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(SSTY) Safestay Share Chat

Discussion in 'General Share Chat (SSTY)' started by Groucho, Feb 28, 2019.

  1. Groucho

    Groucho Member

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    05 February 2019


    Safestay plc

    ("Safestay" or the "Company")


    FY18 Trading Statement


    Poised for European roll-out


    Safestay plc (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to provide the following trading update for the 12 months to 31 December 2018.

    Key highlights in 2018

    · Positive trading performance

    · 39% increase in total revenues to £14.6 million (2017: £10.5 million)

    · Growth in Occupancy to 75.6% (2017: 72.8%)

    · Expect to deliver at least £3.4 million in EBITDA (2017: £3.2 million)

    · Added new hostel sites in Barcelona, Brussels and Vienna

    · Successful £10.36 million capital raise in December 2018 to fund future expansion

    · Poised for European roll-out with 15 European cities identified

    At an annual growth rate of 5%*, the contemporary hostel market is the fastest growing segment of the accommodation sector within which Safestay is already one of the leading operators in Europe with 2,792 beds. Demand for the hostel experience from the digital generation, in particular, remains strong across the UK and the continent.

    * A report from Phocuswright 2016

    The successful capital raise in December 2018 which generated £10.36 million of new funds, reflects the strength of the performance to date and provides the financial platform to complete the next stage of the Group's expansion. 15 European cities have been identified as suited to the Safestay brand and there is a strong pipeline of potential sites located in these cities in various stages of negotiations.

    In 2018, the Company added three new city centre sites. In H1 the Company acquired the 351 bed Barcelona Passeig de Gracia hostel which has performed strongly from the outset. In H2 the Company secured 2 long term leases in Vienna and Brussels.

    In addition, the Company is pleased to announce that the popular Elephant & Castle Safestay hostel located in the Labour Party's ex-headquarters has completed its 73 bed extension and now offers 486 beds per night. In total, the Group now consists of:

    · 4 sites in the UK: York, Edinburgh and two in London

    · 9 sites in Europe: Brussels, Lisbon, Madrid, Paris, Prague, Vienna and three in Barcelona

    · 2,792 beds across all 12 hostels and 234 under construction


    Looking ahead, Larry Lipman, Chairman of Safestay, said:

    "The focus is to grow the brand and the Company has the capital to support an increase from the 13 sites today to over 20, at which point the business will become self-funding and increasingly gain from economies of scale and brand growth."

    The Company will announce Final Results for the 12 months to 31 December 2018 in April 2018.
     
  2. Groucho

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  3. Groucho

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  4. Groucho

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  5. Groucho

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    10 April 2019


    Safestay plc

    ("Safestay", the "Company" or the "Group")

    Final Results for the year Ended 31 December 2018

    Safestay (AIM: SSTY), the owner and operator of a new brand of contemporary hostel,

    2018 Financial highlights

    · 39% increase in total revenues to £14.6 million (2017: £10.5 million)

    · 8% increase in like for like sales in mainland Europe with Group like for like sales up 1% to £10.6 million (2017: £10.5 million) as UK is down by 1% due to the disruption from adding 73 beds in Elephant & Castle

    · 43% or £6.2 million of net revenue now coming from mainland Europe versus 19% in 2017

    · Occupancy grew to 76% (2017: 73%)

    · Adjusted EBITDA of £3.4m (2017: £3.2 million)

    · Loss before tax reduced to £0.60 million (2017: £0.86 million)

    · Loss per share 2.56p (2017: 2.55p)

    · Completed successful £10.36 million capital raise in December 2018 to fund future expansion



    2018 Operational highlights

    · Added 575 beds with 3 new properties in the key gateway cities of Barcelona, Brussels and Vienna

    · Significant improvements in operating margins led to profit before tax from UK hostels increasing by 14% to £1.76 million(2017: £1.55 million)

    · Hostel EBITDAR margins have increased by 7% to 48% (2017 44.8%)

    · Guest recommendation rate increased to 81% (2017 80%)

    · Enhanced website and booking engine implemented in Q4 2018

    · Adopted common property management system (Cloudbeds) now operating in all hostels

    · Madrid rooftop bar open since July 2018


    Post year end

    · Completed 73-bed extension to Elephant & Castle on 20 January 2019, triggering a £1.18 million final payment to Safestay under the re-financing transaction in February



    Larry Lipman commenting on the results said:

    "2018 was a positive year for the business and I am confident that 2019 will deliver continued growth. The portfolio is maturing and shows the benefits of the Group gaining from economies of scale, geographic spread and group wide automation. This, together with continuing global demand for the modern hostel experience means we are well placed to sell an increasing number of bed nights in 2019 and add further destination cities to our portfolio."

    Safestay PLC - Final Results @SafestayHQ https://www.voxmarkets.co.uk/rns/announcement/0b6c067e-2a35-4eb7-b040-ab21f476bd01
     
  6. Groucho

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    13 June 2019

    Safestay plc

    ("Safestay", the "Company" or the "Group"

    Acquires Italian Hostel in Pisa


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to announce that it has acquired the freehold of 'Hostel Pisa' for €3.25 million.

    The acquisition of the 161 bed Hostel Pisa is part of the Group's strategy to establish a pan-European network of premium hostels, located in popular tourist cities. The addition of Hostel Pisa takes the portfolio to fourteen hostels and with the recent fund raising and pipeline of potential sites, the Company is well placed to reach its shorter-term target of owning and operating 20 hostels.

    A very popular destination to visit in Italy's famous region of Tuscany, Pisa attracts over one million visitors each year, all keen to see its famous architecture from the Cathedral of Santa Maria Assunta to the Leaning Tower of Pisa.

    Hostel Pisa is located in the city centre, around the corner from Pisa train station and a 15 minute walk from the airport. Established in 2013, Hostel Pisa is a well maintained successful business with good quality bedrooms offering a contemporary hostel experience which fits neatly within the Safestay portfolio. Serving a true Italian culinary experience to guests sitting in a grape filled garden, it is a popular choice in this sought after tourist city.

    The property is freehold and in the 12 months to 31 December 2018 generated revenues of €0.8 million and EBITDA of €0.3 million. The total consideration of €3.25 million will be satisfied in cash, from the Group's existing cash resources. Given the good condition of the building and facilities, the only investment required will be to re-brand the building to become a Safestay Hostel at an approximate cost of €50,000.

    The Group's portfolio now consists of:

    · 4 sites in the UK: York, Edinburgh and two in London

    · 10 sites in Europe: Brussels, Lisbon, Madrid, Paris (under construction), Pisa, Prague, Vienna and three in Barcelona

    · 3,297 beds across all 14 hostels



    Larry Lipman, Chairman of Safestay, said:

    "It is very pleasing to be announcing the completion of this acquisition. Hostel Pisa is an excellent addition and a natural fit within our portfolio. Currently it operates independently, and we are confident that within the Safestay portfolio it has the potential to excel, taking advantage of our brand, purchasing power and ability to promote Pisa to guests staying in any of our other hostels.

    The Group as a whole is trading well and in line with market expectations. Demand has been strong overall and bookings for the summer look good."
     
  7. Groucho

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    18 September 2019

    Safestay plc

    ("Safestay", the "Company" or the "Group")

    Acquisition of Glasgow Hotel


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to announce that it has agreed to acquire the freehold of its fifteenth hostel, currently operating as 'Best Western Glasgow City Hotel', for £3.15 million. Completion of the acquisition is expected to take place on 21 October 2019.

    The acquisition of the 52-bedroom hotel is part of the Group's strategy to create a pan-European network of premium hostels in leading cities. Located on Elmbank Street in the heart of the City, the hotel is a short walk from Charing Cross railway station providing fast transport links to Edinburgh and other regions.

    Safestay already operates a successful site in Edinburgh and therefore the acquisition of Safestay Glasgow is a natural extension enabling the Group to market both cities. As with the acquisition of other hotels by Safestay, the Company intends to convert this site into a hostel and outline planning permission already exists for conversion into a 200 bed hostel.

    Glasgow, the largest city in Scotland, was the fourth most visited UK city from overseas outside London in 2018, globally renowned for its gothic style architecture such as the famous Glasgow Cathedral.

    The property is freehold and in the 12 months to 31 January 2019 generated revenues of £0.82 million. The total consideration of £3.15 million will be satisfied in cash from the Group's existing cash resources.

    Following this acquisition the Group's portfolio now consists of:

    · 5 sites in the UK: Glasgow, Edinburgh, York and two in London

    · 10 sites in Europe: Brussels, Lisbon, Madrid, Paris (under construction), Pisa, Prague, Vienna and three in Barcelona

    · Approximately 3,500 beds across all 15 hostels

    Larry Lipman, Chairman of Safestay, said:

    "Given the success of our 615 bed Edinburgh hostel which we acquired in 2015 and now considered to be a flagship site within our portfolio, we have been looking for sometime to find the right site in Glasgow. We are therefore very pleased to have secured this excellent building which is ideally suited to being a hostel, providing an excellent base to explore Glasgow from. We very much look forward to Safestay Glasgow becoming part of the portfolio."
     
  8. Groucho

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    24 September 2019

    Safestay plc

    ("Safestay", the "Company" or the "Group")

    Joint Venture Partnership to develop 660 bed Venice Hostel


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to announce that it has entered into a joint venture partnership with EOS Sicav plc to develop a 660 bed hostel in Venice. Safestay will acquire 50% of the freehold site for €2.1 million and share the development costs of building the hostel on a 50:50 basis.

    The site covers 6,000 sqm and is located on Via Fratelli Bandiera, a very short walk from the main railway terminal, Mestre Station. Construction is scheduled to begin in 2020 once final licensing is confirmed. Safestay's share of the development costs are expected to be approximately €5.0 million and once completed, Safestay will lease the hostel from the joint venture partnership and be the sole operator.

    Venice is undoubtedly one of Europe's most iconic cities attracting over 14 million visitors throughout the year and thereby providing year round revenues from tourism.

    Given the popularity of the city, Venice is still relatively under served in terms of number of hostel beds. As a consequence, to have secured a site to develop a 660 bed hostel in such a good market is a very strong addition to the Safestay portfolio and once completed it will be a significant contributor to the Group's future profitability.

    The property is freehold and the total consideration of €2.1 million for 50% of the site will be satisfied from the Group's existing cash resources.

    Following this acquisition, the Group's portfolio consists of:

    · 5 sites in the UK: Glasgow, Edinburgh, York and two in London

    · 11 sites in Europe: Brussels, Lisbon, Madrid, Paris (under construction), Pisa, Prague, Vienna, Venice and three in Barcelona

    · Approximately 4,200 beds across all 16 hostels (once fully developed)

    Larry Lipman, Chairman of Safestay, said:

    "Acquiring a site for a substantial hostel in Venice is a great opportunity for Safestay. We have been working closely with EOS Sicav plc for some time to achieve this, as the potential is clear and the number of similar opportunities are few.

    This is also our second site in Italy following the acquisition of Safestay Pisa earlier this year. Italy is a natural market for us and we are continuing to look for similar opportunities in the other popular Italian cities."
     
  9. Groucho

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    25 September 2019

    Safestay plc

    ("Safestay" or "the Company" or "the Group")



    Interim Results

    For the Six Months to 30 June 2019



    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, announces its unaudited interim results for the six months ended 30 June 2019



    Trading Highlights

    · Safestay now has 16 hostels with approximately 4,000 beds (including hostels in Glasgow, Paris and Venice currently under development) across 9 European and 4 UK cities

    · Total revenues increased by 24% to £8.1 million (2018: £6.5 million) with like for like sales up 4%

    · Average Bed Rate increased by 6%* to £19.5 (2018: £18.4)

    · Adjusted EBITDA (pre IFRS 16 adjustment) is £1.4 million (2018: £1.3 million)

    · As at 30 June 2019 the Company had £8.3 million cash in the bank

    · The freehold 161 bed Pisa hostel site acquired for £3.0 million in June 2019 has traded strongly

    · F&B sales increased by 31%

    · New restaurant in Barcelona Passeig de Gracia hostel and completion of the 73-bed extension in Elephant & Castle hostel with a full renovation of the bar area


    *Excludes Vienna and Brussels which are currently operating as Hotels and as a result have higher bed rates


    H2 2019 and beyond

    · Positive summer trading positions the Company well and the Board expects revenues for the current year to exceed £17.0 million and adjusted EBITDA (pre IFRS 16 adjustment) to be in the region of £3.8 million

    · 18 September, announced the acquisition of a freehold site in Glasgow for £3.15 million currently operating as a 52 bed hotel with the potential to be converted into a 200 bed Safestay hostel following the completion of the purchase in October 2019

    · 23 September, Elephant & Castle hostel was revalued following the 73 bed extension at £26.8 million, an increase of £10.8 million over the last valuation in 2017, which equates to an NAV increase of 16.7p per share

    · 24 September, announced the execution of an agreement to acquire a 50 per cent stake in a site in Venice which will be converted into a 660 bed hostel, our biggest hostel so far, and operated by Safestay upon completion in 2021

    · Good prospects for further complementary acquisitions to be funded from existing resources


    Larry Lipman, Chairman of Safestay, said:

    "2019 has to date been good for trading seen in the 24% increase in sales for H1 and for expansion with the acquisition of three new hostels which once completed will add 1,000 beds increasing the portfolio by nearly one third. Alongside this, our platform is now established, and we can therefore add to our portfolio without materially adding to our structure or central costs so that our economies of scale will increasingly come into play as we move to our 2020 target of operating 20 hostels.

    From a trading perspective, we have yet to see the full benefit from our acquisitions in Vienna, Brussels, Pisa and more recently Glasgow together with the medium-term potential of Paris and Venice. We have also shown the underlying value within our property portfolio with the revaluation of Elephant & Castle to £26.8 million, an increase of 67% since 2017.

    Safestay is therefore in an enviable position to continue its positive growth trajectory, building a portfolio of well positioned hostels under a premium, contemporary hostel brand"

    Safestay PLC - Half-year Report @SafestayHQ https://www.voxmarkets.co.uk/rns/announcement/d74d2131-6452-4b20-a3f4-19bed5776248
     
  10. Groucho

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  11. Groucho

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    3 February 2020

    Safestay plc

    ("Safestay", the "Company" or the "Group")

    FY19 Trading Statement


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to announce a successful trading period for the 12 months to 31 December 2019, recording significant increases in revenues, occupancy and EBITDA.

    FY19 Highlights

    · 25% growth in total revenues to £18.3 million (2018: £14.6 million) with like for like revenues up 7%

    · 11% increase in adjusted EBITDA* to £3.8 million (2018: £3.4 million)

    · 77.3% occupancy achieved over the period, up from 75.6%, reflecting good demand

    · 5% increase in average bed rate to £21.3 (2018: £20.3)

    · 43% growth in F&B revenues now representing 14% of total revenues

    · Completed 6 transactions, adding 8 hostels increasing the portfolio to 21 sites and over 5,100 beds

    · Europe now represents 49% of sales (2018: 43%)

    * adjusted EBITDA excludes one-off, non-recurring expenditure which would otherwise distort the metric for comparison purposes

    Larry Lipman, Chairman of Safestay, said, "In 2019 we near doubled the size of the Safestay network. In doing so, the Safestay brand has become Europe's leading premium hostel network totalling 21 sites, all in sought-after central locations in the UK and Europe's best known cities. The brand is now well established and positioned to sell over a million bed nights in 2020 in unique hostels ranging from Edinburgh to Athens.

    Trading in 2019 was good, all key indicators were strongly positive, in particular the organic growth performance, and critically we have yet to really benefit from the recent acquisitions agreed towards the end of the year. Safestay is therefore well placed to grow substantially in 2020 and take advantage of the increasing popularity of the modern hostel sector."

    Trading performance

    The business performed well in 2019, achieving 25% growth in sales. Demand has been consistent across the business with occupancy now averaging 77.3%, helped by a 50% increase in direct web bookings driven by the Company's booking engine and website which were refreshed in early 2019.

    F&B, previously identified as a growth opportunity, was up 43% in 2019 and supported by the refurbishment of 3 restaurants in Barcelona, Elephant & Castle and Edinburgh. These enhancements were part of the £1.8 million refurbishment and renovations programme across 2019 and 2020. Re-investment is core to maintaining the premium status of Safestay amongst the hostel market and the ongoing high levels of guest satisfaction.

    The integration of the new hostels acquired in 2019 is proceeding well with the investment made over the last three years in centralised IT and booking systems and the integration experience the Group has gained, ensuring that the incoming sites can be integrated efficiently, and immediately benefit from the Group's economies of scale.

    In January 2020, a new 5 year £23 million loan facility was agreed with HSBC. The new facility is on the same terms and replaces the £18 million 5 year loan facility agreed in 2017 also with HSBC and with an interest rate of 2.45% + LIBOR, providing the Company with additional headroom to support its commercial objectives.

    Further to the announcement made on 18 December 2019, the acquisition of the Bratislava and Warsaw Hostels from Dreamgroup Management E.C.P. Ltd for a total consideration of €2.7 million has been completed. The completion of the acquisition of the third hostel of the Dream portfolio, which is located in Prague, will take place in the next weeks.

    Outlook

    The financial performance and the investment made in 2019 has created real momentum going into 2020. While still very early in the year, performance in the first month of 2020 and forward bookings for Q1 are very encouraging, a positive signal for the coming year, which will also benefit from the acquisitions made last year.

    Current Network

    F82871AC-890F-4BC2-A04A-821C7C43BB64.jpeg
     
  12. Groucho

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    79F9E28F-B549-48EC-A6A4-3A68B59008AA.jpeg
    City AM 05/03/2020
     
  13. Groucho

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    10 March 2020

    Safestay plc

    ("Safestay", the "Company" or the "Group")

    Trading Update


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, announces that the spread of the COVID-19 virus is having an impact on bookings across the hostel network.

    We have experienced a material reduction in new bookings over the last week against our expectations and there have been a growing number of group bookings from schools and colleges which have been cancelled or postponed. It is too early to say what the full impact from COVID-19 might be in the current financial year, as it is not known how long the virus will continue to impact travel and spending patterns in Europe and the UK.

    As announced in a trading update on 3 February 2020, the Company completed a successful year in 2019 and entered 2020 in a strong financial position. The Board is confident that the business is well placed to weather the current challenges and return to growth as and when the travel market normalises.

    In the meantime, the Company is reducing flexible costs where possible to offset the dip in bookings whilst strictly adhering to all health advice in order to help protect all of our staff and guests.
     
  14. Groucho

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    29 May 2020

    Safestay plc

    ("Safestay", the "Company" or the "Group")

    Final Results for the year Ended 31 December 2019

    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to announce its Final Results for the 12 months to 31 December 2019.


    2019 Financial highlights

    · Total revenues increased by 26% to £18.4 million (2018: £14.6 million) with like for like sales up 7%

    · 49% or £9 million of net revenue now coming from mainland Europe versus 43% in 2018 (£6.2 million)

    · 77.3% occupancy achieved over the period, up from 75.6%, reflecting good demand

    · 5.4% increase in average bed rate to £21.4 (2018: £20.3)

    · Adjusted EBITDA of £6.1 million and £3.8 million pre-IFRS 16 adjustments (2018: £3.4 million)

    · Loss before tax of £0.6 million and £0.2 million pre-IFRS 16 adjustments (2018: £0.6 million)

    · Loss per share 1.48p (2018: loss of 2.56p)


    2019 Operational highlights

    · Transformational year with the portfolio increasing from:

    o 13 to 20 hostels

    o 3,200 to 4,900 beds

    o 6 to 12 countries

    · Added 7 new properties in the key tourist cities of Pisa, Venice, Glasgow, Berlin, Athens, Bratislava and Warsaw

    · 43% growth in F&B revenues now representing 14% of total revenues

    · 50% increase in number of bookings made via the Safestay website

    · £0.9 million was invested in renovation projects to maintain the premium positioning of the Safestay brand

    · Elephant & Castle hostel was revalued following the 73 bed extension at £26.8 million, an increase of £10.8 million over the last valuation in 2017, which equates to a NAV increase of 16.7p per share


    Post-year end - 2020 year to date highlights

    · Agreed to increase debt facility from £17.9 million to £22.9 million with HSBC under the same terms as the previous facility, for a new 5 year term until January 2025

    · In response to COVID-19 and the temporary closure of all hostels from 1 April, the Company minimised all costs, agreed a £5 million overdraft with HSBC, utilised available government reliefs and as a result is well placed to weather the current crisis

    · Management focus has switched to preparing for a staggered re-opening plan initially just targeting the domestic market in each country

    · Under the re-opening plan there will be protective changes introduced to check-in, food service, cleaning rotas and the temporary closure of common spaces with no shared rooms, and instead rooms will be sold to individuals or groups known to each other


    Larry Lipman, Chairman of the Company, commenting on the results said:

    "2019 was a transformational year for Safestay. We added 7 new hostels increasing our number of sites to 20 making us a leading premium hostel operator in Europe. Our financial performance reflected this expansion with revenues up 26% and while we also made a good start to trading in 2020, the sudden spread of COVID-19 has meant we have had to adapt quickly to an unexpected phase.

    We secured the financial stability of the business and we are now working on our plans to re-open our hostels on a staggered basis, over the course of 2020, as and when we believe they can be profitable. Our focus is on ensuring the safety of our guests, initially targeting the domestic markets in each country, and then looking to gradually return to normal trading patterns.

    Navigating the re-engagement of the business will require us to be highly flexible as we test and match demand in individual markets, however, we are confident of being able to do this and making sure that we balance increased operational cost with increased income. From an industry perspective, the hostel market is highly fragmented with a large number of small operators who are under pressure as a result of the pandemic and this may well create unique opportunities for Safestay".

    Safestay PLC - Final Results #SSTY @SafestayHQ https://www.voxmarkets.co.uk/rns/announcement/6b5b37f3-661d-4dbc-a3e9-1ffb9761f0b1 #voxmarkets
     
    Last edited: Aug 24, 2020
  15. Groucho

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    24 August 2020

    Safestay Plc
    ("Safestay" or the "Company")

    Trading Update and Financing Arrangements

    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, is pleased to provide the following update on trading and its latest financing arrangements.

    Trading update

    On 29 May 2020, in conjunction with the announcement of the Company's final results for the year ended 31 December 2019, the Company updated the market on its financial position and outlook. That announcement explained the material uncertainty which has resulted from the impact of the COVID-19 virus on the economy and the hospitality industry and the company now sets out its revised plan as it adapts to the prolongation of the pandemic beyond June and the current travel restrictions in parts of Europe and across the globe. The perceived likelihood of a second wave, impacting further the tourism sector after the summer of 2020 is increasing, and this has persuaded the Company to take further actions to safeguard the Group's financial position. Additional cost saving measures have recently been implemented, including further negotiations with landlords to obtain additional rent reduction following the £0.4m rent relief granted in the period between April to July 2020, and all costs will continue to be reviewed on an ongoing basis.

    The Directors believe that Safestay has the infrastructure in place to manage the re-opening of hostels and re-engagement with its customers and that ultimately, Safestay will find the route to returning its portfolio of hostels to pre-COVID-19 occupancy levels. Safestay has been at the forefront of the modernisation of the hostel market over the last five years. The Group generated significant cash from its operations in 2019 and its strategy to develop and expand the premium hostel offering within the UK and through its European acquisitions was proving a successful formula pre-crisis, and the Directors believe that it will continue to appeal to the Group's customer base again once the world has moved past the current crisis.

    The Company has built a forecast under two alternative indicative scenarios:

    A base case which applies the following assumptions:

    · All hostels re-open by October 2020

    · 25 per cent. occupancy (versus 90 per cent. in 2019) for the months of August and September 2020 (based on open units rather than total units), rising to 30 per cent. occupancy in the last quarter of 2020, and 40 per cent. occupancy (versus 65 per cent. in 2020) for the months of January and February 2021; and

    · An average occupancy 5 per cent. lower than in 2019 for the rest of 2021.

    A low case which applies the following assumptions:

    · All hostels re-open by October 2020 except for London Kensington Holland Park and Barcelona Gothic which would open in 2021;

    · 20 per cent. occupancy (versus 90 per cent. in 2019) for the months of August and September 2020 (based on open units rather than total units), reducing to 15 per cent. occupancy in the last quarter of 2020 assuming a second wave of infection, and 25 per cent. occupancy (versus 65 per cent. in 2020) for the months of January and February 2021; and

    · An average occupancy 15 per cent. lower than in 2019 for the rest of 2021.

    The Group's hostels break even when the average occupancy reaches approximately 57%. Under both indicative scenarios, the hostels reach this occupancy level from March 2021.

    The contribution of the six hostels acquired in 2019 and 2020 will help the total revenue to return to 2019 levels in 2021 in the base case scenario despite a lower occupancy. The following is an update of the Group's material capital expenditure requirements:

    · The conversions of the Group's properties in Glasgow, Vienna and Brussels from hotels to hostels were completed and paid for by March 2020. The Brussels and Glasgow properties were also fully renovated as part of the conversion works to position the hostels strongly in their market upon re-opening of the properties.

    · The Group completed renovation works in Lisbon, Barcelona Gothic, York and Edinburgh, and to the restaurant in Barcelona Passeig de Gracia by March 2020.

    The conversion and renovation costing upwards of £0.2 million of the Berlin hotel into a 180 bed hostel has been postponed. The Group's planned 2020 renovation program also included some renovation works in Barcelona Sea, Barcelona Passeig de Gracia and Elephant and Castle, which have been postponed. All these projects will resume when the requisite funds are available and if the investment is still financially sensible in the post COVID environment.

    Current Trading

    During the lock down period, management organised 24/7 security in all hostels and all properties have been serviced, maintained, and cleaned. The job retention schemes have allowed the Company to keep essential staff employed, and therefore the Group has the ability to resume activity in all hostels as soon as authorised by relevant jurisdictions and provided that resuming activity makes financial sense. Moreover, following the acquisition of 14 hostels in the last three years, the Group's teams have gained experience in opening hostels in a very short timeframe and limited resource, as demanded by the current situation.

    The re-opening of hostels is subject to the restrictions in each market, and the Group's sales team is initially focused on just domestic customers while international travel remains limited. Under the slogan, 'Stay Safe at Safestay' the priority is to inform guests of the safety measures that are in place. A detailed description of the safety protocols and the operational measures in place is made available to the Group's guests via the Company's website. Rooms are only being sold to individuals or groups who are known to each other.

    The Group re-opened its Berlin hotel on 26 May 2020, the Vienna hostel on 10 June 2020, and all other hostels will have re-open by 28 August, except for London Kensington Holland Park and Barcelona Gothic hostels which will only re-open when there is considered to be sufficient demand to profitably operate more than one hostel in London, and two in Barcelona.

    On average, in July 2020, 30 per cent. of the Group's bed stock was available and 16 per cent. of such bed stock was occupied. The average occupancy for the Group's bed stock rose to 24 per cent. and 27 per cent. of available bed stock respectively in the first and second weeks of August The Directors are encouraged that the data up to 16 August 2020 shows that occupancy levels are gradually increasing week after week after hostels have re-opened. The five hostels (Pisa, Berlin, Vienna, Warsaw, Brussels) which have been re-open for more than five weeks have achieved 31 per cent. occupancy on average in their third week since re-opening, and 39 per cent. occupancy on average in their fourth week since re-opening.

    Whereas under normal circumstances, 28 per cent. of the Group's business is from group bookings made months in advance, and 72 per cent. from individual guest bookings made two months in advance on average, the current business is made essentially of last minute bookings, which makes future bookings more difficult to predict.


    Financing Arrangements

    It was announced on 14 April 2020 that the Company had agreed a new £5 million overdraft facility from HSBC, which together with the Company's cash reserves, would satisfy the Company's working capital cash requirements during and after the lock down period. As announced on by the Company on 29 May 2020, the covenants in the Company's existing £22.9 million debt facility, also with HSBC, have been waived until 31 December 2020. The Group is expected to breach the historic debt service cover covenant and the historic interest cover covenant at the next test date of 31 December 2020, and the Group is currently discussing with HSBC the possibility of HSBC waiving such covenants as at the test date of 31 December 2020 and for a longer period thereafter. There is no guarantee that HSBC will agree to waive such covenants as at 31 December 2020 or agree to extend the waiver of such covenants beyond 31 December 2020. The Group is pursuing a government backed loan pursuant to the Coronavirus Business Interruption Loan Scheme (CBILS) to replace the HSBC facility.

    Cash in bank as at 18 August 2020 was approximately -£0.9 million, with £4.1 million of the £5.0 million HSBC overdraft still available to be drawn. Under the base case scenario above, the Company models its cash low position of approximately £(4.6) million in February 2021, falling within the available £5.0 million overdraft facility. If the assumptions contained in the low case scenario described above were to apply, the Group would have a funding shortfall by 31 January 2021.

    To strengthen the Company's finances the board is investigating alternative options to maintain its cash requirements within the £5 million limit pursuant to the overdraft with HSBC. The Group owns the freeholds of the hostels in Glasgow, Pisa and York, which could therefore be disposed of, either in the form of a sale and lease back transaction or a straight disposal. The Group might also contemplate the early termination of the leases which are anticipated to generate losses in the next months, subject to an agreement being reached with the relevant landlords. The Board is considering a range of options in relation to the business, including raising equity, but the Board is mindful of giving all shareholders the opportunity to participate in any such equity raise.


    The directors remain confident of securing additional funding to continue to support the business and emerge as one of the winners post the pandemic.

    Larry Lipman, Chairman of Safetsay, "This is a challenging period but I am confident that in time we will get back to normal. We are working closely on a range of options to strengthen our financial position, which may not be required but will be an additional comfort to have. We know we have a good cash generative business and while the current market is challenging we have a clear strategy for addressing it and as importantly for moving back to being fully operational."

    The Company will provide a more detailed trading update with its interim results, which will be published on 24 September 2020.
     
  16. Groucho

    Groucho Member

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    24 September 2020

    Safestay plc

    ("Safestay" or "the Company" or "the Group")


    Interim Results

    For the Six Months to 30 June 2020


    Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, announces its unaudited interim results for the six months ended 30 June 2020


    Trading Highlights

    · Safestay operates 20 hostels with approximately 4,800 beds across 11 European and 4 UK cities

    · In response to the COVID-19 pandemic, and in line with the hospitality industry globally, all our hostels closed on 1 April 2020 and a gradual reopening programme began from 26 May 2020

    · As a result occupancy was 55% (based only on hostels while they were open)

    · Total revenues decreased by 58% to £3.4 million (2018: £8.1 million)

    · Recorded Adjusted EBITDA (post IFRS 16 adjustment) loss of £1.2 million (2019: £2.5 million profit)

    · To offset the reduction in income, the Group reduced costs where practical, taking advantage of government support schemes and working with landlords to reduce rents

    · In April the Group secured a £5 million overdraft facility with HSBC and as at 16 September 2020 the cash in bank was -£1 million



    H2 2020 and beyond


    · All hostels re-opened by 28 August, except for London Kensington Holland Park and Barcelona Gothic

    · On 2 September, the Company received a £0.2 million government backed loan in Germany

    · In July and August, the Company has traded at the higher end of the Board's forecast scenarios

    · On 23 September, the Company agreed with HSBC in principle to replace the £5 million overdraft facility with a £5 million Coronavirus Business Interruption Loan Scheme (CBILS)

    Larry Lipman, Chairman of Safestay, said:

    "We made a good start to 2020, however, trading was materially impacted by the Covid-19 pandemic from March onwards. We responded quickly to protect our financial position and the safety of our guests and employees. As a result, the business is stable and it is encouraging to have now reopened nearly all our hostels. While it is still difficult to predict the pace of our recovery, we are re-engaging effectively with our customer base and we are confident that we will in time return our hostel portfolio to pre-Covid-19 occupancy levels."



    Chairman's statement

    Introduction

    The trading results for the six months to 30 June 2020 reflect the challenges which Safestay and more generally the hospitality industry have had to face as a result of the Covid-19 pandemic. It is however pleasing to see that the Company had a strong start in January and February as an underlying reminder of the appeal of our portfolio before the pandemic took effect. I am also pleased that we were quick to implement adequate measures to protect our cash position during the lock down period and successfully executed our reopening strategy to ensure the safety of our guests and employees. We are still operating in a very uncertain environment, but we will work through these challenging times and emerge in a positive position in 2021. Since the half-year end, we have been seeing a gradual increase in occupancy across the hostels that have been open.


    Financial review

    Due to the closure of the hostels, the Group operated just 45% of its available bed stock for the first six months of 2020, and recorded a 58% decrease in revenues to £3.4 million (2019: £8.1 million) leading to an adjusted EBITDA (post IFRS 16 adjustment) loss of £1.2 million (2019: £2.5 million profit).

    To mitigate the reduction in revenue, the Company negotiated rent reductions from landlords and applied for government support where it was available. Consequently, the Group benefited from £0.4 million of rent relief from March to June and total revenue includes £0.3 million of income received via government support schemes. In some countries, employees were paid directly by the government whilst being furloughed, which corresponded to approximately a further £0.3 million saving.

    The Group recorded a loss before tax of £4.7 million (2019: loss before tax of £0.9 million) which includes £0.3 of exceptional costs in relation to the expansion projects completed in 2020. This led to a loss per share of 7.30p (2019: -1.40p per share).

    In April 2020, the Company agreed a new £5 million overdraft facility from HSBC. Cash in bank as at 16 September 2020 was approximately -£1 million.

    As at 30 June 2020, net asset value per share was 48.2p per share (2019: 41.8p per share) following the revaluation of the London Elephant & Castle property in September 2019 to £26.8 million, increasing from £16 million in 2017.


    Operating review

    Safestay currently operates 3,937 beds in 18 properties across 11 European and 4 UK cities, with another 900 beds under development in Paris and Venice where progress has been delayed due to the Covid-19 pandemic and both sites are now expected to open in 2022. While revenues decreased in the first 6 months of 2020, it is worth differentiating between the first 2 months of the year and the last 4 months when the business was impacted by the pandemic. In January and February, total revenue increased 32% versus the previous year, with an underlying like for like increase of 15%. Occupancy was 64%, up from 50% in 2019, for these first two months. In March, the level of bookings started to fall following the implementation of travel restrictions and by 1 April all hostels were closed.

    The Group has capitalised on the recent renovations of the restaurants in Barcelona Passeig de Gracia and Edinburgh to increase the like for like F&B revenue by 22% in the first 2 months of the year. Thanks to the new hostels opened in 2019 and early 2020, this segment increased 46% during the same period. Following the renovation of the Bar in Lisbon in February 2020, and the addition of the Athens rooftop bar since January 2020, we hope that we can continue this trend when the business normalises.

    In 2019 the Group decided to set aside an annual capex fund to improve as well as maintain the premium standards of the portfolio. Some of the works planned in 2020 were completed by the time we decided to pause the renovation program to protect our cash position in March 2020. These included the renovation of the Brussels property for £0.3 million which also included its conversion from a hotel into a 185 bed hostel, and the renovation of the Glasgow property acquired in October 2019, and its conversion into a 251 bed hostel. The renovation of the rooms in the Gothic hostel in Barcelona and the bar and showers in Lisbon, which both started in December 2019, were also completed in the first quarter of 2020. Other capex programs have been suspended for the time being.

    Post period end, on average, in July 2020, 30% of the Group's bed stock was available and 16% of such bed stock was occupied. This increased respectively to 63% and 22% in August. We are encouraged that the occupancy levels gradually increased week on week as more hostels re-opened.


    Acquisitions

    The Group has added 414 beds in 3 hostels in 2020. The acquisition of the leasehold of the 132 bed hostel in Athens was completed in January for £1.3 million. Also in January, Safestay completed the £2.4 million acquisition of the 2 leasehold hostels in Warsaw (158 beds) and Bratislava (124 beds), both acquired from Dream Management Group Ltd. The 3 leases are capitalised in our balance sheet under IFRS 16 and have increased the total lease liability by £3.2 million.


    Financing

    On 13 January 2020, the Group completed the renewal of its debt facility with HSBC. The £17.9 million facility which was agreed for 5 years in April 2017 for an original amount of £18.4 million, was replaced with a new facility of £22.9 million for 5 years until 2025. The terms are similar to the previous facility, with interests of 2.45% + LIBOR and same covenants as before.

    It was announced on 14 April 2020 that the Company had agreed a new £5 million overdraft facility, also from HSBC, which together with the Company's cash reserves, would satisfy the Company's working capital cash requirements during and after the lock down period. At the same time, the covenants in the Company's £22.9 million debt facility have been waived until 31 December 2020.

    On 23 September 2020, the Company agreed with HSBC in principle to amend the covenant test for the period until 30 September 2021 inclusive. The Debt Service Cover Ratio and the Interest Cover Ratio were both replaced with a commitment from the Company to achieve a minimum level of adjusted EBITDA for each quarter from October 2020 to September 2021.

    On 23 September 2020, the Company agreed with HSBC in principle to replace the existing £5 million overdraft facility with a £5 million Coronavirus Business Interruption Loan Scheme (CBILS). The loan has a 6 year maturity. It is interest free in the first year and 3.9% from the second year.


    On 23 June, the Company received a £0.3 million government backed loan in Austria.


    As disclosed in the trading update released on 24 August 202, the Company has produced forecasts under two alternative indicative scenarios, a base case and a low case. The Company has sufficient access to capital to support the business under its base case forecast scenario until March 2021 by which time this scenario predicts the business will be back to breakeven. That said, this is an unpredictable period and the Company is evaluating additional funding options to address the funding shortfall which would occur by 31 January 2021 under the assumptions contained in its low case forecast scenario. The Group owns the freeholds of the hostels in Glasgow, Pisa and York, which could therefore be disposed of, either in the form of a sale and lease back transaction or a straight disposal. The Group might also contemplate the early termination of the leases which are anticipated to generate losses in the next months, subject to an agreement being reached with the relevant landlords. The Group could also temporarily close some hostels during the winter if it is anticipated that the income for these hostels does not cover the incremental costs of opening the hostels during this period. The Board is considering a range of options in relation to the business, including raising equity, but the Board is mindful of giving all shareholders the opportunity to participate in any such equity raise.


    Outlook

    As at today, all properties have re-opened, with the exception of the London Kensington Holland Park hostel and Barcelona Gothic. While occupancy levels are still relatively low, the trend is upwards, and we have the capital in place to support the business into next year under our most conservative forecast. We are mindful of the need to keep flexible and adapt to changing market conditions as they arise. However, in the absence of any significant changes the underlying trend across our portfolio is positive based currently on just domestic guests, and hopefully we can soon welcome foreign travelers back to our hostels.


    Larry Lipman

    Chairman

    24 September 2020


    Safestay PLC - Half-year Report #SSTY @SafestayHQ https://www.voxmarkets.co.uk/rns/announcement/8bea46a7-e693-4407-bdf7-5eff18a6f0e9 #voxmarkets
     

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