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No change to my view on the long term opportunity for the business.
Any news on re-opening?
Would seem rather promising if they can time the re-opening with lots of kids still off school. School holidays have always been strong trading times.
Seems to me quite well suited to a safe opening in a 1m distancing world, with some cleaning and time for changeover between games.
You would go there at your own risk, I suppose, but their core client base is not elderly, is it?
Interesting where the next fundraising goes in terms of amount and structure. I'd like to see a confident, big raise as the opportunities to expand faster with much better rental deals and weaker competition are presenting a golden opportunity for a model that has proven itself up until March.
What are your thoughts playful - I will go into hibernation again soon!
Recommend this article from FT (mentioning how valuable data centre providers are, and presumably that must be a good read across to IDE who partner with Equinix and have a private network connecting data centres). You need to get behind the paywall.
"Data centre stocks surge as world shelters online"
If only they would update on what has happened since December 2019. Come on, surely something has!
Perhaps it is a complete news black out to avoid a tightly held stock surging on speculation and jeopardising a managed shareholder exit. Just a thought. Or perhaps that other poster is correct and it's a still a total dead duck!
Think the key is cashflow - once the onerous contracts are paid down this year (second half) then positive cashflow should be generated and a much clearer view of what this business can generate on a base case. I think this is a company where you really have to focus on what is coming up, rather than what has happened (within reason, as it was pretty appalling!)
Things like device management which had spare capacity and growth potential must surely be promising now as companies empower their staff to work anywhere and need to manage the device lifecycles? Add to this, cloud, their own network, remote working - it all just feels like the IDE portfolio of services is in a good place? As long as their end clients can still pay them!
Probably worth a gamble, which it is as we have no numbers whatsoever.
Your guess is as good as mine, without any numbers to go on.
I don't think 9-10p is a bad guess (also about what MXC needs to get its equity back in full by my reckoning).
Interesting situation - absent any numbers, nothing more than a semi educated guess open to us.
But surely some parts of this business look very well positioned for the future and are also probably trading reasonably ok currently if peer group updates are anything to go by (e.g. Lifecycle Device Management, Networks and Remote working solutions).
I also think Andy Parker will want a success story on his first foray back into a plc Boardroom since his ignominious exit from Capita. Note he has taken a new (private equity) Non Exec role, so must feel somewhat comfortable that IDE is on the right track?
Think IDE will be sold reasonably quickly, once the provisions are paid down. Balance sheet looks clean, if stretched. Cost synergies available to any acquirer, not least losing the listing costs. MXC mentioned there are about 15 private equity backed roll ups in the sector, so if IDE is stable and modestly growing, someone will want it I am sure as part of a scale up story.
But absent any numbers it is total guesswork really!
Not sure what that is about today, but in terms of treating shareholders equally and fairly the company should probably put everyone in the picture.
Nope, went into it with a 3 year horizon and this sort of thing happens. It's called investment and risk, and what these markets are meant to be for, rather than the emotional casino that they actually are.
Obviously, not great for trading at the moment but as a small business, Esc should at least benefit from the budget support from gov't which will help mitigate some costs.
But if there is less revenue then I guess we may well be putting our hand in our pocket. However, imagine how tough things might be for 'mom and pop' small operators of escape rooms over the next 6-8 weeks if they haven't built up cash and don't have shareholders to tap?
It's a delicate situation that could go either way. Yes, the outlook is murky and there is a material risk of failure, but on the other hand there is also a possibility that Esc survives (with some shareholder help) and comes out in a very interesting and stronger market position. Eventually, life will return to normal and people will want to restart their leisure.
Which will it be?!
Let's announce a £9.5m write down on three recently opened sites that are all underperforming ... but hey let's also say we want to resume new site openings in 2021, because we are obviously so good at that, and it's not like we are under huge cost pressures or anything!
Here is a better idea, once debt is at a sensible level, let's use our free cashflow mainly for dividends and reward our long suffering shareholders. When we prove we can open a new site that makes money, then we might talk about a programme of balanced growth.
Footnote: Keith Edelman was Chairman of Goals Soccer Centre whilst an enormous accounting scandal was perpetrated. It is indefensible that he remains Chairman of a leisure business like Revolution Bars after the revelations and demise of Goals has come to light, much of which happened on his watch. Where is the Governance? Why are investors not asking questions?
thank danvers, good to read some counter views and be challenged. It is high risk and I agree it is not a straight and easy road ahead but the valuation probably fairly reflects that. Much rests on good management execution and a supportive shareholder base.
sorry see what you mean, ignore my post.
Don't think it is wrong, look at the dates of the notifications and transactions in the releases - clearly done on different days, it is just that both the holdings releases only got published today.
I am not Stuart Hawthorne... so is this you putting your head above the parapet, Playful?!
On a serious note, this looks good news, we needed some shares to be bought up by other investeors who see this through the lens of longer term investment and not just the hot money speculators. Once you get a few hundred thousand shares there is not really a short term way out at the moment, so anyone buying this number of shares must be in it as an investor and seeing a very attractive valuation entry point.
Yes, not my scene when it goes nuts like that.
Hopefully we can have a sensible information share and challenge each other.
Agree that the numbers will tell a fuller story, but what we do know right now is that current market cap of £3.5m gets you the growing UK sites doing run rate revenues somewhere between £4.5-5m p.a. and generating EBITDA at site level, and an ex growth existing franchise business. That's enough to keep me interested.
Agree there are questions over cash (this is where the grant and tax credits matter) and how long to achieve breakeven to cover central costs and halt operating cash burn, but the mature units are trading well enough to suggest that this can be achieved and that they now have a successful site operating formula. They are pulling the right levers to reduce site build out costs, learning from experience. The Resorts World site, embedded into a retail centre, is very interesting to follow.
I don't care much about the loss of single site franchisees, that is not the equity story and the old EH business which was all franchise is bound to show some churn. That is not the business plan - it is about multi site franchises and most importantly the UK owned sites.
Competition - yes it's a fair observation. I think they are pointing to a lack of competition at the premium end, which is where this whole escape / immersive experience business may be going. It's a bit like saying Cineworld had masses of single site competitors in the late 90's when it started to 'premiumise' the cinema experience but true competition was actually quite low where it was pitching its product. Or Hollywood Bowl (or whatever they called themselves at the start) had a lot of local single site competitors when it took 10 pin bowling up to a new level. I think that is what they are getting at.
Are they reading the opportunity correctly? Quite possibly. The market has plenty enough small single site operators that have started on a low cost almost anywhere. Where this goes next is up a level in terms of amenity and product - it is a well trodden path in leisure businesses.
Personally, I don't think immersive rooms will be faddish, they offer a good quality leisure experience that can be changed and developed (e.g. VR, new games etc) that has a very wide appeal across many potential client segments. As long as the product, people and locations are good, then I see this becoming an established segment of leisure, that lends itself quite well to scale and brand.
All said though it is a high risk micro business. My leaning is that it could well be high reward ... for someone. If the market behaves like a casino then it will be high reward in private hands, where this sort of roll out is easier without all the noise. Then it will be relisted when all the serious money has been made. That would be a shame.
Operationally, the revenue numbers are sound for H2 at the 8 owner occupied sites (c. £2.2m), fitting with modelled performance numbers. Suggests the operational model is quite well established now. Looking forward, 10-11 sites at this sort of run rate continues to look very interesting, and if they can get the roll out going a bit quicker then growth will be very strong.
It is really challenging doing a scale up from scratch on the public markets, and I'm sure they would much prefer to be privately owned. This is the sort of leisure business that private equity does like to get involved in - I can think of many comparators (good centrally produced product, good locations, good people, it's not a complicated one) and the investment opportunity looks outstanding if you have a 3 year + horizon. I am sure Graham Bird has a 3 year + horizon and it is exactly why he got involved - he thinks he will make a lot of money... and probably will!
Glad you came over! I was reading you on advfn but don't have a log in. Like you, I have been tracking bookings for some time to try and get comfort on trading at the existing sites. Am optimistic overall. I also think they should have been able to draw down some of the Scottish grant to help cash. It feels like they have built a valuable platform for growth and this could be the year. If the market doesn't wake up then it is the sort of thing that private equity will snap up. Formal news and updates on progresd from the company will make very interesting reading!
Still think this looks interesting equity story at these prices. An update on H2 performance, cash position and roll out / openings would be good for investors. I overall feel cautiously optimistic but want to see some numbers!
Probably should be locked up but isn't the fall from 40-50p caused by shifting the stake of Arrowgrass (a shuttered hedge fund being liquidated) against the backdrop of a delayed roll out / growth story and zero interest in the stock?
Operationally the business looks like it has found a reasonably good formula in its existing 8 stores, in a growing space ... it is priced for disaster at the moment, which does not look right. If the UK sites have reached maturity trading targets then the equity story looks interesting as new sites roll out (assuming at some point the unit roll out rate actually happens). Feels scary but that is when the best opportunities are available apparently!