TIDMSSTY
RNS Number : 5854N
Safestay PLC
26 September 2023
26 September 2023
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 2023.
'Strong demand from not only young travellers but also families
and business travellers'
H1 Highlights
-- Recorded strong revenues of GBP10.5 million (2022: GBP7.3
million) outperforming pre-pandemic levels (2019: GBP8.1
million)
-- Delivered with an occupancy rate of 68.5% (2022: 51%), still
lower than historic levels pre-COVID, but REVPAB is GBP16.06 (2022:
GBP11.77) compared to GBP15.47 in 2019.
-- Significant increase in average bed rate (ABR) to GBP23.44 (2022: GBP21.5)
-- Generated EBITDA of GBP2.6 million (2022: GBP2.5 million)
held back by a one-off payroll increase and abnormally high energy
costs.
-- Cash at bank of GBP7.3 million as at 30 June 2023 (2022: GBP5.2 million)
-- As at 30 June 2023, accounting net asset value per share was
41.6p (30 June 2022: 44.6p per share). This was casued by the loss
after tax and unrealised foreign exchange losses but is not
reflective of market valuations for property assets which remain
firm.
H2 Trading & Outlook
-- Strong summer with sales in July and August up 11% and 16%
respectively on 2022 and forward bookings for the remainder of 2023
significantly ahead of last year
-- Diversifying mix of customers as families and business
travellers choose hostels for greater value accommodation
-- Focus on driving organic growth across the business,
established a new office in Warsaw to focus solely on attracting
group bookings from colleges, schools and universities
-- Launch of new website in July 2023 set to drive direct sales
-- Continuing to seek earnings enhancing acquisitions
Larry Lipman, Chairman of the Group, commenting on the results
said:
"It was difficult to know if our strong performance in 2022 was
due to a one-off bounce back from the pandemic or the return to
normal trading. Based on our performance so far in 2023, it is
clear we have returned to a healthy market with some key points of
difference. Having been through the pandemic, we have re-emerged as
a leaner, financially stronger business with an excellent portfolio
of premium hostels in prime locations. Added to this, demand has
been strong and pricing has improved by c.20% since 2019 which has
enabled us to generate new sales records. With occupancy still
below 2019 and school and college groups still to come back to
historic levels, there remains plenty of scope for further
growth."
Enquries
+44 (0) 20 8815
Safestay plc 1600
Larry Lipman
Liberum Capital Limited
+44 (0) 20 3100
(Nominated Adviser and Broker) 2000
Andrew Godber/Edward Thomas
+44 (0) 20 3151
Novella 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
The business has come back strongly since the pandemic and these
results for the six months to 30(th) June 2023 show the business
delivering, with a particularly good sales performance, up by 44%
against 2022 and by 30% against 2019. This reflects our customers'
desire to continue to travel and visit the famous cities of Europe,
where our premium hostels in city centre locations are proving
attractive, especially in these economically challenging times.
Good demand continued into the key summer months of July and August
during which the Group achieved occupancy levels of 85%. Overall,
the Group is comfortably placed to achieve market expectations for
the current year.
Financial review
The Group generated revenues of GBP10.5 million (2022: GBP7.3
million), leading to EBITDA of GBP2.6 million (2022: GBP2.5
million). EBITDA margin was 25% (2022: 34%) reduced by an increase
in payroll costs and higher energy costs. Payroll costs in 2022
were abnormally low due to the difficult recruitment market, so
this is a one-off post pandemic inflationary impact on payroll
costs that has now stabilised. Also, new two year UK electricity
contracts have now reduced annual energy bills by GBP0.2 million.
Rental agreements with landlords have normalised and overall, the
cost base is steady.
The Group recorded a loss before tax of GBP1.0 million (2022:
loss of GBP0.3 million) and a loss per share of 1.4p (2021: loss of
0.5p), primarily reflecting the recent interest rate increases. As
always, the majority of income is generated in the second half of
the year.
Group bank borrowings as at 30 June 2023 were GBP16.6 million
with cash at bank of GBP7.3 million. The primary loan is due for
renewal in January 2025 and the refinancing process for this is now
in progress. The directors expect to obtain at least similar terms
to the current facility. The value of the Group's portfolio of
properties further underpins the Group's finances. The Directors
believe that the valuations of both the Elephant & Castle site
of GBP26.8m and the combined Glasgow, Pisa and York freehold sites
of GBP11.9 million have not changed since the December 2022
accounts.
As at 30 June 2023, accounting net asset value per share was
41.6p per share (30 June 2022: 44.6p per share), which is not
reflective of freehold valuations which remain firm as can be seen
from the examples above.
Operational review
Safestay operates 16 sites, offering 3,251 beds across 11
European and 3 UK cities. The first six months have clearly shown
that the business is again moving forward with good prospects to
grow both organically and via acquisition.
Growth depends on increasing demand and this continues to be
driven largely by young people looking to explore Europe's
principal cities, and wishing to stay in clean, centrally located
and attractive surroundings for a reasonable price. These young
people are made up of Millennials, Generation Z and organised
groups coming from schools and universities. They are typically
technologically savvy, working to short decision time frames,
socially active and price conscious. Safestay looks to match these
characteristics, with significantly improved online marketing
across social media platforms and the group website, showcasing the
unique portfolio and making booking easy for stays in single or
multiple hostels. These features are decreasing the Group's
reliance on online travel agents.
One area of difference post pandemic has been the volume of
group bookings. Pre-pandemic, group bookings made up 38% of room
revenue in 2019 whereas group bookings in the period under review
were 13%. There is therefore an opportunity to re-build group
bookings and in August, a new office was opened in Warsaw dedicated
to targeting group sales.
Occupancy was 68.5% in H1, against 51% last year, a very good
performance especially when combined with an average room rate of
GBP23.44 and as shown by a REVPAB of GBP16.06 Occupancy naturally
increases over the summer and so the average for the year will be
higher, but still below the average achieved in 2019 of 71%, which
provides a good indication of the headroom for further growth.
Average bed rate has increased by c. 20% since 2019 and is a key
driver of growth, in part due to the successful application of
dynamic pricing under the PricePoint system which re-calculates
pricing based on demand every two minutes. Business on the books is
significantly higher at this point than 2022 and it is expected
that it will be approximately GBP1m higher at the year end than
2022.
Under the guidance of our Chief Operating Officer, Peter Zielke,
who joined the Group in February 2023, a primary aim has been to
lift all operational standards across the portfolio and create
unique experiences for our guests. Amongst areas of focus are
customer engagement, area management reviews, health & safety
and HR. Each of these has received specific attention with the
Group importing proven systems, which in general have been used
previously by the Management, to track performance and digitalise
tasks where appropriate.
Since 1 January 2023, the Group has returned to an annual capex
budget equivalent to 3% of annual turnover. 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 the buildings themselves and the contents within remain in
excellent condition.
Safestay is an experienced acquirer of hostels and well-
positioned to take advantage of current market conditions as the
supply of hostels and other buildings capable of being converted to
hostels come to the market, but only if all internal criteria are
met.
Overall, 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 GBP23, is unchanged. This combination remains the main driver
of our business and the focus of our marketing efforts.
Outlook
We are very pleased with the progression of the business since
we were allowed to re-open post pandemic. Arguably, the Group is
better positioned than before, having had to rebuild the business
and done so with the benefit of doing something for the second
time. Our trading results for the first half of the year and the
first two months of the summer show we are comfortably on track for
the year and that we are well placed to continue to increase
occupancy and average bed rate into 2024.
Larry Lipman
Chairman
26 September 2023
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited Year
6 months to 6 months to to 31 December
30 June 2023 30 June 2022 2022
Note GBP000s GBP000s GBP000s
------------- ------------- ---------------
Revenue 2 10,472 7,286 19,146
Cost of sales (1,882) (906) (3,142)
Gross profit 8,589 6,380 16,004
Administrative expenses (7,948) (5,759) (13,801)
Exceptional Costs - - (369)
Total administrative expenses (7,948) (5,759) (14,170)
------------- ------------- ---------------
Operating profit / (loss) after exceptional expenses 3 642 620 1,834
Interest received 11 1 2
Finance costs (1,655) (960) (2,559)
Loss before tax (1,002) (339) (723)
Tax 119 (5) 441
------------- ------------- ---------------
Loss after tax (883) (344) (282)
============= ============= ===============
Exchange differences on translating foreign operations (1,901) (969) 134
============= ============= ===============
Total comprehensive profit / (loss) for the period attributable
to owners of the parent company (2,784) (1,313) (148)
============= ============= ===============
Basic / diluted loss per share (1.36p) (0.53p) (0.44p)
============= ============= ===============
Condensed consolidated statement of Unaudited Unaudited Audited
financial position
30 June 30 June 31 December
2023 2022 2022
GBP000 GBP000 GBP000
--------- --------- -----------
Non-current assets
Property, plant and equipment 68,309 73,974 72,059
Intangible assets 9 11 9
Goodwill 11,663 12,145 12,014
Lease assets 440 500 453
Deferred tax asset 1,814 1,126 1,379
Total non-current assets 82,235 87,755 85,914
--------- --------- -----------
Current assets
Stock 26 44 25
Trade and other receivables 707 605 1,121
Lease assets 135 105 139
Current tax asset 49 199 65
Cash and cash equivalents 7,261 5,215 5,226
Total current assets 8,176 6,168 6,576
--------- --------- -----------
Total assets 90,411 93,923 92,490
Current liabilities
Borrowings 1,108 574 925
Lease liabilities 1,810 2,033 1,764
Trade and other payables 5,535 2,236 3,128
Total current liabilities 8,453 4,843 5,817
--------- --------- -----------
Non-current liabilities
Borrowings 22,554 24,140 23,101
Lease liabilities 29,030 32,783 30,450
Deferred tax 3,347 3,287 3,364
Total non-current liabilities 54,931 60,210 56,915
--------- --------- -----------
Total liabilities 63,384 65,052 62,732
--------- --------- -----------
-
Net assets 27,027 28,871 29,758
--------- --------- -----------
Equity
Share capital 649 647 647
Share premium account 23,959 23,904 23,904
Other components of equity 16,513 17,590 18,417
Retained earnings (14,093) (13,271) (13,210)
--------- --------- -----------
Total equity attributable to owners
of the parent company 27,027 28,871 29,758
========= ========= ===========
Condensed consolidated statement of changes in equity
For the six months to 30 June 2023
Share Share premium Other Components Retained Total
Capital account of Equity earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000
-------- ------------- ---------------- --------- -------
Balance at 1 January 2023 647 23,904 18,417 (13,210) 29,758
Comprehensive income
(Loss) for the period - - - (883) (883)
Movement in translation reserve - - (1,901) - (1,901)
Total comprehensive income - - (1,901) (883) (2,784)
-------- ------------- ---------------- --------- -------
Transactions with owners
Share Issue 2 54 (24) - 32
Share-based payment charge
for the period - - 21 - 21
-------- ------------- ---------------- --------- -------
Balance at 30 June 2023 649 23,959 16,513 (14,093) 27,027
======== ============= ================ ========= =======
Share Share premium Other Components Retained Total
Capital account of Equity earnings 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) (1,312)
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
======== ============= ================ ========= =======
Share Share premium Other Components Retained Total
Capital account of Equity earnings Equity
GBP000 GBP000 GBP000 GBP000 GBP000
-------- ------------- ---------------- --------- -------
Balance at 1 January 2022 647 23,904 18,510 (12,928) 30,133
Loss for the year - - - (282) (282)
Other comprehensive income
Movement in translation reserve - - (134) - (134)
-------- ------------- ---------------- --------- -------
Total comprehensive loss - - (134) (282) (416)
Transactions with owners
Share based payment charge
for the period - - 42 - 42
Balance at 31 December 2022 647 23,904 18,417 (13,210) 29,758
======== ============= ================ ========= =======
Condensed consolidated statement Unaudited Unaudited Audited
of cash flows
Note 6 months 6 months Year
to 30 June to 30 to 31
2023 June 2022 December
2022
GBP000 GBP000 GBP000
----------- ---------- ---------
Operating activities
Cash generated from operations 3 4,969 2,939 6,130
Income tax paid 28 4 133
----------- ---------- ---------
Net cash generated from operating
activities 4,997 2,943 6,263
----------- ---------- ---------
Investing activities
Purchase of property, plant and equipment (183) (176) (365)
Purchase of intangible assets - - (5)
Net cash outflow from investing
activities (183) (176) (370)
----------- ---------- ---------
Cash flows from financing activities
Repayment of bank loans (500) (250) (997)
Principal elements of lease payments (1,505) (1,678) (3,495)
Interest paid (775) (106) (656)
(2,780) (2,034) (5,148)
----------- ---------- ---------
Cash and cash equivalents at beginning
of period 5,226 4,482 4,482
Net increase in cash and cash equivalents 2,035 733 744
----------- ---------- ---------
Cash and cash equivalents at end
of period 7,261 5,215 5,226
=========== ========== =========
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 UK-adopted International Accounting
Standards
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 2022 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 2023
and 30 June 2022 is unaudited.
These condensed interim financial statements 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 2022.
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 SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
6 months 6 months Year to 31
to 30 June to 30 June December 2021
2023 2022 2022
GBP000 GBP000 GBP000
----------- ----------- --------------
Hostel accommodation 9,463 6,564 17,150
Food and Beverages sales 697 495 1,109
Other income 312 227 517
Total Income 10,472 7,286 18,776
----------- ----------- --------------
UK Spain Europe Shared services Total
Unaudited 6 months to 30 June 2023 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3,556 2,477 4,438 - 10,472
-------- -------- -------- --------------- --------
Profit/(loss) before tax 931 96 444 (2,473) (1,002)
Add back: Finance costs 98 - 16 1,530 1,644
Add back: Depreciation & Amortisation 298 549 615 511 1,973
-------- -------- -------- --------------- --------
EBITDA 1,327 645 1,075 (433) 2,615
Exceptional & Share based payment expense - - - 21 21
Adjusted EBITDA 1,327 645 1,075 (412) 2,636
-------- -------- -------- --------------- --------
Total assets 34,969 16,335 24,309 14,798 90,411
-------- -------- -------- --------------- --------
Total liabilities (12,227) (12,168) (12,681) (26,306) (63,384)
-------- -------- -------- --------------- --------
Unaudited 6 months to 30 June 2022 UK Spain Europe Shared services Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,657 1,813 2,816 - 7,286
-------- -------- -------- --------------- --------
Profit/(loss) before tax 509 403 456 (1,706) (338)
Add back: Finance costs 160 244 203 353 960
Add back: Depreciation & Amortisation 404 636 670 198 1,908
-------- -------- -------- --------------- --------
EBITDA 1,073 1,283 1,329 (1,155) 2,530
Exceptional & Share based payment expense 49 - - - 49
Rent concessions - (24) - - (24)
Adjusted EBITDA 1,122 1,259 1,329 (1,155) 2,555
-------- -------- -------- --------------- --------
Total assets 34,456 20,739 26,206 12,522 93,923
-------- -------- -------- --------------- --------
Total liabilities (11,653) (13,916) (12,687) (26,796) (65,052)
-------- -------- -------- --------------- --------
Audited 12 months to 31 December 2022 UK Spain Europe Shared services Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 6,864 4,464 7,818 - 19,146
-------- -------- -------- --------------- --------
Profit/(loss) before tax 2,574 278 1,007 (4,583) (724)
Add back: Finance costs 191 1 59 2,306 2,558
Add back: Depreciation & Amortisation 253 1,045 1,370 987 3,654
-------- -------- -------- --------------- --------
EBITDA 3,018 1,324 2,436 (1,290) 5,488
Exceptional & Share based payment expense 411 411
Adjusted EBITDA 3,018 1,324 2,436 (878) 5,900
-------- -------- -------- --------------- --------
Total assets 36,539 16,570 25,233 14,147 92,490
-------- -------- -------- --------------- --------
Total liabilities (9,164) (12,088) (12,672) (28,808) (62,732)
-------- -------- -------- --------------- --------
3. NOTES TO THE CASHFLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2023 2022 2022
GBP0 GBP0 GBP0
----------- ----------- ------------
Loss before tax (1,002) (283) (724)
Adjustments for:
Depreciation of property, plant
and equipment and 1,973 1,908 3,586
amortisation of intangible assets
Finance costs 1,644 960 2,558
Share-based payments 21 - 42
Exchange movements (506) 43 (836)
Lease Modification - - 280
Rent Concessions - (24) -
Changes in working capital
Decrease/(Increase) in inventory 1 (9) 11
(Increase)/Decrease in trade receivables 431 622 154
Increase/(Decrease) in trade and
other payables 2,408 (272) 1,059
----------- ----------- ------------
Cash generated from operating
activities 4,969 2,939 6,130
----------- ----------- ------------
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