TIDMXPF
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(R) and
Boom Battle Bar(R) brands, is pleased to announce its unaudited
interim results for the six months ended 30 June 2023 ("H1
2023").
Half year Half year Change
ended 30 June ended 30 June
2023 (GBP'000) 2022 (GBP'000)
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 GBP18.7m (H1 2022: GBP8.1m)
demonstrating the significant growth in scale:
* Escape Hunt(R) owner operated site revenue increased
41% to GBP6.1m (H1 2022: GBP4.3m)
* Boom Battle Bar(R) ("Boom") owner operated revenue
increased 416% to GBP11.3m (H1 2022: GBP2.2m)
-- Gross margin maintained at 62.1% (H1 2022: 62.8%)
-- Pre IFRS 16 Group Adjusted EBITDA(1) profit of GBP1.05m
(H1 2022: GBP0.28m)
-- Site level pre IFRS 16 EBITDA profit of GBP5.0m (H1 2022:
profit GBP2.2m)
-- Cash at 30 June 2023 of GBP3.7m (31 Dec 2022: GBP3.2m)
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(R) : 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(R) 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- 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(R) site opened in Woking on 17 July 2023
with strong early performance
-- All UK Escape Hunt(R) owner operated sites operating for
more than a year awarded 'Traveller's Choice Awards' by
Tripadvisor(R)
-- Owner operated estate now comprises 24 Escape Hunt(R)
sites and 15 Boom sites
-- Franchise estate now comprises 23 Escape Hunt(R) 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(R) 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(R) 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
Richard Harpham (Chief Executive Officer)
Graham Bird (Chief Financial Officer) +44 (0) 20 7846
Kam Bansil (Investor Relations) 3322
Singer Capital Markets - NOMAD and Broker
Peter Steel
Alaina Wong +44 (0) 20 7496
James Fischer 3000
IFC Advisory - Financial PR
Graham Herring +44 (0) 20 3934
Florence Chandler 6630
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(R) 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(R) Boom Battle Bar(R) 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/ )
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(R) estate during 2022, and in particular the second
half of 2022, saw the Group start 2023 with a footprint of 27 Boom
Battle Bar(R) sites, of which 11 were owner operated, and 46 Escape
Hunt(R) 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(R) 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(R), 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(R) 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 GBP11.3m,
a 416% increase over the same period in 2022 (H1 2022: GBP2.2m).
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 GBP1.1m
and EBITDA of GBP1.1m in the six months ended 30 June 2022. (H1
2022, revenue GBP1.4m and EBITDA of GBP0.9m). The prior period
included GBP0.8m of revenue associated with the sale of a franchise
venue, offset by GBP0.5m 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(R)
Owner operated
The Escape Hunt(R) owner operated business delivered GBP6.1m of
revenue, a 41% increase over the same period in 2022 (H1 2022:
GBP4.3m). Like for like growth in the 26 weeks to 2 July 2023 was
20.4%. Within this, the original seven Escape Hunt(R) 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(R) 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(R) 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(R) continues to enjoy excellent consumer ratings,
achieving a 97% customer satisfaction rating and all eligible
Escape Hunt(R) sites in the UK again received the TripAdvisor
Traveller's Choice (R) award in 2023, a performance significantly
ahead of the industry as a whole.
Franchise
The Escape Hunt(R) franchise business returned to growth and
delivered revenue of GBP282k, up 17% on the same period in 2022 (H1
2022: GBP241k). 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(R) 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(R) 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(R) benefitting
from strong growth in corporate sales revenue. Escape Hunt(R) 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(R)
and +100 Boom Battle Bar(R) 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
GBP18.7m, 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(R)
owner-operated revenue grew 41% to GBP6.1m, 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 GBP275k
to GBP1.049m and to GBP2.356m (H1 2022: GBP1.07m) after IFRS 16
adjustments.
Six months Six months
ended June ended June
2023 2022
GBP'000 GBP'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)
GBP188k 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(R) site in Woking. The GBP312k 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(R) owner operated segment continued
to perform strongly, delivering site-level EBITDA of GBP2.4m at a
margin of 40%. Within the Boom Battle Bar(R) 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.
Escape Escape
H1 2023 Hunt(R) Hunt(R) Boom Boom H1 2023
Owned Franchise Owned Franchise Unallocated GBP'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
---------------- ---------- ----------------- -------------- ---------------- --------------------- ------------
Escape Escape
H1 2022 Hunt(R) Hunt(R) Boom Boom H1 2022
Owned Franchise Owned Franchise Unallocated GBP'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 GBP2.6m 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 GBP115k reflect the additional fit out and
vendor finance utilised.
Unaudited Group operating loss was GBP1.6m (2022: GBP2.4m)
leading to a reduction in the loss per share from 2.2p to
1.58p.
Cashflow
The Group generated GBP3.4m of cash from operations (H1 2022:
GBP0.8m). GBP2.8m was invested in plant and equipment and
intangibles. This comprised total investment of GBP1.8m within Boom
owner-operated sites and GBP1.0m investment in Escape Hunt(R) owner
operated sites. Within Boom, GBP0.9m was invested in new sites in
Dubai, Canterbury and Southend, GBP0.8m was directed to existing
sites to make improvements to the original plans as management
believes this expenditure will produce attractive returns, whilst
GBP0.1m reflected maintenance capex. Within Escape Hunt(R),
GBP0.45m was invested in the new site in Woking with a further
GBP0.25m being invested in extending existing sites through the
addition of new rooms, and GBP0.2m represented maintenance
capex.
GBP600k was paid for the second deferred consideration
instalment for the acquisition of Boom Cardiff (shown within
movements in provisions). The final instalment of EUR50k together
with accrued interest was paid on the vendor loan relating to the
acquisition of the Escape Hunt(R) 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 GBP84k.
Rental payments, classified under IFRS16 as capital and interest
payments totalled GBP1.03m, whilst GBP115k 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, GBP1.4m of new loans were raised,
and GBP0.5m of repayments were made.
Cash at 30 June 2023 was GBP3.7m (30 Jun 2022: GBP5.2m; 31 Dec
2022: GBP3.2m).
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 GBP4.0m, reflecting GBP2.8m of
internal capex, GBP1.1m of fixed asset additions from the
acquisitions of Chelmsford and Ealing Boom franchise sites, GBP1.5m
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 GBP7.3m, 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 GBP5.0m to GBP0.4m
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 GBP23.6m (31 December
2022: GBP21.6m). Group net cash / net debt was GBPnil (31 Dec 2022:
net cash GBP0.8m).
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 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(R) owner
operated estate was 23% in the nine weeks to 3 September 2023.
Margins within Boom saw further, steady improvements and Escape
Hunt(R) 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 MONTHSED 30 JUNE 2022
Six months Six months
ended ended
30 June 2023 30 June 2022
Note Unaudited Unaudited
GBP'000 GBP'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
2012201 2012201
2 2
30 June 31 December
2022 2022
Note Unaudited Audited
GBP'000 GBP'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
2,684
Other receivables and prepayments v 1,839
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
15,215
15,495 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
GBP'000 GBP'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
Convertible
Share Merger Currency Capital Share-based loan
Share premium relief translation redemption payment note Accumulated
capital account reserve reserve reserve reserve reserve losses Total
Six months
ended
30 June
2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------------------- --------------------- ---------------------- ---------------------- --------------------- --------------------- -------------------- --------------------
Balance
as at
1 January
2023 1,883 44,705 4,756 279 46 240 - (30,312) 21,597
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
30 June
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------------------- --------------------- ---------------------- ---------------------- --------------------- --------------------- -------------------- --------------------
Balance
as at
1 January
2022 1,825 44,366 4,756 (83) 46 158 68 (29,317) 21,819
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 MONTHSED 30 JUNE 2022
Six months Six months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
Cash flows from operating activities Note GBP'000 GBP'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 MONTHSED 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(R) Group, the
activities of which related solely to franchise.
On 2 May 2017, the Company's name was changed to Escape Hunt(R)
plc and became the holding company of the enlarged Escape Hunt(R)
Group. Thereafter the group established the Escape Hunt(R) owner
operated business which operates through a UK subsidiary. All of
the Escape Hunt(R) 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(R) 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(R) 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(R) and Escape Hunt(R) 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(R) and Boom Battle Bar(R) brands as
follows:
1. The Escape Hunt(R) franchise business, comprising 23 sites,
where all franchised branches are operating under effectively the
same model;
2. The Escape Hunt(R) owner-operated branch business, which as
at 30 June 2023 consisted of 20 Escape Hunt(R) sites in the UK, one
in Dubai, one in Paris and one in Brussels;
3. The Boom Battle Bar(R) franchise business, comprising 14
sites, where all franchised branches operate under the same model
within the Boom Battle Bar(R) brand; and
4. The Boom Battle Bar(R) owner-operated business, which as at
30 June 2022 comprised 13 Boom Battle Bar(R) sites in the.
The Group operates on a global basis. As at 30 June 2023, the
Company had active Escape Hunt(R) 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(R) Escape Boom Owner Boom Franchise
Owner Hunt(R) operated
operated Franchise Unallocated Total
Six months GBP'000 GBP'000
ended 30 June
2023 GBP'000 GBP'000 GBP'000 GBP'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 (6,966)
costs (1,950) - (5,016) - - (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(R) Escape Boom Owner Boom Franchise
Owner Hunt(R) operated
operated Franchise Unallocated Total
Six months ended
30 June
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP GBP
Loss after tax (GBP000) (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
GBP24.5m as at 30 June 2023 (31 Dec 2022: GBP22.4m) 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 GBP6.1m (31 Dec 2022: GBP5.6m).
8. Property, plant and equipment
Leasehold Office Furniture Games Total
property equipment Computers and fixtures
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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
Internally
Trademarks Intellectual generated Franchise App
Goodwill and patents property IP agreements Quest Portal Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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(R) site situated in Chelmsford. BBB Ealing Ltd runs a Boom
Battle Bar(R) 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 GBP288.2k, 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 BBB Ealing Total
Ltd Ltd GBP'000
GBP'000 GBP'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 Fair
GBP'000 Adjustment Value
GBP'000 GBP'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 GBP364k 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 GBP95k and a net loss
of 29k in the period between acquisition and 30 June 2023.
BBB Ealing Ltd Book Value Fair Value Fair
GBP'000 Adjustment Value
GBP'000 GBP'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 GBP415k 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 GBP76k and a net loss of
28k in the period between acquisition and 30 June 2023.
12. Provisions
As at As at 31
30 June Dec 2022
20223
GBP'000 GBP'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 Six months
ended ended
30 June 30 June
2023 2022
GBP'000 GBP'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 Six months
ended ended
30 June 30 June
2023 2022
GBP'000 GBP'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
GBP'000 GBP'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
GBP'000 GBP'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 GBP360,000 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(R) Cardiff Limited. The acquisition of Boom East
Limited (Boom Norwich) also utilised vendor financing, of which
GBP8k 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 GBP1,281k. 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(R) 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 GBP1,370k. Bank and other loans totaled
GBP655k.
15. Share capital
Six months Year
ended ended
30 June 31 December
2023 2022
Unaudited Audited
GBP'000 GBP'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
* 23,924,420 Ordinary shares (2022: 4,628,082 Ordinary
Shares) 299 58
As at end of period / year
* 174,557,600 (2021: 150,633,180)
Ordinary shares of 1.25 pence each 2,182 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 GBP34,278 has been recognised as a share-based
payment and charged to the profit and loss during the period (6
months ended 30 Jun 2022: GBP34,268). 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(R) Employee Share Incentive Scheme
In November 2020, the Company established the Escape Hunt(R)
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(R) '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 GBP10 per month, but may not, in aggregate, exceed
GBP1,800 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 GBP6.9k
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
GBP'000 GBP'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(R) 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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END
IR LFMFTMTATBJJ
(END) Dow Jones Newswires
September 27, 2023 02:00 ET (06:00 GMT)
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