OWG buys 60% stake in Escaperoom

SHAH ALAM: Only World Group Holdings Bhd (OWG) has acquired a 60% stake in Escaperoom Holdings Sdn Bhd for RM5.4 million, as part of its global expansion strategy.
OWG's wholly-owned subsidiary Believe It or Not Sdn Bhd (BION) signed a conditional share sale agreement with Escaperoom yesterday to acquire 240,000 ordinary shares in Escaperoom. OWG will fund the acquisition, which expands its family attractions offerings, with internally generated funds.
Escaperoom, the registered proprietor of the Escape Room brand of real-life physical adventure games/puzzle, has guaranteed a cumulative consolidated net profit of at least RM4 million for financial years ending June 30, 2016 (FY16) and June 30, 2017 (FY17).
Established in July 2013, Escaperoom has seven outlets in Malaysia and one outlet each in Australia, Estonia, India, Romania, Thailand, the UK and Vietnam.
It is also in the midst of negotiations with potential business associates to expand its presence in the Middle East and Europe. In FY15, Escaperoom achieved a net profit of RM1.03 million and revenue of RM3.45 million while net asset stood at RM1.45 million.
"The acquisition represents a new business opportunity for OWG to expand the operation of its amusement and recreation segment as well as to complement BION's existing business activities," OWG managing director and group CEO Datuk Richard Koh Cheng Keong told reporters at the signing ceremony yesterday.
He said the acquisition will also enable OWG to expand overseas by leveraging on Escaperoom's presence overseas and provide an additional source of income that will contribute positively to the group's future revenue and profitability. The acquisition is expected to be completed by year-end.
Escaperoom director and co-founder Datuk Victor Lo Tung Ho said it is confident of meeting the RM4 million net profit guarantee on the back of its expansion plans.
"We're confident of being able to meet the profit guarantee because with the OWG network, we will be able to expand our business substantially in Malaysia and other parts of the world. Hitting that target would not be too hard for us to do.
"If we do not hit the profit guarantee, we will have to pay back any outstanding amount to OWG within 30 days once we receive the notice," he said.
Lo said revenue contribution from its overseas outlets is close to 40% and rising due to the strength of the currency. It is also researching the local market for opportunities to expand further as well as new markets that it intends to venture into.
He said the initial investment cost for an outlet in Malaysia is RM500,000 to RM600,000 depending on the location and the number of rooms it plans to offer. It is also implementing new gadgets and technology to differentiate itself.
Meanwhile, Koh said it is eyeing more business opportunities that are synergistic with its "fun, food and good living" concept, including acquisitions.
He said it is planning to expand to China and is considering various options including joint ventures and profit-sharing. He also said it is interested in expanding into Southeast Asia but declined to reveal further details.
OWG executive director Kenny Ng Kuan Hua said it is closely monitoring its financial performance due to the economic slowdown and impact of the Goods and Services Tax.
"What we can say at this moment is that we are still meeting our forecasts. We anticipate this year we will maintain (our performance). Last year, we experienced a slight drop because of Genting outdoor theme park closure but when they re-open, we foresee our revenue and profit to grow accordingly," he said.
He added that the opening of The Top in Komtar, Penang at end-2015 will boost its revenue for FY16.