XP Factory completes new £10m revolving credit facility

9th Oct 2024 09:46

(Sharecast News) - XP Factory announced the completion of a new £10m revolving credit facility with Barclays on Wednesday, enhancing its financial flexibility and capacity for growth.

The AIM-traded firm said the facility would support the expansion of its two key experiential leisure brands, Escape Hunt and Boom Battle Bar, while also providing additional working capital and enabling the refinancing of an existing £1m debt facility at significantly lower borrowing costs.

It said the new facility was secured based on the strong cash generation within the business.

In the 15 months to 31 March, XP Factory generated £6.5m of free cash flow after maintenance capital expenditure, delivering an annualised yield of 24% based on the company's current market capitalisation of £21.9m.

That organic cash generation, combined with the revolving credit facility, would allow the company to accelerate the rollout of new sites for both brands.

XP Factory said it also benefited from £22.3m of carried forward tax losses, and expected future capital allowances from its estate expansion to provide additional benefits before corporation tax would be payable.

Historically, new site investments generated annual returns on capital of 52% for Boom Battle Bar and 48% for Escape Hunt, underscoring the company's strong growth potential as it entered a new phase of development.

"Securing this new revolving credit facility represents an important milestone for the group," said chief executive officer Richard Harpham.

"Not only is it a strong endorsement of the progress made in the last few years, but it will significantly enhance our ability and confidence to add further venues to our two fast growing brands."

Harpham said the company's existing cash generation supported around five to six new site openings per annum.

"Although there will not be any impact in the current financial year, with the facility in place we have the ability to increase the pace of roll out in 2025 and beyond whilst maintaining conservative debt ratios."

At 0910 BST, shares in ECR Minerals were down 1.6% at 12.3p.

Reporting by Josh White for Sharecast.com.