REG - Safestay PLC - Interim Results
05/09/2024 07:00
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RNS Number : 9544C Safestay PLC 05 September 2024
5 September 2024
Safestay plc
("Safestay", the "Company" of the "Group")
Interim Results
23% increase in EBITDA reflects strong strategic progress and operational
leverage
Accelerated expansion in 2024 to date with four outstanding new sites added to
the portfolio, strengthening the Group's platform for long-term growth
Safestay (AIM: SSTY), one of Europe's largest hostel groups, is pleased to
announce its Interim Results for the six months to 30 June 2024 (H1 2024 or
the "Period").
H1 2024 Financial Highlights:
● Revenue from continuing operations increased 6.6% to £10.7 million (H1 2023:
£10.0 million)
● Adjusted EBITDA for continuing operations increased 23.1% to £3.2 million (H1
2023: £2.6 million) reflecting strong operational leverage, increased mix of
sales through direct channels, and tight cost control, resulting in a 4%
improvement to the EBITDA margin to 30% (H1 2023: 26%)
● Adjusted Earnings Per Share from continuing operations of 0.16p (H1 2023:
Adjusted loss per share of 1.46p)
● Loss Before Tax from continuing operations of £113k (H1 2023: loss of
£947k); Profit for the period attributable to owners of the parent company
(also known as profit after tax) of £63k (H1 2023: loss of £1,003k)
● Successful debt refinancing with HSBC in January 2024 to increase the Group's
overall funding capacity and support its long-term growth plans. Existing
borrowings refinanced into a single £16 million five-year Term Loan with the
addition of a new £2.5 million Revolving Credit Facility ("RCF")
● Net cash generated from operations was £5.0 million (H1 2023: £5.4 million).
● Cash at bank was £2.1 million, broadly in line with the balance at 31
December 2023 (FY 2023: £2.0 million). The year-on-year decrease (H1 2023:
£7.1m) primarily reflects £4.3 million paid for the Edinburgh acquisition in
H2 2023 as well as the acquisitions made during the Period, outlined below.
● 17.2% increase in net asset value per share to 49.8p (H1 2023: 42.5p)
reflecting the strength of the Group's portfolio.
H1 2024 Operational Highlights:
● 6.0% increase in bed nights to 412,442 (H1 2023: 389,124), of which 42.3% were
booked through direct and non-commissionable channels (H1 2023: 26.9%)
reflecting a step-change in marketing capabilities and supported by a gradual
recovery in group bookings, which represent 23% of accommodation sales in the
period (H1 2023: 13%)
● Occupancy rate of 70.6%, a 1.8% increase year on year (H1 2023: 68.8%),
nearing pre-pandemic levels (H2 2019: 71.1%)
● Total REVPAB increased 3.2% to £18.28 (H1 2023: £17.72) reflecting
management focus on driving overall revenue and supported by significantly
increased sales of ancillary services
● Average Bed Rate ("ABR") of £22.15, a 4.5% decline year on year (H1 2023:
ABR: £23.18) but remains ahead of pre-pandemic levels (H1 2019: £21.19)
● Successful opening of Edinburgh Cowgate Hostel in June 2024 following
acquisition in 2023 with very encouraging initial trading.
● Strategic portfolio expansion with the addition of three new properties during
the Period:
● in April 2024, the Group signed its first management contract to run the
resort-based,120-bed Calpe Seafront Hostel on Spain's Costa Blanca;
● in May 2024, the Group acquired the Hotel Lineros in the heart of Cordoba for
a cash consideration of €2 million. The property is currently being
converted into a 100-bed hostel and is the Group's fifth in Spain; and
● in June 2024, the Group acquired a freehold property in the Centre of Brighton
for £2.3 million. The Group intends to convert the property into a 220-bed
premium hostel and is the Group's sixth site in the UK.
Current Trading & Outlook
● Strong momentum has continued into Q3 with sales to the end of August
significantly ahead of last year supporting strong overall occupancy levels
across the two peak summer months
● Forward bookings for the remainder of 2024 and into 2025 comfortably ahead of
the prior year supported by continuing recovery in group bookings
● Strategic decision taken to surrender the lease for the Group's 52-room hotel
in Vienna, removing the only loss-making property in the Group's portfolio and
enabling the redeployment of capital where there are stronger returns
● Fourth new property added to the portfolio in the year to date with the
acquisition of a leasehold city centre site in Budapest in August, Hungary,
building on the Company's established Eastern European presence in the Czech
Republic, Slovakia and Poland
Larry Lipman, Chairman of the Group, commented:
"2024 so far has been a period of significant strategic progress for Safestay
as we have continued to strengthen our position as one of Europe's leading
hostel operators. During the first half of the year, we successfully added to
our portfolio with two very exciting new properties in Spain, taking us to
five in the market and giving us increased critical mass to drive synergies
and revenue growth. We also acquired a fantastic new site in central Brighton
- taking us to six in the UK - and, early in H2, entered the Budapest hostel
market to expand our reach in Eastern Europe.
In addition to our portfolio expansion, we have continued to focus on driving
organic growth through operational excellence, supporting a 23.1% increase in
Adjusted EBITDA in H1. Our strong trading momentum has continued into H2 with
encouraging sales performances and occupancy rates across the peak summer
months of July and August.
Safestay's portfolio now comprises 20 sites with 17 currently serving guests
in premium locations across some of Europe's great destination cities. In
addition to remaining focused on delivering organic growth through our
operational initiatives, we will continue to actively evaluate new
opportunities where well located, attractive sites become available. We are
excited by the significant long-term growth opportunities available to us as
an established international operator in the highly fragmented and significant
global hostel market."
Copies of this announcement are available on the Company's website,
www.safestay.com (http://www.safestay.com)
Enquiries
Safestay PLC Tel: +44 (0) 20 8815 1600
Larry Lipman
Tel: +44 (0) 20 7408 4090
Shore Capital (Nomad & Broker)
Tom Griffiths/Harry Davies-Ball
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Alex Brennan/Lucy Wollam safestay@hudsonsandler.com
For more information visit our:
Website www.safestay.com
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Vox Markets page https://www.voxmarkets.co.uk/company/SSTY/news/
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Chairman's Statement
Introduction
During H1 2024 Safestay delivered a period of important strategic,
operational, and financial progress. The appeal of Safestay's portfolio of
premium hostels remains very strong amongst its core customer base of young
travellers, families, and business travellers. This resulted in a 6.0%
increase in bed nights sold during the period to 412,442 (H1 2023: 389,124),
of which 42.3% were booked through more profitable direct and
non-commissionable channels (H1 2023: 26.9%).
The increasing demand for our great value hostels continues to be supported by
the growing popularity of the Safestay brand as well as the strength of the
Group's outstanding locations across highly popular European travel locations.
As a result, we delivered sales growth of 6.6% to £10.7 million. This was
driven by a 1.8% increase in occupancy to 70.6% (H1 2023: 68.8%) and a 54.6%
increase in non-accommodation sales to £1.6m (H1 2023: £1.0 million), in
line with our main operational KPIs of increasing occupancy and total revenue
per available bed ('total REVPAB').
We are pleased to report a 23.1% increase to Adjusted EBITDA for continuing
operations to £3.2 million (H1 2023: £2.6 million), reflecting continued
revenue growth, tight cost control and the business's operational leverage.
Strategic portfolio expansion
Safestay operates in the significant and fragmented international hostel
market, which is estimated to grow to US$8.89 billion by 2027 (Source: Markets
and Research, August 2022). Overall market growth continues to be driven by
increasing consumer trends towards great value travel accommodation and the
rise in international travel by Millennial and Gen-Z customer demographics.
Our strategy is focused on continuing to drive organic revenue growth through
operational excellence whilst also actively pursuing strategic expansion
opportunities where great sites become available.
Safestay is an experienced acquirer of hostels and we have a proven track
record of quickly integrating and improving the performance of acquired sites.
We are well-positioned to take advantage as hostels and other buildings
capable of being converted to hostels come to the market, but only if all
internal criteria are met. Overall, our core offer of a comfortable and safe
stay in beautiful, often iconic buildings that are centrally located, in
well-known and popular cities, remains unchanged. During the first half of the
year, we returned to more aggressive expansion of the portfolio with three new
sites added across attractive European travel locations and building further
critical mass in both Spain and the UK.
In April we signed an initial 20-year term management contract to run the
resort-based 120 bed Calpe Seafront Hostel on Spain's Costa Blanca. The Calpe
Seafront hostel is located opposite Salt Lake, home to flocks of greater
flamingos, five minutes' walk from Arenal-Bol beach and a 45-minute drive from
Alicante airport. It was acquired after the hostel had been put into
administration during the pandemic, when trading was severely curtailed. The
hostel has been closed since. As an established hostel operator in Spain, we
are well positioned to take over the management under the Safestay brand and
incorporate it into the Group's booking system. Prior to the pandemic, the
Calpe Seafront was a successful hostel, and we are confident of being able to
quickly re-establish trading and return it to being a successful business. The
Group has already completed some minor refurbishment work and is targeting
re-opening the property in Q4 2024 under Safestay branding, subject to receipt
of necessary licences. Under the management contract, Safestay receives a
fixed management fee plus a percentage of revenue and profits above certain
levels. The Board believes this new operating model for the Group offers an
exciting template for further potential management outsourcing transactions.
In May we continued to build critical mass in the Spanish market with the
acquisition of Hotel Lineros in Cordoba for €2.0 million funded from the
Group's existing cash resources. Hotel Lineros is a spectacular building and a
natural fit with the Group's portfolio of unique properties. The hotel is
ideally located just a short walk from Cordoba's famous ancient mosque, La
Mezquita, which attracts 1.5 million visitors each year. The historic city
centre is also a major tourist destination and a UNESCO world heritage site.
The property is currently run as a hotel, and whilst undergoing a conversion
process, is expected in the eight months to 31 December 2024 to generate
meaningful revenue for the Group.
In June we acquired a freehold property in the centre of Brighton with the
intention of converting it into a 220-bed hostel, subject to planning
permission. The property is in the heart of Brighton - a city which attracts
over 11 million visitors per year - and set over five stories. The cost of
conversion is estimated at £1.0 million and should take approximately six
months once planning permission is received. In its first year of trading,
sales and EBITDA are projected to be £750,000 and £250,000 respectively. The
total acquisition consideration was £2.3 million funded by the Group's
existing cash resources and a new £1.2 million loan from the trustees of the
Sheldon Pension Fund and Sentpark Capital Limited.
Operational Excellence
In addition to strategically expanding our portfolio, a key pillar of the
Group's growth strategy is focused on driving organic revenue growth through
operational excellence. Under the guidance of our Chief Operating Officer,
Peter Zielke, a primary aim has been to lift all operational standards across
the portfolio and create unique experiences for our guests that will, in turn,
underpin sustainable revenue growth.
Key operational focus areas for the Group include driving occupancy rates;
increasing Total REVPAB; increasing bookings through commission-free own
channels supported by effective, digital-led marketing; and increasing
non-accommodation sales through the provision of ancillary services to guests
who are staying at our hostels. All of this is supported by our Commercial Hub
in Warsaw, which was established in 2023 and is a one-stop shop for revenue
management, sales and marketing, and critical HR functions.
Occupancy during the period was 70.6%, a 1.8% increase year on year (H1 2023:
68.8%), nearing pre-pandemic levels (H2 2019: 71.1%). Occupancy naturally
increases over the summer and so the average for the year is expected to be
higher and broadly in-line with 2019 at 71%. This improvement reflects
increasing demand for Safestay's customer proposition as well as the success
of our marketing initiatives and a gradual recovery in Group bookings, which
represented 23% of accommodation sales in the period compared to just under
13% in the prior year.
Average Bed Rate ("ABR") fell 4.5% year-on-year (H1 2023: ABR £23.18) against
the backdrop of wider consumer price pressures across the whole portfolio. In
Spring 2024, management made strategic decisions to protect overall yield in
lieu of ABR. These decisions meant that the Group delivered an increase of
Total REVPAB by 3.2% to £18.28 (H1 2023: £17.72), aided by the Group's
sharpened focus on increasing sales of food and beverage and ancillary
services including laundry facilities, towel rentals, and secure luggage
storage. Our dynamic pricing software, PricePoint, allows us to swiftly
implement changes in pricing strategy every two minutes as the market changes.
Since 1 January 2023, the Group has returned to an annual capex budget
equivalent to 3.0% of annual revenue. This is essential to maintaining the
Group's reputation as a leading premium hostel operator and to protecting the
quality of the portfolio by ensuring that every site remains in excellent
condition.
Financial Review
The Group generated revenues from continuing operations of £10.7 million (H1
2023: £10.0 million), a 6.6% increase on the prior period. Within this,
accommodation sales increased 1.3% to £9.1 million (H1 2023: £9.0 million)
and non-accommodation sales increased 54.6% to £1.6m (H1 2023: £1.0
million).
Adjusted EBITDA from continuing operations increased by 23.1% to £3.2 million
(H1 2023: £2.6 million). The Adjusted EBITDA margin increased 4.0% to 29.6%
(H1 2023: 25.6%) reflecting a more benign cost inflation compared to the prior
period, the increased proportion of sales generated through direct channels,
tight cost control, and the Group's operational leverage.
The Group recorded a loss before tax from continuing operations of £113k (H1
2023: loss of £947k) and a profit for the period attributable to the owners
of the parent company of £63k (H1 2023: loss of £1,003k). The Group recorded
Earnings Per Share ("EPS") from continuing operations of 0.16p (H1 2023: loss
of 1.46p) and basic loss per share from discontinued operations of 0.07p (H1
2023: loss of 0.08p). As always, most income is expected to be generated in
the second half of the year and the Board therefore anticipates reporting
further profitable growth in H2.
Net cash generated from operations was £5.0 million (H1 2023: £5.4 million),
primarily due to tax payments on overseas profits.
Group bank borrowings as at 30 June 2024 were £19.8 million (H1 2023: £16.6
million). Cash at bank was £2.1 million, broadly in line with its balance at
31 December 2023 (FY 2023: £2.0 million). The year-on-year decrease (H1 2023:
£7.1m) reflects £4.3 million paid for the Edinburgh acquisition in the prior
year as well as the acquisitions during the period, outlined above.
In January, the Group announced the refinancing of all its existing borrowings
into a single £16.0 million Term Loan and added a new £2.5 million Revolving
Credit Facility ("RCF") to support future growth plans. The new Term Loan and
RCF are for five years and were provided by existing lender HSBC. The Term
Loan interest rates are £4.4 million at 3.955%, £10 million at SONIA but
capped at 4.75% with a floor of 3% and £1.6 million at SONIA, all with an
additional margin of 2.6%. The RCF has a rate of SONIA plus a margin of 2.85%.
The Term Loan is repayable at £0.1 million per quarter from March 2025
together with a final payment at completion. Interest on both the Term Loan
and RCF is payable quarterly from March 2024. The Term Loan replaces the
previous interest only £12.7 million facility with HSBC and enables the
repayment of the outstanding CBILS loan of £3.3 million which carried a
significantly higher interest rate.
Current Trading & Outlook
We are very pleased with the strategic progress made during the first half of
the year. This strong momentum has continued into H2 so far with strong
occupancy levels in July and August and sales significantly ahead of last year
at the end of August. Forward bookings for the remainder of 2024 and into 2025
are comfortably ahead of the prior year supported by a continuing recovery in
group bookings. As a result of the Group's progress in H1 and its trading
momentum the Board anticipates delivering further profitable growth in H2
.
Since the period end, we have continued to develop our portfolio including
through the acquisition in August of a leasehold city centre site in Budapest,
Hungary, building on Safestay's established Eastern European presence in the
Czech Republic, Slovakia, and Poland. In August we also took the strategic
decision to surrender the lease for the Group's 52-room hotel in Vienna,
removing the only loss-making property in the Group's portfolio and enabling
the redeployment of capital where there are stronger returns.
In June, we successfully opened our Edinburgh Cowgate hostel following its
acquisition in 2023 and we have been very encouraged by early trading and
positive customer feedback, with particularly strong occupancy rates over the
summer months including during the Edinburgh Fringe festival.
In the longer-term, the Board remains highly confident in Safestay's
significant growth prospects. These are underpinned by the Group's growing
portfolio of premium hostels in outstanding locations, as well as the Group's
ability to leverage its established systems, brand, and proven operational
capabilities to a sizeable and growing total addressable market. As a result,
we look forward to the future with optimism and confidence.
Larry Lipman, Chairman
5 September 2024
CONSOLIDATED INCOME STATEMENT
Half year to Half year to Year to
30-Jun 30-Jun 31 December
2024 2023 2023
Unaudited Unaudited Audited
As restated
Total Total Total
Note £'000 £'000 £'000
Revenue 3 10,684 10,022 21,493
Cost of sales (1,704) (1,723) (3,811)
Gross profit 8,980 8,299 17,682
Administrative expenses (7,518) (7,724) (15,231)
Operating profit 1,462 575 2,451
Finance income and costs (1,575) (1,522) (3,173)
Loss before tax (113) (947) (722)
Tax 220 (1) (226)
Profit / (loss) for the period from continuing operations 107 (948) (948)
Net loss from discontinued operations 4 (44) (55) (376)
Profit /(loss) for the financial period attributable to owners of the parent 63 (1,003) (1,324)
company
Basic profit / (loss) per share from continuing operations 5 0.16p (1.46p) (1.46p)
Basic profit / (loss) per share from discontinued operations 5 (0.07p) (0.08p) (0.58p)
Diluted profit / (loss) per share from continuing operations 5 0.16p (1.40p) (1.39p)
Diluted profit / (loss) per share from discontinued operations 5 (0.06p) (0.08p) (0.55p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year to Half year to Year to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
As restated
Total Total Total
£'000 £'000 £'000
Profit / (loss) for the period 63 (1,003) (1,324)
Exchange differences on translating foreign operations (491) (1,729) 7
Property revaluation - - 3,904
Deferred tax on property revaluation - - (171)
Total comprehensive (expense)/income for the period attributable to owners of (428) (2,732) 2,416
the parent company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30 June 2024 As restated 30 June 2023 31 December 2023 As restated 1 Jan 2023
Unaudited Unaudited Audited Audited
Note £'000 £'000 £'000 £'000
Non-current assets
Property, plant and equipment (including right of use asset) 6 77,659 68,310 73,709 72,058
Intangible assets 136 9 71 9
Goodwill 10,660 11,663 10,896 12,014
Lease assets 220 440 297 453
Deferred tax asset 5,314 7,402 5,488 7,226
Fair value of financial assets 10 - - -
Total non-current assets 93,999 87,824 90,461 91,760
Current assets
Inventory 50 26 26 24
Trade and other receivables 1,318 707 1,210 1,122
Lease assets 141 135 142 139
Current tax asset 274 49 134 66
Cash and cash equivalents 2,139 7,261 1,998 5,226
Total current assets 3,922 8,178 3,510 6,577
Total assets 97,921 96,002 93,971 98,337
Current liabilities
Borrowings 7 (267) (1,108) (932) (925)
Lease liabilities (1,818) (1,810) (1,793) (1,871)
Liabilities held for sale (470) - (506) -
Trade and other payables (6,067) (5,537) (4,018) (3,128)
Current liabilities (8,622) (8,455) (7,249) (5,924)
Non-current liabilities
Borrowings 7 (26,427) (22,554) (22,354) (23,095)
Lease liabilities (23,386) (29,030) (24,250) (30,349)
Deferred tax liabilities (7,155) (8,385) (7,359) (8,737)
Total non-current liabilities (56,968) (59,969) (53,963) (62,181)
Total liabilities (65,590) (68,424) (61,212) (68,105)
Net assets 32,331 27,578 32,759 30,232
Equity
Share capital 649 649 649 647
Share premium account 23,959 23,959 23,959 23,904
Other components of equity 8,9 21,461 16,450 21,952 18,158
Retained earnings 8,9 (13,738) (13,480) (13,801) (12,477)
Total equity attributable to owners of the parent company 32,331 27,578 32,759 30,232
Condensed consolidated statement of changes in equity
Share Capital Share premium account Other Components of Equity Retained earnings Total Equity
£000 £000 £000 £000 £000
Balance at 1 January 2024 649 23,959 21,952 (13,801) 32,759
Comprehensive Income
Profit for the period - - - 63 63
Other comprehensive income
Movement in translation reserve - - (491) - (491)
Balance at 30 June 2024 649 23,959 21,461 (13,738) 32,331
Share Capital Share premium account Other Components of Equity Retained earnings Total Equity
£000 £000 £000 £000 £000
Balance at 1 January 2023 as restated 647 23,904 18,158 (12,477) 30,232
Comprehensive income
Loss for the period (as restated - see note 9) - - - (1,003) (1,003)
Other comprehensive income
Movement in translation reserve - - (1,729) - (1,729)
Total comprehensive loss - - (1,729) (1,003) (2,732)
Transactions with owners
Share issue 2 55 - - 57
Share based payment charge for the period - - 21 - 21
Balance at 30 June 2023 649 23,959 16,450 (13,480) 27,578
Share Capital Share premium account Other Components of Equity Retained earnings Total Equity
£000 £000 £000 £000 £000
Balance at 1 January 2023 as restated 647 23,904 18,158 (12,477) 30,232
Comprehensive income
Loss for the year (1,324) (1,324)
Other comprehensive income
Movement in translation reserve 7 7
Property revaluation reserve 3,904 3,904
Deferred tax on property revaluation - - (171) - (171)
Total comprehensive income - - 3,740 (1,324) 2,416
Transactions with owners
Share Issue 2 55 - - 57
Share-based payment charge for the period - - 54 - 54
Balance at 31 December 2023 649 23,959 21,952 (13,801) 32,759
Consolidated Statement of Cashflows
Period to Period to Year to
30 June 30 June 31 December
Note 2024 2023 2023
As Restated
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flow from operating activities
Profit/(loss) for the period 63 (1,003) (1,324)
Tax charge (220) (1) 226
Depreciation, amortisation 1,705 1,973 3,364
Net finance costs 1,574 1,522 3,413
Share based payment charge - 21 54
Impairment charges - - 1,028
(Increase)/decrease in inventories (23) 1 (2)
Decrease in lease asset debtor 78 18 153
(Increase)/decrease in trade and other receivables (118) 413 136
Increase in trade and other payables 2,011 2,407 1,076
Fair value movement of derivatives 26 - -
Cash generated from operations attributable to continuing operations 5,096 5,351 8,124
Income tax received/(paid) (140) 28 (69)
Total net cash inflow from operating activities 4,956 5,379 8,055
Cash flow from investing activities
Purchases of property, plant and equipment (5,685) (183) (4,977)
Purchases of intangible assets (39) - (80)
Interest received 10 11 35
Total net cash outflow from investing activities (5,714) (172) (5,022)
Cash flow from financing activities
Share issue - 57 57
Proceeds from new borrowings 19,695 - -
Payment of fees related to new borrowings (311) - -
Principal elements of lease payments (1,821) (1,505) (3,639)
Interest paid (675) (775) (1,274)
Loan repayments (15,995) (500) (1,000)
Total net cash outflow from financing activities 893 (2,723) (5,856)
Cash and cash equivalents at beginning of period 2,038 5,226 5,226
Net cash flows (used in)/generating from operating, investing and financing 135 2,484 (2,823)
activities
Differences on exchange 48 (449) (365)
Cash and cash equivalents at end of period (including discontinued operations) 4 2,221 7,261 2,038
1 General Information
Safestay plc, the "Company" together with its subsidiaries, "the Group", is a public limited company whose shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange and is incorporated and domiciled in the United Kingdom and registered in England and Wales. The registered number of the Group is 08866498 and its registered address is 1a Kingsley Way, London, N2 0FW.
2 Basis of Preparation
The consolidated interim financial information has been prepared in accordance with UK-adopted International Financial Reporting Standards ("IFRS") in conformity with the requirements of the Companies Act 2006.
The Group's Annual Report and Accounts for the period ended 31 December 2024 are expected to be prepared under IFRS.
The comparative information for the period ended 30 June 2023 in this interim report does not constitute statutory accounts for that period under section 435 of the Companies Act 2006.
Statutory accounts for the period ended 31 December 2023 have been delivered to the Registrar of Companies.
The auditors' report on the statutory accounts for 31 December 2023 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
Significant Accounting Policies
The consolidated interim financial information has been prepared in accordance with accounting policies that are consistent with the Group's Annual Report and Accounts for the period ended 31 December 2023 which is published on the Safestay website, located at
www.safestay.com (http://www.safestay.com)
. At the date of authorisation of this financial information, certain new standards, amendments and interpretations to existing standards applicable to the Group have been published but are not yet affective and have not been adopted early by the Group. The impact of these standards is not expected to be material.
In adopting the going concern basis for preparing these financial statements, the Directors have considered the business model and strategies, as well as taking into account the current cash position and facilities.
Based on the Group's cashflow forecasts, the Directors are satisfied that the Group will be able to operate within the level of its current facilities for the foreseeable future, a period of at least twelve months from the date of this report. Accordingly, the Directors consider it appropriate for the Group to adopt the going concern basis in preparing these financial statements.
Financial information contained in this document does not constitute statutory
accounts within the meaning of section 434 of the Companies Act 2006 ("the
Act"). The statutory accounts for the year ended 31 December 2023 have been
filed with the Registrar of Companies. The report of the auditors on those
statutory accounts was unqualified, and did not contain a statement under
section 498(2) or (3) of the Act.
The financial information for the six months ended 30 June 2024 and 30 June
2023 is unaudited.
These condensed interim financial statements have not been audited, do not
include all the information required for full annual financial statements and
should be read in conjunction with the Group's consolidated annual financial
statements for the year ended 31 December 2023.
The financial statements have been presented in sterling, prepared under the
historical cost convention, except for the revaluation of freehold properties,
right of use assets and fair value of derivative financial assets and
liabilities.
The accounting policies have been applied consistently throughout all periods
presented in these financial statements. These accounting policies comply with
each IFRS that is mandatory for accounting periods ending on 31 December 2023.
New Accounting Policies
Due to the refinancing and the subsequent hedging arrangements agreed in
January 2024 the Group has considered the need to apply hedge accounting on
the two derivatives for the interim financial information. The Group has
decided not to apply hedge accounting on the two derivatives. Fair value
movements in these financial assets and liabilities will be recorded through
the income statement.
New standards and interpretations effective in the year
No new standards have been implemented this year that have a material impact
on the business.
3 Segmental Analysis
Unaudited Unaudited Audited
6 months to 30 June 6 months to 30 June Year to 31 December
2024 2023 2023
£000 £000 £000
Hostel accommodation 9,136 9,021 19,190
Food and Beverages sales 1,001 689 1,495
Other income 547 312 808
Total Income from continuing operations 10,684 10,022 21,493
Unaudited 6 months to 30 June 2024 (continuing operations) UK Spain Europe Shared services Total
£'000 £'000 £'000 £'000 £'000
Revenue 4,183 2,986 3,515 - 10,684
Profit/(loss) before tax 1,626 512 463 (2,714) (113)
Add back: Finance income and costs 115 - (19) 1,479 1,575
Add back: Depreciation & Amortisation 256 599 440 410 1,705
EBITDA 1,998 1,111 884 (826) 3,167
Exceptional & Share based payment expense - - - - -
Adjusted EBITDA 1,998 1,111 884 (826) 3,167
Total assets 44,794 16,987 20,414 15,726 97,921
Total liabilities (13,318) (12,250) (7,973) (32,049) (65,590)
Unaudited 6 months to 30 June 2023 (continuing operations) UK Spain Europe Shared services Total
£'000 £'000 £'000 £'000 £'000
Revenue 3,556 2,477 3,989 - 10,022
Profit/(loss) before tax 931 96 499 (2,473) (947)
Add back: Finance income and costs 98 - 16 1,408 1,522
Add back: Depreciation & Amortisation 298 549 615 511 1,973
EBITDA 1,327 645 1,130 (554) 2,548
Exceptional & Share based payment expense - - - 21 21
Adjusted EBITDA 1,327 645 1,130 (533) 2,569
Total assets 34,969 16,335 24,309 20,389 96,002
Total liabilities (12,227) (12,168) (12,681) (31,348) (68,424)
Audited 12 months to 31 December 2023 (continuing operations) UK Spain Europe Shared services Total
£'000 £'000 £'000 £'000 £'000
Revenue 8,270 5,349 7,874 - 21,493
Profit/(loss) before tax 2,293 (431) (918) (1,666) (722)
Add back: Finance income and costs 315 278 254 2,326 3,173
Add back: Depreciation & Amortisation 432 1,198 931 540 3,101
EBITDA 3,040 1,045 267 1,200 5,552
Impairment - - 1,028 - 1,028
Exceptional & Share based payment expense - - - 80 80
Adjusted EBITDA 3,040 1,045 1,295 1,280 6,660
Total assets 40,944 15,818 21,551 15,658 93,971
Total liabilities (11,424) (11,853) (7,904) (30,031) (61,212)
Total liabilities for the Europe segment for the period ending 30 June 2024
includes £470k of liabilities held for sale (30 June 2023: £nil). Total
liabilities for the Europe segment for the year ending 31 December 2023
includes £506k of liabilities held for sale.
4 Discontinued Operations
Following the classification of the asset group of "Vienna Hotel" as held for
sale in September 2023, the operational performance was classified as
discontinued. The Hostel formed part of the Europe operating segment.
6 months to 6 months to Year to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£000s £000s £000s
Revenue 448 450 996
Cost of sales (95) (160) (228)
Gross profit 353 290 768
Administrative expenses (232) (223) (905)
Operating profit 121 67 (137)
Finance income and costs (165) (122) (239)
Profit/(loss) before tax (44) (55) (376)
Loss after tax for discontinuing operations (44) (55) (376)
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£000s £000s £000s
Property plant and equipment (including right-of-use asset) 3,579 - 3,884
Trade and other payables (293) - (187)
Lease Liabilities (3,869) - (4,291)
Cash and cash equivalents 82 - 40
Trade and other receivables 31 - 48
Liabilities held for sale (470) - (506)
6 months to 6 months Year to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flow from operating activities
Loss for the year (44) (55) (376)
Tax charge - - 1
Depreciation, amortisation and impairment - - 264
Net finance costs 165 122 239
(Increase)/decrease in inventories (1) - 2
Decrease in trade and other receivables 17 45 (54)
Increase in trade and other payables 200 106 306
Net Cash generated from operations attributable to discontinued operations 337 218 382
Cash flow from investing activities
Purchases of property, plant and equipment (44) (16) (9)
Net cash used in discontinued investing activities (44) (16) (9)
Cash flow from financing activities
Principal elements of lease payments (251) (211) (419)
Loan repayments - - (80)
Net cash used in discontinued financing activities (251) (211) (499)
Cash and cash equivalents at beginning of year 40 162 162
Net cash flows (used in)/generating from operating, investing and financing 42 (9) (126)
activities
Differences on exchange - 4
Cash and cash equivalents at end of year 82 153 40
5 Earnings Per Share
Period to Period to Period to
30 June 30 June 31 December
2024 2023 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Basic profit/(loss) per share from:
Continuing Operations 0.16p (1.46p) (1.46p)
Discontinued Operations (0.07p) (0.08p) (0.58p)
Diluted profit/(loss) per share from:
Continuing Operations 0.16p (1.40p) (1.39p)
Discontinued Operations (0.06p) (0.08p) (0.55p)
Basic profit/(loss) per share has been calculated by dividing the loss
attributable to shareholders by the weighted average number of shares in issue
during the period.
Diluted profit/(loss) per share has been calculated after adjusting the
weighted average number of shares used in the basic calculation to assume the
conversion of all potentially dilutive shares, such as share option awards.
The number of shares used in calculating basic and diluted profit/(loss) per
share are reconciled below:
30 June 30 June 31 December
2024 2023 2023
Weighted average number of ordinary shares (000s) for the purposes of basic 64,935 64,802 64,869
earnings per share
Effect of dilutive potential ordinary shares (000s) 3,441 3,142 3,441
Weighted average number of ordinary shares (000s) for the purposes of diluted 68,376 67,944 68,310
profit/(loss) per share
6 Fixed Assets
Freehold land and buildings Right of Use Assets Leasehold land and buildings Leasehold improvements Fixtures, fittings and equipment Assets Total
under construction
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 Jan 2024 16,999 23,244 27,020 3,253 1,039 2,154 73,709
Transfers 2,114 - - - - (2,114) -
Additions 2,688 - - 20 585 2,392 5,685
Depreciation (163) (1,037) (94) (161) (231) - (1,686)
IFRS 16 Lease Modification - 321 - - - - 321
Exchange Differences (7) (368) - 65 (60) - (370)
Revaluation - - - - - - -
At 30 June 2024 21,631 22,160 26,926 3,177 1,333 2,432 77,659
At 1 Jan 2023 11,717 29,464 26,203 3,454 1,220 - 72,058
Transfers - - - 154 (194) 40
Additions - - - - 183 - 183
Depreciation (113) (1,146) (298) (215) (146) - (1,918)
IFRS 16 Lease Modification - 29 - - - - 29
Exchange Differences (260) (479) - (1,014) (287) (2) (2,042)
At 30 June 2023 11,344 27,868 25,905 2,379 776 38 68,310
At 1 Jan 2023 11,717 29,464 26,203 3,454 1,220 - 72,058
Transfers - - - 154 (194) 40 -
Reclassification as held for sale - (3,858) - - (26) - (3,884)
Additions 2,522 - - 4 337 2,114 4,977
Depreciation (169) (2,408) (185) (318) (266) - (3,346)
Impairment - (83) - (65) - - (148)
IFRS 16 Lease Modification - 323 - - - - 323
Revaluation 2,902 - 1,002 - - - 3,904
Exchange Differences 27 (194) - 24 (32) - (175)
At 31 December 2023 16,999 23,244 27,020 3,253 1,039 2,154 73,709
7 Borrowings
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
At amortised cost
Bank Loan repayable within one year 349 1,108 1,000
Property finance liability 3 - -
Loan arrangement fees (85) - (68)
267 1,108 932
Bank Loans repayable within more than one year 19,495 15,495 15,180
Property finance liability 7,175 7,087 7,174
Loan arrangement fees (243) (28) -
26,427 22,554 22,354
In January 2024, the Group refinanced its existing borrowings into a single
£16.0 million Term Loan and added a new £2.5 million Revolving Credit
Facility ("RCF") to support future growth plans. The new Term Loan and RCF are
for 5 years and were provided by existing lender HSBC.
The Term Loan interest rates are £4.4 million at 3.955%, £10.0 million at
SONIA but capped at 4.75% with a floor of 3% and £1.6 million at SONIA, all
with an additional margin of 2.6%. The RCF has a rate of SONIA plus a margin
of 2.85%. The Term Loan is repayable at £0.1 million per quarter from March
2025 together with a final payment at completion. Interest on both the Term
Loan and RCF is payable quarterly from March 2024.
The Group have entered into two hedging arrangements on the term loan, one
being an interest rate swap of 3.955% for £4.4 million, and the other being a
cap and collar with a floor of 3% and a cap of 4.75% for £10.0 million. The
Group have decided not to apply hedge accounting on these two transactions and
will record any fair value movements through the income statement. The fair
value of these financial assets at 30 June 2024 is £26k (30 June 2023:
£nil).
The Term Loan replaces the previous interest only £12.7 million facility with
HSBC and enabled the repayment of the outstanding CBILS loan of £3.3 million,
which carried a significantly higher interest rate.
In June 2024, the Group acquired a freehold property located in Brighton,
United Kingdom, for a consideration of £2.3 million, funded through both the
Group's existing cash balances, and a £1.2 million loan from the trustees of
the Sheldon Pension Fund and Sentpark Capital Limited.
The loan will be made to Safe Hostels Limited (a 100% owned subsidiary of
Safestay plc) with Safestay plc providing a written guarantee. The interest
rate on the loan is 1% per month and is serviced monthly, plus there are
arrangement and exit fees of 1% each. The repayment date is 18 months after
the drawdown date.
8 Deferred Tax
The adoption of the amendments to IAS 12 effective 1 January 2023 , resulted
in an increase in deferred tax assets of £5.8 million, an increase in
deferred tax liabilities of £5.4 million and an increase in brought forward
retained earnings of £0.4 million as at 1 January 2023. These arise from
timing difference between right-of-use assets and lease liabilities under IFRS
16.
The adoption of the amendments results in an increase in deferred tax assets
of £5.6 million, an increase in deferred tax liabilities of £5.0 million, an
increase in brought forward retained earnings of £0.4 million as at 30 June
2023 and a decrease in tax charges of £0.2 million.
9 Prior Year Restatements
Following a review of the share options workings for the year ended 31
December 2023, it was noted that in prior years 1.4 million share options in
relation to option holders who had since left the business and were no longer
entitled to those options, had not been cancelled. The impact of this has been
that the share option charge in prior years has been overstated. Therefore a
prior year adjustment to the 1 Jan 2023 comparatives has been made in respect
of this which has resulted in a reduction in the share based payment reserve
of £0.3m at 1 January 2023 and a corresponding increase in retained earnings
of £0.3m at 1 January 2023 and 30 June 2023.
10 Post Balance Sheet Events
On 1 August 2024, the Group surrendered the lease for its 52-room hotel in
Vienna (the "Hotel") to the Hotel's landlord, Hotel la Prima GmbH. Under the
terms of the surrender agreement, the total consideration payable by Safestay
is €532,000, representing historic COVID-deferred rent. BOSU SBS Hotel GmbH,
the new tenant for the Hotel, has agreed to pay Safestay €275,000, which
will be used by the Company to pay down the consideration. In addition, to
complete the transaction Safestay will pay a further €107,000 from a
historic rent deposit account and €150,000 from the Company's existing cash
resources to settle the outstanding balance.
On 8 August 2024, the Group announced an acquisition of a leasehold property
in Budapest, Hungary, by its wholly owned subsidiary Safestay Hungary kft.
Safestay Hungary kft has signed a five-year lease for the property from Curzon
Capital kft and under the terms of the agreement has the option to extend this
over two additional five-year terms. The first eight months of the property's
€150,000 annual rent will be waived while Safestay obtains the required
licence to operate the property as a hostel and, subsequently, refurbishes the
property at an anticipated cost of €600,000.
Should Safestay be unable to secure the correct licence, the agreement will be
terminated. Once operational, the Budapest hostel is expected to contribute
estimated revenue of approximately €350,000 and EBITDA after rent of
€50,000 to the Group during its first year of operation. This is expected to
increase as the site matures.
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