Interim Results

Snoozebox Holdings plc

("Snoozebox" or "the Company")

Interim results for the six months ended 30 June 2012

Snoozebox, the UK leader in portable hotel accommodation, is pleased to announce its maiden interim results for the six months ended 30 June 2012.

Financial highlights

·; Successful IPO in May 2012 raising gross proceeds of £12.0m

·; Turnover for the reporting period of £1,867,000 (reflecting trading at 280 rooms for two months from May; versus the full inventory of 520 rooms available since July for the entire second half)

·; Gross profit £197,000

·; Net cash at the period end of £982,000

·; Management confident of meeting market expectations

Operational highlights

·; Successful operational roll out has proven the resilience of our product and our systems

·; 520 rooms currently in operation

·; Successful installations at four separate events in period starting with the Queen's Diamond Jubilee Pageant

·; Snoozebox supported the Olympics with a deployment of 320 rooms for the duration of the Olympics and Paralympics in July and August

·; Building a pipeline of long term contracts with major corporates to enhance earnings visibility and maintain year round occupancy levels

·; Bookings for one off "super-events" continue with several new events including World Police and Fire games (Belfast) and European City of Culture (Londonderry)

·; Year round installations at Silverstone and O2 Arena

·; Product enhancement continues with Management developing innovative configurations to build on the Snoozebox offer

·; Snoozebox has been rebooked for 2013 for all recurring events attended to date in 2012, generally for greater capacity

Robert Breare, Chief Executive of Snoozebox, commented:

"We are delighted to report the Company's progress to date which is testament to the flourishing demand for our innovative portable accommodation product. The Snoozebox product has broad appeal across a number of markets and the Company is well positioned to take advantage of the multiple and varied opportunities open to it.

"2012 trading remains in line with expectations and we have an encouraging pipeline of new corporate clients and a wide-ranging programme of forthcoming events both in the UK and internationally. We look forward to our next update to the market, which will be our first full reporting period and the first in which our complete fleet has been deployed."

26 September 2012

Enquiries:

Website: www.snoozebox.com 

Chief Executive's Report

I am pleased to report strong progress in the five months since the Company's flotation on AIM on 1 May this year. Snoozebox Holdings Plc ("Snoozebox") was set up to be the flotation vehicle for Snoozebox Ltd and the results set out in the interim statement are therefore the results of the combined businesses.

Given the relatively new nature of the business, any comparison to historical results is largely meaningless. As against the same period last year, Snoozebox was only incorporated in March 2011 and began trading after 30 June 2011. In the nine month period to 31 December 2011, the Company traded only a prototype 40 room hotel at Silverstone for certain events starting at the Formula 1 British Grand Prix in July, and it was not until the end of April 2012 that material operations began.

Operational Review

The results for the period were in line with expectations, with un-forecasted fees resulting from the Company's orchestration of the Olympic security village at Hainault, the agreement for which was signed on 7 June 2012, being mainly offset by the increased cost of some installations resulting from the extreme weather conditions.

The successful flotation on AIM on 1 May 2012 enabled the Company to extend its manufacture to a further 360 rooms, taking total inventory to 400 rooms at IPO. Of this total, pre-IPO finance had enabled 280 rooms to be available for the Queen's Diamond Jubilee Pageant and installation began during the last week of April in time for the opening of the Pageant on 1 May 2012.

As previously announced, the Company entered into a contract with G4S and JR Pickstock Ltd (the manufacturer of Snoozebox units) for the provision of an Olympic security village at Hainault in Essex under which Snoozebox was required to provide a minimum of 320 rooms to be operational by 14 July 2012. To meet this, and other obligations already entered into, it was necessary to manufacture an additional 120 rooms, bringing the current inventory to 520 rooms. As market demand indicated that the Company could maintain a high deployment of the full 520 room inventory going forward, the order was given to JR Pickstock Ltd in return for an agreement on extended credit.

Higher than normal cost of sales had always been forecasted in the early events and this was exacerbated by the worst weather recorded in a century. Persistent heavy rain made ground conditions at some installations considerably worse than previously experienced by most of our contractors. However, while this increased cost in the short term, valuable lessons were learned which should minimise the impact of such extraordinary conditions, should they ever re-occur in future.

Despite the intensity of the events programme and the prevailing weather conditions, all installations were completed on time and the units performed well throughout.

We are confident that we are now achieving the margins inherent in the Company's business model whilst having enhanced its resistance to extreme weather conditions.

Review of Activities

Our principal objective in 2012 has been to establish a trading platform of events and contracts which will deliver market expectations for 2013 and drive increasing performance year on year thereafter.

We expect 2012 to be in line with expectations based upon certain of the contracts outlined below remaining on schedule and believe that we are already in a good position to achieve our targets for 2013 and beyond.

We are particularly pleased with the emergence of medium to long term contracts with major corporate entities in addition to a strong events programme and we are targeting high levels of winter usage from these contracts. Currently we anticipate having to restrict our ability to satisfy demand coming from the events sector in 2013 in order to fulfill our strategy to satisfy certain corporate contracts.

Super Events

Both the Queen's Diamond Jubilee Pageant in May and the Olympic security village at Hainault in Essex between July and mid September were successful. This was particularly pleasing as both events put our equipment and systems under relatively full loadings with a very satisfactory result generally.

While clearly these 'super events' were 'one-off', we are in discussions for similar sized operations at super events going forward. We have agreed with the relevant authorities to provide a 300 room unit at the World Police and Fire Games in Belfast in July/August 2013 of which 200 rooms are planned to move on to Londonderry as the City of Culture (UK) 2013 for a number of weeks and we are in discussions about similar sized units at the Commonwealth Games in Glasgow, the FIFA World Cup in Brazil and other world sporting events in 2014.

Events

The bulk of consumer bookings for events accommodation take place between four and nine months in advance and clearly the Company was not in a position to take bookings that far ahead of the 2012 programme.

Nevertheless we took an 80 room hotel to the Isle of Man TT achieving 82% occupancy during race week, having only opened the books at the beginning of May. Having started taking bookings for the same event in 2013 three weeks ago in early September, we have already achieved bookings representing full occupancy for 140 rooms for race week and high occupancy for practice week beforehand with nearly nine months to go.

The small installation of 40 rooms at the Download festival in June this year was successful and our client, Live Nation, has re-booked for 2013 doubling the number of rooms to be supplied.

At Silverstone, having launched the 40 room prototype Snoozebox at the F1 British Grand Prix in 2011, the 240 room hotel installed for 2012 was an early sell-out with initial demand for 2013 already indicating a strong increase over 2012. We are also pleased to announce that, subject to the negotiation of some conditions, Snoozebox has received planning approval for a year round 80 room installation in the centre of the circuit and it will continue to utilise the 28 day rule (planning permission exemption) to service the big events such as the Moto GP, the F1 British GP and the Silverstone Classic with larger installations.

Following a successful 140 room business to business operation at Goodwood for the Festival of Speed in June, our client, Goodwood have re-booked for 2013. We took an 80 room unit to the Revival event ten days ago. Despite the extremely short sales lead time we filled an 80 room unit and have received sufficient interest to fill a 140 room unit for September 2013.

Just before the start of the Edinburgh Festival and Royal Tattoo in August 2012, Snoozebox reached agreement with the owners of a city centre site awaiting re-development. We decided to trial a 48 room hotel and despite the small size and very short marketing lead time. We achieved 90% occupancies over the main Festival period. Subsequently we have been granted planning permission for 120 rooms for up to 70 trading days per year.

Longer Term Corporate Events

We have reached agreement with AEG for the provision of a unit inside the O2 Arena on a year round basis. We believe that demand coming from the impressive annual events programme achieved by AEG will be high and installation will begin as soon as the usual regulatory issues have been resolved. This is currently planned for mid November 2012. The size of the initial unit will be between 80 and 120 rooms, which can be expanded in line with demand.

We have reached agreement with Stoneleigh Park, Warwickshire for the provision of 80 rooms to increase their capacity to service corporate conferencing and events demand between October 2012 and March 2013. Installation is expected over the next few days and provided that our reasonable expectations are met, we anticipate that this contract will be renewable annually. We intend that this contract will be the first of a number whereby Snoozebox can satisfy the seasonal capacity shortfalls of conventional hotel and conference operations.

Agreement has been reached in principle with a US entity for the provision of 240 rooms for an events tour starting with the US Formula 1 Grand Prix in Austin, Texas in mid November 2012 and finishing with the Superbowl contest in February 2013. We are working 'round the clock' to identify and be able to satisfy any additional US regulatory requirements and make the necessary shipping arrangements to ensure that the units arrive in Austin on time and with the necessary operating licenses.

We are in advanced discussions with Merlin Entertainments Group for the provision of a Snoozebox unit at Thorpe Park starting at 60 rooms between April and July 2013, increasing to 120 rooms from July to October 2013. This contract will involve the production of a three bedroom per container product alteration with each room able to accommodate a family of four. We believe that there is a strong market for a family product of this kind and we plan to use the template to provide a VIP product for corporate events. Merlin is the second biggest operator of amusement parks and attractions in the world and we anticipate that the Thorpe Park model could roll out across a number of their sites.

Contrax and International

Good progress is being made in respect of both these initiatives and the work done so far should bear fruit in 2013.

In Western Europe, our energies are currently focused on advancing discussions with the Motorsport Industry as an initial platform for growth and we expect to operate in this area in 2013.

Outside Western Europe, we will only operate at this stage via a form of license, franchise or joint venture and there are promising discussions in progress.

Financial Review

Turnover for the period was £1,867,000 and Gross Profit was £197,000. As mentioned above, these results were generated from just over two months trading. Administrative expenses (excluding share issue costs) for the six month period were £1,266,000. Loss before taxation was £1,671,000 resulting in a loss per share of 6.18p.

Risks and Uncertainties

While clearly the Company has made strong progress over a short space of time, it is still at an early stage. While performance remains in line with expectations, the remainder of the year will depend, as always, on the Company's activities being implemented as planned. This is particularly in respect of any additional regulatory requirements for the O2 Arena as the Snoozebox unit will be inside the building and the US Formula 1 GP at Austin, Texas.

Subsequent to the period end, the Company has obtained interim financing through the issue of an unsecured loan note of £1.25m, redeemable on or before 18 January 2013 at an interest rate of 12%. The Group also has an agreement with the manufacturer of the bedroom units in regard to extended terms for an amount of up to £2 million and the extension of the loan note until 30 September 2013. The Group is currently in discussions to secure longer term financing to cover this and further expansion.

Outlook

Despite the obvious general risks and uncertainties arising from the general economic environment, the Board believes that the Snoozebox product has broad appeal across a number of markets and that the Company is well positioned to take advantage of the strength of its product and the firm progress it has established so far.

Robert Breare

Chief Executive

26 September 2012

Condensed consolidated statement of comprehensive income 

for the period to 30 June 2012

Condensed consolidated balance sheet

Condensed consolidated statement of changes in equity

Prior to 4th July 2011 the issued share capital of the entity was £2.

Condensed consolidated cash flow statement

Notes to the condensed consolidated financial statements

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 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. Copies of this Interim Report may be obtained from the above address or on the Investor Relations section of the Company's website at www.snoozebox.com.

2. Accounting Policies

(a) Statement of Compliance

The condensed financial statements have been prepared using accounting policies consistent with those applied in the Subsidiary Company's latest audited financial statements.

The financial information for the period ended 31 December 2011 does not constitute the full statutory accounts for that period. The Annual Financial Statements for 2011 for the subsidiary have been filed with the Registrar of Companies. The Independent Auditors' Report on the Financial Statements for 2011 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 499(3) of the Companies Act 2006. All comparative figures represent the trading of the subsidiary only as Snoozebox Holdings plc was not incorporated until 30th March 2012.

(b) Basis of preparation

In accordance with AIM guidance, this Interim Report has been prepared for the six months ended 30 June 2012, with comparative information for the periods ended 31 December 2011 and 30 June 2011 for the statements of comprehensive income, changes in equity and cash flows. The report, which has not been audited by the Company's auditors, incorporates the results of the Company and its subsidiary.

The condensed financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.

The condensed consolidated 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 forseeable future. The Group is dependent for its working capital requirements on cash generated from operations, cash holdings, bank and other loan facilities. The cash holdings of the Group at 30th June 2012 were £982,000.

Subsequent to the period end, the Group has obtained interim financing through the issue of an unsecured loan note of £1.25m, redeemable on or before 18 January 2013. The Group has also reached agreement with the manufacturer of the bedroom units in regard to extended terms for £2 million of trade credit and the extension of the above loan note until 30 September 2013. The Group is currently in discussions to secure longer term financing to replace the existing unsecured loan note.

The Directors have prepared cash flow projections for the period to December 2013 ("the Projections") which are based on certain assumptions. These show that the Group is capable of operating within the financing arrangements referred to above and of meeting its liabilities as they fall due for a period of not less than 12 months from the date of these condensed financial statements.

The Directors have therefore continued to adopt the going concern basis in preparing these financial statements. The financial statements do not include any adjustments that would result if the going concern basis were not appropriate.

(c) 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 parent company did not actively trade at the time.

The merger of the two companies took place on 17 April 2012. Under merger accounting the shares issued were recorded in the Company's 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.

Both the Companies Act 2006 and applicable International Accounting Standards require that the results of the subsidiary undertaking should be included for the full period of the company's financial period.

(d) Revenue

Revenue represents sales (excluding VAT) of goods and services provided in the normal course of business and recognised when the services have been rendered. Sales represent the provision of portable hotel services.

(e) 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. They arise principally through the provision of portable hotel services. 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 receivables 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.

Bank overdrafts are shown within loans and borrowings in current liabilities on the balance sheet.

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

(f) 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.

(g) Leased assets

Where substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Company (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 income statement 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 income statement 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 purposes of lease classification.

(h) Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount 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 the 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 Company 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.

(i) Dividends

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

(j) Trade Marks

Trade marks which have been acquired are stated at their estimated fair value on acquisition less any accumulated amortisation. Trade marks are amortised over an Trade marks which have been acquired are stated at their estimated fair value on acquisition less any accumulated amortisation. Trade marks are amortised over an written-off as incurred.

(k) Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes 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 and fittings - 7% to 20% per annum straight line

Office equipment - 25% per annum straight line

3. 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 amounts of assets and liabilities within the next year are discussed in more detail below.

(a) Accruals

In order to provide for all valid liabilities which exist at the balance sheet date, the finance team is required to estimate and accrue for certain costs or expenses which have not been invoiced and therefore the amount of which cannot be known with certainty. Such accruals are based on management's best judgement and past experience.

(b) Useful lives of property, plant and equipment

Property, plant and equipment are depreciated over their estimated 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(l) - can result in significant variations in the carrying value and amounts charged to the statement of comprehensive income as depreciation in a particular period.

(c) Share-based payment

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 instruments at the date of grant, excluding the impact of any non-market vesting conditions. The Company has also issued a warrant instrument entitling the holder to acquire shares. The fair value of the share options and the warrants is estimated by using the Black Scholes model on the date of grant based on certain assumptions. These include among others the dividend growth rate, expected volatility, expected life of the options/warrant and the number of each expected to vest.

Notes to the condensed consolidated financial statements

Notes to the condensed consolidated financial statements 

6. Property, plant and equipment

7. Capital commitments

8. 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 this merger is detailed in note 2(c) above.

9. Event after the balance sheet date

On 14 September 2012 the Company issued a Loan Note for £1,250,000 repayable on 18 January 2013. Interest at 12% per annum is payable at the end of the term.