Key Numbers

Revenue down 59% to £2.7m and loss before taxes of £5.6m. Cash of £16.9m.

Analysis

Snoozebox Holdings was one of the more interesting IPOs to hit the market during this upturn. As with most "interesting" IPOs though, Snoozebox has sunk under the weight of its own ambition. Fixed costs were too high, cash was too low, and management wasn't up to the task. The stock is off 80% from the issue price.

2013 was the year of the implosion and it looks like 2014 has been the recovery year. New management look to have settled in and have formulated a plan to turn things around. The company naturally took quite a large loss but the cost base has come way down, although admin costs are still far too high. In combination with the issuance of equity and a lease facility, this has given the business enough financial room to try and turnaround.

Now there is quite a lot to work with here but the core piece of here is the redesign of the "Snoozebox model". Units are being built that utilize a new design offer faster deployment and reconfiguration of the insides. Old units are being deployed on "semi-permanent" contracts.

Being able to deploy quickly is really a very significant advantage. Management state that the old model was locked up for three weeks for a one weekend event whilst the new design can do one event per week. The maths of this is compelling.

Imagine we have a 100 unit fleet working two nights a week. Under the old model we only have 3,466 room nights/year but under the new model we have 10,400, a 200% increase. These rooms. 150 of them, will come through in the second half of this calendar year.

The "semi-permanent" development seems to recognise that the old format just isn't financially viable in the events market and management plan to redeploy all of this old stock into "semi-permanent" use at much lower levels of profit. I am not sure how many months were contributed (Premier Oil was announced in November 2014) but we can use numbers released in the pre-close statement to reverse out the price for semi-permanent room nights: £80 average against £147 for events, down 45%.

If the company can get full occupancy through the week for these units than this may actually not be a total disaster. We earn £80 across 7 days rather than £147 across 2 days.…

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