Escape Hunt: Rebound in demand

Escape Hunt plc

Consumer demand for Escape Hunt plc (LON:ESC) experiential leisure sites has rebounded strongly since reopening. At the same time, the company continues to gain scale with acquisitions outperforming and site rollouts on track to exceed targets. Such solid trading and operational progress improve the company’s long-term profit outlook.

UK sites outperforming: ESC provided a trading update for the ten-week period since its UK sites were reopened on 17 May. UK owner-operated sites have outperformed expectations and occupancy and growth rates are accelerating. Occupancy levels are returning faster than expected after lockdown. Revenue from the UK owner-operated sites that were open in the same period in 2019 was 95% of the revenues in the same period in 2019 but sales in the last five weeks were up 2% compared to the same period in 2019. Site level EBITDA from the eight established sites jumped 83% compared to the same period in 2019, with growth accelerating to 114% in the last five weeks, due to margin enhancing initiatives and the temporarily reduced VAT rate.

International also strong: The company’s recent acquistions have outperformed since reopening. Escape Hunt’s owner-operated site in Dubai generated H1 revenue and EBITDA ahead of expectations. As a result, the site should achieve full pay back on its acquisition price in under 12 months, based on current trading levels. Similarly, the company’s owner-operated sites in Brussels and Paris have experienced faster than anticipated return of business since re-opening in June 2021, with turnover marginally ahead of expectations. Escape Hunt’s franchise estate performed in line with expectations in H1 2021, with stronger performance in Australia offset pro-longed closures in Europe, especially in France.

H1 results: H1 results as a whole are not indicative of ESC’s growth and profitability since economies were in lockdown for most of the period. Revenue is expected to be about £1.1m compared to £1.3m a year ago. However, the comparison is inconsistent since the current period includes only about six weeks of trading in the UK compared to approximately 11 weeks in the year ago period. Current period revenues include £0.2m of franchise revenue and £151k of remote and digital revenue. Cash at 30 June 2021 was £2.4m, indicating £0.9m of cash burn from £3.3m at the end of Q1 2021.

Site rollouts on track to outperform: ESC has exchanged contracts for its 18th owner-operated site in Milton Keynes and games are in the process of being installed at its 19th site in Lakeside. The company has more potential sites in its pipeline and expects property conditions to remain favourable in the short to medium term. As a result, Escape Hunt remains confident in growing to 20 owner-operated sites ahead of the original target date of June 2022.

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