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What should the management be doing then josey?
It is blatently obvious that you are not invested.
And your challenge was anything but constructive - the RNS said that it was a positive start to the year. Whether they use the word pleased or 'in line' is irrelevent - you are simply spliiting hairs by argueing one over the other.
Why be so concerned Mike Pickle - you clearly are not invested
Just doing the classic deramper thing and tring to cheery pick words or make mountains out of molehills
Josey - I dont have rose tinted glasses on.
I am well aware that the company continues to be in a tough spot.
My argument though is that even factoring in all the challenges - IMHO a share price of 7p is just ridiculous and doe not reflect even th ethreshold level at which this business could get bought for.
And there are signs of light...
(1) They do not have a debt issue - they are simply using debt to bridge the gap between 'money out' and 'money in' on their rental proposition. I anticipate that we'll see a lower rental base in the next update - so net debt should improve.
(2) They will not require the same amount of bank funding as they start to manage down the rental base - reducing their exposure and interest payments. We are getting close to an interest rate reduction - so that will help MM
(3) They traded well in Q1, and started well in Q1. This is encouraging
In some shape or form - there is a good business here that will live on as a going concern and thrive if it had owners with deeper pockets IMO.
As for Robswire - he has not had ONE good thing to say about MM. We can argue abour how influential this foum is and what impact it can or cant have an effect on the share price - but regardless, he is clearly here to suppress any positive nnarative or optimism. He may be short, he may be heloing facilitate a party get cheap shares. Who knows - but he is not invested in MM, only seems to post on this board and nbody is here for no reason
Strong update from the CFO and CEO - they shared a compelling update on how the copnay is performing.
Nice waterfall showing the coponents of thier 98% revenue growth in FY23.; many opportunities to maintain the growth were discussed (Further optimisation of current venues, Create additional capacity in existing venues, New Venues, Price Increases, Further International expansion). They also talked about a 6mth payback on most investments they make into existing venues.
So many smart moves that will continue to benefit the compnay or start to benefit in 2024.
1. When they convert a franchise into an owner operated, not only are they materially increasing the ongoing profitability - they strike a very compelling deal which usually means its cash neutral. (They pay for it from ongoing cashflows and explains the small amount of debt they have)
2. ROI and Payback is strong on new venues (dur to landlord contributions) but they are also seeing the same ROI and payback on other investment opportunities - so they have lots of options
3. They absorbed the utilities costs in 2023 - they expect a significant benefit in 2024
4. They absorbed wage increases in 2023 - without having to put prices up. At the same time they also increased the profitability at the same time.
5. The upcoming increase in National wage increase will work out to be less than 3% Gross Margin. They are confident though that the work they have done to negotiate rates and the utlities savings will still allow them to absorb the wage increase AND still grow margin % WITHOUT having to increase prices.
These guys are highly professional and doing a fantastic job - a very exciting time to be invested and will add more this year when i can
(Nice to hear that they firmly believe their stock price is MATERIALLY undervalueing the business - they would consier buy backs, but with the strong ROI they beleive (as do I) that more long term value created from grwoing the business withtheir cash)
You missed an important point about haveing "negative working capital"
Most customer pay upfront, they carry very little stock (2-3 days of drink)
Yet they may most of their bills in arrears (cleaning)
So as the grow - the negative working capital will increase in line and generate additioanl cash
HT, not for the first time you clearly missed the point here.
Here is a clue, it was followed by a wink
Boring! Same old rubbish from the de-rampers
Adding nothing to this forum
According to Robswire this company was going to be taken down by the banks 3 months ago…yawn
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/