TIDMSSTY
RNS Number : 0735B
Safestay PLC
29 September 2022
29 September 2022
Safestay plc
("Safestay", the "Company" or the "Group")
Interim Results
Safestay (AIM: SSTY), the owner and operator of an international
brand of contemporary hostels, is pleased to announce its Interim
Results for the 6 months to 30 June 2022.
H1 Financial Highlights
-- All 16 hostels remained largely open for the first time since
early 2020 and demonstrated that their customer appeal remains
strong
-- Revenues built during the period to GBP7.3 million (2021:
GBP1.0 million) a good performance moving back toward pre-pandemic
levels (2019: GBP8.1 million)
-- Delivered with an Occupancy rate of only 51% (2019: 71%)
showing there remains significant upside
-- Average bed rate (ABR) was sustained at GBP21.5 (2019: GBP19.5)
-- Cost base coming back in line with increased trading
-- Generated EBITDA of GBP2.5 million (2021 loss of GBP1.09
million and 2019 profit of GBP2.2 million) and a loss before tax of
GBP0.3 million (2021: profit of GBP3.6 million including gains from
property disposals and 2019 loss of GBP0.9 million).
-- Cash at bank of GBP5.2 million as at 30 June 2022
-- As at 30 June 2022, net asset value per share was 44.6p (30
June 2021: 47.6p per share(restated)) reflecting the underlying
value of the property portfolio
H2 Trading
-- Good start to the key summer months with trading in both July and August ahead of budget
-- Sales currently coming mostly from young travellers, Group
bookings from schools, colleges and universities starting to come
back but well below where they are expected, although forward group
bookings for the latter part of 2022 are encouraging.
-- On track to complete a successful year
Larry Lipman, Chairman of the Company, commenting on the results
said:
"It is difficult to predict how quickly a business will recover,
so we are very pleased to present these results which show Safestay
coming back rapidly towards pre-pandemic levels of trading and
beyond. As we always felt, if allowed to travel, our customers
would again opt to stay in our premium portfolio of hostels all of
which are well located in the major and most visited cities across
Europe. Our trading is naturally second half weighted over the
summer months and we have enjoyed a strong July and August and have
done so with college groups around 14.8% of room revenue at this
stage but is expected to build back to historical levels of 30-40%.
It is important to remain cautious, especially given the current
economic backdrop, but the business is well funded, demand is
rising and we are well placed to deliver a trading result for the
year that is comfortably ahead of our expectations at the outset of
2022.
Enquiries
Safestay plc +44 (0) 20 8815 1600
Larry Lipman
Liberum Capital Limited
(Nominated Adviser and Broker) +44 (0) 20 3100 2000
Andrew Godber/Edward Thomas
Novella +44 (0) 20 3151 7008
Tim Robertson
Safia Colebrook
For more information visit our:
Website www.safestay.com
Vox Markets page
https://www.voxmarkets.co.uk/company/SSTY/news/
Instagram page www.instagram.com/safestayhostels/
Chairman's Statement
Introduction
I am pleased to present these results which demonstrate the
continued popularity of the Safestay portfolio of premium hostels.
This was the first 6-month trading period in the last two years
where we have been able to remain largely open with very little
interruption and our customers have been free from travel
restrictions to visit each of the 12 countries where we operate. We
have come out of the pandemic with 16 high quality hostels and a
strengthened balance sheet, following the two hostel sales last
year, to support the return of the Group to full trading. These
results show the Group is close to being level with the H1
performance in 2019 and given this was achieved with occupancy at
just 51% there is certainly scope for further improvement.
We have started the key second half of the financial year well
and we look forward to delivering a good result for the year as a
whole.
Financial review
The Group generated revenues of GBP7.3 million (2021: GBP1.0
million), leading to EBITDA of GBP2.5 million (2021: Loss of
GBP1.09 million). The EBITDA calculation is disclosed in note
2.
With the portfolio now open and less likely to face further
closures, the cost base, which was successfully pared back during
the pandemic, is now coming back up to support the trading
prospects of the hostels. There was no government support for the
Group in the period and the rental agreements are also normalising
after several landlords acted supportively during the pandemic. In
addition, the rent on Holland Park has been reduced by 38% or
GBP250,000 following successful rent negotiations.
The Group recorded a loss before tax of GBP0.3 million (2021:
profit of GBP3.6 million), in the prior year, the Group benefited
from the sale of the Edinburgh hostel and recorded a loss per share
of 0.5p (2021: profit of 5.6p).
Group borrowings as at 30 June 2022 were GBP24.8 million with
cash at bank of GBP5.2 million. The value of the Group's portfolio
of properties further underpins the Group's finances and while it
is not valued on an annual basis, the most recent valuation for
just the Elephant & Castle site as at 31 December 2021 was
GBP26.8 million.
As at 30 June 2022, net asset value per share was 44.6p per
share (30 June 2021: 47.6p per share(restated)).
Operational review
Following the disposal in 2021 of the Barcelona (Sea) and
Edinburgh Hostels for GBP16.7 million, Safestay now operates 16
hostels with approximately 3,242 beds across 11 European and 3 UK
cities. Like many operators in the hospitality sector, the last two
years have presented significant challenges to every part of the
business. The Group has had to adapt quickly but has now re-emerged
in 2022 a leaner, more financially secure business with the
capability to recover all lost ground and move forward again. The
first six months have clearly shown good demand which has continued
into the second half of the year.
Demand at this stage has primarily come from young people
exploring Europe who have been the first to respond to the ability
to travel freely and once again visit the attractions of Europe's
principal cities. Whereas group bookings by colleges, schools and
universities who typically make up between 30-40% of the annual
room revenue have been slower to come back post pandemic,
responsible for just 14.8% of the H1 room revenue. Demand has
increased from this segment in H2 but the Group expects it will be
in 2023 that the group bookings market returns in earnest.
Occupancy was 51% in H1, a figure that is building back towards
pre-pandemic levels of 71%, recorded for the same H1 period in
2019. The return of group bookings to previous levels will be an
important factor and increasing confidence amongst all customer
segments will support a return to normal trading.
Operationally the Group is building back the teams in each
hostel, new staff are being recruited in line with increasing
demand. Recruitment in this market is challenging and competition
for good staff may lead to higher payroll costs but as yet there
has been no need for a significant shift. The management team are
also very mindful of potential inflationary pressures on other
parts of the business. In terms of energy costs, the Group has
fixed electricity prices in the UK to September 2023 providing
certainty during this period. Ultimately, if required bed prices
would be increased.
Overall, the business has made a good return to trading, always
placing the safety of guests first and looking to build momentum
and trust in the business over the coming months. The core offer of
a comfortable and safe stay in beautiful, often iconic buildings
that are centrally located, in well-known and popular cities but
still with a bed rate of around just GBP20, is unchanged.
Importantly, a good proportion of the bookings received were direct
to the Group's website, in total 25.1% of non-groups room revenue,
which delivers a higher margin.
Capex has been kept at a minimum over the last two years given
cash constraints. During H1 while capex spend levels were still
relatively low where required the business invested behind ensuring
the fabric and quality of the buildings was maintained. Reflecting
the uncertainty of the market environment, new development projects
remain on hold. The focus for now is solely on improving the
marketing and revenue management strategies to optimise performance
and supporting customer return to pre-pandemic levels.
In February, Paul Hingston joined the Group as Chief financial
Officer replacing Peter Harvey. In June, Nuno Sacramento, Chief
Operating Officer left the Group and a search for his successor is
well advanced.
Outlook
This has been a good performance by Safestay, certainly better
than we had originally forecast. Most importantly, when our
customers were allowed to visit, they did, proving the ongoing
appeal of our venues. The sale of the two hostels last year for
GBP16.7 million, helped refinance the business and place us in a
good position to move forward positively. There will no doubt be
further cost pressures, but we may also benefit from being a value
offer in a market where consumers are more cash constrained.
Overall, we feel confident in our business and its prospects are
steadily returning.
Larry Lipman
Chairman
28 September 2022
Condensed consolidated statement (restated)
of comprehensive income Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
Note GBP000 GBP000 GBP000
------------ ------------ -------------
Revenue 3 7,286 407 5,810
Cost of sales (906) (42) (1,160)
Gross profit 6,380 365 4,650
Administrative expenses (5,759) (2,836) (9,867)
------------ ------------ -------------
Operating profit / (loss)
before exceptional expenses 620 (2,471) (5,217)
EBIT
Exceptional items - profit
on sale of assets - -
Exceptional items - other operating
income - 336 1,737
Exception items - loss on disposal -
Exceptional items - costs - (20) -
------------ ------------ -------------
Operating profit / (loss)
after exceptional expenses 3 620 (2,155) (3,480)
Interest received 1 - -
Finance costs (960) (1,196) (2,627)
Profit / (loss) before tax (338) (3,351) (6,107)
Tax (5) 1,891 218
------------ ------------ -------------
Profit/(Loss) after tax for
continuing operations (343) (1,460) (5,889)
============ ============ =============
Profit/(Loss) after tax for
discontinued operations - 5.407 5,290
============ ============ =============
Total comprehensive profit
/ (loss) for the period attributable
to owners of the parent company (343) 3,947 (599)
============ ============ =============
Basic profit/(loss) per share (0.53p) 6.1p (0.93p)
============ ============ =============
Condensed consolidated statement
of Unaudited
financial position Unaudited (restated) Audited
30 June 30 June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
---------- ------------ -------------
Non-current assets
Property, plant and equipment 73,974 73,780 73,609
Intangible assets 11 29 18
Goodwill 12,145 12,146 12,146
Lease assets 500 - 562
Deferred tax asset 1,126 2,693 1,122
Total non-current assets 87,755 88,648 87,457
---------- ------------ -------------
Current assets
Stock 44 38 35
Trade and other receivables 605 1,673 1,227
Lease assets 105 - 78
Current tax asset 199 65 199
Cash and cash equivalents 5,215 16,230 4,482
Total current assets 6,168 18,006 6,021
---------- ------------ -------------
Total assets 93,923 106,654 93,478
Current liabilities
Borrowings 574 776 926
Lease liabilities 2,033 1,854 1,922
Trade and other payables 2,236 2,310 2,062
Total current liabilities 4,843 4,940 4,910
---------- ------------ -------------
Non-current liabilities
Borrowings 24.140 34,312 24,028
Lease liabilities 32,783 34,863 31,086
Deferred tax 3,287 1,758 3,314
Trade and other payables due in
more than one year - - 7
Total non-current liabilities 60,210 70,933 58.435
---------- ------------ -------------
Total liabilities 65,052 75,873 63,345
---------- ------------ -------------
Net assets 28,871 30,781 30,133
---------- ------------ -------------
Equity
Share capital 10 647 647 647
Share premium account 23,904 23,904 23,904
Other components of equity 17,590 14,613 18,510
Retained earnings (13,271) (8,383) (12,928)
---------- ------------ -------------
Total equity attributable to owners
of the parent company 28,871 30,781 30,133
========== ============ =============
Condensed consolidated statement of changes in equity
For the six months to 30 June 2022 (unaudited)
Share Share Other Components Retained earnings Total
capital premium account of Equity equity
GBP000 GBP000 GBP000
GBP000 GBP000
-------- ---------------- ---------------- ----------------- -------
Balance at 1 January
2022 647 23,904 18,510 (12,928) 30,133
Comprehensive income
(Loss) for the period - - - (343) (343)
Movement in translation
reserve - - (969) - (969)
Total comprehensive
income - - (969) (343) 3,769
-------- ---------------- ---------------- ----------------- -------
Transactions with
owners
Share-based payment
charge for the period - - 49 - 49
-------- ---------------- ---------------- ----------------- -------
Balance at 30 June
2022 647 23,904 17,590 (13,271) 28,871
======== ================ ================ ================= =======
Condensed consolidated statement of changes in equity
For the six months to 30 June 2021 (unaudited) (restated)
Share Share Other Components Retained earnings Total
capital premium account of Equity equity
GBP000 GBP000 GBP000
GBP000 GBP000
-------- ---------------- ---------------- ----------------- -------
Balance at 1 January
2021 647 23,904 14,628 (12,329) 26,851
Comprehensive income
Profit for the period - - - 3,947 3,947
Movement in translation
reserve - - (178) - (178)
Total comprehensive
income - - (178) 3,947 (3,769)
-------- ---------------- ---------------- ----------------- -------
Transactions with
owners
Share-based payment
charge for the period - - 162 - 162
-------- ---------------- ---------------- ----------------- -------
Balance at 30 June
2021 647 23,904 14,613 (8,383) 30,781
======== ================ ================ ================= =======
For the year ended 31 December 2021 (audited)
Balance at 1 January
2021 (restated) 647 23,904 14,628 (12,329) 26,851
Loss for the year - - - (599) (599)
Other comprehensive income
Property revaluation 5,039 5,039
Deferred tax on property
revaluation (1,399) (1,399)
Movement in translation
reserve - - 169 - 169
--- ------ --------- -------- ---------
Total comprehensive loss - - 3,809 (599) 3,210
Transactions with owners
Share based payment charge
for the period - - 72 - 72
Balance at 31 December
2021 647 23,904 18,510 (12,928) 30,133
=== ====== ========= ======== =========
Condensed consolidated statement
of cash flows Unaudited Unaudited Audited
Note 6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
------------ ------------ -------------
Operating activities
Cash generated from operations 4 2,939 (244) (1,272)
Income tax paid 4 - (51)
------------ ------------ -------------
Net cash generated from operating
activities 2,943 (244) (1,323)
------------ ------------ -------------
Investing activities
Purchase of property, plant and equipment (176) (55) (307)
Purchase of intangible assets - - -
Acquisition of business - - -
Payment of deferred consideration - - -
Sale proceeds from disposals - 16,000 16,658
Net cash outflow from investing
activities (176) 15,945 16,351
------------ ------------ -------------
Cash flows from financing activities
Proceeds from refinancing transaction - - -
Fees relating to financing transaction - - -
Proceeds from property financing
transaction - - -
Proceeds from Coronavirus Business
Interruption loan - - -
Repayment of bank loans (250) (205) (10,373)
Principal elements of lease payments (1,678) (882) (1,810)
Property financing payments - (166) -
Fees related to borrowings - - -
Interest paid (106) (343) (488)
(2,034) (1,596) (12,671)
------------ ------------ -------------
Cash and cash equivalents at beginning
of period 4,482 2,125 2,125
Net increase/(decrease) in cash and
cash equivalents 733 14,105 2,357
------------ ------------ -------------
Cash and cash equivalents at end
of period 5,215 16,230 4,482
============ ============ =============
1. ACCOUNTING POLICIES FOR THE GROUP AND COMPANY FINANCIAL STATEMENTS
Safestay plc is listed on the AIM market of the London Stock
Exchange and was incorporated and is domiciled in the UK.
The Group and Company interim financial statements have been
prepared in accordance with International Accounting Standards
under UK-adopted IFRS.
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 2021.
The financial statements have been presented in sterling,
prepared under the historical cost convention, except for the
revaluation of freehold properties and right of use assets.
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 2022.
New standards and interpretations effective in the year
No new standards have been implemented this year that have a
material impact on the business.
2. PRIOR YEAR RESTATEMENT
IFRS 16 Adjustment
Following a review of the IFRS 16 accounting for the year to 31
December 2021, it is noted that the classification between
accruals, IFRS lease liability and rent expense in the year to 31
December 2020 was found to be incorrect. This has resulted in an
increased lease liability of GBP440,000, a decrease in accruals of
GBP598,000 and a decrease in rent (increase in retained earnings
brought forward) of GBP158,000.
Overall, the 2020 loss decreased and consequently the 2021
retained earnings brought forward has increased by GBP158,000, plus
the net assets has increased by GBP158,000.
Deferred tax liability on the 2019 Safestay (Elephant &
Castle) Ltd property revaluation
From a review of the deferred tax balances as at 31 December
2021 it is noted that the deferred tax liability relating to the
property revaluation on Safestay (Elephant & Castle) Ltd was
erroneously omitted from the liability for the year ended 31
December 2019.
An adjustment has been made to correct this that has reduced the
property revaluation reserve by GBP1,758,000 and increased the
deferred tax liability by GBP1,758,000. This has reduced net assets
by GBP1,758,000 and has no impact on the trading profit in
2019.
Profit and Loss Representation
For the period ending 30 June 2021 we have restated the profit
and loss account to present the discontinued operations on a
separate line. There has been no impact on the profit and loss made
for the period.
3. SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
------------ ------------ -------------
Hostel accommodation 6,564 507 4,901
Food and Beverages sales 495 364 725
Other income 227 18 550
Rental income - 131 247
------------ ------------ -------------
Total Income 7,286 1,020 6,423
------------ ------------ -------------
UNAUDITED 6 MONTHS TO 30 JUNE 2022
UK Spain Rest Shared Total
2022 of Europe services
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2,657 1,813 2,816 - 7,286
Profit/(Loss) before tax 509 403 456 (1,706) (338)
Finance costs 160 244 203 353 960
--------- --------- ----------- ---------- ---------
Operating Profit after
exceptional items 669 648 659 (1354) 622
Depreciation, Amortisation
& disposals 404 636 670 198 1,908
Exceptional & Share based
payment expense 49 - - 49
Rent forgiveness - (24) - - (24)
--------- --------- ----------- ---------- ---------
Adjusted EBITDA 1,122 1,260 1,329 (1,156) 2,555
--------- --------- ----------- ---------- ---------
Total assets 34,456 20,739 26,206 12,522 93,923
--------- --------- ----------- ---------- ---------
( 11,653 ( 13,916 ( 26,796 ( 65,052
Total liabilities ) ) (12,687) ) )
--------- --------- ----------- ---------- ---------
AUDITED 12 MONTHS TO 31 DECEMBER 2021
UK Spain Europe Shared Total
2021 services
GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 2,422 1,363 2,625 - 6,423
Profit/( Loss ) before
tax 6,689 (2,278) (3,448) (2,549) 692
Finance costs 271 618 1,157 1,273 2,701
--------- ---------- ---------- ---------- ---------
Operating Loss after exceptional
items 6.960 (1,660) (2,291) (1,276) 3,393
Depreciation, Amortisation
& disposals 1,028 1,076 2,350 395 3,773
Exceptional & Share based
payment expense (7,511) 554 554 72 (6,885)
Rent forgiveness (595) (227) (680) - (1,275)
--------- ---------- ---------- ---------- ---------
Adjusted EBITDA (118) (257) (67) (809) (994)
--------- ---------- ---------- ---------- ---------
Total assets 34,975 19,144 44,168 14,335 93,478
--------- ---------- ---------- ---------- ---------
Total liabilities (10,731) (13,432) (25,893) (26,721) (63,345)
--------- ---------- ---------- ---------- ---------
4. NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2022 2021 2021
GBP000 GBP000 GBP000
-------------- ------------ -------------
Loss before tax (283) 3,565 693
Adjustments for:
Depreciation of property, plant and
equipment and 1,908 2,466 3,773
amortisation of intangible assets
Profit on disposal of assets - (7,074) (6,957)
Finance costs 960 1,270 2,545
Share-based payments - 162 72
Exchange movements 43 30 116
Rent concessions (24) (788) (1,275)
Changes in working capital
Decrease/(Increase) in inventory (9) 10 12
(Increase)/Decrease in trade receivables 622 218 549
Increase/(Decrease) in trade and other
payables (272) (103) (800)
-------------- ------------ -------------
Cash generated from operating activities 2,939 (244) (1,272)
-------------- ------------ -------------
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