Innobox Plc (the "Company")
Preliminary results announcement for the year ended 30 April 2006
31 October 2006
Chairman's Statement
I report the Group's results for the year ended 30 April 2006. The trading loss
for the year, before impairment and amounts written off investments, was �
648,285 (2005: �493,736). We have made impairment provisions of �500,000 (2005:
�120,000) against the carrying values of the fixed assets in each of our
subsidiaries, and also provided against amounts due from minority shareholders
of �208,833. This has resulted in the loss for the year after taxation and
minority interests of �1,214,757 (2005: loss of �909,940), which represents a
weighted average loss per share of 5.04p (2005: loss per share of 7.11p).
During the year the Company operated three trading pub & hotel sites: The Moss
Cottage in Ripley, Derbyshire; The Three Tuns in Pettistree, near Ipswich; and
The Royal Oak in Leominster, Herefordshire. In addition it owns a development
site at Fishmore Hall, Ludlow. The Company has continued to experience
extremely tough trading conditions during the year with similar volumes to the
previous year, having still not seen a recovery to anticipated levels, despite
the Group having seen a slight increase in Gross Profit percentages from 20.21%
to 21.37%. Whilst the Group has made every effort to retain customers on a
basis going forward, there is a potential risk that there may not be a repeat
trade of customers.
As I announced in my Chairman's statement last year the board had previously
made a decision to attempt to dispose of the sites at The Moss Cottage and The
Three Tuns.
Whilst an offer was received for the Moss Cottage, the board decided that this
was not an acceptable figure and the decision to retain the site was made.
Following a recent change in management in the current year this site has now
managed to increase its volumes, and whilst it will still trade at a loss for
2006/07 the site is nevertheless recovering.
The Board were also disappointed that there were no acceptable offers received
for The Three Tuns, and the decision was made to convert this site from that of
a managed house to that of a tenancy. I am pleased to confirm that as
previously announced to the market on 25 August 2006, a three year tenancy
agreement was entered into with private tenants. This tenancy agreement will
provide for an annual rental income of �34,800. The board have now agreed a
capital repayment holiday in respect of the mortgage for this site, and whilst
the rental income will not generate a profit during the course of the tenancy
due to the high ongoing depreciation charges, it means that the interest only
mortgage can be serviced and the site is effectively being held on a cash
neutral basis. In addition it enables us to retain the site until the capital
value has recovered.
In order to try and improve trading volumes at The Royal Oak, the board has
continued its ongoing refurbishment program of the function rooms, bar and
restaurant, and a number of the bedrooms at the site. The Board is hopeful that
this refurbishment strategy will improve the trading volumes at the site in due
course, although it is anticipated that this site will continue to trade at a
loss for 2006/07.
The planned refurbishment of the freehold investment at Fishmore Hall, Ludlow
did not manage to commence as had been hoped. The project has had a number of
problems on site firstly with the announcement by the local council that the
adjacent land was being considered for a gypsy and traveller accommodation
site, and also an attempt, by the council, to list the building. The council
has now confirmed that this adjacent short listed site is no longer being
considered for a gypsy and traveller accommodation site and we have managed to
secure an exemption from the attempt to give the building listed status, but
this has meant that there was a long delay in the planned refurbishment. In
addition the introduction of far more stringent fire regulations this Autumn
has added a significant cost to the refurbishment program. Due to all these
problems and delays, our joint venture partners, who were due to manage the
site, recently advised us that they no longer wished to proceed and as a result
a decision has been taken to dispose of this property.
It is clear that the licensed trade sector has been seeing some hard times and,
whilst there is improvement, the Directors do not envisage the company will
return to profitability until the 2007/08 financial year.
During the year the Directors made the decision that the entire holding of
3,250,002 shares held in Aerobox Plc should be disposed of. This investment was
sold in five disposal tranches between July and November 2005 with the
disposals generating proceeds, after costs, of �252,133. The overall loss on
the disposal of this investment amounted to �16,929. The board consider this to
be the correct decision especially having seen that the U.S. operating
subsidiary of Aerobox filed for bankruptcy in September 2006.
The Board has reviewed the need for the Company to be able to raise finance and
the decision to reorganise the share capital was circulated to shareholders
with the proposal document on 11 September 2006. This reorganisation of the
share capital was passed at the EGM held on 9 October 2006 and the Directors
will be seeking to issue further shares to provide funds for the continuity of
the Company until the trading conditions improve.
Finally, I would like to take this opportunity to thank my colleagues and our
employees for their hard work during this year and under continued difficult
trading conditions.
A S Baker
Non-executive Chairman
31 October 2006
Consolidated Profit and Loss Account for the year ended 30 April 2006
Note Year ended Year ended
30 April 30 April
2006 2005
� �
Turnover 939,936 804,859
Cost of sales (739,035) (642,209)
----------- -----------
Gross profit 200,901 162,650
Administrative expenses - continuing (697,748) (546,305)
Administrative expenses - exceptional (500,000) (120,000)
----------- -----------
Total administrative expenses (1,197,748) (666,305)
----------- -----------
Operating loss (996,847) (503,655)
(Loss)/profit on sale of investments (16,929) (6,562)
Amounts written off investments - (379,600)
----------- -----------
Loss before interest and taxation (1,013,776) (889,817)
Interest receivable 4,079 3,420
Interest payable (138,588) (106,939)
----------- -----------
Loss on ordinary activities before (1,148,285) (993,336)
taxation
Taxation - -
----------- -----------
Loss for the year (1,148,472) (993,336)
Equity minority interests (66,472) 83,396
----------- -----------
Retained loss for the year (1,214,757) (909,940)
----------- -----------
Basic loss per share (pence) 4 (5.04)p (7.11)p
----------- -----------
The Group has no recognised gains or losses other than the (loss)/profit for
the year.
Consolidated Balance Sheet as at 30 April 2006
Note As at As at
30 April 30 April
2006 2005
� �
Fixed assets
Intangible fixed assets - 190,417
Tangible fixed assets 2,005,858 2,669,464
Fixed asset investments - 270,400
----------- -----------
2,005,858 3,130,281
Current assets
Stocks 23,378 25,197
Debtors 85,687 583,626
Investments 627,260 -
Cash at bank and in hand 31,317 3,586
----------- -----------
767,642 612,409
----------- -----------
Creditors:
Amounts falling due within one year (1,875,936) (1,512,311)
----------- -----------
Net current liabilities (1,108,294) (899,902)
----------- -----------
Total assets less current liabilities 897,564 2,230,379
Creditors:
Amounts falling due after more than (831,170) (1,330,890)
one year
----------- -----------
Net assets 66,394 899,489
----------- -----------
Capital and reserves
Called up share capital 730,000 430,000
Share premium 1,062,364 1,070,364
Profit and loss account (1,725,970) (511,213)
----------- -----------
Shareholders' funds 5 66,394 989,151
Minority interest - (89,662)
----------- -----------
Total capital employed 66,394 899,489
----------- ------------
Consolidated Cash Flow Statement for the year ended 30 April 2006
Note Year Year
ended ended
30 April 30 April
2006 2005
� �
Net cash inflow/(outflow) from 6 212,542 (302,022)
operating activities
Return on investments and servicing
of finance
Interest received 4,079 3,420
Interest paid (134,987) (104,289)
Interest element of finance lease (3,601) (2,650)
rentals
----------- -----------
(134,509) (103,519)
Acquisitions and disposals
Payments to acquire businesses - (1,368,790)
Capital expenditure and financial
investment
Payments to acquire fixed assets (394,987) (954,080)
Proceeds from disposal of investments 253,471 43,438
----------- -----------
Net cash outflow from capital (139,715) (910,642)
expenditure and financial investment
----------- -----------
Net cash outflow before financing (61,682) (2,684,973)
Financing
Issue of ordinary shares for cash 292,000 486,360
Bank loan - 1,766,350
Issue of minority interest shares for 1,000 4,754
cash
Repurchase of minority shares for (2,255) -
cash
Part disposal of minority interests 24,445 -
Capital element of bank loan (271,563) -
repayments
Capital element of finance lease (9,183) (4,692)
rentals
----------- -----------
Decrease in cash 7 (29,039) (432,201)
----------- ------------
Notes to the Preliminary Results for the year ended 30 April 2006
1 Accounting policies
Basis of accounting
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost convention.
At 30 April 2006 the Group's balance sheet reflects a net current
liability position. The Group meets its day to day working capital
requirements through overdraft facilities which are repayable on demand.
The Directors have prepared cash flow forecasts for the period following
the year end to 31 October 2007. The cash flow forecast anticipates the
sale of Fishmore Hall. The nature of the Group's business is such that
there can be significant unpredictable variances in cash flows. However
the Directors have decided there is a necessity of raising finance by way
of a public offering in order to meet any shortfall in the Group cash
position that may occur until such time that a return to profitability is
met. The success of the public offering and the timing of the sale of
Fishmore Hall are subject to significant uncertainty. Should either prove
to be unsuccessful there will be significant doubt as to the ability of
the Group to continue as a going concern which may result in the Group
being unable to realise its assets and discharge its liabilities in the
normal course of business.
On the basis of the cash flow information, the success of a public
offering and the sale of the Fishmore Hall during the period to 31 October
2007 the Directors have formed a judgement that it is appropriate to
prepare the financial statements on the going concern basis.
2 Publication of non-statutory accounts
The financial information set out in this preliminary announcement does
not constitute statutory accounts as defined in Section 240 of the
Companies Act 1985. The summarised consolidated balance sheet at 30 April
2006 and the summarised consolidated profit and loss account, summarised
consolidated cashflow statement and associated notes for the year then
ended have been extracted from the Group's 2006 statutory financial
statements upon which the auditors opinion is unqualified and does not
contain any statement under section 237 of the Companies Act 1985.
3 Dividends
No dividend is proposed for the year ended 30 April 2006.
4 Loss per share
The calculation of the basic loss per share is based on the loss on
ordinary activities after tax and minority interests and on the weighted
average number of shares in issue during the period. The impact of share
options is anti dilutive. The loss and weighted average number of shares
used in the calculations are set out below:
Loss Weighted Loss per
average share
� number of
shares (pence)
Basic loss per share:
Year ended 30 April 2006 (1,214,757) 24,089,041 (5.04)
Year ended 30 April 2005 (909,940) 12,795,890 (7.11)
------------ ------------ ------------
5 Reconciliation of movements in equity
shareholders' funds
Year Year
ended ended
30 April 30 April
2006 2005
� �
Loss for the year (1,214,757) (909,940)
Share subscription 300,000 504,000
Share subscription costs (8,000) (17,640)
------------ ------------
Net reduction in shareholders' funds (922,757) (423,580)
Shareholders' funds brought forward 989,151 1,412,731
------------ ------------
Shareholders' funds at the end of the 66,394 989,151
period
------------ ------------
6 Reconciliation of operating loss with
net cash flow from operating
activities
Year Year
ended ended
30 April 30 April
2006 2005
� �
Operating loss (996,847) (503,655)
Depreciation, amortisation and 621,750 210,549
impairment
Decrease/(increase) in stocks 1,819 (17,012)
Decrease/(increase) in debtors 497,939 (480,675)
Increase in creditors 87,881 488,771
------------ ------------
Net cash outflow from operating 212,542 (302,022)
activities
------------ ------------
7 Reconciliation of net cash flow to
movement in net funds
Year Year
ended ended
30 April 30 April
2006 2005
� �
Decrease in cash for the year (29,039) (432,201)
Repayment/(new) bank loans during the 271,563 (1,766,350)
year
New finance leases and hire purchase (1,801) (28,768)
contracts
Repayment of finance lease and hire 9,183 4,692
purchase liabilities
------------ ------------
Movement in net borrowings for the 251,707 (2,222,627)
year (note 8)
Net borrowings at the beginning of the (2,294,263) (71,636)
year
------------ ------------
Net borrowings at the end of the year (2,042,556) (2,294,263)
------------ ------------
8 Analysis of changes in
net funds
As at Cash Flow Other As at
Changes
1 May � 30 April
�
2005 2006
(audited) (audited)
� �
Cash at bank and in hand 3,586 27,731 - 31,317
Bank overdraft (132,348) (56,770) - (189,118)
------------
(29,039)
Bank loans (2,043,425) 271,563 - (1,771,862)
Loan notes (98,000) - - (98,000)
Finance leases and hire (24,076) 9,183 (1,801) (14,893)
purchase contracts
------------ ------------ ------------ ------------
(2,294,263) 251,707 (1,801) (2,042,556)
------------ ------------ ------------ ------------
9 Availability of Annual Report
The Annual Report will be posted to shareholders shortly and copies will
be available from the registered office of the Company, Meriden House, 6
Great Cornbow, Halesowen, West Midlands B63 3AB. The Annual Report is also
available from today as a download from the Company's website at
www.innobox.co.uk.
10 Annual General Meeting
The Annual General Meeting of the Company will be held at Meriden House, 6
Great Cornbow, Halesowen, West Midlands, B63 3AB at 9.00am on Monday 15th
January 2007
Enquiries:
Russell Stevens 07860 562621
Chief Executive, Innobox Plc russell@innobox.co.uk
Tim Feather 0113 246 2611
Hanson Westhouse LLP tim.feather@hansonwesthouse.com
END
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