Half-year Results

XP Factory plc (AIM: XPF), one of the UK's pre-eminent experiential leisure businesses operating the Escape Hunt® and Boom Battle Bar® brands, is pleased to announce its unaudited interim results for the six months ended 30 September 2024 ("H1 FY2025").

• Escape Hunt owner operated site revenue increased 7% to £6.5m (H1 2023: £6.1m)
• Boom Battle Bar ("Boom") owner operated revenue increased 56% to £17.6m (H1 2023: £11.3m)

1 H1 2023 interim results previously published were for the six months to 30 June 2023.

2 Earnings before interest, tax, depreciation and amortization, calculated before pre-opening losses, exceptional items, and other non-cash items. 2023 comparative restated

3 Cash generated from operations, after IFRS16 lease payments, interest and tax, before capital expenditure

POST PERIOD-END HIGHLIGHTS

Richard Harpham, Chief Executive of XP Factory, commented: "I am delighted to report on another period of positive, cash generative growth in the six months to 30 September 2024, with Group revenue increasing by 33.2% compared to our first half in 2023. This performance reflects continued volume-driven like-for-like growth across both of our brands, ahead of industry levels. Consumer sentiment weakened in the summer and ahead of the UK Budget, softening first half performance and, whilst we are encouraged by strong early indicators for the all-important festive season, with corporate pre-bookings significantly ahead of 2023, we remain laser focused on maximising the Christmas trade that is so important in delivering the full year's results. This is a testament to the strength of our offering, the loyalty of our customer base, and the hard work of our teams.

"We have also achieved important milestones to support our expansion goals. The completion of a £10m revolving credit facility with Barclays provides us with the financial ability to execute our clear plan to double Group EBITDA over the next four years. In addition, we are planning a balance sheet re-organisation to enable share buy-backs and to create capacity for dividend payments in future, should we deem it appropriate. With a solid foundation in place, we remain confident in our ability to deliver sustainable growth and significant long-term value creation."

XP Factory will provide a trading update after the Christmas period in late January 2025.

CHIEF EXECUTIVE'S REPORT

INTRODUCTION

We are pleased to report another six-month period of further progress with good growth in both our Escape Hunt and Boom Battle Bar brands. Both businesses achieved positive like-for-like sales growth against strong prior year comparatives despite an environment characterised by weaker consumer sentiment particularly in the run up to and immediate aftermath of the UK budget announcement.

Escape Hunt continues to perform exceptionally well; site level EBITDA margins improved to 42% (H1 2023: 40.2%), with strong cash generation and outstanding customer feedback. We continue to see significant further growth opportunities for the brand, and plan to accelerate the roll out within the UK. We are also in the early stages of investigating new international opportunities.

Following a very strong year of growth in 2023, Boom has continued to deliver positive like-for-like sales growth, whilst maintaining healthy gross margins and producing strong free cash generation. As a more seasonal business, site level EBITDA is always lower in the first half of the year than as the second half is significantly bolstered by the important Christmas period which has started positively with corporate pre-bookings significantly up compared to November and December in 2023. Boom is now in its third year of operation under XP's ownership and with the data and learnings garnered, the strong cash return on capital and in particular the opportunities for further roll-out in high footfall and high population areas, we believe the runway for Boom remains highly attractive.

Our £10m revolving credit facility with Barclays is now in place, providing the funding to accelerate our growth with a clear target to double EBITDA within four years. More detail is set out below. Whilst there will be additional costs on the business driven by the Government's recent budget, we have plans in place to mitigate the impact which can largely be absorbed without the need for significant price increases. We remain optimistic for both our businesses for the coming year.

ESCAPE HUNT

The Escape Hunt owner operated business delivered £6.5m of revenue in the period with continued positive like-for-like sales growth of 3.5% across the UK estate, achieved with negligible increases in pricing. The performance in the period was adversely impacted in the final two weeks of the football European Championships, when England played in the knock-out games, and we also experienced a significant reduction in activity during the two weekends in late July / early August when rioting in the UK kept consumers at home. Several of our sites were forced to close in locations where rioting was close to the venue. Excluding the final two weeks of the Euros and the weeks impacted by riots, like-for-like sales growth in the UK was 6.7%.

Site level EBITDA was £2.7m, a 12% increase on the site level EBITDA reported in H1 2023. The Minimum Living Wage (MLW) increased by 9.8% in April 2024 and in order to maintain our premium to the MLW, labour costs increased accordingly. However, we have largely been able to absorb the cost increases at site level through improved efficiencies, leading to increased EBITDA margins in the period of 42.0%. Performance across the estate has been consistent, characterised by strong cash generation and high return on capital metrics.

We opened one new site in the period in Worcester, which is trading well, and since the period end we have opened a further site in Glasgow, with a site in Cambridge opening to the public on 6th December 2024. We have developed a further pipeline of towns and cities to target and, as explained below, plan to accelerate the roll out of Escape Hunt sites using cash generated from operations and our credit facility.

Our content strategy has also made significant strides and continues to prove extremely popular with our customers. Our new Excalibur game is now operating in four sites and we have a new Dracula game in two. An exciting new game, Jewel of India, is in production and new games themed around the Chocolate Factory and carnival style Fiesta have been launched for our franchisees. All games are proprietary to Escape Hunt and the growing content library, together with the production know-how provides growing differentiation and represents a significant barrier to entry for competition.

BOOM BATTLE BARS

Owner operated

The Boom owner operated business delivered turnover of £17.6m, representing a 56% increase compared to the previously reported H1 2023 (H1 2023: £11.3m). Like-for-like growth in the 26 weeks to 29 September 2024 was 4.4%. As for Escape Hunt, the underlying like for like growth in the period was negatively impacted during two weeks in August 2024 when riots took place across the country. The prior year comparative also benefitted from international rugby games in Cardiff over two weekends in August, which delivered exceptionally high sales in our Cardiff site. Excluding these two factors, the underlying like-for-like growth was 10.3% across our UK owner operated estate.

Site level EBITDA of £2.1m represents a margin of 11.8%. However, the margin has been diluted in particular by two former franchise units which were struggling, one of which we have taken over at no cost and the other with a termination payment due from the franchisee. Excluding these two sites, the underlying site level EBITDA margin for the UK estate was 13.6%.

Three former franchise sites were acquired during the period in Aldgate, Wandsworth and Bournemouth. The sites in Aldgate and Wandsworth were both owned by the same franchisee who had significant outstanding debts and had fallen in arrears. In each case, we stepped in to take over the site to avoid brand and lease guarantee exposure with a termination payment due from the franchisee payable over a three-year period. Aldgate is a high performing site with potential to deliver strong margins. Wandsworth has been a more difficult venue and we have since restructured the lease, reduced the footprint and are confident of turning the site's performance around. Bournemouth has historically been a good performer, and we expect to generate attractive returns from the acquisition. Since the period end, we have bought back the strong performing site in Southampton and have stepped into the Ipswich site in return for a termination payment. Both sites will form part of our owner operated estate in future.

Franchise

Franchise revenue in the period was £0.5m, a 51% decrease on H1 2023 (£1.1m). The deliberate decrease is as a result of the reduction in the number of franchisees following the acquisitions completed in late 2023 and further acquisitions during the current period. There are currently five franchise sites in the Boom estate, and it is likely that a number of these will also be brought back into the owner operated estate.

STRATEGY

We recognised the significant growth opportunity for XP Factory some time ago, and our extensive data points around market-leading customer validation, high returns on capital and runway have only served to further cement that view for both brands. The challenge, however, was how to fund such growth in the most effective way for shareholders. Now that we have access to a £10m revolving credit facility from Barclays, we are pleased to communicate our plan to double Group Pre IFRS 16 EBITDA over 4 years, targeting run-rate sales of £100m at 15% EBITDA in the medium term, whilst maintaining modest net debt ratios.

The consistently strong returns generated by Escape Hunt and experience in cities such as Norwich, where we proved two sites could operate very profitably alongside each other has given us confidence in a significantly longer runway than we first imagined, with scope for around 100 sites rather than 50. Furthermore, we are increasingly being able to secure landlord contributions for smaller Escape Hunt sites, which previously were not available, reducing the net investment required to open a new site.

In the case of Boom, with three years of experience, we have learnt much about the factors that drive success, which enables a more nuanced approach to locating new sites.

As a Group, our vision is to deliver £90m of sales and £13m Group EBITDA margin within four years, with an underlying run-rate revenue of £100m and targeting a 15% Group EBITDA margin. This will be delivered by focusing principally on growing the owner operated estate and leveraging the head office platform we have in place already.

Escape Hunt performs highly consistently across all sites, all of which are similar sized with six games rooms on average. Expanding the estate rapidly across the UK in this format remains the focus, and additionally we now have data that supports the building of larger sites in areas of particularly high traffic.

Our Boom estate comprises some large sites in very high footfall areas, but also some smaller sites in more neighbourhood towns. Whilst the business works in both, the returns are disproportionately higher when the sites are larger, more prime and in large towns, so these opportunities will be our focus over the coming periods.

The group's target can be achieved from a portfolio comprising 50 - 60 Escape Hunt sites, requiring growth on average of 8 - 10 of our current sized sites per annum, alongside 35 - 40 Boom sites, requiring growth on average of 2 - 4 new sites per annum from the current base. This can be achieved with modest leverage, aiming to keep average Debt:EBITDA ratios around 1.0x on a pre-IFRS16 basis.

The accelerated growth strategy provides an exciting and clear path to value creation, capitalising on the growing and positive long-term trends in favour of experiential leisure. We plan to host a capital markets day in Q1 2025 to provide greater insight to investors.

FINANCIAL REVIEW

Financial performance

Following our change of year end, the unaudited results for the six months to 30 September 2024 represent a different period to the period previously reported in our interims in 2023. Sales and gross profit information is provided for the comparison purposes. Group revenue in the six months to 30 September was £24.9m, an increase of 19% over the same period in 2023 (six months to Sep 2023: £20.9m) and an increase of 33% over the six months to June 2023 as previously reported (six months to June 2023: £18.7m). The increase is driven by positive like-for-like growth, all of which was volume driven, coupled with growth in the Boom estate comprising both new site openings in late 2023 and the acquisition of former franchise sites.

Revenue and gross profit in the three relevant six month periods were as follows:

Group Adjusted EBITDA pre IFRS16 was £1.5m and increase of 31% over the £1,1m for the six months to June 2023. Adjusted EBITDA after IFRS16 was £3.2m, up 30% compared to the £2.4m reported in the six months to June 2023.

£307k of expenditure in the period related to pre-opening costs covering the new Boom site in Cambridge and new Escape Hunt sites in Cambridge, Worcester and Glasgow. The £384k contract termination and other exceptional costs includes an onerous contract provision relating to TV subscriptions which we have removed from the majority of our Boom sites, as there has been no discernible benefit from the significant cost associated with the service.

At a site level, Escape Hunt owner operated segment continued to perform strongly, delivering site-level EBITDA of £2,733k at a margin of 42.0%. The underlying site level EBITDA margins achieved in Boom (11.8%) reflect the seasonality in Boom's business but more significantly were diluted by the losses/lower margins generated from two previous franchise sites. We have taken over the two franchise sites in question as we had lease exposure, and the franchisee was unable to operate the site satisfactorily. Outside of these two sites, the estate delivered site level EBITDA margins of 13.6%.

Central costs of £4.1m represent a 3.5% increase on the six-month period to June 2023, and increased largely as a result of inflationary pay rises awarded earlier in the year. Since the period end, we have identified and implemented a number of cost savings within our head office cost base with a run rate of c.£1m per annum. It is our intention to leverage the central cost base against further growth in the business in future.

Interest costs of £195k reflect the additional fit out and vendor finance utilised.

Unaudited Group operating loss was £0.9m (six months to June 2023: loss £2.2m) leading to a reduction in the loss per share from 1.58p to 1.26p.

Cashflow

The Group generated £4.2m of cash from operations (H1 2023: £3.4m) on a post IFRS16 basis, and £2.3m pre IFRS16 (H1 2023: £2.4m), demonstrating the strong cashflow characteristics of the business. £3.6m was invested in plant and equipment and intangibles, offset by £0.4m landlord contributions received. This investment comprised capital expenditure of £2.1m within Boom owner-operated sites, of which £0.1m represented 'maintenance' capex, capital expenditure of £1.4m in Escape Hunt owner operated sites, of which £0.1m represented maintenance capex, and £94k of central capital expenditure, the majority of which was related to intellectual property protection.

£0.9m of loan repayments were made, predominantly vendor and fit out finance, and £0.1m was utilised towards acquisitions of former franchise sites.

Rental payments, classified under IFRS16 as capital and interest payments totalled £1.9m, whilst £195k was paid in interest on fit out finance and other loans.

Since the period end, the Group has formalised the revolving credit facility with Barclays. £2.5m was drawn in October 2024 of which £1.1m was used to refinance existing debt and the balance is being used on site expansion, notably in Cambridge.

Cash at 30 September 2024 was £1.9m, offset by £3.2m of debt leaving net debt of £1.3m. (31 Mar 2024: £0.0m).

Financial position

Movements on the balance sheet largely reflect the capital investment, acquisitions of former franchise sites and related funding undertaken during the period.

Current assets reduced to £5.8m, driven by a reduction in receivables and cash.

The increase in current liabilities of £1.5m comes from a combination of increased trade creditors, much of which is capex related to Cambridge and the new Escape Hunt sites opened in September and October, coupled with an increase in contract liabilities comprising deferred revenue, being pre-bookings.

Net assets as at 30 September 2023 stood at £22.7m (31 March 2024: £25.0m). Group net debt was £1.3m (31 Mar 2024: £0.0m).

UK BUDGET

The Budget announcement on 29 October 2024 has been widely criticised as anti-business due, in large part, to the 6.7% increase in MLW and the increase in the rate payable for employer's national insurance coupled with the lower threshold at which employer's national insurance becomes payable. These two changes have a direct impact on the hospitality and retail industries in particular, and much has been written in the ensuing weeks regarding the additional costs the changes will place on the industry. We have analysed the potential impact of the changes and believe that the increased costs can largely be absorbed within our existing cost forecasts, alongside mitigating actions to reduce overall costs. The impact within head office salaries is confined to the NI changes with the overall increase representing approximately 1% of the total employee cost. Our cost forecasts assume increased employee costs in future years, and we believe this increase can be absorbed within those assumptions.

Within the Boom and Escape Hunt owner operated sites, the impact is greater. Although we have historically paid a premium to the MLW, in many cases, the new MLW level is higher than existing hourly rates. We have also not historically differentiated hourly pay based on age and around 40% of Escape Hunt's hourly paid staff and 50% of Boom's hourly paid staff have not previously worked sufficient hours to reach the threshold at which employer's NI was payable. However, under the new thresholds, about half of these employees would now fall into the banding. We have a number of ways in which the impact of the total increase can be mitigated, including changing the allocation of hours, hourly rates and the employee mix. Labour represents c.30% of sales in Escape Hunt and c.28% of sales in Boom. Our estimates suggest that the NI changes will lead to labour cost increase of approximately 3.5%, whilst the changes to MLW would add between 2.5% and 5.0% in Escape Hunt and between 1.2% and 5% in Boom. As such we believe total labour cost increases at site level of between 5% and 9% are likely, dependent on the decisions we make regarding potential mitigating actions. The bottom of the range is within our existing cost forecasts whilst the top end of the range would see additional costs of c.£0.8m before any further mitigating actions.

We have already taken action to address our overall cost base, notably at head office where we have restructured post period-end to take out annualised costs of c.£1m. We are also looking at ways that we can use technology to further reduce the growth of labour costs as we grow the estate and, with the benefit of learnings from our Boom estate, have been able to remove certain subscription costs which are not providing a return. These and further actions will significantly mitigate any additional impact not already reflected in our forecasts. Whilst it is possible we may have to pass some of the additional cost on to customers, with all these actions, we believe the increased costs arising from the budget can largely be offset without the need to look for significant price increases.

PROPOSED BALANCE SHEET REORGANISATION

As the business has grown and is now generating strong cashflows, the board has made the decision to reorganise the balance sheet to enable share buy-backs and to create capacity for dividend payments in future. The process to enable this will commence in the final quarter of the financial year.

POST PERIOD END TRADING AND OUTLOOK

The last two years have been characterised by a tough macro environment and the considerable headwinds facing consumers. More recently, the deterioration in consumer sentiment in the run up to the UK Budget was widely reported and XP Factory has not been immune to these dynamics which softened the performance in the first half of our financial year. Against this backdrop, we are pleased to have delivered another period of growth in all areas and positive, volume-driven like-for-like sales in both Escape Hunt and Boom Battle Bars. As we enter the Christmas period, the most important trading weeks of the year for the hospitality industry and the period which is critical to delivering a successful full year outcome for XP Factory, we are pleased with our levels of pre-booked revenues in both brands, and are laser focused on maximising the trade that delivers so much of the year's result and investible capital.

With both brands having achieved a return on capital of circa 50% and a significant runway for new sites ahead, we have always been excited about the growth opportunity for XP Factory. Backed with funding from our new £10m facility with Barclays, we are therefore pleased to be able to set out our plans to grow sales 50% whilst doubling Group EBITDA to create a business with £90m sales and £13m Pre IFRS 16 Adjusted EBITDA by March 2028. There are many reasons to be optimistic, with falling interest rates, lower inflation and rising real wages which should improve consumer sentiment, although these will undoubtedly be counterbalanced by the impact of tax rises imposed by the recent UK Budget and the knock-on effects thereof. The recent performance of XP Factory during a tough economic environment has been robust, and we therefore remain cautiously optimistic for the future and confident in our ability deliver sustainable long term value creation.

Richard Harpham

Chief Executive Officer

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPT 2024

Other comprehensive income:

Items that may or will be reclassified to profit or loss:

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPT 2024 (continued)

EQUITY

Capital and reserves attributable to equity holders of XP Factory plc

NOTES TO THE UNAUDITED INTERIM REPORT

General information

The Company was incorporated in England on 17 May 2016 under the name of Dorcaster Limited with registered number 10184316 as a private company with limited liability under the Companies Act 2006. The Company was re-registered as a public company on 13 June 2016 and changed its name to Dorcaster Plc on 13 June 2016. On 8 July 2016, the Company's shares were admitted to AIM.

The Company's registered office is Ground Floor and Basement Level, 70-88 Oxford Street, London, England, W1D 1BS.

The consolidated interim financial information represents the unaudited consolidated results of the Company and its subsidiaries, (together referred to as "the Group"). The Consolidated Interim Financial Statements are presented in Pounds Sterling, which is the currency of the primary economic environment in which the Company operates.

Basis of preparation

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2024/25 annual report. The statutory financial statements for the period ended 31 March 2024 were prepared in accordance with International Financial Reporting Standards in accordance with the requirements of the Companies Act 2006. The auditors reported on those financial statements; their Audit Report was unqualified.

The interim financial information is unaudited and does not constitute statutory accounts as defined in the Companies Act 2006.

The interim financial information was approved and authorised for issue by the Board of Directors on 3 December 2024.

Going concern

The directors have assessed the Group's ability to continue in operational existence for the foreseeable future in accordance with the Financial Reporting Council's Guidance on the going concern basis of accounting and reporting on solvency and liquidity risks issued in April 2016.

The Board has prepared detailed cashflow forecasts covering a 42 month period from the reporting date. The forecasts take into account the Group's plans to continue to expand the network of both Boom Battle Bar and Escape Hunt sites through organic growth. The forecasts consider downside scenarios reflecting the potential impact of an economic slowdown, delays in the roll out of sites and inflationary pressures. Based on the assumptions contained in the scenarios considered and taking into account mitigating actions that could be taken in the event of adverse circumstances, the directors consider there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable, as well as to fund the Group's future operating expenses. The going concern basis preparation is therefore considered to be appropriate in preparing these financial statements.

Significant accounting policies

The Company has applied the same accounting policies, presentation, methods of computation, significant judgements and the key sources of estimation of uncertainties in its interim consolidated financial statements as in its audited financial statements for the period ended 31 March 2024, which have been prepared in accordance with International Financial Reporting Standards in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.

• Segment information
• The Escape Hunt franchise business, comprising 20 sites, where all franchised branches are operating under effectively the same model;
• The Escape Hunt owner-operated branch business, which as at 30 Sept 2024 consisted of 21 Escape Hunt sites in the UK, one in Dubai, one in Paris and one in Brussels;
• The Boom Battle Bar owner-operated business, which as at 30 Sept 2024 comprised 22 Boom Battle Bar sites in the UK and one in Dubai.
• The Boom Battle Bar franchise business, comprising 7 sites, where all franchised branches operate under the same model within the Boom Battle Bar brand; and

The Group operates on a global basis. As at 30 Sept 2024, the Company had active Escape Hunt franchisees in 7 countries. The Company does not presently analyse or measure the performance of the franchising business into geographic regions or by type of revenue, since this does not provide meaningful analysis to managing the business.

Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders by the weighted average number of ordinary shares in issue during the period. Diluted loss per share is not presented as the potential issue of ordinary shares from the exercise of options are anti-dilutive.

Taxation

The tax charge is based on the expected effective tax rate for the year. The Group estimates it has tax losses of approximately £20.1m as at 30 Sept 2024 (30 June 2023: £24.5m) which, subject to agreement with taxation authorities, would be available to carry forward against future profits. The estimated tax value of such losses amounts to approximately £5m (30 June 2023: £6.1m).

Property, plant and equipment

The additions of in the period relate to new leases signed. The Group leases land and buildings for its offices and escape room venues under agreements of between five to fifteen years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated.

During 2022 the Group entered into a lease on a premises in Bournemouth where a portion of the property is sub-let to a Boom franchisee. The total value of the master lease is recognised within lease liabilities whilst the underlease has been recognised as a finance lease receivable.

During the six month period to Sept 2024, the Boom franchisee sub letting the Bournemouth premises was acquired and now forms part of the owner-operated operated estate. As a result, the finance lease receivable has been de-recognised and the corresponding right-of-use asset has been created.

Intangible assets

Business Combination

Acquisition of Boom Battle Bar Wandsworth

Effective 9 May 2024 XP Factory Plc acquired the operating assets and trade relating to the Boom Battle Bar site in Wandsworth ("Boom Wandsworth").

The details of the business combination are as follows:

Total £'000

Fair value of consideration transferred

Assets and liabilities recognised as a result of the acquisition

Boom Wandsworth contributed revenues of £216k and a loss of £185k in the period between acquisition and 30 Sept 2024.

Acquisition of Boom Battle Bar Aldgate East

Effective 9 May 2024 XP Factory Plc acquired the operating assets and trade relating to the Boom Battle Bar site in Aldgate East ("Boom Aldgate East").

The details of the business combination and the allocation of the estimated fair value of the consideration are as follows:

Total £'000

Fair value of consideration transferred

Assets and liabilities recognised as a result of the acquisition

Boom Aldgate East contributed revenues of £627k and a profit of £28k in the period between acquisition and 30 September 2024.

Acquisition of Boom Battle Bar Bournemouth

Effective 28 June 2024 XP Factory Plc acquired the operating assets and trade relating to the Boom Battle Bar site in Bournemouth ("Boom Bournemouth").

The details of the business combination and the allocation of the estimated fair value of the consideration are as follows:

Total £'000

Fair value of consideration transferred

Assets and liabilities recognised as a result of the acquisition

Boom Bournemouth contributed revenues of £277k and a loss of £2k in the period between acquisition and 30 September 2024.

Provisions

The movement on provisions in the period can be analysed as follows:

On 28 June 2024, the Group acquired the assets and liabilities of BBB Bournemouth Limited more details of which are set out in note 11. The acquisition was partially funded by a vendor loan which is being paid in instalments. Total loan balance outstanding to the vendors recorded at 30 September 2024 is £184k.

The Group has utilised asset backed fit-out finance and has used an unsecured loan to fund fit outs in certain Boom and Escape Hunt locations, has a number of small bank loans in certain subsidiaries, and uses a loan facility to spread the cost of insurance over the year. The total fit-out finance outstanding as at 30 September 2024 was £880k. Bank and other loans totaled £1,071k.

Share capital

Share option and incentive plans

XP Factory plc Enterprise Management Incentive Plan

On 15 July 2020, the Company established the XP Factory plc Enterprise Management Incentive Plan ("2020 EMI Plan"). The 2020 EMI Plan is an HMRC approved plan which allows for the issue of "qualifying options" for the purposes of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 ("Schedule 5"), subject to the limits specified from time to time in paragraph 7 of Schedule 5, and also for the issue of non qualifying options.

The Company has made four awards to date as set out in the table below. The options are exercisable at their relevant exercise prices and vest in three equal tranches on each of the first, second and third anniversary of the grants, subject to the employee not having left employment other than as a Good Leaver. The number of options that vest are subject to a performance condition based on the Company's share price. This will be tested in the period up to each vesting date and again between the third and fourth anniversaries of awards. If the Company's share price at testing equals the first vesting price, one third of the vested options will be exercisable. If the Company's share price at testing equals the second vesting price, 90 per cent of the vested options will be exercisable. If the Company's share price at testing equals or exceeds the third vesting price, 100% of the vested options will be exercisable. The proportion of vested options exercisable for share prices between the first and second vesting prices will scale proportionately from one third to 90 per cent. Similarly, the proportion of options exercisable for share prices between the second and third vesting prices will scale proportionately from 90 per cent to 100 per cent.

If not exercised, the options will expire on the fifth anniversary of award. Options exercised will be settled by the issue of ordinary shares in the Company.

As at 30 Sept 2024, 17,366,666 options were outstanding under the 2020 EMI Plan (30 June 2023, 16,700,000).

The sum of £13,022 has been recognised as a share-based payment and charged to the profit and loss during the period (6 months ended 30 Jun 2023: £34,268). The fair value of the options granted during the period has been calculated using the Black & Scholes formula with the following key assumptions:

Table 2

The performance conditions were taken into account as follows:

The value of the options have then been adjusted to take account of the performance hurdles by assuming a lognormal distribution of share price returns, based on an expected return on the date of issue. This results in the mean expected return calculated using a lognormal distribution equaling the implied market return on the date of issue validating that the expected return relative to the volatility is proportionately correct. This was then used to calculate an implied probability of the performance hurdles being achieved within the four year window and the Black & Scholes derived option value was adjusted accordingly.

The weighted average remaining contractual life of the options outstanding at 30 Sept 2024 is 12.9 months (30 June 2023: 28.9 months).

Escape Hunt Employee Share Incentive Scheme

In January 2021, the Company established the Escape Hunt Share Incentive Plan ("SIP").

As at 30 September 2024, 538,916 matching shares (30 June 2023, 248,605) had been awarded and were held by the trustees for release to employees pending satisfaction of their retention conditions . A charge of £9,243 (H1 2023: £6,944) has been recognised in the accounts in respect of the Matching Shares awards.

Key management personnel compensation

Related party transactions

During the period under review, the Directors are not aware of any significant transactions with related parties (six months ended 30 June 2023: nil).

Subsequent Events

There are no material subsequent events requiring disclosure.

COMPANY INFORMATION

Directors

Richard Rose, Independent Non-Executive Chairman

Richard Harpham, Chief Executive Officer

Graham Bird, Chief Financial Officer

Martin Shuker, Non-Executive Director

Philip Shepherd, Non-Executive Director

Company Secretary

Joanne Briscoe

Company number

10184316

Registered address

Boom Battle Bar Oxford Street

Ground Floor and Basement Level, 70-88 Oxford Street

London, England

W1D 1BS

Independent auditors

HW Fisher Audit (a trading name of Sumer Auditco Limited)

Acre House

11-15 William Rd

London

NW1 3ER

Nominated adviser and broker

Singer Capital Markets Advisory LLP

One Bartholomew Lane

London

EC2N 2AX

Registrars

Link Market Services Limited

29 Wellington Street

Leeds

LS1 4DL