Member Info for HedgeHogarth

TW is a prize pill-lock - he embodies the saying ' a little knowledge is a dangerous thing'

Borrowing may well be close to 2x market cap; but as we all know from the RNS the vast majority of the borrowing is similar to bridge the gap to receiving contract revenue and assets from their rental prop.

If the share price went to 4p - you could make the comment that borrowing was up to 3x mCap.

However it does not chaneg anything - it does not affect the compnaies ability to stay complaint with the bank covenants which are no linked to mCap. The mCAP is just a function of the current share price which in no way reflect the genuine market value of the company. If you think it does - why not go and try and buy the company for 7p and see how many holders will sell you their shares.

I beleive that if MM wanted to do a proper finance lease proposition - it would come with a much heavier regulatory burden with is a big undertaking for a business. It is generally unpopular with customers, adding time to th etransaction and requires then to take out a formal loan.

Northern , my friend.... You are either deluded, have a vendetta, have an underhand agenda or just misplaced your trust in the wrong people.

I'm not sure what you expect to happen next - I'm looking forward to their next trading update and waiting to hear what the is happening with the offer period - it is almost 4 months i think now.

It's official - I just did the Math.....

In 90 days time the SP will be back to 6p - at todays +0.047p growth

Sean Cagney on Ice ;-)

Was hoping to sneak a few at sub 7p as a spread bet - sadly Spreadex are only allowing closing transactions and wont't let me buy. Often a sign that the share price is primed for a big more.

Northern - I can assure you that I spent over 40 hours in my professional career in discussio with qualified lawyers and accountings (with greater technical knowledge than me) to create a rental proposition in which you could align the accounting and FCA rules. There is no sultion - this is not a MM policy issue, it is simply staying compliant with accounting and regulatory standards / rules.

If MM were to allow you to buy the device at the end of the rental period the proposition would no longer be regardred as a rental by accounting / regulatory rules.

Like it or not, they are the rules and they are made very clear at the start of the proposition.

Pippy back to deramping again - SIGH

They are not doing anything to blind anyone.

They shows the EBITDA at site level which is super helpful - it helps me model out the growth The central Opex is clearly segregated as this wll not grow in line with revenue - with sensible cost managemnet it should decrease as a % of revenue and we'll see EBITDA margin improves as the number of venues grow.

We've all already agreed that depreciation and amortisation is a paper exercise - this compnay has already invested £50m to put into place it's current infrastructure

They dont have £2m Financing costs - they have minimal debt and only paid £200k interest in 2023. You are muddling up their lease costs .

As I have said in many posts already....

XP has a network of 80 venues; this is fully paid for. We know from the lastest RNS that:

1. XP are continuing to see L4L growth of their current estate (Escape Hunt - 17% in 2023, 11% YTD in 2024 and (Boom Battle Bar - 19%, 9% YTD in 2024)

2. The change in depreciation shows that they believe the life of the games is longer than previoulsy thought

3. These 80 venues require only a modest amount of annual maintence CAPEX

4. These 80 venues represent a paid for Asset that delivers a miniumum +£10m Cash per annum and +£10m EBITDA

5. Bigger CAPEX undertakings (Full Refit of existing Venue or New Venues) to be funded organically through the +£10m cashh flow it generates + combined with a small amount of 'low cost' vendor financing when opening new venues

Pippi - at last we are in agreement about something

I'm an accountant myself - we do all our business cases, forecasts, budgets and post investment reviews on EBITDA and cashflows as that is what is actually happening.

As you say the rest is just a paper thing that dictates when and where things get accounted for. It's not massaging the numbers - its following the very clear rules that get checked by the auditors each year. Failure to follow the rules is a serious issue. It's not about makin numbers better.

Equally on cashflow - every business should be doing their best to improve cashflow. Getting your money in quicker and taking the allowable time to pay your bills is good business sense.

XP appear very good at managing cash - they have only a small trade debtor balance and their trade creditors seems consistent - growing as their business grows (more venues > more customers > more alcohol, more food, more energy to pay for so the amount owing at any given time will grow broadly in line with COS.

maimus and wavecrest - i'm in complete agreement with you both

sadly, it is just derampers fabricating a storm in a teacup.

i believe we are invested in a very special company - it has acheived everything it said it would in the years that i have followed it. and it has achieved this at a time when the economy has put so much pressure on small businesses.

i cannot emphasise enough how important their people are - people are such a key asset and seeing the culture, the energy and the creativity from their team in the field continues to blow me away. this is testament to a good leadership team.

the majority of customer reviews are great - happy customers, happy employees - a ****tail for success

Was nice to see some decent buys over the last week or so

I see from an email today that the clown Winnifrith is still talking down the prospects of this company.

He clearly is not aware of the strong start to the year in the secondary market and MM trading.

I will surprised if the current status so continues for too much longer.

My guess is that we will get an update soon - curious to find out what route is taken

PippLongStockin - Have you not read or understood my posts?

I categorically addressd your accusation about the December Cash position - not managed at all, all very normal and it is not even their year end anymore

I do not agree that it is a capital intensive business - it's all relative, it depends what are you comparing it agains. Far less capital intenive vs Miners, Manufacturers, Mobile phone Networks and many tech businesses. (i could go on...)

I dont see your point about 'managing' EBITDA

Profit is important - they are many metrics that measure profit. EBITDA is one, as is Gross Margin as is Net profit. They all offer different perspectives. My point is Private Equality will be more focussed on EBITDA which offers a better view of how a company performed in eth current year. Let's foe one moment assume XP paid twice as much as they did from Boom - that would impact net profit but it's history now and is irrlevant.

What is important now is: The cash generation, goring the business, growing EBITDA

You seem to just keep spurting out the same stuff without acknowledging the points I have made

Keep going chaps, you are both just showing your pure ignorance.

Its very obvious there are a couple of people who are shorting and / or have reasons to want the share price to stay low...

Attempts to undermine the investment opportunity is very transparent.

Ironically, on one hand you raise the fact that the asset life is now considered longer - yet then youargue against yourself and say its capital intensive.

The company already have about 80 venues - most on very favourable lease terms, all kitted out with 5-6 life in them.

If they chose not to grow and just spend £1-£2m on keeping them fresh per annum - the company will be delivering c£10m Revenue and £10m Free Cash Flow per annum.

I mean no offense, my i genuinely think some people are deluding themselves here.

Let me try and explain the value here....(for those who seemingly are spooked by depreciation and the movmenet between EBITDA and Net Profit)

XP have raised £37m since 2017

XP have been cash generative from operations since 2021 and not needed to raise further - generating appro £13m operating cash surplus so far

So XP have invested £50m in their assets - which in 2024 will deliver EBITDA and Cash of >£10m

The depreciation is just a way of spreading a lot of that £50m across the years - but it's already been spent and not a issue for XP Factory. They just need to focus on growing the business and keeping the estate fresh - some of that will be CAapex and a lot will be Opex.

I'm BUYING all day long a successful, popular and innovatibe business that is growing profitably and rapidly with 80 great venues - all still delivering L4L growth!!

A business built with £50m (and remember some of that was raised in 2017-19 - and think about the time-value of money) is now available at £25m - not to mention all the added vaue through it's brand journey so far

DYOR

I am very confident they are growing profitably

Central costs are not excessive and they will only reduce now as a % of earnings

Read this - talks about waht Private Equity are looking for.... EBITDA, GROWTH being the biggies

https://www.forbes.com/sites/davidwmccombie/2022/05/16/private-equitys-playbook/

I have followed X Factory for about 4 years - dating back to the days when it was just Escape Hunt

Its currently valued at a an 18 month low; valued at £25m which ionly 3x EBITDA.and valued at at c 1.5x forward EBITDA.

However with less than 10% of shares in public hands this companies shares are quite illiquid; the SP has been worked lower from one seller / shorter but I do not for one moment beleive that the small number of shareholders who own 90% of the company value the company so low - my guess is that they already see it having a triple digit market value. We'll find out if somebody wants to buy the company very quickly - and if that does not come in 2024 I think we are seeing the momentum change (at last)

I've read so many people's 'opinions' on this share - many very bullish and many who have let the SP performance put them off.

IMO - XP Factory is one of a number of UK listed companies that is stupidly cheap. I'd bet my last dollar that their are foreign suitors circling....

This is a potential 10 bagger in my book - I'm expecting to see double digit Net profit within 2-3 years and EBITDA to excced £20m in the same period. Combining the profitable growth and a more bullish UK market i can easily see this exceed £100m mCAP.

Good luck to all holders (although most won't be reading this as 55% with IIs, and another 35% wih private companies, 2x high net worth individuals and Hedge funds.

Here is the Link to the Richards Interview

https://www.youtube.com/watch?v=JEnCMTGXRLU

And we get another formal, detailed interview this week which I am very much looking forward to .

Ofcourse the cash is being eaten up by CAPEX - That is their stated strategy.

This compnay will continue to use its increasing operating cash flow to invest back in the business - i suggest you take a listen to Richard's interview with Vox Markets.

XP generated (through operations) +£3m in 2022, +£9.5m in FY23 and i expect it to be at least £15m in 2024. It will then use this cash to invest in new venues and improve existing ones - and will maintain a cash balance of c£3m based on recent updates.

PippyLS

You are correct to point out the depreciation change - but is is both very normal and 'required' for accountants and auditors to review depriation and amortisation policy on an annual basis.

ON the other side of things, FY22 benefited from a one off +£6.2m fair value adj. So the YOY improvment in profitability is bigger than than it looks.

New Profit is a historical measure because it relies on assumptions around depreciation and valuation of assets etc. That is why most compnaies focus on EBITDA and Cash which is a good indicator of how the compnay performs in a 1 year time frame.

EBITDA more than double in 2023 amd I expect it to double again in the 12mth to March 2025 by 60-70%. And operating cashflow to show a similar growth which will allow them to grow more quickly

Questionable post in the last 24 hrs from Hitthattarget - It's very tenuous and not fabricated. They claim not to be invested, so why come onto this forum and try and post a sly, subtle, thought through de-ramp.

The Truth on Cash - XPF is cash generative and growing quickly - Cash generated from Operating activities increase by over 200% from £3.2m to £9.5m. I expect this to increase to c£15m in the next 12mth period (12mth to March 2025)

The company will then 'cut it's cloth' accordingly and invest in the business. Richard explained that they are very data driven when making investment decisions; the ROI on a refit may be higher than a new venue. It looks like the company are keen to maintain a £3m+ bank balance

Let's address the strange comments fro "Hitthetarget":

Quite ludicrous to suggest the company are massaging their numbers - ALLcompanies will make an effort to deliver / exceed their cash target towards year end. (Regardless, Dec 2023 is no longer their year End - so it was just BAU)

Their trade payables have indeed increased from £1.8m to £3.2m; an increase of 70%. This is ABSOLUTELY NORMAL and if anything slightly lower than i would expect. Their cost of sales have doubled from £8.1m to £16m. They will have 30/60 or 90 day terms so an increase in trade payables of 70% is absolutely NORMAL.

XP benefited from a reduction in Trade Recievables in 2023 by +£1.1m. This is really good news and shows they are collecting cash quicker - this wil be related to the Corporate bookings where they get a purchase order. It may also have reduced perhaps because they may have changed their payment policies and ask more groups to pay on the day.

There is NOTHING unusual about the XP cashflow - it looks normal and it looks very efficient.

Exactly Cheers1

Their RNS talks a lot about 'Operational Leverage'

In Nov/Dec they are able to significantly increase revenue without needing to signifcantly increase cost

Christmas Party season - increases footfall + Increase average stay time + Increase rate on food / group deales

Better utilisation of assets - In the winter they are well positioned to get daytime corporate events in both brands - meaning they can signifcantly increase the daily footfall

Those who have got short positions will be looking to close I imagine if they have not already

I hope they dont though - would much prefer to see them burnt when (and If) an offer comes in :-)

My holding and my average is my business

Say what you like - but I've done nothing my post facts about the company and share some broader insight as I follow them closely

You can't blame a stock exchange for this compnay's share price.

Share prices move due to supply and demand. I think it is highly relevant who holds the shares - Most of the holders of the 90-95% shares (Those with >3% and directors) have to notify the market if they buy or sell. We've seen no RNS showing any reductions in holdings since Dec 2021.

My point is that 95% of the holders and me are happy holding this share

I cannot be sure why the share price is not much higher - but looking at some of the trades in recent days, there were some big 500k blocks that looks like a short position being closed. Hence why I would say that this share has been kept low through shorting.

My opinion - Great compnay, worth far more than the SP currently suggest