REG - Safestay PLC - Final Results
23/06/2025 07:00
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RNS Number : 8627N Safestay PLC 23 June 2025
23 June 2025
Safestay PLC
("Safestay" or the "Company")
Final Results
Year of good strategic and operational progress underpins record revenues and
Safestay's ambitions to double size of its portfolio over the medium term
Safestay (AIM: SSTY), the owner and operator of an international brand of
contemporary hostels, is pleased to announce its audited final results for the
year ended 31 December 2024 (the "Year").
Financial highlights:
· Record revenue of £23.0m (includes discontinued operations) (2023: £22.5m)
and Adjusted EBITDA of £6.5m (2023: £6.8m)
· UK sales increased by 8% to £9.0m (2023: £8.3m) accounting for 39% (2023:
37%) of revenue generated by the Group;
· Overseas sales totalled £14.0m (2023: £14.2m), representing a 1% decrease
year-on-year due to unfavourable movements in the Euro, which had an estimated
£0.3m impact on revenue
· Reduced loss after tax of £0.9m (2023 restated(1): loss of £1.4m)
· Loss per share of 1.37p (2023 restated 1 (#_ftn1) : loss of 2.09p)
· Available cash balances at 31 December 2024 of £1.4m (2023: £2.0m)
reflecting the freehold purchases in Brighton and Cordoba made during the Year
and ongoing capital expenditure across the portfolio
· Net asset value per share of 47p (2023: 50p)
(1) 2023's figures have been restated as set out in Note 12 to these financial
statements
Strategic and operational highlights:
· 10% increase in total bed nights to 931,688 (2023: 848,633) and occupancy
increased by 3.8% to 75.2% (2023: 71.4%) supported by effective marketing
investment
· Recovery in group bookings, which represented 16% of accommodation sales
(2023: 13%)
· Successful focus on maximising higher-margin direct bookings which represented
38% of accommodation sales (2023: 30%)
· 26% increase in non-accommodation spend helped to offset 10% decrease in
average bed rate reflecting industry-wide challenging pricing environment. As
a result, Revenue Per Available Bed was broadly maintained at £18.56
(£18.93)
· Increased tempo of new hostel acquisitions in line with the Board's intention
to double the size of the Safestay portfolio over the medium term:
· International footprint of 20 properties at the year-end (2023: 17), with 17
operational and 3 in development
· 3 new properties acquired in Brighton, Cordoba, and Budapest
· 20-year term management contract signed to operate a 120-bed hostel on the
Costa Blanca, Spain
· Lease surrender of unprofitable Vienna Hotel
· Edinburgh hostel opened in Summer 2024 (following its acquisition in December
2023) in time for the Edinburgh Fringe Festival and the Taylor Swift: Eras
Tour which is performing encouragingly
Post balance sheet events:
· In 2025 to date, the Group has continued to deliver important strategic
initiatives:
· In January, partnership announced with Cloudbeds, an award-winning hospitality
management system which will drive financial and operational efficiencies
· In April, planning permission secured for Brighton site, which will open
during 2026
· In June 2025, the Group was awarded a Covid-19-related business interruption
insurance claim of £1.4m
Current trading and outlook:
· During H1 2025, consumer confidence has remained under pressure, resulting in
a continued competitive pricing environment. Despite these pressures, forward
bookings are running at a satisfactory level
· With several further expansion opportunities being appraised the Board
remains highly confident that Safestay is well placed to deliver its
medium-term ambitions of doubling the size of its portfolio
Larry Lipman, Chairman of Safestay, commented:
"Our outstanding locations, focus on delivering safe and enjoyable spaces for
a broad range of travellers, and growing reputation for fantastic value all
continue to resonate well with our customers. As a result, I am pleased to
report a year of good strategic and operational progress with record revenues
achieved despite the challenging macroeconomic environment. This performance
was underpinned by a 10% increase in bed nights and a 4% increase in
occupancy.
We increased the tempo of new hostel acquisitions during the Year with four
exciting new properties added to the portfolio. We have a clear medium-term
ambition to double the number of Safestay hostels and have our sights firmly
set on becoming one of the global sector leaders in what remains a fragmented
but significant and fast-growing market.
Whilst consumer confidence continues to remain under pressure, we remain
confident in our highly relevant customer proposition. We have a clear
strategy to capitalise on the significant growth opportunities in the
international hostel market, including several promising prospects in our
expansion pipeline."
The Company's report and accounts for the year ended 31 December 2024 will be
available later today on its website, https://www.safestay.com/investors/
(https://url.avanan.click/v2/___https:/www.safestay.com/investors/___.YXAxZTpzaG9yZWNhcDphOm86ZTBkNzJhNDQzMDQxMzRlNTBlZDg4YmI3N2U4MDhlNTM6Njo0ZGYyOjE0N2M3NDc3MTIxODlkYWRkODY1NDZlODJiMDkxNzlhOTc2YzE0MDM0NGVmYjdiZTMyN2YwMWEyYTk4NzY2N2M6cDpGOk4)
and will be posted to shareholders in due course.
Notice of Investor Presentation via Investor Meet Company:
Paul Hingston, Chief Financial Officer and Peter Zielke, Chief Operating
Officer, will provide a live presentation relating to the Final Results via
Investor Meet Company on 30 Jun 2025 at 12:00 BST. The presentation is open
to all existing and potential shareholders. Questions can be submitted
pre-event via your Investor Meet Company dashboard up until 29 Jun 2025,
09:00 BST, or at any time during the live presentation. Investors can sign up
to Investor Meet Company for free and add to meet Safestay PLC via:
https://www.investormeetcompany.com/safestay-plc/register-investor
(https://www.investormeetcompany.com/safestay-plc/register-investor)
Investors who already follow Safestay PLC on the Investor Meet Company
platform will automatically be invited.
Enquiries
Safestay PLC Tel: +44 (0) 20 8815 1600
Larry Lipman
Shore Capital (Nomad & Broker) Tel: +44 (0) 20 7408 4090
Tom Griffiths/Harry Davies-Ball
Hudson Sandler (Financial PR) Tel: +44 (0) 20 7796 4133
Alex Brennan/India Laidlaw safestay@hudsonsandler.com
For more information visit our:
Website www.safestay.com (https://www.safestay.com/)
Vox Markets page https://www.voxmarkets.co.uk/company/SSTY/news/
(https://url.avanan.click/v2/___https:/www.voxmarkets.co.uk/company/SSTY/news/___.YXAxZTpzaG9yZWNhcDphOm86YjBkMWIzZWM0NTkxMzYyMTUyNWNhYTNmNGYyYTE0ZWM6NjoxYWQzOjZjNzA3M2IwNmY1NTI0NjY0N2VmZTk0ZjZiNzBjOWU4ZTVmOGU1YWE0MWY4YzVmNzJiZDk3ODBkNTdhMWVjMTE6cDpUOk4)
Instagram page www.instagram.com/safestayhostels/
(https://www.instagram.com/safestayhostels/?hl=en)
About Safestay PLC
Safestay
(https://url.avanan.click/v2/r02/___https:/www.safestay.com/___.YXAxZTpzaG9yZWNhcDphOm86NTk5NzExNTk0Mzk0MDRhM2IyNWZjYTRiZjA4MmM3ZDk6Nzo3ZDIzOjBjZWU2ZmU2MGJhZmIxYjdkODY3ZmE0MTRhMzA1MmFhY2M4MzYxYjIzY2FjNWZlMmNhZDJhZTZjZjlmZDg3NWM6cDpUOk4)
PLC is one of Europe's largest hostel groups, operating in the fragmented and
fast-growing global hostel market that is expected to be worth $8.9bn annually
by 2027*.
Safestay's portfolio of 20 locations offer guests both private and shared
rooms in destination cities across the UK, Spain, Belgium, Czech Republic,
Germany, Greece, Italy, Poland, Portugal, and Slovakia.
The Group sold 931,688 (2023: 848,633) total bed nights in 2024 with occupancy
increasing 3.8% to 75.2% supported by effective marketing investment.
Safestay's mission at each of its locations is to provide a safe, inclusive,
and enjoyable space that caters to the needs of different travellers. Its
properties offer first-class locations and thoughtful designs that cater for
the different needs of travellers, from digital nomads to backpackers and from
families to group travellers.
https://www.safestay.com/
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*Source - Markets and Research, August 2022
Safestay's pan-European locations include:
· Athens Monastiraki, Greece
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· Barcelona Gothic, Spain
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· Barcelona Passeig de Gracia, Spain
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· Berlin Kurfurstendamm, Germany (hotel)
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· Bratislava Presidential Palace, Slovakia
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· Brighton, UK (in development)
· Brussels Grand Place, Belgium
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· Budapest, Hungary (in development)
· Calpe Seafront, Spain (in development)
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· Córdoba Mezquita Catedral, Spain
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· Glasgow Charing Cross, UK
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· Edinburgh Cowgate, UK
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· London Elephant & Castle, UK
(https://url.avanan.click/v2/r02/___https:/www.safestay.com/venue/safestay-london-elephant-castle/___.YXAxZTpzaG9yZWNhcDphOm86NTk5NzExNTk0Mzk0MDRhM2IyNWZjYTRiZjA4MmM3ZDk6Nzo0NmNhOjdlNjM3ZDhhN2NlNTBjMmVmYTMyMjQwZjhmMzBiYzQxYzliNWJmMDg5MGI2ZDFkMTQ1ZDI1M2ExNWM4NGE3NjA6cDpUOk4)
· London Kensington Holland Park, UK
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· Lisbon Bairro Alto, Portugal
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· Madrid Central, Spain
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· Pisa Centrale, Italy
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· Prague Charles Bridge, Czeck Republic
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· Warsaw Old Town, Poland
(https://url.avanan.click/v2/r02/___https:/www.safestay.com/venue/safestay-warsaw-old-town/___.YXAxZTpzaG9yZWNhcDphOm86NTk5NzExNTk0Mzk0MDRhM2IyNWZjYTRiZjA4MmM3ZDk6NzpkZTdmOmMwYmNlZGRmODc3Y2UwYzkzMDUwY2Y1YmJhZjJmNDZmMjA3YWI1NjY1OTRmMzdiMWY4ZTJmYjkzYTNmZGIwMTU6cDpUOk4)
· York Micklegate, UK
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Chairman's Statement
Introduction
2024 was a year of important strategic and operational development for
Safestay. The Group made encouraging progress across several of its core
operational KPIs as it benefited from important investments made in recent
years in people, technology, and the customer proposition.
FY24 overview
During the year we signalled our longer-term growth ambitions, outlining our
intention to double the size of our portfolio over the medium term. We
increased the tempo of new hostel acquisitions with the addition of four new
properties as well as the surrender of the Vienna Hotel lease. As a result, at
the year-end, Safestay's international footprint comprised 20 properties
(2023: 17), of which 17 were operational with the remaining three in
development.
Safestay's portfolio is located across prime locations within key destination
cities. It is these outstanding locations, combined with our steadfast focus
on delivering on our mission to provide a safe, inclusive, and enjoyable space
for our customers at fantastic value, that underpins the continued demand for
and the growing awareness of the Safestay brand amongst our core customer base
of young travellers, families, and business travellers.
In 2024, we were pleased to welcome 447,926 customers for a record total of
931,688 bed nights (2023: 848,633), driven by a strengthened occupancy rate of
75.2% (2023: 71.4%). Whilst Average Bed Rate decreased by 10% to £21.43
(2023: £23.74) reflecting market wide pressures on pricing, we were pleased
to broadly maintain Total Revenue per Available Bed at £18.56 (2023:
£18.93). This was supported by our strategic focus on non-accommodation
revenue, which increased by 29.8% year-on-year (2023: 17.6%). Included within
this, food & beverage sales increased year-on-year by 25.6% (2023: 37.5%).
Our focus on delivering an outstanding customer experience combined with
measures to maintain strong overall Revenue per Available Bed resulted in a
strong financial performance despite a challenging macroeconomic backdrop. The
Group achieved record revenue of £23.0m (including discontinued operations)
(2023: £22.5m), with growth impacted by the significant movement in the value
of the Euro (resulting in an impact of £0.3m). Adjusted EBITDA was slightly
below the prior year at £6.5m (2023: £6.8m). For further details, please see
the Chief Financial Officer's review set out on pages 12 to 16 of the Annual
Report.
Our leading customer proposition
Safestay operates in the exciting and growing hostel segment of the global
hospitality market. Our hostels offer both private and shared rooms to ensure
broad customer appeal, which are complemented by comprehensive ancillary
facilities that drive increased spend. These include all-day food and beverage
menus as well as breakfast and late-night licensed bars, laundry, and luggage
storage facilities.
The global hostel market is large and expanding quickly. Worth approximately
US$5.85bn in 2025, it is estimated to grow to US$13.68bn by 2033 (The Market
Data Forecast, 2024). Overall market growth is driven by increasing consumer
trends towards great value travel accommodation, the rise in international
travel by Millennial and Gen-Z customer demographics and the rise in solo and
experiential travel (Research & Markets, 2024). To develop improved
understanding of our customers' priorities, last year the Group undertook an
initial guest survey which saw us seek feedback from a small sample of 300
Safestay customers in November 2024. From this, we understand that price,
location, and safety are the key drivers for them choosing to stay with us. We
are confident that the Group is well placed to continue to capitalise on these
structural growth trends over the coming years.
Board Updates
Stephen Moss resigned as a Director and as Chair of both the Remuneration and
Audit & Risk Committees on 29 March 2024. On behalf of the Board, I would
like to thank Stephen, for his invaluable contribution to the Group over the
last 10 years. Following Stephen's resignation, Michael Hirst was appointed as
Chair of both the Remuneration and Audit & Risk Committees.
Ongoing Board Priorities
As a Board, we are wholeheartedly committed to ensuring that Safestay executes
its strategy to create value for all stakeholders, including our shareholders.
In this context, the Board has three distinct priority areas: Environmental,
Social and Governance ("ESG"), People, and Strategic Execution.
ESG
We are mindful that, as the business continues to grow, we always operate in a
way that is mindful and responsible towards our people, the environment, and
the communities in the areas where we operate. We are committed to fostering
a sustainable and responsible approach to hospitality. We understand the
importance of preserving our environment and supporting local communities for
the benefit of future generations.
As a Board, we strive to achieve higher levels of sustainability performance
and when possible, look for opportunities to make improvements across our
operations. This is an important factor for our key demographic market.
More information on the Group's sustainability strategy is available in the
Section 172 statement on page 10 of the Annual Report.
People
An ongoing focus of the Board is to ensure that we have the right executive
team in place to deliver the Group's growth strategy and create shareholder
value. We have assembled a strong leadership team across the business and have
over the past two years also strengthened the Group's centralised services
through the development of the Group's Commercial Hub in Warsaw.
Our people are at the heart of our business, and the continued strong
performance of the Group and progress against our long-term strategy would be
impossible without their hard work and commitment to ensuring that every
Safestay guest has a memorable experience. I would like to take this
opportunity to thank them for all their hard work during the year.
With this in mind, during 2024 we continued to focus on improving staff
engagement and training. In September 2024, we completed the successful
roll-out of the multilingual online training platform MAPAL. This was
complemented by the launch of STAYconnect, our internal website that brings
together resources for our employees on marketing, policies and procedures,
internal announcements, and company news. We look forward to utilising these
platforms over the coming years to further build staff engagement and skills.
Strategic execution
As a Board we are proud of the progress delivered in 2024, which was a year of
record revenue and exciting portfolio expansion. We have a clear strategic
vision to develop Safestay into one of the world's leading hostel operators
and remain firmly focused on the execution of our clear growth strategy to
deliver this.
During the year we successfully increased the Group's overall funding capacity
by securing a single £16m five-year term loan, with the addition of a new
£2.5m revolving credit facility. We also secured additional funding of
£1.2m, which was utilised for the purchase of the freehold property in
Brighton in June 2024.
FY25 Outlook
Safestay delivered encouraging progress during 2024, including the return to
active portfolio expansion. In 2025 to date, we have continued to deliver
important strategic initiatives. In January, we announced our partnership with
Cloudbeds, an award-winning hospitality management system. This partnership
will drive financial and operational efficiencies while further enhancing the
guest experience. In April, we were pleased to secure planning permission for
our Brighton site, which we are excited to open during 2026.
During H1 2025, consumer confidence has remained under pressure, resulting in
a continued competitive pricing environment. Despite these pressures, forward
bookings are running at a satisfactory level.
From April 2025, the UK Employers' National Insurance rate increased from
13.8% to 15.0%, accompanied by a rise in the maximum Employment Allowance from
£5,000 to £10,500. We estimate that this change will have an annual impact
of £154,000 on the Group.
The Board remains excited about Safestay's prospects, with several further
expansion opportunities being appraised. We believe that Safestay has a highly
relevant customer proposition in a growing market, and as such is well placed
to deliver its medium-term ambitions of doubling the size of its portfolio.
Larry Lipman
Chairman
20 June 2025
Business Model
The Safestay business model is to develop and operate a brand of contemporary,
well-located hostels in the UK and key tourist cities in Europe. The Safestay
brand is positioned at the premium end of the hostel spectrum appealing to a
broad range of guests. Core elements of the model are:
· Development: Identifying potential properties in target cities,
acquiring the leasehold or freehold in the properties and their contemporary,
stylish refurbishment to fit with the Safestay brand
· Operations: Deploying strong hostel expertise, cost control and
technology to drive efficiency and achieve best-in-class operating margins
· Brand: Building Safestay's brand value
· Scale: Building the platform to efficiently add further hostels to
the Group
· People: Investing in the right people where automation cannot be
adopted; and
· Guest experience: Providing a comfortable, safe, and enjoyable stay
in our hostels for a reasonable price underpinned by a relentless focus on
customer satisfaction, a strong community experience and repeat stays.
Our Strategy
Safestay's strategy is focused on creating value for all our stakeholders by
actively pursuing attractive expansion opportunities whilst maximising
revenues and margins through operational excellence.
This evolved three-pillar strategy is underpinned by our ongoing investment in
our people, brand, and customer proposition, and is always led by our
mission to provide a safe, inclusive, and enjoyable space for every individual
to connect, explore, and make lifelong memories.
During the year, the Group made strong progress against each of its strategic
pillars:
1. Strategic portfolio expansion
We have a proven track record of both opportunistically and strategically
acquiring high quality, high potential sites in key locations within popular
cities across Europe. The nature of our business, specifically our ability to
combine shared dormitory rooms of varying sizes as well as private rooms and
differing types of communal areas, enables us to acquire, refurbish and
integrate well-located sites into our portfolio that often due to their
configuration or listed status cannot typically be taken on for other uses. We
continue to be encouraged by the volume and quality of available properties on
the market that suit our internal acquisition criteria, and going forward will
continue to capitalise on these opportunities where the Board believes such
acquisitions will deliver long-term, sustainable shareholder value.
In May 2024, Safestay's strong presence in Spain was cemented with the
freehold acquisition of a fifth location, in the ancient Spanish city of
Cordoba, for €2.0m. Formerly a hotel, the site is undergoing a conversion
process to a 100-bed hostel. As with all the new acquisitions, sales and
EBITDA are expected to increase significantly in subsequent years as the full
impact of the branding and refurbishment takes effect.
In June 2024, we built on Safestay's already-strong UK presence by acquiring
the freehold of a Grade II listed property in Brighton with the potential for
a 220-bed hostel located just 600 metres from the popular seafront. Post year
end, in April 2025, we secured planning approval to commence a £1.0m
conversion at the site. The total acquisition consideration of £2.3m was
funded from existing cash resources and a £1.2m loan, the details of which
can be found in the Chief Financial Officer's review set out on pages 15 to 16
of the Annual Report.
All acquisitions have been or will be updated in line with the recently
launched Safestay 'blueprint' and will benefit from the Group's well-invested
marketing and bookings infrastructure, systems, and processes.
Alongside the acquisitions made during 2024 we were pleased to open our hostel
in Edinburgh. This site was acquired in December 2023 for a cash consideration
of £4.3m and following a six-month refurbishment, the site welcomed guests
for the first time in June 2024 in time for the world-famous Edinburgh Fringe
Festival and the Taylor Swift: Eras Tour. A Category A listed building located
on Cowgate, in an area known for its lively pub, club, bar and restaurant
scene and within walking distance of Edinburgh's attractions including The
Royal Mile and Edinburgh Castle, this location is performing well.
The Group made one disposal during the year when the Board took the decision
to surrender the lease for Safestay Vienna.
The Group's portfolio at year-end totalled 20 sites, comprising 3,383 beds
(2023: 3,255 beds) across 17 operational locations and three in development
(2023: 17 sites comprising 16 operational and one in development).
2. Exploring capital-light expansion through management and franchising
opportunities
In addition to the continued expansion of the Safestay portfolio through
leasehold and freehold property acquisitions, we continue to explore other
financially attractive opportunities to expand our portfolio including
franchising, partnership programmes and property management agreements. These
require reduced capital input whilst enabling Safestay to leverage its key
strengths - including its brand, marketing and operational capabilities - to
drive incremental growth.
Under a management contract model, Safestay receives a fixed management fee
plus a percentage of revenue and profits above certain levels.
In 2024 we were pleased to sign the first such agreement - a 20-year term
management contract to operate a 120-bed hostel on the Costa Blanca, Spain.
With our experience of operating in the Spanish market, Safestay is
well-placed to integrate this site, which is located on the iconic Calpe
Seafront, and to establish enhanced levels cross-marketing opportunities and
trading. Refurbishment work began in June 2024 and the hostel will open to
guests once the licence has been obtained. Under the terms of the management
contract, Safestay receives a fixed management fee plus a percentage of
revenue and profits above certain levels.
We look forward to exploring other such opportunities that suit our criteria
and align with the Safestay brand and believe this structure represents a
significant opportunity for the business over the long-term. During the year,
we completed the creation of brand, building design and operations guidelines
to support these growth opportunities.
3. Driving operational excellence to maximise revenues
The third key pillar of the Group's growth strategy is to drive sustainable,
long-term growth through implementing operational excellence across all
aspects of our business. We are focused on optimising the key performance
indicators of occupancy and Revenue per Available Bed ("RevPAB"); maximising
direct and group-related bookings, which carry a higher profitability, through
direct marketing spend; and supporting growth in ancillary services, namely
food and beverage sales and sales of site-specific services including luggage
storage, and laundry facilities. All of this is supported by our Commercial
Hub in Warsaw, which oversees revenue management, sales and marketing, and
critical HR functions.
During the year occupancy rose by 3.8% to 75.2% (2023: 71.4%). This strong
year-on-year increase reflected the effectiveness of the Group's marketing
function as well as the recovery in group bookings, which represented 16% of
accommodation revenue (2023: 13%). Considering the challenging sales
environment, the Board took the decision to protect overall yield through a
focus on RevPAB over Average Bed Rate, which during the year decreased by 10%
to £21.43 (2023: £23.74). This reduction was offset by a pleasing 26% uplift
in non-accommodation spend to broadly maintain RevPAB at £18.56 (2023:
£18.93).
We made excellent progress against this pillar during the year, including the
implementation of several important long-term projects which will provide a
strong foundation for Safestay to continue to maximise revenue opportunities
across our sites and customer base. Further detail on these initiatives is
shared below.
We continued to focus on maximising direct bookings, which carry a higher
margin due to the lack of commissions passed onto online travel agent
partners. These represented 38% of accommodation sales during the year (2023:
30%) reflecting a recovery in group bookings and effective investment in the
Group's marketing capabilities.
Investment in our teams, technology and processes remains a key priority for
the Group to support its ability to scale in line with our long-term growth
ambitions, enhance the Safestay proposition and drive efficiencies. We were
pleased to complete a number of important operational projects that support
this, particularly the implementation of market-leading technologies and the
standardisation of practices and policies.
An example of this included an agreement announced at the beginning of 2025 to
incorporate Cloudbeds, a hospitality management platform into our operations.
The integration of this system is now complete, and management is confident
this will improve operational and financial efficiencies, provide better data
analytics for marketing and improve the end-to-end customer experience. It is
complemented by the launch of a new purchasing and authorisation system and
the continued use of proven AI-driven pricing software Pricepoint, to maximise
yields.
To facilitate Safestay's continued expansion we have assessed the Group's
processes regarding future site expansion and have implemented a new hostel
'blueprint' which will ensure the smooth and efficient implementation of our
brand and design across all new sites.
We continue to invest in our guest proposition to drive higher customer
satisfaction scores, looking to utilise technology and automation when
appropriate. During the year we installed our first 'keyless' door lock system
enabling guests to use their mobile phone as a room key.
Chief Financial Officer's review
It continues to be a challenging trading environment, with significant
consumer price pressure and rising costs affecting large parts of the
Financial Year 2024 and subsequently. However, I am pleased to announce record
revenues (including discontinued operations) of £23.0m (2023: £22.5m) and
Adjusted EBITDA (including discontinued operations) of £6.5m (2023: £6.8m).
Financial Key Performance Indicators
As Restated
2024 2023
Occupancy % 75.2% 71.4%
Average Bed Rate £21.43 £23.74
Room Revenues (£'000):
Continuing Operations 19,488 19,190
Discontinued Operations 474 953
Total 19,962 20,143
Total Revenues (£'000)
Continuing Operations 22,497 21,493
Discontinued Operations 512 997
Total 23,009 22,490
Net cash generated from operations (£'000)
Continuing Operations 6,751 7,672
Discontinued Operations 117 383
Total 6,868 8,055
Net assets per share 47p 50p
Adjusted EBITDA (£'m)
Continuing Operations 6.3 6.7
Discontinued Operations 0.2 0.1
Total 6.5 6.8
Finance Cost (£'000)
Continuing Operations 3,229 3,173
Discontinued Operations 192 239
Total 3,421 3,412
Earnings per share
Continuing Operations (1.97p) (1.51p)
Discontinued Operations 0.60p (0.58p)
Total (1.37p) (2.09p)
Occupancy is calculated by dividing the number of beds sold over the year with
the number of beds available when the hostels were open during the same
period. Occupancy for the year was 75.2% (2023: 71.4%), primarily as a result
of management's approach to attract more customers by offering a lower Average
Bed Rate ("ABR").
ABR is calculated by dividing room revenues by the number of beds sold over
the period. ABR for the year was £21.43 (2023: £23.74).
Revenue
Total revenue (including discontinued operations) for the year ended 31
December 2024 increased to £23.0m (2023: £22.5m), up 2% on the previous
year.
Room revenue (including discontinued operations) was £20.0m (2023: £20.1m)
and food and beverage and ancillary sales were £3.0m (2023: £2.4m) as a
result of an increased strategic focus on these revenue streams.
Sales in the UK business increased by 8% to £9.0m (2023: £8.3m) due to the
opening of the Edinburgh hostel in June 2024, which contributed £0.9m in
sales during the year. UK sales accounted for 39% (2023: 37%) of revenue
generated by the Group. Sales from our overseas businesses totalled £14.0m
(2023: £14.2m), representing a 1% decrease year-on-year. This is largely due
to unfavourable movements in the Euro, which had an estimated impact on
revenue of £0.3m in the year.
Adjusted EBITDA
The Directors consider that an adjusted EBITDA, a non-statutory measure,
provides a key measure of performance since it removes the impact of
non-trading activities. These non-trading activities are considered adjusting
items. Adjusted EBITDA represents earnings before interest, tax, depreciation,
amortisation, and one-off non-recurring adjusting items ("adjusting items").
Following the introduction of IFRS16 from 1 January 2019, rent charges are no
longer included in EBITDA as they are shown in lease finance and right-of-use
depreciation.
Adjusting items include professional fees relating to leasehold acquisitions;
one-off legal fees relating to COVID subsidy investigations and insurance
claims; the impairment of the fixed assets and right of use assets in
Bratislava; and one-off profits relating to the surrender of the Vienna Hotel
lease in July 2024.
Adjusted EBITDA fell by 4% in the year to £6.5m (2023: £6.8m). Adjusted
EBITDA margins were down 2% to 28% driven largely through a fall in the ABR
year-on-year. The impact on EBITDA for the fall in ABR represents £2.0m. The
Group has mitigated the decline in ABR through increased focus on other
revenue streams (such as food and beverage) which rose by 29.8% year-on year
to £3.0m (2023: £2.3m) as well as an overall increase in the total bed
nights sold in the year, which rose by 10% to 931,688 (2023: 848,633).
A reconciliation of operating profit to adjusted EBITDA has been performed
below:
As Restated
2024 2023
£'000 £'000
Adjusted EBITDA is as follows:
Operating Profit (including discontinued operations) 3,405 2,281
Add back:
Depreciation 1,291 938
Right of Use Depreciation 2,054 2,408
Amortisation 36 18
Actual EBITDA 6,786 5,645
Impairment of goodwill - 880
Impairment of tangible fixed assets 428 148
Adjusting items (refer to note 5) (297) 26
Fair value movement of derivatives 13 -
Profit on disposal of assets (400) -
Share based payment expense - 54
Adjusted EBITDA 6,530 6,753
Finance Costs
Finance costs (note 6) were £3.4m (2023: £3.4m) as follows:
2024 2024 2024 2023
Discontinued operations Continuing operations Total
£'000 £'000 £'000 £'000
Interest on bank overdrafts and loans - 1,455 1,455 1,340
Amortised loan arrangement fees - 140 140 68
Interest expense for lease arrangements 192 1,424 1,616 1,725
Property financing expense - 222 222 315
The Group recorded finance income of £12k (2023: £36k).
The Group refinanced all its borrowings in January 2024 into a single £16m
Term Loan and added a new £2.5m Revolving Credit Facility ("RCF") to support
future growth plans. The new Term Loan and RCF are for 5 years and were
provided by existing lender HSBC.
The Term Loan interest rates are £4.4m at 3.955%, £10m at SONIA but capped
at 4.75% with a floor of 3% and £1.6m at SONIA, all with an additional margin
of 2.6%. The RCF has a rate of SONIA plus a margin of 2.85%. The Term Loan is
repayable at £0.1m per quarter from March 2025 together with a final payment
at completion. Interest on both the Term Loan and RCF is payable quarterly
from March 2024.
The Term Loan replaces the previous interest only £12.7m facility with HSBC
and enabled the repayment of the outstanding CBILS loan of £3.25m which
carried a significantly higher interest rate.
In April 2025, the Group obtained an extra £0.5m Revolving Credit Facility
for future expansion at a rate of SONIA plus a margin of 2.85% which has not
been drawn down yet. The potential facility will reduce by £0.1m per month
from June to October 2025.
In addition, the Group has a loan in Germany (£0.1m) as well as a loan in
relation to the purchase of the freehold property in Brighton, totalling
£1.2m that was taken out in June 2024. The term of this loan was extended
post year end from December 2025 to December 2026. The interest on this loan
is paid monthly and the loan is fully repayable on 31 December 2026.
Since the introduction of IFRS 16 from 1 January 2019, our hostel leases have
been accounted for as lease liabilities. At the lease commencement date, the
Group recognises a right-of-use asset and a lease liability on the statement
of financial position. The rental charge is replaced with interest and
depreciation. In 2024, the finance costs include £1.6m of lease interest
(2023: £1.7m).
Earnings per Share
The Group made a loss after tax of £0.9m in the year (2023 restated: loss of
£1.4m). Earnings per share for the year were a loss of 1.37p compared to a
loss of 2.09p in 2023 (as restated). This improvement is largely due to the
surrender of the Vienna Hotel lease.
Cash flow, capital expenditure and debt
Net cash generated from operations was £6.9m (2023 restated: £8.1m)
primarily due to the reduction in ABR, being only partially offset by tight
cost control.
The Group had cash balances of £1.4m at 31 December 2024 (2023: £2.0m). This
reduction is largely due to the freehold purchases in Brighton and Cordoba,
totalling £4.0m, as well as a further £1.8m of capital expenditure relating
largely to Edinburgh, and smaller projects across other properties within the
portfolio.
Outstanding bank debt at 31st December 2024 was £20m (2023: £16m) and is
broken down as follows:
2024 2023
£m £m
Main Loan 16.0 12.7
Revolving Credit Facility 2.5 -
CBILS - 3.3
Germany 0.1 0.2
Brighton 1.2 0.0
Capitalised Loan Fees (0.3) (0.1)
Lease liabilities decreased to £23.7m (2023: £26.0m), primarily as a result
of £3.6m in rent payments made during the year. In addition, lease
modifications were recognised during the year in accordance with the terms of
the lease agreements.
The gearing ratio (exclusive of lease liabilities) is 59% (2023: 50%).
Net asset value per share in 2024 is 47p (2023: 50p).
Going concern
In assessing the going concern position of the Group for the consolidated
financial statements for the year ended 31 December 2024, the Directors have
considered the Group's cash flow, liquidity, and business activities.
During 2024, the Group recorded an adjusted EBITDA of £6.5m (2023: £6.8m).
In January 2024, the Group refinanced all its existing borrowings into a
single £16.0m Term Loan and added a new £2.5m Revolving Credit Facility
("RCF") to support future growth plans. The new Term Loan and RCF are for five
years and were provided by existing lender HSBC. In June 2024, the Group took
out a £1.2m loan in relation to Brighton, due to be fully repaid in December
2025. Post year end this was extended to December 2026. In addition, in April
2025, a new £0.5m RCF was made available for expansion.
In June 2025, the Group signed a settlement agreement in relation to a
business interruption insurance claim covering the COVID-19 period. The net
settlement amount, after deduction of loss assessor fees, totals £1.4m.
As part of their going concern assessment, the Directors have prepared
forecasts for a minimum period of twelve months from the date of approval of
the financial statements. In addition, certain adverse scenarios have been
considered for the purposes of stress and sensitivity testing. Refer to note 1
for further information on the assumptions and judgements applied.
Upon consideration of this analysis and the principal risks faced by the
Group, the Directors are satisfied that the Group has adequate resources to
continue in operation for the foreseeable future, a period of at least 12
months from the date of this report. Accordingly, the Directors have concluded
that it is appropriate to prepare these financial statements on a going
concern basis.
Non-financial KPIs
The Board also considers non-financial KPIs when evaluating the performance of
the business. The Directors consider Guest Response Scores to be a key metric
of the business's performance, guest satisfaction and marketing effectiveness.
The following guest satisfaction metrics are derived from TrustYou, an
independent guest feedback platform, and are based on data collected across
all 17 operational Safestay sites:
2024 2023
Overall Guest Recommendation Rate 87% 87%
Location 90% 90%
Value-for-Money 81% 81%
While there were no movements in the scores year-on-year, the ability to
maintain consistently strong results reflects the Group's continued
operational focus to deliver quality.
Principal risks and uncertainties
Management has completed a full review of the risks which may arise from
within or outside of the business and may have an impact on the Group.
The impact of the environment on the Group's operations has been assessed and
there is a strategy to reduce this risk as explained in the Environment
section above. No other emerging risks have been identified at this point.
There has been no identified change in the principal risks and uncertainties.
The principal risks and uncertainties that could potentially have a material
impact on the Group's performance are presented below.
Business risks
Safestay operates in the hospitality and tourism industry which, over the
years, has experienced fluctuations in trading performance. Traditionally, the
hotel sector's performance has tracked macro-economic trends, feeling the
strain during the economic downturn, and becoming more buoyant during
recovery. The hostel sector, which leans more heavily on leisure travellers
and has a lower price point, has proved more resilient and has delivered more
robust cash flows through the economic cycle and has quickly recovered from
isolated terror acts which may limit travel in the short term. The hospitality
sector in the UK continues to face a number of cost headwinds from the
National Living Wage, commodity price inflation, foreign exchange rate
fluctuations and the hangovers from the UK's departure from the European Union
and the consequences of that.
A proportion of Safestay's business in the UK comes from Europe, including
several school groups. In addition, over 60% of the turnover is generated from
hostels located in mainland Europe. The business is therefore highly
vulnerable to changes in the source market, schools' education, travel
policies and any fluctuations arising in the market from the 'Brexit' process
and travel restrictions implemented by the governments, or the school
governance bodies.
Conversely, this balance between the UK and mainland Europe offers a natural
hedging against fluctuations of each local market and currency where Safestay
operates.
There is also the risk of higher energy and other supply costs. A utility
broker is helping to identify opportunities for reducing consumption, other
cost savings are being targeted and cost pressure on consumers can result in a
desire to stay in hostels rather than budget hotels.
The Group's brand is a key asset, and its value is closely tied to guest
experience, service quality, and public perception. There is a risk of
reputational damage from operational failures, negative publicity, or brand
infringement. To mitigate this, the Group maintains brand standards across all
locations, actively monitors guest feedback, and takes prompt action to
address issues. Brand assets are also legally protected by registered
trademarks.
IT and system risks
Safestay's property management and accounting systems are deployed via SaaS
(software as a service). As such, the Group is dependent on robust internet
connectivity and the resilience of the provider's third-party data centre and
back-up protocols to operate. Whilst the arrangement carries risks, these
are deemed to be reduced when compared to an in-house option which would lead
to higher management overhead costs for the business. Management believes
this current arrangement is more suitable to the business needs as well as
being more cost effective due to the small size of our business. The other
systems used are not deemed to be business critical.
The Group contracts the maintenance of the IT infrastructure with an external
provider and has a cloud based back up system to secure all data which are not
already covered via other SaaS suppliers. This is a more robust and flexible
option compared to an internally managed solution.
In addition, the Group recognises the growing risk of cyber threats, including
phishing attacks, malware, and unauthorised access to systems, which could
result in operational disruption, financial loss, or breaches of data privacy.
To mitigate these risks, the Group has implemented multi-factor authentication
across key systems, provides staff training to raise awareness of phishing and
cyber threats, and conducts simulated phishing tests. Firewalls, anti-malware
protection, regular system updates, and data recovery protocols are also in
place to support resilience and ensure business continuity.
Property risks
The Group operates hostels across Europe, many under lease agreements,
exposing it to risks such as rising rental costs, lease renewals on
unfavourable terms and landlord financial stability. Macroeconomic factors and
local regulatory changes may also affect property costs and expansion
opportunities.
In addition, the Group must maintain its properties to ensure safety,
compliance, and guest satisfaction as failure to do so could lead to increased
costs, reputational harm, or regulatory breaches.
To mitigate these risks, the Group conducts thorough due diligence before
entering lease agreements, maintains strong landlord relationships, and
regularly reviews its property portfolio to ensure alignment with strategic
goals. Maintenance is managed through a proactive programme supported by
planned capital investment.
Expansion and regulatory risks
Accessing expansion opportunities at the right price and in the right
locations is, by its nature, an opportunistic exercise. Whilst the leadership
team has a track record in securing properties to support business growth, and
the fact that the market should offer more real estate opportunities in the
coming years, there is no guarantee that future opportunities can be secured
but opportunities should increase with the alternative of converted office and
retail asset classes.
Expansion in new jurisdictions and changes in regulation in countries where
Safestay already operates is creating an environment where it is more likely
to be in regulatory breach compared to a group which would only trade in one
country. Safestay plc is a listed business and as such is bound to a very high
level of compliance. The Board is composed of six experienced Non-Executive
and Executive Directors who have proven experience in hospitality and
marketing as well as a strong understanding of regulatory and compliance
topics. Moreover, the Group works with local law firms in each country where
it operates to gain access to the local expertise and guarantee full local
compliance, notably via the obtention of relevant licences. As opposed to
other hospitality sectors, such as sharing economy or private rental, the
hostel sector is built on strong regulation plus existing fundamentals and
trade licences, which makes it less likely to require the introduction of more
strict regulations.
Financial risk
In January 2024, the Group refinanced its existing borrowings into a single
£16m Term Loan and added a new £2.5m Revolving Credit Facility ("RCF") to
support future growth plans. The new Term Loan and RCF are for 5 years and
were provided by existing lender HSBC.
The Term Loan interest rates are £4.4m at 3.955%, £10m at SONIA but capped
at 4.75% with a floor of 3% and £1.6m at SONIA, all with an additional margin
of 2.6%. The RCF has a rate of SONIA plus a margin of 2.85%. The Term Loan is
repayable at £0.1m per quarter from March 2025 together with a final payment
at completion. Interest on both the Term Loan and RCF is payable quarterly
from March 2024.
The Term Loan replaces the previous interest only £12.7m facility with HSBC
and enabled the repayment of the outstanding CBILS loan of £3.25m, which
carried a significantly higher interest rate.
In April 2025, the Group obtained an extra £0.5m Revolving Credit Facility
for future expansion at a rate of SONIA plus a margin of 2.85% which has not
been drawn down yet. The potential facility will reduce by £0.1m per month
from June to October 2025.
Any increases in SONIA or base rate will increase the cost of these loans and
therefore impact the net profit of the business (a 0.5% change in interest
rate would impact the net profit before tax by £92,475 (2023: £92,500)).
Strict financial controls are in place to ensure that monies cannot be
expended above the available limits or to breach any banking covenants.
A proportion of Safestay's business comprises group bookings and there is a
risk of booking cancellations which will leave the hostel with unforeseen beds
to sell at relatively short notice. To offset this risk, all group bookings
require a non-refundable deposit of 10% at time of confirmation and staged
payments in advance of the group arrivals.
Except for a small number of credit sales for which applied credit limits are
verified through external sources, Safestay has a policy of full payment
upfront for guests staying which is the norm for hostels. As such there are
negligible trade receivable risks.
Financial risk management
The Group's financial instruments comprise bank loans, lease liabilities, cash
and cash equivalents, and various items within trade and other receivables and
payables that arise directly from its operations.
The main risks arising from the financial instruments are foreign exchange
risk, interest rate risk and liquidity risk. The Board reviews and agrees
policies for managing these risks which are detailed below.
Interest rate risk
The Group's interest rate risk arises from long-term borrowings. Borrowings
at variable rate expose the Group to cash flow interest rate risk which is
partially offset by cash held at variable rates.
Liquidity risk
All the Group's long-term bank borrowings are secured on the Group's property
portfolio. If the value of the portfolio were to fall significantly, the Group
risk breaching borrowing covenants. The Board regularly reviews the Group's
gearing levels, cash flow projections and associated headroom and ensures that
excess banking facilities are available for future use.
The business continues to service this debt and make the interest payments as
they fall due. There are no off-balance sheet financing arrangements or
contingent liabilities.
Foreign currency risk
The Group is exposed to foreign currency risk from overseas subsidiaries with
Group transactions carried out in Euros. Exposure to currency exchange rates
arises from the Group's overseas sales and purchases, which are primarily
denominated in Euros. This risk is mitigated by each hostel holding a
denominated bank account in the country of operation. The Group monitors
cashflows and considers foreign currency risk when making intra-group
transfers.
Interest rate risk management
The Group is exposed to interest rate risk on its borrowings and carefully
manages its interest rate risk on an ongoing basis. In January 2024, the Group
refinanced its existing borrowings and added a £2.5m Revolving Credit
Facility ("RCF").
This risk is mitigated as the Term Loan interest rates are £4.4m at 3.955%,
£10m at SONIA but capped at 4.75% with a floor of 3% with only £1.6m subject
to changes in SONIA.
Interest rate sensitivity
The sensitivity analysis in the paragraph below has been determined based on
the exposure to interest rates for all borrowings subject to interest charges
at the statement of financial position date. For floating rate liabilities,
the analysis is prepared assuming the amount of the liability outstanding at
the statement of financial position date was outstanding for the whole year. A
0.5% increase or decrease is used when reporting interest rate risk internally
to key management and represents management's assessment of the reasonably
possible change in interest rates.
Based on bank borrowings, at 31 December 2024, if interest rates were 0.5%
higher or (lower) and all other variables were held constant, the Group's net
profit would increase or decrease by £92,475 (2023: £92,500). This is
attributable to the Group's exposure to interest rates on its variable rate
borrowings.
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors. The Board manages liquidity risk by regularly reviewing the Group's
gearing levels, cash flow projections and associated headroom and ensuring
that excess banking facilities are available for future use. All of the
Group's long-term bank borrowings are secured on the Group's property
portfolio.
For more details, refer to note 22.
The Strategic Report was approved by the Board of Directors and signed on its
behalf by:
Paul Hingston
Chief Financial Officer
20 June 2025
Consolidated Income Statement for the Year Ended 31 December 2024
As Restated
Note 2024 2023
Total Total
£'000 £'000
Revenue 2 22,497 21,493
Cost of sales (3,939) (3,846)
Gross profit 18,558 17,647
Administrative expenses (15,736) (15,231)
Operating profit 2,822 2,416
Finance income and costs (3,229) (3,173)
Loss before tax (407) (757)
Tax 4 (875) (226)
Loss for the year from continuing operations (1,282) (983)
Net profit / (loss) from discontinued operations 3 391 (375)
Loss for the financial year attributable to owners of the parent company (891) (1,358)
Loss per share from continuing operations (1.97p) (1.51p)
Basic profit / (loss) per share from discontinued operations 0.60p (0.58p)
Diluted loss per share from continuing operations (1.87p) (1.44p)
Diluted profit / (loss) per share from discontinued operations 0.57p (0.55p)
Consolidated Statement of Comprehensive Income
Year ended 31 December 2024
As Restated
2024 2023
£'000 £'000
Loss for the year (891) (1,358)
Exchange differences on translating foreign operations (812) 6
Property revaluation 1,181 3,904
Deferred tax on property revaluation (1,038) (171)
Total comprehensive income/(loss) for the year attributable to owners of the (1,560) 2,381
parent company
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Financial Position
As Restated
31 December 2024 31 December 2023
Non-current assets Note £'000 £'000
Property, plant and equipment (including right of use asset) 5 76,507 73,709
Intangible assets 6 150 71
Goodwill 6 10,383 10,896
Lease assets 143 297
Deferred tax asset 4,392 5,488
Fair Value of Financial Assets 24 -
Total non-current assets 91,599 90,461
Current assets
Inventory 39 26
Trade and other receivables 981 1,054
Lease assets 140 142
Current tax asset 120 134
Cash and cash equivalents 1,430 1,998
Total current assets 2,710 3,354
Total assets 94,309 93,815
Current liabilities
Borrowings 8 (4,164) (932)
Lease liabilities (1,815) (1,793)
Liabilities held for sale - (504)
Trade and other payables 7 (5,084) (4,299)
Current liabilities (11,063) (7,528)
Non-current liabilities
Borrowings 8 (22,569) (22,354)
Lease liabilities 9 (21,891) (24,250)
Deferred tax liabilities (8,022) (7,359)
Total non-current liabilities (52,482) (53,963)
Total liabilities (63,545) (61,491)
Net assets 30,764 32,324
Equity
Share capital 649 649
Share premium account 23,959 23,959
Other components of equity 21,282 21,951
Retained earnings (15,126) (14,235)
Total equity attributable to owners of the parent company 30,764 32,324
The accompanying accounting policies and notes form an integral part of these
financial statements.
Consolidated Statement of Changes in Equity
Year ended 31 December 2024
Other
Share Share Components Retained Total
capital premium of Equity earnings equity
£'000 £'000 £'000 £'000 £'000
Balance as at 1 January 2023 647 23,904 18,158 (12,477) 30,232
Prior Year Adjustment (note 25) - - - (400) (400)
Balance as at 1 January 2023 (as restated) 647 23,904 18,158 (12,877) 29,832
Comprehensive income
Loss for the year as restated - - - (1,358) (1,358)
Other comprehensive income
Movement in translation reserve - - 6 - 6
Property revaluation reserve - - 3,904 - 3,904
Deferred tax on property revaluation - - (171) - (171)
Total comprehensive income 3,739 (1,358) 2,381
Transactions with owners
Issue of shares 2 55 - - 57
Share based payment charge for the period - - 54 - 54
Balance at 31 December 2023 (as restated) 649 23,959 21,951 (14,235) 32,324
Comprehensive income
Loss for the year - - - (891) (891)
Other comprehensive income -
Movement in translation reserve - - (812) - (812)
Property revaluation reserve - - 1,181 - 1,181
Deferred tax on property revaluation - - (1,038) - (1,038)
Balance at 31 December 2024 649 23,959 21,282 (15,126) 30,764
Consolidated Statement of Cash Flows
Year ended 31 December 2024
As Restated
2024 2023
£'000 £'000
Cash flow from operating activities
Loss for the year (891) (1,358)
Tax charge 191 226
Depreciation, amortisation 3,381 3,364
Net finance costs 3,421 3,413
Share based payment charge - 54
Impairment charges 428 1,028
Profit on sale of fixed assets (400) -
(Increase)/decrease in inventories (12) (2)
Decrease in lease asset debtor - 153
Decrease in trade and other receivables 229 253
Increase in trade and other payables 524 993
Cash generated from operations attributable to continuing operations 6,871 8,124
Income tax received/(paid) (3) (69)
Total net cash inflow from operating activities 6,868 8,055
Cash flow from investing activities
Purchases of property, plant and equipment (6,097) (4,977)
Purchases of intangible assets (115) (80)
Interest received 12 35
Total net cash outflow from investing activities (6,200) (5,022)
Cash flow from financing activities
Share issue - 57
Principal elements of lease payments (3,709) (3,639)
Interest paid (1,453) (1,274)
Loan repayments (16,029) (1,000)
Loan received 19,695 -
Fair value movement in financial assets (24) -
Total net cash outflow from financing activities (1,520) (5,856)
Cash and cash equivalents at beginning of year 2,038 5,226
Net cash flows (used in)/generating from operating, investing and financing (852) (2,823)
activities
Differences on exchange 244 (365)
Cash and cash equivalents at end of year (including discontinued operations) 1,430 2,038
Notes to the Consolidated Financial Statements
1. GENERAL INFORMATION
Corporate Information
Safestay plc, the "Company" together with its subsidiaries, the "Group", is a
public limited company, limited by share capital, whose shares are publicly
traded on the Alternative Investment Market ("AIM") of the London Stock
Exchange and is incorporated in the United Kingdom and registered in England
and Wales. The principal activity for the Group is hostel operation. The
registered number of the Group is 08866498 and its registered address is 1a
Kingsley Way, London, N2 0FW.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with
International Accounting Standards as adopted by the UK ("IFRS") in conformity
with the requirements of the Company Act 2006.
Basis of preparation
The consolidated 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 2024.
Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
Safestay plc and its subsidiaries. The financial statements of subsidiaries
are prepared for the same reporting period as the Parent Company with
adjustments made to their financial statements to bring their accounting
policies in line with those used by the Group.
The financial results of subsidiaries are included in the consolidated
financial information from the date that control commences, being where the
Group controls more than 50% of a subsidiary's share capital, until the date
that control ceases. The consolidated financial information presents the
results of the companies within the same group. Intra-group balances and
transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial
information. Unrealised losses are eliminated in the same way as unrealised
gains, but only to the extent that there is no evidence of impairment.
Judgements made by the Directors in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next period
are discussed below.
New standards, amendments and interpretations adopted
The following standards are applicable for financial years beginning on/after
1 January 2024:
· IFRS10 - Sale or contribution of assets between an investor and its
associate or joint venture
· IFRS16 - Lease liability in a sale and leaseback
· IAS 1 - Classification of liabilities as current or non-current
· IAS 1 - Non-current liabilities with covenants
· IAS 12 - International tax reform - pillar two model rules
· IFRS18 - Presentation and Disclosure in Financial Statements
When applied, none of these amendments have a material impact on the Group.
New standards, amendments and interpretations issued but not yet effective
The following standards are applicable for financial years beginning on/after
1 January 2025:
· IAS 21 - Lack of Exchangeability
The following standards are applicable for financial years beginning on/after
1 January 2026:
· IFRS 9 and IFRS 7 - Classification and Measurement of Financial
Instruments
When applied, none of these amendments are expected to have a material impact
on the Group.
Going concern
In assessing the going concern position of the Group for the consolidated
financial statements for the year ended 31 December 2024, the Directors have
considered the Group's cash flow, liquidity, and business activities.
During 2024, the Group recorded an adjusted EBITDA of £6.5m (2023: £6.8m).
During 2024, the Group refinanced all its existing borrowings in January 2024
into a single £16.0m Term Loan and added a new £2.5m Revolving Credit
Facility ("RCF") to support future growth plans. The new Term Loan and RCF are
for five years and were provided by existing lender HSBC. In June 2024, the
Group took out a £1.2m loan in relation to Brighton, due to be fully repaid
in December 2025. Post year end this was extended from December 2025 to
December 2026. Also in April 2025, a new £0.5m RCF was made available for
expansion.
In June 2025, the Group signed a settlement agreement in relation to a
business interruption insurance claim covering the COVID-19 period. The net
settlement amount, after deduction of loss assessor fees, totals £1.4m.
As part of their going concern assessment, the Directors have prepared
forecasts for a minimum period of twelve months from the date of approval of
the financial statements. In addition, certain adverse scenarios have been
considered for the purposes of stress and sensitivity testing. Refer to
Section A of this note for further information on the assumptions and
judgements applied.
Upon consideration of this analysis and the principal risks faced by the
Group, the Directors are satisfied that the Group has adequate resources to
continue in operation for the foreseeable future, a period of at least 12
months from the date of this report based on the forecast prepared.
Accordingly, the Directors have concluded that it is appropriate to prepare
these financial statements on a going concern basis.
In addition, certain adverse scenarios have been considered for the purposes
of stress and sensitivity testing.
A downside case was considered whereby EBITDA was reduced by 5% for the
forecasted period to June 2026. In this scenario, the Group has sufficient
liquidity to remain in compliance with its covenant obligations.
A severe downside case whereby EBITDA was reduced by 20%. In this scenario,
there would not be any expected breaches of the covenant obligations and
doesn't factor in any mitigating actions such as reducing labour spend and
controllable costs. This severe case was modelled to provide comfort over the
Group's headroom on its covenants and is not considered to be a realistic
scenario.
Upon consideration of this analysis and the principal risks faced by the
Group, the Directors are satisfied that the Group has adequate resources to
continue in operation for the foreseeable future, a period of at least 12
months from the date of this report. Accordingly, the Directors have concluded
that it is appropriate to prepare these financial statements on a going
concern basis.
(A) Accounting Policies
Revenue
To determine whether to recognise revenue, the Group follows a 5-step process
in accordance with IFRS 15
- Identifying the contract with a customer
- Identifying the performance obligations
- Determining the transaction price
- Allocating the transaction price to the performance obligations
- Recognising revenue when/as performance obligation(s) are
satisfied.
Revenue is stated net of VAT and is gross of travel agency commission with the
Group being the principal in all third-party booking arrangements. It
comprises revenues from overnight hostel accommodation, the sale of ancillary
goods and services such as food & beverage and merchandise.
Accommodation and the sale of ancillary goods and services are recognised when
provided.
In accordance with IFRS 16, the Group accounts for its subleases as operating
leases as they do not transfer substantially all the risks and rewards of
ownership to the lessee.
The Group recognises income from lease payments from operating leases as
income on a straight-line basis over the term of the contract.
The sale of ancillary goods comprises sales of food, beverages, and
merchandise.
Deferred income comprises deposits received from customers to guarantee future
bookings of accommodation. This is recognised as revenue once the bed has been
occupied.
There are no significant judgements or estimations made in calculating and
recognising revenue.
Revenue is not materially accrued or deferred between one accounting period
and the next.
Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision makers ("CODM"), who are responsible for allocating resources and
assessing performance of the operating segments, have been identified as the
executive directors. Currently the operating segments are the operation of
hostel accommodation in the UK and Europe. An additional geographical area has
been identified in respect of Spain as disclosed in note 2.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The Group's liability for current tax is calculated based on tax
rates that have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the statement of financial position
liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
The carrying amount of deferred tax assets are reviewed at each statement of
financial position date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or
part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is
settled, or the asset is realised based on tax losses enacted or substantively
enacted at the statement of financial position date. Deferred tax is charged
or credited in the income statement, except when it relates to items charged
or credited in other comprehensive income, in which case the deferred tax is
also dealt with in other comprehensive income.
Foreign currency translation
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in Sterling which is the Group's functional currency.
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign
currencies are generally recognised in the income statement.
Foreign exchange gains and losses that relate to borrowings are presented in
the statement of income statement and within finance costs. All other exchange
gains and losses are presented in the statement of profit or loss within
administrative expenses.
Non-monetary items that are measured at fair-value in a foreign currency are
translated using the exchange rates at the date when fair-value was
determined. Translation differences on assets or liabilities carried at
fair-value are reported as part of the fair-value gain or loss.
The results and financial position of foreign operations that have a
functional currency different to the presentation currency are translated into
the presentation currency as follows:
· assets and liabilities for each statement of financial position are
translated using the closing rate at the date of that statement of financial
position.
· income and expenses for each statement of profit or loss and
statement of comprehensive income are translated at average exchange rates.
· All resulting exchange differences are recognised in other
comprehensive income.
Goodwill and fair-value adjustments arising on the acquisition of a foreign
operation are treated as the assets and liabilities of the foreign operation
and translated at the closing rate.
Business combinations
Acquisitions of subsidiaries and businesses are accounted using the
acquisition method. The consideration transferred in a business combination is
measured at fair value, which is calculated as the sum of the acquisition-date
fair values of assets transferred by the Group, liabilities incurred by the
Group to former owners of the acquiree and the equity interest issued by the
Group in exchange for control of the acquiree. Acquisition costs are
expensed as incurred.
At the acquisition date, the identifiable assets acquired, and liabilities
assumed are recognised at their fair value at the acquisition date.
Prior Year Adjustments
Prior year adjustments are recognised where changes in accounting policy or
misstatements identified in respect of previously reported amounts have a
material impact on the prior year comparatives.
Assets and liabilities held for sale & discontinued operations
Disposal groups are classified as held for sale if their carrying amount will
be recovered principally through sale. Assets held in Assets held for sale are
measured at the lower of their carrying amount and fair value less costs to
sell. Non-current assets included in Assets held for sale are not depreciated
or amortised. Assets and liabilities classified as held for sale are presented
in current assets and current liabilities separately from the other assets and
liabilities in the balance sheet.
A discontinued operation is a component of the Group that has been disposed
of, distributed or is classified as held for sale or distribution and that
represents a separate major line of business. The results of discontinued
operations are presented separately in the consolidated income statement, the
consolidated statement of other comprehensive income and the consolidated
statement of cash flows and comparatives are restated on a consistent basis.
Deferred Consideration
Deferred payments made in relation to acquisitions of subsidiaries and
business are accounted for their discounted value in trade and other payable.
Any difference between the discounted value and the cash consideration at the
time of the payment, is recognised as an interest charge in the income
statement.
Property, plant and equipment
Freehold property and Lease assets are stated at fair value and revalued
periodically in accordance with IAS 16 Property Plant and Equipment. Valuation
surpluses and deficits arising in the period are included in the statement of
Comprehensive Income. All other property, plant and equipment are recognised
at historical cost less depreciation and are depreciated over their useful
lives. The applicable useful lives are as follows:
Fixtures, fittings and equipment 3-5 years
Freehold properties 50 years
Leasehold properties Term of the lease
Land is not depreciated.
Leasehold land and buildings relate to property from financing transactions
related to Safestay Elephant and Castle. The sale of the property in 2017 was
agreed with an institutional buyer in exchange for 150 year geared ground rent
leases. The significant risks and rewards of ownership were retained, and the
exercise to repurchase these properties is "almost certain". The contract took
the legal form of the sale and leasebacks. However, the economic substance of
the original transactions in 2017 meant that the lease has historically been
treated as owned by Safestay. Therefore, the transactions are classified as
leasehold land and buildings.
Impairment of property, plant and equipment
At each statement of financial position date, the Group reviews the carrying
amounts of its property, plant and equipment to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have been adjusted. If the
recoverable amount of an asset (or cash-generating unit) is estimated to be
less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease, but a negative revaluation reserve
is not created.
For revalued assets, where an impairment loss subsequently reverses, the
carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset (cash-generating unit) in
prior years. Any remaining balance of the reversal of an impairment loss is
recognised in the income statement. For assets carried at cost, any reversals
of impairments are recognised in the income statement.
Goodwill
Goodwill represents the future economic benefits arising from a business
combination, measured as the excess of the sum of the consideration
transferred over the net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed. Goodwill is carried at cost less
accumulated impairment losses. A review of the carrying value of goodwill is
carried out annually.
For the purpose of impairment testing, goodwill acquired in a business
combination is allocated to each of the cash-generating units ("CGUs"), or
groups of CGUs, that is expected to benefit from the synergies of the
combination. The Directors consider each individual hostel to be a separate
cash generating unit for impairment purposes and, as explained in note 12 to
the financial statements, each unit or group of units to which the goodwill is
allocated represents the lowest level within the entity at which the goodwill
is monitored for internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment. The
carrying value of the CGU containing the goodwill is compared to the
recoverable amount, which is the higher of value in use and the fair value
less costs of disposal. Any impairment is recognised immediately as an expense
and is not subsequently reversed.
Intangible assets
Costs that are directly attributable to a project's development phase,
including capitalised internally developed software, are recognised as
intangible assets using the cost model, provided they meet all of the
following recognised:
• the development costs can be measured reliably
• the project is technically and commercially feasible
• the Group intends to and has sufficient resources to complete the project
• the Group has the ability to use or sell the software, and
• the software will generate probable future economic benefits.
Intangible assets acquired in a business combination are recognised at fair
value at the acquisition date, which is deemed to be the cost going forward.
The leasehold rights and tenancy subleases relate to intangible assets
acquired in a business combination as outlined in note 12 of the Annual
Report.
Assets with a finite useful life are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method to
allocate the cost of trademarks and licences over their estimated useful lives
as set out above.
The following useful lives are applied:
- 10 years for the life of the interest in the head lease
- 13 years for tenancy sublease
- 3 years for website development.
Residual values and useful lives are reviewed at each reporting date.
Assets that are subject to amortisation are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset's fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are largely independent cash inflows (CGUs).
Prior impairments of non-financial assets (other than goodwill) are reviewed
for possible reversal at each reporting date.
Inventory
Inventory is stated at the lower of cost and net realisable value. Cost is
calculated using the weighted average method. Net realisable value represents
the estimated selling price.
Financial assets measured at amortised cost
Financial assets held at amortised costs are non-derivative financial assets
with fixed or determinable payments which are not quoted in an active market.
They are included in current assets, except for maturities greater than 12
months after the statement of financial position date. These are classified as
non-current assets.
Financial assets measured at fair value
Derivative financial assets are measured at fair value plus transaction costs
at the date of initial recognition. Any subsequent movements in fair value are
recorded in the income statement. The Group has decided not to apply hedge
accounting in relation to these derivative financial assets.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held at call with
banks and other short-term highly liquid investments with original maturities
of three months or less. Bank overdrafts that are repayable on demand and
which form an integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose of the statement of
cash flows.
Trade and other receivables
Trade and other receivables are measured at initial recognition at transaction
price plus transaction costs and are subsequently measured at amortised cost
using the effective interest rate method. The Group recognises lifetime ECL
for trade receivables and amounts due on contracts with customers. The
expected credit losses on these financial assets are estimated based on the
Group's historical credit loss experience, adjusted for factors that are
specific to the debtors. Management have considered the ECL for trade
receivables as immaterial given the majority of sale receipts are obtained
prior to the stay.
Credit risk
The Group assesses impairment on a forward-looking basis using the expected
credit loss method and has applied the simplified approach which uses the
lifetime expected loss provision for all trade and other receivables. The
Group has no significant history of non-payment; as a result, the expected
credit losses on financial assets are not material.
Financial liabilities
The Group classifies its financial liabilities as other financial liabilities.
Other financial liabilities are measured at fair value on initial recognition
and subsequently measured at amortised cost, using the effective-interest
method.
Borrowings
Borrowings other than bank overdrafts are recognised initially at fair value
less attributable transaction costs. Subsequent to initial recognition,
borrowings are stated at amortised cost with any difference between the amount
initially recognised and redemption value being recognised in the income
statement over the period of the borrowings, using the effective interest
method.
Where there are extension options, management have made an accounting policy
choice that these are loan commitments from the holder of the debt instrument
that does not need to be separately accounted for.
Loan arrangement fees
The loan arrangement fees are offset against the loan balance and amortised
over the term of the loan to which they relate as part of the effective
interest rate calculation.
Trade and other payables
Trade and other payables are initially measured at fair value and are
subsequently measured at amortised cost using the effective interest rate
method.
Leases
The Group has leases for hostels across Europe. With the exception of
short-term leases and leases of low-value underlying assets, each lease is
reflected on the statement of financial position as a right-of-use asset and a
lease liability. Leases of property generally have a lease term ranging from 5
years to 50 years.
For any new property asset contracts entered on or after 1 January 2019, the
Group considers whether a contract is, or contains a lease. A lease is defined
as 'a contract, or part of a contract, that conveys the right to use an asset
(the underlying asset) for a period of time in exchange for consideration'. To
apply this definition the Group assesses whether the contract meets three key
evaluations which are whether:
· the contract contains an identified asset, which is either explicitly
identified in the contract or implicitly specified by being identified at the
time the asset is made available to the Group
· the Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract the Group has
the right to direct the use of the identified asset throughout the period of
use; and
· the Group has the right to direct the use of the asset. The Group has
this right when it has the decision-making rights that are most relevant to
changing how and for what purposes the asset is used. In rare cases where all
the decisions about how and for what purpose the asset is used are
predetermined, the Group has the right to direct the use of the asset if
either:
- The Group has the right to operate the asset; or
- The Group designed the asset in a way that predetermines how and for
what purpose it will be used.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a
lease liability on the statement of financial position. The right-of-use asset
is measured at cost, which is made up of the initial measurement of the lease
liability, any initial direct costs incurred by the Group, an estimate of any
costs to dismantle and remove the asset at the end of the lease, and any lease
payments made in advance of the lease commencement date (net of any incentives
received). The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease if that rate is readily available or the
Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in substance fixed), variable payments based on
an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be
exercised.
The lease liability is measured at amortised cost using the effective interest
method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, or if the Group changes its
assessment of whether it will exercise an extension or termination option.
The Group has elected to take the exemption not to recognise right-of-use
assets and lease liabilities for short-term lease of machinery that have a
lease term of 12 months or less and leases of low-value assets. The Group
defines leases of low value assets as being any lease agreement where the
total value of payments made across the lease term is less than £10,000. The
Group recognises the lease payments associated with these leases as an expense
on a straight-line basis over the lease.
On the statement of financial position, right-of-use assets have been included
in property, plant and equipment and lease liabilities have been included in
trade and other payables.
Measurement of the Right-of-use Assets
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis.
The Group as a lessor
As a lessor the Group classifies its leases as either operating or finance
leases.
A lease is classified as a finance lease if it transfers substantially all the
risks and rewards incidental to ownership of the underlying asset and
classified as an operating lease if it does not.
The Group accounts for its sub leases as finance leases with reference to the
right-of-use asset arising from the head lease. The Group has not offset the
assets and liabilities of the head lease and sub lease, nor the income and
expenditure arising from these contracts. A lease receivable is recognised in
the statement of financial position in respect of the net investment in the
sub lease. The net investment in the sub lease is assessed annually for any
indicators of impairment.
Equity
The total equity attributable to the equity holders of the parent comprises
the following:
Share Capital
Share capital represents the nominal value of shares issued.
Share premium account
Share premium represents amounts subscribed for share capital in excess of
nominal value less the related costs of share issues.
Retained earnings
Retained earnings represent undistributed cumulative earnings.
Equity Instruments
Equity instruments issued by the Group are recorded at the proceeds received,
net of direct issue costs.
Other Components of Equity
Merger reserve
Merger reserve represents amounts subscribed for share capital in excess of
nominal value exchanged for the shares in the acquisition of a subsidiary
company.
Revaluation reserve
Revaluation reserves represent the increase in fair value of freehold property
and leasehold assets over the value at which it was previously carried on the
statement of financial position. Any gain from a revaluation is taken to the
revaluation reserve. Where it reverses a previous impairment, the impairment
is reversed, but any surplus in excess of the amount of the impairment is
added to the revaluation reserve.
Translation Reserve
Translation Reserve comprises foreign currency translation differences arising
from the translation of financial statements of the Group's foreign entities
into presentational currency.
Share based payment reserve
The equity settled share-based payment reserve arises as the expense of
issuing share-based payments is recognised over time. The reserve will fall as
share options vest and are exercised but the reserve may equally rise or might
see any reduction offset, as new potentially dilutive share options are
issued. Balances relating to share options that lapse after they vest are
transferred to retained fair value of employee services determined by
reference to transfer of instruments granted.
The Group has applied the requirements of IFRS 2 Share based payment to share
options. The fair value of the share options is determined at the grant date
and are expensed on a straight-line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest and adjusted for the
effect of non-market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life
used in the model has been adjusted, based on management's best estimate, for
the effects on non-transferability, exercise restrictions and behavioural
considerations.
Dividends
Dividend distributions payable to equity shareholders are included in other
liabilities when the dividends have been approved in a general meeting prior
to the reporting date.
Critical accounting judgements and key sources of estimation and uncertainty
The fair value of the Group's property is the main area within the financial
information where the Directors have exercised significant estimates.
Judgements
· The Group has identified certain costs and income as exceptional in
nature in that, without separate disclosure, would distort the reporting of
the underlying business. A degree of judgement is required in determining
whether certain transactions merit separate presentation to allow shareholders
to better understand financial performance in the year, when compared with
that of previous years and trends. This is set out in note 5. The value for
these costs in the Consolidated Income statement for the year ended 31
December 2024 is £68,000 (2023: £26,000). The value of income classified as
exceptional in the Consolidated Income statement for the year ended 31
December 2024 is £365,000 (2023: £nil).
· Extension options for leases: In accordance with IFRS 16, when the
entity has the option to extend a lease, management uses its judgement to
determine whether or not an option would be reasonably certain to be
exercised. Management considers all facts and circumstances including their
past practice and any cost that will be incurred to change the asset if an
option to extend is not taken, to help them determine the lease term.
Management generally includes extensions when the option to extend can be
unilaterally exercised by the tenant provided the hostel under lease is
expected to continue to be profitable for the Group after the extension is
exercised.
· The Group has an option to repurchase the leasehold property at
Elephant & Castle after 25 years. The Directors have considered whether
the option would be exercised and have concluded that for commercial reasons,
the option would not be taken. If the option were to be taken, the property
finance liability at 31 December 2024 would be £9.0m (2023: £8.7m), and
finance charges relating to the liability would total £0.5m (2023: £0.5m).
· The Group has identified that a portion of the freehold property in
Edinburgh has been leased out to a third party. The Directors have considered
whether the portion of the property leased out to a third party constitutes
investment property under IAS 40. The Directors concluded that due to the
specific leasing arrangements with the third party, it was appropriate to
consider the space as freehold property. If the treatment were to be
considered as investment property, the property would be held at fair value
per the valuation report of £3.3m (2023: £1.8m). The fair value gain of
£1.5m would be recognised in the income statement. The impact on depreciation
would equate to a reduction in depreciation expense of £0.1m per annum.
· The Group, where the interest rate implicit in the lease cannot be
practicably determined, has used the incremental borrowing rate (based on a
quoted rate from an external lender as at the date of inception or most recent
modification of the lease) instead to calculate the present value of the
minimum lease payments. The nature and therefore small changes in the
incremental borrowing rate could have a material impact on the financial
statements. In 2024 this ranged from 3.6% to 8.4% (2023: from 3.25% to 3.8%).
At 31 December 2024, lease liabilities totalled £23.7m (2023: £26.0m) and
finance charges relating to lease liabilities for the year totalled £1.6m
(2023: 2.0m).
Estimates
· Assessment of impairment of goodwill, property, plant and equipment
(including right of use assets) and the ability for the Group to continue as a
going concern requires estimation of future cash flows, which are uncertain,
discounted to present value which also requires estimation by management. The
key assumptions used to calculate the value in use (VIU) to test the goodwill
for each cash generating units (CGUs) are detailed in note 12. A Pre-tax
discount rate of 12.89% (2023: 9.7%) has been calculated using weighted
average cost of capital. An assessment was made on the differing risks between
countries in which the hostels operate based on country risks. Based on the
assessment it was concluded that the differences between discount rates
between each CGU is not material. The assets are similar in nature, with all
CGUs providing the provision of hostel accommodation and therefore similar
cashflows and therefore the risk associated with the assets is considered to
be consistent between CGUs. As such one discount rate has been utilised for
the purposes of performing an impairment review. At 31 December 2024, Goodwill
totalled £10.3m (2023: £10.9m) and impairment charges totalled £nil (2023:
£0.9m). At 31 December 2024, property plant and equipment (including right of
use assets) totalled £76.5m (2023: £73.7m) and impairment charges totalled
£0.4m (2023: £0.1m).
· As outlined in the accounting policy, the financial statements have
been prepared under the historical cost convention except for the revaluation
of the freehold properties and lease assets (in respect of Elephant and
Castle). The Group is required to value properties on a sufficiently regular
basis by using open market values to ensure that the carrying value does not
differ significantly from their fair values. Valuations are performed by
qualified valuers using open market values, which reflect the estimated
selling price in an arms-length transaction and includes assumptions of future
income levels and trading potential for each hostel as other factors including
location and tenure. Key valuation estimates include the discount rate,
capitalisation rate, inflation rate, and running yield. Further details can be
found in the Valuation Methodology section of note 5. The Group has used
external valuations on freehold properties and leased assets under financing
transactions, as outlined in note 5. Based on the market data assessed and
internal assessment of each property, management does not consider that the
fair value differs materially from the carrying value. Management is confident
that the carrying value is deemed reasonable at 31(st) December 2024.
· The estimated useful lives which are used to calculate depreciation
of property, plant and equipment are based on the length of time these are
expected to generate income and be of benefit to the Group. Depreciation
methods, useful economic lives and residual values are reviewed at each
reporting date and adjusted if appropriate. Property plant and equipment
totalled £76.5m at 31 December 2024 (2023: £73.7m) and depreciation charges
totalled £3.3m (2023: £3.3m).
· The Group has recognised deferred tax assets for deductible temporary
differences and unused tax losses that it believes are recoverable. The
recoverability of recognised deferred tax assets is in part dependent on the
Group's ability to generate future taxable profits sufficient to utilise
deductible temporary differences and tax losses (before the latter expire).
The Directors consider the likelihood that the Group will generate taxable
profits is probable, and as such, recognises deferred tax assets related to
tax losses in full. Deferred tax assets at 31 December 2024 totalled £4.4m
(2023: £5.5m). Deferred tax charges for the year ended 31 December 2024
totalled £0.7m (2023: £0.2m).
2. SEGMENTAL ANALYSIS
An analysis of the Group's revenue from external customers for each major
product and service category is as follows:
2024 2023
£'000 £'000
Hostel accommodation 19,962 20,143
Food and Beverages sales 1,915 1,525
Other income 1,132 822
Total Income 23,009 22,490
Like for like income 21,373 21,485
Like-for-like income relates to all turnover less turnover associated with the
newly operating properties, Edinburgh and Cordoba as well as discontinued
operating segments.
The Group recognises income from lease payments from operating leases as
income on a straight-line basis over the term of the contract.
Operating segments are reporting in a manner consistent with the internal
reporting provided to the Chief Operating Decision Maker ("CODM"). The CODMs,
who monitor the performance of these operating segments as well as deciding on
the allocation of resources to them, have been identified as the Executive
Directors. Currently the operating segments are the operation of hostel
accommodation in the UK and Europe.
An additional material geographical area has been identified in respect of
Spain to meet the disclosure requirements of IFRS 8 due to its significance to
the Group.
The Group provides a shared services function to its operating segments and
reports these activities separately. Management does not consider there to be
any other material reporting segments. Management revisit this at each year
end.
The most important measures used to evaluate the performance of the business
are revenue, EBIDTA and adjusted EBITDA, which is the operating profit after
excluding depreciation and amortisation, and removing non-recurring
expenditure which would otherwise distort the cash generating nature of the
segment.
2024 UK Spain Europe Shared services Discontinued operations Total
£'000 £'000 £'000 £'000 £'000s £'000
Revenue 8,986 5,953 7,540 18 512 23,009
Profit/(loss) before tax 1,355 (456) 324 (1,630) 391 (16)
Add back: Finance income and costs 315 1,066 790 1,058 192 3,421
Add back: Depreciation & Amortisation 623 1,206 1,211 335 6 3,381
EBITDA 2,293 1,816 2,325 (237) 589 6,786
Impairment - - 428 - - 428
Profit on disposal of assets - - - 4 (404) (400)
Fair value movements of derivatives - - - 13 - 13
Exceptional & Share based payment expense - - (344) 21 26 (297)
Adjusted EBITDA 2,293 1,816 2,409 (199) 211 6,530
Total assets 45,573 16,235 18,120 14,381 - 94,309
Total liabilities (13,322) (10,742) (7,085) (32,396) - (63,545)
2023 as restated UK Spain Europe Shared services Total
£'000 £'000 £'000 £'000 £'000
Revenue 8,270 5,349 8,871 - 22,490
Profit/(loss) before tax (including discontinued operations) 2,252 (448) (1,269) (1,667) (1,132)
Finance income and costs 315 278 493 2,326 3,412
Depreciation & Amortisation 432 1,198 1,195 539 3,364
EBITDA 2,999 1,028 419 1,198 5,644
Impairment - - 1,028 - 1,028
Adjusting Items & Share based payment expense - - - 80 80
Adjusted EBITDA 2,999 1,028 1,447 1,278 6,752
Total assets 40,939 15,788 21,253 15,835 93,815
Total liabilities (11,471) (11,881) (7,930) (30,209) (61,491)
The Group's non-current assets (other than financial instruments and deferred
tax assets) are located into the following geographic regions:
2024 2023
£'000 £'000
UK 45,034 40,472
Spain 15,428 14,976
Rest of Europe 17,193 19,650
Shared services 13,944 15,363
Total 91,599 90,461
3. DISCONTINUED OPERATIONS AND LIABILITIES HELD FOR SALE
Following the classification of the asset group of "Vienna Hotel" as
held-for-sale in September 2023, the operational performance was classified as
discontinued. The Hostel formed part of the Europe operating segment. The
lease for the Vienna Hotel was surrendered on 31 July 2024.
As Restated
2024 2023
Note £000s £000s
Revenue 512 996
Cost of sales (115) (227)
Gross profit 397 769
Administrative expenses 186 (905)
Operating profit 583 (136)
Finance income and costs (192) (239)
Profit/(loss) before tax 391 (375)
Profit/(loss) after tax for discontinuing operations 391 (375)
2024 2023
£000s £000s
Property plant and equipment (including right-of-use asset) - 3,884
Trade and other payables - (187)
Lease Liabilities - (4,291)
Cash and cash equivalents - 40
Trade and other receivables - 50
Liabilities held for sale - (504)
As Restated
2024 2023
Cash flow from operating activities
Loss for the year 1,062 (377)
Tax charge - 1
Depreciation, amortisation and impairment 7 264
Net finance costs - 239
(Increase)/decrease in inventories 3 2
Decrease in trade and other receivables 21 (52)
Increase in trade and other payables (133) 306
Lease modification (843) -
Net Cash generated from operations attributable to discontinued operations 117 383
Cash flow from investing activities
Purchases of property, plant and equipment - (9)
Net cash used in discontinued investing activities - (9)
Cash flow from financing activities
Principal elements of lease payments (293) (419)
Loan repayments 192 (80)
Net cash used in discontinued financing activities (101) (499)
Cash and cash equivalents at beginning of year 40 162
Net cash flows (used in)/generating from operating, investing and financing 16 (125)
activities
Differences on exchange 11 3
Cash and cash equivalents at end of year 67 40
4. TAX
The Group tax charge is made up as follows:
2024 2023
£'000 £'000
Current tax
Corporation tax on profits for the year 5 13
Adjustments for corporation tax on prior periods - -
Other local taxes 186 38
Total current tax 191 51
Deferred tax 684 96
Adjustments for deferred tax in prior periods - 79
Effect of increased tax rate on opening balance - -
Total tax charge 875 226
The charge for the year can be reconciled to the loss per the consolidated
income statement as follows:
As Restated
2024 2023
£'000 £'000
Loss before tax (407) (1,358)
Tax at the standard UK corporation tax rate of 25% (2023: 23.52%) (102) (319)
Fixed asset differences 91 43
Adjustment for tax rate differences in foreign jurisdictions (1) -
Adjustments for tax on prior periods - deferred tax 174 -
Adjustments for tax on prior periods - deferred tax 175 79
Other tax adjustments, reliefs and transfers - -
Remeasurement of deferred tax for changes in tax rates - 1
Deferred tax not recognised 192 (16)
Factors affecting charge for the period
Non-deductible items and other timing differences 190 417
Chargeable gains/(losses) - -
Foreign exchange differences 156 21
Deferred tax eliminated - -
Group tax charge 875 226
The Group has a deferred tax liability of £4.8m (2023: £3.3m) related to the
potential future gain on property revaluations.
The Finance Bill 2021 included legislation to increase the main rate of
corporation tax from 19% to 25% from 1 April 2023. This rate change is
included above as the Finance Bill 2021 has been substantively enacted.
The Finance Bill 2023 includes legislation to implement the Organisation for
economic Co-operation and Development ("OECD") Base Erosion and Profit
Shifting ("BEPS") Pillar two income inclusion rule ("IIR") in the United
Kingdom ("UK"). The legislation introduces a multination top-up tax ("MTUT")
and the domestic top-up tax ("DTT") and both will apply to large multination
enterprises for accounting periods beginning on or after 31 December 2023. The
legislation is not thought to have any impact on the Group tax charge.
5. PROPERTY, PLANT AND EQUIPMENT
Freehold land and buildings Right of Use Assets Leasehold land and buildings Leasehold improve-ments Fixtures, fittings & equipment Assets Total
under construction
Cost or Valuation £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 12,039 38,540 26,799 4,731 4,179 - 86,288
Transfers - - - 680 (720) 40 -
Reclassification as held for sale - (5,246) - - (56) - (5,302)
Additions 2,522 - - 4 337 2,114 4,977
IFRS lease modification - 323 - - - - 323
Revaluation 2,411 - 221 - - - 2,632
Exchange movements 27 (194) - 24 (32) - (175)
At 1 January 2024 16,999 33,423 27,020 5,439 3,708 2,154 88,743
Transfer 2,114 - - - - (2,114) -
Additions 2,880 - - 62 742 2,413 6,097
Disposals - - - - (86) - (86)
IFRS lease modification - 151 - - - - 151
Revaluation 1,004 - - - - - 1,004
Surrender of Vienna Lease - - - - (48) - (48)
Exchange movements ( 140) (952) - (17) (195) - (1,304)
At 31 December 2024 22,857 32,622 27,020 5,484 4,121 2,453 94,557
Depreciation & Impairment
At 1 January 2023 322 9,076 596 1,277 2,959 - 14,230
Transfer - - - 526 (526) - -
Reclassification as held for sale - (1,388) - - (30) - (1,418)
Charge for the period 169 2,408 185 318 266 - 3,346
Impairment - 83 - 65 - - 148
Revaluation (491) - (781) - - - (1,272)
At 1 January 2024 - 10,179 - 2,186 2,669 - 15,034
Transfers - - - - - - -
Charge for the period 453 2,054 188 322 328 - 3,345
Disposals - - - - (86) - (86)
Revaluation (453) - 276 - - (177)
Impairment - 235 - 154 39 - 428
Surrender of Vienna Lease - - - - (24) - (24)
Exchange movements - (239) - (82) (149) - (470)
At 31 December 2024 - 12,229 464 2,580 2,777 - 18,050
Net book value:
At 31 December 2024 22,857 20,393 26,556 2,904 1,344 2,453 76,507
At 31 December 2023 16,999 23,244 27,020 3,253 1,039 2,154 73,709
Freehold properties
The freehold values relate to the five following hostels:
· The £2.8m value of the freehold in York is based on the external
valuations as at 31 December 2024 prepared by Cushman and Wakefield.
· The freehold of the Glasgow property acquired in October 2019 for
£3.2m and which has undergone renovation for £0.4m. The £5.5m value of the
freehold in Glasgow is based on the external valuations as at 31 December 2024
prepared by Cushman and Wakefield.
· The £6.7m value of the freehold in Edinburgh is based on the
external valuations as at 31 December 2024 prepared by Cushman and Wakefield.
The freehold was acquired in December 2023 for £4.3m and underwent
refurbishment totalling £1.2m.
· The hostel in Pisa was acquired in June 2019 for £3.0m, of which
£2.3m for the freehold. The £6.2m value of the freehold in Pisa is based on
the external valuations as at 31 December 2024 prepared by Cushman and
Wakefield.
· The freehold of the Córdoba property was acquired in May 2024 for
£1.7m. The external valuation at 31 December 2024 prepared by Cushman and
Wakefield valued the property at £2.1m.
If the properties had been accounted for under the historic cost accounting
rules, they would have been accounted for as follows:
2024 2023
£'000s £'000s
Historic Cost including Renovations 15,637 10,639
Accumulated Depreciation (1,313) (1,012)
14,324 9,627
Details of the revaluation surplus, including the movement during the period,
are presented in the Statement of Changes in Equity (SOCIE) on page 64 of the
Annual Report.
Leasehold, land and buildings
The Group has used external valuations on Elephant & Castle. The London
Elephant & Castle leasehold was independently valued on 31 December 2024
at £26.8m. The valuation was performed by Cushman and Wakefield. The Group
has accounted for the finance transactions as interest-bearing borrowings
secured on the original properties held. The historic carrying value is
£15.5m, which is the initial value at date of inception of the lease plus
£2.5m of additions, less £3.0m of depreciation charges.
Leasehold improvements
Leasehold improvements comprise the capitalised refurbishment costs incurred
by the Group on the leased properties.
Valuation process
The Group provides information to valuers, including profit and cashflow
forecasts along with asset-specific business plans. These independent external
valuers hold recognised and relevant and professional qualifications and have
recent experience in the location and category of the properties being
valued. The valuers use this and other inputs including market transactions
for similar properties to produce valuations. These valuations and the
assumptions they have made are then discussed and reviewed with the directors.
Cushman & Wakefield were engaged to value properties now valued at £50.1m
(including fixtures & fittings).
Valuation fees are a fixed amount agreed between the Group and the valuers in
advance of the valuation and are not linked to the valuation output.
Valuation methodology
The value is assessed by adopting the income approach to valuation adopting a
discounted cashflow approach. Under this approach it is assumed that the
property is held for a period of 10 years and the net present value of the
earnings during this period are added to the exit value which is discounted to
present day values. Adopting an income approach also requires the analysis
of comparable transactions in the market to assess the rates of returns
investors are prepared to accept at the date of valuation.
The table below provides details of the assumptions used in the valuation of
the properties:
Location Discount rate Capitalisation rate Inflation rate Running Yield
Elephant & Castle 9.0% 7.9% 2.5% 6.67% - 7.38%
Glasgow 11.3% 9.3% 2.5% 9.24% - 9.62%
Edinburgh 10.0% 8.0% 2.5% 5.72% - 6.34%
York 11.0% 7.9% 2.5% 8.11% - 9.45%
Pisa 10.0% 8.0% 2.5% (0.88)% - 9.67%
Cordoba 8.8% 6.8% 2.5% 5.08% - 7.22%
Capital Commitments
There were no capital commitments at the year-end (2023: £0.7m).
6. INTANGIBLE ASSETS AND GOODWILL
Website Goodwill Total
£'000 £'000 £'000
Cost
At 1 January 2023 139 13,505 13,644
Additions 80 - 80
Exchange differences - (238) (238)
At 31 December 2023 219 13,267 13,486
Additions 115 - 115
Exchange differences - (509) (509)
At 31 December 2024 334 12,758 13,092
Amortisation and Impairment
At 1 January 2023 130 1,491 1,621
Impairment - 880 880
Charge for the period 18 - 18
At 31 December 2023 148 2,371 2,519
Write off on Surrender of Vienna Hotel Lease - 4 4
Charge for the period 36 - 36
At 31 December 2024 184 2,375 2,559
Net book value:
At 31 December 2024 150 10,383 10,533
At 31 December 2023 71 10,896 10,967
Goodwill
Goodwill in a business combination is allocated to the cash generating units
("CGUs") that are expected to benefit from that business combination. The
Group's CGUs have been defined as each operating hostel. This conclusion is
consistent with the approach adopted in previous years and with the
operational management of the business.
Impairment
Goodwill is not amortised but tested annually for impairment. The
recoverable amount of each CGU is determined from value in use ("VIU")
calculations based on future expected cash flows discounted to present value
using an appropriate pre-tax discount rate.
Goodwill carrying values as at 31 December 2024 are shown below:
CGU 2024 2024 2023 2023
Goodwill Headroom Goodwill Headroom
£000s £000s £000s £000s
Madrid 2,071 2,329 2,173 -
Paris 11 - 11 -
Gothic 679 2,561 712 1,307
Lisbon 1,266 - 1,328 220
Prague 198 366 207 248
Barcelona Passeig De Gracia 1,577 6,966 1,654 69
Vienna - - 5 184
Brussels 1,239 3,828 1,300 2,428
Pisa 743 7,672 779 2,924
Berlin 902 346 947 -
Athens 1,130 732 1,185 550
Warsaw 567 1,798 595 692
10,383 26,598 10,896 8,622
There were no impairment charges relating to goodwill for the year ended 31
December 2024 (2023: £0.9m). Goodwill relating to the Vienna Hotel was
written off.
The key assumptions used in the VIU calculations for all hostels are based on
forecasts approved by management performed for a 5-year period:
· A pre-tax discount rate of 12.89% (2023: 9.7%) was calculated using
weighted average cost of capital. An assessment was made on the differing
risks between countries in which the hostels operate. Based on the
assessment it was concluded that the differences between discount rates
between each CGU are not material. The assets are similar in nature, with all
CGUs providing the provision of hostel accommodation and therefore similar
cashflows and therefore the risk associated with the assets is considered to
be consistent between CGUs. As such one discount rate has been utilised for
the purposes of performing an impairment review.
· Goodwill was assessed for impairment based on the remaining lease
term, consistent with the lease term used for the associated right-of-use
asset. In addition, an estimated exit value was included, determined by
applying a long-term growth rate of 2.0% in perpetuity.
· The estimated average bed rate, along with revenue and costs, is
projected to increase annually by 2.5% in line with assumed inflation.
· Occupancy is projected to increase by 1% year-on-year over the
forecasted period.
· After the 5-year period, a flat growth rate of 2.5% was applied to
the discounted cashflows.
Discount Rate
The Group calculates a WACC applying local government bond yields and tax
rates. For reference the Group WACC for Safestay plc was 12.89% (2023: 9.7%).
The discount rate applied to a CGU represents a pre-tax rate that reflects the
market assessment of the time value of money as at 31 December 2024 and the
risks specific to the CGU.
7. TRADE AND OTHER PAYABLES
As Restated
2024 2023
£'000 £'000
Due in less than one year
Trade payables 484 572
Social security and other taxes 1,176 1,197
Corporation tax 187 -
Other creditors 107 156
Accruals and deferred income 3,130 2,374
5,084 4,299
8. BORROWINGS
2024 2023
£'000 £'000
At amortised cost
Bank and other loans repayable within one year 4,246 1,000
Loan arrangement fees (85) (68)
Property Finance Liability 3 -
4,164 932
Bank and other loans repayable within more than one year 15,595 15,180
Loan arrangement fees (200) -
Property Finance Liability 7,174 7,174
22,569 22,354
In January 2024, the Group refinanced its existing borrowings into a single
£16m term Loan and added a new £2.5m Revolving Credit Facility ("RCF") to
support future growth plans. The new Term Loan and RCF are for 5 years and
were provided by the existing lender HSBC.
The Term Loan interest rates are £4.4m at 3.955%, £10.0m at SONIA but capped
at 4.75% with a floor of 3.0%, all with an additional margin of 2.6%. The RCF
has a rate of SONIA plus a margin of 2.85%. The Term Loan is repayable at
£0.1m per quarter from March 2024, together with a final payment at
completion. Interest on both the Term Loan and RCF is payable quarterly.
The Term Loan replaced the previous interest only £12.7m facility with HSBC
and enabled the repayment of the outstanding Coronavirus Business Interruption
Loan Scheme ("CBILS") loan of £3.3m, which carried a significantly higher
interest rate.
In addition to the Group refinancing, a supplementary £1.2m loan was obtained
from the trustees of the Sheldon Pension Fund and Sentpark Capital Limited in
June 2024, in order to facilitate the purchase of a freehold property located
in Brighton, United Kingdom. The loan was made to Safe Hostels Limited (a 100%
owned subsidiary of Safestay plc) with Safestay plc writing a written
guarantee. The interest rate on the loan is 1% per month and is serviced
monthly, plus arrangement and exit fees of 1%. This loan has an 18-month term
and was initially repayable in December 2025. Post year end, the term of the
loan was extended to December 2026.
Non-Current Liabilities with Covenants
As disclosed in note 1, the Group has adopted the amendments to IAS 1 relating
to the classification of non-current liabilities with covenants. In accordance
with these amendments, the Group provides the following information regarding
loan covenants associated with the £16.0m Term Loan and £2.5m RCF:
1. Historical Interest Cover
The Group must maintain a minimum historical interest cover as follows:
Period Minimum Historical Interest Cover (%)
31 Dec 2024 - 31 Mar 2025 150%
1 Apr 2025 - 30 Jun 2025 150%
1 Jul 2025 - 30 Sep 2025 165%
1 Oct 2025 - 31 Dec 2025 175%
2. Loan to Value (LTV)
The Group must ensure that the LTV does not, at any time, exceed 50%.
3. Minimum EBITDA
On the specified test dates, the Group must meet the following EBITDA
thresholds:
Test Date Minimum EBITDA
31 Dec 2024 £2,000,000
4. Debt Service Cover Ratio (DSCR)
From 31 March 2025, the Group is required to maintain a minimum DSCR of 125%
on each Test Date:
Period Ending Minimum DSCR (%)
31 Mar 2025 125
30 Jun 2025 125
30 Sep 2025 125
31 Dec 2025 125
5. Debt Leverage
The maximum debt leverage ratio allowed under the agreement is:
Relevant Period Maximum Ratio
12 months to 31 Dec 2024 9:1
12 months to 31 Mar 2025 8:1
12 months to 30 Jun 2025 8:1
12 months to 30 Sep 2025 8:1
12 months to 31 Dec 2025 8:1
The Directors have prepared forecasts for a minimum period of twelve months
from the date of approval of the financial statements. Based on this they are
confident that the covenants in this period will be met and there is
sufficient headroom to cover certain adverse scenarios.
After the year-end, the terms of the Group's banking facility were amended,
resulting in changes to the historical interest cover and debt leverage ratio
covenants. These adjustments were implemented to better reflect current
trading conditions and to provide the Group with greater flexibility in
managing its obligations.
9. LEASES
Lease assets are presented in the statement of financial position as follows:
2024 2023
£'000 £'000
Current 140 142
Non-current 143 297
Total 283 439
The lease asset relates fully to our contract with Casa Suecia where the Group
has outsourced, on a revenue share basis, our Madrid food and beverage
operations.
This is a contract where Safestay receives the higher of a minimum guaranteed
rent or an agreed % of the food and beverage revenue in return for Casa Suecia
receiving the profit from this income stream by managing this part of the
operation with its own staff. This arrangement commenced in July 2021 and is
for an initial five years.
In our lease asset calculations, the Directors have assumed the net profit of
Casa Suecia did not exceed the variable threshold.
2024
Minimum lease receipts due
Within 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years After 5 years Total
Lease receipts 149 149 - - - 298
Finance income (9) (6) - - - (15)
Net present values 140 143 - - - - 283
2023
Minimum lease receipts due
Within 1 year 1 - 2 years 2 - 3 years 3 - 4 years 4 - 5 years After 5 years Total
Lease receipts 156 156 153 - - - 465
Finance income (15) (9) (3) - - - (27)
Net present values 141 147 150 - - - 438
Lease liabilities are presented in the statement of financial position as
follows:
2024 2023
£'000 £'000
Current 1,815 1,793
Non-current 21,891 24,250
Total 23,706 26,043
Total cash outflow for leases for the year ended 31 December 2024 was £3.4m
(2023: £3.6m).
The Group has leases for hostels across Europe. With the exception of
short-term leases and leases of low-value underlying assets, each lease is
reflected on the statement of financial position as a right-of-use asset and a
lease liability. Variable lease payments which do not depend on an index or a
rate (such as lease payments based on a percentage of Group sales) are
excluded from the initial measurement of the lease liability and asset and any
additional consideration is recognised through the income statement. The Group
classifies its right-of-use assets in a consistent manner to its property,
plant and equipment (note 5).
The hostel in London Kensington Holland Park has a term of 50 years. There is
no purchase option in this lease.
Lease payments are generally linked to annual changes in an index (either RPI
or CPI). However, the Group has leases in Lisbon and Kensington Holland Park
for which a portion of the rentals are linked to revenue. The variable portion
of the lease in Lisbon and Kensington Holland Park are accounted for as a
variable rent over the period it relates to.
Each lease generally imposes a restriction that, unless there is a contractual
right for the Group to sublet the asset to another party, the right-of-use
asset can only be used by the Group. Leases are either non-cancellable or may
only be cancelled by incurring a substantive termination fee. Some leases
contain an option to purchase the underlying leased asset outright at the end
of the lease, or to extend the lease for a further term. The Group is
prohibited from selling or pledging the underlying leased assets as security.
For leases over hostels or hotels, the Group must keep those properties in a
good state of repair and return the properties in good condition at the end of
the lease. Further, the Group must insure items of property, plant and
equipment and incur maintenance fees on such items in accordance with the
lease contracts.
The table below describes the nature of the Group's leasing activities by type
of right-of-use asset recognised on balance sheet:
Right-of-use asset No of right-of-use assets leased Range of remaining term Average remaining lease term No of leases with extension options No of leases with options to purchase No of leases with variable payments linked to an index No of leases with termination options
Hostel buildings 11 4 - 40 years 11 9 0 10 0
In addition to the above, there is the London Kensington Holland Park lease
which ends in 2065. There are no such options as above.
There is a short-term lease commitment relating to the commercial hub in
Warsaw. The total commitment is £60k (2023: £18k).
Lease liabilities
The lease liabilities are secured by the related underlying assets. The
undiscounted maturity analysis of lease liabilities at 31 December 2024 is as
follows:
2024
Minimum lease payments due
Within 1 year 1-5 years After 5 years Total
Lease payments 3,085 11,249 21,756 36,090
Finance charges (1,270) (3,887) (7,227) (12,384)
Net present values 1,815 7,362 14,529 23,706
2023
Minimum lease payments due
Within 1 year 1-5 years After 5 years Total
Lease payments 3,156 11,740 24,642 39,538
Finance charges (1,363) (4,295) (7,837) (13,495)
Net present values 1,793 7,445 16,805 26,043
10. ANALYSIS OF NET DEBT
31st December 2023 Cash Edinburgh Renovation Acquisition of Brighton & Cordoba New Loans Loan Finance Expenses 31st December 2024
Flows
Repay
-ments
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 1,998 1,187 (1,207) (3,929) 19,410 (16,029) - 1,430
Bank and Other Loans (16,180) 5 - - (19,695) 16,029 - (19,841)
Loan Arrangement Fees 68 (68) - - 285 - - 285
Property Finance Liability (7,174) (3) - - - - - (7,177)
Lease Liabilities (26,043) 3,953 - - - - (1,616) (23,706)
(47,331) 5,074 (1,207) (3,929) - - (1,616) (49,009)
11. Other commitments and guarantees
The bank loan held by the Group of £18.5m is secured against the Group's
assets, including freehold properties of £15.0m, leasehold properties
totalling £26.8m and trade and other receivables relating to UK properties.
In June 2024, the Group took out an additional loan of £1.2m from the
trustees of the Sheldon Pension Fund and Sentpark Capital Limited.
The Group also has guarantees totalling £1.0m in relation to ongoing leases.
12. PRIOR YEAR RESTATEMENT
During the current year, the Group identified the incorrect accounting
treatment of VAT on certain OTA ("Online Travel Agent") commissions.
Specifically, where OTAs remitted amounts net of their commission fees, the
Group recognised the gross receipts in accordance with IFRS 15 to reflect the
appropriate revenue and commission expense. However, the related commission
expense had been incorrectly reduced by the applicable local VAT rate, on the
assumption that VAT was chargeable and recoverable.
It has since been determined that, under EU VAT rules, these OTA services are
subject to the reverse Charge mechanism and therefore no VAT should have
been claimed. As a result, the VAT creditor and OTA commission expenses were
understated in the previously reported financial statements.
In 2021 and 2022, the VAT treatment was correct, however it was determined
that the OTA commission expense was understated and as a result there has been
an adjustment to Retained Earnings and Trade Receivables. There was also a
reclassification between Trade receivables and Trade payables due to this
adjustment.
Accordingly, the prior year comparatives have been restated to correct this
error. The impact of
the restatement is as follows:
Income statement 2023 2023 2023
As previously stated Adjustment As restated
£'000 £'000 £'000
Cost of Sales (3,811) (35) (3,846)
Loss for the year from continuing operations (948) (35) (983)
Net loss from discontinued operations (376) 1 (375)
Loss for the year (1,324) (34) (1,358)
Statement of Financial Position 2023 2023 2023
As previously stated Adjustment As restated
£'000 £'000 £'000
Trade and Other Payables (4,018) (281) (4,299)
Liabilities Held for Sale (506) 2 (504)
Trade and Other Receivables 1,210 (156) 1,054
Retained Earnings brought forward (12,477) (400) (12,877)
Loss for the Year (1,324) (34) (1,358)
Retained Earnings (13,801) (434) (14,235)
Other Components of Equity 21,952 (1) 21,951
Statement of Cash Flows 2023 2023 2023
As previously stated Adjustment As restated
£'000 £'000 £'000
Decrease in Trade and Other Receivables 136 117 253
Increase in Trade and Other Payables 1,076 (83) 993
Loss for the year (1,324) (34) (1,358)
These adjustments have been reflected in the restated comparative figures
presented in these
financial statements.
13. POST BALANCE SHEET EVENTS
In April 2025, the planning permission to convert the Brighton site was
approved.
In addition, the maturity of the Group's £1.2m loan has been extended, with
full repayment now scheduled for December 2026, as opposed to the original
date of December 2025.
In June 2025, the Group signed a settlement agreement in relation to a
business interruption insurance claim covering the COVID-19 period. The net
settlement amount, after deduction of loss assessor fees, totals £1.4m. This
income would typically be recognised within "Other Income" in the Group's
consolidated statement of comprehensive income.
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