STAY IN A NEW
KIND OF PLACE
STAY IN A NEW
KIND OF PLACE
STAY IN A NEW
ANNUAL REPORT 2023
STAY IN A NEW KIND OF PLACE
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Total revenue increased
by 18% to £22.5million
(2022: £19.1 million)
2.3M
Operating Profit increased
by 15% to £2.3 million
(2022: £2.0 million)
Adjusted EBITDA increased
by 14% to £6.8 million
(2022: £5.9 million)
6.8M
71.4%
£23.74
Occupancy increased to 71.4%
(2022: 63%)
Average bed rate increased
to £23.74
(2022: £23.63)
22.5M Contents
Strategic Report
Our Locations
Chairman’s Statement
Our Strategy
Section 172(1) statement
Chief Financial Officer’s Review
Corporate Governance Statement
Chairman’s Introduction to Corporate Governance
Application of the Code Principles
Senior Management
Audit Committee Report
Remuneration Committee Report
Directors' Report
Independent Auditors’ Report to the Members of Safestay plc
Financial Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Company Statement of Cash Flows
Notes to the Company Financial Statements
Officers and Professional Advisors
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2
5
9
14
17
23
24
27
30
32
36
39
49
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90
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93
102
Safestay PLC 22
Our Locations
Glasgow Charing Cross
Edinburgh Cowgate
Today, the Safestay
network extends
to 3,255 beds
across 15 cities,
in 12 of Europe’s most
popular countries.
3,255 BEDS
Portugal
Lisbon Bairro Alto
UK
York Micklegate
Kensington Holland Park
Elephant and Castle
Berlin Kurfürstendamm
Germany
Poland
Warsaw Old Town
Brussels Grand Place
Belgium
Prague Charles Bridge
Czech Republic
Austria
Vienna Margaretenviertel
Slovakia
Bratislava Presidential Palace
Madrid Central
Spain
Barcelona Gothic
Barcelona Passeig de Gràcia
Pisa Centrale
Italy
Greece
Athens Monastiraki
Report & Financial Statements 2023 3
Glasgow Charing Cross
Edinburgh Cowgate
UK
York Micklegate
17 HOSTELS
Kensington Holland Park
Elephant and Castle
Berlin Kurfürstendamm
Germany
Poland
Warsaw Old Town
Brussels Grand Place
Belgium
Portugal
Lisbon Bairro Alto
Madrid Central
Spain
Barcelona Gothic
Barcelona Passeig de Gràcia
Prague Charles Bridge
Czech Republic
Austria
Vienna Margaretenviertel
Slovakia
Bratislava Presidential Palace
Pisa Centrale
Italy
12 COUNTRIES
Greece
Athens Monastiraki
Safestay PLC 4
STRATEGIC
REPORT
Report & Financial Statements 2023 5
Chairman’s Statement
I am delighted to report that over the course of 2023 we were able to
build on the recovery that we saw in 2022 and have delivered impressive
growth in spite of a difficult economic environment. Group revenues
(including discontinued operations, please refer to Chief Financial Officer’s
report for more information) for the period were up 18% to £22.5 million
(2022: £19.1 million). Occupancy levels increased to 71.4% (2022: 63%) which
is a very pleasing result. However, this still remains below historic levels,
leaving scope for further improvement. Average bed rate has increased
and now stands at £23.74 (2022: £23.63). This has been achieved in spite of
macroeconomic headwinds and reflects a material improvement in pricing on
pre-pandemic levels.
Our portfolio of 16 hostels and hotels at the 31st December
2023 – soon to be 20 following the acquisitions of
Edinburgh, Brighton, Cordoba and the management
contract in Calpe – located in key cities across the UK and
Europe and our value conscious proposition continues to
attract a core client base of young travellers and families,
and increasingly business travellers, who are drawn to our
premium hostels in city centre locations.
In October 2023, we announced the purchase of a freehold
property situated in the heart of Edinburgh for £4.3 million.
This property is an extremely attractive and spacious
building, positioned in the heart of Edinburgh in the middle
of its tourist hotspots. It is set to open ahead of the crucial
summer season this year. With 225 beds available in a
range of room configurations, we are delighted to be able
to offer accommodation in this incredible city once again.
Edinburgh remains a top destination for countless young
travellers and we are confident our new property will have
huge appeal for this group.
In January of this year, we were able to successfully
refinance our debt, placing all of our existing borrowings
into a single term loan on favourable terms (refer to note 27
for more information) as well as adding a new £2.5 million
Revolving Credit Facility (further information on this can be
found in the Chief Financial Officer’s review). This increases
the Group’s financial flexibility and will enable us to make
additional investment into the growth of our business when
the right opportunities arise. We have additionally sourced
finance to aid the purchase of the Brighton freehold
property. More details can be found in note 27.
The year has started well and our pipeline is strong, with
forward bookings as at January 1st 2024 significantly
ahead of the level of the previous year. There is headroom
to increase occupancy rates and we expect to be able
to expand our group and direct bookings in 2024 as we
reap the benefits of our investments in marketing and the
specialist sales team in Warsaw. I am confident that we are
in a strong position to deliver another solid year of growth.
Operational Review
This has been a strong year for the Group, building on the
recovery that we delivered in 2022 following the pandemic.
International tourism has returned and we are well-
positioned to benefit from this recovery as well as a shift
to value-conscious travel. We are seeing a diversifying mix
of customers. Young travellers and groups comprise the
core of our business and we are seeing a growing number
of families and business travellers who are attracted to
our proposition.
At the year-end, we operated out of 16 hostels and hotels
across 14 Cities in both Europe and the UK, offering a total
of 3,255 beds at an average cost of £23.74 per night in
2023. Overall, we delivered 848,633 bed nights in 2023.
Soon we will boast 20 sites with 6 sites in the UK following
the acquisitions of freehold properties in Brighton and
Edinburgh, and 5 sites in Spain, including our new Cordoba
site and the management contract for Calpe.
Our hostels delivered a strong performance in all
geographies in 2023. Our UK sites performed well
accounting for 37% of sales. London Elephant & Castle and
London Kensington Holland Park both performed well in the
UK with strong performances overseas from Athens, the
Barcelona hostels and Pisa.
In August, we established a new office in Warsaw, employing
five staff and intended to focus exclusively on driving group
bookings from colleges, schools and universities. Pre-
pandemic, this target group accounted for 38% of room
revenue compared to 13% in 2023 and we believe there is a
significant opportunity to build this back up to historic levels.
We are already seeing the results of this investment with
Safestay PLC Safestay PLC
6
forward bookings for groups up materially at the
beginning of the year at £2.7 million, against £0.9 million
in 2023. Overall, total forward bookings are up twofold
to £3.7 million.
We have invested in marketing and improved our online
platforms as well as our social media presence. We
upgraded our website to make it more user-friendly
and effective in terms of showcasing sites and enabling
seamless bookings in single or multiple hostels. Since
launching the website in July, we have attracted 2,215
new members to the site.
We are determined to maintain our premium offer and
keep it relevant and attractive to our core client base and
this requires investment. This year we allocated a total of
3% of revenues to refurbishing existing sites. Investments
have been various and varied, including the roll-out of
self-check in kiosks at our Elephant and Castle site.
In September 2023, the Board took the decision to look
for a buyer for our hostel in Vienna. Following this
decision, the Directors reclassified the Vienna hostel
as a discontinued operation and the assets and liabilities
were reclassified to held-for-sale.
In October 2023, we announced the purchase of a
freehold property situated in the heart of Edinburgh
for £4.3 million, which completed in December 2023.
We are investing £1.2 million in the preparation and
refurbishment of the Edinburgh site and look forward to
seeing it in operation ahead of the crucial summer season.
The Board
In November 2022, Peter Zielke was appointed as
Chief Operating Officer and took up the role on 1 February
2023. Peter is a highly experienced operator with extensive
industry experience. In April 2023, Sarah Whiddett was
appointed as a Non-Executive Director and has strong
marketing leadership experience.
Safestay PLC
7
7
The year has started well and
our pipeline is strong, with
forward bookings as at January
1st 2024 significantly ahead of
the level of the previous year.
Stephen Moss announced his resignation as Chair of
both the Remuneration and Audit & Risk Committee on
29 March 2024. I would like to thank Stephen, on behalf
of the Board, 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 Committee and Audit & Risk Committee.
Outlook
The pipeline for 2024 is extremely promising with forward
sales at the beginning of the year significantly ahead of
the level of the previous year. We are well-positioned in a
challenging market and believe that there is an opportunity
to drive occupancy rates and product mix through an
increase in group and direct bookings. The Edinburgh
site will make its first contribution this year and we are
confident that it will be a great success. The acquisition
of the Cordoba site further enhances our Spanish hostel
offering and consolidates on our strong European portfolio.
Our recent debt restructuring and resulting financial
flexibility leave us in a strong position to take advantage
of further opportunities should they arise. Further, with
the addition of our first management contract at Calpe
Seafront, we are aiming to start adding asset-light hostels
to sit alongside our expanding freehold and leasehold
portfolio. Finally, the acquisition of the Brighton site will
further establish Safestay as a key player in the UK
hostel market.
Larry Lipman
Chairman
6 June 2024
88
Report & Financial Statements 2023
17% UPLIFT ON
ROOM REVENUE
2023 brought a 17% uplift on total room revenue
Safestay PLC
9
Our Strategy
Business Model
The Safestay business model is to develop and operate a
brand of contemporary 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 brand
— Operational: Deploying a strong hostel expertise and
cost control to achieve best-in-class operating margins
— Brand: Building the Safestay 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
— Guest experience: Providing a comfortable, safe and
enjoyable stay in our hostels for a reasonable price with
a focus on customer satisfaction, a strong community
experience and repeat stays.
New openings, new opportunities
This year saw the opening of our new Commercial Hub
in Warsaw. Operating in lockstep with our London-based
headquarters, this new office is home to a diverse,
multilingual team, working across sales, marketing and
revenue management functions. The Commercial Hub will
provide great opportunities to increase sales in low season,
as well as our food and beverage offerings.
To complement the skills of our dedicated revenue
management team, we also introduced an AI-powered
yielding system that monitors and updates prices
dynamically, across all bed categories. Prices are demand-
driven and reviewed automatically in two-minute intervals.
Elevating experiences
Increasing occupancy and stay durations relies on
delivering consistently superior experiences, and there’s
been a firm focus on customer sentiment this year.
The re-introduction of TrustYou – an intelligent review
management platform that consolidates guest feedback
from across platforms into a single score – has enabled
us to more easily harness, understand and act upon
customer feedback.
We have also undergone a brand refresh, to reflect
the continually evolving expectations of the travel and
hospitality sector. This has been successfully rolled out
across all our digital and print media, including our new-
and-improved website. Here, the addition of an integrated
booking engine has elevated the customer experience,
reduced our reliance on online travel agents, and increased
our share of valuable direct bookings.
We’ve been delighted to see
the key industry measure
of Revenue Per Available Bed
increase by 14.2%.
101010
Report & Financial Statements 2023
Our Strategy continued
Brand Awareness
2023 marked a significant step in refreshing the Safestay brand. As part
of wider brand refresh, this year saw the launch of our new website, with
enhanced booking engine functionality. Website searches converted into
bookings at a rate of 11.65% (up from 8.65% in 2022), with a clear positive trend
following the website relaunch in August 2023. Across the year, a strong 31.8%
of bed nights were booked through direct and non-commissionable channels,
and we expect this trajectory to continue trending upwards as a result of our
ongoing digital investments.
Broadening our reach
Digital campaigns have centred around increasing our
Google presence, and our enhanced partnership with
Triptease – an innovative data-driven marketing platform
– has helped boost our metasearch, paid search and
retargeting results. In 2023, metasearch delivered 15%
of our website bookings, with a Return on Ad Spend of
23.6x – a big jump from 17.3x in 2022. These initiatives will be
further complemented by a new SEO programme, which
we kicked off in March 2024.
A global picture
Our core markets remain the UK and Spain, with overnight
stays improving by 20% and 26% respectively. However,
our shift towards a multilingual digital marketing approach
is already making headway in wider markets, with arrivals
from France up by 26%, and Italy increasing by 28%. We
continue to reach further afield too, cementing a strong
following in South America. Overnight stays from here rose
by 32%, while guest nights booked from Australia almost
doubled, marking an increase of 81.3%.
We have also partnered with a new email marketing
platform, GetResponse, to nurture our customer base,
boost conversions and optimise marketing based on
actionable insights.
The new website gives our
guests the option of pre-arrival
online check-in, delivering the
seamless experiences
customers now expect across
travel touchpoints.
Report & Financial Statements 2023 Safestay PLC
11
31.8%
OF BED
NIGHTS
BOOKED
DIRECT
31.8% of bed nights booked through direct and non-commissionable channels
12
Report & Financial Statements 2023
17.5% INCREASE
IN SALES
17.5% increase in daily sales conversion rate
Safestay PLC
13
Our Strategy continued
Setting Foundations for the Future
With the opening of the Commercial Hub in Warsaw, we are well placed to
consolidate our position at the leading edge of the European hostel market.
The office is a one-stop shop for revenue management, sales and marketing,
as well as critical HR functions. Five of our key countries now have local phone
numbers to the Hub’s call centre, and we can communicate effectively with
guests, booker and hostel teams in eight different languages.
Since the Commercial Hub began operations, we’ve seen
the daily sales conversion rate increase by 23.4%. This
creates a strong business pipeline as we move towards
becoming less reliant on a short-lead booking model.
Fostering talent for the long term
Our Safestay teams remain at the heart of the business,
and this year saw the introduction of a number of new
initiatives to foster talent, boost retention and improve
staff engagement. Our Employee of the Quarter awards
have been integrated into our rewards programme, and
we also launched ‘Be Our Guest’, whereby staff enjoy
complimentary stays in our properties, with discounts for
our team members’ friends and families.
We are continuing to build on these activities with a new
intranet launching this year. Centralised policies and
announcements will make it easier to access consistent,
clear information, while opportunities for interaction
and feedback will help boost engagement. We are also
partnering with Mapal, an online training platform, that
will host customer service modules and statutory health
and safety sessions, in seven different languages – with
additional translation functionality as required.
Unlocking digital experiences
Along with boosting our share of direct bookings, the new
website gives our guests the option of pre-arrival online
check-in, delivering the seamless experiences customers
now expect across travel touchpoints. Meanwhile, the
addition of check-in kiosks within hostels marks the start
of a fully automated experience. This is currently in its trial
phase at our London Elephant & Castle property, with the
aspiration for keys to be delivered direct to guests’ mobile
devices. Launch of this functionality is expected in our new
Edinburgh Cowgate hostel, opening summer 2024.
This will be the first property in the Safestay portfolio to
operate without a reception desk, freeing up staff to focus
on key customer service moments and tailored support.
With searches on mobile devices outranking desktops by
2:1, these initiatives will underpin our mobile strategy moving
forwards, and ensure we’re meeting our guests on their
devices of choice.
Cost Control
Operating in an inflationary landscape meant navigating
wage increases in excess of 15% in some markets. Dynamic
yield management played a strong part in mitigating cost
pressures, as did the introduction of a number of HR and
people-focused initiatives. A central, Group-wide scheduling
and HR system has delivered closer payroll control, and
enhanced staff engagement at the same time. A new
invoicing system, Contina Document Capture, streamlined
cost control activities. Further plans are in place to
establish a purchase order system processing system with
Continia, to further identify cost saving opportunities.
The Group have further looked to consolidate the
buying power of the regions. With the acquisition of
Edinburgh Cowgate, the UK hosts 5 properties. This
opens opportunities for potential cost savings through
agreements with suppliers. Following the announcements
of the management contract for a hostel in Calpe, and the
acquisition of a hostel in Cordoba, this takes the number of
Spanish properties operating under the Safestay Brand
to 5. This will create potential for cost saving opportunities
which the Group will look to take advantage of in 2024.
During October 2023, new utility contracts were secured
for the UK properties, resulting in a reduction in unit prices
of up to 66%. Further opportunities are being investigated
with our utility consultant.
Meanwhile, ongoing technology investments – including
the introduction of mobile check-in facilities – will further
increase staff productivity, without compromising our
customer-centric approach. The new website, with
enhanced booking engine functionality, combined with the
commercial hub, will look to increase the percentage of
direct bookings. This offers direct savings in commissions
paid to third parties.
14
Section 172(1) statement
The Directors are aware of their duty under Section 172(1)
of the Companies Act 2006, to act in the way they consider,
in good faith, would be most likely to promote the success of
the Group for the benefit of its members as a whole, and in
doing so have regard to (amongst other matters):
— the likely consequences of any decisions in
the long-term;
— the interests of employees;
— the need to foster business relationships with suppliers,
customers and others;
— the impact of operations on the community
and environment;
— the desirability of maintaining a reputation for high
standards of business conduct; and
— the need to act fairly as between members of
the Group.
This duty underpins the Board’s decision-making
processes and the Group’s strategic direction, with due
consideration given to the long-term impact of its decisions
on shareholders, employees, customers and wider
stakeholders. Practical measures that the Board takes to
ensure the interests of these stakeholders are reflected in
the Board’s decision-making process are as follows:
Customers
Customer engagement levels is a key performance
indicator of our business. We use this customer feedback
to continuously improve our product and level of service
in the hostels. The Group also directly engages with
customers via social media to share information and collect
further feedback.
Employees
Employees are at the heart of the hospitality industry
and the Directors know that the long-term success of
the Group and its ability to continue to extend its unique
pan-European hostel network will rely on a strong Group
culture, employees’ wellbeing, and efficient succession
planning. Some Board Meetings take place in hostels to
encourage direct contact between the Board and the
operational teams. Bi-annual meetings are organised with
all managers to share best practice, Group information
and help build a positive culture amongst the teams.
Suppliers
Where possible, the Group forms long-term relationships
with suppliers, so that the Group and its suppliers have
a more certain environment in which to operate. This
also applies to landlords of the 12 hostels operated by the
Group under lease agreements.
Shareholders
In addition to the annual general meeting, the Directors
hold meetings with institutional shareholders following
the release of year end and interim results and remain
available for ad hoc meetings throughout the year. In
addition, the Executive Directors have participated in
shareholder conferences to present their business and
strategy and obtain live and direct feedback from non-
institutional shareholders. The Group website includes an
investor section where shareholders can find all relevant
information and reports.
The Board believes communication with stakeholders
helps to shape and adapt the Group’s strategy and
ultimately contributes to maintaining a high standard of
business conduct. The Directors will always assess the
consequences of any decision over the long-term. For
example, decisions over whether to acquire or develop
new properties follows a rigorous process involving
long-term financial assessment and commercial study,
all in conjunction with the funding capabilities of the Group.
Similarly, the Group uses customer satisfaction reports
to help allocate the way funds are deployed under an
annual capex improvement programme to enhance
the experience of customers and ultimately safeguard
brand equity.
The Group complies with the UK’s Quoted Companies
Alliance Corporate Governance code for Small and Mid-
Size Quoted Companies (the “QCA Code”) and further
information is publicised in the investor section of the Group
website. https://www.safestay.com/investors
Engagement with the wider community
The board ensures that decisions made are responsible
and ethical by taking into consideration the wider society
external to the organisation. The Group is committed to
contributing to the community in which it operates as a
business. The Group is using its footprint in each country
to encourage local initiatives via the local management
and staff.
Anti-bribery
The Group is committed to the prevention of bribery by
those employed and associated with it and is committed
to carrying out business fairly, honestly and openly, with
zero-tolerance towards bribery. All employees have a
responsibility to prevent, detect and report all instances of
bribery as stated in our employee handbook.
Report & Financial Statements 2023 Section 172(1) statement continued
Social matters
Safestay provided jobs for 283 people in 2023.
The Group operates in 13 different countries and has
established local operating entities in each of the countries
where our hostels are located. This gives us the ability
to hire employees locally and offer them employment
contracts and social benefits in full compliance with each
relevant jurisdiction. This also includes the relevant level of
hospitality training as well as mandatory training courses.
Maintaining a reputation for high standards
of business conduct
The Board is mindful that the continued growth and
success of the Group is dependent upon maintaining high
standards of business conduct, including:
— The ability to successfully compete within the market,
to attract and retain clients, and to service these clients
to a high standard;
— The ability to attract and retain high quality employees;
— The ability to attract investors and to meet their
expectations of good governance and sound
business conduct;
— The ability to meet the Group’s regulatory
obligations, and to meet the expectations of relevant
regulatory bodies.
This mindset underpins the formulation of the Group’s
strategy and is evident throughout the Board’s
decision-making process.
Ensuring that members of the Company
are treated fairly
The Board ensures that the Group’s shareholders are
treated equally and fairly, regardless of the size of their
shareholding or their status as a private or institutional
shareholder. The Group provides clear and timely
communications to all shareholders in their chosen
communication medium, as well as via the Group’s website
and via a Regulatory News Service. All holders of Ordinary
shares are able to vote at general meetings of the Group.
15
Environment
The Group is mindful of the importance of reducing
environmental impact wherever possible and has
implemented several initiatives to achieve a sustainable
future. The Group intends to continuously review and
increase its efforts in this area. As an example, in all
Safestay properties, we minimise the use of plastics
wherever possible seeking more sustainable alternatives.
This enables us to reduce our environmental footprint and
helps us build a reputation with our guests as it meets their
environmental expectations. We reuse and recycle the
plastic we do use.
We are also constantly reviewing our CO2 emissions.
We are committed to reducing Scope 1 and 2 emissions
- for example, in the future, we would like to incorporate
water-saving products in our showers to encourage our
guests to be mindful of water wastage. We will also look
to reduce Scope 3 emissions working only with trusted
suppliers. Additionally, we are exploring the possibility of
working with train and other public transport companies
to reduce the carbon footprint of our guests.
We have a unique carbon impact tool which we offer to our
guests. This gives them the opportunity to test their carbon
impact by using an online carbon calculator on our website
with the aim to increase the overall awareness and desire
to act responsively during their journey.
More information is available on our website
at https://www.safestay.com/sustainability/.
Employee diversity
The Group is committed to diverse representation at all
levels. We were pleased to welcome to the Board this year
our first female Director, Sarah Whiddett. We hope that this
is the first of many steps in diversifying our recruitment at
all levels, including the most senior.
The following table reports on the gender diversity of the
Group’s employees at 31 December 2023:
Directors
Senior Managers
Male
Female
6
3
1
4
Safestay PLC 16
Section 172(1) statement continued
Employment of disabled people
It is the policy of the Group to employ disabled persons in
the job suited to their aptitudes, abilities and qualifications
whenever practicable, endeavour to continue to employ
those who become disabled whilst in the Group’s
employment and to provide disabled employees with the
same opportunities for promotion, career development
and training as those afforded to other employees.
Human rights
The Group is committed to respecting human rights within
our business by complying with all relevant laws and
regulations. We prohibit any form of discrimination, forced,
trafficked or child labour and are committed to safe and
healthy working conditions for all individuals, whether
employed by the Group directly or by a supplier in our
supply chain.
Legal and ethical conduct
The Group has comprehensive measures to meet its
statutory requirements across all areas of its operation,
and those expected by our customers and employees,
as necessary, for the long-term success of the business.
Risks in this area can occur from corruption, bribery, and
human rights abuses, including discrimination, harassment,
and bullying. The Group has training programmes for all
employees. We take a zero-tolerance approach to bribery
and are committed to acting professionally, fairly and
with integrity in all our business dealings and relationships
wherever we operate and implementing and enforcing
effective procedures to counter bribery as documented in
the Group anti bribery policy signed by the Directors.
Report & Financial Statements 2023 17
Chief Financial Officer’s Review
The Group faced a challenging trading period in FY23 under the cost-of-living
crises which saw impacts to consumer demand, alongside increases in utility and
food costs as a result of the geopolitical situation still ongoing in Ukraine. Despite
these challenges, the Group has had a strong year, delivering revenue (including
discontinued operations) of £22.5 million (2022: £19.1 million) and Adjusted EBITDA
(including discontinued operations) of £6.8 million (2022: £5.9 million).
Financial Key Performance Indicators
Occupancy %
2023
71.4%
As restated
2022
63.0%
Average Bed Rate
£23.74
£23.62
Room Revenues (£'000)
Continuing Operations
Discontinued Operations
Total
Total Revenues (£'000)
Continuing Operations
Discontinued Operations
Total
19,190
953
20,143
21,493
997
22,490
Net cash generated from operations (£’000)
Continuing Operations
Discontinued Operations
Total
Net assets per share
Adjusted EBITDA (£'m)
Continuing Operations
Discontinued Operations
Total
Finance Cost (£'000)
7,673
382
8,055
50p
6.7
0.1
6.8
16,157
993
17,150
18,148
998
19,146
6,556
541
7,097
46p
5.6
0.3
5.9
Continuing Operations
3,209
2,395
Discontinued Operations
239
164
Total
Earnings per share
3,448
2,559
Continuing Operations
(1.46p)
(0.07p)
Discontinued Operations
(0.58p)
(0.16p)
Total
(2.04p)
(0.23p)
Occupancy is calculated by dividing the number of beds
sold over the period with the number of beds available
when the hostels were opened during the same period.
This means that in 2022 and 2021 the occupancy was
calculated specifically for those days when the hostels
were not closed due to the COVID-19 pandemic. Occupancy
for the period was 71.0% (2022: 63.0%), primarily driven
through more normalised trading in the first half of 2023
compared to 2022.
Average Bed Rate is calculated by dividing room revenue
by the number of beds sold over the period. Average Bed
Rate for the period is £23.74 (2022: £23.62).
Revenue
Total revenue for the financial year ended 31 December
2023 increased to £22.5 million (2022: £19.1 million), up 18%
on the previous year.
Room revenue was £20.1 million (2022: £17.2 million) and
food, beverage and ancillary revenues were £2.4 million
(2022: £1.9 million).
Sales in the UK business increased by 20% to £8.3 million
(2022: £6.9 million), accounting for 37% of revenue versus
36% the previous year. Sales of our Overseas businesses
of £14.2 million (2022: 12.3 million) were up 16% on last year.
Adjusted EBITDA
The Directors consider that an adjusted EBITDA 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 nonrecurring 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 comprise of professional fees relating to
aborted acquisitions.
Safestay PLC
18
Chief Financial Officer’s Review continued
Adjusted EBITDA for the period was £6.8 million,
up 15% compared to £5.9 million in 2022. EBITDA margins
were down by 100 basis points to 30%, a reflection of
a normalisation of payroll costs, which were artificially
low in 2022 due to the COVID pandemic, as well as an
abnormal increase in utility costs.
Adjusted EBITDA is as follows:
Operating Profit
(including discontinued operations)
Add back:
Depreciation
Right-of-Use-Depreciation
Amortisation
Actual EBITDA
Impairment
Adjusting items (refer to note 5)
Share-based payment expense
2023
£’000
As restated
2022
£’000
2,315
1,968
938
2,408
18
5,679
1,028
26
54
1,363
2,210
81
5,622
-
369
(92)
Adjusted EBITDA
6,787
5,899
Finance Costs
Finance costs were £3.4 million (2022: £2.6 million)
as follows:
2023
£’000
2022
£’000
Interest on bank overdrafts and loans
1,340
896
Amortised loan arrangement fees
68
68
Interest expense for lease arrangements
(note 17)
1,725
1,404
Property financing expense
315
191
The Group recorded finance income of £36k (2022: £2k)
The Group has an ongoing loan facility with HSBC UK Bank
plc, which renewed in January 2024. The value of the loan
at 31 December 2023 was £12.7m (2022: £12.7 million). The
Group also had a £5.0 million government backed CBILS
loan secured for 6 years on 16 December 2020, with
repayments, which commenced on 16 April 2022 reducing
the balance to £3.25 million at 31 December 2023 (2022:
£4.25 million).
The Group has refinanced all of its existing borrowings in
January 2024 into a single £16 million Term Loan and added
a new £2.5 million 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 £4.4 million at 3.955%,
£10 million at SONIA but capped at 4.75% with a floor of
3% and £1.6 million 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 £0.1 million 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
£12.7 million facility with HSBC and enables the repayment
of the outstanding CBILS loan of £3.25 million which carried
a significantly higher interest rate.
In addition, the Group has a loan in Germany (£0.2 million).
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 2023, the finance costs include
£1.7 million of lease interest (2022: £1.4 million).
Earnings per Share
The Group made a loss after tax of £1.3 million in the
period (2022 as restated: loss of £0.1 million). Earnings per
share for the period were a loss of 2.04p compared to a
loss of 0.23p in 2022 (as restated). This is largely driven
by £1.0 million of impairment charges relating to Bratislava
during the period.
Cash flow, capital expenditure and debt
Net cash generated from operations was £8.1 million
(2022 restated: £7.1 million) primarily due to the increase
in trading performance.
The Group had cash balances of £2.0 million at
31 December 2023 (2022: £5.2 million). This reduction
is because £4.3 million was paid from the Group’s cash
flow for the Edinburgh hostel acquisition.
Report & Financial Statements 2023 19
Chief Financial Officer’s Review continued
Outstanding bank debt at 31st December 2023 was
£16 million (2022: £17 million). This includes a £12.7 million
loan with HSBC (2022: £12.7 million) minus the £0.1 million
amortised loan fees (2022: £0.1 million), the £5 million
government CBILS loan now reduced to £3.3 million at
31 December 2023(2022: £4.3 million), and the German
loan £0.2 million (2022: £0.2 million). The lease liabilities
reduced to £25.9 million (2022: £32.2 million) primarily
due to paying another year of rent and the classification
of the Vienna disposal group as held for sale.
The gearing ratio (exclusive of lease liabilities) is 50%
(2022: 56%).
Net asset value per share increased to 50p (2022: 46p).
This is largely due to freehold and leasehold property
revaluation across the portfolio.
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 and health.
Principal risks and uncertainties
Management has completed a full review of the risks which
may arise from within or outside 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 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 coming 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.
Post COVID-19 crisis, the demand in Safestay’s markets has
strengthened, as we expect that the existing supply within
the competitor set will temporarily reduce, until the industry
expands again. However, provision of new supply will
increase again with the opportunity for real estate owners
to repurpose and convert existing buildings previously
used for retail or offices. Safestay’s defence to such
threats is the combination of our premium locations and
high standard of accommodation and operations. As supply
increases, the business's focus on revenue, customer
service, and sales and marketing activity is key to protect
and grow market share, brand loyalty and reputation.
There is also the risk of higher energy and other supply
costs, but a new utility broker is helping to identify
opportunities for reducing consumption and the growth in
the average bed rate has shown that cost increases can be
offset. Also, the cost pressure on consumers can result in
a desire to stay in hostels rather than budget hotels.
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
Safestay PLC 20
Chief Financial Officer’s Review continued
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 in-house solution.
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, even if it is
expected that the market will offer real estate opportunities
when emerging from the COVID-19 crisis and existing
property owners look for alternatives to 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 all have a proven experience in hospitality
and 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 licenses. 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 £16 million Term Loan and added a
new £2.5 million 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.
2.6%. The RCF has a rate of SONIA plus a margin of 2.85%.
The Term Loan is repayable at £0.1 million 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 £12.7
million facility with HSBC and enables the repayment of the
outstanding CBILS loan of £3.25 million, which carried a
significantly higher interest rate.
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 £92,500 (2022: £83,500)). 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.
The Term Loan interest rates are £4.4 million at 3.955%,
£10 million at SONIA but capped at 4.75% with a floor of 3%
and £1.6 million at SONIA, all with an additional margin of
Liquidity risk
All of the Group’s long-term bank borrowings are
secured on the Group’s property portfolio. If the value
Report & Financial Statements 2023 21
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 2023, 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 £92,500 (2022: £83,000). 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, from pages 14 to 17, was approved by
the Board of Directors and signed on its behalf by:
Paul Hingston
Chief Financial Officer
6 June 2024
Chief Financial Officer’s Review continued
of the portfolio were to fall significantly, the Group risk
breaching borrowing covenants. The Board regularly
review the Group’s gearing levels, cash flow projections
and associated headroom and ensure that excess banking
facilities are available for future use.
The business continued to manage its liquidity risk with the
renewal of its debt facility with HSBC on the 13 January
2020 with a new facility of £12.8m until 2025. In addition,
a £5.0m bank CBILs facility was secured for 6 years
on 16th December 2020, which is interest free for the
first year increasing to 3.99% above base rate from
year 2. Repayment of CBILs facility commenced in April
2022. In January 2024, the Group refinanced its existing
borrowings and added a £2.5 million Revolving Credit
Facility (“RCF”). More details can be found in note 27, post
reporting date events.
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. Exposures to currency exchange rates arise
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. The £17.7 million main facility has an interest
rate of 2.95% above the London inter-bank offer rate
(LIBOR). When the £10.2 million from the Edinburgh sale
proceeds was used to reduce the debt in July 2021, LIBOR
was replaced with 2.95% above SONIA. The £5 million
CBILS in interest free in year 1 and has an interest rate of
3.99% above base rate from year 2 until it is fully repaid at
the end of year 6. The Group carefully manages its interest
rate risk on an ongoing basis. In January 2024, the Group
refinanced its existing borrowings and added a £2.5 million
Revolving Credit Facility (“RCF”). More details can be found
in note 27, post reporting date events.
Safestay PLC 22
Report & Financial Statements 2023
RPORATE
CCOORPORATE
GOVERNANCE
GOVERNANCE
STATEMENT
STATEMENT
Introduction from the Chairman
23
The Board of Directors (the “Board”) of Safestay plc (the “Company”) recognises the importance of, and is committed
to, high standards of corporate governance. We believe strong corporate governance is the key to delivering high
performance as a business and ensuring success for its stakeholders. Accountability to our stakeholders, including
shareholders, guests, suppliers and employees is key to our governance approach.
Therefore, and in compliance with the updated AIM Rules for Companies, the Company has chosen to formalise its
governance policies by complying with the UK’s Quoted Companies Alliance Corporate Governance Guidelines for Small
and Mid-Size Quoted Companies (the “QCA Code”).
The annual financial statements for the Company for the period ending 31 December 2023 will be prepared in accordance
with the Company’s obligations as an AIM company and the requirements of the QCA Corporate Governance Code.
All Directors are fully aware of their duties and responsibilities under the QCA Code. As at the date of this report, we
consider we are in full compliance with the QCA Code, which is made up of 10 principles. Below, we explain how we have
complied with each principle. We continue to review for best practice and will update this report accordingly as we do so,
at least annually.
Larry Lipman
Chairman
6 June 2024
Safestay PLC
24
The Quoted Companies Alliance’s
Ten Principles of Corporate Governance
The Group applies the Quoted Companies Alliances’
code for corporate governance in order to ensure
the long-term success of the Group. By applying the
code, the Group will benefit from improved governance,
and ultimately therefore promotion of long-term value
for shareholders.
Further details of how the Group applies each principle of
the code is outlined below:
1. Establish a strategy and business model which
promote long-term value for shareholders.
The Group’s strategy and business model is discussed
within the Strategic report on pages 14 to 17. Our key
strategic pillars are:
— Openings and Opportunities
— Elevating Experiences
— Brand Awareness
— Setting Foundations for the Future
— Cost Control
The Group saw the opening of a new Commercial Hub in
Warsaw during 2023. The office seeks to drive group sales,
an area which pre pandemic, used to account for a more
significant portion of the Group’s revenue, and is an area
that the Board feel is ripe for growth in 2024 and beyond.
Alongside the commercial hub, the Group also introduced
an AI-powered yielding system that monitors and updates
prices dynamically based on demand.
The long-term aim of the Group is continued expansion
of the Portfolio that currently exists, evidenced by
the purchase of the freehold properties in Brighton,
Edinburgh and Cordoba, along with our first management
contract entered into to manage a hostel in Calpe. The
Group constantly monitors a strong pipeline of potential
properties and locations to further expand where the right
opportunity arises.
Our Safestay team remains the heart of the business and
so it is important to ensure that the staff feel valued. We
introduced a number of initiatives, such as ‘employee of
the quarter’ reward programmes to reward our high
performing staff members. Additionally, we also launched
the ‘Be Our Guest’, where staff can enjoy complimentary
stays in our properties, while offering generous discounts
to our team members’ friends and families.
Guest experience has and always will be a key driver of
business success. The Group has introduced a review
management platform to further understand guest
feedback and sentiment and be able to respond more
quickly to our guests’ needs.
The key risks we face as a business are discussed in the
strategic report on pages 14 to 17.
2. Seek to understand and meet shareholder needs and
expectations – there is continuous communication with
shareholders and the largest shareholder has a seat
on the Board of Directors.
The Board understands the importance of ensuring
and maintaining regular dialogue with shareholders.
The Chairman and Chief Financial Officer (“CFO”)
are responsible for investor relations. The ultimate
responsibility for ensuring a satisfactory dialogue with
Shareholders sits with the Board. The Group’s financial
PR agency leads the preparation, coordination and
communication of all dealings with the financial community
and is the primary point of contact for shareholders
and third-parties.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term
success –
this is explained in the Section 172(1) statement of the
Strategic Report.
The Group considers the key stakeholders in the
business to be its customers, employees, suppliers and
shareholders.
The Board understands that the Group’s long-term
success relies heavily upon strong relations with each of
their stakeholders and they must ensure that the needs of
each are met.
The Board is committed to ensuring a continuous and open
dialogue with its stakeholders, both internal and external.
Further details can be found in the Section 172 Statement
on Pages 15 to 16.
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation.
In order to ensure that the Group has fully understood its
exposure to risk, each key area of the business is reviewed
on an annual basis to ensure that any key risks are identified
and monitored. A risk register is maintained to track the
risks identified as part of these reviews.
Report & Financial Statements 2023 The Quoted Companies Alliance’s Ten Principles of Corporate Governance continued
25
5. Maintain the board as a well-functioning, balanced
Paul Cummins
The risks outlined in the strategic report on pages 14 to 17
are those which the Board believes are the most significant
to the Group’s business model and most likely to prevent
the Group from achieving its strategic objectives. There
may be additional risks and uncertainties that are currently
unknown or currently believed to be immaterial that may
also have an adverse effect on the Group.
team led by the chair.
The Board consists of six Directors: three Executive
Directors and three Non-Executive Directors. Two of
the three Non-Executive Directors (Sarah Whiddett and
Michael Hirst OBE) are independent, in line with the QCA
Code Guidance. Paul Cummins, due to his employment with
Pyrrho Investments Limited (the largest shareholder in
Safestay plc), is not considered to be independent. The Non-
Executive Directors of the Board have been selected with
the objective to further support the breadth of skills and
experience of the Board and bring constructive challenge
to the Executive Directors. They are also responsible for
ensuring the effective running of the Board’s Committees
and ensuring that the Committees support the strategic
priorities of the Board.
The Board Members are:
— Larry Lipman – Chairman
— Paul Hingston – Chief Financial Officer
— Peter Zielke – Chief Operating Officer
— Michael Hirst – Independent Non-Executive Director and
Chair of the Audit and Remuneration Committees
— Sarah Whiddett – Independent Non-Executive Director
— Paul Cummins – Non-Executive Director
The Executive Directors of the Company are employed on a
full time basis. Non-Executive Directors are required to
devote such time to the Group’s affairs as necessary to
discharge their duties, and this may change from time to
time.
All Directors are required to attend all Board meetings and
Committee meetings as necessary.
The attendance record of each of the Directors at full
Board and the Sub-Committees of the Board is set out
below:
Board
Meetings
Audit
Committee
Meetings
Remuneration
Committee
Meetings
24/24
24/24
24/24
24/24
24/24
19/24
23/24
3/3
3/3
3/3
1/1
1/1
Paul Hingston
Michael Hirst
Larry Lipman
Stephen Moss
Sarah Whiddett
Peter Zielke
Please note that Paul Hingston attended the Audit
Committee Meetings in an advisory capacity. Attendance of
Executive Directors to Remuneration and Audit Committee
meetings are by invitation only.
Due to the size of the business, the Board of Directors do
not consider there is a need for a Nominations Committee.
They will review this over time and evaluate the need for
one in future periods.
6. Ensure that between them the Directors have
the necessary up-to-date experience, skills
and capabilities.
The Board considers that it has sufficient skills and
experience to enable it to execute its duties and
responsibilities effectively given the nature and size of
the Group. The Directors have a wide range of skills and
experience as outlined in the Director biographies on pages
27 to 29.
Where the Board considers that it does not possess
the necessary expertise or experience, it will engage
the services of professional advisers or consultants.
The Directors receive regular updates from external
advisers on legal requirements and regulations as well
as remuneration matters and corporate governance
best practice.
Safestay PLC 26
The Quoted Companies Alliance’s Ten Principles of Corporate Governance continued
7. Evaluate board performance based on clear and
relevant objectives, seeking continuous improvement.
10. Communicate how the Group is governed and
is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Group communicates with its shareholders through:
— The Annual Report and Accounts
— Half-Year report announcements
— RNS announcements
— AGM
— Investor relation programme
— The Company website www.safestay.com
The Board has recently reviewed its Financial Position and
Prospects Procedures Memorandum designed to outline
the roles of the Board and the Sub-Committees amongst
other things. This has given the Board a clear benchmark
for which they can evaluate the Board’s performance
against.
In line with best practice and the newly applicable
requirements of the QCA Code, the Board intends to
undertake regular evaluations of the Board and the Sub-
Committees.
8. Promote a corporate culture that is based on ethical
values and behaviours.
The culture of the Group is set by the Board, and the
Directors are committed to promoting a culture of honesty
and ethical behaviours. All new staff receive training and
information on the values and culture of the Group as well
as regular updates to these, to ensure that the culture and
behaviours reflected in the business support the Group’s
long-term strategy.
The Group is currently developing an intranet which
will contain all employee policies, and will provide a key
source of information for all employees on cultures and
behaviours. The intranet will prove invaluable to ensure
that our employees have the right training on the cultures
and behaviours that will enhance our guests' stay as much
as possible. It will also outline best practice on operations
relating to the hostels, to ensure unnecessary costs are
not incurred.
9. Maintain governance structures and processes that
are fit for purpose and support good decision-making
by the Board – this is covered by the Board’s best
practice review.
The Chairman has the ultimate responsibility for corporate
governance, and ensures that the Directors have access to
timely, accurate and clear information from which to base
their decisions. They also ensure that the Committees are
functioning appropriately, and the fiduciary requirements
of the Board are being carried out.
Report & Financial Statements 2023 Directors’ and senior management biographies
27
Larry Lipman
Chairman
Larry has been the main driving force behind the Safestay business
since its establishment. He is responsible for the Group’s strategy and
business development. He has extensive experience of the property
market, gained over thirty years, throughout which he has been the
Managing Director of Safeland plc, where his primary focus is on
trading opportunities and the assessment of potential investments and
refurbishment projects. He was also a key executive in each of Safeland’s
previous demergers, including BizSpace and Safestore, and, in each
case, he continued after the demerger to be closely involved with the
growth of those businesses as well as continuing to manage the core
businesses of Safeland.
Paul Hingston
Chief Financial Officer & Company Secretary
Paul is a KPMG qualified FCA Chief Financial Officer with an MBA.
Significant board level experience in the UK and overseas has involved
operating in a wide variety of sectors including Leisure, Travel, Hospitality,
Aviation and Construction. He was most recently Group Finance
Director of Starboard Hotels Ltd.
In addition to working with operational teams to optimise business
performance, often during periods of rapid growth, Paul has worked
extensively on financing strategy with corporate finance advisers,
banks, private equity funds and other city investors. Paul’s expertise
in optimising value from the interaction of Finance with the other
functions of the business has been applied across a variety of corporate
structures including PLCs, privately owned and private equity backed
businesses. Additionally, he is the Business Members Representative on
the Management Committee for the Beds, Bucks and Herts Society of
Chartered Accountants.
Safestay PLC 28
Directors’ and senior management biographies continued
Peter Zielke
Chief Operating Officer
Peter joined Safestay plc in February 2023. His international hospitality
career spans over 25 years with management and director positions
held in Germany, the UK, Russia, New Zealand and other countries. He
started his career in his hometown Weimar, Germany at renowned
Hotel Elephant. Most recently Director of Operations for the South-
UK region for Kew Green Hotels, where he was in charge of Marriott
International and IHG branded properties. He also gained considerable
brand knowledge in previous roles at Hilton and Millennium & Copthorne
Hotels at which he completed various operational strategy reviews. His
expertise in optimising revenue, marketing and operational management
is extremely valuable for Safestay in enhancing its market position. Peter
was Chairman of the Gatwick Hotels Association until March 2023 and a
member of various business focus groups.
Michael Hirst
Remuneration and Audit and Risk Committee Chair
Michael is the former Chairman of the UK Events Industry Board,
advising Ministers on how to increase the value of international business
events held in the UK. He serves on the Tourism Industry Council, a
collaboration between the UK Government and the tourism industry
focusing on improving the tourism sector. He is an Executive Committee
member and past Chairman of the Business Visits & Events Partnership,
representing Britain’s Events Industry and a director of The Tourism
Alliance, bringing together all the major tourism organisations in the UK.
He is a Director of CP Holdings Ltd, a diversified industrial and services
group, which includes hotels and thermal spas in Central Europe and a
service office business in the UK.
He is a former consultant to CBRE Hotels, the world’s leading hotel
experts. He also advises hospitality and tourism businesses and has
acted as an arbitrator for the International Court of Arbitration in hotel
dispute resolution.
Michael Hirst was awarded an OBE for services to tourism in Britain
and awarded the Joint Meetings Industry Council Unity Award, for his
significant contribution to the advancement of the international Meetings
Industry. He was awarded a Lifetime Achievement Award for his
distinguished career in hospitality, leisure and tourism by the International
Hotel Investment Forum and recently awarded a Fellowship by the Event
and Visual Communications Association.
He was a board member of the Ladbroke Group Plc where he was
Chairman and CEO of Hilton International and voted “Corporate Hotelier
of the World” by HOTELS Magazine.
Report & Financial Statements 2023 Directors’ and senior management biographies continued
29
Stephen Moss
Remuneration and Audit Committee
Stephen is Chairman of Grosvenor Securities Limited, a Central London
commercial property investment and development company. He is past
Chairman of Bibendum PLB, the leading wine and spirit distributors and,
prior to that, CEO of BCP Airport Parking which he grew to become the
UK’s largest airport car parking booking platform. Stephen founded
Springboard in 1990, a charity which promotes careers in hospitality,
leisure and tourism, of which he remains President, and its board and
corporate partners include many of the UK’s top hotel groups. He is
now Chair of London Youth, Chairman of Trustees of London’s top-
ranked comprehensive school and of a leading demographic and social
research think tank. In 1992 he was awarded an MBE for services to the
restaurant industry and, in 2002, a CBE for his contribution towards
education and training. Stephen stepped down from his role as non-
executive director, as well as his roles as Chairman of the Remuneration
and Audit Committee. The Board thanks him for his services and wishes
him the best in the future.
Paul Cummins
Non-Executive Director
Paul is a qualified chartered accountant and is currently Investment
Director of Pyrrho Investments Ltd, Safestay’s largest shareholder. He
has previously worked at Nomura International in both Hong Kong and
London as a proprietary trader, he also worked at KPMG in Hong Kong
and BDO in London. He is currently Chairman of Pacific Jade Holdings Ltd,
a Hong Kong based tax and company secretarial business.
Sarah Whiddett
Remuneration and Audit and Risk Committee
Sarah Whiddett has over 17 years’ leadership experience in Insight, CX
and Marketing. Currently, she is a Strategic Client Partner for Kantar
Insights & Consulting, a leading global data, insight and consultancy
agency. Sarah, and her global matrix team, support clients with their
brand strategy, innovation, creative and media activation, and consumer
experience, through a mix of research, analytics and consultancy
services. She was previously Chair and Director of AURA, the UK's
biggest client-side research networking and events organisation,
and prior to that held numerous leadership positions at food and
drinks wholesaler Bidfood. Alongside these roles, Sarah has been
involved in extensive public speaking and industry engagement, judging
multiple industry awards, speaking at conferences and leading press
engagement. Sarah was a Marketing Academy Scholar 2019 – selected
as a group of 30 future leaders from a group of over 600 applicants,
and was selected for the Kantar Women in Leadership program 2022.
Sarah has been enlisted to the Safestay board in 2023 to support
Safestay’s growth ambition, utilising her marketing and consumer
insight expertise.
Safestay PLC 30
Audit Committee Report
I am pleased to introduce the report of the Audit Committee for the year ended
31 December 2023.
Best practice recommends that all members of the Committee be Non-Executive Directors, independent in character and
judgement and free from any relationship or circumstance which may, could or would be likely to, or appear to, affect their
judgement and that at least one such member has recent and relevant financial experience. Accordingly, the Committee
comprises of both independent Non-Executive Directors, with Paul Hingston supporting in an advisory capacity.
The Committee provides support to the Board in meeting its statutory responsibilities as set out in the QCA Code.
The Board’s view is that the skills and experience of the Committee members are very much relevant to the Group’s
business, as evidenced by the biographies within the Directors page in the Directors’ report. The Committee also monitors
the integrity of the financial statements of the Company and meets regularly with management and Haysmacintyre
LLP (the Company’s external auditors) to review and monitor the financial reporting process, the statutory audit of the
consolidated financial statements, audit procedures, risk management, internal controls and financial matters.
Haysmacintyre LLP was appointed as external auditor of the Company to conduct the audit of the Company’s financial
statements for the financial year to 31 December 2023 and their re-appointment as auditor for the following financial year
will be subject to approval by shareholders at the 2023 Annual General Meeting. External audit partners are rotated every
five years. The current external audit partner is Laura Mott. The external auditors present in advance of the year end their
approach to the forthcoming audit and present their findings from the audit following the completion of their work.
The Committee assesses the performance of the external auditors on an annual basis and based on this review the
Committee recommends the appointment, re-appointment or removal of the Company’s external auditors to the Board.
The Committee was chaired by Stephen Moss and I was also part of the Committee. Following Stephen Moss’s resignation
in March 2024, Sarah Whiddett was appointed to the Committee.
The Committee meets at least annually with the Company’s external auditors. The Committee has a minimum of 2 meetings
per year. They review the audit plan at the start of the annual audit, plus the audit findings and the draft annual accounts
before they are submitted to the Board for approval. The Committee generally also meets to follow up the audit action
plan and risk assessment report during the year. The external auditors have unrestricted access to the Committee. Both
the Committee and the Board keep the external auditor’s independence under close scrutiny. The Group also receives a
formal statement of independence and objectivity from the external auditors each year.
Three meetings were held in 2023, these were all attended by Michael Hirst and Stephen Moss, with Paul Hingston
attending in an advisory capacity.
The Committee’s activities and areas of focus during the year were the following:
— Key assumptions used in the cash forecast prepared by the Directors in relation to the Going Concern note;
— Review of the management paper in relation to key assumptions used in the impairment test as at 31 December 2023
under IAS 36;
— Review of the management paper in relation to the valuation of the assets under IAS 16 and IFRS16;
— Board governance, including the Committee and the procedure for assessing the Group’s key risks.
— The classification of Vienna as discontinued operations and assets and liabilities held-for-sale under IFRS 5.
— Review of accounting relating to the acquisition of the freehold property in Edinburgh.
Report & Financial Statements 2023 31
Audit Committee report continued
Significant issues considered in relation to the financial statements
The Committee reviewed the financial statements, with particular attention to accounting policies and areas of judgement.
The key matters considered by the Committee in respect of the period ended 31 December 2023 are set out below:
— Assets held for sale and discontinued operations: The Committee reviewed Management's assessment on the
application of IFRS 5 for the property located in Vienna to ensure that the judgements applied were deemed to
be reasonable.
— Impairment of goodwill and fixed assets: The Committee reviewed Management's assessment of impairment
on goodwill and fixed asset balances related to Bratislava. They challenged Management's assumptions of future
cashflows to ensure they were reasonable.
Risk management and internal control
The Board has overall responsibility for maintaining sound internal control and risk management systems and has
delegated responsibility to monitor their effectiveness to the Committee.
The system of internal control comprises high level Group-wide controls, controls operating within individual properties
and controls over processes. Policies, procedures and clearly defined levels of delegated authority have been
communicated across the Group, and Management has identified the key operational financial processes which exist
within the business and implemented internal controls over these processes in addition to the higher-level review and
authorisation-based controls. These policies are designed to ensure the accuracy and reliability of financial reporting and
govern the preparation of financial statements. The Committee is satisfied that the system of controls is sufficient for a
Group of Safestay’s size and complexity.
Internal Audit
The Group does not currently have an internal audit function, and the Committee supports Management’s view that there
is no need, at present, to establish an internal audit function given the operational scale of the business as well as the fact
that where possible, the Group avoids cash payments.
The Committee will keep this under consideration and will review the need for an internal audit function on an annual basis.
Michael Hirst
Chair of the Audit Committee
6 June 2024
Safestay PLC 32
Remuneration Committee Report
As Chair of the Remuneration Committee (“the Committee”), I am pleased to
present the report of the Committee for the period ended 31 December 2023.
Membership, role and responsibilities
As an AIM-listed company, we are not required to comply with the Listing Rules of the Financial Conduct Authority, or the
requirements of Schedule 8 (Quoted Companies Directors Remuneration Report) as amended by the provisions of The
Large and Medium-sized Companies and Groups (Accounts and Report) Regulations 2008 (SI 2008/410) (the “Regulations”)
or the UK Corporate Governance Code. However, noting the Company has chosen to comply with the UK’s Quoted
Companies Alliance Corporate Governance Guidelines for Small and Mid-Size Quoted Companies (the “QCA Code”),
the Board considers it appropriate for the Company to provide shareholders with additional information in respect of
executive remuneration where appropriate.
I was appointed the Committee’s Chair following Stephen Moss’s resignation as chair of the Remuneration Committee in
March 2024. I would like to thank Stephen for his services as Committee Chair. Following Stephen’s resignation, Sarah
Whiddett was appointed to the Committee. Both Sarah and I are considered independent by the Board within the meaning
of the QCA Code.
The Committee operates under Terms of Reference approved by the Board. The terms of reference are subject to an
annual review by the Committee.
The Committee is responsible for reviewing the performance of the Executive Directors and within the terms of the
agreed remuneration policy, determining their remuneration packages, including, where appropriate, bonuses and the
grant of share options.
Activity during the year
The Committee met once during 2023, and all relevant Committee members were present at every meeting. During the
period, the Committee discussed and agreed to approve the remuneration arrangements for the Executive Directors.
Remuneration policy
The objective of the Group’s remuneration policy is to attract, motivate, and retain high quality individuals who will
contribute to the success of the Group.
Report & Financial Statements 2023 33
Remuneration Committee Report continued
The table below summarises the key elements of the remuneration policy for Executive Directors and Senior Management:
Operation
Maximum opportunity
Performance Metric
Element
Base Salary
Link to remuneration
policy/strategy
To help recruit and
retain high performing
Executive Directors.
It should reflect the
individual's skills and
experience within
the role.
Salaries will normally
be reviewed annually
taking into account
performance, experience,
responsibilities, relevant
market information and
the level of workforce
pay increases.
A broad-based
assessment of individual
and Group performance
is considered as part of
any salary review.
None
None
None
Annual increases will
usually be commensurate
with those of the wider
workforce. Further
increases may be
considered if there are
significant changes in
responsibility or scope of
the role, sustained
increase in the size of the
business, or if there are
significant movements in
market rates. New
joiners, where pay is
initially set below market
levels, may benefit from
larger increases as their
salary is progressed
towards the market rate
based on their
development in the role.
Executive and
Non-Executive Directors
receive statutory
minimum pension
contributions, in line with
legislation, and with all
other UK employees.
Bonuses are provided
on an ad-hoc basis.
It is the Committee's
preference to provide
longer term incentives
to align the Executive
Directors' interests
to the wider business
There is no limit to the
number of share option
awards available at any
one time. However, the
committee exercises
judgement to ensure that
any awards are
commensurate to the
employee/Executive
Director who receives
the award.
Pension
To provide cost-effective,
yet market-competitive,
retirement benefits.
Annual Bonus
To help recruit and retain
high performing
Executive Directors.
Long-Term
Incentive Plan
To incentivize and
reward long-term
performance and
value creation. To aid
retention and align the
interest of Executive and
Non-Executive Directors
and shareholders in the
long-term.
Contribution to a
personal pension
arrangement or cash in
lieu of pension by way of
a salary supplement.
Executives are all
eligible to receive
bonus incentives,
at the discretion
of the Remuneration
Committee. Any awards
are deemed to be ad-hoc.
Executives are both
eligible to receive
share option incentives,
at the discretion
of the Remuneration
Committee. Any awards
are deemed to be ad-hoc.
Safestay PLC 34
Remuneration Committee Report continued
Directors' service contracts
Larry Lipman has a contract terminable on 6 months’ notice. All the other Directors have contracts terminable by either
party upon three months’ written notice except for Paul Cummins as he is employed by Pyrrho Investments Limited.
The Directors’ service contracts contain no provision for fixed termination payments.
Directors’ emoluments (audited)
The emoluments of the Directors of the Company for the period ended 31 December 2023 were as follows:
Name
Executive directors
Larry Lipman
Paul Hingston
Peter Zielke
Non-executive directors
Michael Hirst
Paul Cummins
Stephen Moss
Sarah Whiddett
Total
The comparative for the 31 December 2022 is as follows:
Name
Executive directors
Larry Lipman
Nuno Sacramento
Peter Harvey
Paul Hingston
Non-executive directors
Michael Hirst
Paul Cummins
Stephen Moss
Total
Salary and fees
£’000
Pension
£’000
Benefits
in kind
£’000
2023
Total
£’000
105
143
105
33
9
31
20
446
-
4
4
-
-
-
-
8
-
-
-
-
-
-
-
-
105
147
109
33
9
31
20
454
Salary and fees
£’000
Pension
£’000
Benefits
in kind
£’000
2022
Total
£’000
100
63
16
122
33
-
30
364
-
2
-
3
-
-
-
5
-
-
-
-
-
-
-
-
100
65
16
125
33
-
30
369
Directors’ interests in shares
The following Directors directly own share capital of the Company:
Larry Lipman
Stephen Moss
Michael Hirst
Ordinary shares of 1p each
Fully paid number
Percentage %
346,054
233,988
97,142
0.5
0.4
0.1
Report & Financial Statements 2023
35
Remuneration Committee Report continued
Larry Lipman also owns one-third of the share capital of Safeland Holdings (2008) Corporation (“SHC”) a corporation
incorporated in Panama and 2% of Safeland plc, a company incorporated in the UK. SHC owned 3,112,484 ordinary shares
in the Company, representing 4.8% of the Company’s shares in issue as at 31 December 2023. SHC owned 83.4% of
Safeland plc. Safeland plc owned 2,597,334 ordinary shares of the Company, representing 4.0% of the Company’s shares
in issue at 31 December 2023. Paul Cummins is not considered to be independent as he is employed by Pyrrho Investments
Limited which is a significant shareholder in the Company, owning 19,025,638 ordinary shares representing 29.3% of the
Company’s shares in issue at 31 December 2023.
Directors’ interests in options over the equity share capital of the Company at 31 December 2023 were:
Granted
Lapsed
At 31 December
2023
Exercise
Price
Exercisable
From
Exercisable
To
Larry Lipman
Michael Hirst
Paul Hingston
Stephen Moss
Peter Zielke
396,521
300,000
400,000
37,100
20,900
25,700
25,700
23,900
22,300
22,300
19,700
18,600
20,900
4,600
2,600
3,200
3,200
3,000
2,800
2,800
2,400
2,300
2,600
400,000
11,200
6,300
7,700
7,700
7,200
6,700
6,700
5,900
5,600
6,300
300,000
396,521
300,000
400,000
37,100
20,900
25,700
25,700
23,900
22,300
22,300
19,700
18,600
20,900
4,600
2,600
3,200
3,200
3,000
2,800
2,800
2,400
2,300
2,600
400,000
11,200
6,300
7,700
7,700
7,200
6,700
6,700
5,900
5,600
6,300
300,000
15 p
15 p
15 p
9 p
15 p
13 p
13 p
14 p
15 p
15 p
15 p
15 p
15 p
9 p
15 p
13 p
13 p
14 p
15 p
15 p
15 p
15 p
15 p
15 p
9 p
15 p
13 p
13 p
14 p
15 p
15 p
15 p
15 p
15 p
15p
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
01/01/2024
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
31/12/2031
The options granted in the first 7 months of 2021 were received by the existing Directors in exchange for a 40% reduction
in their salary to reduce the operating costs of the Group during the lockdown period.
Approval
This report was approved by the Remuneration Committee and signed on its behalf by:
Michael Hirst OBE
Chair of the Remuneration Committee
6 June 2024
Safestay PLC
36
Directors' Report
The Directors present the Directors’ report on the affairs of Safestay plc (the “Company”) together with the audited
consolidated financial statements, for the period ended 31 December 2023.
Directors’ indemnity provisions
The Group has granted an indemnity to each of its Directors against liability in respect of proceedings brought by
third-parties, subject to the conditions set out in section 234 of the Companies Act 2006. The Company purchases
Directors and Officers liability insurance which gives appropriate cover for any legal action brought against its Directors.
Such qualifying indemnity provision remains in force as at the date of approving the Directors’ Report.
Other substantial shareholdings
The Company has been notified of the following shareholdings which constitutes three per cent or more of the total issued
ordinary shares of the Company as at 31 December 2023.
Pyrrho Investments
BGF
Mr Peter O'Reilly
Chelverton Asset Management
Bredbury Limited
Safeland Holdings (2008) Corporation
Safeland plc
Mr Peter Leslie Squire
Mrs JD Squire
Hargreaves Lansdown
Ordinary shares of 1p each
Fully paid number
Percentage %
19,025,638
29.30
11,791,661
4,758,767
4,361,764
3,129,665
3,112,484
2,597,334
2,150,000
2,000,000
1,995,723
18.16
7.33
6.72
4.82
4.79
4.00
3.31
3.08
3.07
Dividends
The Directors have not recommended the payment of a dividend for the year (2022: nil).
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Chairman’s Statement, Directors’ Report, Strategic Report, Corporate
Governance report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. The Directors are required to
prepare consolidated accounts under UK-adopted International Accounting Standards. Under company law the Directors
must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs
of the Company and the Group and the profit or loss of the Group for that period. In preparing these financial statements,
the Directors are required to:
— select suitable accounting policies and then apply them consistently;
— make judgments and accounting estimates that are reasonable and prudent;
— state whether applicable UK accounting standards or UK-adopted International Accounting Standards, subject to any
material departures disclosed and explained in the financial statements;
— prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Report & Financial Statements 2023 37
Directors' Report continued
Conflicts of interest
Under the articles of association of the Company and in accordance with the provisions of the Companies Act 2006
a Director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or possibly may
conflict with the Company’s interests. However, the Directors may authorise conflicts and potential conflicts, as they deem
appropriate. As a safeguard, only Directors who have no interest in the matter being considered will be able to take the
relevant decision, and the Directors will be able to impose limits or conditions when giving authorisation if they think this
is appropriate. During the financial period ended 31 December 2023, the Directors have authorised no such conflicts or
potential conflicts in accordance with the above procedures.
Director Independence
The appointment of the Non-executive Directors is designed to provide balance between those with detailed knowledge
of business operations, and those who are independent to provide the right levels of scrutiny to the business operations.
Both Sarah Whiddett and Michael Hirst are considered to be independent Non-Executive Directors, whilst Paul Cummins
is not deemed to be independent due to his employment with Pyrrho Investments Limited, who at the reporting date, had a
29.3% ownership in Safestay plc.
Going concern
In assessing the going concern position of the Group for the consolidated financial statements for the period ending
31 December 2023, the Directors have considered the Group’s cash flow, liquidity, and business activities.
During 2023, the Group recorded an adjusted EBITDA of £6.8 million (2022: £5.9 million) as the business continued to
recover well from the pandemic and for the first time since 2019, the hostels have been open for 100% of the year.
Additionally, 2024 sales are significantly ahead of 2023 with the profit impact further enhanced by tight cost control and a
changing sales mix from increased groups business.
The Group reduced its bank loan borrowings by £0.8m as the Group continued repaying CBILS (Coronavirus Business
Interruption Loan Scheme). The Group reported a cash position of £2.0 million (2022: £5.2 million) which is largely reduced
due to the acquisition of a freehold property in Edinburgh for £4.3 million. During 2024, the Group refinanced all its existing
borrowings in January 2024 into a single £16.0 million Term Loan and added a new £2.5 million 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.
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.
Post balance sheet events
In January 2024, the Group refinanced its existing borrowings into a single £16 million Term Loan and added a new
£2.5 million 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 £4.4 million at 3.955%, £10 million at SONIA but capped at 4.75% with a floor of 3% and
£1.6 million 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 £0.1 million 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.
Safestay PLC 38
Directors' Report continued
The Term Loan replaces the previous interest only £12.7 million facility with HSBC and enables the repayment of the
outstanding CBILS loan of £3.25 million, which carried a significantly higher interest rate.
On 30 April 2024, the Group acquired a property located in Cordoba, Spain for a consideration of €2 million, funded
through the Group’s existing cash balance.
In June 2024, the Group acquired a freehold property located in Brighton, United Kingdom, for a consideration of
£2.3 million, funded through both the Group’s existing cash balances, and a £1.2 million loan from the trustees of the
Sheldon Pension Fund and Sentpark Capital Limited.
The loan will be made to Safe Hostels Limited (a 100% owned subsidiary of Safestay plc) with Safestay plc providing a
written guarantee. The interest rate on the loan is 1% per month and is serviced monthly, plus there are arrangement and
exit fees of 1% each. The repayment date is 18 months after the drawdown date.
Statement of disclosure of information to the auditor
The directors confirm that:
— so far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and
— the Directors have taken all the steps that they ought to have taken as Directors to make themselves aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
The Directors are responsible for preparing the annual report in accordance with applicable law and regulations. Having
taken advice from the Audit Committee, the Directors consider the annual report and the financial statements, taken as a
whole, provides the information necessary to assess the Company’s performance, business model and strategy and they
are fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
To the best of our knowledge:
— Company and Group financial statements, prepared in accordance with International Accounting Standards, give a
true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
— the Strategic Report and Directors’ Report include a fair review of the development and performance of the business
and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
Future Developments
Details of the Group’s future developments are provided within the Strategic Report.
Employees and social matters
The Strategic Report outlines the position of the Company with regard to social, environmental matters and employment
of disabled persons.
This report was approved by the Board of Directors and signed on behalf of the Board.
Paul Hingston
Chief Financial Officer
6 June 2024
Report & Financial Statements 2023
Independent Auditors' Report
to the members of Safestay plc
39
Opinion
We have audited the financial statements of Safestay Plc (“the Parent Company”) and its subsidiaries (“the Group”)
for the year ended 31 December 2023 which comprise the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statement of
Cash Flows, Consolidated and Company Statements of Changes in Equity and notes to the financial statements,
including a summary of significant accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and International Reporting Financial Standards (IFRS) as adopted by the
United Kingdom.
In our opinion, the financial statements:
— give a true and fair view of the state of the Group’s and of the Parent company’s affairs as at 31 December 2023
and of the Group’s loss for the period then ended;
— the Group’s financial statements have been properly prepared in accordance with IFRSs as adopted by the
United Kingdom and in accordance with the requirements of the Companies Act 2006; and
— the Parent Company’s financial statements have been property prepared in accordance with IFRS as adopted
by the United Kingdom and in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group and Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
An overview of the scope of our audit
For the year ended 31 December 2023, the Group undertook all its trading activities through its wholly owned subsidiaries.
The scope of our audit work was therefore the audit of the Group, which included the parent company and its subsidiaries.
All audit work to respond to the risks of material misstatement of both the Group and Parent Company was performed
directly by the group audit engagement team.
The scope of the audit and our audit strategy was developed by using our audit planning process to obtain and update our
understanding of the Group, its activities, internal control environment, and likely future developments. Our audit testing
was informed by this understanding of the Group and accordingly was designed to focus on areas where we assessed
there to be the most significant risks of material misstatement.
Audit work to respond to the assessed risks was performed directly by the group audit engagement team who
performed full scope audit procedures on the six UK subsidiaries, being Safestay (HP) Limited, Safestay (Elephant & Castle)
Limited, Safestay (Edinburgh) Limited, Safestay (Edinburgh) Hostel Limited, Safestay (York) Limited and Safestay (York) Hostel
Limited. The remaining UK subsidiary, WXYZ2 Limited, is exempt from audit under the s479 parent company guarantee
audit exemption and so was not subject to statutory audit with the remaining overseas subsidiaries subject to specific
scope audit procedures. Specific scope audits were planned and performed to provide sufficient audit evidence based on
the size of these subsidiaries compared to the size of the group and group materiality. Our group scoping ensured that we
achieved at least 90% coverage of our key audit matters and at least 75% coverage across all other balances.
There have been no component auditors used in this engagement. All work was completed by the group audit
engagement team.
Safestay PLC 40
Independent Auditors' Report to the members of Safestay plc continued
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Key Audit Matter
Group Revenue (Note 2)
The key risks surrounding income have been assessed
individually, with risk assessments being performed for each
element of revenue recognition.
The possible risk of fraud in revenue recognition is reduced
in respect of the automatic postings of daily accommodation
and food & beverage sales. This is on the basis that these
transactions are made up of a large volume of small value
transactions which are recognised at the point of sale. As such,
the point of revenue recognition is non-complex and involves
little judgement.
Cut off risk is also not deemed to be significant as the recognition
criteria is not complex or subjective. Accommodation revenue
is recognised on the date of stay and food and beverage sales
are recognised at the point of sale. The distinct recognition
dates provide limited subjectivity in recognition and reduces risk
of misstatement.
Therefore, journals to revenue within the expected
revenue cycle of journal postings are not considered
to be a significant risk.
However, as the Group is listed and revenue is a key KPI for the
Group, there are incentives for the overstatement of revenue.
Therefore, there remains a significant risk around the manual
posting of journals to revenue, outside of the normal revenue
cycle, to overstate reported revenue.
How our scope addressed this matter
We have undertaken the following procedures to verify the
appropriateness of revenue recognition:
–
–
–
–
–
–
Evaluated the processes and controls relating to the
recognition of revenue and related balance sheet accounts;
Performed cash to revenue reconciliations for each
trading entity;
Performed reconciliations from the EPOS system to the
trial balance of each subsidiary;
Performed cut off testing for accommodation revenue,
looking at bookings straddling year end, ensuring that
appropriate portions of revenue were recognised in the
period of stay.
Utilised data analytics software to identify any unusual
transactions that are posted outside of the ‘normal’ revenue
cycle. We then substantively tested any exceptions to ensure
they were free from material fraud or error;
Substantive testing was performed of transactions around
year-end with verification of transactions to supporting
documentation (EPOS reports and bank statements)
challenging the appropriateness of revenue recognition.
Comfort was obtained over reliability of EPOS system
through reconciliation of EPOS to bank receipts.
– Our review also included an assessment of the
appropriateness of the recognition of trade receivables,
accrued income and the completeness of deferred income.
Report & Financial Statements 2023 41
Independent Auditors' Report to the members of Safestay plc continued
Key Audit Matter
How our scope addressed this matter
Management override of controls
Controls Approach
Management is in a unique position to manipulate accounting
records and prepare fraudulent financial statements by
overriding controls that otherwise appear to be operating
effectively. Due to the unpredictable way in which such override
could occur, it is a risk of material misstatement due to fraud and
thus a significant risk on all audits. The specific risk to the Group
is the manipulation of journal entries and accounting estimates,
including assessments of asset impairment, assessments of
debtor recoverability, discount rates used in the calculation of
IFRS 16 leases and the valuation of the properties.
– We have reviewed the controls of the business and
performed walkthrough tests of the controls to determine
any weaknesses which could lead to management override
of controls. This was with particular reference to areas that
we felt could have weaker controls in place.
Substantive Audit Approach
– We considered and reviewed all areas requiring judgement
or estimates in order to assess the appropriateness of the
judgements and estimates made by Management.
– We inquired with management personnel to understand
their controls and risk assessment procedures and if they
consider any other areas which may be susceptible to risk
of material misstatement due to fraud;
– We have tested a number of journal entries made as part
of the year-end financial reporting process and those
made in the year. These journals were selected based on
our assessment of high-risk features, in particular journal
entries posted with round sum values, blank descriptions,
keywords or involving intercompany or related parties.
We have ensured these are in the normal course of
business, have a valid business rationale and have been
appropriately authorised.
Right-of-Use assets and lease liabilities (IFRS16) (Note 11)
As part of our audit procedures we:
The Group holds a significant number of its hostel properties on
long-term leasehold contracts.
As at 31 December 2023, the Group recognised right-of-use
assets with a carrying value of £23.2m and related lease
liabilities totalling £25.9m. These assets and liabilities are material
to the Group and there is a risk that they have been incorrectly
calculated under IFRS16.
The leasehold contracts contain clauses to increase rental
charges if certain inflationary thresholds are breached.
There is a risk that the list of modifications is incomplete and/
or the IFRS lease liability and right-of-use assets has not been
correctly adjusted.
A significant level of judgement is required to assess the
Incremental Borrowing Rate (IBR) for both lease additions
and modifications.
– Obtained the IFRS 16 model and the underlying calculations
for each lease and checked the arithmetic accuracy of
these.
– Obtained lease agreements for each property leased within
the group and reviewed each agreement against the inputs
of the model.
– Obtained details of all lease modifications which were agreed
during the year and compared the terms of each against
the inputs of the model.
–
–
Reviewed and assessed management's assessment
for the calculation of IBR rates for all lease additions and
modifications and challenged the reasonableness of the
assumptions of the assumptions made by management in
respect of them.
Performed sensitivity analysis to assess the possible impact
of changes to the IBR rate on the capitalised right-of-use
asset and lease liability values.
Safestay PLC 42
Independent Auditors' Report to the members of Safestay plc continued
Key Audit Matter
How our scope addressed this matter
Valuation of freehold and leasehold property (Note 11)
As part of our procedures we:
The Group owns four freehold properties, three in the UK
and one in Pisa, Italy and the long-leasehold property in the UK.
The Group carries all freehold and leasehold properties at
a revalued amount, which is the fair value of the items at the
date of the revaluation, less any subsequent accumulated
depreciation and accumulated impairment losses.
The fair value assessment is judgemental and includes
assessing the appropriateness of the key assumptions
used in the valuation by directors and external valuers.
Management has obtained an external valuation for each
of the freehold and leasehold properties in the current
reporting periods.
Increasing interest rates are expected to have had significant
impacts on property valuations in the year, increasing the
likelihood that the properties could be inappropriately valued.
Freehold and leasehold property valuations contain significant
assumptions and judgements and therefore there is a risk that
the valuation is not materially accurate or has been applied
incorrectly in the financial statements.
Impairment of Goodwill (Note 12), investment in
subsidiaries (Note 4 – Parent) and intercompany
receivables Note 5 – Parent).
Included in the Group’s Statement of Financial Position is
Goodwill of £10.9m (2022: £12.0m).
In addition, included in the Parent Company’s Statement
of Financial Position are investments in subsidiaries of £9.3m
(2022: £9.9m) and intercompany receivables of £21.1m
(2022: £19.1m).
Given that the Group, and a number of subsidiaries to which
the balances relate are loss making, there is a risk that the
Group's Goodwill, and Parent Company’s investment in
subsidiaries and intercompany receivables should be impaired.
The impairment review of these balances Is subjective due to
the inherent uncertainty involved in forecasting and discounting
future cash flows and the assumptions made in relation to
the forecasted performance of the subsidiaries to which the
balances relate.
The effect of this is that the recoverable amount of Goodwill,
Investment in subsidiaries and intercompany receivables
has a high degree of estimation uncertainty and a potential
range of reasonable outcomes greater than materiality for
the financial statements. Therefore, there is a risk that they
require impairment.
– Obtained valuation reports from external valuers and
challenged the reasonableness of the key assumptions,
judgements and estimates within them.
– Assessed key estimates such as discount rates, EBITDA
forecasts and inflation rates in line with our work performed
on forecasts within our impairment reviews noted below.
–
–
Verified these key estimates to supporting calculations,
and / or third-party sources where applicable.
Evaluated the experience, competence and independence
of the external valuers to assess whether they had the
required capabilities to provide the valuation services that
they had been charged with.
– Assessed whether movements in fair value have been
appropriately recorded in the financial statements.
–
Reviewed the appropriateness of the accounting treatment
of revaluation gains in the current and previous financial
years, noting that they have previously been accounted
for as an adjustment to cost rather than first eliminating
accumulated depreciation and then adjusting cost for any
gains in excess of depreciation. This was discussed with
management and subsequently confirmed by them that
historic revaluation gains should have first gone offset
accumulated depreciation and so a prior year adjustment
has been recognised in respect of this.
–
Reviewed the appropriateness and completeness of
disclosure of the prior year restatements included in the
financial statements.
We obtained and critically assessed management’s impairment
assessment of these balances, which largely related to
forecasts of the subsidiaries’ performance to which these
balances are attributable. As part of our audit procedures we:
– Challenged the reasonableness of key assumptions used
in the formation of expected future revenues by CGU. This
included a review of projected occupancy and forecasted
revenue per available room.
– Assessed the reasonableness of revenue growth rates
applied year on year, with reference to third-party sources.
– Assessed the completeness and accuracy of forecasted
expenditure in line with actuals from the current year and
contracts for committed expenditure in future periods.
– Assessed the appropriateness of the discount factor used
in the calculation of the present value of future forecasts.
This involved an agreement to third-party sources and
contracted agreements.
–
Ensured that forecasted future revenues were only
included for the period up to the end of the contracted lease
term, taking into account any options to extend.
– Assessed the sensitivity analysis presented by management
detailing the headroom for each subsidiary.
–
Performed our own sensitivity analysis to assess the level of
headroom regarding the balance of goodwill, investments in
subsidiaries and intercompany receivables, where a prior
year restatement was made between Safestay PLC and
WXYZ2 Limited.
Report & Financial Statements 2023 43
Independent Auditors' Report to the members of Safestay plc continued
Key Audit Matter
How our scope addressed this matter
Recognition of held for sale assets
As part of our audit procedures we:
Discussions with management during our audit indicated
that around year end there were ongoing discussions
surrounding the disposal of the hostel in Vienna, operated
by Safestay Hostel GmbH.
Under IFRS 5, assets should be classified as held for sale if an
entity has the intention and ability to transfer the assets to a
buyer in its present conditions.
It was determined during this audit that this classification criteria
had been met and therefore audit testing was performed to
ensure appropriate recognition of the held for sale assets and
the discontinued operations.
Included in the Group's Statement of Financial Position are
liabilities held for sale of £506k and a net loss from discontinued
operations of £376k.
–
Reviewed board meeting minutes and other
correspondence around year end to verify at which date
the held for sale recognition criteria was met.
– Assessed the appropriateness of whether the sale
recognition criteria had been met prior to the year end, and
we reviewed management’s assessments on the valuation
of the Vienna property, ensuring that it is appropriately
recognised at the lower of carrying amount and fair value
less costs to sell.
Re-performed depreciation calculations ensuring that
depreciation charges ceased at the point of recognition as
held for sale.
Reviewed management’s accounting disclosures for
the held for sale assets, ensuring that it is appropriately
recognised within the face of the statement of financial
position and within the notes to the accounts.
–
–
Sale and leaseback
As part of our audit procedures we:
In 2017, the Group entered into a sale and leaseback transaction
in respect of one of its properties. The arrangement requires
the Group to pay an annual rental charge, but also grants the
right of re-purchase of the property either after 25 years from
the commencement of the lease or at the end of the 150 year
lease term.
Management have considered that this transaction does not
meet the definition of a sale of the asset and so rather than
applying the requirements of IAS 17 (the accounting standard
relating to leases applicable in 2017) to recognise a finance lease
liability at the lower of the fair value of the asset and the present
value of future minimum lease payments, instead the sales
proceeds have been accounted for as a financing liability which
is being amortised, using the effective interest method, over
the term of the lease based on management’s judgement that
they will not take the 25 year re-purchase option and instead will
acquire it at the end of the lease term.
Given the complexity of this transaction and that it is outside of
the ordinary course of business for the Group we identified
that there was a risk that the liability in respect of this had been
incorrectly accounted for.
–
Evaluated the accounting policy adopted by the Group for
compliance with IFRSs as adopted by the UK, specifically
obtaining management’s assessment of the substance of
the financing transactions and assessing its reasonableness
through reference to the requirements of IAS 17,
other relevant accounting standards and associated
technical guidance;
– Assessed the appropriateness of management’s judgement
with regards to whether or not they will trigger the 25 year
re-purchase option;
–
–
–
Substantiated the terms of the sale and leaseback
transaction to the sale and subsequent lease agreement
for property;
Reviewed the mathematical accuracy of their calculations
of the lease liabilities and ensuring that the inputs in relation
to cash flows agreed to the terms of the sale and lease
agreements and that the effective interest rate estimated
was appropriate; and
Reviewed the appropriateness of the disclosures within the
financial statements to ensure that they are appropriate
and complete.
Safestay PLC 44
Independent Auditors' Report to the members of Safestay plc continued
Key Audit Matter
How our scope addressed this matter
WXYZ2 Impairment (Parent Company only)
As part of our audit procedures we:
During our review of impairment of investment in subsidiaries,
we noted accounting entries for a group restructure in both
2014 and 2017 had been omitted from the financial statements.
– Assessed the appropriateness and mathematical accuracy
of management’s steps paper showing the calculation of all
missing accounting entries;
The financial statements have been restated to include the
accounting treatment for this transaction. This has been
recognised as a prior period adjustment.
– Obtained the restructuring steps paper to confirm the
substance of the transactions;
–
–
Reviewed Companies House to confirm the legal transfer
of ownership of Safestay (Elephant & Castle) Limited to
Safestay PLC on 22 March 2017; and
Reviewed the appropriateness of the disclosures, including
the prior year adjustment, within the financial statements to
ensure they are appropriate and complete.
Our application of materiality
The scope and focus of our audit were influenced by our assessment and application of materiality. We define materiality
as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions
of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing
and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial
statements as a whole.
The materiality for the Group financial statements as a whole was set at £1,850,000. This was determined as being
2% of the Group’s gross assets. Gross assets have been selected as a benchmark because net assets per share is a
Key Performance Indicator of the Group and gross assets are a key driver of this. Gross assets also reflects the high
asset base of the Group which is required to continue to operate its daily trade.
In addition to this, a lower area specific materiality was set at £382,000 for all areas except for leasehold and freehold
property, and those intrinsically linked to them such as the revaluation reserve and goodwill. This was determined as
2% of revenue as it is also a Key Performance Indicator of the Group and stakeholders are principally interested in the
underlying performance of the Group. Consideration was given as to whether a profit-based area specific materiality
should be used, however on the basis that the Group is loss making, it was concluded that it was more appropriate to base
the area specific materiality on revenue.
On the basis of our risk assessment and review of the Group’s control environment, performance materiality was set at
65% of materiality, being £1,200,000 on full materiality and £248,300 on area specific materiality. The reporting threshold
to the audit committee was set at 5% of materiality, being £92,500 and £19,100 respectively. If in our opinion, differences
below this level warranted reporting on qualitative grounds, these would also be reported.
We have determined Parent Company materiality to be £776,000. This was determined as being 2% of gross assets.
Gross assets was selected as the benchmark as the Parent company is a holding company and does not generate
revenue. Therefore, the gross asset position is considered to be the area of principal interest for the stakeholders.
Additionally, an area specific materiality was set at £84,000 for all transactions related to the Income Statement. This was
determined at 2% of total expenditure.
Because of our risk assessment and review of the Parent Company’s control environment, performance materiality was
set at 65% of materiality, being £504,000 for total materiality and £54,500 for area specific materiality. The reporting
threshold to the Audit Committee was set at 5% of materiality, being £38,800 and £4,100 respectively. If in our opinion,
differences below this level warranted reporting on qualitative grounds, these would also be reported.
Report & Financial Statements 2023 45
Independent Auditors' Report to the members of Safestay plc continued
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s
ability to continue to adopt the going concern basis of accounting included but was not limited to:
— Obtaining management’s assessment of going concern and supporting cash flow forecasts covering up to 31
December 2028, and challenging the reasonableness of the assumptions, current and historic trading performance,
estimates and judgements that support them.
— Reviewing and considering of the appropriateness of downside and stressed scenarios of trading performance and
cash flow forecasts prepared by management;
— Reviewing and considering compliance with bank loan covenants during the period ended 31 December 2023 and as
prospectively forecast;
— Challenging and assessing the underlying assumptions of the cashflow forecasts and considering whether the period
of the forecast is appropriate and;
— Reviewing post balance sheet trading performance and cash flow to assess the reasonableness of management’s
forecasting, including an assessment of the impact of post balance sheet events including the group refinancing in
January 2024.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period
of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in
the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in
this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
— the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
— the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Safestay PLC 46
Independent Auditors' Report to the members of Safestay plc continued
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Croup and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
— adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
— the Parent Company financial statements are not in agreement with the accounting records and returns; or
— certain disclosures of directors’ remuneration specified by law are not made; or
— we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Based on our understanding of the Group and the industry in which it operates, we identified that the principal risks of non-
compliance with laws and regulations related to regulatory requirements for the Group and trade regulations, such as
minimum wage regulation and food standards requirements and AIM listing rules, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations
that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, income tax,
payroll tax and sales tax.
Report & Financial Statements 2023 47
Independent Auditors' Report to the members of Safestay plc continued
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including
the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal
entries to revenue and management bias in accounting estimates. Audit procedures performed by the engagement
team included:
— Inspecting correspondence with regulators and tax authorities;
— Evaluating management’s controls designed to prevent and detect irregularities;
— Discussion with management regarding the relevant laws and regulations that apply to the Group and its subsidiaries, with
specific tests completed to ensure compliance with National Minimum Wage requirements and food hygiene standards;
— Reviewing board meeting minutes for any details on ongoing legal cases or known regulatory breaches;
— Reviewing legal expenses to assess for evidence of contingent liabilities;
— Holding discussions with management regarding the risk of breaches of AIM rules, as well as discussing this with the
Company’s NOMAD;
— Reviewing revenue recognition throughout the year to ensure that it has been correctly accounted for. Specifically
this involved targeted journals testing around manual journals posted to revenue and journals outside of the normal
revenue cycle;
— Identifying and testing journals, in particular journal entries posted with round sum values, blank descriptions,
keywords or involving intercompany or related parties;
— Challenging assumptions and judgements made by management in their critical accounting estimates, particularly in
relation: to assumptions made in preparing value in use calculations for impairment assessments in respect of goodwill,
tangible fixed assets and investments in subsidiaries; their assessment of the recoverability of intercompany debtors
and the calculation of discount rates used in lease valuations and freehold property valuations.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements,
as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities
occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission
or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those
matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have formed.
Laura Mott
Senior Statutory Auditor
For and on behalf of
Haysmacintyre LLP, Statutory Auditors
10 Queen Street Place
London EC4R 1AG
6 June 2024
Safestay PLC
48
Report & Financial Statements 2023
FINANCIAL
STATEMENTS
Consolidated Income Statement
For the period ended 31 December 2023
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit after exceptional items
Finance income and costs
Loss before tax
Tax
Loss for the year from continuing operations
Net loss from discontinued operations
Loss for the financial year attributable to owners of the parent company
Basic loss per share from continuing operations
Basic loss per share from discontinued operations
Diluted loss per share from continuing operations
Diluted loss per share from discontinued operations
49
2023
Total
£’000
21,493
(3,811)
17,682
2022
(As restated)
Total
£’000
18,148
(2,831)
15,317
(15,231)
(13,410)
2,451
(3,173)
(722)
(226)
(948)
(376)
(1,324)
(1.46p)
(0.58p)
1,907
(2,393)
(486)
442
(44)
(105)
(149)
(0.07p)
(0.16p)
(1.39p)
(0.06p)
(0.55p)
(0.15p)
Note
2
3
5
6
8
4
9
9
9
9
Safestay PLC 50
Consolidated Statement of Comprehensive Income
Year ended 31 December 2023
Loss for the year
Exchange differences on translating foreign operations
Property revaluation
Deferred tax on property revaluation
Total comprehensive income for the year attributable to owners of the parent company
The accompanying accounting policies and notes form an integral part of these financial statements.
2023
£’000
(1,324)
7
3,904
(171)
2,416
2022
As restated
£’000
(149)
134
-
-
(15)
Report & Financial Statements 2023 Consolidated Statement of Financial Position
31 December 2023
51
Non-current assets
Property, plant and equipment (including right-of-use asset)
Intangible assets
Goodwill
Lease assets
Deferred tax asset
Total non-current assets
Current assets
Inventory
Trade and other receivables
Lease assets
Current tax asset
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Borrowings
Lease liabilities
Liabilities held for sale
Trade and other payables
Current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Trade and other payables
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Other components of equity
Retained earnings
Total equity attributable to owners of the parent company
31 December
2023
£’000
Note
As restated
31 December
2022
£’000
As restated
1 January
2022
£’000
11
12
12
17
18
13
17
14
16
17
4
15
16
17
18
19
19
19
73,709
71
10,896
297
5,488
90,461
26
1,210
142
134
1,998
3,510
93,971
(932)
(1,793)
(506)
(4,018)
(7,249)
(22,354)
(24,250)
-
(7,359)
(53,963)
(61,212)
32,759
649
23,959
21,952
(13,801)
32,759
72,058
9
12,014
453
7,226
91,760
24
1,122
139
66
5,226
6,577
98,337
(925)
(1,871)
-
(3,128)
(5,924)
(23,095)
(30,349)
-
(8,737)
(62,181)
(68,105)
30,232
647
23,904
18,158
(12,477)
30,232
73,609
18
12,146
562
6,969
93,304
35
1,227
78
199
4,482
6,021
99,325
(926)
(1,922)
-
(2,062)
(4,910)
(24,028)
(31,086)
(7)
(8,687)
(63,808)
(68,718)
30,607
647
23,904
18,384
(12,328)
30,607
The accompanying accounting policies and notes form an integral part of these financial statements.
These financial statements were approved by the Board of Directors and authorised for issue on 6th June 2024.
Signed on behalf of the Board of Directors.
Paul Hingston
Chief Financial Officer
Safestay PLC
52
Consolidated Statement of Changes in Equity
31 December 2023
Balance as at 1 January 2022
Prior year adjustment (note 25)
Transition to IAS 12 (see note 18)
Share
premium
account
£’000
Other
Components
of
Equity
£’000
Share
Capital
£’000
647
23,904
-
-
-
-
18,510
(126)
-
Retained
earnings
£’000
(12,928)
126
474
Total
equity
£’000
30,133
-
474
Balance as at 1 January 2022 (as restated)
647
23,904
18,384
(12,328)
30,607
Comprehensive income
Loss for the year (as restated - see note 25)
Other comprehensive income
Movement in translation reserve
Total comprehensive income
Transactions with owners
Share-based payment charge for the period
(as restated)
-
-
-
-
-
-
-
-
Balance at 31 December 2022 (as restated)
647
23,904
Comprehensive income
Loss for the year
Other comprehensive income
Movement in translation reserve
Property revaluation reserve
Deferred tax on property revaluation
Total comprehensive income
Transactions with owners
Issue of shares
Share-based payment charge for the period
-
-
-
-
-
2
-
-
-
-
-
-
55
-
-
(134)
(134)
(149)
-
(149)
(149)
(134)
(283)
(92)
18,158
-
(12,477)
(92)
30,232
-
7
3,904
(171)
3,740
-
54
(1,324)
(1,324)
-
-
-
(1,324)
-
-
7
3,904
(171)
2,416
57
54
Balance at 31 December 2023
649
23,959
21,952
(13,801)
32,759
Report & Financial Statements 2023 Consolidated Statement of Cash Flows
31 December 2023
Note
Cash flow from operating activities
Loss for the year
Tax charge
Depreciation, amortisation
Net finance costs
Share-based payment charge
Lease modification
Impairment charges
(Increase)/decrease in inventories
Decrease in lease asset debtor
Decrease in trade and other receivables
Increase in trade and other payables
Cash generated from operations attributable to continuing operations
Income tax received/(paid)
Total net cash inflow from operating activities
Cash flow from investing activities
Purchases of property, plant and equipment
Purchases of intangible assets
Interest received
Total net cash outflow from investing activities
Cash flow from financing activities
Share issue
Principal elements of lease payments
Interest paid
Loan repayments
Total net cash outflow from financing activities
Cash and cash equivalents at beginning of year
Net cash flows (used in)/generating from operating, investing and financing activities
Differences on exchange
Cash and cash equivalents at end of year (including discontinued operations)
4, 14
53
As restated
2022
£’000
(149)
(442)
3,587
2,557
(92)
280
-
11
48
104
1,059
6,963
134
7,097
2023
£’000
(1,324)
226
3,364
3,413
54
-
1,028
(2)
153
136
1,076
8,124
(69)
8,055
(4,977)
(365)
(80)
35
(5)
2
(5,022)
(368)
57
(3,639)
(1,274)
(1,000)
(5,856)
5,226
(2,823)
(365)
2,038
-
(3,495)
(658)
(997)
(5,150)
4,482
1,579
(835)
5,226
Safestay PLC 54
Notes to the Consolidated Financial Statements
31 December 2023
1. GENERAL INFORMATION
Corporate Information
Safestay plc 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 registered number of the Group is
8866498 and its registered address is 1a Kingsley Way,
London, N2 0FW.
Statement of Compliance
The Group and Company financial statements have been
prepared in accordance with UK-adopted International
Financial Reporting Standards (“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 2023.
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 Directors do not consider that there are any new
standards or amendments applicable for the accounting
period ending 31 December 2023 that would have a
material impact on the Group’s accounting treatment.
New standards, amendments and interpretations
issued but not yet effective
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
— IFRS18 – Presentation and Disclosure in
Financial Statements
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 period ending
31 December 2023, the Directors have considered the
Group’s cash flow, liquidity, and business activities.
During 2023, the Group recorded an adjusted EBITDA of
£6.8 million (2022: £5.9 million) as the business continued to
recover well from the pandemic and for the first time since
2019, the hostels have been open for 100% of the year.
Additionally, 2024 sales are significantly ahead of 2023 with
the profit impact further enhanced by tight cost control
and a changing sales mix from increased groups business.
The Group reduced their bank borrowings by £0.8m as the
Group continued repaying CBILS (Coronavirus Business
Interruption Loan Scheme). The Group reported a cash
position of £2.0million (2022: £5.2 million) which is largely
reduced due to the acquisition of a freehold property
in Edinburgh for £4.3 million. During 2024, the Group
refinanced all its existing borrowings in January 2024 into
a single £16.0 million Term Loan and added a new £2.5 million
Report & Financial Statements 2023 55
Notes to the Consolidated Financial Statements continued
31 December 2023
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.
Accommodation and the sale of ancillary goods and
services are recognised when provided.
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.
A downside case was considered whereby EBITDA was
reduced by 5% for the 18-month period to June 25. 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.
Income from the rent of student accommodation is
recognised on a straight-line basis over the academic year
to which the rent relates. 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.
Safestay PLC 56
Notes to the Consolidated Financial Statements continued
31 December 2023
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
Company’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.
Report & Financial Statements 2023 57
Notes to the Consolidated Financial Statements continued
31 December 2023
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 at their
discounted value in trade and other payables. 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
Freehold properties
Leasehold properties
3-5 years
50 years
Term of the lease
Land is not depreciated.
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.
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 a 150 year geared
ground rent lease. The significant risks and rewards of
ownership were retained, and the exercise to repurchase
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
Safestay PLC
58
Notes to the Consolidated Financial Statements continued
31 December 2023
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.
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.
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.
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.
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 expected credit losses (“ECL”) for trade receivables
Report & Financial Statements 2023 59
Notes to the Consolidated Financial Statements continued
31 December 2023
and amounts due on contracts with customers. The ECL 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.
Safestay PLC 60
Notes to the Consolidated Financial Statements continued
31 December 2023
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.
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.
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.
Share premium account
Share premium represents amounts subscribed for share
capital in excess of nominal value less the related costs of
share issues.
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.
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
Report & Financial Statements 2023 61
Notes to the Consolidated Financial Statements continued
31 December 2023
that lapse after they vest are transferred to retained fair
value of employee services determined by reference to
transfer of instruments granted.
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 2023 would be £8.7 million (2022: £8.4
million), and finance charges relating to the liability would
total £0.5 million (2022: £0.4 million).
— The Group has identified that a portion of the newly
acquired 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 £1.8 million.
Depreciation charges would not be affected under
treatment as investment property for the period ending
2023 given the property was purchased in December
2023. The impact on depreciation charges for future
periods would equate to a reduction in depreciation
expense of £0.1 million 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. At 31 December
2023, lease liabilities totalled £26.0 million (2022: 32.2
million) and finance charges relating to lease liabilities for
the period totalled £1.9 million (2022: 1.4 million).
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 period ending 31
December 2023 is £26,000 (2022: £369,000).
— 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
Safestay PLC — 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 £73.7 million at 31 December 2023 (2022: £72.1
million) and depreciation charges totalled £3.3 million
(2022: £3.3 million).
— 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 2023
totalled £5.5 million, of which £1.2 million (2022: £1.4
million) relates to losses. Deferred tax charges for the
period ending 31 December 2023 totalled £0.2 million
(2022: £0.5 million tax credit).
62
Notes to the Consolidated Financial Statements continued
31 December 2023
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 Unit (“CGU”)
are detailed in note 12. A pre-tax discount rate of 9.7%
(2022: 11.0%) has been calculated using a weighted
average cost of capital (“WACC”). 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 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 2023, goodwill totalled £10.9 million (2022
: £12.0 million) and impairment charges totalled £0.9
million (2022: £nil). At 31 December 2023, property
plant and equipment (including right-of-use assets)
totalled £73.7 million (2022: £72.1 million) and impairment
charges totalled £0.1 million (2022: £nil).
— 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
property on a sufficiently regular basis by using open
market values, to ensure that the carrying value does
not differ significantly from the fair value. The valuation,
performed by qualified valuers, is based on market
observations and estimates on the selling price in an
arms-length transaction, and includes estimates of
future income levels and trading potential for each
hostel as well as other factors including location and
tenure. The Group has used external valuations on
freehold properties and leased assets under financing
transactions, as outlined in note 11. 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 31st December 2023.
Report & Financial Statements 2023 63
Notes to the Consolidated Financial Statements continued
31 December 2023
2. SEGMENTAL ANALYSIS
An analysis of the Group’s revenue from external customers for each major product and service category is as follows:
Hostel accommodation
Food and Beverages sales
Other income
Total Income
Like-for-like income
2023
£’000
20,143
1,525
822
22,490
21,493
2022
£’000
17,150
1,109
887
19,146
18,148
Like-for-like income relates to all turnover less turnover associated with the 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
period 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.
Safestay PLC 64
Notes to the Consolidated Financial Statements continued
31 December 2023
2023
Revenue
Profit/(loss) before tax
(including discontinued operations)
Add back: Finance costs
Add back: Depreciation & Amortisation
EBITDA
Impairment
Adjusting Items & Share-based payment expense
Adjusted EBITDA
Total assets
Total liabilities
2022
Revenue
Profit/(loss) before tax (as restated)
(including discontinued operations)
Finance costs
Depreciation & Amortisation
EBITDA
Adjusting Items & Share-based payment expense
(as restated)
Adjusted EBITDA
Total assets
Total liabilities
UK
£’000
8,270
2,293
315
432
3,040
-
-
3,040
40,944
(11,424)
UK
£’000
6,864
2,574
191
253
3,018
-
3,018
36,539
(9,164)
Spain
£’000
5,349
(431)
278
1,198
1,045
-
-
1,045
15,818
(11,853)
Spain
£’000
4,464
278
1
1,045
1,324
-
1,324
16,570
(12,088)
Shared
services
£’000
Total
£’000
-
22,490
Europe
£’000
8,871
(1,293)
494
1,194
395
1,028
-
1,423
21,551
(1,667)
2,326
540
1,199
-
80
1,279
15,658
(7,904)
(30,031)
Europe
£’000
7,818
1,009
59
1,369
2,437
-
2,437
25,233
(12,672)
Shared
services
£’000
-
(4,450)
2,306
987
(1,157)
277
(880)
19,995
(34,181)
(1,098)
3,413
3,364
5,679
1,028
80
6,787
93,971
(61,212)
Total
£’000
19,146
(589)
2,557
3,654
5,622
277
5,899
98,337
(68,105)
The Group’s non-current assets (other than financial instruments and deferred tax assets) are located into the following
geographic regions:
UK
Spain
Rest of Europe
Shared services
Total
2023
£’000
40,472
14,976
19,650
15,363
90,461
2022
£’000
36,005
15,636
22,733
17,386
91,760
Report & Financial Statements 2023 Notes to the Consolidated Financial Statements continued
31 December 2023
3. COST OF SALES
Food and beverage
Direct room supplies and sales commissions
Total
2023
£’000
635
3,404
4,039
4. DISCONTINUED OPERATIONS
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.
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Finance income and costs
Profit/(loss) before tax
Loss after tax for discontinuing operations
Property plant and equipment (including right-of-use asset)
Trade and other payables
Lease Liabilities
Cash and cash equivalents
Trade and other receivables
Liabilities held for sale
2023
£’000
996
(228)
768
(905)
(137)
(239)
(376)
(376)
3,884
(187)
(4,291)
40
48
(506)
65
2022
£’000
449
2,693
3,142
2022
£’000
998
(311)
687
(628)
59
(164)
(105)
(105)
-
-
-
-
-
Safestay PLC 66
Notes to the Consolidated Financial Statements continued
31 December 2023
Cash flow from operating activities
Loss for the year
Tax charge
Depreciation, amortisation and impairment
Net finance costs
(Increase)/decrease in inventories
Decrease in trade and other receivables
Increase in trade and other payables
Net Cash generated from operations attributable to discontinued operations
Cash flow from investing activities
Purchases of property, plant and equipment
Net cash used in discontinued investing activities
Cash flow from investing activities
Principal elements of lease payments
Loan repayments
Net cash used in discontinued investing activities
Cash and cash equivalents at beginning of year
Net cash flows (used in)/generating from operating, investing and financing activities
Differences on exchange
Cash and cash equivalents at end of year
5. ADMINISTRATIVE EXPENSES
Staff costs (see note 10)
Legal and professional fees
Property costs
Depreciation and amortisation
Impairment of goodwill and fixed assets
Share option expenses
Adjusting items: one-off legal and other
Other expenses
2023
£’000
As restated
2022
£’000
(376)
1
264
239
2
(54)
306
382
(9)
(9)
(419)
(80)
(499)
162
(126)
4
40
2023
£’000
7,093
781
344
3,364
1,028
54
26
3,446
16,136
(103)
-
259
161
(2)
(13)
239
541
(5)
(5)
(366)
(72)
(438)
75
98
(11)
162
As restated
2022
£’000
5,380
895
513
3,654
-
(92)
369
3,319
14,038
Report & Financial Statements 2023 Notes to the Consolidated Financial Statements continued
31 December 2023
6. FINANCE COSTS
Interest on bank overdrafts and loans
Amortised loan arrangement fees
Interest expense for lease arrangements (note 17)
Property financing expense
Finance income for the period totalled £36k (2022: £2k)
7. LOSS FOR THE FINANCIAL YEAR
67
2022
£’000
896
68
1,404
191
2,559
2023
£’000
1,340
68
1,725
315
3,448
The audit fees disclosed in 2023 represent the fees payable for the audit for the period ended 31 December 2023.
Profit/(Loss) for the financial period is arrived at after charging:
Depreciation on owned assets
Depreciation of assets under lease liabilities
Amortisation of intangible assets
CLA Evelyn Partners Limited Auditor’s remuneration for audit services
Haysmacintyre LLP Auditor’s remuneration for audit services
Amounts payable in respect of both audit and non-audit services are set out below:
Fees payable to Company’s auditors for the audit of the Parent Company
and consolidated financial statements:
CLA Evelyn Partners Limited audit of the Group and Company’s annual accounts
CLA Evelyn Partners Limited additional fees relating to first year 2021 audit
CLA Evelyn Partners Limited audit of the subsidiaries’ annual accounts
Haysmacintyre LLP audit of the Group and Company's annual accounts
Haysmacintyre LLP audit of the subsidiaries' annual accounts
2023
£’000
2022
£’000
938
2,408
18
40
175
1,363
2,210
81
281
-
2023
£’000
2022
£’000
40
-
-
110
65
215
136
116
29
-
-
281
CLA Evelyn Partners audit charge in 2023 relates to agreed overruns relating to 2022 annual accounts agreed post
signing of the 2022 annual accounts.
Safestay PLC
68
Notes to the Consolidated Financial Statements continued
31 December 2023
8. TAX
The Group tax charge is made up as follows:
Current tax
Corporation tax on profits for the year
Adjustments for corporation tax on prior periods
Other local taxes
Total current tax
Deferred tax
Adjustments for deferred tax in prior periods
Effect of increased tax rate on opening balance
Total tax charge
2023
£’000
2022
£’000
13
-
38
51
96
79
-
-
48
(4)
44
(506)
20
-
226
(442)
The charge for the year can be reconciled to the loss per the consolidated income statement as follows:
Profit/(loss) before tax
Tax at the standard UK corporation tax rate of 23.52% (2022: 19%)
Fixed asset differences
Adjustment for tax rate differences in foreign jurisdictions
Adjustments for tax on prior periods
Other tax adjustments, reliefs and transfers
Remeasurement of deferred tax for changes in tax rates
Deferred tax not recognised
Factors affecting charge for the period
Non-deductible items and other timing differences
Chargeable gains/(losses)
Foreign exchange differences
Deferred tax eliminated
Group tax charge
2023
£’000
(1,098)
(258)
43
-
79
-
1
(16)
356
-
21
-
226
As restated
2022
£’000
(590)
(112)
34
73
68
(4)
(111)
(26)
(310)
-
(54)
-
(442)
The Group has a deferred tax liability of £3.3 million (2022: £3.2 million) related to the potential future gain on
property revaluations.
Included within current tax are adjustments for corporation tax on prior periods of £6k and relates to Group losses.
Report & Financial Statements 2023
69
Notes to the Consolidated Financial Statements continued
31 December 2023
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.
9. PROFIT/(LOSS) PER SHARE
Basic profit/(loss) per share from:
Continuing Operations
Discontinued Operations
Diluted profit/(loss) per share from:
Continuing Operations
Discontinued Operations
2023
£’000
(1.46p)
(0.58p)
(1.39p)
(0.55p)
As restated
2022
£’000
(0.07p)
(0.16p)
(0.06p)
(0.15p)
Basic loss per share has been calculated by dividing the loss attributable to shareholders by the weighted average number
of shares in issue during the period.
Diluted loss per share has been calculated after adjusting the weighted average number of shares used in the basic
calculation to assume the conversion of all potentially dilutive shares, such as share option awards.
The number of shares used in calculating basic and diluted loss per share are reconciled below:
Weighted average number of ordinary shares (000s) for the purposes of basic loss earnings
per share
Effect of dilutive potential ordinary shares (000s)
Weighted average number of ordinary shares (000s) for the purposes of diluted profit/(loss)
per share
The total number of shares in issue as at 31 December 2023 was 64,935,414.
2023
As restated
2022
64,869
3,441
64,679
3,398
68,310
68,077
Safestay PLC 70
Notes to the Consolidated Financial Statements continued
31 December 2023
10. STAFF COSTS
The average monthly number of employees (including Directors) during the period was:
2023
Number
2022
Number
Hostel operation
Directors
The costs incurred in respect of employees (including directors) were:
Wages and salaries
Social security costs
Pension costs
Total staff costs
277
6
283
2023
£’000
6,073
978
42
7,093
The remuneration of the Directors, who are the key management personnel of the Group, is set out below.
Short-term employee benefits
Pension
Share-based payment charges
2023
£’000
446
8
57
511
222
4
226
2022
£’000
4,680
670
30
5,380
2022
£’000
364
5
42
411
Further information about the remuneration of individual Directors is provided in the Directors’ Remuneration Report.
Details of Directors’ share options is provided in the Directors’ Remuneration Report.
Report & Financial Statements 2023
Notes to the Consolidated Financial Statements continued
31 December 2023
11. PROPERTY, PLANT AND EQUIPMENT
Freehold
land and
buildings
£’000
Right-
of-Use
assets
£’000
Leasehold
land and
buildings
£’000
Leasehold
improvements
£’000
Fixtures,
fittings and
equipment
£’000
Assets
under
construction
£’000
Cost or valuation
At 1 January 2022
9,484
36,907
Prior Year Adjustment
(340)
-
31,691
(1,997)
4,967
3,554
-
-
At 1 January 2022
(as restated - see note 25)
Transfers
Additions
IFRS lease modification
Revaluation
Exchange movements
9,144
36,907
29,694
2,895
-
-
-
-
-
-
(280)
-
1,913
(2,895)
-
-
-
-
At 1 January 2023 as restated
12,039
38,540
26,799
Transfers
Reclassification as held for sale
Additions
IFRS lease modification
Revaluations
Exchange movements
-
-
2,522
-
2,411
27
-
(5,246)
-
323
-
(194)
-
-
-
-
221
-
4,967
(305)
69
-
-
-
4,731
680
-
4
-
-
24
At 31 December 2023
16,999
33,423
27,020
5,439
3,554
305
296
-
-
24
4,179
(720)
(56)
337
-
-
(32)
3,708
Depreciation
At 1 January 2022
Prior Year Adjustment
(as restated - see note 25)
At 1 January 2022
(as restated - see note 25)
Charge for the year
Revaluation
At 1 January 2023
Transfers
Reclassification as held for sale
Charge for the period
Impairment
Revaluation
439
6,866
1,997
1,036
2,656
(340)
-
(1,997)
-
-
99
223
-
322
-
-
169
-
(491)
6,866
2,210
-
9,076
-
(1,388)
2,408
83
-
-
596
-
596
-
-
185
-
(781)
-
1,036
2,656
241
-
1,277
526
-
318
65
-
303
-
2,959
(526)
(30)
266
-
-
2,186
2,669
71
Total
£’000
86,603
(2,337)
84,266
-
365
(280)
-
1,937
86,288
-
(5,302)
-
-
-
-
-
-
-
-
-
40
-
2,114
4,977
-
-
-
323
2,632
(175)
2,154
88,743
-
-
-
-
-
-
-
-
-
-
-
-
12,994
(2,337)
10,657
3,573
-
14,230
-
(1,418)
3,346
148
(1,272)
15,034
At 31 December 2023
-
10,179
Net book value:
At 31 December 2023
16,999
23,244
27,020
At 31 December 2022
11,717
29,464
26,203
3,253
3,454
1,039
1,220
2,154
73,709
-
72,058
Safestay PLC 72
Notes to the Consolidated Financial Statements continued
31 December 2023
Freehold properties
The Freehold values relates to the 4 following hostels:
— The £2.9 million value of the freehold in York is based on the external valuation as at 31 December 2023 prepared
by Cushman and Wakefield. The historic cost carrying value is £1.9 million which is the acquisition price in 2014 of
£2.4 million, less depreciation charges of £0.5 million.
— The freehold of the Glasgow property was acquired in October 2019 for £3.2 million and has undergone renovation
for £0.4 million. The £4.9 million value of the freehold is based on the external valuation as at 31 December 2023
prepared by Cushman and Wakefield. The historic carrying value is £3.3 million, which is the acquisition price of
£3.2 million plus renovations totalling £0.4 million, less depreciation charges of £0.3 million.
— The freehold of the Edinburgh property was acquired in December 2023 for £4.3 million. The freehold value is based
on the external valuation as at 31 December 2023 prepared by Cushman and Wakefield. At the reporting date, a
portion of the property equivalent to the value of £2.1m is deemed not ready for use, and has been classified as an
asset under construction.
— The hostel in Pisa was acquired in June 2019 for £3 million, of which £2.3 million was for the freehold. The £6.7 million
value of the freehold in Pisa is based on the external valuation as at 31 December 2023 prepared by Cushman and
Wakefield. The historic carrying value is £2.0 million, which is the acquisition value of £2.3 million for the freehold, less
depreciation charges of £0.3 million.
Right-of-use assets
The £38.4 million right-of-use assets all relate to properties operated by the Group as hostels.
Right-of-use assets as at 31 December 2022
IFRS 16 lease modification
Exchange differences
Transfer of assets to held for sale
Right-of-use assets as at 2023
38,540
323
(194)
(5,246)
33,423
Leasehold, land and buildings
The London Elephant & Castle leasehold was independently valued on 31 December 2023 at £27.2 million. 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 £16.3 million, which is the initial value at
date of inception of the lease plus £2.5 million of additions, less £2.2 million 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 management as well as the directors. Cushman & Wakefield were engaged to
value properties now valued at £46.0m.
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.
Report & Financial Statements 2023 73
Notes to the Consolidated Financial Statements continued
31 December 2023
Valuation methodology
The value is assessed by adopting the income approach to valuation using a discounted cash flow. 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 return 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
Elephant & Castle
Glasgow
Edinburgh
York
Pisa
Discount
rate
Capitalisation
rate
Inflation
rate
Running
Yield
9.5%
11.8%
10.5%
11.0%
11.0%
7.0%
9.3%
8.0%
8.5%
8.5%
2.5%
5.96% - 8.98%
2.5%
8.93% - 11.58%
2.5%
4.25% - 8.39%
2.5%
7.02% - 10.90%
2.0%
6.82% - 10.77%
Capital Commitments
Capital commitments totalling £0.7 million (2022: £nil) were recognised in relation to the ongoing capital refurbishment
project at Edinburgh.
12. INTANGIBLE ASSETS AND GOODWILL
Cost
At 1 January 2022
Additions
Exchange differences
At 31 December 2022
Additions
Exchange differences
At 31 December 2023
Amortisation and Impairment
At 1 January 2022
Charge for the period
At 31 December 2022
Impairment
Charge for the period
At 31 December 2023
Net book value:
At 31 December 2023
At 31 December 2022 as restated
Website
£’000
Goodwill
£’000
134
5
-
139
80
-
219
116
14
130
-
18
148
71
9
13,637
-
(132)
13,505
-
(238)
13,267
1,491
-
1,491
880
-
2,371
10,896
12,014
Total
£’000
13,771
5
(132)
13,644
80
(238)
13,486
1,607
14
1,621
880
18
2,519
10,967
12,023
Safestay PLC 74
Notes to the Consolidated Financial Statements continued
31 December 2023
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 the 31 December 2023 are shown below.
CGU
Madrid
Paris
Gothic
Lisbon
Prague
Barcelona Passeig De Gràcia
Vienna
Brussels
Pisa
Berlin
Athens
Bratislava
Warsaw
2023
2022
Goodwill
£000s
Headroom
£000s
Goodwill
£000s
Headroom
£000s
2,173
11
712
1,328
207
1,654
5
1,300
779
947
1,185
-
595
10,896
-
-
1,307
220
248
69
184
2,428
2,924
-
550
-
692
8,622
2,217
11
726
1,355
211
1,687
5
1,326
795
966
1,210
898
607
-
-
2,449
1,010
475
-
1,626
4,349
4,507
-
652
-
1,119
12,014
16,187
Impairment charges relating to Bratislava totalled £0.9 million for the year ended 31 December 2023 (2022: £nil).
No other impairments were deemed necessary by Management.
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 9.7% (2022: 11.0%) 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.
— Estimated 2023 average bed rate per property and increasing in line with a 5.0% inflationary increase in revenue and
costs over the subsequent years.
Report & Financial Statements 2023 75
Notes to the Consolidated Financial Statements continued
31 December 2023
Discount Rate
The Group calculates a WACC applying local government bond yields and tax rates. For reference the Group WACC
for Safestay plc was 9.7% (2022: 11.0%). 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 2023 and the risks specific to the CGU.
Sensitivity analysis
A sensitivity analysis was performed for the group of CGUs and management have concluded that no reasonably
possible change in any of the key assumptions would result in the carrying value of the CGUs to exceeding their
recoverable amount.
13. TRADE AND OTHER RECEIVABLES
Trade and other receivables
Prepayments and accrued income
2023
£’000
741
469
1,210
2022
£’000
620
502
1,122
Credit risk is the risk that a counterparty does not settle its financial obligation with the Company. At the year end, the
Company has assessed the credit risk on amounts due from suppliers, based on historic experience, meaning that the
expected lifetime credit loss was immaterial. Cash and cash equivalents are also subject to the impairment requirements of
IFRS 9 – the identified impairment loss was none.
14. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
2023
£’000
1,998
2022
£’000
5,226
The directors consider that the carrying amount of cash and cash equivalents approximates their fair value. Cash and
cash equivalents comprise cash.
15. TRADE AND OTHER PAYABLES
Due in less than one year
Trade payables
Social security and other taxes
Other creditors
Accruals and deferred income
2023
£’000
2022
£’000
395
1,093
156
2,374
4,018
663
150
758
1,557
3,128
Safestay PLC 76
Notes to the Consolidated Financial Statements continued
31 December 2023
16. BORROWINGS
At amortised cost
Bank Loan repayable within one year
Loan arrangement fees
Bank Loans repayable within more than one year
Property Finance Liability
2022
£’000
2022
As restated
£’000
1,000
(68)
932
15,180
7,174
987
(62)
925
16,007
7,088
22,354
23,095
Included within borrowings is CBILS (Coronavirus Business Interruption Loan Scheme) obtained via HSBC. The government
provide lenders with a guarantee on each loan, and it may be possible that there is a government grant in the form of a
lower rate of interest than would likely have been payable in the absence of the government guarantee. However, in the
absence of further information the total amounts are disclosed within finance costs. The loan will be repaid at a rate of
£1 million per year from April 2022 until April 2027 and the balance at 31 December 2023 is £3.3 million (2022: £4.3 million).
The interest rate is 3.99% margin over base rate from year 2 onwards and is interest free in the first year.
At 31 December 2021 a HSBC bank loan facility was taken out which was secured against the UK freehold and long
leasehold properties. The facility ends in January 2025 and the interest rate is 2.95% margin over SONIA. The balance
owing on the loan at the reporting date is £12.7 million (2022: £12.7 million).
17. LEASES
Lease assets are presented in the statement of financial position as follows:
Current
Non-current
Total
2023
£’000
142
297
439
2022
£’000
139
453
592
The lease asset relates fully to our contract with Casa Suecia where the Group have 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.
Report & Financial Statements 2023 Notes to the Consolidated Financial Statements continued
31 December 2023
Minimum lease receipts due
2023
Within 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
Lease receipts
Finance income
Net present values
156
(15)
142
156
(9)
147
153
(3)
150
-
-
-
-
-
-
Minimum lease receipts due
2022
Within 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
Lease receipts
Finance income
Net present values
159
(20)
139
159
(15)
144
159
(9)
150
162
(3)
159
-
-
-
Lease liabilities are presented in the statement of financial position as follows:
Current
Non-current
Total
77
Total
466
(27)
439
Total
640
(48)
592
2022
£’000
1,871
30,349
32,220
After
5 years
-
-
-
After
5 years
-
-
-
2023
£’000
1,793
24,250
26,043
Total cash outflow for leases for the year ended 31 December 2023 was £3.6m (2022: £3.5m).
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 11).
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 leases 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.
Safestay PLC 78
Notes to the Consolidated Financial Statements continued
31 December 2023
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
Hostel buildings
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
11
5 – 42 years
12
10
0
11
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 £18k
(2022: £nil).
Lease liabilities
The lease liabilities are secured by the related underlying assets. The undiscounted maturity analysis of lease liabilities at
31 December 2023 is as follows:
2023
Within 1 year
1 – 5 years
After 5 years
Lease payments
Finance charges
Net present values
3,156
(1,363)
1,793
11,740
(4,295)
7,445
24,642
(7,837)
16,805
Minimum lease payments due
2022
Within 1 year
1 – 5 years
After 5 years
Lease payments
Finance charges
Net present values
3,345
(1,474)
1,871
13,075
(4,876)
8,199
31,420
(9,271)
22,149
Minimum lease payments due
18. DEFERRED INCOME TAX
Balance as at 1 January 2022
Transition to IAS 12
Balance at 1 January 2022 (as restated)
Recognised in the income statement
Recognised in other comprehensive income
Balance at 31 December 2022
Recognised in the income statement
Recognised included directly in equity
Recognised in other comprehensive income
Deferred
tax assets
£’000
Deferred
tax liabilities
£’000
1,122
5,847
6,969
257
-
7,226
(1,724)
(14)
-
(3,314)
(5,373)
(8,687)
(82)
32
(8,737)
1,549
-
(171)
Total
39,538
(13,495)
26,043
Total
47,841
(15,621)
32,220
Total
£’000
(2,192)
474
(1,718)
175
32
(1,511)
(175)
(14)
(171)
Balance at 31 December 2023
5,488
(7,359)
(1,871)
Report & Financial Statements 2023 79
Notes to the Consolidated Financial Statements continued
31 December 2023
The Group has recognised deferred tax assets of £1.2m (2022: £1.4m), which are expected to offset against future profits,
in respect of tax losses. This is on the basis that it is probable that profits will arise in the foreseeable future, enabling the
assets to be utilised. There are no unrecognised deferred tax assets (2022: £nil).
The adoption of the amendments to IAS 12, effective 1 January 2023, resulted in an increase in deferred tax assets of
£5.8 million, an increase in deferred tax liabilities of £5.3 million and an increase in brought forward retained earnings at 1
January 2022 of £0.5 million. These arise from timing differences between right-of-use assets and lease liabilities under
IFRS 16.
The summary of deferred tax asset by type is as follows:
2023
Fixed asset timing differences
Short-term timing differences
Losses carried forward
2022 (as restated)
Fixed asset timing differences
Losses carried forward
19. EQUITY
Called up share capital
Allotted, issued and fully paid
64,679,014 Ordinary shares of 1p each at 31 December 2022
Shares issued in the year
64,935,414 Ordinary Shares of 1p each at 31 December 2023
Deferred
tax assets
£’000
Deferred
tax liabilities
£’000
4,567
(7,359)
2
919
0
-
5,488
(7,359)
Deferred
tax assets
£’000
Deferred
tax liabilities
£’000
5,914
1,312
7,226
(8,737)
-
(8,737)
Total
£’000
(2,792)
2
919
(1,871)
Total
£’000
(2,823)
1,312
(1,511)
£’000
647
2
649
At the 31 December 2023, the ordinary shares rank pari passu. There are no changes to the voting rights of the
ordinary shares since the reporting date. The holders of ordinary shares are entitled to receive dividends as declared
from time-to-time and are entitled to one vote per share the meetings of the Company. Ordinary shareholders are also
entitled to repayment of capital.
In addition to called up share capital, there are 3,441,189 (2022 as restated: 3,397,589) potential shares relating to share
options. The value of shares relating to share options totals £34k (2022 as restated: £34k).
Safestay PLC 80
Notes to the Consolidated Financial Statements continued
31 December 2023
Share premium
At 31 December 2022
Share issue
At 31 December 2023
Other components of equity
Cost
At 1 January 2022
Prior Year Restatements (see note 25)
At 1 January 2022 as restated
Share-based payment charge
Property revaluation
Deferred tax on property revaluation
Exchange differences on translating foreign operations
At 31 December 2022 as restated
1,772
Share-based payment charge
Property revaluation
Deferred tax on property revaluation
Exchange differences on translating foreign operations
-
-
-
-
Merger
reserve
£’000
Share-based
payment
reserve
£’000
Revaluation
reserve
£’000
Translation
reserve
£’000
1,772
-
1,772
-
-
-
-
510
(126)
384
(92)
-
-
-
292
54
-
-
-
15,996
-
15,996
-
-
-
-
15,996
-
3,904
(171)
-
232
-
232
-
-
-
(134)
98
-
-
-
7
£’000
23,904
55
23,959
Total
£’000
18,510
(126)
18,384
(92)
-
-
(134)
18,158
54
3,904
(171)
7
At 31 December 2023
1,772
346
19,729
105
21,952
Report & Financial Statements 2023 81
Notes to the Consolidated Financial Statements continued
31 December 2023
20. SHARE-BASED PAYMENTS
The Company operates a share-based payments scheme for Directors as outlined in the Directors’ Remuneration Report.
Share options were awarded as part of longer-term incentives.
The option holder may only exercise the option if, on the date of exercise, the market value targets are achieved.
480,000 share options were granted in the period (2022: 609,000) and the average share price target for options issued
in 2023 was 24p (2022: 15p).
Number of share options outstanding
Grant date
2-May-14
12-May-14
21-May-14
1-Jan-19
26-Jun-19
5-Sep-19
2-Jan-20
31-Oct-20
30-Nov-20
31-Dec-20
31-Jan-21
28-Feb-21
31-Mar-21
30-Apr-21
31-May-21
30-Jun-21
31-Jul-21
14-Apr-22
9-Nov-22
25-Nov-22
15-Aug-23
Exercise price
per share (pence)
Period within which options
are exercisable
15p
50p
50p
15p
15p
15p
15p
9p
15p
13p
13p
14p
15p
15p
15p
15p
15p
15p
16p
16p
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
21/05/2017 to 20/05/2024
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
24p
01/01/2024 to 31/12/2031
2023
396,521
528,695
132,173
300,000
100,000
100,000
600,000
78,900
44,400
54,600
54,600
50,800
47,400
47,400
41,800
39,500
44,400
400,000
30,000
50,000
300,000
3,441,189
2022
396,521
528,695
132,173
300,000
100,000
100,000
600,000
140,100
78,800
97,000
97,000
90,100
84,100
47,400
41,800
39,500
44,400
400,000
30,000
50,000
-
3,397,589
Safestay PLC 82
Notes to the Consolidated Financial Statements continued
31 December 2023
The share options are exercisable at a price equal to the average quoted market price of the Group’s shares on the date
of grant. The share options that have been issued in 2022 have a vesting period to 1 January 2024 and have no minimum
price condition. The options are forfeited if the employee leaves the Group before the options vest. Details of these share
options are summarised in the table below:
2023
2022
Number of
share options
Weighted
average
exercise price
As restated
Number of
share options
As restated
Weighted
average
exercise price
3,397,589
-
(256,400)
300,000
3,441,189
132,173
21.5p
-
12.9p
24.0p
22.4p
50.0p
4,443,766
(1,526,177)
-
480,000
3,397,589
388,573
18.2p
18.3p
-
20.9p
21.5p
50.0p
Brought forward 1 January
Forfeited in the period
Exercised during the period
Issued in the period
Outstanding at 31 December
Exercisable at end of the period
No options were exercised in the period.
The fair value of the share options was calculated using the Black-Scholes model. There is a charge of £60k taken though
the income statement (2022: £42k).
The inputs are as follows:
Closing price of Safestay plc
Weighted average share price
Weighted average exercise price
Expected volatility
Average vesting period
Risk free rate
Expected dividend yield
2023
23.5p
23.6p
24.2p
25%
2022
15.5p
15.7p
19.3p
52%
1.0 years
2.0 years
1.93%
0.00%
1.47%
0.00%
The expected volatility percentage was derived from the quoted share prices since flotation.
21. RELATED PARTY TRANSACTIONS
The Group has taken advantage of the exemption contained within IAS 24 – ‘Related Party Disclosures’ from the
requirement to disclose transactions between wholly owned group companies as these have been eliminated on
consolidation.
The remuneration of the Directors, who are the key management personnel of the Group, is set out below:
Short-term employee benefits
Pension
Share-based payment charges
2023
£’000
446
8
57
511
2022
£’000
364
5
42
411
Report & Financial Statements 2023 83
Notes to the Consolidated Financial Statements continued
31 December 2023
Further information about the remuneration of individual directors is provided in the Directors’ Remuneration Report.
Details of Directors' share options is provided in the Directors’ Remuneration Report and in note 20 of the accounts.
The Directors' share options have been audited.
Safestay plc has a common directorship with Safeland plc. In the year, Safestay plc rented premises from Safeland plc
on non-commercial terms. Total rent paid to Safeland plc was £50,000 (2022: £50,000).
22. FINANCIAL INSTRUMENTS
Capital management
Total capital is calculated as equity, as shown in the consolidated statement of financial position, plus debt.
The Board’s policy is to maintain a strong capital base with a view to underpinning investor, creditor and market confidence
and sustaining the future development of the business. The Board regularly monitors cash balances across the Group
and evaluates borrowing levels to ensure an appropriate gearing ratio is maintained. The Board’s careful monitoring of
its capital has allowed us to purchase a freehold property in the year entirely through cash generated from business
operations. It has also successfully refinanced in January 2024 to more favourable terms (please refer to note 27 for
more information) which will reduce the cash outflows relating to interest charges and capital repayments. Capital
consists of ordinary shares, other capital reserves and retained earnings. To this end, the Board monitors the Group’s
performance at both a corporate and individual asset level and sets internal guidelines for interest cover and gearing.
The Executive Directors monitor the Group’s current and projected financial position against these guidelines. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to reduce debt.
Share capital
Share premium account
Retained earnings
Merger reserve
Share based payment reserve
Revaluation reserve
Translation reserve
Bank loans
Property Finance Liability
Lease liabilities
2023
£’000
649
23,959
(13,801)
1,772
346
19,279
105
16,180
7,174
As restated
2022
£’000
647
23,904
(12,477)
1,772
292
15,996
98
17,000
7,088
26,043
32,220
The Group has no externally imposed capital requirements.
Significant Accounting Policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instruments are disclosed in note 1 to these financial statements and in the tables below:
Safestay PLC 84
Notes to the Consolidated Financial Statements continued
31 December 2023
Categories of financial instruments
At 31 December 2023, the Group held the following financial assets:
Trade and other receivables (note 13)
Cash and cash equivalents (note 14)
Cash and cash equivalents from discontinued operations (note 4)
At 31 December 2023, the Group held the following financial liabilities:
Bank loans (note 16)
Property financing loans (note 16)
Lease liabilities (note 17)
Trade and other payables (note 15)
2023
£’000
1,210
1,998
40
3,248
2023
£’000
16,180
7,174
2022
£’000
1,122
5,226
-
6,348
As restated
2022
£’000
17,000
7,088
26,043
32,220
4,018
53,415
3,128
59,436
All financial assets and liabilities are measured at amortised cost.
The carrying amounts of the Group’s bank loans and overdrafts, lease obligations and trade and other payables
approximate to their fair value. Total financial liabilities excludes deferred tax balances.
Total liabilities (excluding deferred tax)
Cash and cash equivalents (note 14)
Cash and cash equivalents from discontinued operations (note 4)
Net Debt
2023
£’000
As restated
2022
£’000
(53,853)
(59,367)
1,998
40
5,226
-
(51,815)
(54,141)
Financial risk management
The Group’s financial instruments comprise bank loans and overdrafts, 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 interest rate risk and liquidity risk. The Board reviews and agrees
policies for managing these risks which are detailed below.
Foreign currency risk
The Group is exposed to foreign currency risk from overseas subsidiaries with Group transactions carried out in Euros.
Exposures to currency exchange rates arise 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.
Report & Financial Statements 2023 85
Notes to the Consolidated Financial Statements continued
31 December 2023
Foreign transactions are translated into the functional currency at the exchange rate ruling when the transaction is
entered. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the translation
at year end exchange rates, of monetary assets and liabilities are recognised in the income statement.
The Group has performed a sensitivity analysis to determine the impact of a fluctuation in exchange rate on the business.
The Group has assumed that a 10% fluctuation in exchange rate reasonably reflects the change in the currency pair over
the last 12 months.
2023
2022
Profit before tax
(losses)/gains
£’000
Equity
(losses)/gains
£’000
Profit before tax
(losses)/gains
As Restated
£’000
Equity
(losses)/gains
As Restated
£’000
10% Strengthening of Sterling versus the Euro
10% Weakening of Sterling versus the Euro
(157)
172
(1,590)
1,749
(117)
129
(1,549)
1,704
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.
The Group is exposed to interest rate risk on its borrowings. The £17.7 million main facility has an interest rate of 2.95%
above the London inter-bank offer rate (‘LIBOR’). When the £10.2 million from the Edinburgh sale proceeds was used to
reduce the debt in July 2021, LIBOR was replaced with 2.95% above SONIA. The £5 million CBILS loan was interest free in
year 1 and has an interest rate of 3.99% above base rate from year 2, until it is fully repaid at the end of year 6. The Group
carefully manages its interest rate risk on an ongoing basis. When the bank loan was refinanced in 2020, LIBOR and the
bank base rates were significantly lower, and therefore the Board did not implement an active risk management policy.
Given that the majority of the loans are held in the United Kingdom, the Board considers the United Kingdom interest rate
level as the key concentrated risk. Changes in interest rates for loans held in other countries are not expected to have a
material impact on the Group.
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 2023, 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 £92,500 (2022: £83,000). This is attributable to
the Group’s exposure to interest rates on its variable rate borrowings.
Credit Risk
Credit risk arises from the Group’s cash balances held with counterparties and trade and other receivables. Credit risk
is the risk of financial loss to the Group if a third-party owing monies to the Group fails to meet its contractual obligations.
The Group limits its exposure to credit risk from trade receivables by establishing policies to limit the levels of cash owed
by third-party customers, such as guests paying in advance of their stays. Lease income relating to Edinburgh and Madrid
operates on normal payment terms of 30 days. Where payments are not made within these normal payment terms, the
credit risk is considered to have increased since initial recognition and when the customer defaults on their debts, it is
determined that the receivables are credit-impaired. The Group defines a default as aged debtor balances of over a year,
or if other information comes to light that suggests a customer can not satisfy their debts. In the case of a default, the
Group would provide in full for any balance outstanding for that customer.
Safestay PLC 86
Notes to the Consolidated Financial Statements continued
31 December 2023
Trade receivables are measured at amortised cost and total £0.8 million at 31 December 2023 (2022: £0.6 million). Based
on the comments above, the Group does not consider there to be any significant concentrations of risk in relation to trade
and other receivables. In addition, based on historical default rates and adjusted forward-looking macroeconomic data,
the Group has assessed the expected lifetime credit loss in respect to be £nil (2022: £nil).
All cash balances are held with reputable financial institutions and the Board monitors its exposure to counterparty risk on
an ongoing basis. The Group attempts to mitigate credit risk by assessing financial counterparties.
Given the nature of the Group’s operations, the Directors do not consider the Group’s credit risk, which arises mainly
from cash held with mainstream UK banks, to be significant.
The Group’s financial assets, which are exposed to credit risk, are as follows:
Trade receivables
Cash and cash equivalents
2023
£’000
789
1,998
2,787
2022
£’000
620
5,226
5,846
The directors are not aware of any factors affecting the recoverability of outstanding balances as at 31 December 2023.
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.
Liquidity risk
All of the Group’s long-term bank borrowings are secured on the Group’s property portfolio. If the value of the portfolio
was to fall significantly, the Group risk breaching borrowing covenants. The Board regularly review the Group’s gearing
levels, cash flow projections and associated headroom and ensure that excess banking facilities are available for future
use. Liquidity risk is considered across all regions in which the Group operates in, on the basis that short-term debt
obligations arise through normal trading. The concentration of the risk exists most in the UK, due to the fact that the Group
debt obligations are held there.
The business continued to manage its liquidity risk with the renewal of its debt facility with HSBC on the 13 January 2020
with a facility of £12.8m until 2025. In addition, a £5.0m bank CBILs facility was secured for 6 years on 16th December 2020,
which is interest free for the first year increasing to 3.99% above base rate from year 2. Repayment of CBILS facility
commenced in April 2022.
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.
Report & Financial Statements 2023 87
Notes to the Consolidated Financial Statements continued
31 December 2023
Liquidity and interest risk analysis
The following table details the Group’s remaining contractual maturity for all financial liabilities. The tables have been
drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group
can be required to pay including interest.
Variable interest rate borrowings
Property finance liabilities
Trade and other payables
Lease liabilities
2,312
219
4,018
3,434
9,983
14,052
219
-
3,434
17,705
Less than
1 year
£’000
1-2 years
£’000
3-5 years
£’000
Later than
5 years
£’000
-
30,660
-
Total
£’000
18,735
31,755
4,018
2,371
657
-
9,796
29,546
46,210
12,824
60,206
100,718
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the
liabilities at the reporting date.
The repayment of the £5 million CBILS started in April 2022. It was agreed with HSBC that the main debt facility would
be interest only from July 2021 after the disposal of the previous Edinburgh hostel, which involved a £10.2 million debt
repayment to HSBC. As of January 2024, Safestay plc refinanced, consolidating the current debt positions and adding
a Revolving Credit Facility of £2.5 million. More details of this can be found in note 27, Post Reporting Date Events.
23. FAIR VALUES OF NON-FINANCIAL ASSETS
The following table shows the levels within the hierarchy of non-financial assets measured at fair value on a
recurring basis:
2022
As restated
Freehold Property
Leasehold Property
2023
Freehold Property
Leasehold Property
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
-
-
-
-
-
-
-
-
-
-
-
-
11,717
26,203
37,920
16,999
27,020
44,019
11,717
26,203
37,920
16,999
27,020
44,019
The Group’s freehold and leasehold property asset is estimated based on appraisals performed by independent,
professionally qualified property valuers. The significant inputs and assumptions are developed in close consultation
with Management. The valuation process and fair value changes are reviewed by the directors at each reporting date.
Safestay PLC 88
Notes to the Consolidated Financial Statements continued
31 December 2023
24. OTHER COMMITMENTS AND GUARANTEES
The bank loan held by the Group of £16.0 million is scored against the Group’s assets, including freehold properties of
£17.0 million, leasehold properties totalling £27.0 million and trade and other receivables relating to UK properties.
The Group also has guarantees totalling £1.0 million in relation to ongoing leases.
25. PRIOR YEAR RESTATEMENT
In prior periods, revaluation gains were incorrectly allocated against cost rather than firstly being offset against
accumulated depreciation with any remaining surplus then being allocated against cost. Therefore, an adjustment has
been made to the prior year comparatives to reduce the cost and accumulated depreciation of freehold and leasehold
property at 1 January 2022 by £0.4 million and £2.6 million respectively. This adjustment has no impact on the overall net
book value of property plant and equipment, or on the Income Statement or Statement of Financial Position for the period.
Following a review of the share options workings for the year ended 31 December 2023, it was noted that in prior
years 1.4 million share options in relation to option holders who had since left the business and were no longer entitled to
those options, had not been cancelled. The impact of this has been that the share option charge in prior years has been
overstated. Therefore, a prior year adjustment to the 2022 comparatives has been made in respect of this which has
resulted in a reduction in the share-based payment reserve of £0.1m at 1 January 2022 and a corresponding increase
in retained earnings of £0.1m at 1 January 2022. In addition, the 2022 comparative for administrative expenses has been
adjusted to reflect a reduction in the share option charge of £0.1m for 2022 arising from this. The overall impact of these
adjustments is therefore to reduce the loss for the year ended 31 December 2022 by £0.1 million compared with amounts
previously reported.
The impact of the above on earnings per share (including discontinued operations) is:
Basic Earnings per share
Diluted Earnings per share
2022
0.02p
0.02p
2021
0.02p
0.02p
Report & Financial Statements 2023 89
Notes to the Consolidated Financial Statements continued
31 December 2023
26. CHANGES IN ACCOUNTING ESTIMATES
During the period, the Directors reviewed the useful economic life of the leasehold property at Elephant & Castle
and determined that the useful economic life should be extended from 50 years to 150 years, in line with the term of the
lease of the property. The impact of the change in accounting estimate results in a decrease in depreciation of £0.4 million
in the current period. The impact on future periods will be a decrease in depreciation charges of £0.4 million per annum.
27. POST REPORTING DATE EVENTS
In January 2024, the Group refinanced its existing borrowings into a single £16 million Term Loan and added a new
£2.5 million 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 £4.4 million at 3.955%, £10 million at SONIA but capped at 4.75% with a floor of 3%
and £1.6 million 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 £0.1 million 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 £12.7 million facility with HSBC and enables the repayment of the
outstanding CBILS loan of £3.25 million, which carried a significantly higher interest rate.
On 30 April 2024, the Group acquired a property located in Cordoba, Spain for a consideration of €2 million, funded
through the Group’s existing cash balance.
In June 2024, the Group acquired a freehold property located in Brighton, United Kingdom, for a consideration of
£2.3 million, funded through both the Group’s existing cash balances, and a £1.2 million loan from the trustees of the
Sheldon Pension Fund and Sentpark Capital Limited.
The loan will be made to Safe Hostels Limited (a 100% owned subsidiary of Safestay plc) with Safestay plc providing
a written guarantee. The interest rate on the loan is 1% per month and is serviced monthly, plus there are arrangement
and exit fees of 1% each. The repayment date is 18 months after the drawdown date.
Safestay PLC 90
Company Statement of Financial Position
31 December 2023
Non-current assets
Property, plant and equipment
Intangible assets
Investments
Deferred tax asset
Intercompany receivable
Total non-current assets
Current assets
Trade and other receivables
Cash at bank and in hand
Total current assets
Total Assets
Current Liabilities
Loans and overdrafts
Lease liabilities
Trade and other payables
Current Liabilities
Non-current liabilities
Bank loans
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Profit and loss account
Equity attributable to the owners of the parent company
Note
2
3
4
5
5
6
8
9
7
8
9
10
11
As restated
31 December
2022
£’000
As restated
1 January
2022
£’000
10,070
9
9,904
-
19,107
39,090
43
2,520
2,563
41,653
(925)
(85)
(14,767)
(15,777)
(15,933)
(8,446)
(24,379)
(40,156)
1,497
647
23,904
1,772
292
(25,118)
1,497
10,311
18
9,904
-
17,946
38,179
59
3,947
4,006
42,185
(932)
(82)
(11,784)
(12,798)
(16,608)
(8,530)
(25,138)
(37,936)
4,249
647
23,904
1,772
384
(22,458)
4,249
2023
£’000
9,811
65
9,265
-
21,059
40,200
167
141
308
40,508
(932)
(132)
(17,482)
(18,546)
(14,995)
(8,403)
(23,398)
(41,944)
(1,436)
649
23,959
1,772
346
(28,162)
(1,436)
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own Income
Statement and Statement of Comprehensive Income account for the year. The Company’s loss for the period was
£3,044k (2022 as restated: £2,660k).
These financial statements were approved by the Board of Directors and authorised for issue on 6 June 2024.
Paul Hingston
Chief Financial Officer
Report & Financial Statements 2023 Company Statement of Changes in Equity
31 December 2023
Merger
Reserve
£’000
Share-based
payment
reserve
£’000
Profit and
loss account
£’000
91
Total
equity
£’000
4,430
(181)
4,249
510
(126)
384
-
-
(92)
292
-
-
-
54
346
(22,403)
(55)
(22,458)
(2,660)
(2,660)
(2,660)
(2,660)
-
(25,118)
(3,044)
(3,044)
-
-
(92)
1,497
(3,044)
(3,044)
57
54
(28,162)
(1,436)
At 1 January 2022
Prior Year adjustments (refer to note 14)
At 1 January 2022 as restated
Comprehensive income
Loss for the year as restated
Total comprehensive loss
Transactions with owners
Share-based payment charge for period
as restated
Share
Capital
£’000
647
-
647
Share
premium
account
£’000
23,904
-
23,904
-
-
-
-
-
-
1,772
-
1,772
-
-
-
At 31 December 2022 as restated
647
23,904
1,772
Comprehensive income
Loss for the year
Total comprehensive loss
Transactions with owners
Share issue
Share-based payment charge for period
-
-
2
-
-
-
55
-
-
-
-
-
At 31 December 2023
649
23,959
1,772
Safestay PLC 92
Company Statement of Cash Flows
31 December 2023
Loss after tax
Tax charge
Adjustments for:
Finance cost
Finance income
Share-based payment charge
Impairment of investments
Expected credit loss on intercompany balances
Depreciation
Amortisation
Changes in working capital:
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Income tax paid
Net cash used in operating activities
Investing activities
Interest received
Purchase of tangible fixed assets
Purchase of intangible assets
Net cash (outflow) / inflow from investing activities
Financing activities
Share issue
Movement in intercompany
Loan repayments
Lease principal payments
Fees on refinancing
Interest paid
Net cash generated / (outflow) from financing activities
Cash and cash equivalents at beginning of year
Net increase in cash and cash equivalents
Cash and cash equivalents at end of year
2023
£’000
(3,044)
13
As restated
2022
£’000
(2,660)
-
1,731
(777)
54
639
770
475
18
(122)
211
(13)
(45)
34
(10)
(74)
(50)
57
367
(1,000)
(450)
-
(1,258)
(2,284)
2,520
(2,379)
141
927
(2)
(92)
-
-
346
14
16
641
-
(810)
2
(6)
(5)
(9)
-
1,238
(750)
(500)
-
(596)
(608)
3,947
(1,427)
2,520
Report & Financial Statements 2023 93
2023
2022
Notes to the Company Financial Statements
31 December 2023
1. STAFF COSTS
The average monthly number of employees (including Directors) during the period was:
Administration
Directors
The costs incurred in respect of employees (including directors) were:
Wages and salaries
Social security costs
Pension costs
Total staff costs
10
6
16
2023
£’000
842
96
17
955
The remuneration of the Directors, who are the key management personnel of the Group, is set out below.
Short-term employee benefits
Pension
Share-based payment charges
2023
£’000
446
8
57
511
8
4
12
2022
£’000
691
79
12
782
2022
£’000
364
5
42
411
Further information about the remuneration of individual Directors is provided in the Directors’ Remuneration Report.
Details of Directors' share options is provided in the Directors’ Remuneration Report.
Safestay PLC 94
Notes to the Company Financial Statements continued
31 December 2023
2. PROPERTY, PLANT AND EQUIPMENT
Right-of-Use
assets buildings
£’000
Leasehold
improvements
£’000
Fixtures,
fittings and
equipment
£’000
Assets under
construction
£’000
Cost
At 1 January 2022
Additions
IFRS 16 lease modification
At 31 December 2022
Additions
Recognition of right-of-use asset under IFRS 16
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
At 31 December 2022
Charge for the year
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
8,868
3,149
-
-
8,868
-
206
9,074
978
84
1,062
312
1,374
7,700
7,806
-
-
3,149
-
-
3,149
736
154
890
161
1,051
2,098
2,259
89
6
-
95
4
-
99
81
9
90
2
92
7
5
-
-
-
-
6
-
6
-
-
-
-
-
6
-
Leasehold improvements comprise the capitalised refurbishment costs incurred by the Company on the
leased properties.
Total
£’000
12,106
6
-
12,112
10
206
12,328
1,795
247
2,042
475
2,517
9,811
10,070
Report & Financial Statements 2023 Notes to the Company Financial Statements continued
31 December 2023
3. INTANGIBLE ASSETS
Cost
At 1 January 2022
Additions
At 31 December 2022
Additions
At 31 December 2023
Depreciation
At 1 January 2022
Charge for the year
At 31 December 2022
Charge for the year
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
95
Website
Development
£’000
Total
£’000
134
5
139
74
213
116
14
130
18
148
65
9
134
5
139
74
213
116
14
130
18
148
65
9
4. INVESTMENT IN SUBSIDIARIES
Significant Accounting Policy
The investment in the Company’s subsidiaries are recorded at cost less provisions for impairment. Carrying values are
reviewed for impairment annually to determine if there is any indication that any of the investments might be impaired.
The Company uses forecast cash flow information and estimates of future growth to assess whether investments are
impaired. Impairments are recognised in the income statement.
Cost
At 1 January 2022
Prior year restatement additions (see note 14)
Prior year restatement impairment (see note 14)
As at 1 January 2022 and 31 December 2022 as restated
Impairment
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022 as restated
Shares in
subsidiary
undertakings
£’000
10,085
1,662
(1,843)
9,904
(639)
9,265
9,265
9,904
Safestay PLC 96
Report & Financial Statements 2023
Notes to the Company Financial Statements continued
31 December 2023
Shares in subsidiary undertakings
The subsidiaries at 31 December 2023 and their principal activities are as follows:
Direct ownership
WXYZ2 Limited
Investment activities (dormant)
Safestay (York) Limited
Property owning activities
Safestay (Edinburgh) Limited
Property owning activities
Safestay (Edinburgh) Hostel Limited
Property owning activities and Hostel operation
Safestay (Elephant and Castle) Limited
Hostel operation
Safestay (HP) Limited
Hostel operation
Safestay Hostels Madrid SL
Holding company (Spain)
Calle Sagasta 22, Madrid 28004
Safestay France SAS
Safestay España S.L
Hostel operation (France)
11 Rue de Cambrai, CS 90042, Paris
Hostel operation (Spain)
Street Vigatans 5-9, Barcelona 08003
Equity Point Lisboa Unipessoal Lda.
Hostel operation (Portugal)
Travessa do Fala-So9, Lisbon 1250-109
Equity Point Prague, s.r.o
Hostel operation (Czech Republic)
Ostrovní 131/15, Prague, Nové Město 110 00
GELS BVBA
Holding company (Belgium)
Av. Louise 209A, 1050 Brussels
SSD Safestay Deutschland GmbH
Holding Company (Germany)
Bayreuther Str. 10 in 10789 Berlin
Safestay Italia Srl
Holding Company (Italy)
Via Privata Maria Teresa 4, 20123 Milan
Safestay Athens Hostel
Hostel operation (Greece)
Ag.Theklas 10, Monastiraki, 10554 Athens
Dream Hostel SK sro
Dream Hostel SP zoo
Indirect ownership
Hostel operation (Slovakia)
Leškova 4932/9A, Bratislava 81104
Hostel operation (Poland)
55 Krakowskie Przedmieście Str, Warsaw 00-071
Safestay (York) Hostel Ltd
Hostel operation
U Hostels Albergues Juveniles S.L
Hostel operation (Spain)
Calle Sagasta 22, Madrid 28004
Arcadie SA
Safestay Hostel GmbH
Hotel Auberge GmbH
Hpisa srl
Hotel operation (Belgium)
Hotel operation (Austria)
Rue Grétry 53, 1000 Bruxelles
Schubertring 6, 1010 Wien
Hostel operation (Germany)
Bayreuther Str. 10 in 10789 Berlin
Hostel operation (Italy)
Via Filippo Corridoni No 29, Pisa, CAP 56125
All subsidiaries are incorporated in Great Britain and registered in England and Wales unless otherwise stated.
All subsidiaries are 100% owned.
5. TRADE AND OTHER RECEIVABLES
Due within one year:
Other receivables and prepayments
Due over one year:
2023
£’000
2022
£’000
167
167
43
43
Amounts due from subsidiary undertakings
21,059
19,107
Credit risk is the risk that a counterparty does not settle its financial obligation with the Company.
97
Notes to the Company Financial Statements continued
31 December 2023
At the year end, the Company has assessed the credit risk on amounts due from subsidiary undertakings. The company
has considered the recoverability of the trade receivables and determined an expected credit loss in line with IFRS 9.
Provisions for bad debts in relation to amounts due from subsidiary undertakings totalled £0.8 million (2022: reversal of
bad debt provision of £0.2 million).
6. CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents
2023
£’000
141
2022
£’000
2,520
The Directors consider that the carrying amount of cash and cash equivalents approximates their fair value. Cash and
cash equivalents comprise cash.
7. TRADE AND OTHER PAYABLES
The amounts due from subsidiary undertakings are repayable on demand but are not expected to be recovered within the
next 12 months.
Trade payables
Amounts due to subsidiary undertakings
Other payables
8. BANK AND OTHER FINANCE LOANS
Bank Loan
Loan arrangement fees
2023
£’000
-
16,420
1,062
17,482
2023
£’000
15,995
(68)
15,927
2022
£’000
69
13,808
890
14,767
2022
£’000
16,920
(62)
16,858
Included within borrowings is £5.0 million CBILS (Coronavirus Business Interruption Loan Scheme) obtained via HSBC. The
Government provide lenders with a guarantee on each loan, and it may be possible that there is a government grant in
the form of the lower rate of interest than would likely have been payable in the absence of the Government guarantee.
However, in the absence of further information the total amounts are disclosed within finance costs. The loan will be repaid
at a rate of £1 million per year from April 2022 until April 2027. The balance outstanding on the loan at 31 December 2023 is
£3.3 million (2022: £4.3 million). The interest rate is 3.99% margin over base rate from year 2 onwards and is interest free
in the first year.
At 31st December 2023, the Group has a HSBC bank loan facility, which is secured against the UK freehold and long
leasehold properties. The balance outstanding on the loan at 31 December 2023 is £12.7 million (2022: £12.7 million). The
facility ends in January 2025 and the interest rate is 2.95% margin over SONIA.
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 £92,500). Strict financial controls are in
place to ensure that monies cannot be expended above the available limits or to breach any banking covenants.
Safestay PLC 98
Notes to the Company Financial Statements continued
31 December 2023
The bank loan is repayable as follows:
Within one year
After more than one year
9. OBLIGATIONS UNDER LEASE LIABILITIES
31 December 2023
Lease payments
Finance charges
Net present values
31 December 2022
Lease payments
Finance charges
Net present values
2023
£’000
932
14,995
15,927
Minimum lease payments due
Within 1 year
£’000
1 to 5 years
£’000
After 5 years
£’000
450
(318)
132
400
(315)
85
1,646
(1,214)
432
1,600
(1,226)
374
14,400
(6,429)
7,971
14,800
(6,728)
8,072
2022
£’000
925
15,933
16,858
Total
£’000
16,496
(7,961)
8,535
16,800
(8,269)
8,531
The Company has treated the Holland Park and head office leases as lease liabilities in accordance with IFRS 16.
The leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
The fair value of the Company’s lease obligations is approximately equal to their carrying amount. The Company’s lease
liabilities disclosed above are in sterling.
10. SHARE CAPITAL
Allotted, issued and fully paid
64,679,014 Ordinary Shares of 1p each as at 1 January 2023
Share issue
Shares at 31 December 2023
£’000
647
2
649
At the 31 December 2023, the ordinary shares rank pari passu. There are no changes to the voting rights of the ordinary
shares since the reporting date. The holders of ordinary shares are entitled to receive dividends as declared from time
to time and are entitled to one vote per share in the meetings of the Company. Ordinary shareholders are also entitled to
repayment of capital.
In addition to called up share capital, there are 3,441,189 (2022 as restated: 3,397,589) potential shares relating to share
options. The value of shares relating to share options totals £34k (2022 as restated: £34k).
Report & Financial Statements 2023 Notes to the Company Financial Statements continued
31 December 2023
11. SHARE PREMIUM
Brought forward at 1 January 2023
Share issue
Carried forward at 31 December 2023
12. SHARE-BASED PAYMENTS
99
£’000
23,904
55
23,959
The Company has granted share options to subscribe for ordinary shares of 1p each, as follows:
Number of share options outstanding
Grant date
2-May-14
12-May-14
21-May-14
1-Jan-19
26-Jun-19
5-Sep-19
2-Jan-20
31-Oct-20
30-Nov-20
31-Dec-20
31-Jan-21
28-Feb-21
31-Mar-21
30-Apr-21
31-May-21
30-Jun-21
31-Jul-21
14-Apr-22
9-Nov-22
25-Nov-22
15-Aug-23
Exercise price per
share (pence)
Period within which options
are exercisable
15p
50p
50p
15p
15p
15p
15p
9p
15p
13p
13p
14p
15p
15p
15p
15p
15p
15p
16p
16p
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
21/05/2017 to 20/05/2024
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
01/01/2024 to 31/12/2031
24p
01/01/2024 to 31/12/2031
2023
396,521
528,695
132,173
300,000
100,000
100,000
600,000
78,900
44,400
54,600
54,600
50,800
47,400
47,400
41,800
39,500
44,400
400,000
30,000
50,000
300,000
3,441,189
2022
396,521
528,695
132,173
300,000
100,000
100,000
600,000
140,100
78,800
97,000
97,000
90,100
84,100
47,400
41,800
39,500
44,400
400,000
30,000
50,000
-
3,397,589
Safestay PLC 100
Notes to the Company Financial Statements continued
31 December 2023
The share options are exercisable at a price equal to the average quoted market price of the Company’s shares on the
date of grant. The share options that have been issued in 2023 have a vesting period to 1 January 2024 and have no
minimum price condition. The options are forfeited if the employee leaves the Group before the options vest. Details of
these share options are summarised in the table below:
2023
2022
Number of share
options
Weighted
average
exercise price
As restated
Number of share
options
As restated
Weighted
average
exercise price
3,397,589
21.5p
4,443,766
-
-
(1,526,177)
(256,400)
300,000
3,441,189
132,173
12.9p
24.0p
22.4p
50.0p
-
480,000
3,397,589
388,573
18.2p
18.3p
-
20.9p
21.5p
50.0p
Brought forward 1 January
Forfeited in the period
Exercised during the period
Issued in the period
Outstanding at 31 December
Exercisable at end of the period
No options were exercised in the period.
The fair value of the share options was calculated using the Black-Scholes model. There is a charge of £60k taken though
the income statement (2022: £42k).
Closing price of Safestay plc
Weighted average share price
Weighted average exercise price
Expected volatility
Average vesting period
Risk free rate
Expected dividend yield
2023
23.5p
23.6p
24.2p
25%
2022
15.5p
15.7p
19.3p
52%
1.0 years
2.0 years
1.93%
0.00%
1.47%
0.00%
The expected volatility percentage was derived from the quoted share prices since flotation.
13. RELATED PARTY TRANSACTIONS
The remuneration of the Company’s Directors, who are the key management personnel of the Group, is set out in note 21
of the Group financial statements. Further information about the remuneration of individual Directors and the Directors’
share options is provided in the Directors’ Remuneration Report.
Report & Financial Statements 2023 101
Notes to the Company Financial Statements continued
31 December 2023
14. PRIOR YEAR RESTATEMENTS
Following a review of the share options workings for the year ended 31 December 2023, it was noted that in prior
years, 1.4 million share options in relation to option holders who had since left the business and were no longer entitled to
those options, had not been cancelled. The impact of this has been that the share option charge in prior years has been
overstated. Therefore, a prior year adjustment to the 2022 comparatives has been made in respect of this which has
resulted in a reduction in the share-based payment reserve of £0.1m at 1 January 2022 and a corresponding increase
in retained earnings of £0.1m at 1 January 2022. In addition, the 2022 comparative for administrative expenses has been
adjusted to reflect a reduction in the share option charge of £0.1m for 2022 arising from this. The overall impact of these
adjustments is therefore to reduce the loss for the year ended 31 December 2022 by £0.1 million compared with amounts
previously reported.
Additionally, following a review of the accounting of the purchase of Safestay (Elephant & Castle) by the Company in the
year ending 31 December 2017, it was noted that the accounting for the sale did not occur, and as a result, Safestay plc did
not recognise an investment relating to Safestay (Elephant & Castle). As a result of the correction, it was then determined
that the investment held by the Company in WXYZ2 Limited (the former owner of Safestay (Elephant & Castle) Limited)
should then be written off, as the company no longer has recoverable assets for the investment to be held against. The
impact of this results in an addition of £1.6 million to investment in subsidiaries as at 1 January 2022, an impairment of
investment in subsidiaries of £1.8 million as at 1 January 2022 and a decrease in brought forward retained earnings of
£0.2 million as at 1 January 2022.
The overall impact on brought forward retained earnings as at 1 January 2022 is as follows:
Share Option Charge
Reversal of previous impairment charges relating to WXYZ2 Limited intercompany debtor
Impairment of investment held in WXYZ2 Limited
Total
£’000
126
1,662
(1,843)
(55)
The impact of the above on loss per share for the parent company for the period ending 31 December 2021 is an increase
of 0.01p. The impact of the above on loss per share for the parent company for the period ending 31 December 2022 is a
decrease of 0.02p.
Safestay PLC 102
Officers and Professional Advisors
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
Bankers
HSBC Bank plc
69 Pall Mall
St James’s
London SW1Y 5EY
Directors
The directors who have served in the year to
31 December 2023 were as follows:
Larry Lipman
Paul Hingston
Peter Zielke (Appointed 1 February 2023)
Michael Hirst OBE
Paul Cummins
Stephen Moss CBE
Sarah Whiddett (Appointed 20 March 2023)
Directors
Larry Lipman
Chairman
Paul Hingston
Chief Financial Officer & Company Secretary
Peter Zielke
Chief Operating Officer
Michael Hirst OBE
Non-Executive Director
Paul Cummins
Non-Executive Director
Sarah Whiddett
Non-Executive Director
Registered Office
1a Kingsley Way
London N2 0FW
Company Number
08866498
Nominated Adviser and Broker
Liberum Capital Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
Corporate Solicitor
Shepherd and Wedderburn LLP
9 Haymarket Square
Edinburgh EH3 8FY
Auditor
Haysmacintyre LLP
10 Queen Street Place
London EC4R 1AG
Report & Financial Statements 2023
Austria
Vienna Margaretenviertel
Belgium
Brussels Grand Place
Czech Republic
Prague Charles Bridge
Germany
Berlin Kurfürstendamm
Greece
Athens Monastiraki
Italy
Pisa Centrale
Portugal
Lisbon Bairro Alto
Poland
Warsaw Old Town
Slovakia
Bratislava Presidential Palace
Spain
Barcelona Gothic
Barcelona Passeig de Gràcia
Madrid Central
UK
Edinburgh Cowgate
Glasgow Charing Cross
London Elephant & Castle
London Kensington Holland Park
York Micklegate
Designed by And-Now
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Safestay plc
1a Kingsley Way
London N2 0FW
T: 020 8815 1600
safestay.com