TIDMZZZ
RNS Number : 6182J
Snoozebox Holdings PLC
29 June 2017
29 June 2017
Snoozebox Holdings plc
Preliminary announcement of results for the year ended 31
December 2016
Snoozebox Holdings plc (AIM: ZZZ), ("the Company" or "the
Group") today announces its preliminary results for the year ended
31 December 2016.
2016 Highlights
-- Revenue decreased as anticipated to GBP2.4m (2015: GBP5.8m)
-- Adjusted EBITDA* loss GBP2.0m significantly improved (2015: GBP6.0m)
-- Exceptional tangible fixed assets impairment charge of GBP4.1m (2015: GBP9.6m)
-- Loss from operating activities GBP7.3m (2015: GBP17.9m loss)
-- Loss before taxation GBP8.9m (2015: GBP18.9m loss)
-- Loss per share decreased to 3.03p (2015: loss 8.91p)
-- Cash GBP2.4m (2015: GBP3.6m, of which GBP1.3m restricted (per note 9))
-- Net debt GBP5.5m (2015: net debt GBP5.4m)
-- Immediately prior to release of these results, capital and
interest payments holiday agreed on debt for period July 17 through
to April 18 inclusive
*Adjusted EBITDA is EBITDA before exceptional items and
share-based payment charges
The Board is currently continuing its discussions with its
primary lender concerning amendments to the Group's capital
structure and funding.
Chris Errington, Executive Chairman, commented:
"Following a comprehensive strategic business review in early
2016 we have now executed the first stage of our strategy and
successfully stabilised the Group's operations. Alongside, and
critical to, this we have also improved our short-term financial
stability through the support of our lender by way of a debt
capital and interest payments holiday.
Coming into 2017, our plans were to engage in a limited number
of Events deployments, which we have done, and also to progress
Semi-Permanent V1 room opportunities for first deployment in the
last quarter of 2017, a plan that remains on track.
Over the past few months we have made good commercial progress
with Semi-Permanent sales opportunities that were first qualified
in the second half of 2016. During 2017 we have also made good
progress in qualifying a number of new deployment opportunities
both in the Events and Semi-Permanent markets. The first of these
newly identified and qualified opportunities in the Events market
has already been secured in June 2017 for July 2017 deployment. Our
key focus is to repeat this success by closing out further
qualified sales opportunities in the second half of 2017 and on
into 2018."
The Company's audited Annual Financial Statement for the year
ended 31 December 2016 will be available on the Company's website
shortly and be posted to shareholders before the end of June along
with notice of the Company's Annual General Meeting. An update will
be provided in due course.
Enquiries:
Panmure Gordon 020 7886 2500
Corporate Finance: Andrew Godber
Duncan Monteith
Corporate Broking: Charles Leigh-Pemberton
STRATEGIC REPORT
The Directors present their Strategic Report for the year ended
31 December 2016. The Strategic Report comprises the:
-- Chairman's Statement; and
-- Operating and Financial Review.
Chairman's Statement
Over the past few years, Snoozebox has established itself as a
leading provider of rapidly deployed quality accommodation. In
early 2016, the Board commenced a restructuring of the Group's
operations intended to improve operating stability, financial
performance and position.
We have made good progress in reducing the Group's cost burden
and stabilising operations, as further set out in the Operating and
Financial Review. We have also made good progress in identifying
deployment opportunities for our V1 accommodation as set out in
Current Trading and Outlook section below.
Business Strategy and Position of the Business
-- Accommodation Assets. The Group has a good stock of
differentiated and viable accommodation assets and access to a
reasonable market for those assets. The Group is focussing on
placing existing accommodation assets into the market with an aim
of generating sufficient revenues to at least cover overheads and
contribute towards servicing debt in the medium-to-long term. The
Group's room stock assets for hire comprise:
o Possession of and access to 570 V1 containerised rooms (V1
rooms), all of which are owned by a third-party provider of asset
finance and leased by the Group as described further at note 20 to
the financial statements. Each V1 room is ensuite and can sleep at
least two adults; and
o Ownership of 200 Snoozy pop-up rooms, each of which can sleep
at least two adults.
-- Unique Selling Points. The Group's key differentiator is the
ability to rapidly deploy its quality accommodation solutions on a
temporary or semi-permanent basis;
-- Semi-Permanent Market. The Semi-Permanent market involves the
deployment of V1 rooms for target periods of six months to many
years, which the Board considers is most likely to generate the
revenue and margins required to achieve the Group's short-to-medium
term business objectives. Semi-Permanent deployment also delivers
longer term predictable revenues, without the drag of void periods,
allowing the high one-off deployment and extraction costs to be
absorbed from revenues generated over a longer period. The Group is
focussed on Semi-Permanent sales and the execution and timing of
new sales to generate revenues in this market will be a critical
factor in the achievement of the Group's business objectives;
-- Events Market. The Events market involves the deployment of
Snoozy rooms, complemented where there is capacity and demand by V1
rooms, for target periods of days to weeks and generates a modest
contribution towards Group objectives. The Events market has longer
void periods associated with moving assets from event to event. The
related high one-off deployment and extraction costs, means that
this market is unlikely to contribute significantly to short or
medium-term trading at the Group's current scale. The Group will
continue with the Events market where commercially viable, making
appropriate use of the Group's accommodation assets and aiming for
longer-term deployment periods;
-- Sales Focus. A careful balance of Semi-Permanent and Events
deployments is being sought, with a keen focus on ensuring that the
Group's key objectives are met in the short-to-medium term;
-- Margins, Costs and Capex. The Group's margins, central
overheads and capital expenditure have historically been out of
balance with trading and cash generation from operations. The Board
is focussed on achieving an appropriate mix of costs, capital and
margins to achieve medium to long term objectives. The Board has
significantly reduced central overheads during the course of 2016
and entered 2017 with central overhead cash costs now running at
approximately GBP0.1m per month as planned. Capital expenditure is
being limited in the short-term to appropriate maintenance and
replacement expenditure that keeps the existing accommodation stock
in good condition. In the medium-to-long term, and where
appropriate, we will seek to match expenditure to firm new
contracts for deployment; and
-- Funding and debt. The Group has a historical capital
structure that involves a significant level of debt that is
inconsistent with its current and near term financial performance
and position. The Board is currently continuing its discussions
with its primary lender options concerning amendments to the
Group's capital structure and funding.
Business Objectives
The Group is focused on three key business objectives:
1. In the short-term, establishing a more stable operating
environment for the Group and seeking improved financial stability
through renegotiating its debt;
2. In the short-to-medium term, achieving net operating cash
flows sufficient to cover central overheads and service the Group's
debt; and
3. In the medium-to-long term, securing further growth in
revenues and operating cash flows from a stable base.
In terms of short-term objectives, significant improvements have
been made to the operating environment of the Group in 2016 and
through into 2017. Central overheads have also been reduced to the
targeted GBP0.1m per month going into 2017, compared to
approximately GBP0.4m per month entering 2016. In November 2016, we
announced an amendment to the Group's debt servicing obligations
which reduced the short-term debt repayment burden whilst also
reducing the overall balance outstanding through use of the Group's
cash then held in escrow. Constructive discussions with our lender
are ongoing, as evidenced by the further amendment to the Group's
debt servicing obligations secured immediately prior to the date of
this report.
In the short-to-medium term, the Group is engaged in sales
activities aimed at securing Semi-Permanent deployments of V1
rooms. Several good opportunities for deployment of V1 rooms have
been qualified and we are now at various stages of negotiation with
landlords and customers for deployment. Securing one or more of
these opportunities for 80 V1 rooms alongside existing revenues
would provide a good contribution towards achieving cash flow break
even at an operational level (pre-debt servicing and capital
expenditure) and, with time for the deployments to mature and to
secure further wins, help the Group become cash generative in the
medium term.
In the medium-to-long term, the Board believes that the Group
has several growth options available to it, including repetition of
a revised and working business strategy with similar assets,
production of new assets backed by a more predictable revenue
pipeline, entry into new markets or a combination of these. Until
the Group has made appropriate progress towards its objectives of
stability and achieving operating cash flow breakeven, the Board
will approach any such medium to long term growth plans
cautiously.
Business Model
The Group earns revenue from the provision of rapidly deployed
quality accommodation to customers in three main ways:
1. Hire of accommodation stock to a customer for them to operate
as a service for their end customers (a "dry hire"). The customer
is responsible for operating the rooms and for room occupancy
through its own sales efforts. The Group typically secures a fixed
element of committed revenue for the deployment period and may
secure an additional variable element depending on commercial
factors;
2. Hire of accommodation stock to a customer where the Group is
responsible for operating the accommodation as a service to end
customers (a "managed service"). The Group is responsible for
operating the accommodation and the responsibility for room
occupancy falls into two models:
o The Group is responsible for room occupancy through its own
sales efforts; or
o The customer is responsible for room occupancy through its own
sales efforts;
The revenue stream for both models is generally variable
depending on occupancy and room rates achieved and may include a
fixed element in the latter customer model; and
3. Lease or license of land by the Group on which to deploy and
then operate the Group's accommodation assets as a service to end
customers (a "hotel" style deployment). The Group is responsible
for all aspects of operating the hotel, although it may
sub-contract some or all obligations to third parties.
The Group can earn further revenues from each deployment through
provision of additional services, such as food and drink, and these
additional services, when managed well, can be a valuable source of
additional margin in the right environment.
The Group's preferred model is for longer term hire or
deployment of the Group's room stock, targeting hire or deployment
periods of three years or more.
Formal planning permission may be required for longer-term
deployments, depending on the circumstances, and where granted may
have specific covenants or conditions attached. Planning
applications introduce delay into the sales cycle. New deployments
involve a significant cash outflow covering transportation, site
preparation and installation together with any ancillary capital
expenditure required to complement a new deployment. The level of
such set-up expenditure can be material.
Funding and going concern
Funding
The Group initiated discussions with its primary lender in April
2016 seeking an amendment to its debt servicing obligations. In
November 2016, the Group announced amendments to its debt servicing
obligations, the details of which are set out in note 20. As
reported in note 2 to the financial statements, the Group remains
in constructive discussions with its primary lender, concerning
repayment obligations and longer-term capital structure, and they
remain supportive of the Directors' strategy and plans. Throughout
2016 the Group paid all of its debt repayment obligations as they
fell due and has continued to do so to the date of this report,
taking into account the changes introduced by the November 2016
amendment.
Immediately prior to the date of this report, the Board agreed a
debt capital and interest repayment holiday with its lender in
respect of the four quarterly payments due in July 17 to April 18
inclusive as set out in note 2.
The Board will provide further updates on these discussions in
due course.
Going concern
After making enquiries and taking account of the Group's cash
resources, future trading prospects, an agreement with the primary
lender for a four quarter debt capital and interest repayment
holiday and ongoing supportive discussions with the primary lender
regarding capital structure, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the next 12 months and, for this reason,
they continue to adopt the going concern basis in preparing the
financial statements. Note 2 to the financial statements provides
further information concerning the assumptions made by the
directors in forming their view and should be read in conjunction
with this statement.
Board Changes
The Board's composition changed significantly in 2016 since my
initial appointment as a Non-Executive Director in January 2016. In
February 2016, the then Chairman and a Non-Executive director
resigned, at which time I became Non-Executive Chairman, followed
in April 2016 by the resignation of the CEO, at which time I became
Executive Chairman. The Board now comprises myself and two other
Non-Executives.
Current Trading
Trading in the new financial year to 30 April 2017 has been in
line with the Board's expectations with an unaudited unadjusted
EBITDA loss of approximately GBP0.4m (unaudited 4 months to 30
April 2016: GBP0.5m loss). In general, and as a result of the
operational changes implemented in 2016, we are seeing an early
trend of increased underlying contribution to central overheads
from deployments both in the Semi-Permanent and Events
divisions.
Semi-Permanent
We are in the final stages of agreeing a renewal of the Group's
Semi-Permanent deployment in Cornwall and anticipate remaining on
site for a number of years to come. We remain deployed and
operational in Cornwall in the meantime.
We have identified and qualified several opportunities in the UK
for deployment of our Semi-Permanent V1 accommodation. A number of
these are now entering final commercial negotiations which, if
successfully concluded, should see deployments commencing in the
fourth quarter of 2017 (consistent with our plans) and on into
2018. The Board has assumed that any such opportunities will not
generate material new revenues (or contribution to central
overheads) until at least 2018.
Events
In June 2017, we will have completed two deployments of
accommodation to the UK Events market, generating revenues of
approximately GBP0.7m and an underlying anticipated contribution to
central overheads of approximately GBP0.1m. Guest feedback so far
has been excellent for which my thanks go to our loyal and
hard-working operations team. We continue to assess Event
attendance on its commercial merits and the Board expects to remain
involved in this market going forward
I am pleased to report that in June 2017 we entered into a
contract for the July 2017 deployment of a number of our Snoozy
rooms to a new customer in the sports and leisure industry, where
we expect to generate a small but valuable contribution. We are
actively looking to repeat this type of contract for provision of
Snoozies going forward.
Central overheads are now running at approximately GBP0.1m per
month, capital expenditure has been minimised and the Group
continues to incur appropriate maintenance and replacement
expenditure to keep the existing accommodation in good
condition.
The Group's unaudited net debt at 30 April 2017 was
approximately GBP6.6m, comprising GBP8.5m debt and GBP1.9m of cash
and cash equivalents (31 December 2016: GBP5.5m net debt).
Outlook
Following a comprehensive strategic business review in early
2016 we have now executed the first stage of our strategy and
successfully stabilised the Group's operations. Alongside, and
critical to, this we have also improved our short-term financial
stability through the support of our lender by way of a debt
capital and interest payments holiday. The Group remains in
constructive discussions with its primary lender, concerning
repayment obligations and longer-term capital structure, and they
remain supportive of the Directors' strategy and plans.
From this platform of relative stability, we are now much better
placed to execute the second phase of our strategy - that of
securing longer-term deployment opportunities for our accommodation
to earn target revenues and margins that will over time cover
central overheads
Coming into 2017, our plans were to engage in a limited number
of Events deployments, which we have done, and also to progress
Semi-Permanent V1 room opportunities for first deployment in the
last quarter of 2017, a plan that remains on track.
Over the past few months we have made good commercial progress
with Semi-Permanent sales opportunities that were first qualified
in the second half of 2016. During 2017 we have also made good
progress in qualifying a number of new deployment opportunities
both in the Events and Semi-Permanent markets. The first of these
newly identified and qualified opportunities in the Events market
has already been secured in June 2017 for July 2017 deployment. Our
key focus is to repeat this success by closing out further
qualified sales opportunities in the second half of 2017 and on
into 2018.
I look forward to reporting progress towards securing new
deployments in 2017 and beyond.
Chris Errington
Executive Chairman
29 June 2017
Operating and Financial Review
Operating performance table
The following tables summarise the Group's operating
performance:
Revenue-based performance 2016 2015 Variance
--------------------------- ------ ------ -------------
GBPm GBPm GBPm %
--------------------------- ------ ------ ------ -----
Semi-Permanent 1.4 4.0 (2.6) -65%
--------------------------- ------ ------ ------ -----
Events 1.0 1.8 (0.8) -44%
--------------------------- ------ ------ ------ -----
Total revenue 2.4 5.8 (3.4) -59%
--------------------------- ------ ------ ------ -----
Gross profit 2.0 3.3 (1.3) -39%
--------------------------- ------ ------ ------ -----
Logistics, deployment and
equipment hire (1.3) (3.6) (2.3) -64%
--------------------------- ------ ------ ------ -----
Contribution to central
overheads 0.7 (0.3) 1.0
--------------------------- ------ ------ ------ -----
Earnings-based performance 2016 2015 Variance
----------------------------- ------- ------- --------------
GBPm GBPm GBPm %
----------------------------- ------- ------- ------ ------
Statutory loss before tax
as reported (8.9) (18.9) 10.0 -53%
----------------------------- ------- ------- ------ ------
Adjustment for exceptional
items (note 7 to financial
statements) 4.4 9.9 (5.5) -56%
----------------------------- ------- ------- ------ ------
Adjusted loss before tax (4.5) (9.0) 4.5 -50%
----------------------------- ------- ------- ------ ------
Net interest payable 1.6 1.0 0.6 60%
----------------------------- ------- ------- ------ ------
Depreciation 1.0 1.9 (0.9) -47%
----------------------------- ------- ------- ------ ------
Share-based payments charge (0.1) 0.1 (0.2) -200%
----------------------------- ------- ------- ------ ------
Adjusted EBITDA (2.0) (6.0) 4.0 -67%
----------------------------- ------- ------- ------ ------
Loss after tax as reported (8.9) (18.9) 10.0 -53%
----------------------------- ------- ------- ------ ------
Basic and diluted earnings
per share (pence) (3.03) (8.91) 5.9 -66%
----------------------------- ------- ------- ------ ------
Total revenue decreased as anticipated to GBP2.4m (2015:
GBP5.8m) as the Falklands Semi-Permanent deployment came to an end
and we focussed on a lower number of Event deployments. During the
year, the Group continued to provide its 58 V1 rooms at an
attraction in Cornwall, which operates on a dry hire basis operated
by a third party.
Contribution to central overheads improved significantly as we
began controlling costs better and avoiding uncommercial
deployments, whilst also benefitting from the tail end of the
Semi-Permanent Falklands deployment and ongoing deployment in
Cornwall. Total contribution to central overheads improved by
GBP1.0m, with GBP0.7m profit in the year (2015: GBP0.3m loss).
The Semi-Permanent division returned a contribution to central
overheads of GBP0.8m for the year (2015: GBP1.2m contribution)
which reflects the ongoing profitable nature of such deployments,
impacted by the end of our deployment in the Falklands in the first
half 2016.
The Events division returned a contribution to central overheads
of GBP0.1m loss (2015: GBP1.4m loss), which whilst an improved
performance suffered from an excessive direct cost base and the
turmoil of a group restructuring undertaken at peak deployment
time.
We commenced a reduction in the central overhead cost base in
the first half of 2016 which reduced costs going into the second
half of 2016 but for which the full benefit will only be seen in
2017. As a measure of underlying trading, adjusted EBITDA improved
GBP4.0m to a loss of GBP2.0m in the year (2015: GBP6.0m loss). Cost
reductions were made in all areas of the business, including:
reducing headcount through a structured redundancy programme,
reducing Board numbers and costs and removing or re-negotiating
non-essential expenditure in all areas.
The Group's depreciation charge reduced in line with lower
capital expenditure and the impairment charge in 2015 to a charge
of GBP1.0m (2015: GBP2.0m).
Exceptional costs totalled GBP4.4m for the year (2015: GBP9.9m
exceptional costs), as explained further in note 7 to the financial
statements. The largest exceptional cost in 2016 was a GBP4.1m
non-cash impairment charge (2015: GBP9.6m non-cash impairment
charge) recorded against the carrying value of the Group's tangible
fixed assets, further details of which are provided in note 11 to
the financial statements. The impairment charge for 2016 arose
largely from an experience based reduction in the likely future
cash contribution achievable from the V1 rooms. We now believe that
a certain degree of managed services is likely to be required for
all deployments, reducing the contribution and net cash inflows
available from the V1 stock of rooms (compared with our initial
modelling) which in turn gives rise to an increased impairment on a
value in use basis.
Finance expenses increased as a result of a one-off GBP0.5m
expense associated with the re-measurement of the finance lease
liability as described in note 16.
Cash flows
The Group's net cash outflow from operating activities improved
in the year to GBP3.1m outflow (2015: GBP7.2m outflow) because of
the improved trading performance offset by the negative impact of a
working capital reversal with a net outflow to reduce payables.
The Group's cash outflows from investing activities reduced
significantly as we curtailed the new asset investment programmes,
which featured in 2015, and disposed of surplus equipment. As a
result, there was a small net cash inflow (from disposals) in 2016
compared to the GBP4.4m outflow in 2015.
In January 2016, the Group completed a new equity placing to
raise GBP4.5m net of expenses.
The Group serviced the capital element of its debt with a cash
outflow to finance lease creditors of GBP1.9m in the year (2015:
GBP0.8m). The cash outflow increase includes a payment of GBP1.3m
of restricted cash to repay debt as part of the amendment agreed in
November 2016 as detailed in Note 20.
The Group ended the year with GBP2.4m of cash (2015: GBP2.3m)
and no restricted cash (2015: GBP1.3m).
Funding and net debt
On 2 September 2014, the Group entered a sale and leaseback
arrangement whereby it sold its V1 portable rooms to third party
provider of asset finance and leased them back for a primary term
of 7.5 years, with secondary periods available. The assets under
lease included 578 rooms in the amount of GBP10m, which was drawn
down in full on 24 October 2014.
Net debt at 31 December 2016 was GBP5.5m (2015: GBP5.4m net
debt). Further information concerning the Group's cash and debt
position can be found in notes 16, 20 and 22 to these financial
statements.
Taxation
The Group has incurred significant trading losses in the current
and prior year and as a result, no corporation tax charge has been
made in the current or prior year.
At 31 December 2016, the Group had gross unrecognised tax losses
carried forward for offset against future trading profits of
approximately GBP24m (2015: GBP20m) and gross unrecognised deferred
capital allowances of approximately GBP6m (2015: GBP6m). As a
result, the Group is unlikely to pay corporation tax in the short
to medium term. No deferred tax assets have been recognised because
of the uncertainty over the timing of any likely recovery.
Principal risk and uncertainties
As described in the Chairman's Statement section of this
Strategic Report, the Group earns revenue from the provision of
accommodation to customers.
The Board recognises that there are a number of risk factors
that have the potential to adversely affect the Group's execution
of its strategic plan and, more generally, the Group's operations,
its financial performance or the value of its equities.
The Directors have carried out an assessment of the principal
risks facing the Group, including those that would threaten its
business model, future performance, solvency or liquidity. A
description of those risks and an explanation of how they are being
managed or mitigated is set out below.
Adequacy of funding / liquidity and going concern
Impact on Group Assessment of Mitigation of
change in risk risk
in year
------------------------- ------------------------ --------------------------
As referred to The Group has The Board has
in the Strategic reduced its central begun executing
Report: The Group overheads and against the revised
has historically capital expenditure strategy set
been loss making to a significantly out in 2016 and
with negative lower level than is now at the
cash flows and 2015 and also key stage of
this trend has stabilised operations. finalising negotiations
so far continued During 2016, for deployment
into 2017 albeit negotiations of its V1 accommodation.
on an improved with the primary The Board has
basis; and The lender allowed commenced constructive
Group has a significant for a significant discussions with
debt burden and portion of the the Group's primary
a net debt financial debt to be repaid lender concerning
position. Failure with cash held potential amendments
to improve trading by the Group to the capital
significantly in escrow (and structure of
in the short therefore of the Group.
to medium term no operational Note 2 to the
would raise doubts use to the Group). financial statements
as to the adequacy This reduces provides further
of funding, liquidity the debt outstanding information concerning
and ultimately and future interest adequacy of funding,
the Group's ability payable. liquidity and
to service debt going concern.
and continue
as a going concern.
------------------------- ------------------------ --------------------------
Failure to grow new revenues
Impact on Group Assessment of Mitigation of
change in risk risk
in year
---------------------- -------------------- ---------------------------
Growing new revenues Stabilisation Additional strategic
is critical to of the Group's focus is being
achieving the operations has placed on the
Group's key business improved the markets and accommodation
objectives. A chances of winning assets that the
failure to grow new opportunities Board believes
new revenues for deployment. have the highest
either to the potential to
target levels grow new higher
required or where margin revenues.
they are delayed The cost base
further into and capital expenditure
the future than has been significantly
planned, would reduced, consistent
jeopardise the with delivery
Group's ability of the Group's
to deliver against overall objectives
its business whilst balancing
objectives. the delivery
of a quality
guest experience.
We have identified
a number of partners
to assist with
our operational
activity and
securing new
sales that should
help mitigate
this risk.
---------------------- -------------------- ---------------------------
Failure to control operational risks
Impact on Group Assessment of Mitigation of
change in risk risk
in year
----------------------- -------------------- -----------------------
Operational risks This risk increased In 2016 and on
to be managed during 2015 as into 2017, the
include: project the Group expanded Board has made
risk (controlled its operations. changes to mitigate
delivery of new During 2016 and this risk through
and existing into 2017, the a clear strategic
projects), deployment operational risk focus on business
(and extraction) profile decreased objectives and
risk and customer as controls were improvement in
service risk put in place operations, including
(guest experience). and operations the use of preferred
Failure to control stabilised. contractors.
these risks would
have a negative
impact on the
Group's ability
to deliver against
its business
objectives either
because planned
cash flows would
be reduced or
the potential
to earn revenues
from guests would
be adversely
affected.
----------------------- -------------------- -----------------------
Failure to respond to market risks and competition
Impact on Group Assessment of Mitigation of
change in risk risk
in year
---------------------- ---------------- ---------------------
There is a risk This risk has The Group continues
that the market not changed in to focus on,
for the Group's the year. and invest in,
product declines its key market
or that competition and competitive
increases, reducing differentiators
the ability to of: (1) the ability
win work at all, to rapidly deploy
or at appropriate accommodation
margins. Failure to satisfy customer
to control this requirements
risk will have and (2) provide
an adverse impact accommodation
on the Group's that is at the
ability to deliver upper end of
against its business the quality and
objectives. standard available
from competitors.
---------------------- ---------------- ---------------------
The Strategic Report was approved by the Board of Directors and
was signed on its behalf by:
Chris Errington
Executive Chairman
29 June 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
Note Year ended Year ended
31 Dec 31 Dec
2016 2015
GBP'000 GBP'000
-------------------------------- ----- ----------- -----------
REVENUE 4 2,416 5,821
Cost of sales (401) (2,517)
GROSS PROFIT 2,015 3,304
Logistics, deployment and
equipment hire (1,295) (3,557)
CONTRIBUTION TO CENTRAL
OVERHEADS 4 720 (253)
Administrative expenses (8,064) (17,647)
ADJUSTED EBITDA (2,024) (5,960)
Exceptional items - impairment
and restructuring costs 7 (4,400) (9,910)
Depreciation 11 (1,004) (1,962)
Equity-settled share-based
payment credit / (charge) 84 (68)
-------------------------------- ----- ----------- -----------
LOSS FROM OPERATING ACTIVITIES 5 (7,344) (17,900)
Finance income 8 10 25
Finance expenses 8 (1,581) (1,009)
LOSS BEFORE TAXATION (8,915) (18,884)
Taxation 9 - -
LOSS AND TOTAL COMPREHENSIVE
INCOME FOR THE YEAR (8,915) (18,884)
Loss per share - basic
and diluted (pence) 10 (3.03)p (8.91)p
Gross profit Profit after hotel operation
costs have been deducted from
revenue
Contribution to Profit / (loss) after logistics,
central overheads deployment and equipment hire
have been deducted from gross
profit
Adjusted EBITDA Earnings before interest, tax,
depreciation and amortisation
and before exceptional costs
and equity-settled share-based
payment charges
Consolidated Statement of Financial Position
As at 31 December GROUP
2016
--------------------
Note 2016 2015
GBP'000 GBP'000
--------------------------- ----- --------- ---------
ASSETS
NON-CURRENT ASSETS
Property, plant
and equipment 11 3,477 8,537
Investments 12 - -
--------------------------- ----- --------- ---------
TOTAL NON-CURRENT
ASSETS 3,477 8,537
--------------------------- ----- --------- ---------
CURRENT ASSETS
Trade and other
receivables 14 326 1,527
Restricted cash
and cash equivalents 22 - 1,281
Cash and cash equivalents 22 2,360 2,345
--------------------------- ----- --------- ---------
TOTAL CURRENT ASSETS 2,686 5,153
--------------------------- ----- --------- ---------
TOTAL ASSETS 6,163 13,690
--------------------------- ----- --------- ---------
LIABILITIES
CURRENT LIABILITIES
Trade and other
payables 15 787 2,805
Loans and borrowings 16 368 1,097
--------------------------- ----- --------- ---------
TOTAL CURRENT LIABILITIES 1,155 3,902
--------------------------- ----- --------- ---------
NON-CURRENT LIABILITIES
Provisions 15 80 -
Loans and borrowings 16 7,526 7,911
--------------------------- ----- --------- ---------
TOTAL NON-CURRENT
LIABILITIES 7,606 7,911
--------------------------- ----- --------- ---------
TOTAL LIABILITIES 8,761 11,813
--------------------------- ----- --------- ---------
TOTAL NET (LIABILITIES)
/ ASSETS (2,598) 1,877
--------------------------- ----- --------- ---------
EQUITY
Share capital 17 2,952 2,119
Share premium 40,700 37,009
Other reserve 718 718
Merger reserve - -
Retained earnings (46,968) (37,969)
TOTAL (DEFICIT)
/ EQUITY (2,598) 1,877
--------------------------- ----- --------- ---------
Consolidated Statement of Cash Flows
For the year ended 31 December 2016
GROUP
--------------------
Note 2016 2015
GBP'000 GBP'000
----------------------------------- ----- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES
Loss before taxation for
the year (8,915) (18,884)
Depreciation 1,004 1,962
Fixed asset impairment
charge 7 4,085 9,560
Equity-settled share-based
payment adjustment (84) 68
Net finance expenses 1,570 984
Decrease / (increase) in
inventories - 26
(Increase) in trade and
other receivables 1,210 (151)
(Decrease) / increase in
trade and other payables (2,032) (725)
Increase in provisions 80 -
----------------------------------- ----- --------- ---------
NET CASH OUTFLOW FROM OPERATING
ACTIVITIES (3,082) (7,160)
----------------------------------- ----- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest received 10 25
Payments to acquire property,
plant and equipment (29) (4,387)
Receipts from disposal 31 -
of property, plant and
equipment
----------------------------------- ----- --------- ---------
NET CASH GENERATED FROM
/ (USED IN) INVESTING ACTIVITIES 12 (4,362)
----------------------------------- ----- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Issue of equity shares 4,524 -
net of issue costs net
of issue costs
Interest paid (866) (961)
Repayment of finance lease
creditors (1,854) (804)
----------------------------------- ----- --------- ---------
NET CASH GENERATED FROM
/ (USED IN) FINANCING ACTIVITIES 1,804 (1,765)
----------------------------------- ----- --------- ---------
NET (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,266) (13,287)
Cash and cash equivalents
at beginning of year 3,626 16,913
CASH AND CASH EQUIVALENTS
AT OF YEAR 22 2,360 3,626
----------------------------------- ----- --------- ---------
A cash flow statement has not been prepared for the Company as
the Company does not have a bank account; all cash amounts in
respect of the Company are received or paid by its subsidiary and
recharged via the inter-company account.
The accompanying accounting policies and notes form an integral
part of these financial statements.
Statement of Changes in Equity
For the year ended 31 December 2016
GROUP Called Share Other Retained Total
up share premium reserve earnings equity
capital GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
----------------------- ---------- --------- --------- ---------- ---------
AT 31 DECEMBER
2014 2,119 37,009 718 (19,153) 20,693
Loss and total
comprehensive income
for the year - - - (18,884) (18,884)
Equity-settled
share-based payment
credit - - - 68 68
----------------------- ---------- --------- --------- ---------- ---------
AT 31 DECEMBER
2015 2,119 37,009 718 (37,969) 1,877
Loss and total
comprehensive income
for the year - - - (8,915) (8,915)
Equity-settled
share-based payment
debit - - - (84) (84)
Issue of new equity
shares 833 4,167 - - 5,000
Share issue costs - (476) - - (476)
AT 31 DECEMBER
2016 2,952 40,700 718 (46,968) (2,598)
----------------------- ---------- --------- --------- ---------- ---------
Notes to the preliminary financial information for year ended 31
December 2016
1.General information
Snoozebox Holdings plc is a public limited company incorporated
and domiciled in England and Wales. The Company's ordinary shares
are traded on the Alternative Investment Market (AIM) of the London
Stock Exchange. This preliminary announcement was authorised for
issue by the Board of Directors on 29 June 2017. The basis of
preparation of this preliminary announcement is set out below.
The financial information set out in this preliminary
announcement does not constitute the Company's statutory accounts
for the years ended 31 December 2015 or 2016, but is derived from
those accounts. Statutory accounts for 2015 have been delivered to
the Registrar of Companies and those for 2016 will be delivered
following the Company's Annual General Meeting. The auditors have
reported on those accounts: their reports on the years ended 31
December 2015 and 31 December 2016 were not qualified but did both
draw attention by way of an emphasis of matter to a material
uncertainty related to the Group and Company's ability to continue
as a going concern.
The following emphasis of matter paragraph has been extracted,
unedited, from the Independent Auditors' Report on the financial
statements for the year ended 31 December 2016:
Emphasis of matter - Going concern
In forming our opinion on the financial statements, which is not
modified, we have considered the adequacy of the disclosures made
in note 2 to the financial statements concerning the group and
company's ability to continue as a going concern. The Directors
have prepared forecasts of the group's cash flows which indicate
that the group will be able to operate within the facilities
expected to be available to it. The forecasts assume that the
directors will reach formal agreement with the finance company
which owns the major fixed assets of the group to defer certain
cash flows due under the existing arrangement between the parties.
In addition the forecasts include assumptions on turnover and costs
which may not be achieved, in which case further funding would be
required. The Directors are confident of being able to achieve the
forecasts and reach formal agreement with the finance company,
however there can be no guarantee that these will be met. These
conditions indicate the existence of a material uncertainty which
may cast significant doubt about the group's ability to continue as
a going concern. The financial statements do not include the
adjustments that would result if the group and company was unable
to continue as a going concern.
Neither the audit report for the year ended 31 December 2015 nor
that for the year ended 31 December 2016 contained statements under
s498 (2) or (3) of the Companies Act 2006.
The financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting
Standards (IFRSs) but it does not comply with all of the disclosure
requirements in IFRSs. The accounting policies used in the
preparation of this financial information included in this
preliminary announcement are consistent with those that have been
applied in the Company's audited financial statements for the years
ended 31 December 2016 and 2015.
Certain note numbers referred to in this preliminary
announcement relate to the full audited annual financial
report.
Copies of this announcement can be obtained from the Company's
registered office at 60 Trafalgar Square, London, WC2N 5DS.
The full financial statements which comply with IFRSs and have
been audited will be posted to shareholders before the end of June
2017, are available to members of the public at the registered
office of the Company from that date and will be available shortly
on the Company's website: www.snoozebox.com.
2.Going concern basis
The following going concern basis section has been extracted in
unedited format from note 2 to the financial statements for the
year ended 31 December 2016:
Going concern basis
The Directors are required to report whether the business is a
going concern, with supporting assumptions and qualifications as
necessary.
The Group's business activities, recent trading performance, net
debt position, cash flows and principal risks and uncertainties are
described in the Operating and Financial Review section of the
Strategic Report. In light of these factors the Directors have
performed a detailed review of the Group's ability to continue in
operational existence for the foreseeable future, a period of not
less than twelve months from the date of this report, to determine
whether it is appropriate to continue to adopt the going concern
basis in preparing these financial statements.
Forecasts, assumptions and sensitivities
The Directors have prepared detailed cash flow forecasts for the
five years to 31 December 2021 based on their current expectations
of trading prospects, likely contract wins and cost efficiencies
arising from the new strategic focus described in the Chairman's
Statement section of the Strategic Report. These forecasts take
account of reasonably possible changes in trading performance and
cash flows.
The Directors believe that the critical assumptions inherent in
these cash flow forecasts are:
-- New customers. The primary source of new sales is forecast to
be the Semi-Permanent division and the Directors anticipate
deploying the majority of existing V1 room assets on a
Semi-Permanent basis in a gradual and phased manner commencing in
the second half of 2017 and continuing through to 31 December 2021,
earning revenues and margins sufficient to cover the cash outflows
associated with central overheads and lower levels of capital
expenditure;
-- Debt servicing and levels. The Directors continue to have
constructive discussions with the primary lender concerning the
level of debt and the repayment profile. In the short term and by
concession with rights reserved, the primary lender has
(immediately prior to the date of this report) agreed not to
enforce the quarterly capital and interest payment obligations for
July 2017 through to and including April 2018 (totalling GBP1.7m).
This recent concessionary change is in addition to, and modifies,
the debt amendment of November 2016. In addition, both parties have
commenced discussions concerning the longer-term capital structure
of the Group, which if successfully concluded would result in a
more sustainable long-term capital structure for the Group in its
restructured form; and
-- Central overheads. The Directors have assumed that central
overheads will be contained to approximately GBP0.1m per month,
reducing slightly as existing and committed property operating
leases expire.
The Directors have performed a sensitivity analysis on the
forecast assumptions and determined the forecast is most sensitive
to the assumptions concerning new customers and debt servicing /
level, as follows:
-- Deployment of the existing V1 room assets is planned to
commence in the 4(th) quarter of 2017, initially with 80 rooms
deployed earning revenues from that point with rooms deployed
increasing in a phased manner moving into 2021. The Directors
estimate that, in the absence of other corrective action, the
effect of a delay in the deployment dates, and resulting revenue
flows, for V1 accommodation deployment in the forecast by 3 months
would necessitate access to new funding in early 2018; and
-- The forecasts are fundamentally sensitive to: (1) the
quarterly capital and interest payment holiday impacting July 2017
through to and including April 2018 remaining in place and not
being withdrawn and (2) a successful conclusion of discussions with
the primary lender concerning a suitable longer-term capital
structure. A change to the existing capital structure and debt
servicing obligations, once the four quarter repayment holiday
ends, is required for the Group to continue as a going concern. In
forming their overall going concern conclusion, the Directors have
assumed that the quarterly payment holiday will apply for the
stated four quarters as agreed and that in the longer-term the
parties will agree an appropriate capital structure for the Group
to resolve the existing and significant level of debt and reduce
future obligations to a sustainable level. If the agreement for a
full four quarter payment holiday is reversed at any point (other
than against increased revenue from Semi-Permanent deployment of V1
rooms) then this event would cast significant doubt on the Group's
ability to continue as a going concern.
Other matters considered
The Directors have, amongst other matters, also taken into
account the following in forming their conclusions on the going
concern assumption:
-- Execution of new sales will be the key factor in the
achievement of objectives. The current level of qualified
Semi-Permanent sales opportunities is good;
-- The Group is in constructive discussions with its primary
lender, who remains supportive of the Directors' strategy and
plans. Throughout 2016 the Group paid all of its debt capital and
interest payment obligations (as amended by the November 16 debt
amendment) as they fell due and has continued to do so to the date
of this report;
-- Trading in the new financial year to 30 April 2017 has been
in line with the Board's expectations with overheads reduced to the
GBP0.1m per month target and operations stabilised;
Conclusion
Whilst there is a material uncertainty which may cast
significant doubt about the ability of the Group and Company to
continue as a going concern, the Directors have concluded that
there is a reasonable expectation that the Group and Company have
adequate resources to continue in operational existence for the
foreseeable future, a period of not less than twelve months from
the date of this report, and that it is appropriate to continue to
adopt the going concern basis in preparing these financial
statements.
3.Segment information
For management purposes, the Group is organised into the
following reportable segments: Events and Semi-Permanent. The
Events segment includes all activities providing short-term hotel
accommodation at popular events and festivals. The Semi-Permanent
segment includes all activities in relation to the provision of
long-term managed hotel solutions.
2016 2015
------------------------------------- -------------------------------------
Events Semi-Permanent Total Events Semi-Permanent Total
GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------- --------------- --------- --------- --------------- ---------
REVENUE 1,000 1,416 2,416 1,783 4,038 5,821
Cost of sales (276) (125) (401) (1,182) (1,335) (2,517)
---------------- --------- --------------- --------- --------- --------------- ---------
GROSS PROFIT 724 1,291 2,015 601 2,703 3,304
Logistics,
deployment
and equipment
hire (838) (457) (1,295) (2,037) (1,520) (3,557)
---------------- --------- --------------- --------- --------- --------------- ---------
CONTRIBUTION
TO CENTRAL
OVERHEADS (114) 834 720 (1,436) 1,183 (253)
---------------- --------- --------------- --------- --------- --------------- ---------
In 2016, revenues from a single customer totalled GBP1.2m which
is reported in the Semi-Permanent segment (2015: GBP3.2m from a
single customer reported in the Semi-Permanent segment).
Geographical segments
Revenue and non-current assets by geographical area are as
follows:
Revenue Non-current
assets
-------------------- --------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- --------- ---------
United Kingdom 1,201 2,592 3,477 7,403
Rest of the World -
South Atlantic 1,215 3,229 - 1,134
Total 2,416 5,821 3,477 8,537
--------------------- --------- --------- --------- ---------
For the purposes of the analysis of revenue, geographical
markets are defined as the country or area in which the service is
provided. Non-current assets are allocated based on their location
as at the period end.
4.Exceptional items
GROUP
--------------------
2016 2015
GBP'000 GBP'000
--------------------------------- --------- ---------
Reorganisation costs 350 350
Profit on disposal of tangible (35) -
fixed assets
Tangible fixed asset impairment
charge 4,085 9,560
Exceptional charge 4,400 9,910
--------------------------------- --------- ---------
5.Loss per share
GROUP
--------------
2016 2015
------------------------------------ ------ ------
Loss per share (basic and diluted)
- pence 3.03p 8.91p
------------------------------------ ------ ------
Loss per 2016 2015
share
--------------------------------- ---------------------------------
Loss Weighted Loss Loss Weighted Loss
GBP'000 average per GBP'000 average per
number share number share
of shares of shares
--------------- --------- ------------ -------- --------- ------------ --------
Loss per
share (basic
and diluted) (8,915) 294,032,574 (3.03)p (18,884) 211,840,727 (8.91)p
--------------- --------- ------------ -------- --------- ------------ --------
All share options have been excluded when calculating the
diluted EPS in both 2016 and 2015 as they were anti-dilutive.
6.Property, plant and equipment
GROUP Hotel Hotel IT Equipment Motor Total
Rooms Furniture GBP'000 Vehicles GBP'000
GBP'000 & Equipment GBP'000
GBP'000
-------------------------- --------- ------------- ------------- ---------- ---------
Cost
AT 31 DECEMBER
2014 20,312 1,586 203 245 22,346
Additions 4,156 194 30 8 4,388
AT 31 DECEMBER
2015 24,468 1,780 233 253 26,734
Additions 16 13 - - 29
Disposals - - - (92) (92)
-------------------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2016 24,484 1,793 233 161 26,671
-------------------------- --------- ------------- ------------- ---------- ---------
Accumulated depreciation
AT 31 DECEMBER
2014 5,698 781 90 106 6,675
Charge for the
year 1,606 242 52 62 1,962
Impairment charge 9,068 400 48 44 9,560
-------------------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2015 16,372 1,423 190 212 18,197
Charge for the
year 843 104 17 40 1,004
Impairment charge 3,969 103 13 - 4,085
Disposals - - - (92) (92)
-------------------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2016 21,184 1,630 220 160 23,194
-------------------------- --------- ------------- ------------- ---------- ---------
Net book value
-------------------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2016 3,300 163 13 1 3,477
-------------------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2015 8,096 357 43 41 8,537
-------------------------- --------- ------------- ------------- ---------- ---------
The net book value of assets held under finance leases included
in the table above is as follows:
GROUP Hotel Hotel IT Equipment Motor Total
Rooms Furniture GBP'000 Vehicles GBP'000
GBP'000 & Equipment GBP'000
GBP'000
---------------- --------- ------------- ------------- ---------- ---------
Net book value
---------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2016 2,150 2 - - 2,152
---------------- --------- ------------- ------------- ---------- ---------
AT 31 DECEMBER
2015 5,274 7 - 37 5,318
---------------- --------- ------------- ------------- ---------- ---------
Impairment of property, plant and equipment
The Directors have carried out impairment testing of the
recoverable amount of property, plant and equipment following
indicators of impairment arising from the Group's trading
performance and financial position in 2016. As a result of this
review, an impairment loss of GBP4.09m has been recognised in the
financial statements for 2016 (2015: GBP9.56m).
Carrying value
For the purposes of this impairment testing, the Directors have
identified the property, plant and equipment directly attributable
to each CGU and that generate cash flows for that CGU largely
independent of other assets. These assets primarily comprise the
Hotel class of assets within property, plant and equipment.
Corporate assets are those property, plant and equipment assets
that do not themselves generate independent cash inflows, but
instead act to support the Group's CGUs in general. These corporate
assets comprise the classes of fittings and equipment, IT equipment
and motor vehicles and have been allocated to each CGU weighted by
the relative number of rooms. The allocation of these corporate
assets to CGUs has been performed based on the weighting of room
numbers available within each CGU, which the Directors believe is a
reasonable basis for the purpose of impairment testing.
The following table summarises the carrying amount of the
Group's property, plant and equipment within each CGU, the
allocation of corporate assets, recoverable amount and resulting
impairment charge:
Year ended 31 December Semi-Permanent Events Corporate Total
2016 CGU assets NBV
GBP'000 CGU
GBP'000 GBP'000
GBP'000
------------------------- --------------- --------- ---------- ---------
Carrying value 7,200 70 213 7,483
------------------------- --------------- --------- ---------- ---------
Allocation of corporate
assets to CGUs 213 - (213) -
------------------------- --------------- --------- ---------- ---------
Carrying value 7,413 70 - 7,483
------------------------- --------------- --------- ---------- ---------
Recoverable amount 3,398 - - 3,398
------------------------- --------------- --------- ---------- ---------
Impairment charge (4,015) (70) - (4,085)
------------------------- --------------- --------- ---------- ---------
Year ended 31 December Semi-Permanent Events Corporate Total
2015 CGU assets NBV
GBP'000 CGU
GBP'000 GBP'000
GBP'000
------------------------- --------------- --------- ---------- ---------
Carrying value 15,967 1,197 932 18,096
------------------------- --------------- --------- ---------- ---------
Allocation of corporate
assets to CGUs 695 237 (932) -
------------------------- --------------- --------- ---------- ---------
Carrying value 16,662 1,434 - 18,096
------------------------- --------------- --------- ---------- ---------
Recoverable amount 8,337 199 - 8,536
------------------------- --------------- --------- ---------- ---------
Impairment charge (8,325) (1,235) - (9,560)
------------------------- --------------- --------- ---------- ---------
Working capital balances are excluded from the carrying amounts
of each CGU. Where assets are held under finance leases, the
finance lease liability has been excluded from the carrying amount
and the lease payments excluded from the value in use calculation
used to determine the recoverable amount.
Recoverable amount
The CGU recoverable amount has been established by calculating
its value in use, which is the present value of the future cash
flows expected to be derived from the CGU over future periods. The
period in the case of the Events CGU is 5 years whilst that of the
Semi-Permanent CGU is 10 years. The 10 year life for the
Semi-Permanent CGU has been selected based on the Directors
estimate of the economic life of these particular assets, when
compared to the assets in the Events CGU, arising from their robust
construction. Each future period is discounted back at a discount
rate to take account of the time value of money.
The cash flows used in the value in use calculation are based on
budgets formally approved by the Board for 2017 to 2019 (2015: 2016
- 2018). Future periods after 2019 are expected to largely repeat
2019 performance. The key assumptions relevant to the Group in
establishing the value in use are:
-- Estimated future cash flows. An estimation of the expected
future cash flows and, in particular, the timing and quantum of
cash inflows from customers, deployment cash outflows and capital
expenditure cash outflows, including:
o Only cash inflows from room use (i.e. assuming no additional
income from other sources) and cash outflows necessary to generate
those future cash inflows and can be directly attributed, or
allocated, on a reasonable basis use are considered, including cash
outflows to prepare the asset for use (deployment cash outflows),
to maintain their current condition and to extract assets from use;
and
o Overhead costs relating to the day-to-day servicing of the
assets, as well as future overheads costs, are only included to the
extent they can be attributed directly, or allocated on a
reasonable basis;
-- Discount rate. The discount factor used to establish the
value of future cash flows in the forecast period and the terminal
period. The Group has applied the Weighted Average Cost of Capital
("WACC") model in establishing a suitable discount rate and risk
adjusted the component parts of the WACC to take account of the
Group's specific circumstances, including a normalisation of the
debt to equity ratio, adding a risk premium to the cost of equity
and adjusting to a pre-tax basis; and
-- Growth rates. No growth rates have been applied to the forecast revenues.
A pre-tax discount rate of 19.5% (2015: 19.5%) has been applied
to the Semi-Permanent CGU and 20.3% (2015: 20.3%) to the Events CGU
cash flows.
Sensitivity analysis
The calculation of recoverable amount is most sensitive to the
amount and timing of revenue and discount rate being applied.
The effect of a delay in the deployment dates, and resulting
revenue, for V1 accommodation deployment in the forecast by 3
months is to increase the overall impairment by GBP0.7m. The effect
of a 1% increase in the discount rate applied is to increase the
overall impairment by GBP0.1m.
7.Loans and borrowings
The book value and fair value of loans and borrowings are as
follows:
GROUP COMPANY
-------------------- --------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- --------- --------- ---------
NON-CURRENT
Finance lease liabilities 7,526 7,911 - -
---------------------------- --------- --------- --------- ---------
7,526 7,911 - -
---------------------------- --------- --------- --------- ---------
CURRENT
Finance lease liabilities 368 1,097 - -
368 1,097 - -
---------------------------- --------- --------- --------- ---------
Total loans and borrowings 7,894 9,008 - -
---------------------------- --------- --------- --------- ---------
The finance lease liabilities are disclosed as current and
non-current liabilities based on the finance lease agreements in
place at 31 December 2016. No amendments have been made to these
disclosures following the concessions made by the primary lender as
disclosed in note 2 which had the effect of removing all the
obligations falling due within 12 months of the balance sheet
date.
Borrowings are shown net of unamortised issue costs of
GBP373,000 (2015: GBP443,000) which have been recorded as a
reduction in the proceeds of the loan and are being amortised over
the term of the facility. The amortisation charged to the Income
Statement during the year was GBP70,000 (2015: GBP70,000).
The Group has amended its plans and now anticipates taking up
the lease extension option available in the lease. Accordingly, the
revised cash flows have been remeasured using the original
effective interest rate, leading to an increase in the lease
liability and a corresponding finance expense of GBP527,000.
8.Lease commitments - Obligations under finance leases
Obligations under finance leases
Future minimum lease payments and their present value under
finance lease agreements were as follows:
GROUP 2016 GROUP 2015
----------------------------------- -----------------------------------
Total Future Capital Total Future Capital
finance interest element finance interest element
lease charges of finance lease charges of finance
GBP'000 GBP'000 lease GBP'000 GBP'000 lease
GBP'000 GBP'000
--------------- --------- ---------- ------------ --------- ---------- ------------
Within 1
year 980 612 368 1,959 863 1,096
Between 1
and 5 years 7,710 1,975 5,735 7,676 2,225 5,451
After 5 years 2,042 251 1,791 2,678 217 2,461
10,732 2,838 7,894 12,313 3,305 9,008
--------------- --------- ---------- ------------ --------- ---------- ------------
The finance lease liabilities are disclosed as current and
non-current liabilities based on the finance lease agreements in
place at 31 December 2016. No amendments have been made to these
disclosures following the concessions made by the primary lender as
disclosed in note 2 which had the effect of removing all the
obligations falling due within 12 months of the balance sheet
date.
Obligations under finance leases are stated net of unamortised
arrangement costs of GBP373,000 (2015: GBP443,000).
On 2 September 2014, the Group entered into a sale and leaseback
arrangement whereby it sold its first-generation portable hotel
rooms to a provider of asset finance (the primary lender) and
leased them back for a primary term of 7.5 years with secondary
periods available. The assets under lease include 578 rooms in the
amount of GBP10,000,000, which was drawn down on 24 October 2014.
Snoozebox Limited is the Group's borrowing party.
At initiation, the leaseback arrangement contained the following
key terms:
-- a fixed schedule of cash repayments for the term of the agreement;
-- an embedded finance rate of 9.5% per annum; and
-- an obligation to maintain a cash balance (an escrow balance)
in a bank account managed by the Group charged in favour of the
lender for the term of the lease, with GBP1.3m placed into this
escrow account attracting a nominal credit interest rate at
initiation. This escrow balance has been reported as 'Restricted
cash and cash equivalents'. The balance to be retained in escrow
was to be calculated following the end of a financial year based on
EBITDA performance for that prior year and the prospective EBITDA
performance for the next year. Where EBITDA performance fell below
a minimum multiple of annual rent payments, additional cash was
required to be added to the escrow account, and, where it fell
above the minimum, cash was permitted to be withdrawn from the
escrow account.
In the first half of 2016, the Group initiated discussions with
its primary lender seeking an amendment to its debt servicing
obligations. The following amendments were subsequently agreed with
the primary lender in November 2016:
-- Debt servicing payments for each of the quarters ending
January 2017, April 2017 and July 2017 were reduced to interest
only, resulting in quarterly payments due of GBP0.18m per quarter.
The total payable over these three quarters was reduced to GBP0.54m
compared to GBP1.4m of capital and interest debt servicing payments
that was due for these three quarters prior to the amendment;
-- Subsequent debt servicing quarterly payments commencing
October 2017 would comprise interest and capital resulting in
quarterly payments due of GBP0.5m per quarter, giving a total
interest and capital debt servicing payment of GBP2.0m per annum, a
level consistent with the GBP2.0m due per annum prior to the
amendment. Debt servicing payments remained due in January, April,
July and October each year, with the overall repayment term
unchanged and a final quarterly payment due in April 2022;
-- The escrow balance held by the Group in a 'restricted cash'
bank account, equal to GBP1.3m at the date of the amendment
(GBP1.3m at 31 December 2015), was transferred to the primary
lender and applied against the outstanding capital balance,
reducing the gross outstanding capital balance due under the
finance lease. As set out in note 22, the escrow balance was
reduced to nil as result of this transfer; and
-- The requirement to maintain an escrow balance based on
financial performance and certain other obligations was suspended
pending the outcome of discussions with the primary lender, which
are ongoing at the date of these financial statements.
Further to the November 2016 debt amendment noted above, in the
short term and by concession with rights reserved, the primary
lender has (immediately prior to the date of this report) agreed
not to enforce the quarterly debt capital and interest payment
obligations for July 2017 through to and including April 2018
(totalling GBP1.7m). In addition, both parties have commenced
discussions concerning the longer-term capital structure of the
Group, which if successfully concluded would result in a more
sustainable long-term capital structure for the Group in its
restructure form.
The lease finance is secured on the fixed assets included in the
sale and leaseback arrangement.
9.Notes supporting the cash flow statement
Cash and cash equivalents for the purposes of the cash flow
statement comprise:
GROUP
--------------------
2016 2015
GBP'000 GBP'000
-------------------------------------- --------- ---------
Restricted cash and cash equivalents - 1,281
Cash and cash equivalents 2,360 2,345
2,360 3,626
-------------------------------------- --------- ---------
In November 2016, the Group agreed an amendment to its debt
servicing obligations as set out in note 8 which included the
utilisation of the restricted cash and cash equivalents balance in
settlement of an element of the capital balance outstanding with
the primary lender.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUPGQUPMGWB
(END) Dow Jones Newswires
June 29, 2017 09:15 ET (13:15 GMT)
Snoozebox (LSE:ZZZ)
Gráfico Histórico do Ativo
De Out 2024 até Nov 2024
Snoozebox (LSE:ZZZ)
Gráfico Histórico do Ativo
De Nov 2023 até Nov 2024
