP Factory will provide a trading update after the Christmas period in late
January 2025.
Enquiries
XP Factory plc +44 (0) 20 7846 3322
Richard Harpham (Chief Executive Officer)
Graham Bird (Chief Financial Officer)
Singer Capital Markets - NOMAD and Broker +44 (0) 20 7496 3000
Peter Steel
James Todd
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 leading 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 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
We are pleased to report another six-month period of further progress with
good growth in both our Escape Hunt and Boom Battle Bar brands. Both
businesses achieved positive like-for-like sales growth against strong prior
year comparatives despite an environment characterised by weaker consumer
sentiment particularly in the run up to and immediate aftermath of the UK
budget announcement.
Escape Hunt continues to perform exceptionally well; site level EBITDA margins
improved to 42% (H1 2023: 40.2%), with strong cash generation and outstanding
customer feedback. We continue to see significant further growth
opportunities for the brand, and plan to accelerate the roll out within the
UK. We are also in the early stages of investigating new international
opportunities.
Following a very strong year of growth in 2023, Boom has continued to deliver
positive like-for-like sales growth, whilst maintaining healthy gross margins
and producing strong free cash generation. As a more seasonal business, site
level EBITDA is always lower in the first half of the year than as the second
half is significantly bolstered by the important Christmas period which has
started positively with corporate pre-bookings significantly up compared to
November and December in 2023. Boom is now in its third year of operation
under XP's ownership and with the data and learnings garnered, the strong cash
return on capital and in particular the opportunities for further roll-out in
high footfall and high population areas, we believe the runway for Boom
remains highly attractive.
Our £10m revolving credit facility with Barclays is now in place, providing
the funding to accelerate our growth with a clear target to double EBITDA
within four years. More detail is set out below. Whilst there will be
additional costs on the business driven by the Government's recent budget, we
have plans in place to mitigate the impact which can largely be absorbed
without the need for significant price increases. We remain optimistic for
both our businesses for the coming year.
ESCAPE HUNT
The Escape Hunt owner operated business delivered £6.5m of revenue in the
period with continued positive like-for-like sales growth of 3.5% across the
UK estate, achieved with negligible increases in pricing. The performance in
the period was adversely impacted in the final two weeks of the football
European Championships, when England played in the knock-out games, and we
also experienced a significant reduction in activity during the two weekends
in late July / early August when rioting in the UK kept consumers at home.
Several of our sites were forced to close in locations where rioting was close
to the venue. Excluding the final two weeks of the Euros and the weeks
impacted by riots, like-for-like sales growth in the UK was 6.7%.
Site level EBITDA was £2.7m, a 12% increase on the site level EBITDA reported
in H1 2023. The Minimum Living Wage (MLW) increased by 9.8% in April 2024 and
in order to maintain our premium to the MLW, labour costs increased
accordingly. However, we have largely been able to absorb the cost increases
at site level through improved efficiencies, leading to increased EBITDA
margins in the period of 42.0%. Performance across the estate has been
consistent, characterised by strong cash generation and high return on capital
metrics.
We opened one new site in the period in Worcester, which is trading well, and
since the period end we have opened a further site in Glasgow, with a site in
Cambridge opening to the public on 6(th) December 2024. We have developed
a further pipeline of towns and cities to target and, as explained below, plan
to accelerate the roll out of Escape Hunt sites using cash generated from
operations and our credit facility.
Our content strategy has also made significant strides and continues to prove
extremely popular with our customers. Our new Excalibur game is now
operating in four sites and we have a new Dracula game in two. An exciting
new game, Jewel of India, is in production and new games themed around the
Chocolate Factory and carnival style Fiesta have been launched for our
franchisees. All games are proprietary to Escape Hunt and the growing
content library, together with the production know-how provides growing
differentiation and represents a significant barrier to entry for competition.
BOOM BATTLE BARS
Owner operated
The Boom owner operated business delivered turnover of £17.6m, representing a
56% increase compared to the previously reported H1 2023 (H1 2023: £11.3m).
Like-for-like growth in the 26 weeks to 29 September 2024 was 4.4%. As for
Escape Hunt, the underlying like for like growth in the period was negatively
impacted during two weeks in August 2024 when riots took place across the
country. The prior year comparative also benefitted from international rugby
games in Cardiff over two weekends in August, which delivered exceptionally
high sales in our Cardiff site. Excluding these two factors, the underlying
like-for-like growth was 10.3% across our UK owner operated estate.
Site level EBITDA of £2.1m represents a margin of 11.8%. However, the margin
has been diluted in particular by two former franchise units which were
struggling, one of which we have taken over at no cost and the other with a
termination payment due from the franchisee. Excluding these two sites, the
underlying site level EBITDA margin for the UK estate was 13.6%.
Three former franchise sites were acquired during the period in Aldgate,
Wandsworth and Bournemouth. The sites in Aldgate and Wandsworth were both
owned by the same franchisee who had significant outstanding debts and had
fallen in arrears. In each case, we stepped in to take over the site to
avoid brand and lease guarantee exposure with a termination payment due from
the franchisee payable over a three-year period. Aldgate is a high
performing site with potential to deliver strong margins. Wandsworth has
been a more difficult venue and we have since restructured the lease, reduced
the footprint and are confident of turning the site's performance around.
Bournemouth has historically been a good performer, and we expect to
generate attractive returns from the acquisition. Since the period end, we
have bought back the strong performing site in Southampton and have stepped
into the Ipswich site in return for a termination payment. Both sites will
form part of our owner operated estate in future.
Franchise
Franchise revenue in the period was £0.5m, a 51% decrease on H1 2023
(£1.1m). The deliberate decrease is as a result of the reduction in the
number of franchisees following the acquisitions completed in late 2023 and
further acquisitions during the current period. There are currently five
franchise sites in the Boom estate, and it is likely that a number of these
will also be brought back into the owner operated estate.
STRATEGY
We recognised the significant growth opportunity for XP Factory some time ago,
and our extensive data points around market-leading customer validation, high
returns on capital and runway have only served to further cement that view for
both brands. The challenge, however, was how to fund such growth in the most
effective way for shareholders. Now that we have access to a £10m revolving
credit facility from Barclays, we are pleased to communicate our plan to
double Group Pre IFRS 16 EBITDA over 4 years, targeting run-rate sales of
£100m at 15% EBITDA in the medium term, whilst maintaining modest net debt
ratios.
The consistently strong returns generated by Escape Hunt and experience in
cities such as Norwich, where we proved two sites could operate very
profitably alongside each other has given us confidence in a significantly
longer runway than we first imagined, with scope for around 100 sites rather
than 50. Furthermore, we are increasingly being able to secure landlord
contributions for smaller Escape Hunt sites, which previously were not
available, reducing the net investment required to open a new site.
In the case of Boom, with three years of experience, we have learnt much about
the factors that drive success, which enables a more nuanced approach to
locating new sites.
As a Group, our vision is to deliver £90m of sales and £13m Group EBITDA
margin within four years, with an underlying run-rate revenue of £100m and
targeting a 15% Group EBITDA margin. This will be delivered by focusing
principally on growing the owner operated estate and leveraging the head
office platform we have in place already.
Escape Hunt performs highly consistently across all sites, all of which are
similar sized with six games rooms on average. Expanding the estate rapidly
across the UK in this format remains the focus, and additionally we now have
data that supports the building of larger sites in areas of particularly high
traffic.
Our Boom estate comprises some large sites in very high footfall areas, but
also some smaller sites in more neighbourhood towns. Whilst the business works
in both, the returns are disproportionately higher when the sites are larger,
more prime and in large towns, so these opportunities will be our focus over
the coming periods.
The group's target can be achieved from a portfolio comprising 50 - 60 Escape
Hunt sites, requiring growth on average of 8 - 10 of our current sized sites
per annum, alongside 35 - 40 Boom sites, requiring growth on average of 2 - 4
new sites per annum from the current base. This can be achieved with modest
leverage, aiming to keep average Debt:EBITDA ratios around 1.0x on a
pre-IFRS16 basis.
The accelerated growth strategy provides an exciting and clear path to value
creation, capitalising on the growing and positive long-term trends in favour
of experiential leisure. We plan to host a capital markets day in Q1 2025 to
provide greater insight to investors.
FINANCIAL REVIEW
Financial performance
Following our change of year end, the unaudited results for the six months to
30 September 2024 represent a different period to the period previously
reported in our interims in 2023. Sales and gross profit information is
provided for the comparison purposes. Group revenue in the six months to 30
September was £24.9m, an increase of 19% over the same period in 2023 (six
months to Sep 2023: £20.9m) and an increase of 33% over the six months to
June 2023 as previously reported (six months to June 2023: £18.7m). The
increase is driven by positive like-for-like growth, all of which was volume
driven, coupled with growth in the Boom estate comprising both new site
openings in late 2023 and the acquisition of former franchise sites.
Revenue and gross profit in the three relevant six month periods were as
follows:
£'000 6 Months to 6 Months to 6 Months to % change % change
30 Sept 2024 30 Sept 2023 30 June 2023 v six months to Sep 2023 v six months to June 2023
Revenue
Escape Hunt Owner operated 6,510 6,392 6,063 2% 7%
Escape Hunt Franchise 292 338 282 (14%) 4%
Boom Owner Operated 17,555 13,270 11,260 32% 56%
Boom Franchise 538 897 1,089 (40%) (51%)
24,895 20,897 18,694 19% 33%
Gross profit
Escape Hunt Owner operated 4,648 4,431 4,240 5% 10%
Escape Hunt Franchise 292 334 282 (13%) 4%
Boom Owner Operated 10,150 7,807 6,086 30% 67%
Boom Franchise 538 897 1,089 (40%) (51%)
15,628 13,469 11,697 16% 34%
Group Adjusted EBITDA pre IFRS16 was £1.5m and increase of 31% over the
£1,1m for the six months to June 2023. Adjusted EBITDA after IFRS16 was
£3.2m, up 30% compared to the £2.4m reported in the six months to June 2023.
H1 FY2025 H1 2023
£'000 £'000
Adjusted EBITDA - pre IFRS 16 1,472 1,129
IFRS 16 adjustments 1,701 1,307
Adjusted EBITDA 3,173 2,436
Amortisation of intangibles (77) (393)
Depreciation (3,013) (2,936)
Dilapidations provision (108) (80)
Loss on disposal of tangible assets (71) (19)
Contract termination and other exceptional costs (384) (49)
Branch pre-opening costs (307) (188)
Provision against loan to franchisee (12) -
Foreign currency gains / (losses) 13 7
Fair value movement on contingent consideration - (312)
IFRS 9 provision for guarantee losses 22 7
Share-based payment expense (22) (42)
Operating loss (786) (1,569)
£307k of expenditure in the period related to pre-opening costs covering the
new Boom site in Cambridge and new Escape Hunt sites in Cambridge, Worcester
and Glasgow. The £384k contract termination and other exceptional costs
includes an onerous contract provision relating to TV subscriptions which we
have removed from the majority of our Boom sites, as there has been no
discernible benefit from the significant cost associated with the service.
At a site level, Escape Hunt owner operated segment continued to perform
strongly, delivering site-level EBITDA of £2,733k at a margin of 42.0%. The
underlying site level EBITDA margins achieved in Boom (11.8%) reflect the
seasonality in Boom's business but more significantly were diluted by the
losses/lower margins generated from two previous franchise sites. We have
taken over the two franchise sites in question as we had lease exposure, and
the franchisee was unable to operate the site satisfactorily. Outside of
these two sites, the estate delivered site level EBITDA margins of 13.6%.
Six months to 30 September 2024 Escape Hunt Escape Hunt Boom Boom H1 2023
Owned Franchise Owned Franchise Unallocated £'000
Sales 6,510 292 17,555 538 - 24,895
Gross profit 4,648 292 10,150 538 - 15,628
Pre IFRS 16 Adjusted site level EBITDA 2,733 272 2,069 538 - 5,612
Site level EBITDA margin 42% 93% 12% 100% 23%
Centrally incurred costs (946) (2) (475) - (2,716) (4,139)
Pre-IFRS Adjusted EBITDA 1,787 270 1,594 538 (2,716) 1,473
IFRS adjustments (net of pre-opening) 321 - 1,380 - - 1,738
Post IFRS 16 Adjusted EBITDA 2,108 270 2,974 538 (2,715) 3,174
Six months to 30 June 2023 Escape Hunt Escape Hunt Boom Boom H1 2022
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 (683) (54) (591) (21) (2,567) (3,993)
Pre-IFRS Adjusted EBITDA 1,7154 228 643 1,068 (2,567) 1,126
IFRS adjustments (net of pre-opening) 276 - 1,031 - - 1,307
Post IFRS 16 Adjusted EBITDA 2,030 228 1,674 1,068 (2,567) 2,433
Central costs of £4.1m represent a 3.5% increase on the six-month period to
June 2023, and increased largely as a result of inflationary pay rises awarded
earlier in the year. Since the period end, we have identified and
implemented a number of cost savings within our head office cost base with a
run rate of c.£1m per annum. It is our intention to leverage the central cost
base against further growth in the business in future.
Interest costs of £195k reflect the additional fit out and vendor finance
utilised.
Unaudited Group operating loss was £0.9m (six months to June 2023: loss
£2.2m) leading to a reduction in the loss per share from 1.58p to 1.26p.
Cashflow
The Group generated £4.2m of cash from operations (H1 2023: £3.4m) on a post
IFRS16 basis, and £2.3m pre IFRS16 (H1 2023: £2.4m), demonstrating the
strong cashflow characteristics of the business. £3.6m was invested in
plant and equipment and intangibles, offset by £0.4m landlord contributions
received. This investment comprised capital expenditure of £2.1m within Boom
owner-operated sites, of which £0.1m represented 'maintenance' capex, capital
expenditure of £1.4m in Escape Hunt owner operated sites, of which £0.1m
represented maintenance capex, and £94k of central capital expenditure, the
majority of which was related to intellectual property protection.
£0.9m of loan repayments were made, predominantly vendor and fit out finance,
and £0.1m was utilised towards acquisitions of former franchise sites.
Rental payments, classified under IFRS16 as capital and interest payments
totalled £1.9m, whilst £195k was paid in interest on fit out finance and
other loans.
Since the period end, the Group has formalised the revolving credit facility
with Barclays. £2.5m was drawn in October 2024 of which £1.1m was used to
refinance existing debt and the balance is being used on site expansion,
notably in Cambridge.
Cash at 30 September 2024 was £1.9m, offset by £3.2m of debt leaving net
debt of £1.3m. (31 Mar 2024: £0.0m).
Financial position
Movements on the balance sheet largely reflect the capital investment,
acquisitions of former franchise sites and related funding undertaken during
the period.
Current assets reduced to £5.8m, driven by a reduction in receivables and
cash.
The increase in current liabilities of £1.5m comes from a combination of
increased trade creditors, much of which is capex related to Cambridge and the
new Escape Hunt sites opened in September and October, coupled with an
increase in contract liabilities comprising deferred revenue, being
pre-bookings.
Net assets as at 30 September 2023 stood at £22.7m (31 March 2024:
£25.0m). Group net debt was £1.3m (31 Mar 2024: £0.0m).
UK BUDGET
The Budget announcement on 29 October 2024 has been widely criticised as
anti-business due, in large part, to the 6.7% increase in MLW and the increase
in the rate payable for employer's national insurance coupled with the lower
threshold at which employer's national insurance becomes payable. These two
changes have a direct impact on the hospitality and retail industries in
particular, and much has been written in the ensuing weeks regarding the
additional costs the changes will place on the industry. We have analysed
the potential impact of the changes and believe that the increased costs can
largely be absorbed within our existing cost forecasts, alongside mitigating
actions to reduce overall costs. The impact within head office salaries is
confined to the NI changes with the overall increase representing
approximately 1% of the total employee cost. Our cost forecasts assume
increased employee costs in future years, and we believe this increase can be
absorbed within those assumptions.
Within the Boom and Escape Hunt owner operated sites, the impact is greater.
Although we have historically paid a premium to the MLW, in many cases, the
new MLW level is higher than existing hourly rates. We have also not
historically differentiated hourly pay based on age and around 40% of Escape
Hunt's hourly paid staff and 50% of Boom's hourly paid staff have not
previously worked sufficient hours to reach the threshold at which employer's
NI was payable. However, under the new thresholds, about half of these
employees would now fall into the banding. We have a number of ways in which
the impact of the total increase can be mitigated, including changing the
allocation of hours, hourly rates and the employee mix. Labour represents
c.30% of sales in Escape Hunt and c.28% of sales in Boom. Our estimates
suggest that the NI changes will lead to labour cost increase of approximately
3.5%, whilst the changes to MLW would add between 2.5% and 5.0% in Escape Hunt
and between 1.2% and 5% in Boom. As such we believe total labour cost
increases at site level of between 5% and 9% are likely, dependent on the
decisions we make regarding potential mitigating actions. The bottom of the
range is within our existing cost forecasts whilst the top end of the range
would see additional costs of c.£0.8m before any further mitigating actions.
We have already taken action to address our overall cost base, notably at head
office where we have restructured post period-end to take out annualised costs
of c.£1m. We are also looking at ways that we can use technology to further
reduce the growth of labour costs as we grow the estate and, with the benefit
of learnings from our Boom estate, have been able to remove certain
subscription costs which are not providing a return. These and further
actions will significantly mitigate any additional impact not already
reflected in our forecasts. Whilst it is possible we may have to pass some
of the additional cost on to customers, with all these actions, we believe the
increased costs arising from the budget can largely be offset without the need
to look for significant price increases.
PROPOSED BALANCE SHEET REORGANISATION
As the business has grown and is now generating strong cashflows, the board
has made the decision to reorganise the balance sheet to enable share
buy-backs and to create capacity for dividend payments in future. The
process to enable this will commence in the final quarter of the financial
year.
POST PERIOD END TRADING AND OUTLOOK
The last two years have been characterised by a tough macro environment and
the considerable headwinds facing consumers. More recently, the
deterioration in consumer sentiment in the run up to the UK Budget was widely
reported and XP Factory has not been immune to these dynamics which softened
the performance in the first half of our financial year. Against this
backdrop, we are pleased to have delivered another period of growth in all
areas and positive, volume-driven like-for-like sales in both Escape Hunt and
Boom Battle Bars. As we enter the Christmas period, the most important
trading weeks of the year for the hospitality industry and the period which is
critical to delivering a successful full year outcome for XP Factory, we are
pleased with our levels of pre-booked revenues in both brands, and are laser
focused on maximising the trade that delivers so much of the year's result and
investible capital.
With both brands having achieved a return on capital of circa 50% and a
significant runway for new sites ahead, we have always been excited about the
growth opportunity for XP Factory. Backed with funding from our new £10m
facility with Barclays, we are therefore pleased to be able to set out our
plans to grow sales 50% whilst doubling Group EBITDA to create a business with
£90m sales and £13m Pre IFRS 16 Adjusted EBITDA by March 2028. There are
many reasons to be optimistic, with falling interest rates, lower inflation
and rising real wages which should improve consumer sentiment, although these
will undoubtedly be counterbalanced by the impact of tax rises imposed by the
recent UK Budget and the knock-on effects thereof. The recent performance of
XP Factory during a tough economic environment has been robust, and we
therefore remain cautiously optimistic for the future and confident in our
ability deliver sustainable long term value creation.
Richard Harpham
Chief Executive Officer
4 December 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPT 2024
Six months ended Six months ended
30 Sept 2024 30 June 2023
Note Unaudited Unaudited
£'000 £'000
Continuing operations
Revenue 24,895 18,694
Cost of sales (9,267) (6,997)
Gross profit 15,628 11,697
Other income - 40
Administrative expenses (16,414) (13,306)
Operating loss (785) (1,569)
Adjusted EBITDA 3,173 2,436
Amortisation of intangibles (77) (393)
Depreciation (3,013) (2,936)
Dilapidations provision (108) (80)
Loss on disposal of tangible assets (71) (19)
Contract termination and other exceptional costs (384) (49)
Branch pre-opening costs (307) (188)
Provision against loan to franchisee (12) -
Foreign currency gains / (losses) 13 7
Fair value movement on contingent consideration - (312)
IFRS 9 provision for guarantee losses 22 7
Share-based payment expense (22) (42)
Operating loss (786) (1,569)
Interest received 43 73
Interest expense (195) (115)
Lease finance charges 13 (1,261) (828)
Loss before taxation (2,199) (2,439)
Taxation 7 (8) 47
Loss after taxation (2,207) (2,392)
Other comprehensive income:
Items that may or will be reclassified to profit or loss:
Exchange differences on translation of foreign operations 4 (46)
Total comprehensive loss (2,203) (2,438)
Loss attributable to:
Equity holders of XP Factory plc (2,203) (2,392)
(2,203) (2,392)
Total comprehensive loss attributable to:
Equity holders of XP Factory plc (2,203) (2,438)
(2,203) (2,438)
Loss per share attributable to equity holders: (1.26) (1.58)
Basic (Pence) 6 (1.26) (1.58)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPT 2024
30 Sept 31 March
2024 2024
Note Unaudited Unaudited
£'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 8 21,839 19,360
Right-of-use assets 9 25,359 20,326
Intangible assets 10 23,390 23,639
Finance lease receivable 9 - 1,389
Rent deposits 102 71
70,690 64,785
Current assets
Inventories 371 348
Trade receivables 1,165 1,635
Other receivables and prepayments 2,392 2,444
Cash and bank balances 1,853 3,935
5,781 8,362
TOTAL ASSETS 76,471 73,147
LIABILITIES
Current liabilities
Trade payables 5,225 3,758
Contract liabilities 2,397 1,809
Loans 14 1,631 1,941
Lease liabilities 13 2,034 2,032
Other payables and accruals 6,950 7,546
Provisions 12 185 -
18,422 17,086
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPT 2024
(continued)
As at As at
30 Sept 31 March
2024 2024
Note Unaudited Unaudited
£'000 £'000
Non-current liabilities
Contract liabilities 316 419
Provisions 12 695 609
Loans 14 1,548 1,917
Deferred tax liability 22 326
Lease liabilities 13 32,645 27,786
35,226 31,057
TOTAL LIABILITIES 53,648 48,143
NET ASSETS 22,823 25,004
EQUITY
Capital and reserves attributable to equity holders of XP Factory plc
Share capital 15 2,182 2,182
Share premium account 48,832 48,832
Merger relief reserve - -
Accumulated losses (28,184) (25,977)
Currency translation reserve (387) (391)
Capital redemption reserve 46 46
Share-based payment reserve 334 312
TOTAL EQUITY 22,823 25,004
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPT 2024
Share capital Share premium account Merger relief reserve Currency translation reserve Capital redemption reserve Share-based payment reserve Accumulated losses Total
Six months ended £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
30 Sept 2024
Balance as at 2,182 48,832 - (391) 46 312 (25,977) 25,004
1 April 2024
Loss for the period - - - - - - (2,207) (2,207)
Other comprehensive income - - - 4 - - - 4
Total comprehensive loss - - - 4 - - (2,207) (2,203)
Issue of shares - - - - - - - -
Share issue costs - - - - - - - -
Share-based payment charge - - - - - 22 - 22
Transactions with owners - - - - - 22 - 22
Balance as at 30 Sept 2024 2,182 48,832 - (387) 46 334 (28,184) 22,823
Six months ended £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
30 June 2023
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
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPT 2024
Six months ended Six months ended
30 Sept 2024 30 June 2023
Unaudited Unaudited
Cash flows from operating activities Note £'000 £'000
Loss before income tax (2,199) (2,439)
Adjustments:
Depreciation of property, plant and equipment 8 1,842 2,008
Depreciation of right-of-use assets 9 1,171 928
Amortisation of intangible assets 10 77 393
Fair Value movement on contingent consideration - 313
Provision against non-current assets 12 -
Loss on write-off of property, plant and equipment 71 18
Share-based payment expense 22 40
Foreign currency movements 24 5
Lease interest charges 12 1,261 828
Dilapidations provision 12 108 80
Provisions for guarantee losses (22) -
Interest expense / (income) 153 42
Operating cash flow before working capital changes 2,520 2,216
Decrease in trade and other receivables 566 825
Increase in inventories 11 31
Increase in trade and other payables 632 398
Increase in provisions - (504)
Increase / (decrease) in deferred income 464 452
Cash generated / (used) in operations 4,193 3,418
Income taxes paid (16) -
Net cash generated / (used) in operating activities 4,177 3,418
Cash flows from investing activities
Purchase of property, plant and equipment 8 (3,520) (2,735)
Landlord incentives received 445 -
Purchase of intangibles 10 (87) (101)
Receipt of deposits - -
Movement on loans to franchisees - -
Acquisition of business, net of cash acquired (100) 84
Interest received 43 28
Net cash used in investing activities (3,219) (2,724)
Cash flows from financing activities
Proceeds from issue of ordinary shares 13 - -
Interest payments (195) (115)
Finance lease interest payments 12 (1,092) (522)
Finance lease capital payments 12 (835) (513)
Movements on loans (909) 958
Net cash generated / (used) from financing activities (3,031) (192)
Net increase / (decrease) in cash and bank balances (2,073) 502
Cash and cash equivalents at beginning of period 3,935 3,189
Exchange rate changes on cash held in foreign currencies (9) (9)
Cash and cash equivalents at end of period 1,853 3,682
NOTES TO THE UNAUDITED INTERIM REPORT
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 2024/25 annual report.
The statutory financial statements for the period ended 31 March 2024 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 3 December 2024.
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 42 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 period ended 31 March 2024, 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 20 sites, where all
franchised branches are operating under effectively the same model;
2. The Escape Hunt owner-operated branch business, which as at 30 Sept
2024 consisted of 21 Escape Hunt sites in the UK, one in Dubai, one in Paris
and one in Brussels;
3. The Boom Battle Bar owner-operated business, which as at 30 Sept
2024 comprised 22 Boom Battle Bar sites in the UK and one in Dubai.
4. The Boom Battle Bar franchise business, comprising 7 sites, where
all franchised branches operate under the same model within the Boom Battle
Bar brand; and
The Group operates on a global basis. As at 30 Sept 2024, the Company had
active Escape Hunt franchisees in 7 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 Sept 2024 £'000 £'000 £'000 £'000 £'000 £'000
Revenue 6,510 292 17,555 538 - 24,895
Cost of sales (1,862) - (7,405) - - (9,267)
Gross profit 4,648 292 10,150 538 - 15,628
Site level operating costs (1,746) - (6,846) - - (8,592)
Other income - - - - - -
Site level EBITDA 2,902 292 3,304 538 - 7,036
Centrally incurred overheads (1,032) (3) (585) - (2,727) (4,346)
Depreciation and amortisation (866) (15) (2,156) (42) (12) (3,091)
Exceptional items (49) - (299) - (36) (384)
Operating profit / (loss) 955 274 264 496 (2,775) (786)
Adjusted EBITDA 2,107 269 2,975 538 (2,715) 3,173
Depreciation and amortisation (619) (15) (1,231) (42) (12) (1,919)
Depreciation of right-of-use assets (247) (924) - - (1,171)
-
Dilapidations provision (35) (73) - - (108)
-
Contract termination and other exceptional costs (49) (299) - (36) (384)
-
Pre-opening costs (198) (109) - - (307)
-
Provision against guarantee losses - - - - 22 22
Provision against loan to franchisee - - - - (12) (12)
Loss on disposal of assets (4) - (67) - - (71)
Foreign currency gains - 20 (7) - - 13
Share-based payment expenses - - - - (22) (22)
Operating profit 955 274 264 496 (2,775) (786)
Interest income / (expense) - - - (152) (152)
Finance lease charges (179) - (1,082) - - (1,261)
Profit/(loss) from operations before tax 776 274 (818) 496 (2,927) (2,199)
Taxation (5) - (11) 8 - (8)
Profit / (loss) for the period 771 274 (829) 505 (2,928) (2,207)
Other information:
Non-current assets 9,448 25 38,773 70 22,374 70,690
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 (1,601) - (3,973) - - (5,574)
Other income 29 - 4 - 7 40
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) 575 166 (155) 883 (3,037) (1,569)
Adjusted EBITDA 2,034 228 1,675 1,068 (2,569) 2,436
Depreciation and amortisation (1,117) (68) (924) (184) (108) (2,401)
Depreciation of right-of-use assets (224) - (704) - - (928)
Dilapidations provision (39) - (41) - - (80)
Contract termination and other exceptional costs (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 575 166 (155) 883 (3,038) (1,569)
Interest income / (expense) - - - (42) (42)
Finance lease charges (142) - (686) - - (828)
Profit/(loss) from operations before tax 433 166 (841) 883 (3,080) (2,439)
Taxation 1 46 47
Profit / (loss) for the period 433 167 (841) 929 (3,080) (2,392)
Other information:
Non-current assets 6,308 140 28,526 4,420 19,231 58,625
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 Sept 30 June
2024 2023
Unaudited Unaudited
£ £
Loss after tax (£000) (2,207) (2,392)
Weighted average number of shares:
- Basic and diluted 174,918,256 151,161,896
Loss per share (pence)
- Basic and diluted 1.26 1.58
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 £20.1m as at 30 Sept 2024
(30 June 2023: £24.5m) 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 £5m (30 June 2023: £6.1m).
8. Property, plant and equipment
Leasehold property Office equipment Computers
Furniture and fixtures Games Total
£'000 £'000 £'000 £'000 £'000 £'000
Cost
At 31 March 2024 18,840 695 681 2,780 9,235 32,231
Additions arising from purchases 2,052 1 178 482 807 3,520
Disposals (140) - - (116) (124) (380)
Additions arising from acquisition 650 - 17 193 55 915
Conversion differences (30) (3) 3 (31)
As at 30 Sept 2024 21,372 206 879 3,801 9,951 36,209
Accumulated depreciation
At 31 March 2024 (6,131) (102) (307) (1,100) (5,231) (12,871)
Depreciation charge (803) (25) (99) (315) (600) (1,842)
Disposals (116) - - (116) (77) (309)
Additions arising from acquisitions - - - - - -
Conversion differences (5) (14) 1 (1) (15) (34)
As at 30 Sept 2024 (6,813) (113) (407) (1,298) (5,739) (14,370)
Carrying amounts
At 31 March 2024 12,709 593 374 1,680 4,004 19,360
As at 30 Sept 2024 14,559 93 472 2,503 4,212 21,839
9. Right-of-use assets
As at As at
30 Sept 31 March
2024 2024
£'000 £'000
Land and buildings - right-of-use asset cost b/f 25,442 20,484
Closures / leases ended for renegotiation during the period - 275
Additions during the year, including through acquisition 6,650 6,245
Lease incentives (445) (1,563)
Less: Accumulated depreciation b/f (5,116) (2,641)
Depreciation charged for the period (1,171) (2,474)
Net book value 25,360 20,326
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.
Six months ended Six months ended
Finance lease receivable 30 Sept 30 June
2024 2023
£'000 £'000
Balance at beginning of period 1,389 1,273
De-recognition of sub lease (1,413) -
Interest charged 24 45
Payments received -
Balance at end of period - 1,318
During the six month period to Sept 2024, the Boom franchisee sub letting the
Bournemouth premises was acquired and now forms part of the owner-operated
operated estate. As a result, the finance lease receivable has been
de-recognised and the corresponding right-of-use asset has been created.
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 March 2024 22,875 96 10,195 1,979 2,988 100 330 38,563
Additions - 15 - 26 - - 46 87
Disposals - - - - - - - -
Additions arising from acquisition - - - - - - - -
Re-analysis from acquisitions 892 - - - (1,182) - - (290)
Conversion differences - - - 12 - - 18 30
As at 30 Sept 2024 23,767 111 10,195 2,017 1,806 100 394 38,390
Accumulated amortisation
At 31 March 2024 (1,393) (81) (10,195) (1,163) (1,675) (100) (317) (14,924)
Amortisation - (3) - (32) (37) - (6) (78)
Disposals - - - - - - - -
Additions arising from acquisitions - - - - - - - -
Conversion Differences - - - - - - 2 2
At 30 Sept 2024 (1,393) (84) (10,195) (1,195) (1,712) (100) (321) (15,000)
Carrying amounts
At 31 March 2024 21,482 15 - 816 1,313 - 14 23,639
At 30 Sept 2024 22,374 27 - 822 94 - 73 23,390
11. Business Combination
Acquisition of Boom Battle Bar Wandsworth
Effective 9 May 2024 XP Factory Plc acquired the operating assets and trade
relating to the Boom Battle Bar site in Wandsworth ("Boom Wandsworth").
The details of the business combination are as follows:
Total
£'000
Fair value of consideration transferred
Amounts settled in cash -
Termination payment from vendor (153)
Settlement of amounts owed to XP Factory group 57
Total purchase consideration (97)
Boom Battle Bar Wandsworth Book Value Fair Value Adjustment £'000 Fair Value £'000
£'000
Assets and liabilities recognised as a result of the acquisition
Property, plant and equipment 83 - 83
Right of use assets - 825 825
Inventory 13 - 13
Lease liabilities - (825) (825)
Other payables (192) - (192)
Net identifiable assets acquired (97) - (97)
Goodwill arising on consolidation - - -
Total (97) - (97)
Boom Wandsworth contributed revenues of £216k and a loss of £185k in the
period between acquisition and 30 Sept 2024.
Acquisition of Boom Battle Bar Aldgate East
Effective 9 May 2024 XP Factory Plc acquired the operating assets and trade
relating to the Boom Battle Bar site in Aldgate East ("Boom Aldgate East").
The details of the business combination and the allocation of the estimated
fair value of the consideration are as follows:
Total
£'000
Fair value of consideration transferred
Loan receivable (80)
Write off of debts owed 129
Total purchase consideration 49
Boom Battle Bar Aldgate East Book Value Fair Value Adjustment £'000 Fair Value £'000
£'000
Assets and liabilities recognised as a result of the acquisition
Other receivables and deposits 83 - 83
Property, plant and equipment 116 - 116
Right of use assets 1,849 1,849
Inventory 12 - 12
Lease liabilities (1,849) (1,849)
Other payables (162) - (162)
Net identifiable assets acquired 49 - 49
Goodwill arising on consolidation - - -
Total 49 - 49
Boom Aldgate East contributed revenues of £627k and a profit of £28k in the
period between acquisition and 30 September 2024.
Acquisition of Boom Battle Bar Bournemouth
Effective 28 June 2024 XP Factory Plc acquired the operating assets and trade
relating to the Boom Battle Bar site in Bournemouth ("Boom
Bournemouth").
The details of the business combination and the allocation of the estimated
fair value of the consideration are as follows:
Total
£'000
Fair value of consideration transferred
Amounts settled in cash 100
Vendor loan 302
Total purchase consideration 402
Boom Battle Bar Bournemouth Book Value Fair Value Adjustment £'000 Fair Value £'000
£'000
Assets and liabilities recognised as a result of the acquisition
Other receivables and deposits 3 - 3
Property, plant and equipment 716 - 716
Right of use assets - 1,123 1,123
Trade payables (327) 291 (36)
Inventory 10 - 10
Finance lease receivable - (1,414) (1,414)
Net identifiable assets acquired 402 - 402
Goodwill arising on consolidation - - -
Total 402 - 402
Boom Bournemouth contributed revenues of £277k and a loss of £2k in the
period between acquisition and 30 September 2024.
12. Provisions
As at As at
30 Sept 2024 31 March 2024
£'000 £'000
Dilapidations provisions 647 539
Provision for financial guarantee contracts 48 70
Other provisions 185 -
Provisions at end of period 881 609
Due within one year 185 -
Due after more than one year 696 609
881 609
The movement on provisions in the period can be analysed as follows:
Six months ended Six months ended
30 Sept 2024 30 June 2023
£'000 £'000
Balance at beginning of period 609 5,383
Reduction in deferred consideration - (605)
Increase in deferred consideration - 112
Movement in dilapidations provision 108 80
IFRS 9 Provision for lease guarantees (22) (7)
Settlement of contingent consideration - (4,113)
Movement in other provisions 185 (5)
Provisions at end of period 881 845
13. Lease liabilities
Six months ended Six months ended
30 Sept 2024 30 June 2023
£'000 £'000
In respect of right-of-use assets
Balance at beginning of period 29,819 24,040
Closures / leases ended for renegotiation during the period - -
Additions during the period 5,527 3,353
Interest Incurred 1,261 828
Repayments during the period (1,927) (1,035)
Rent concessions received - -
Reallocated from accruals and trade payables
Lease liabilities at end of period 34,680 27,186
As at As at
30 Sept 31 March
2024 2024
£'000 £'000
Maturity
< 1month 213 232
1 - 3 months 426 463
3 - 12 months 1,561 1,337
Non-current 32,480 27,786
Total lease liabilities 34,680 29,818
14. Borrowings
As at As at
30 Sept 31 March
2024 2024
£'000 £'000
Amounts due within one year
Vendor loans and loan notes 795 922
Fit out finance, including equipment finance leases 792 795
Bank and other borrowings 43 224
1,630 1,941
Amounts due in more than one year:
Vendor loans and loan notes 150 234
Fit out finance 371 683
Bank and other borrowings 1,028 1,000
As at end of period / year 1,549 1,917
Total at end of period / year 3,179 3,858
On 28 June 2024, the Group acquired the assets and liabilities of BBB
Bournemouth Limited more details of which are set out in note 11. The
acquisition was partially funded by a vendor loan which is being paid in
instalments. Total loan balance outstanding to the vendors recorded at 30
September 2024 is £184k.
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 September 2024 was £880k. Bank and other loans totaled
£1,071k.
15. Share capital
As at As at
30 Sept 31 March
2024 2024
Unaudited Unaudited
£'000 £'000
As at beginning of period / year
- 174,557,600 (2023: 150,633,180)
Ordinary shares of 1.25 pence each 2,182 1,883
Issued during the period / year - 299
- nil Ordinary shares (2023: 23,924,420 Ordinary Shares)
As at end of period / year 2,182 2,182
- 174,557,600 (2023: 174,557,600)
Ordinary shares of 1.25 pence each
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 four 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 #4
Date of award 15-Jul-20 18-Nov-21 23-Nov-21 15-Dec-23
Date of expiry 15-Jul-25 18-Nov-26 23-Nov-26 31-Jul-30
Exercise price 7.5p 35.0p 35.0p 15.0p
Qualifying awards - number of shares under option 13,333,332 700,001 533,334 0
Non-qualifying awards - number of shares under option 2,400,000 0 0 666,666
Awards Lapsed 0 0 266,667 0
First vesting price 11.25p 43.75p 43.75p 18.75p
Second vesting price 18.75p 61.25p 61.25p 25.00p
Third vesting price 25.00p 70.00p 70.00p 26.25p
Proportion of awards vesting at first vesting price 33.33% 33.33% 33.33% 33.33%
Proportion of awards vesting at second vesting price 90.00% 90.00% 90.00% 90.00%
Proportion of awards vesting at third vesting price 100% 100% 100% 100%
As at 30 Sept 2024, 17,366,666 options were outstanding under the 2020 EMI
Plan (30 June 2023, 16,700,000).
The sum of £13,022 has been recognised as a share-based payment and charged
to the profit and loss during the period (6 months ended 30 Jun 2023:
£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 #4
Exercise price 7.5p 35.0p 35.0p 15.0p
Volatility 34.60% 31% 31% 35%
Share price at date of award 7.375p 33.50p 32.00p 15.00p
Option exercise date 15-Jul-24 18-Nov-25 23-Nov-25 31-Jul-29
Risk free rate -0.05% 1.55% 1.55% 3.5%
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 Sept 2024 is 12.9 months (30 June 2023: 28.9 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 January 2021, 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.
As at 30 September 2024, 538,916 matching shares (30 June 2023, 248,605) had
been awarded and were held by the trustees for release to employees pending
satisfaction of their retention conditions . A charge of £9,243 (H1 2023:
£6,944) has been recognised in the accounts in respect of the Matching Shares
awards.
16. Key management personnel compensation
Six months Six months
ended ended
30 Sept 30 June
2024 2023
Unaudited Unaudited
£'000 £'000
Salaries and benefits (including directors) 421 433
Share-based payments 7 29
Social security costs 77 74
Other post-employment benefits 20 9
Less amounts capitalised (26) (41)
Total 501 504
17. 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 2023: nil).
18. 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 Audit (a trading name of Sumer Auditco Limited)
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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