Escape Hunt ‘confident’ that both consumer and corporate demand will return strongly
(ESC ) said it has exchanged contracts to acquire its French master franchise partner, BGP Escape, with the acquisition expected to be completed on or before 15 March 2021.
The Company, which operates within the escape rooms sector, conditionally agreed to terms to acquire BGP back in January 2021. It said the terms of the original deal still stand.
This morning, the Group told investors that it has seen ‘modest improvement’ during FY20 with Group Adjusted EBITDA loss expected to be around £2.0m compared to FY19: £2.1m.
FY20 trading was severely impacted by government mandated restrictions on the leisure industry in response to the pandemic, affecting Escapes’ UK and international business.
Revenue for the year to 31 December 2020 fell to around £2.6m from £4.9m in 2019. It ended the year with £2.7m of cash (FY19: £2.2m) and the January Placing raised a further £1.4m (before expenses). The Group held £3.95m of cash at the end of January 2021.
However, the Company detailed that it was able to take action to mitigate the impact of the site closures, including the launch of digital and play-at-home propositions, careful management of costs, and by accessing certain government support schemes.
Since restrictions were initially imposed, it has completed two successful fundraisers, raising £4.3m in July 2020 and £1.4m in January 2021 in part to fund the French Acquisition.
Shares in Escape Hunt have increased by nearly 70% in value since the beginning of year from 15.25p. The stock dipped 0.87% lower this morning to 23.99p following the news.
The July placing enabled the Group to advance its five-point value creation plan set out at the time. As a result, its UK owner-operated estate has been substantially expanded and the Company has been able to successfully launch a series of digital and play-at-home products.
While ongoing restrictions make for hard planning, the directors believe it is in ‘a strong position to benefit from a resumption of activity once lockdown restrictions are lifted.’
Outlook
It said the pace at which the vaccination programme is being rolled out in the UK and the recent Government announcement outlining a route towards re-opening the economy gives reason for a more positive outlook than the Group was faced with only a few weeks ago.
It said it is confident that both consumer and corporate demand will return strongly after restrictions are lifted and that UK property market conditions are ‘increasingly favourable’.
In February 2021, the Group had 9 Escape Hunt branded owner-operated sites in the UK. Following the French Acquisition and the build-out at Kingston, the network will have expanded to 17, with Milton Keynes potentially becoming the 18th owner-operated site.
‘Once new site performance has matured and conditions and demand have normalised post COVID-19,’ it commented, ‘the Directors believe that an owner-managed network of this size should be capable of supporting positive group EBITDA and positive cash generation.’
It said it has made significant progress in establishing digital and other play-at-home products which offers ‘a new, scalable revenue stream and growth opportunity, which the directors expect to become an increasingly important part of the business in the future.’
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