XP Factory plc (LON:XPF), one of the UK’s pre-eminent experiential leisure businesses operating the Escape Hunt® and Boom Battle Bar® brands, has announced the completion of its new £10m revolving credit facility (RCF) provided by Barclays Bank PLC.
The facility increases the Group’s flexibility and capacity to grow both the Escape Hunt and Boom estates, provides additional working capital headroom, and will enable the Company to refinance an existing £1m debt facility at significantly lower borrowing costs. The facility has been secured on the strength of the underlying cash generation in the business.
In the 15 months to 31 March 2024, XP Factory delivered £6.5m of free cash flow after maintenance capex, representing an annualised yield of 24% based on the Company’s current market capitalisation of £21.9m. Over and above this strong organic cash generation, the RCF will allow the Group to more actively manage and accelerate its expansion of the Boom Battle Bar and Escape Hunt networks.
The results for the 15 months to 31 March 2024 illustrated the underlying cash generation within the business:
| £m | |
| Pre IFRS 16 Group EBITDA: | 6.3 |
| IFRS 16 Adjustments | 3.7 |
| Working capital and other non-cash movements | 1.1 |
| Net cash generated from operating activities per cashflow statement | 11.1 |
| Rent payments (treated as interest and capital payments under IFRS16) | (3.1) |
| Underlying cash generated from operating activities | 8.0 |
| Maintenance capex | (1.1) |
| Interest and finance costs | (0.4) |
| Free cashflow available | 6.5 |
| Market capitalisation at 12.5p per share | 21.9 |
| Annualised free cash yield | 24% |
The Group has £22.3m of carried forward tax losses which together with future capital allowances from expansion in the estate provides significant future benefits before corporation tax will become payable.
Historically, investments into new sites within the Boom and Escape Hunt networks have generated returns on capital of 52% and 48% per annum respectively. The Group’s strong free cash generation dynamics and high returns on capital provided the basis for securing the RCF at an exciting phase in its growth strategy.
Philip Richardson, Director of Hospitality & Leisure, UK Corporate Banking, Barclays said “XP Factory are a great example of an innovative business in the hospitality sector and we’re proud to support them with lending to continue their growth as they expand their business across the UK.”
Richard Harpham, Chief Executive of XP Factory plc said “Securing this new RCF represents an important milestone for the Group. Not only is it a strong endorsement of the progress made in the last few years, but it will significantly enhance our ability and confidence to add further venues to our two fast growing brands. Our existing cash generation supports around 5-6 new site openings per annum. Although there will not be any impact in the current financial year, with the facility in place we have the ability to increase the pace of roll out in 2025 and beyond whilst maintaining conservative debt ratios. “
