 Poster: A snowHead
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Maybe of interest to anyone contemplating opening an indoor snow slope...
http://www.thebusinessdesk.com/northwest/news/49358-chill-factore-backers-put-in-1.9m-to-halt-downward-slide.html?news_section=4150
THE OWNERS of the £30m Chill Factore ski slope attraction are having to inject £1.9m of new equity into the Trafford-based business in order to complete a refinancing. Bridges Community Ventures, the London-based equity fund run by Sir Ronald Cohen and Worcester-based property developer Pemberstone will put in the cash by the end of the month, according to its chief executive Stephen Evans.
Chill Factore's parent company has been in breach of its banking covenants for more than six months and newly-filed accounts show that its net debts have increased to almost £34m. Mr Evans told TheBusinessDesk.com that the funding would be used to settle a couple of title claims outstanding since the resort's construction as well as providing ongoing working capital.
Accounts have just been filed for the year to October 31, 2009 which showed a marginal growth in sales to £7.5m (2008: £7.4m) but continuing pre-tax losses of £1.1m. Its net debt increased by £1.2m to £33.9m and its liabilities outweighed its assets by more than £14m.
Mr Evans, who joined Chill Factore in 2008, said that Chill Factore's parent company still enjoyed the support of its bank, RBS - to whom it owes more than £25m.
"The bank are very supportive and are very comfortable with the way the business is performing," he said.
Indeed, he argued that in the 22 months since he he has taken charge he has put in measures that have significantly improved Chill Factore's profitability, such as taking its phone booking system back in-house, offering incentives to potential tenants to reduce the number of empty units and introducing initiatives to boost visitor numbers. As a result, he said that earnings before interest, tax, depreciation and amortisation have climbed from £800,000 when he took over to their current level of around £2.8m. "There are lots of small things that have contributed to our improved profitability," he said.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Bode Swiller, thanks for posting that
It is a shame that the finances at chill factore are in such a mess as it is an excellent slope. However I think that there has been a big change in the companies attitude to its customers in the last 18 months and I know that they have been focusing on improving the overall experience to drive up the levels of repeat visitors which has historically been very low.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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which all suggests that an in-door ski slope is not financially viable ..... without considerable commercial/property revenue assistance
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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I don't pretend to know about the details of the finances but I wonder if there is a pricing strategy issue. When visitor numbers are lower than ideal it's tempting to raise charges - but if the charges deter the visitors that doesn't help. Surely it costs a minimum amount to have the place open and I would think that isn't going to be much different between maximum and minimum visitor numbers making it worth encouraging larger numbers with a lower entry cost. Price drops/special offers during school holidays to attract higher numbers ought to be more effective than charging "peak" rates for all times during the school summer holiday?
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| Butterfly wrote: |
| Price drops/special offers during school holidays to attract higher numbers ought to be more effective than charging "peak" rates for all times during the school summer holiday? |
I think most of the indoor slopes run price promotions during the summer. Hemel has been running 2 hours for the price of 1 Monday-Thursday, and has recently changed that to all week.
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Butterfly, businesses always have to look very hard at the cost of increasing turnover by reducing profit margin. Often it does not make the sense you might feel it should. It's a bit of a wonder the fridges can run at all, really. Wonder how the various xscapes are doing.
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achilles, xscapes have more retail and entertainment revenues.
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You'll get to see more forums and be part of the best ski club on the net.
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Bode Swiller, so the fridge at a location like Castleford is seen as a loss-leader to bring the punters in to go to the shops and bars?
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achilles, As far as I am aware the Xscapes have a far more robust buisness but one that is much less skier focused, they make way more money from the 60 people at a time doing 20ft of sledging and other such family activities. They also have more income from the various pubs etc that they have in the same building. The overall experience as a skier is poor but the buisness profitability is better.
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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I wonder how Hemel's doing with its clearly snowsports focused model? I can believe that chillfactore falls between 2 camps - it wants to be a mixed use destination centre but for retail tenants etc its competing with the 500lb gorilla of the Trafford Centre next door. I went to chillfactore once and the overall experience was so poor I'd never really want to return unless say I lived with 15 mins.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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kevindonkleywood, so to sum up, Chil Factore has not been running on a viable business model, whilst xscape has. Hemel Hempstead has a more densely populated catchment area so my guess is that it can run on a different concept (though I have not seen it). Which leaves Tamowrth - the first of the UK fridges - which does seem to keep plodding on.
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Whilst on the subject there is a 'For Sale' sign on the old Swansea dry slope (just a hill now really) so it looks like the fridge intended for the site (plus property/retail development) is just a distant and short lived memory.
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You know it makes sense.
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fatbob, I believe hemel already owned the land/hill so perhaps had a much lower development cost (no land purchase or building lease?) and lower finance burden ?
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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fatbob, how long ago was it that you visited? in the last 18 months or so we have been several times and have seen an improving experience.
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Poster: A snowHead
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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| kevindonkleywood wrote: |
| fatbob, how long ago was it that you visited? in the last 18 months or so we have been several times and have seen an improving experience. |
About 20 months ago so before they started improving  More seriously the experience was marred by equipment failures, inability of staff to react to decreased slope capacity and unpoliced queuejumping by race brats plus those stupid ticket gates. And this was long enough after opening to have ironed out wrinkles so I concluded they simply didn't give a toss about the casual visitor's experience.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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kevindonkleywood, quite 
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fatbob, Hemel is right beside London and is probably making a nice tidy profit between low development costs, huge captive market and big exsisting business. Is a shame about Chill but they have been their own worst enemy at times with some of their decisions and choices
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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fatbob, I think that was the general feeling from a lot of people about the earlier operations which is why they had such poor repeat buisness figures.
I did end up by chance having a very long chat about the situation they were in with one of the management team and he was fairly candid about the fact that thay had not been looking after those that brought in the money and that it did not just affect them but those that leased their units. He was also fairly open about the conflict between the need to keep the freestyle skiers happy with slope space given over to features even if that was sometimes at the expense of the 'pure' ski experience but he did point out that the freestylers were heavy users and a group that contributed a large portion to their income.
I have seen in recent wisits both the Manchester Ski club members and a race training group told in no uncertian terms that they will queue like everyone else and that the lesson lines are just that, and for the use of people being taught by chill factore staff only. I have also seen a number of 'unguided missiles' removed from the slope fairly quickly, you know the type never skied but will give it a go without lessons.
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These centres can be highly profitable with or without retail space. it seems to me another case of an under capitalised UK business over reliant on debt finance with little equity. Everyone seems to think the ski business is a loss leader but that doesnt stack up. They do make money and if the retail space isnt fully let Chill is operationally doing very well indeed.
i havent seen their accounts but with revenues 7.5M pre tax Loss of 1.1M year ending Oct 09 the headline loss is misleading.
if the figures of EBITDA of 800k "when i took over 22 months ago" (oct 08ish) are true then they could have had a sizable write down during FY 09 and or debt costs were huge. If 2.8M EBITDA "current level" is to be believed and is an true annual projected figure not 12x their best month, the underlying gross margins sound almost too good, against revenues of say 8, 9 or 10M, i doubt revenues shot up hugely so the new CEO must have corrected a lot of the previous management teams operational and sales errors.
if a business that has such high % EBTIDA/ margins and cant make a pre tax profit needs its balance sheet sorting not necessarily its operations fixed. over reliance on debt isnt sustainable, think london eye...
the cash injection is probably a sign that the business is doing well and the "investors" are confident not a desperate attempt to stave off bankruptcy. if not they would have continued to breach the covenants on the basis the banks wouldnt foreclose cause they wouldnt get their loans back in a fire sale...
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skimottaret, EBITDA? I prefer good old fashioned accrual accounting - albeit viewed cautiously. But I agree with you that debt has to be paid for some how, and that investors putting their money into a company to lower the debt burden could be a good sign of confidence. I suspect many businesses are doing this - I am not at all sure that business borrowing gernerally should be on the rise, as the government seems to think.
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You'll get to see more forums and be part of the best ski club on the net.
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achilles, ebitda is accrual accounting and is just pre tax profit plus interest costs (cash), depreciation and amortisation (non cash). my point is that the business sounds to be overleveraged but has high underlying profitablity not a loss leader that makes money on retail space...
livetoski, RBS wouldnt wind up a company that is servicing its debt and probably couldnt be sold for the level of subordinated debt outstanding to the bank.
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skimottaret, I agree with you about the over-leveraging. I am less keen on the implicit message in EBITDA that capital expenditure can be ignored. OTOH, I don't think you do, either.
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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achilles, yeah the D part is probably a heck of a lot lower than the L part It is just typical of how overly clever financial engineering can wreck a decent business model... who knows what rate the long term debt is at but if they are into RBS for £25M you would think there is scope to reduce rates or replace with other better value debt once they get a decent track record of underlying operational profitability.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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skimottaret,
| Quote: |
livetoski, RBS wouldnt wind up a company that is servicing its debt and probably couldnt be sold for the level of subordinated debt outstanding to the bank.
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I beg to differ on this, have had first hand experience of RBS, cut and run still happens even when the banks lose will be huge in the short term.
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livetoski,if RBS wound up a company you were involved with i would guess it either had little chance of survival, or if it was making money but not servicing the debt they got most of their capital back from the administrators. if there was little asset value to sell on and little chance of servicing the note them they might cut and run, but with chill are making decent operating profits and the asset value is not zero but it would be tough to find a buyer so i am guessing they are hanging in there.
i too have first hand experience of this (not RBS)
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You know it makes sense.
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So hard to hold my tongue here... but I shall.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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| beanie1 wrote: |
| So hard to hold my tongue here... but I shall. |
Too right.. a bit of accurate inside knowledge might totally derail our idle speculation but you must have a better idea of what was in the business plan when they started.
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Poster: A snowHead
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| Quote: |
So hard to hold my tongue here... but I shall
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It will go purple and swell up if you do
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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| kevindonkleywood wrote: |
| fatbob, how long ago was it that you visited? in the last 18 months or so we have been several times and have seen an improving experience. |
I only live 1/2 an hour away and the last time Iused the slope must be 18 months since, it was ridiculous. The place wasn't overly busy but their was a group of people using the main slope who clearly sholdn't have been there. Only 1 lift was running and this group were each missing about 6 poma's a time before catching one and going 10 yards. OI complained about the situation and got the stock answer of "we all had to learn sometime" to which I replied "yes of course but under instruction, this lot have clearly never skied in their lives before".
After getting pretty pee'd off I skied to the bottom and took one of the many missed poma's, came back down and was told in no uncertain terms I would be ejected if I did this again. Now I can fully appreciate this if I? was Q jumping, but I was just taking one of the many missed Pomas and only did this after several times of Qing with those who shouldnt have been there in the first place.
At the end of the session I expressed my feelings to the duty manager, to be honest my words fell on deaf ears. Not that my custom is going to make much difference, skiing in a fridge doesn't really do much for me, but that experience has left me with a negative impression about the place.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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Static year on year sales of £7 million against a £1,000,000 annual loss, £14 million negative equity and the company is in breach of its covenants - all sounds like a poor business model imho. The only reason that the owner has put more money in is to stop the bank from pulling the plug for breach of covenants imv because it is happening a lot at the moment.
Would any snowheads invest in this ?
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You need to Login to know who's really who.
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| skimottaret wrote: |
| RBS wouldnt wind up a company that is servicing its debt and probably couldnt be sold for the level of subordinated debt outstanding to the bank. |
that is exactly what has just happened to a £100+ million company here in Swansea for breach of covenants - even though the company was servicing its debt - not RBS though 
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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rayscoops, ummm not defending anyone but did you read the bit about 800 and 2.8 ebitda against sales of high single figures, sounds good to me... static sales in a recession on a luxury product isnt too bad. would i invest, if i could buy up the joint from the administrators should it come to that i would definately look hard at it.
if a 100m company was shut down it probably had no chance of recovery, impossible to make intelligent comments unless all the facts are known.
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£2.8m 'profit' of £7.5m sales is pretty good I'd say, the issue is the amount of debt it's carrying. If I have a chance I might pull the accounts and have a look.
I wonder what the projections were in the original business plan.
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| Quote: |
| are having to inject £1.9m of new equity |
Despite all the conjecture, that appears to be the relevant part.
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| skimottaret wrote: |
| RBS wouldnt wind up a company that is servicing its debt and probably couldnt be sold for the level of subordinated debt outstanding to the bank. |
They did exactly that to the company I worked for. We were making good profits and servicing a debt that was to do with a previous take over. They pulled the plug and now we have been bought by a company who are now profiting from our contribution without the debt. We were sold for less than a million pounds with an outstanding debt of several millions.
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You'll get to see more forums and be part of the best ski club on the net.
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geepee, don't forget that the CFe business includes a major asset, i.e. the building with contracted rent from tenants. That makes it a different propostiion to a business without such an asset..
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I live 10 minutes away and very rarely go. The last time i was there with 2 family members it was a disgrace. 1 person issuing skis and boots and another for snowboarding. We wasted 15 minutes getting our gear and then when we went in there was only 1 lift working. Also there was 2 ski classes going on which walked right to the front of the queue. Then the cable jumped off the track so therr was no lift working. As we started to then walk up the slope, we were told that doing this was against the rules and asked to stop. At that point and after 4 goes on the slopemwemwalked off and asked for a refund which we didnt recieve. All they offered us was a 10% off voucher fir the next time. I took it then ripped it up infront of him and told him i will never be returning. They have no clue of customer service
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FAQ
it was great to see some great young skiers with talent 
