Escape Hunt earnings slightly ahead of expectations

(Sharecast News) - Escape Hunt said annual earnings would be slightly ahead of expectations as the escape rooms company added sites and increased sales at existing venues.
Revenue at owner-operated sites rose to £3.8m from £1.1m in the year to the end of December as the number of active games rooms rose to 49 from 38, Escape Hunt said in a trading update.

At the three most mature owner-operated sites in Birmingham, Bristol and Leeds like-for-like sales rose 34% in the final quarter of 2019. Like-for-like sales rose 70% across all eight owner-operated sites in December.

The company's franchise estate had annual revenue of £1m, in line with 2018. Franchised earnings were in line with management expectations. Escape Hunt said it had made good progress with its US franchise partner.

Escape Hunt shares rose 2.9% to 15.94p at 11:42 GMT.

The company is tapping into the craze for teams of people to get out of a locked room in an hour by solving puzzles. The rooms, of which there are about 1,500 in the UK, attract groups of adults and lure teenage gamers away from their screens.

A new site in Birmingham, featuring two virtual reality escape rooms opened in mid-December and has traded ahead of company expectations. Problems for retail landlords are causing new openings to take longer than expected but fit-out is underway at two sites with heads of terms agreed at others. There are signs that market pressures are easing, the company said.

Excluding applications for research and development credits and a Scottish Enterprise grant, underlying earnings before interest, tax, depreciation and amortisation will be "modestly ahead of management's expectations", the company said.

Chief Executive Richard Harpham said: "We are pleased with our progress in FY19. The performance of our owner-operated sites continues to give us confidence in the proposition and opportunity in the UK.

"The signing of the US franchise deal marked a significant step in accelerating the growth of our franchise business. Finally, we have made significant steps towards reducing the average unit build cost underpinning our confidence in the underlying returns profile for the business."