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Snoozebox Hldgs PLC (ZZZ)

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Friday 26 April, 2013

Snoozebox Hldgs PLC

Final Results

RNS Number : 2943D
Snoozebox Holdings PLC
26 April 2013
 



Snoozebox Holdings plc

("Snoozebox" or "the Company")

 

Preliminary results for the year ended 31 December 2012

 

Snoozebox, the UK leader in portable hotel accommodation, announces its preliminary results for the year ended 31 December 2012.

 

Key points

 

·      Since IPO the Snoozebox concept has become established in a number of markets and its infrastructure developed

 

·      Snoozebox has built on and learned from the success of the events of the past year and has continued to build a strong pipeline of business for the current year

 

·      Revenue was lower than anticipated at £3.8m. The loss was £4.4m. This was primarily due to uncertainty over the amount of revenue to be recognised from Olympics related contracts. Some of this revenue may be recognised in 2013

 

·      David Morrison, Chairman, will now chair the Executive Committee. Robert Breare, having stepped down as Chief Executive, will concentrate on sales and business development. Chris Upton, Finance Director, will be succeeded by Lorcan O'Murchu. Gary Thomson is promoted to the Board as Chief Operating Officer

 

·      Bookings for 2013 are encouraging and the outlook for new business in 2014 is also positive

 

David Morrison, Chairman said:

 

"Whilst disappointing to be reporting a less than satisfactory result, there is undoubted momentum within the business and a strong pipeline for the current year. Our opportunity remains undiminished."

 

26 April 2013

Enquiries:

 

Snoozebox

Today via College Hill

David Morrison, Chairman

020 7457 2020



Panmure Gordon

020 7886 2500

Corporate Finance:

Fred Walsh

 

Corporate Broking:

Adam Pollock

Charles Leigh-Pemberton




College Hill


Matthew Smallwood

07831 379 122

 

Website: www.snoozebox.com

 

 



 

Chairman's Report

 

Financial Results

 

Revenue is earned from the supply and operation of portable hotel and accommodation services, together with fees and commissions in respect of such services derived from assets owned by third parties.

 

Revenue for the year was £3,780,000 (2011: £35,000), which was lower than had been anticipated due to uncertainties regarding the amount of revenue from Olympic-related contracts at Hainault that could be recognised in the year.  The shortfall related to fees due on completion of the site restoration and a commission on the sale of purpose built cabins, which are quite separate from the Snoozebox units. This sale ultimately did not complete. Some revenue may be recognised in 2013 following site restoration.

 

As the group only began to trade fully following the IPO in May 2012, comparisons to the previous period are of limited value.

 

The loss for the year was £4,434,000 (2011: £1,251,000). Loss per share was 11.22p (2011: 19.92p).

 

Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation ("EBITDA") for the year was a loss of £1,886,000 (2011: loss of £1,069,000).  The items that have been adjusted for are:

 

Flotation and acquisition costs                             £476,000

Non recurring initial mobilisation costs                 £450,000

International franchise development costs            £262,000

            Share based remuneration                                   £68,000

 

The flotation on AIM on 1 May 2012 raised gross proceeds of £12,000,000, which, together with a further placing on 15 November 2012 that raised gross proceeds of £8,400,000, enabled the group to manufacture a total of 520 rooms by 31 December 2012 and subsequently a further 58  rooms for Thorpe Park.

 

Review of Operations

 

Snoozebox has made progress in developing its business from concept to being a provider of high quality, portable hotel and accommodation services with considerable potential both within the UK and internationally. At the outset it was clear that Snoozebox was an innovative format which would have wide-reaching application.  The Board continues to be encouraged by the broad appeal and flexibility of the Snoozebox model.

 

Snoozebox achieved its principal objective in 2012, which was to establish a platform of events and contracts, together with the necessary infrastructure to support further growth. The company provided accommodation at nine sporting and cultural events across the UK, commencing with the Queen's Diamond Jubilee Pageant at the beginning of May. 

 

Notwithstanding the intensity of the events programme and the consistently adverse weather conditions, we did not lose a single day's trading and always opened on schedule. Our equipment, our systems and our personnel all proved themselves and I would particularly like to acknowledge the commitment of our staff at all the events. However, whilst valuable lessons were learned, additional costs were incurred.  We have identified £450,000 of initial mobilisation costs as exceptional when calculating adjusted EBITDA

 

The most significant contract in the year was for the provision of accommodation at the security village for the London Olympic Games in Hainault.  Snoozebox found the site, negotiated the licence to occupy and undertook the planning application. We subsequently arranged for the JR Pickstock group to manage the installation of the infrastructure and the manufacture of cabins to accommodate 3,000 of the 3,500 security personnel based at the site. Snoozebox provided 320 rooms from its own stock, thereby accommodating 500 personnel.  In addition to revenue earned from its own units, Snoozebox earned a fee from Pickstock as remuneration for its role in procuring the site and introducing Pickstock to the commissioning organisation. 

 

Towards the end of the year we established a logistics centre at Turweston Airfield near Silverstone.  This central location is the base for the logistics team when they are not on site and is a cost effective solution for the storage and management of our parts and equipment inventory. 

 

Whilst we still see event organisers as the principal route to market for rooms at their events, there are occasions when customers want to book with us direct.  To this end we have now implemented online booking linked direct to our hotel property management system. This also gives us the flexibility to use Online Travel Agencies (OTAs) for selling rooms utilising tactical marketing initiatives.   

 

We are increasingly defining our market in the following categories.  

 

Annually Recurring Events

 

We attended seven recurring events in 2012, starting with the Isle of Man TT and culminating with the Goodwood Revival.  All of these have been rebooked for 2013, generally for more rooms if space at the event allows:

 



Actual Rooms 2012

Planned Rooms 2013

Isle of Man TT

Isle of Man

80

160

Download Festival

Donington

40

80

F1 British Grand Prix

Silverstone

240

240*

Festival of Speed

Goodwood

140

160

Silverstone Classic

Silverstone

200

160*

Edinburgh Festival

Edinburgh

48

160

Goodwood Revival

Goodwood

80

140

24 Hours Le Mans

Le Mans

-

80

Hay Festival

Hay-on-Wye

-

80

The Open

Muirfield

-

160

Pageant of Power

Cholmondeley Castle

-

80

Rewind Festival

Henley

-

80

 

·      Excluding the permanent hotel mentioned below

 

These events, together with other new annual events identified for 2014, are expected to constitute the core of an evergreen annual events diary.

 

Non-recurring Events

 

These are non-recurring, or intermittent and generally substantial, events. 

 

In 2012 these comprised the Queen's Diamond Jubilee Pageant and the London Olympic and Paralympic Games.       

 

We are currently considering opportunities in 2014 for the Commonwealth Games in Glasgow and the Ryder Cup at Gleneagles.

 



 

Longer Term Contracts

 

Having gained planning permission for a two year deployment at a first class site within the Silverstone circuit, we have built an 80 room Snoozebox hotel that will have a permanent presence for duration of the period, serving the forty or so small and mid-sized events as well as other visitors to the circuit and surrounding area.  The unit boasts its own Social Hub, complete with viewing platforms, which was well received by guests at the Six Hour World Endurance Championships that started the season in mid-April.  We will continue to service the major events of the F1 British Grand Prix and The Classic from a separate events unit at another location adjacent to the circuit. We hope to announce additional longer term contracts as the year progresses.

 

In October 2012, we installed 80 rooms at Stoneleigh Park close to the M40 at Leamington Spa, to increase this venue's capacity to service corporate conferencing and events demand between October 2012 and April 2013. Stoneleigh Park have been very pleased with the arrangement and have indicated that they would like to renew the contract for 2013/14 season.

 

We believe that this type of contract will be a blueprint whereby Snoozebox can satisfy the seasonal capacity shortfalls of conventional hotel and conference operations.

 

Since the year end, we have installed 58 rooms at Thorpe Park under an agreement to supply hotel rooms and services for Merlin Entertainments Group, the leading attractions business in the UK and internationally.  Our hotel is branded "Crash Pad" and was launched in time for the Easter weekend.  The hotel will operate until early November. The rooms are of a new design featuring a double bed and two single beds, with three rooms rather than four to each container.  Crash Pad has received some positive reviews in national newspapers and social media and customer feedback has been encouraging to date.

 

Contrax

 

The market for the Contrax product is large organisations with a requirement for medium to long term accommodation. Opportunities include temporary housing for local authorities, additional wards adjacent to hospitals to address bed-blocking and construction and mining camps. We are able to customise containers for their particular requirements, which may be higher density, lower specification accommodation or with specialised fittings.

 

International

 

During the year, we explored and continue to explore various international opportunities. We decided not to deliver 240 rooms for the USA Formula 1 Grand Prix in Austin, Texas last November, as we could not guarantee that we would satisfy all US regulatory compliance issues in time.

 

Cabins

 

Cabins were developed by JR Pickstock, the manufacturer of Snoozebox units, to satisfy a particular demand at the Olympic security village at Hainault. We have found that they are a complementary offering to our existing Snoozebox product where the client wants a lower priced, higher density solution. A cabin sleeps up to eight people in two rooms each with an en-suite bathroom. Two cabins can be transported on a standard flat-bed articulated truck.

 

We see this as an opportunity to develop a second product line and, as recently announced, have secured a contract to provide accommodation for 13,500 bed nights in support of the G8 conference in Northern Ireland.  We have identified various potential opportunities for the cabins, generally in conjunction with Snoozebox units.

 

Raising debt finance in the current market conditions is not easy for an early stage company, however, we have recently completed financing of £935,000 with Close Brothers Leasing, which represents 50% of the capital cost of the Thorpe Park rooms.  As the company matures, we anticipate that it will have access to a wider range of financing options than it has to date. 

 

Board and Management

 

On 25th April, it was agreed that Robert Breare would stand down as Chief Executive with immediate effect. Robert continues as a director of the Company. Chris Upton is also standing down as Finance Director, but has made himself available for consultancy assignments in future. I would like to acknowledge the role of both of them in the foundation of the company.

 

Having previously held senior logistics roles in the Army, Gary Thomson joined the Company in the middle of last year as COO and was appointed to the Board on 25th April. At the same time, Lorcan O'Murchu joined the Board as Finance Director. Lorcan O'Murchu was, most recently, Finance Director of UK Specialist Hospitals, a privately owned company involved in the development and operation of treatment centres providing a range of clinical services on behalf of the NHS and others.  Following these changes, I will chair the Executive Committee, responsible for the management of the Company

 

In January 2013, the Board announced the appointment of Stephen East and Hugh Scrimgeour as Non-Executive Directors of the Company.  Stephen East previously served as Finance Director of MEPC plc and Woolworth Group plc and Hugh Scrimgeour was previously Chief Financial Officer of Princess Cruises and Chairman and Managing Director of Earls Court and Olympia, bringing with him a wealth of international events industry experience of great relevance to Snoozebox.

 

Current Trading and Outlook

 

2013 will be the first full year of operations and the current schedule of deployments and bookings for the year is encouraging.  By way of example, occupancy for Race week at the Isle of Man TT in May is 95% and for the Grand Prix at Silverstone in June it is currently 85%.  The outlook for new business in 2014 is also positive. 



 

Consolidated statement of comprehensive income

For the year ended 31 December 2012

 


Note

Year ended 31 Dec 2012

£'000

Period1 March 2011 to 31 Dec 2011

£'000

Revenue

4

3,780

35

Cost of sales


(4,169) 

(188)

Gross Profit/(Loss)


(389)

(154)

Administrative expenses


(3,854)

(1,000)

Adjusted EBITDA


(1,886)

(1,069)

Depreciation

5

(1,101)

(85)

Exceptional items

7

(1,188)  

0

Share based payments

17

(68)

0

Loss from operating activities           

5

(4,243)

(1,154)

Finance expenses

8

(191)

(97)

Loss before taxation


(4,434)

(1,251)

Taxation

9

0

0

Loss and total comprehensive income for the period attributable to equity shareholders


(4,434)

(1,251)

Loss per share - basic and diluted

10

(11.22)p

(19.92)p

 

* Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation, share based payments and exceptional items.

 

All results relate to continuing operations.

 

Statement of financial position

Year ended 31 December 2012

 



Group



2012

2011


Note

    £'000

£'000

ASSETS




Non-current assets




Property, plant & equipment

11

14,700

1,441





Total non-current assets


14,700

1,441

Current assets




Inventories

12

45

0

Trade and other receivables

13

2,473

78

Cash and cash equivalents

23

1,757

3

Total current assets


4,275

81

Total assets


18,975

1,522

LIABILITIES




Current liabilities




Trade and other payables

14

1,020

1,034

Loans and borrowings

15

1,294

675

Total current liabilities


2,314

1,709

Non-current liabilities  




Loans and borrowings

15

0

964

Total non-current liabilities


0

964

Total liabilities


2,314

2,673

Total net assets/ (liabilities)


16,661

(1,151)

 

 

Statement of financial position

Year ended 31 December 2012

 



Group


Note

2012

£'000

2011

£'000

EQUITY




Share capital

16

666

100

Share premium


20,894

0

Other reserve


718

0

Merger reserve


0

0

Retained earnings


(5,617)

(1,251)

Total Equity


16,661

(1,151)

 

The accompanying accounting policies and notes form an integral part of these financial statements.

Registered number 8013887.

 

Consolidated Statement of cash flows

Year ended 31 December 2012   

      




Note

Year ended 31 Dec 2012 £'000

Period 1 March 2011 to 31 Dec 2011 £'000

Cash flows from operating activities




Loss for the period


(4,434)

(1,251)

Adjustments for:




Depreciation


1,101

85

Equity-settled share-based payment expense


68

0

Finance (income)/expenses


191

97

Cash flows from operating activities before




changes in working capital and provisions


(3,074)

(1,069)

Increase in inventories


(45)

0

Increase in trade and other receivables


(2,395)

(78)

Increase in trade and other payables


52

981

Cash used in operations


(5,462)

(166)

Investing activities




Investment in subsidiary   


0

0

Payments to acquire property, plant and equipment


(14,360)

(688)

Net cash outflow from investing activities


(14,360)

(688)

Financing activities




Issue of equity shares net of issue costs


19,201

100

Issue of loan notes


3,509

0

Interest paid


(213)

(44)

 

Consolidated Statement of cash flows

Year ended 31 December 2012

 


Note

Year Ended 31 Dec 2012

Period 1 March 2011 to 31 Dec 2011

Repayment of finance lease creditor


(776)

(62)

Loans (paid)/received


(145)

863

Net cash inflow from financing activities


21,576

857

Net increase in cash and cash equivalents


1,754

3

Opening cash and cash equivalents


3

0

Cash and cash equivalents as at 31 December

23

1,757

3

 

Statement of changes in equity

Year ended 31 December 2012

Group

 


Called up


Share Capital £'000

Share premium £'000

Other reserves £'000

Retained earnings

£'000

Total Equity £'000

At 1 March 2011

0

0

0

0

0

Total comprehensive income for the financial period

0

0

0

(1,251)

(1,251)

Issue of new equity shares

100

0

0

0

100

At 1 January 2012

100

0

0

(1,251)

(1,151)

Total comprehensive income for the financial period

0

0

0

(4,434)

(4,434)

Equity settled share based payment credit

0

0

0

68

68

Issue of new shares

566

22,093

0

0

22,659

Reserve arising on merger

0

0

718

0

718

Share Issue costs

0

(1,199)

0

0

(1,199)

At 31 December 2012

666

20,894

718

(5,617)

16,661

 

Statement of changes in equity

Year ended 31 December 2012

 

The following describes the nature and purpose of each reserve within owners' equity:

 

Reserve

Description and purpose

Share capital

Amount subscribed for share capital at nominal value.

Share premium

Amount subscribed for share capital in excess of nominal value less any direct costs of issue.

Other reserve

Amount arising in respect of capital contribution in the period.

Merger reserve

Amount arising on share for share exchange with subsidiary company.

Retained earnings

Cumulative net gains and losses recognised in the consolidated income statement.

 



 

1.       General Information

 

Snoozebox Holdings plc ("the Company") was incorporated in England and Wales on 30th March 2012 under the Companies Act 2006 (registration number 8013887) and its registered address is 30 Old Burlington Street, London W1S 3NL. On 17th April 2012 the Company entered into share exchange agreements to acquire 100% of the issued share capital of Snoozebox Limited, a company incorporated in England and Wales on 1 March 2011 and registered at the same address. On 1st May 2012 the Company was admitted to the Alternative Investment Market (AIM) where its ordinary shares are traded.

 

The consolidated financial statements of the Company as at and for the year ended 31 December 2012 comprise the Company and its subsidiary (together referred to as the "Group").

 

As noted below the merger method of accounting has been used to consolidate the results of the subsidiary undertaking. Under merger accounting the assets and liabilities of the subsidiary are consolidated at book value. In the Group accounts the subsidiary undertaking is treated as if it had always been a member of the Group and therefore comparative information is provided for the Group from the date the subsidiary was formed

 

The financial information set out in this announcement does not constitute the Group's statutory accounts for the period ended 31 December 2012 or for the period ended 31 December 2011 but have been derived from those accounts. Statutory accounts for the Company for the period ended 31 December 2012 and for the subsidiary company, Snoozebox Limited for the period ended 31 December 2011 have been reported on by the Independent Auditors. The Independent Auditors' Report on the Annual Report and Financial Statements for both periods was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

The Annual Report and Financial Statements for the period ended 31 December 2011 for Snoozebox Limited have been filed with the Registrar of Companies. The statutory accounts for the 52 weeks ended 31 December 2012 for the Company will be delivered to the registrar in due course.

 

2.       Accounting Policies

 

Statement of compliance

 

The financial statements have been prepared in accordance with the accounting policies and presentation required by International Financial Reporting Standards (IFRS), and International Financial Reporting Interpretations Committee ("IFRIC") Interpretations as endorsed by the European Union. They are presented in pounds sterling, rounded to the nearest thousand. Where applicable the same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the 2011 financial statements of Snoozebox Limited.

 

The financial statements were approved by the Board of Directors on 25 April 2013.

 

Basis of preparation

 

The financial statements have been prepared on a going concern basis, which assumes that the Group will be able to meet its liabilities as they fall due for the foreseeable future. The Group is dependent for its working capital requirements on cash generated from operations, cash holdings, and bank and other loan facilities. The cash holdings of the Group at 31st December 2012 were £1,757,000.

 

The directors have prepared detailed cash flow projections for the period to 31 December 2014 ("the Projections") which are based on their current expectations of trading prospects and likely contract wins. The Projections indicate that the Group is capable of operating within the financing facilities noted above and of meeting its liabilities as they fall due for a period of not less than 12 months from the date of these financial statements. Whilst there is uncertainty over the future levels of event income, the Directors have concluded that it is appropriate to continue to adopt the going concern basis in preparing these financial statements.

 

Functional and presentation currency

 

This consolidated financial information is presented in sterling, which is also the functional currency of the parent and the subsidiary company.

 

Business combinations

 

The merger method of accounting has been used to consolidate the results of the subsidiary undertaking because the transaction was a Group reconstruction with no changes in the ultimate ownership of the company and shareholdings transferred via a share for share transfer. The legal parent company did not actively trade at the time. The merger of the two companies took place on 17th April 2012. Under merger accounting the shares issued were recorded in the consolidated balance sheet at the nominal value of the shares issued plus the fair value of any additional consideration. The difference between the nominal value of the shares issued and the nominal value of the shares acquired, if any, is taken to a merger reserve in the Group accounts. The assets and liabilities of the subsidiary are consolidated at book value. In the Group accounts the subsidiary undertaking is treated as if it had always been a member of the Group and therefore comparative information is provided for the Group from the date the subsidiary was formed.

 

Revenues

 

Revenue represents sales (excluding VAT) of goods and services provided in the normal course of business and recognised when the services have been rendered or the goods sold, and is measured at the fair value of the consideration received or receivable. Where contracts extend over a reporting period, revenues are recognised in accordance with the fair value of the services provided or work carried out in the period.

 

Revenues consist of the provision of portable hotel and accommodation services. Such services include amounts receivable from guests booking accommodation, amounts receivable under contract from event producers or other parties, commissions and fees receivable in respect of portable hotel and accommodation services derived from assets not directly owned by the Group, and ancillary income from advertising, food and beverage and other management and housekeeping services.

 

Exceptional items

 

Exceptional items are material items which individually, or if of a similar type, in aggregate, need to be disclosed by virtue of their size or incidence in order to assist in understanding the Group's financial performance (see note 7).

 

Taxation

 

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in other comprehensive income.

 

Current tax

 

Current tax is the expected tax payable on the taxable income for the year, using rates which are enacted or substantively enacted at the reporting date and any adjustment to tax payable in respect of previous years.

 



 

Financial assets and liabilities

 

Financial assets held consist of loans and receivables.

 

Trade receivables are recognised at fair value and are carried at amortised cost. A provision for impairment is established where there is objective evidence that all the amounts due will not be collectable according to the original terms of the receivable concerned.

 

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts.

 

Trade and other payables are recognised at fair value and carried at amortised cost.

 

Share capital

 

Financial instruments issued are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company's ordinary shares are classified as equity instruments.

 

Leased assets

 

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a "finance lease"), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased property and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the consolidated statement of comprehensive income over the period of the lease and is calculated so that it represents a constant portion of the lease liability. The capital element reduces the balance owed to the lessor.

 

Where substantially all of the risks and rewards incidental to ownership are not transferred to the Company (an "operating lease"), the total rentals payable under the lease are charged to the consolidated  statement of comprehensive income on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

 

The land and buildings element of property leases are considered separately for the purpose of lease classification.

 

Deferred tax

 

Deferred tax assets and liabilities are recognised where the carrying value of an asset or liability in the balance sheet differs from its tax base.

 

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

 

The amount of asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

 



 

Dividends

 

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when paid, in the case of final dividends, this is when approved by shareholders at the AGM.

 

Provisions and contingent liabilities

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

 

Investments

 

Investments in subsidiaries are carried at cost less any impairment provision required.

 

Property, plant and equipment

 

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, costs include directly attributable costs.

 

Depreciation is provided on all other items of property, plant and equipment to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:

 

Container units

5% to 7% per annum straight line

Container fit outs

5% to 20% per annum straight line

Office equipment

25% per annum straight line

 

 

Inventories

 

Inventories comprise the stock per room of bed linen and towels. As and when these items are replaced the cost of the replacement goods are charged to the statement of comprehensive income.

 

Share based payments

 

The Group has applied the requirements of IFRS2 Share Based Payment. The Group operates a number of equity settled share based payment schemes under which share options are granted to certain employees. Share warrants were also issued at the time of flotation. The costs of equity settled transactions are measured at fair value at the date of grant. In determining fair value no account is taken of any vesting conditions other than market based conditions.

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market consideration is satisfied, provided all other conditions are satisfied. The fair value determined at the grant date is expensed on a straight line over the vesting period, based on the directors best estimate of the number of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. The movement in the cumulative expense since the previous balance sheet date is recognised in the income statement, with the corresponding movement taken to equity.

 

The grant by the company of options over its equity instruments to the employees of its subsidiary in the group is treated as a capital contribution in the accounts of the subsidiary, and as an increase in the investment in the subsidiary over the vesting period.

 



 

Critical accounting estimates and judgements

 

The preparation of financial statements under IFRS requires the Company to make estimates and judgements that affect the application of policies and reported amounts. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates and assumptions. The estimates and assumptions that are considered to have a significant risk of causing a material adjustment to the carrying value of assets and liabilities within the next year are discussed in more detail below.

 

The following are the key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

(a)  Useful lives of property, plant and equipment

 

Property, plant and equipment are depreciated over their useful lives. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Changes to these estimates - the current rates are set out in the accounting policy in Note 2 - can result in significant variations in the carrying value and amounts charged to the statement of comprehensive income as depreciation in a particular period.

 

(b)  Share options

 

The Company operates equity-settled share-based remuneration schemes for employees. Employee services received and the corresponding increase in equity are measured by reference to the fair value of the equity instrument at the date of the grant, excluding the impact of any non-market based vesting conditions. The Company has also issued a warrant entitling the holder to acquire shares. The fair value of the share options and the warrants is estimated by using the Black Scholes and Monte Carlo Simulation models on the date of grant based on certain assumptions. These include among others the dividend growth rate, expected volatility, expected life of the options/warrants and the number of each expected to vest.

 

Standards and interpretations

 

The following standards and interpretations, issued by the IASB or the International Financial Reporting Interpretations Committee (IFRIC) have been adopted by the Group with no significant impact on its consolidated results or financial position.

 

Amendments to IAS 12 - Deferred Tax: Recovery of Underlying Assets.

 

Amendments to IFRS7 - Disclosures: Transfers of Financial assets

 

Standards and interpretations in issue not adopted

 

The following standards and interpretations issued by the IASB or IFRIC have not been adopted by the Group as they were not effective for the year 2012. The Group is currently assessing the impact these standards and interpretations will have on the presentation of, and recognition in, its consolidated results in future periods.

 

Amendments to IAS 1 - Presentation of items of Other Comprehensive Income (effective for accounting periods beginning on or after 1 July 2012).

 

IFRS 10 - Consolidated Financial Statements (effective for accounting periods beginning on or after 1 January 2014).

 

IFRS 11 - Joint Arrangements (effective for accounting periods beginning on or after 1 January 2014).

 

IFRS 12 - Disclosure of Interests in Other Entities (effective for accounting periods beginning on or after 1 January 2014).

 

IFRS 13 - Fair Value Measurement (effective for accounting periods beginning on or after 1 January 2013).

 

IAS 27 - Separate Financial Statements (effective for accounting periods beginning on or after 1 January 2014).

 

IAS 28 - Investments in Associates and Joint Ventures (effective for accounting periods beginning on or after 1 January 2014).

 

IAS 19 - Employee Benefits (effective for accounting periods beginning on or after 1 January 2013).

 

Amendments to IFRS 7 - Disclosures Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2013).

 

Amendments to IFRS 10, IFRS 11 and IFRS 12 - Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities (effective for accounting periods beginning on or after 1 January 2013).

 

Amendments to IAS 32 - Offsetting Financial Assets and Financial Liabilities (effective for accounting periods beginning on or after 1 January 2014).

 

IFRS 9 - Financial Instruments (effective for accounting periods beginning on or after 1 January 2015). This amendment has not yet been endorsed for use in the EU.

 

Improvements to IFRSs

 

This annual improvement project clarifies the requirements of IFRS's and eliminate inconsistencies within and between standards. The relevant changes included amendments to IFRS 1 'First-time adoption of International Financial Reporting Standards', IAS 1 'Presentation of financial statements', IAS 16 'Property, plant and equipment', IAS 32 ' Financial instruments, IAS 12 'Income taxes'.

 

3.       Financial instruments - risk management

 

General objectives, policies and processes.

 

The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's finance function.

 

The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls' and to monitor risks and adherence to limits. Risk management policies to provide protection for the Group's activities are regularly reviewed and reflect changes in market conditions. The Group through its management standards and procedures aims to develop a disciplined and constructive control environment in which its employees understand their roles and obligations.

 

The Audit Committee oversees how management monitors compliance with the Group risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

 

In addition the Group has a capital management strategy, details of which are set out below.

 

Capital Management Strategy - The Board's policy is to maintain a strong capital base within the Group so as to maintain investor and creditor protection and to maintain market confidence in the Group. The strategy also sustains future development potential of the Group.  The Directors monitor the return on capital used by the Group and use adjusted EBITDA as the key measure monitored.

 

A summary of the financial instruments held by category is shown below, given the nature of the Group's activities the Board does not consider that there is a material risk attached to these assets.

 

Financial assets

 


Group


2012

2011


£'000

£'000

Trade receivables

6

2

Cash and cash equivalents

1,757

3

Amount due from subsidiary   

0

0

Total financial assets   

1,763

5

 

All non-impaired trade receivables are current. The directors have made provision against overdue trade debtors in the Group in the amount of £30k in the period (2011 £nil).In the directors opinion there is no material difference between the book and fair values of the financial assets.

 

Financial liabilities

 


Group


2012

2011


£'000

£'000

Trade and other payables

817

1,001

Loans and borrowings

1,294

1,639

Total financial liabilities

2,111

2,640

 

The main financial risk the Group is exposed to is liquidity risk. 

 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.

 

The Board seeks to mitigate liquidity risk by close management of cash resources, by ensuring that contractual terms for supplies and capital purchase are negotiated to achieve optimal payment terms and by arranging investment funding and borrowing facilities to match anticipated cash requirements from trading income and capital commitments.

 



 

The following table details the contractual maturity analysis of the Group and Company's financial liabilities:

 


2012

2011


Due within 3 months

Due within 3 to 12 months

After 12 months

Due within 3 months

Due within 3 to 12 months

After 12 months


£'000

£'000

£'000

£'000

              £'000

              £'000

Group







Trade and other payables

8170

0

1,001

0

0


Loans

1,294

0

0

145

0

718

Lease Liability

0

0

0

133

397

246

Total

2,111

0

0

1,279

397

964

 

The maturity analysis of financial liabilities excludes taxation and social security and accruals, and is measured at amortised cost. In the opinion of the directors there is no material difference between the book and fair value of the financial liabilities

 

4. Segmental analysis

 

The group currently operates in one operating and geographical segment, being the UK portable hotel and accommodation market. All revenue arose in the United Kingdom.

 

Of the revenue for the year ended 31 December 2012, £ 2,414,000 and £500,000 derives from two customers in relation to Olympic contracts.

 

5. Loss from operating activities

 


2012

2011


£'000

£'000

This has been arrived at after charging:



Staff costs (see note 6)

1,404

329

Equity settled share based payments

68

0

Exceptional items (see note 7)

1,188

0

Depreciation of property, plant and equipment

1,101

85

Auditors' remuneration -audit services for the audit of the group accounts

15

0

- audit of subsidiaries of the company

20

20

- audit related services

11

0

- tax compliance services

7

0

- tax advisory services

62

0

- corporate finance services

135

0




 



 

6. Staff Costs 

 


2012

2011


£'000

£'000

Staff costs including directors comprise:



Wages and salaries

1,230

72

Employer's national insurance contributions and similar charges

133

7

Pension scheme contributions

12

0


1,375

79

Amounts  paid to third parties in respect of staff and directors services

218

250

Equity share based payment charges in respect of employees

62

0




Total Staff Costs

1,665

329

Less staff costs capitalised within fixed assets

(189)

0


1,466

329




 

Average staff numbers during the period were 21 (2011 - 5).

 

Key management personnel remuneration

 

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company. They comprise the directors, Chief Operating Officer, Head of Logistics and senior finance personnel.

 


2012

2011


£'000

£'000




Salaries, fees and other short term employee benefits

496

250

Contributions to personal pension plans

12

0

Share based payments

62

0


___

___


570

250

 

7. Exceptional Items 

 


2012

2011


£'000

£'000

Non recurring initial mobilisation costs

450

0

International franchise development costs

262

0

Flotation and acquisition costs

476

0


1,188

0

 

8. Interest Payable

 


2012

2011


£'000

£'000

Bank loans and overdrafts

4

2

Other loans

262

20

Finance lease interest

(75)

75


191

97

 

During 2012, the interest charged in 2011 on the finance leases was waived as part of an agreement for early settlement of the amounts due.



 

9. Tax expense                        

 


2012

2011


£'000

£'000

Current tax expense



UK corporation tax on profits for the period

0

0




Deferred tax expense



Origination and reversal of temporary differences

0

0




 Total income tax expense

0

0

 

The reasons for the difference between the actual tax charge for the period and the standard rate of corporation tax in the UK applied to profits for the period are as follows:

 


2012

2011


£'000

£'000

Loss for the period

-4,434

-1,251

Expected tax charge based on the standard rate of corporation tax in the UK of 24.5% (2011 -  26.5%)

-1,086

-332

Expenses not deductible for tax purposes

232

13

Deferred tax asset not recognised

854

319

Total tax expense

 

The Group has unprovided tax losses of approximately £3.6 million (2011 £1.1 million) available to carry forward against future taxable profits, subject to agreement with HMRC.

 

A deferred tax asset has not been recognised in respect of these tax losses and in respect of depreciation in excess of capital allowances of £1.8 million (2011 £0.1million) due to uncertainty of the timing of recovery.

 

10.     Loss per share

 


2012

2011

Loss per share (basic and diluted)

11.22p

19.92p

 

Loss per share

 


Weight average

Weight average


Loss £'000

Number of shares

Loss per share

Loss £'000

Number of shares

Loss per share

Basic and diluted loss per share

4,434

39,530,207

11.22

1,251

6,281,663

19.92p

 



 

11.     Property, plant and equipment 

 


Container

Container   

Office

Total


Units & Fit-Out

Mother Units

Equipment



£'000

£'000

£'000

£'000

Cost





At 1 March 2011

0

0

0

0

Additions in period

1,259

261

6

1,526

At 31 December 2011

1,259

261

6

1,526

Additions

12,718

1,529

113

14,360

At 31 December 2012

13,977

1,790

119

15,886

Accumulated depreciation





At 1 March 2011

0

0

0

0

Depreciation charge for the period

67

17

1

85

At 31 December 2011

67

17

1

85

Depreciation charge for the year

938

157

6

1,101

At 31 December 2012

1,005

174

7

1,186

Net book value





At 31 December 2012

12,972

1,616

112

14,700

At 31 December 2011

1,192

244

5

1,441

 

Included in the above are assets held under finance lease with a net book value of £nil (2011 - £809,000) at the year end.

 

12.     Inventories

 


Group


2012

2011


£'000

£'000

Bed linen and Towelling

45

0

 

No material inventory was recognised as an expense in the period (2011-£nil)

 

13.     Trade and Other Receivables

 


Group


2012

2011


£'000

£'000

Trade receivables

6

2

Deposit paid

1,900

0

Amounts owed by group undertakings

0

0

Other receivables

73

0

VAT recoverable

303

66

Prepayments and accrued income

191

10


2,473

78

 

The deposit, paid on 22nd November 2012, of £1,900,000 was made in respect of the production of a further 20 Snoozebox units. Delivery of this order was received during the first week of March 2013. See also note 20.

 

Amounts owed by group undertakings have no set repayment date, and interest is chargeable at 6% per annum.

 

14. Trade and other payables and current tax liabilities

 


Group


2012

2011


£'000

£'000

Trade payables

656

900

Other tax and social security taxes

148

18

Other payables

41

5

Accruals

120

96


965

1,019




Deferred income

55

15

Total trade and other payables

1,020

1,034

 

All amounts shown above are short-term. The carrying values are considered to be a reasonable approximation of the fair value.

 

15.     Loans and borrowings

The book value and fair value of loans and borrowings are as follows:

 


Group


2012

2011

Non-Current

£'000

£'000

Loans from third parties

0

0

Loans from related party

0

718

Finance lease liabilities

0

246


0

964




Current



Loan note issued

1,294

0

Loans from related parties

0

145

Finance lease liabilities

0

530


1,294

675

Total borrowings

1,294

1,639

 

Loan notes of £1,250,000 carrying interest at 12.5% were issued by the Group on 14th September 2012 and repaid in full on 18th January 2013.

 

Assets held under finance lease at 31st December 2011 were acquired outright by the Group on 1st May 2012 through the exercise of its purchase option under the agreement.

 



 

16.     Share Capital

 

Issued and fully paid

 


Number

£'000

Initial issue

100

0







Issued as consideration for the share for share exchange with Snoozebox Limited

9,999,900

100

Issue of shares at 40p on 1 May 2012

30,000,000

300

Issued as consideration for loan notes at 20p on 1 May 2012

11,295,000

113

Issue of shares at 55p on 15th November 2012

15,272,727

153


66,567,727

666

 

The share capital of Snoozebox Holdings plc consists only of 1p shares. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at shareholders' meetings.

 

The Company was incorporated on 30th March 2012 with a share capital of 1 £1 share. On 17th April this share was sub-divided into 100 1 pence shares. Also on 17th April 2012 the Company acquired the entire share capital of Snoozebox Limited by way of a share for share issue. Under the terms of the merger the holders of the ordinary shares in Snoozebox Limited exchanged their shares for ordinary shares in the Company which became the holding company of Snoozebox Limited.  The Company issued a further 9,999,900 1pence shares to complete this merger.On 17th April the Company also entered into a loan note exchange agreement with each of the holders of unsecured convertible loan notes in Snoozebox Limited in relation to the merger. At the same time the Company also issued a further £730,000 of 15% Loan Notes.

 

On 1st May the Company was admitted on the Alternative Investment Market (AIM) and placed 30,000,000 ordinary 1 pence shares on the AIM market at a premium of 39 pence per share. At the same time it converted all outstanding loan notes into Ordinary 1 pence shares at a premium of 19 pence per share.  

 

On 15th November the Company placed a further 15,272,727 ordinary shares of 1 pence each at a premium of 54 pence per share.

 

The share capital at 31 December 2011 represents the shares issued as consideration for Snoozebox Limited which under merger accounting are treated as if they replace the share capital of the subsidiary.

 

Snoozebox Limited was incorporated on 1 March 2011 with a share capital of 2 £1 shares, which were subsequently converted to 200 1p shares. During the period to 31 December 2011 the company issued a further 9,999,800 ordinary shares of 1p each.

 

17.     Share-based Payments

 


2012

2011




The charge for share-based remuneration recorded in

the financial statements comprises






Equity-settled schemes

68

0

 

The company believes that share ownership by executive directors and key staff strengthens the link between their personal interests and those of the shareholders. It therefore operates both approved and unapproved share option schemes, under which options are granted in order to assist in the incentivisation and recruitment of key staff. IFRS2 (Share-based payment) requires that the fair value of such equity-settled transactions is calculated and systematically charged to the Statement of comprehensive income over the vesting period. Details of outstanding share options and the calculation of this charge are set out below.

 


Options

Warrants


 31 December 2012

31-Dec-12

31-Dec-12

31-Dec-12


Weighted average exercise price

Number

Weighted average exercise price

Number


(pence)

'000

(pence)

'000

Outstanding at the beginning of the period

0

0

0

0

Granted during the period

51.4

3,092

52

513

Lapsed during the period

-

-

-

-

Outstanding at the end of the period

51.4

3,092

52

513

 

The exercise price of options and warrants outstanding at the end of the period ranged between 42.57p and 53.5p and their weighted average remaining contractual life was 4.9 years.

 

Of the total number of options outstanding at the end of period none had vested and were exercisable at the end of the period.

 

No options were exercised during either the current or prior period.

 

The weighted average fair value of options granted during the period was 14.10p.

 

The fair value of warrants granted during the period was 2.99p.

 

At 31 December 2012 outstanding share options for directors and employees to subscribe to ordinary shares of 1 pence each were -

 


Exercise price (pence)

Date granted

Number of shares

Exercisable between

approved

42.5

Jun-12

592,353

June 2015 - June 2022

unapproved

53.5

July 2012

2,500,000

 July 2014 - July 2017

 

 

Options under all of the schemes are granted at the average of the middle market price of the shares during the three dealing days prior to the grant. Awards will vest after three years of additional service have been completed.  Options may then be exercised over the remaining seven years of the contractual life of the option. Of the unapproved share options 50% will only be capable of being exercised if the share price is above 80p at the time of exercise

 

Warrants

On 25th April 2012 the Company issued a warrant instrument. The warrant instrument constitutes warrants to acquire 512,950 Ordinary Shares at 52 pence each at any time up to and including the second anniversary of the Admission. 

 

The following information is relevant in the determination of the fair value of options granted during the  period under the equity settled share based remuneration schemes operated by the Company. No options were granted in the prior period.

 

No expected divided growth rate figure is included as the Company has no history of dividends distributions due to its recent formation.

The volatility assumption, measured at the standard deviation of expected share price returns, is based on a statistical analysis of daily share prices of other comparable companies over the last four years.

 


Options and warrants-no market based performance conditions

Options- Market based performance conditions

Equity-settled



Option pricing model used

Black- Scholes

Monte Carlo

Weighted average share price at grant date (pence)

47.8p

53.5p

Weighted average exercise price (pence)

50.3p

80.0p

Weighted average contractual life (days)

1,394

1,461

Expected volatility

36.07%

38.06%

Risk-free interest rate

0.49%

0.35%

 

 

18.     Related Party Transactions

                       

The Group and Company have entered into the following transactions with related parties:

 


Type of Transaction

Group



2012 £'000

2011 £'000

Key management personnel and related companies

Provision of services

558

309


Amounts owing to key management personnel 

10

297





Controlling parties: 

Loans to Group

0

718


Loans forgive

718

0

 

In addition in 2012 the subsidiary issued £150,000 of convertible unsecured loan notes to a company controlled by a director, which were subsequently exchanged for loan notes in the parent company, and converted into ordinary shares in Snoozebox Holdings plc.

 

19.     Contingent Liability

 

The Group is in dispute with the administrators of one of its suppliers in respect of the supply of equipment which the Group considers was not in line with the required specification. The supplier is claiming in respect of disputed invoices totalling £574,000, excluding VAT.The directors do not consider it probable that any amount will be payable in respect of this. The Group is counterclaiming for costs incurred in using the equipment. The directors have been advised that they have a strong case but are unable to quantify reliably the outcome of the litigation. Accordingly no provision has been made in the accounts for any amounts that may be payable or that may be recovered.

 

20.     Capital commitments

 


2012

2011


£'000

£'000




Authorised and contracted

1,900

0

 

As at the balance sheet date, the Group had capital commitments in respect of a contract for the provision of 20 additional Snoozebox . The total value of this contract was £1.9 million. As disclosed in note 13 a deposit of £1.9million was paid towards this work in November 2012.

 

21.     Merger

 

On 17 April 2012, the Company acquired the entire share capital of Snoozebox Limited. Under the terms of the merger the holders of the ordinary shares in Snoozebox Limited exchanged their shares for ordinary shares in the Company which became the holding company of Snoozebox Limited. The accounting for the merger is detailed in note 2 above.

 

22.     Events after the balance sheet date

 

In March 2013 the Group took delivery of the 20 additional Snoozebox units referred to in Note 20. These have been installed at Thorpe Park under an agreement with Merlin Attractions Operations Ltd.

 

On 28 March 2013 Snoozebox Limited signed a Hire Purchase agreement with Close Brothers Finance Ltd for the financing of £935,000 related to the Snoozebox units at Thorpe Park referred to above. This amount was advanced on 17 April 2013.

 

23.     Notes supporting the cash flow statement

 


Group


2012 £'000

2011 £'000

Investing activities



Equity consideration for business combination

830

0

Financing activities



Debt converted to equity

2,259

0

Debt converted to capital contribution  

718

0

Assets acquired under finance leases

0

776

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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