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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Safestay Plc | LSE:SSTY | London | Ordinary Share | GB00BKT0J702 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 19.00 | 18.00 | 20.00 | 19.00 | 19.00 | 19.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Hotels And Motels | 19.15M | -282k | -0.0043 | -44.19 | 12.35M |
From Apr 2019 to Apr 2024
TIDMSSTY
RNS Number : 6321R
Safestay PLC
25 September 2017
The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR")
STRICTLY EMBARGOED UNTIL 7am: 25 September 2017
Safestay plc
("Safestay" or "the Company" or "the Group")
Interim Results
For the Six Months to 30 June 2017
Safestay (AIM: SSTY), the owner and operator of an international brand of contemporary hostels, announces its unaudited interim results for the six months ended 30 June 2017
H1 Financial Highlights
-- Strong H1 performance with demand for Safestay's unique contemporary hostel offer generating a 23% increase in revenues to GBP4.1m (2016: GBP3.3m)
-- 62% increase in EBITDA GBP1.3m (2016: GBP0.8m)
-- Reduced loss before tax of GBP0.4m (2016: GBP0.6m), in line with the development of the business and a profit before tax of GBP0.1m if one-off costs of acquisition (GBP0.1m) and refinancing (GBP0.4m) are eliminated
-- Successful financing transactions in respect of the Elephant & Castle and Edinburgh hostels, raising GBP12.6m
-- New GBP18.4m bank facility with HSBC replaces previous bank facility and two convertible loans, significantly reducing interest expense
H1 Operating Highlights
-- Average occupancy across the four UK hostels increased to 71.6% (period to 30 June 2016: 63.7%)
-- 18.4% increase in the bed nights sold on a like-for-like basis
-- Kensington Holland Park hostel has been transformed, producing like for like revenue growth of 31.3%, with occupancy increasing by 14.3 percentage points compared with the previous year to date and looks set to continue to deliver on its potential
-- Good performance too from Edinburgh, Elephant & Castle and York hostels
-- Expansion of Elephant & Castle to add a further 80 beds. Work will commence imminently with estimated completion in October 2018
-- Operational changes have been effective in driving increased revenues from established Safestay hostels and building on the investment made in 2016 in direct booking channels, property management systems and online capabilities
Acquisitions
-- Hostel portfolio transformed with the acquisition during H1 of 7 new European hostels increasing the number of sites from 4 to 11 and number of beds from 1,526 to 2,574 plus 34 apartments
-- New hostel locations in Paris, Prague, Barcelona x2, Madrid x2 and Lisbon -- 5 new operating hostels all performing well and trading ahead of budget -- Madrid apartments to be completed in H1 2018 and the Paris hostel due to open in 2019
Larry Lipman, Chairman of Safestay, said:
"This has clearly been a transformational period for the business in many ways. I would point to the improvement in performance at our Kensington Holland Park hostel as a key factor for taking real confidence from our trading performance, as it means all four of our UK hostels are trading to plan and we still have significant untapped potential in our Kensington Holland Park and Edinburgh sites. This, together with our plans to expand Elephant & Castle, means the UK base is well placed to develop further.
In addition, the refinancing clearly demonstrated the underlying value within our portfolio and enabled the acquisition of 7 new hostels. It is exciting that those which are operating are performing ahead of plan and we look forward to further integrating them into the Group.
The outlook for the business is extremely positive."
Enquiries
Safestay plc +44 (0) 20 8815 1600 Larry Lipman Canaccord Genuity Limited (Nominated Adviser and Broker) +44 (0) 20 7523 8000 Bruce Garrow Chris Connors Ben Griffiths Novella +44 (0) 20 3151 7008 Tim Robertson Toby Andrews
For more information visit: www.safestay.com
Chairman's statement
Introduction
I am very pleased to present the results for the six months to 30 June 2017 which clearly show the substantial progress that the business has made both in terms of the trading performance and in expanding our network of Safestay hostels from 4 to 11, and into key cities in a total of five countries.
There is a sense of momentum building within the business as the Group refines its practices in all areas of building a portfolio of modern, contemporary hostels. The substantially improved performance of our Kensington Holland Park hostel is perhaps the best example of this. This hostel has increased like-for-like occupancy by 14.3 percentage points although there is still significant opportunity for further growth.
The 5 new operating sites which were acquired during the course of the first six months of 2017 have integrated well and our focus is on completing their rebranding as Safestay hostels and looking to develop the crossover of customers throughout the network. The apartments in Madrid are expected to open in the first half of 2018 and the development of the Paris hostel is expected to complete in 2019.
Financial review
For the period under review, the Group generated a 23% increase in revenues to GBP4.1 million (2016: GBP3.3 million) including a contribution of GBP0.2m from acquisitions. This led to the Group recording a 62% increase in EBITDA to GBP1.3m (2016: GBP0.8m) and a smaller loss before tax of GBP0.4m (2016: loss of GBP0.6m). As a consequence, the Company recorded a loss per share of 1.08p compared with a loss of 1.43p per share in the first half of 2016. The Group generated an underlying profit before tax of GBP0.1m if one-off costs of acquisition (GBP0.1m) and refinancing (GBP0.4m) are eliminated.
During the period, the Group refinanced its borrowings with a new 5-year GBP18.4 million secured bank facility with HSBC which enabled it to repay all previous borrowings including two convertible loans and therefore significantly reducing ongoing interest costs for the remainder of 2017 and beyond.
Net asset value per share remained broadly constant at 57p per share (2016: 58p per share).
Property valuation
In March, the Company completed a geared ground rent financing transaction on the Edinburgh and Elephant & Castle hostels raising gross cash proceeds of GBP12.6 million. Importantly, the Group retains a long-term operational interest in the properties following the sale and leaseback. The two hostels were valued for the refinancing as leaseholds on 14 March 2017 at GBP30.3 million. As a result, the Company has been able to extract GBP12.6 million from the property portfolio without significantly changing the book value of the assets. Net debt increased to GBP39.3m (2016: GBP28.5m).
Operating review
Following a year of consolidation in 2016, the first six months of 2017 delivered significant growth. Excluding the recent acquisitions, Safestay sold 157,984 bed nights compared to 133,444 in the same period in 2016 from its four hostels which combined have 1,526 beds, an increase of 18.4%. Average occupancy was 71.6% compared to 63.7% in the prior year to date demonstrating both the progress made and the scope for further growth. Gross margin improved in large part due to the outsourcing of revenue management which has had a positive impact performance achieved.
Elephant & Castle, the Company's first hostel, has been a consistent performer for the business. Ideally located in the heart of London, this hostel generated revenue of GBP1.3 million (2016: GBP1.3 million) and EBITDA of GBP0.7 million (2016: GBP0.6 million). Demand certainly exceeds supply at regular points during the year and full planning permission and listed building consent has been granted to develop an additional 80 beds over four floors and rework the lower ground floor food and beverage areas. Work is expected to start imminently and take the hostel's total bed count to 493.
The York hostel improved in 2016 and during the first six months of 2017 it continued to build on the progress made. While occupancy is high for all weekends, there still remains further opportunity to increase midweek custom.
Kensington Holland Park hostel with its unique location in the very centre of the park offers accommodation that cannot be matched by many other hostels worldwide. The site opened under the Safestay brand in August 2015 after extensive refurbishment and made a slower than expected start. However, momentum has built as people have become aware of the opportunity to stay in this historic Grade 1 listed building. Revenues from Holland Park increased by 31.3% to GBP0.8 million (2016: GBP0.6 million) and this led to recording EBITDA of GBP0.3 million (2016: GBP0.1 million). The focus is now on continuing this momentum and increasing on current still relatively low levels of occupancy given the potential of the site.
Edinburgh has again performed well, generating revenues of GBP1.4 million (2016: GBP1.2 million) and EBITDA of GBP0.5 million (2016: GBP0.4 million). The balance between offering beds for students during the academic year and then having full capacity available for the lucrative summer period works well and this site has proved to be a very good acquisition for the Group.
Importantly, we have also seen resilience in both London and Barcelona to the recent terror attacks and the impact has, so far, been short term.
Acquisitions
During the period, the Group made the following acquisitions:
-- On 22 May, for EUR3.0m the Group acquired a 228-bed luxury hostel in Madrid, an apartment block adjacent to the hostel in Madrid with 34 apartments currently under refurbishment and a 2,300 sqm building in central Paris with planning for conversion into a 266-bed hostel.
-- On 31 May, for EUR3.6m, the Group acquired a 150-bed hostel in Prague, a 110-bed hostel in Barcelona and a 150-bed hostel in Lisbon. The transaction completed on 29 June.
-- Effective 29 June , for EUR2.0m, the Group completed the acquisition of 144-bed hostel in Barcelona
All seven sites are progressing well and the five that are open are all trading ahead of budget.
Outlook
Since the period end, the Group has enjoyed a good summer with good performances from the new hostels and a strong performance from Edinburgh during August in particular. Importantly, the UK-based hostels have continued the trading momentum from H1 into H2.
The combination of all this means the Company is well placed to achieve a good result for the year as a whole.
Larry Lipman
Chairman
22 September 2017
Hot Features
Premium
Condensed consolidated income
statement Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
------------ ------------ -------------
Revenue 6 4,058 3,288 7,411
Cost of sales (513) (413) (1,022)
Gross profit 3,545 2,875 6,389
Administrative expenses (2,769) (2,685) (5,242)
------------ ------------ -------------
Operating profit before exceptional
expenses 776 190 1,147
EBIT
------------------------------------- ----- ------------ ------------ -------------
EBITDA* 1,268 783 2,188
Depreciation and amortisation (492) (593) (1,041)
------------ ------------ -------------
Operating profit 776 190 1,147
------------------------------------- ----- ------------ ------------ -------------
Exceptional expenses 3 (100) - (152)
------------ ------------ -------------
Operating profit after exceptional
expenses 676 190 995
Finance costs (1,046) (789) (1,463)
Loss before tax (370) (599) (468)
Tax - 107 (43)
------------ ------------ -------------
Loss for the financial period
attributable to owners of the
parent company (370) (492) (511)
============ ============ =============
Basic loss per share in pence 2 (1.08p) (1.43p) (1.49p)
Diluted loss per share in pence 2 (1.08p) (1.43p) (1.49p)
The revenue and operating result for each period is derived from acquired and continuing operations as follows:
GBP000 GBP000 GBP000
------- ------- -------
Revenue
United Kingdom 3,868 3,288 7,411
Other Europe 190 - -
------- ------- -------
4,058 3,288 7,411
------- ------- -------
Operating profit
United Kingdom 651 190 995
Other Europe 25 - -
------- ------- -------
676 190 995
------- ------- -------
* Earnings before exceptional items, interest, tax, depreciation and amortisation
Condensed consolidated statement
of comprehensive income Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------- ------------- -------------
Loss for the period (370) (492) (511)
Other comprehensive income
Items that will not be reclassified
to profit and loss:
Revaluation of freehold land and
buildings - 3,876 3,860
------------- ------------- -------------
Total comprehensive income for the
period attributable to owners of
the parent company (370) 3,384 3,349
============= ============= =============
Condensed consolidated statement
of
financial position Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
Note GBP000 GBP000 GBP000
---------- ---------- ------------
Non-current assets
Property, plant and equipment 5 46,381 45,959 45,771
Intangible assets 6 8,492 1,282 1,212
Goodwill 525 525 525
Deferred tax - 209 -
---------- ---------- ------------
Total non-current assets 55,398 47,975 47,508
---------- ---------- ------------
Current assets
Stock 97 94 23
Trade and other receivables 854 932 491
Derivative financial instruments 9 13 13
Cash and cash equivalents 4,195 1,398 737
Total current assets 5,155 2,437 1,264
---------- ---------- ------------
Total assets 60,553 50,412 48,772
Current liabilities
Borrowings 7 100 689 3,489
Finance lease obligations 8 36 32 34
Trade and other payables 1,697 1,929 1,261
Derivative financial instruments - - 45
Total current liabilities 1,833 2,650 4,829
---------- ---------- ------------
Non-current liabilities
Borrowings 7 28,982 17,467 13,906
Finance lease obligations 8 10,222 10,283 10,195
Deferred tax - 102 5
Derivative financial instruments 33 60 -
---------- ---------- ------------
Total non-current liabilities 39,237 27,912 24,106
---------- ---------- ------------
Total liabilities 41,070 30,562 28,935
---------- ---------- ------------
Net assets 19,483 19,850 19,837
---------- ---------- ------------
Equity
10
Share capital 10 342 342 342
Share premium account 14,504 14,504 14,504
Merger reserve 1,772 1,772 1,772
Share-based payment reserve 73 35 57
Revaluation reserve 4,218 4,234 4,218
Retained earnings (1,426) (1,037) (1,056)
---------- ---------- ------------
Total equity attributable to owners
of the parent company 19,483 19,850 19,837
========== ========== ============
Condensed consolidated statement of changes in equity
For the six months to 30 June 2017 (unaudited)
Share Share Merger Share-based Revaluation Retained Total
capital premium reserve payment reserve earnings equity
GBP000 account GBP000 reserve GBP000 GBP000 GBP000
GBP000 GBP000
-------- -------- -------- ----------- ----------- --------- -------
Balance at 1 January
2017 342 14,504 1,772 57 4,218 (1,056) 19,837
342 14,504 1,772 57 4,218 (1,056) 19,837
Comprehensive income
Loss for the period - - - - - (370) (370)
Other comprehensive - - - - - - -
income
-------- -------- -------- ----------- ----------- --------- -------
Total comprehensive
income - - - - - (370) (370)
-------- -------- -------- ----------- ----------- --------- -------
Transactions with
owners
Share-based payment
charge for the
period - - - 16 - - 16
-------- -------- -------- ----------- ----------- --------- -------
Balance at 30 June
2017 342 14,504 1,772 73 4,218 (1,426) 19,483
======== ======== ======== =========== =========== ========= =======
For the six months to 30 June 2016 (unaudited)
Share Share Merger Share-based Revaluation Retained Total
capital premium reserve payment reserve earnings equity
GBP000 account GBP000 reserve GBP000 GBP000 GBP000
GBP000 GBP000
-------- -------- -------- ----------- ----------- --------- -------
Balance at 1 January
2016 342 14,504 1,772 23 358 (545) 16,454
342 14,504 1,772 57 4,218 (1,056) 19,837
Comprehensive income
Loss for the period - - - - - (492) (492)
Other comprehensive
income - - - - 3,876 - 3,876
-------- -------- -------- ----------- ----------- --------- -------
Total comprehensive
income - - - - 3,876 (492) 3,384
-------- -------- -------- ----------- ----------- --------- -------
Transactions with
owners
Share-based payment
charge for the
period - - - 12 - - 12
-------- -------- -------- ----------- ----------- --------- -------
Balance at 30 June
2016 342 14,504 1,772 35 4,234 (1,037) 19,850
======== ======== ======== =========== =========== ========= =======
For the year ended 31 December 2016 (audited)
Share Share Merger Share-based Revaluation Retained Total
Capital premium Reserve payment Reserve earnings equity
GBP'000 account GBP'000 reserve GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
-------- -------- -------- ----------- ----------- --------- --------
Balance at 1 January
2016 342 14,504 1,772 23 358 (545) 16,454
Comprehensive income
Loss for the year - - - - - (511) (511)
Other comprehensive
income - - - - 3,860 - 3,860
-------- -------- -------- ----------- ----------- --------- --------
Total comprehensive
income - - - - 3,860 (511) 3,349
-------- -------- -------- ----------- ----------- --------- --------
Transactions with
owners
Share-based payment
charge for the
year - - - 34 - - 34
-------- -------- -------- ----------- ----------- --------- --------
Balance at 31 December
2016 342 14,504 1,772 57 4,218 (1,056) 19,837
======== ======== ======== =========== =========== ========= ========
Condensed consolidated statement
of cash flows Unaudited Unaudited Audited
Note 6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------ ------------ -------------
Operating activities
Cash generated from operations 12 851 1,544 2,308
------------ ------------ -------------
Net cash generated from operating
activities 851 1,544 2,308
------------ ------------ -------------
Investing activities
Purchase of property, plant and
equipment (1,032) (279) (484)
Purchase of intangible assets (7,350) - -
------------ ------------ -------------
Net cash outflow from investing
activities (8,382) (279) (484)
------------ ------------ -------------
Cash flows from financing activities
Proceeds from borrowings 29,445 - (660)
Repayment of borrowings (17,600) (523) (755)
Interest paid (856) (404) (732)
------------ ------------ -------------
10,989 (927) (2,147)
------------ ------------ -------------
Cash and cash equivalents at beginning
of period 737 1,060 1,060
Net increase/(decrease) in cash
and cash equivalents 3,458 338 (323)
------------ ------------ -------------
Cash and cash equivalents at end
of period 4,195 1,398 737
============ ============ =============
1. Basis of preparation and principal accounting policies
The condensed interim consolidated financial statements of the Company and its subsidiaries ("the Group") for the six months to 30 June 2017 ("the period") have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial information presented above does not constitute statutory financial statements as defined by section 435 of the Companies Act 2006.
Copies of this announcement are available from the Company's registered office at 1a Kingsley Way, London N2 0FW and on its website, www.safestay.com.
These condensed interim financial statements have not been audited, do not include all of the information required for full annual financial statements and should be read in conjunction with the Group's consolidated annual financial statements for the year ended 31 December 2016. While the financial figures included within this interim report have been computed in accordance with IFRS applicable to interim periods, this report does not contain sufficient information to constitute an interim financial report as set out in International Accounting Standard 34 Interim Financial Reporting.
Revenue
Revenue is stated net of VAT and comprises revenues from overnight hostel accommodation, income from the rental of student accommodation during the academic year and the sale of ancillary goods and services. Accommodation and the sale of ancillary goods and services is recognised when provided. Income from the rent of student accommodation is recognised on a straight-line basis over the academic year to which the rent relates.
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.
Leases
The Group as lessor:
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.
The Group as lessee:
Assets held under finance leases are recognised as assets of the Group at the present value of the lease payments at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction in lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in the profit and loss account.
All other leases are classified as operating leases. Operating leases are recognised in the income statement on a straight-line basis over the life of the lease.
Property, plant and equipment
Freehold property is stated at fair value and revalued annually. Valuation surpluses and deficits arising in the period are included in other comprehensive income. Fixtures, fittings and equipment are stated at cost less depreciation and are depreciated over their estimated useful lives. The applicable estimated useful lives are as follows:
Fixtures, fittings and equipment 3 years Freehold properties 50 years Leasehold properties 50 years
Assets held as finance leases are depreciated over the shorter of the lease term and their expected useful lives on the same basis as owned assets.
Intangible assets
Intangible assets are initially recognised and measured at fair market value.
Where an intangible asset has a determinable finite useful life, the intangible asset is amortised on a straight-line basis over that useful life. Where the intangible asset is closely associated with a lease of premises, the related intangible asset is amortised over the remaining life of the associated lease, also taking into account any renewal options in respect of the associated lease where the Group intends to exercise its right to renew the associated lease.
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.
Financial instruments issued by the Group comprise convertible loan notes that can either be repaid in cash, or be converted to a fixed number of shares at the option of the loan note holder. These financial instruments are recognised in liabilities.
Loan notes with no option to be converted to share capital and that will be repaid in cash are recognised in liabilities.
Loan arrangement fees
Loan arrangement fees are amortised over the term of the loan to which they relate.
Exceptional items
The Group separately discloses on the face of the Income Statement items of income or expense which are material and their nature and amount would, without separate disclosure, distort the reporting of the underlying business.
2. Loss per share Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------ ------------ -------------
Loss for the period attributable
to equity holders of the company (370) (492) (511)
============ ============ =============
Number Number Number
'000 '000 '000
Weighted average number of ordinary
shares for the purposes of basic
loss per share 34,219 34,219 34,219
Effect of dilutive potential ordinary
shares 36 7,488 2,264
------------ ------------ -------------
Weighted average number of ordinary
shares for the purposes of diluted
loss per share ('000s) 34,255 41,707 36,483
------------ ------------ -------------
Basicloss per share (1.08p) (1.43p) (1.49p)
------------ ------------ -------------
Diluted loss per share (1.08p) (1.43p) (1.49p)
------------ ------------ -------------
3. Exceptional expenses
The following costs are separately disclosed on the Condensed
Consolidated Income Statement as exceptional and outside the
underlying trading of the hostels:
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------ ------------ -------------
Administration costs relating to
the unsuccessful acquisition of
a property in Dublin - - 152
Administration costs relating to
the acquisition of businesses 100 - -
------------ ------------ -------------
100 - 152
------------ ------------ -------------
4. Dividend
No interim dividend has been declared in the period (30 June
2016: nil, 31 December 2016: nil). No dividends have been paid
in the period.
5. Property, plant and equipment
For the period from 1 January 2017 to 30 June 2017 (unaudited)
Freehold Leasehold Fixtures,
land and land and fittings
buildings buildings and equipment Total
GBP000 GBP000 GBP000 GBP000
----------- ----------- --------------- -------
Cost or valuation
At 1 January 2017 32,460 13,122 1,253 46,835
Additions 18 709 58 785
Acquired in business combination - - 247 247
Transfer (29,777) 29,777 - -
At 30 June 2017 2,701 43,608 1,558 47,867
----------- ----------- --------------- -------
Depreciation
At 1 January 2017 153 333 578 1,064
Charge for the period 68 159 195 422
Transfer (178) 178 - -
At 30 June 2017 43 670 773 1,486
----------- ----------- --------------- -------
Net book value
30 June 2017 2,658 42,938 785 46,381
----------- ----------- --------------- -------
For the period from 1 January 2016 to 30 June 2016 (unaudited)
Freehold Leasehold Fixtures,
land and land and fittings
buildings buildings and equipment Total
GBP000 GBP000 GBP000 GBP000
----------- ----------- --------------- -------
Cost or valuation
At 1 January 2016 28,764 12,793 1,055 42,612
Additions 128 - 151 279
Revaluations 3,740 - - 3,740
----------- ----------- --------------- -------
At 30 June 2016 32,632 12,793 1,206 46,631
----------- ----------- --------------- -------
Depreciation
At 1 January 2016 - 71 215 286
Charge for the period 141 126 255 522
Revaluations (136) - - (136)
----------- ----------- --------------- -------
At 30 June 2016 5 197 470 672
----------- ----------- --------------- -------
Net book value
30 June 2016 32,627 12,596 736 45,959
=========== =========== =============== =======
For the period from 1 January 2016 to 31 December 2016 (audited)
Freehold Leasehold Fixtures,
land and land and fittings
buildings buildings and equipment Total
GBP000 GBP000 GBP000 GBP000
----------- ----------- --------------- -------
Cost or valuation
At 1 January 2016 28,764 12,793 1,055 42,612
Transfer (267) 267 - -
Additions 224 62 198 484
Revaluation 3,739 - - 3,739
----------- ----------- --------------- -------
At 31 December 2016 32,460 13,122 1,253 46,835
----------- ----------- --------------- -------
Depreciation
At 1 January 2016 - 71 214 285
Charge for the period 275 262 364 901
Revaluation (122) - - (122)
----------- ----------- --------------- -------
At 31 December 2016 153 333 578 1,064
----------- ----------- --------------- -------
Net book value
At 31 December 2016 32,307 12,789 675 45,771
=========== =========== =============== =======
At 30 June 2017, the carrying value of the Group's freehold and leasehold property including fixtures and fittings was GBP46,835,000 (30 June 2016: GBP45,959,000, 31 December 2016: GBP45,771,000).
The directors based their valuation of the freehold properties using external valuations as at 14 March 2017 prepared by Cushman and Wakefield on behalf of HSBC (the Group's bankers) as part of the security for the Group's bank financing.
Leasehold land and buildings additions comprise the capitalised finance lease plus refurbishment costs incurred on the Holland Park hostel and the Group properties transferred from freehold land and buildings following the finance transactions in respect of its hostels in Edinburgh and Elephant & Castle which completed on 31 March 2017.
The newly-created leaseholds for both properties were also independently valued on 14 March 2017 at GBP30.3 million by Cushman and Wakefield on behalf of HSBC (the Group's bankers). The Group has accounted for the finance transactions as interest-bearing borrowings secured on the original properties held. There were no recognised gains or losses arising in respect of these transactions.
6. Intangible assets Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------ ------------ -------------
Cost
At beginning of period 1,400 1,400 1,400
Acquired in business combination 7,350 - -
(note 9)
------------ ------------ -------------
At end of period 8,750 1,400 1,400
------------ ------------ -------------
Amortisation
At beginning of period 188 48 48
Charge for the period 70 70 140
------------ ------------ -------------
At end of period 258 118 188
------------ ------------ -------------
Net book value
At end of period 8,492 1,282 1,212
============ ============ =============
Intangible assets comprise a lease with the University of Edinburgh at a cost of GBP1,400,000 less amortisation of GBP258,000, together with 'right-of-use' leased assets following the acquisition of U Hostels on 22 May 2017, provisionally valued at GBP2,573,000, and leased properties following the acquisition of four sites from Equity Point on 29 June 2017, provisionally valued at GBP4,777,000. See also note 9.
7. Borrowings Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------- ---------- ------------
At amortised cost
Bank loans 18,400 14,586 13,794
Convertible loan notes - 3,800 3,800
Lease obligations 11,420 - -
29,820 18,386 17,594
Unamortised borrowing costs (738) (230) (199)
---------- ---------- ------------
29,082 18,156 17,395
---------- ---------- ------------
Loans repayable within one year 100 689 3,489
Loans repayable after more than
one year 28,982 17,467 13,906
---------- ---------- ------------
29,082 18,156 17,395
---------- ---------- ------------
The repayment profiles of the loans as at 30 June 2017, 30 June 2016 and 31 December 2016 were as follows:
For the period ended 30 June 2017 (unaudited)
Lease obligations Bank loans Total
GBP000 GBP000 GBP000
------------------ ----------- -------
Due within one year 10 90 100
Between one and two years 10 270 280
Between two and five years 35 18,040 18,075
After more than five years 11,365 - 11,365
------------------ ----------- -------
Balance at 30 June 2017 11,420 18,400 29,820
------------------ ----------- -------
For the period ended 30 June 2016 (unaudited)
Convertible
loan notes Bank loans Total
GBP000 GBP000 GBP000
------------ ----------- -------
Due within one year 2,800 755 3,555
Between one and two years 1,000 755 1,755
Between two and five years - 13,076 13,076
After more than five years - - -
------------ ----------- -------
Balance at 30 June 2015 3,800 14,586 18,386
------------ ----------- -------
For the year ended 31 December 2016 (audited)
Convertible
loan notes Bank loans Total
GBP000 GBP000 GBP000
------------ ----------- -------
Due within one year 2,800 755 3,555
Between one and two years 1,000 755 1,755
Between two and five years - 12,284 12,284
After more than five years - - -
------------ ----------- -------
Balance at 30 June 2015 3,800 13,794 17,594
------------ ----------- -------
On 31 March 2017, the Group completed an GBP18.4 million refinancing, replacing the previous convertible and bank debt with a single banking facility with HSBC. The facility has a five-year term, variable interest payable based on LIBOR and is in pounds sterling. The HSBC facility is secured by fixed and floating charges over the assets of the Group in favour of HSBC Bank plc.
On 17 May 2017, the Group received GBP11.42 million before expenses in relation to the sale and leaseback of the Elephant & Castle and Edinburgh properties where the titles of the freehold premises were sold and long-term operating leases based upon the ground rents were entered into, with the Group holding options to reacquire the freeholds with 25 years. The transactions have been accounted for as secured debt transactions. As disclosed in note 5, these freehold assets have been reclassified as long-leasehold properties. The expenses of the transaction are being amortised over 25 years.
8. Obligations under finance
leases Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------- ---------- ------------
Amounts payable under finance
leases:
Within one year 36 32 34
In the second to fifth years
inclusive 168 169 157
After five years 10,054 10,114 10,038
---------- ---------- ------------
Present value of future lease
obligations 10,258 10,315 10,229
========== ========== ============
The Group has treated the Holland Park lease as a finance lease on the basis that the present value of the lease payments constitutes the substantial part of a theoretical freehold valuation. The average effective borrowing rate was 6.55%. The lease is on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
9. Business combinations (unaudited)
Two businesses were acquired in the six-month period ended 30 June 2017.
The first of these was U Hostels Albergues Juveniles, S. L. ("U Hostels")
On 22 May 2017 the Group completed the acquisition of U Hostels for a total cash consideration of GBP2.9 million (EUR3.0 million before working capital adjustment).
The U Hostels portfolio includes three leasehold properties:
-- 228-bed luxury hostel located in the heart of Madrid, operating since 2013 under the U Hostels brand with a 15-year lease.
-- An apartment block situated next to the Madrid hostel. This block is made up of 14 one-bedroom and 20 two-bedroom apartments which are currently being renovated and will open in the first half of 2018. The apartments will be managed by the hostel management team.
-- A 2,300 sqm building in Montmartre, Paris with planning for conversion into a 266-bed hostel. The building is ideally located to become a Safestay hostel and has a 12+12 year lease effective from the opening of the hostel. The landlord will be investing alongside Safestay in the redevelopment of this site, expected to commence this year and open in 2019. Safestay's contribution to this redevelopment is capped at EUR2.3 million (approximately GBP2 million), which will be funded from existing cash resources.
The acquisition has been accounted for by the purchase method of accounting and the results of U Hostels are consolidated within the Group financial statements from 22 May 2017. The fair-values of the acquisition are still being evaluated although provisional fair-values of the U Hostels included for the purposes of the half-year results are set out below.
Unaudited and provisional Fair-values
GBP000
Non-current assets
Intangible assets
Right of use of leasehold properties 2,573
Tangible assets
Property plant and equipment 116
Net current assets 207
Fair-value of businesses acquired 2,896
============
The costs of the acquisition have been expensed in the period (note 3).
The acquired businesses contributed revenues of GBP190,000 and operating profit of GBP25,000 for the period 22 May 2017 to 30 June 2017 which have been recognised in the results to 30 June 2017.
The second business acquired was Equity Point Hostels ("Equity Point")
On 29 June 2017, the Group completed the acquisition of four leasehold sites from Equity Point for a total cash consideration of GBP4.9 million (EUR5.6 million). The acquisition was in two tranches finally completing on 29 June 2017. The locations acquired are located in Lisbon, Prague and Barcelona.
The acquisition has been accounted for by the purchase method of accounting and the results of Equity Point are consolidated within the Group financial statements from 29 June 2017. The fair-values of the acquisition are still being evaluated although provisional fair-values of the Equity Point assets included for the purposes of the half-year results are set out below.
Unaudited and provisional Fair-values
GBP000
Non-current assets
Intangible assets
Right of use of leasehold properties 4,777
Tangible assets
Property plant and equipment 131
Net current liabilities (22)
Fair-value of businesses acquired 4,886
============
The costs of the acquisition have been expensed in the period (note 3).
No contribution has been recognised in the results to 30 June 2017.
10. Share capital Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
---------- ---------- ------------
Allotted, issued and fully paid
34,219,135 Ordinary Shares of
1p each (34,219,135, 30 June
2016 and 31 December 2016) 342 342 342
---------- ---------- ------------
At 30 June 2017, the Ordinary Shares rank pari passu. There have been no changes to the voting rights of the ordinary shares since 31 December 2016.
11. Post-balance sheet events
On 14 July 2017, the Group granted the following nil cost options
under the Group's existing share option scheme exercisable at
60 pence per share after a period of three years from grant to
Persons Discharging Managerial Responsibility ("PDMRs") as listed
below.
- Larry Lipman (Chairman) - 250,000 Ordinary Shares
- Nuno Sacramento (Chief Operating Officer) - 500,000 Ordinary
Shares
12. Notes to the condensed consolidated statement of
cash flows
Unaudited Unaudited Audited
6 months 6 months Year to
to 30 June to 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
------------ ------------ -------------
Loss before tax (370) (599) (468)
Adjustments for:
Depreciation
Depreciation of tangible assets 422 523 901
Amortisation of intangible assets 70 70 140
Finance costs 1,046 789 1,361
Share-based payments 17 12 34
Changes in working capital
Stock (74) (76) (4)
Trade and other receivables (363) (339) 205
Trade and other payables 103 1,164 139
------------ ------------ -------------
Cash generated from operating activities 851 1,544 2,308
------------ ------------ -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUWWBUPMGRP
(END) Dow Jones Newswires
September 25, 2017 02:00 ET (06:00 GMT)
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