TIDMSSTY
RNS Number : 9781B
Safestay PLC
10 April 2017
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Safestay plc
("Safestay", the "Company" or the "Group")
Final Results for the Year Ended 31 December 2016
Financial highlights
-- Strong uplift in revenues to GBP7.4 million (2015: GBP4.0
million) reflecting demand for Safestay's unique contemporary
hostel offer and full year contributions from Edinburgh and Holland
Park
-- EBITDA of GBP2.2 million (2015: GBP0.7 million)
-- Reduced loss after tax of GBP0.5m (2015: loss GBP0.6m)
-- The Group's freehold property assets were valued at GBP32.3
million as at 31 December 2016 (2015: GBP28.5 million)
-- Loss per share 1.5p (2015: 2.5p)
-- Net asset value per share increased to 58p per share (2015: 48p per share)
-- Post year end:
o Completed the sale and leaseback of Elephant & Castle and
Edinburgh hostels raising GBP12.6 million of gross cash
proceeds
o Agreed new GBP18.4 million 5 year secured debt facility with
HSBC to replace existing bank loan and two convertible loans
o Cost of borrowings to reduce significantly and cash resources
now in place to support the Group's expansion plans
Operational highlights
-- Strong trading performance from Elephant & Castle, Edinburgh and York
-- Holland Park building revenue momentum and has shown an improvement in 2017
-- Further investment in direct booking channel, property
management systems and online capabilities; the platform is now in
place to support a larger portfolio of hostels
-- Nuno Sacramento appointed as Chief Operating Officer in February 2017
Larry Lipman commenting on the results said:
"In 2016 we sold a total of 297,276 individual bed nights
compared to 184,061 in 2015, an increase of 61.5%. The business has
expanded significantly and the systems and infrastructure to
support this growth are in place and are capable of managing
current capacity as well as our future plans for expansion.
Within the premium hostel sector, Safestay is carving out its
own unique brand positioning. The appeal of the brand is based on
offering a combination of safety, style and comfort in good city
centre locations. A key indicator is repeat bookings from school
and college groups coming every year to visit the UK.
The recent restructuring and refinancing has transformed the
financial base of the business and provided the necessary resources
to support our ambitions."
Enquiries
Safestay plc +44 (0) 20 8815 1600
Larry Lipman, Chairman
Canaccord Genuity Limited
(Nominated Adviser and Broker) +44 (0) 20 7523 8000
Bruce Garrow
Chris Connors
Ben Griffiths
Novella
Tim Robertson +44 (0) 20 3151 7008
Toby Andrews
For more information visit: www.safestay.com
Chairman's Statement
Introduction
I am very pleased to present the results for the year to 31
December 2016 which show our portfolio of hostels delivering a
significant increase in revenues during a year of internal
investment and development with a specific focus on integrating the
newer hostels and building on our saleable platform from which to
expand the Safestay brand.
The concept of a premium hostel is becoming more widely
recognised which is increasing our existing and future customer
base as awareness of the offer grows. This is significant when it
is understood that, for just under GBP20 per night, an individual
can stay in a safe, stylish and comfortable room in a city centre
location, compared to the cost of budget hotel accommodation.
Consequently, the Safestay hostels are not only attracting young
travellers, but increasingly families and older adults who are
recognising its appeal combined with affordability.
2016 has been a good year for the business and I believe the
work completed in this year has paved the way for an even stronger
year in 2017. We have put in place firm foundations for growth and
continue to apply our disciplined approach in assessing
opportunities to expand the portfolio into key European gateway
cities.
Financial Results
For the year to 31 December 2016, the Group generated revenues
of GBP7.4 million compared to GBP4.0 million in the prior year,
with underlying EBITDA of GBP2.2m (2015: GBP0.7m). Operating
profits before financing costs and exceptional costs increased to
GBP1.15 million compared to GBP0.21 million in 2015. The growth
included full contributions in the year from Edinburgh and Holland
Park. The Group incurred exceptional administration costs of
GBP0.15 million in the year relating to an unsuccessful property
acquisition.
Finance costs of GBP1.4 million (2015: 0.8 million), reflecting
the full years costs of the debt used to acquire Edinburgh and
refurbish Holland Park, meant the Group recorded a loss after tax
of GBP0.5 million versus a loss after tax of GBP0.6 million in the
prior year. As a consequence, the Company recorded a loss per share
of 1.5p compared with a loss of 2.5p per share in 2015.
Gearing, measured as total liabilities less trade and other
payables and derivative financial instruments as a proportion of
total shareholder's equity reduced to 1.39 (2015: 1.72).
Net asset value per share increased to 58p (2015: 48p).
As at 31 December 2016, the Group had gross bank and loan note
borrowings of GBP17.6 million (2015: GBP18.4m) secured against its
freehold and leasehold properties with an average weighted interest
cost of 3.7%. Since the year-end the Group has refinanced its
borrowings with a new 5 year GBP18.4 million secured bank facility
with HSBC which enables it to repay all previous borrowings
including the two convertible loans and, on doing so, significantly
reduce annual interest costs in 2017 and beyond.
We continue to focus on seeking investment opportunities to
develop additional hostels and on achieving operating efficiencies
to help drive growth and deliver on our strategy.
Property valuation
As at 31 December 2016, the freehold property portfolio was
valued at GBP32.3 million (2015: GBP28.5 million), following the
uplift in the revaluation of the Elephant & Castle property.
Since then the Company has completed a geared ground rent sale and
leaseback agreement on the Edinburgh and Elephant & Castle
hostels raising gross cash proceeds of GBP12.6 million.
Importantly, the Group retains a long term operational interest in
the properties following the sale and leaseback. The two hostels
were valued for the refinancing as leaseholds on 14 March 2017 at
GBP30.3 million. The Company has been able to extract GBP12.6
million from the property portfolio without significantly changing
the book value of the assets.
Operational review
2016 was a year of consolidation of our investment of the two
new hostels which joined the Group latterly in 2015, the focus was
on integrating them and establishing a scalable platform for
expanding the Safestay brand. Good progress was made on these
objectives with both Edinburgh and Holland Park hostels completing
refurbishment and rebranding programmes.
From a trading perspective, Safestay sold 297,276 bed nights
compared to 184,069 in 2015 from its four hostels which combined
have 1,526 beds. There remains further potential to enhance
performance of the existing portfolio, through increased occupancy,
through increasing our direct customer base, greater brand
recognition, improving group's business and the Group's digital and
direct marketing campaigns.
Elephant & Castle had another good year showing revenue
increases of 5.7% to GBP2.6 million, and operating profit of 54.6%
(2015: 48.9%). This is the Group's most established hostel and has
provided the template for others to follow. Plans have been
approved and tenders are out to extend the building and add a
further 80 beds which is expected to be completed during 2018.
The York hostel performed well in terms of revenues with
operating profit for the year up 19.6% over 2015. While weekend
occupancy has remained very high, the more challenging mid-week
periods are responding well to increased marketing campaigns.
The Holland Park hostel is perhaps in the most sought-after
location of all the sites we have and while it has had a slower
start than anticipated, trading is improving significantly in 2017.
The refurbishment was completed in the summer of 2015 and so it has
not completed a comparable trading period, but in 2016 Safestay
Holland Park generated revenues of GBP1.3 million. As word spreads
of the opportunity to stay comfortably and safely in the centre of
Holland Park for just GBP20 per night, we feel very confident in
the future of this site.
The Edinburgh hostel has been a highly successful acquisition
for the Group and has from the outset performed strongly against
our purchase assumptions and budgets. In 2016, Edinburgh generated
revenue of GBP2.9 million (2015 from 16 September: GBP0.5 million)
and operating profit margins of 41.6% (2015: 38.1%). Food &
Beverage in this property accounts for 27.8% of the total revenue,
making it the largest offering of any hostel in the Group. The
switch between providing some student accommodation during the
academic year and then making all beds available as hostel
accommodation over the summer is an effective business model which
maximises the potential of this site.
In December 2016, the Company announced the appointment of Nuno
Sacramento as Chief Operating Officer from 1 February 2017. Nuno
was previously Head of Customer Operations with Carillion PLC
focusing on developing their group-wide customer service culture.
Prior to this, Nuno worked for Whitbread PLC for 16 years in
several senior managerial roles, working with the Company's
well-known brands Premier Inn, Beefeater and Costa Coffee. Nuno's
primary focus is to drive revenue and cost performance of the
hostels and deliver the Group's operational platform for
growth.
Outlook
2017 has begun well for Safestay. The announcement on 31 March
2017 of our GBP18.4 million debt restructuring and refinancing and
raising of GBP12.6 million through the sale and leaseback provides
a secure base for the business to meet its growth plans.
We are continuing to generate efficiencies in the business by
consolidating our Group purchasing wherever possible and improving
our management structure. Our bookings pipeline for the coming year
is encouraging with cash received in respect 2017 revenues as at 31
December 2016 up 51% over the corresponding period in 2015, which
underpins my belief that the Group will continue to positively
exploit the potential in the rapidly changing hostel arena.
Our strategy is to create a European network of Safestay premium
hostels located in gateway cities and we have a number of potential
sites in our pipeline. We are confident that during 2017 we will
expand our portfolio and continue to build the Safestay brand.
Larry Lipman
Chairman
6 April 2017
Condensed Consolidated Income Statement
Note 2016 2015
GBP'000 GBP'000
Revenue 7,411 4,023
Cost of sales (1,022) (486)
-------- --------
Gross profit 6,389 3,537
Administrative expenses (5,242) (3,327)
-------- --------
Operating profit before exceptional expenses 1,147 210
Exceptional expenses (152) -
-------- --------
Operating profit after exceptional expenses 995 210
Finance income - 1
Finance costs (1,463) (821)
-------- --------
Loss before tax (468) (610)
Tax (43) 8
-------- --------
Loss for the financial year attributable
to owners of the parent company (511) (602)
======== ========
Basic and diluted loss per share 2 (1.49p) (2.52p)
Condensed Consolidated Statement of Comprehensive Income
2016 2015
GBP'000 GBP'000
Loss for the year (511) (602)
Other comprehensive income
Items that will not be reclassified subsequently
to profit and loss
Revaluation of freehold land and buildings 3,860 152
Total comprehensive income/(loss) for
the year
attributable to owners of the parent
company 3,349 (450)
======== ========
Condensed Consolidated Statement of Financial Position
Note 2016 2015
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 3 45,771 42,327
Intangible assets 4 1,212 1,352
Goodwill 4 525 525
-------- --------
Total non-current assets 47,508 44,204
-------- --------
Current assets
Stock 23 19
Trade and other receivables 491 594
Derivative financial instruments 13 20
Cash and cash equivalents 737 1,060
-------- --------
Total current assets 1,264 1,693
-------- --------
Total assets 48,772 45,897
-------- --------
Current liabilities
Loans and overdrafts 5 3,489 693
Finance lease obligations 6 34 65
Trade and other payables 1,261 1,062
Derivative financial instruments 45 36
-------- --------
Current liabilities 4,829 1,856
-------- --------
Non-current liabilities
Bank loans and convertible loan notes 5 13,906 17,391
Deferred tax liabilities 5 -
Finance lease obligations 6 10,195 10,196
Total non-current liabilities 24,106 27,587
-------- --------
Total liabilities 28,935 29,443
-------- --------
Net assets 19,837 16,454
======== ========
Equity
Share capital 7 342 342
Share premium account 14,504 14,504
Merger reserve 1,772 1,772
Share based payment reserve 57 23
Revaluation reserve 4,218 358
Retained earnings (1,056) (545)
-------- --------
Total equity attributable to owners of
the parent company 19,837 16,454
======== ========
Condensed Consolidated Statement of Changes in Equity
Share Share Merger Share Revaluation Retained Total
Capital premium Reserve based Reserve earnings equity
GBP'000 account GBP'000 payment GBP'000 GBP'000 GBP'000
GBP'000 reserve
GBP'000
-------- -------- -------- -------- ----------- --------- --------------
Balance as at 1
January 2015 192 6,410 1,772 6 206 115 8,701
Comprehensive income
Loss for the year - - - - - (602) (602)
Other comprehensive
income - - - - 152 - 152
-------- -------- -------- -------- ----------- --------- --------------
Total comprehensive
income - - - - 152 (602) (450)
-------- -------- -------- -------- ----------- --------- --------------
Transactions with
owners
Issue of shares 150 8,094 - - - - 8,244
Dividend paid (58) (58)
Share based payment
charge for the
period - - - 17 - - 17
-------- -------- -------- -------- ----------- --------- --------------
Balance at 31 December
2015 342 14,504 1,772 23 358 (545) 16,454
-------- -------- -------- -------- ----------- --------- --------------
Comprehensive income
Loss for the year - - - - - (511) (511)
Other comprehensive
income - - - - 3,860 - 3,860
-------- -------- -------- -------- ----------- --------- --------------
Total comprehensive
income - - - - 3,860 (511) 3,349
-------- -------- -------- -------- ----------- --------- --------------
Transactions with
owners
Issue of shares - - - - - - -
Dividend paid - - - - - - -
Share based payment
charge for the
period - - - 34 - - 34
-------- -------- -------- -------- ----------- --------- --------------
Balance at 31 December
2016 342 14,504 1,772 57 4,218 (1,056) 19,837
======== ======== ======== ======== =========== ========= ==============
Condensed Consolidated Statement of Cash Flows
2016 2015
GBP'000 GBP'000
Operating activities
Cash generated from operations 2,308 643
-------- --------
Net cash generated from operating activities 2,308 643
-------- --------
Investing activities
Interest received - 1
Purchases of property, plant and equipment (484) (4,082)
Acquisition of business - (14,150)
Net cash outflow from investing activities (484) (18,231)
-------- --------
Financing activities
New loans - 10,500
Loan arrangement fees - (81)
Issue of ordinary shares for cash - 8,535
Fees related to the issue of shares - (1,041)
Dividend paid - (58)
Lease capital repaid (660) -
Interest paid (732) (620)
Loan repayments (755) (1,897)
-------- --------
Net cash (absorbed in)/generated from
financing activities (2,147) 15,338
-------- --------
Cash and cash equivalents at beginning
of year 1,060 3,310
Net decrease in cash and cash equivalents (323) (2,250)
-------- --------
Cash and cash equivalents at end of year 737 1,060
======== ========
Basis of Preparation
On 7 April 2017, the Directors approved this preliminary
announcement for publication. Copies of this announcement are
available from the Company's registered office at 1a Kingsley Way,
London N2 0FW and on its website, www.safestay.com. The Annual
Report and Accounts will be sent to shareholders in due course and
will be available on the Company's website, www.safestay.com. The
financial information presented above does not constitute statutory
financial statements as defined by section 435 of the Companies Act
2006 for the year ended 31 December 2016.
The financial information for the year ended 31 December 2016 is
derived from the statutory financial statements for that year,
prepared under IFRS, under which the auditors have reported. The
audit report was unqualified, did not include references to matters
to which the auditor drew attention by way of emphasis without
qualifying their report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006. The statutory
financial statements for the year ended 31 December 2016 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The accounting policies applied in this announcement are
consistent with those of the annual financial statements for the
year ended 31 December 2015, as described in those financial
statements.
1. Significant Accounting Policies
Revenue
Revenue is stated net of VAT and comprises revenues from
overnight hostel accommodation, income from the rental of student
accommodation during the academic year and the sale of ancillary
goods and services. Accommodation and the sale of ancillary goods
and services is recognised when provided. Income from the rent of
student accommodation is recognised on a straight line basis over
the academic year to which the rent relates.
The sale of ancillary goods comprises sales of food, beverages
and merchandise.
Deferred income comprises deposits received from customers to
guarantee future bookings of accommodation. This is recognised as
revenue once the bed has been occupied.
Leases
The Group as lessor:
Rental income from operating leases is recognised on a
straight-line basis over the term of the relevant lease.
The Group as lessee:
Assets held under finance leases are recognised as assets of the
group at the present value of the lease payments at the inception
of the lease. The corresponding liability to the lessor is included
in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance expenses and
reduction in lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance
expenses are recognised immediately in the income statement.
All other leases are classified as operating leases. Operating
leases are recognised in the income statement on a straight line
basis over the life of the lease.
Property, plant and equipment
Freehold property is stated at fair value and revalued annually.
Valuation surpluses and deficits arising in the period are included
in other comprehensive income. Fixtures fittings and equipment are
stated at cost less depreciation and are depreciated over their
useful lives. The applicable useful lives are as follows:
Fixtures, fittings and equipment 3 years
Freehold properties 50 years
Leasehold properties 50 years
Assets held as finance leases are depreciated over the shorter
of the lease term and their expected useful lives on the same basis
as owned assets.
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.
-- The fair value of the Group's property portfolio is estimated
by the directors of the Group. Where Level 1 inputs are not
available, the Group engages third party qualified valuers to
perform the valuation, valuations provided to support current
banking facilities or market-observable data to the extent it is
available.
-- The Holland Park lease showed indicators that it could be
treated as either a finance or operating lease. The Group's
decision to treat it as a finance lease was based on a balanced
judgment of relevant factors. Furthermore, the fair value of the
Group's finance lease asset is inherently subjective. The
methodology applies a discount rate to the future lease payments to
approximate to the fair value of the asset.
-- The Group has identified certain costs as exceptional in
nature in that, without separate disclosure, would distort the
reporting of the underlying business. In 2016, exceptional costs
were incurred relating to the unsuccessful acquisition of a
property in Dublin.
2. Loss per share
The calculation of the basic and diluted loss per share is based
on the following data:
2016 2015
GBP'000 GBP'000
Loss for the period attributable to equity holders
of the company (511) (602)
======== ========
2016 2015
'000 '000
Weighted average number of ordinary shares for
the purposes of basic loss earnings per share 34,219 23,881
Effect of dilutive potential ordinary shares 2,264 6,545
-------- --------
Weighted average number of ordinary shares for
the purposes of diluted loss per share 36,483 30,426
-------- --------
Basic loss per share (1.49p) (2.52p)
-------- --------
Diluted loss per share (1.49p) (2.52p)
-------- --------
There is no difference between the diluted loss per share and
the basic loss per share presented. Due to the loss incurred in the
year the effect of the share options in issue is anti-dilutive.
3. Property, Plant and Equipment
Freehold Leasehold Fixtures, Total
land and land and fittings GBP'000
buildings buildings and equipment
GBP'000 GBP'000 GBP'000
Cost or valuation
Balance as at 1 January 2015 14,921 - 113 15,034
Additions 1,068 12,793 742 14,603
Acquisitions 12,775 - 200 12,975
Balance as at 31 December 2015 28,764 12,793 1,055 42,612
Transfer (267) 267 - -
Additions 224 62 198 484
Revaluation 3,739 - - 3,739
----------- -------------- ---------
At 31 December 2016 32,460 13,122 1,253 46,835
----------- ----------- -------------- ---------
Depreciation
Balance as at 1 January 2015 - - 34 34
Charge for the period 152 71 180 403
Revaluation (152) - - (152)
----------- ----------- -------------- ---------
Balance as at 31 December 2015 - 71 214 285
Charge for the year 275 262 364 901
Revaluation (122) - - (122)
----------- ----------- -------------- ---------
At 31 December 2016 153 333 578 1,064
----------- ----------- -------------- ---------
Net book value:
At 31 December 2016 32,307 12,789 675 45,771
=========== =========== ============== =========
At 31 December 2015 28,764 12,722 841 42,327
=========== =========== ============== =========
The Director's fair value of the freehold land and buildings at
31 December 2016 has been arrived at taking into account valuations
prepared for the bank as part of the refinancing in March 2017,
disclosed in note 8, and revaluation in July 2016 of the Elephant
& Castle property. All valuations were undertaken by
independent valuers not connected with the Group and conform to
International Valuation Standards, and are arrived at by applying
discounted cash flows to forecasts of future earnings before
interest, taxation and depreciation (EBITDA). The freehold land and
buildings were previously valued for the Group between 10 November
2014 and 17 August 2015.
The Directors do not consider there to be any significant
difference between these valuations and their value in use at 31
December 2016.
The historical cost of property, plant and equipment is GBP28.7
million (2015: GBP28.8 million).
The group has pledged freehold property with a carrying value of
GBP32.3 million (2015: GBP28.8 million) to secure banking
facilities and loan notes granted to the Group (note 5).
The valuation of the lease on the Holland Park property is
stated at the present value of the future lease payments at a yield
of 6.5%. This constitutes the substantial part of a theoretical
freehold valuation.
4. Intangible Assets and Goodwill
Intangible Goodwill Total
Asset GBP'000 GBP'000
GBP'000
Cost
At 1 January 2015 and 31 December
2015 1,400 525 1,925
At 31 December 2016 1,400 525 1,925
---------- -------- --------
Amortisation
At 1 January 2015 - - -
Charge for the period 48 - 48
---------- -------- --------
At 31 December 2015 48 - 48
Charge for the period 140 - 140
At 31 December 2016 188 - 188
---------- -------- --------
Net book value:
At 31 December 2016 1,212 525 1,737
========== ======== ========
At 31 December 2015 1,352 525 1,877
========== ======== ========
On the acquisition of the business on Smart City hostel in
Edinburgh in 16 September 2015 the Directors identified an
intangible asset in relation the lease with the University of
Edinburgh, which terminates in 2027 and the amortisation if this
intangible asset is based on a straight line basis until that
date.
Goodwill arises from the acquisition of the business of the
Smart City hostel in Edinburgh, which is the relevant cash
generating unit. At 31 December 2016, an impairment review has been
performed using forecast cash flows discounted at appropriate
discount rates to affirm its value in use. This forecast requires
the use of assumptions and estimates based on current operating
parameters and there are no reasonable sensitivities that indicate
this asset is impaired.
5. Loans
2016 2015
GBP'000 GBP'000
At amortised cost
Bank Loan 13,794 14,549
Convertible loan 3,800 3,800
17,594 18,349
Loan arrangement fees (199) (265)
-------- --------
17,395 18,084
======== ========
Loans repayable within one year 3,489 693
Loans repayable after more than one year 13,906 17,391
-------- --------
17,395 18,084
======== ========
The bank facilities at 31 December 2016 are summarised
below:
Related Property Elephant & Edinburgh York Holland Park
Castle
Principal ('000) GBP5,600 GBP6,500 GBP1,000 GBP2,000
Outstanding as at 31 GBP4,900 GBP6,094 GBP925 GBP1,875
December 2016 ('000)
Secured Secured Secured Secured
Interest rate LIBOR plus LIBOR plus LIBOR plus LIBOR plus
3.25% 3% 3.25% 3%
Term 5 years 5 years 5 years 5 years
Each of the bank loans have a term of five years on which
interest is payable at between 3.00% and 3.25% over LIBOR. The
Group has given security to the bank including a first ranking
charge over the Group's freehold hostels in Elephant & Castle,
York and Edinburgh and a legal charge over the Holland Park
property. There were no breaches in bank loan covenants as at 31
December 2016.
Convertible loan note terms:
Secured (GBP'000) Unsecured (GBP'000)
Value 2,800 1,000
Issued 2 May 2014 11 September
2015
Term 3 years from 3 years from
issue issue
Coupon rate 6% 5%
Conversion price per Ordinary Share at
the option of the noteholder, at any
time prior to redemption 57.5p 70.0p
Secured Convertible loan notes are by way of a charge over the
Group's hostel in Elephant & Castle, ranking after the security
granted to the bank.
All of the Group's loans disclosed above comprise borrowings in
sterling.
On 31 March 2017, the Group agreed an GBP18,400,000 debt
restructuring and refinancing, replacing the above convertible and
bank debt with a single banking facility with HSBC. Further details
are set out in note 8.
As at the balance sheet date, the repayment profiles of the
loans were as follows:
Convertible Bank Total
loan notes loan
GBP000 GBP000 GBP000
------------ ------- --------
Due within one year 2,800 755 3,555
Between one and two years 1,000 755 1,755
Between two and five years - 12,284 12,284
------------ -------
Balance at 31 December 2016 3,800 13,794 17,594
============ ======= ========
Balance at 31 December 2015 3,800 14,549 18,349
============ ======= ========
6. Obligations under Finance Leases
Minimum lease payments
2016 2015
GBP'000 GBP'000
Amounts payable under finance leases:
Within one year 660 660
In the second to fifth years inclusive 2,640 2,640
After five years 28,380 29,040
Less future finance charges (21,451) (22,079)
----------- -----------
Present value of future lease obligations 10,229 10,261
=========== ===========
Present value of
minimum lease payments
2016 2015
GBP'000 GBP'000
Amounts payable under finance leases:
Within one year 34 65
In the second to fifth years inclusive 157 158
After five years 10,038 10,038
------------ -----------
Present value of future lease obligations 10,229 10,261
============ ===========
The group has treated the Holland Park lease as a finance lease
on the basis that the present value of the lease payments
constitutes the substantial part of a theoretical freehold
valuation.
The average effective borrowing rate was 6.55%. The lease is on
a fixed repayment basis and no arrangements have been entered into
for contingent rental payments.
The fair value of the group's lease obligations is approximately
equal to their carrying amount. The Group's finance leases
disclosed above are in sterling.
7. Called Up Equity Share Capital
GBP'000
Allotted, issued and fully paid
34,219,134 Ordinary Shares of 1p each as at 31 December
2015 and 2016 342
=======
At the 31 December 2016, the ordinary shares rank pari passu.
There are no changes to the voting rights of the ordinary shares
since the balance sheet date.
8. Post Balance Sheet Events
On 31 March 2017, the Group announced an GBP18,400,000 debt
restructuring and refinancing and raising GBP12,600,000 million
through sale and leaseback agreements.
Debt restructuring and refinancing:
A new GBP18,400,000, 5 year bank facility with HSBC to replace
arrangements set out in note 16 to these financial statements. The
net effect of this will significantly reduce cost of debt and repay
all outstanding convertible loans when they become due. The new
facility is secured against the Group's assets.
New sale and leaseback arrangement:
The Group completed sale and leaseback transactions on its
hostels in Edinburgh and Elephant & Castle raising gross cash
proceeds of GBP12,600,000. The sale is with an institutional buyer
in exchange for 150 year geared ground rent leases. Safestay will
continue to operate both hostels under long term ownership whilst
releasing the cash from the two properties. The total gross
proceeds from the sale and leaseback are set against annual
combined ground rents commencing at GBP300,000 rising to GBP330,000
on completion of the extension, representing a net initial yield of
2.46%.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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