REG - Hostelworld Grp PLC - Half-year Report - Correction
26/09/2024 16:00
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RNS Number : 8701F Hostelworld Group PLC 26 September 2024
LEI:213800OC94PF2D675H41
Date: 26 September 2024
Correction - Interim Management Report
This announcement replaces the Interim Results 2024 announcement released at
07.00 on 08 August 2024 under RNS No. 6290Z. The Interim Management Report
included in the announcement did not, owing to administrative error, include a
responsibility statement. The responsibility statement is now included
within the Interim Management Report and is reflected below. All other text
remains unchanged.
Hostelworld Group plc ("Hostelworld" or the "Group" or the "Company")
Interim Results 2024
Strong bookings growth, FY Adjusted EBITDA guidance in line with expectations
Hostelworld is pleased to provide an update on trading up to 30 June 2024
("H1").
Strong financial delivery continued in H1 2024:
· Continuing growth in net bookings, a record half-year for Asia
and Central America
· Social strategy continuing to deliver, with direct marketing as a
% of revenue(1) at the low end of guidance range
· Continuing to maintain cost discipline, underpinning significant
Adjusted EBITDA growth
· Highly cash generative business model, AIB term loan facility and
RCF repaid early and in full
Well positioned for further profitable growth:
· Continuing investment in our social network strategy driving
growth in penetration and usage
· App bookings growth continuing to outpace Web, delivering
marketing efficiencies to fuel future growth
· Growing hostel supply, with market coverage increasing 3% year on
year
· Reiterating FY 2024 Adjusted EBITDA guidance in line with market
consensus(2)
Financial highlights:
· Net bookings of 3.7m (+9% year on year) driven by record
performances in Asia and Central America
· Net average booking value of €13.60 (-10% year on year)
driven by a greater proportion of Asian destination bookings and a slight
increase in the proportion of solo customers
· Net revenue of €46.4m (+1% year on year) reflecting the
drivers above
· Direct marketing as a percentage of revenue(1) totalled 45%,
down 6% from 51% in H1 2023, driving net margin growth of +23% year on year
· Proportion of bookings from social members increased to 80% (66%
in H1 2023)
· Operating costs(3) of €12.5m, (-2% year on year)
· Operating profit for the period €4.0m compared to a loss of
€1.7m in H1 2023 (+335% year on year)
· H1 2024 adjusted EBITDA €9.6m compared to €5.1m in H1
2023, (+88% year on year), representing an increase in adjusted EBITDA margin
from 11% to 21%
Balance sheet and cash flow:
· 30 June 2024 cash balance of €5.0m (31 December 2023: €7.5m)
· Net debt(4) position of €2.6m (31 December 2023: €12.3m)
· Commenced repayment of warehoused payroll taxes to Irish Revenue,
€7.6m outstanding (31 December 2023: €9.6m)
· Net asset position of €62.6m (31 December 2023: €59.2m)
Gary Morrison, Chief Executive Officer, commented:
"I am very pleased to report strong growth in net bookings (+9% YoY) and even
stronger growth in net margins (+23%), primarily driven by our highly
differentiated social strategy. This performance, coupled with operating cost
discipline, has translated directly into strong operating cashflow enabling us
to fully repay our residual debt facility with AIB, two years ahead of
schedule.
In parallel, I am also pleased to report that we made good progress during H1
on all aspects of our growth strategy. We have continued to provide our
customers with enhanced social network product features, added more hostel
inventory to our platform, and have continued to upgrade our platform towards
a fully cloud native architecture. In respect of delivering on our key
sustainability strategic goals, we launched our 'Staircase to Sustainability'
platform to deliver ongoing sustainability improvements in the hostel
industry."
Trading update
During the first 6 months of the year, net bookings grew +9% YoY driven by
strong consumer demand for low-cost destinations. This trend was driven
primarily by strong growth in net bookings made by UK customers and European
customers, travelling to lower cost destinations in Asia and resulted in
significant growth in lower ABV net bookings. Consequently, higher cost ABV
net bookings to destinations in Europe reduced YoY.
Strong consumer demand for lower cost destinations for the half year overall
has resulted in ABVs contracting by 10% YoY (H1 2024: €13.60); driven by the
reduction in average bed prices on a booked basis. Over the balance of the
year, we expect to continue to see strong customer demand for lower cost
destinations in Asia and other regions resulting in lower ABVs YoY and revenue
growth lower than net bookings growth on a full year basis.
We are pleased to report that marketing cost as a percentage of revenue(1) has
also reduced from 51% in H1 2023 to 45% in H1 2024, primarily driven by our
social strategy. This highly differentiated strategy drives new and existing
customers to use our mobile native app. This has resulted in a greater mix of
low-cost bookings overall, which in turn has delivered a 23% increase in net
margin YoY. On a full year basis, we expect direct marketing costs as a
percentage of revenue(1) will remain in the 45% to 50% range as we continue to
optimise marketing investments for long term growth in new customers and
direct margin.
Finally, we have seen continued robust momentum in operating cash performance,
with cash generation of €12.4m in H1 2024 (H1 2023: €10.8m), driven by the
strong cash conversion characteristics of our business model. This strong
performance has enabled the early repayment of the remaining AIB debt
facility, well ahead of schedule, which represents another positive milestone
for the business. Furthermore, we continue to deleverage the balance sheet
having commenced the repayment of warehoused payroll taxes to the Irish
Revenue Commissioners. Our financial position has been significantly
strengthened as a result, with a reduction in our net debt(4) from €12.3m as
at 31 December 2023 to €2.6m as at 30 June 2024.
(1)Revenue is generated revenue - gross revenue less cancellations and
excludes impact of deferred revenue
(2)Company compiled market consensus FY 2024 adjusted EBITDA is €21.4M as of
07 August 2024
(3)Operating costs exclude paid marketing costs, credit card fees, exceptional
costs, share option charges, depreciation and amoritisation
(4)Net debt is cash less outstanding debt, including term loan, revolving
credit facility and warehoused payroll taxes
Outlook:
The Board remains confident in our differentiated growth strategy and
reaffirms our full year earnings guidance of adjusted EBITDA in line with
market consensus, absent any deterioration in the macro-economic climate or
the occurrence of significant air travel related disruptions.
Date of retirement of Mr. Michael Cawley as Chair (Date change from 02 May
2024 RNS announcement):
Following a change to the date of the scheduled October 2024 Company Board
meeting from 21 October to 10 October, with effect from the close of the 10
October 2024 Board meeting, Mr. Michael Cawley will step down from the Board
and Mr. Ulrik Bengtsson will assume the role of Chair of both the Board and
the Nomination Committee.
Analyst Presentation
A presentation will be made to analysts today at 9.00am, a copy of which will
be available on our Group website: http://www.hostelworldgroup.com
(http://www.hostelworldgroup.com) .
If you would like to dial into the presentation, please join directly via the
webcast link provided or contact Sodali & Co on the contact details
provided below.
Webcast link: https://brrmedia.news/HSW_IR24 (https://brrmedia.news/HSW_IR24)
For further information please contact:
Hostelworld Group
PLC
Corporate@hostelworld.com
Gary Morrison, Chief Executive Officer
Caroline Sherry, Chief Financial Officer
David Brady, Head of Commercial Finance
Sodali & Co
hostelworld@sodali.com
Eavan Gannon / Oliver Banks
+44 (0) 20 7250 1446
About Hostelworld Group
Hostelworld Group PLC is a ground-breaking social network powered Online
Travel Agent ("OTA") focused on the hostelling category, with a clear mission
to help travellers find people to hang out with. Our mission statement is
founded on the insight that most travellers go hostelling to meet other
people, which we facilitate through a series of social features on our
platform that connect our travellers in hostels and cities based on their
booking data. The strategy has been extraordinarily successful, generating
significant word of mouth recommendations from our customers and strong
endorsements from our hostel partners.
Founded in 1999 and headquartered in Ireland, Hostelworld is a well-known
trusted brand with almost 230 employees, hostel partners in over 180
countries, and a long-standing commitment to building a better world. To that
end, our focus over the last few years has been on improving the
sustainability of the hostelling industry. In particular, over the last two
years we have commissioned independent research to validate the category's
sustainability credentials, and recently introduced a hostel specific
sustainability framework which encourages our hostel partners to move to even
more sustainable operations and also provides the data points for our
customers to make more informed decisions about where they stay. In addition,
our customers are now able to offset their trip's carbon emissions should they
wish to do so, and we have maintained our 'Funding Climate Action' label
awarded by South Pole.
Disclaimer
This announcement contains forward-looking statements. These statements relate
to the future prospects, developments and business strategies of Hostelworld.
Forward-looking statements are identified by the use of such terms as
"believe", "could", "envisage", "estimate", "potential", "intend", "may",
"plan", "will" or variations or similar expressions, or the negative thereof.
Any forward-looking statements contained in this announcement are based on
current expectations and are subject to risks and uncertainties that could
cause actual results to differ materially from those expressed or implied by
those statements. If one or more of these risks or uncertainties materialize,
or if underlying assumptions prove incorrect, Hostelworld's actual results may
vary materially from those expected, estimated or projected. Any
forward-looking statements speak only as at the date of this announcement.
Except as required by law, Hostelworld undertakes no obligation to publicly
release any update or revisions to any forward-looking statements contained in
this announcement to reflect any change in events, conditions or circumstances
on which any such statements are based after the time they are made.
Cautionary statement
This Interim Management Report (IMR) has been prepared to provide additional
information to shareholders to assess the Group's strategies and the potential
for those strategies to succeed. The IMR should not be relied on by any
other party or for any other purpose. The IMR contains certain forward-looking
statements. These statements are made by the directors in good faith based on
the information available to them up to the time of their approval of this
report but such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors, underlying
any such forward-looking information.
This interim management report has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters which are significant to
Hostelworld Group plc and its subsidiary undertakings when viewed as a whole.
Chief Executive's Review: Gary Morrison
Throughout the first half of the year, we have continued to execute our highly
differentiated growth strategy as outlined in our Capital Markets Day
presentation in November 2022, commensurate with our Company Mission to "help
travellers find people to hang out with".
Executing our growth strategy
At its core, our ground-breaking social network leverages our customer booking
data to create online hostel and city-based chat rooms, populated by customers
with overlapping stay dates, accessible via our iOS and Android apps.
Customers use these chat rooms and other customer's profiles to make plans and
find people to hang out with in destination. These chat rooms are available to
customers who have opted into the social platform 14 days before check-in, and
close 3 days after check-out.
Since launching our social network in Q2 2022 we have seen penetration
steadily increase, with now over 80% of all of our bookings being made by
social members in the first half of this year (+14% YoY). Moreover, we have
also seen a steady increase in usage, with growth in messages sent far
outstripping growth in bookings made by social members. Overall, our social
strategy has not only driven strong growth in net bookings and market share
since launch but has also driven strong growth in App bookings (+20% YoY)
relative to other web channels (+2% YoY), which has served to reduce our
marketing expenses as a percentage of generated revenue over time.
Over the course of H1 2024 we have continued to innovate and strengthen our
differentiated social network value proposition with upgrades to customer
profiles and chat features. We've now made it easier for our customers to
initiate chats with others through a dedicated pane in our application that
exposes the profiles of all travellers in a location with overlapping stay
dates. We've also continued to add to the richness of our profile content by
incorporating users' Instagram photos within their profiles. Additionally, we
have helped our users better signal their interest in socialising through a
new "hang out" status within the chat platform, similar to how other instant
messaging platforms signal online/offline/away statuses. Over the balance of
the year, we will continue to invest in driving more robust profile content,
increased profile visibility and higher profile completion rates across our
user base. Finally, within the chat product itself we identified a need for
customers to be able to create personal group chats on our social network.
This feature was released earlier this year, and we continue to refine it.
Over the balance of the year, we will continue to build upon our chat
functionality, making it easier for customers to discover chat content,
especially in cities with very large numbers of daily chat users.
In parallel to the ongoing work on our social platform, we have continued to
streamline our new hostel sign up and onboarding processes and improved the
LinkUps product for all hostels. The improvements to the sign up and
onboarding processes have resulted in a greater number of hostels entering our
acquisition pipeline, and a significant reduction in the time and effort to
onboard new properties. Collectively this has increased our market coverage
from 73% in H1 2023 to 77% in H1 2024. In relation to Linkups, we have
continued to invest in this differentiator for our hostel partners, with many
smaller features released to make the product easier to use and allowing
hostels to upload and display multiple photos of their events within our
shopping funnel. Collectively, I am delighted to see that this has encouraged
even more hostels to load their event catalogue on to the LinkUps platform;
with more than 84% of social members with a booking (in H1 2024) seeing at
least one LinkUp that they could attend in a trip, and 73% seeing at least
three LinkUps that they could attend in a trip.
More generally, our overarching objective with regards to our hostel partners
is to ensure we deliver them the most profitable customers at market leading
commission rates and provide them with the tools to showcase the very best of
what they offer through our LinkUps and our 'Staircase to Sustainability'
platforms.
To that end, we have expanded our B2B marketing programs to educate and
inform, both new and existing hostel partners, on how to get the most from the
platform, with Hostelworld conferences in Chiang Mai in April this year, and
additional conferences planned in Copenhagen and Mexico City in Autumn. In
addition to these conferences, we have both sponsored and hosted numerous
events around the world over the last six months and delivered multiple
webinars in all major languages and geographies. Finally, we continue to send
our global markets team on market visits to meet our hostel partners in person
and provide detailed guidance on how to use the tools/features of our platform
to maximise their business with us.
Investing in our platform
Over the last 6 months, we have continued to build key services on our
platform with application level "on demand" scaling, a flexible microservices
based architecture, and more opportunities to use off the shelf services from
our cloud services provider. These services include state of the art
artificial intelligence and machine learning optimisation engines, which are
now powering some of our key services. Our current focus is on the migration
of our core inventory availability and pricing services to this new
architecture, which we expect to have completed by year end.
Leveraging our cloud-native architecture has allowed us to make good progress
towards our goal of transitioning our infrastructure from periodic manual
configurations to infrastructure as code. This moves towards eliminating
single points of failure and dramatically improves the scalability and
resilience of our systems, in addition to reducing our hosting cost.
Progressing our ESG agenda
In parallel with helping millions of travellers around the world to find
people to hang out with, we are also committed to building a better world in
everything we do.
As noted over the last two years in letters to shareholders, we continue to
see growth in the importance of sustainability to all stakeholders in the
travel ecosystem. Within the hostelling category, we not only see the majority
of young travellers indicating that a hostel's sustainability credentials play
a role in deciding where to stay, but also actively choosing to stay in
hostels over other accommodation types given their favourable sustainability
credentials. In parallel, we also see our hostel partners investing in more
sustainable operations, coupled with a strong need for a sustainable
management system which both aligns to travel industry standards and allows
them to showcase their sustainability practices. More broadly, across travel
and other categories, we also see increasing demands for companies not only to
do more to address the risks of climate change, but also provide more granular
disclosures around their efforts for the same.
We continued our collaboration with Bureau Veritas to refresh the calculation
of scope 1 and 2 emissions of a representative group of hostels (+24 % YoY)
and compared these with the publicly available emissions data from a
representative group of hotel chains. The second edition of this report was
published in February 2024 and once again indicated that the hostelling
category emits significantly less (-82%) scope 1 and scope 2 emissions
(tCO(2)e) on a per bednight basis compared to a 1-night stay in a typical
hotel chain. Furthermore, the analysis also indicated that the sustainability
gap between hostels and hotels has widened still further YoY, with hostels
reporting a YoY reduction in average emissions whilst the YoY emissions from
the hotels analysed shows an increase.
Our work over the last six months has focused on growing our sustainability
improvement framework for the hostelling industry. As noted in my shareholder
communications from last year, we have made a significant investment to build
this sustainability framework for the hostelling industry in early 2023, with
three specific objectives in mind.
1. The framework had to be anchored in GSTC standards to ensure that
the sustainability classifications it generated were robust, traceable and
comparable against any other business in the travel ecosystem;
2. The framework needed to be appropriate to the needs of smaller
business hostel owners, who had reported that existing travel industry
sustainability measurement systems were either too costly or time consuming to
maintain; and
3. The framework needed to not only provide the means for hostel
partners to showcase their sustainability credentials on our platform, but to
also encourage progression towards even more sustainable operations over time.
After almost a year's worth of work, I am delighted to report that we
delivered on all three objectives in February this year, with the launch of
our 'Staircase to Sustainability' platform. This bespoke sustainability
improvement framework comprises a data collection process built into our
existing hostel facing extranet portal, logic within our platform to determine
a sustainability classification level for each hostel, and the means to
display that sustainability classification level as a "badge" throughout our
website and mobile native apps. Since launching the 'Staircase to
Sustainability' platform, we have seen strong uptake from the hostels on our
platform, with over 1,800 hostels having already completed the sustainability
assessment process and receiving a classification on platform; and a further
250 in the pipeline. Overall, we are very proud to play our leading role in
championing sustainability in the hostel industry, and we are excited to see
the impact of this framework in the years to come.
We also champion our own sustainability. For the past three years we have been
awarded the 'Funding Climate Action' label, in partnership with South Pole
partly due to our elimination and strict control of scope 1 and scope 2
emissions. This year we have partnered with South Pole to perform a detailed
review of our scope 3 emissions and set a target for these emissions, which
goes beyond the thresholds stipulated by the SBTi for our size of Company. We
will report to the market later this year.
In addition to our efforts towards building a more sustainable travel
industry, we also seek to build an inclusive, high-performance culture at
Hostelworld, and ensure we create a positive impact within the communities we
operate in. To that end, over the last six months we have worked closely with
Neurodiversity Ireland, the Dyslexia Association of Ireland and the UK
National Autistic Society to enhance our employee's understanding and support
of Neurodiversity across our business, and thus creating a safe space for open
discussions and inclusivity.
In parallel, we have also strengthened our partnership with Teen-Turn, an
Irish based charity that helps teenage girls from underserved backgrounds gain
experience working in STEM with the aim of leading more women into
tech-focused qualifications and careers. We are delighted to have welcomed
program participants to our business on summer internships.
Summary
Over the first six months of this year, we have continued to demonstrate the
capacity of our social strategy to drive profitable growth in market share,
and we have continued to tightly manage costs. Taken together, this enabled
the Hostelworld team to deliver an 88% increase YoY in adjusted EBITDA, and
fully repay our outstanding debt with AIB, two years ahead of schedule. I'd
therefore like to take this opportunity to thank each and every one of our
employees for their commitment and hard work in delivering these results.
Gary Morrison
Chief Executive Officer
08 August 2024
Financial Review: Caroline Sherry
Highlights
· Net bookings of 3.7m (+9% year on year) driven by record
performances in Asia and Central America
· Net average booking value of €13.60 (-10% year on year) driven
by a greater proportion of bookings from low bed price destinations, record
half-year for Asia and Central America and, a slight increase in the
proportion of solo customers
· Net revenue of €46.4m (H1 2023: €45.8m), +1% year on year
reflecting the drivers above
· Direct marketing as a percentage of generated revenue totalled
45%, down 6% from 51% in H1 2023, driving a net margin growth of +23% year on
year
· Total operating costs of €42.5m, (H1 2023: €47.6m), -11% year
on year driven by a reduction in paid marketing costs
· Operating profit €4.0m (H1 2023: operating loss of €1.7m),
+335% year on year
· Adjusted EBITDA €9.6m (H1 2023: €5.1m), +88% year on year,
with an increase in adjusted EBITDA margin from 11% to 21%
· Adjusted earnings per share 6.0 € cent (H1 2023: adjusted loss
per share 1.9 € cent)
· Closing cash position of €5.0m (31 December 2023: €7.5m) and
a net debt position of €2.6m (31 December 2023: €12.3m), AIB debt facility
and RCF both repaid in full
· Net asset position of €62.6m (31 December 2023: €59.2m)
Revenue and operating profit
Net bookings totalled 3.7m, an increase of 9% compared to H1 2023 (H1 2023:
3.4m) driven by strong growth in Asia and Central America. Net ABV, the
average value paid by a customer for a net booking was €13.60 which
decreased by 10% from H1 2023 (H1 2023: €15.15), driven by a greater
proportion of bookings from low-cost destinations, Asia and Central America,
and a slight increase in the proportion of solo customers.
Featured listing advertising revenue, revenue generated from hostels
advertising on our platform, grew to €0.8m (H1 2023: €0.5m). Reported
revenue (net revenue) for the period was €46.4m (H1 2023: €45.8m) after
considering deferred revenue, ancillary revenue streams, vouchers, refunds and
other accounting adjustments. At 30 June 2024, the Group held €7.1m of
customer deposits on its balance sheet relating to bookings made under the
free cancellation policy (31 December 2023: €3.4m). This balance will
largely unwind in H2 2024.
Operating expenses totalled €42.5m (H1 2023: €47.6m), a decrease of
€5.1m year on year. This decrease was driven by a €3.6m reduction in
direct marketing costs to €22.9m (H1 2023: €26.5m) with direct marketing
costs as a percentage of generated revenue reducing to 45% (H1 2023: 51%).
Excluding direct marketing costs and share option charges, operating expenses
have reduced by 2% year on year driven by a focus on cloud efficiencies and
procurement savings.
Group operating profit amounted to €4.0m (H1 2023: loss of €1.7m), a year
on year increase of €5.7m. Adjusted EBITDA of €9.6m (H1 2023: €5.1m)
represented growth of €4.5m compared to prior year.
Exceptional items
Exceptional items warrant separate disclosure due to their nature or
materiality. The Group incurred no exceptional items in the period. Prior
period exceptional items primarily relate to costs incurred on refinancing of
the HPS facility totalling €3.6m, broken down as €0.7m of early repayment
penalty interest, €0.1m of transaction costs relating to exiting the old
facility and €2.8m accelerated interest costs which relate to transaction
costs capitalised on drawdown of HPS facility in February 2021, which were
expected to be amortised over a five-year period to 2026, but unwound in full
on refinancing.
Share-based payment
The Group incurred a total share-based payment expense of €0.9m (H1 2023:
€0.9m) arising on the issuance of options in accordance with the Group's
Restricted Share Awards ("RSU") and Long-Term Incentive Plans ("LTIP").
On 22 April 2024, 5,245 shares were issued regarding the 2020 SAYE scheme at
€0.01 cent per share, and on 29 April 2024, 1,345,870 shares were issued to
satisfy long term incentive plan awards in relation to LTIP 2021. 100% of the
performance obligations were satisfied.
On 03 May 2024 a new LTIP plan of 1,909,075 awards was struck for executives
and key members of the Hostelworld team. All LTIP and RSU awards are nil cost
options.
Current and deferred tax
The Group corporation tax charge for H1 2024 is €0.1m (H1 2023: €0.1m)
relating to our international operations where tax losses from our Irish
operations cannot be utilised.
Deferred tax charge amount to €1.1m (H1 2023: €0.3m), increase year on
year relating to an unwind of a deferred tax asset recognised in H2 2023. As
at 31 December 2023 the Group recognised a total deferred tax asset of €6.4m
relating primarily to COVID-19 trading losses and interest relief which had no
expiry date and can be carried forward indefinitely. The asset recognised in
the prior year is being unwound to the Income Statement to align to how the
tax losses and interest relief is being utilised.
Earnings per share
Basic earnings per share for the Group was 2.03 € cent (H1 2023: loss per
share: 6.23 € cent). Adjusted earnings per share was 6.0 € cent per share
(H1 2023 loss per share: 1.9 € cent per share) with the return to
profitability, of both metrics, reflective of the business's return to normal
trading post COVID-19.
Finance costs, net debt and financing
At the balance sheet date, the Group had repaid AIB debt facilities, in full
and 2 years ahead of schedule, and had a closing net debt position of €2.6m
(31 December 2023: €12.3m).
In May 2023 the Group repaid the €30m facility drawn down in February 2021,
during COVID-19, with HPS Investment Partners LLC (or subsidiaries or
affiliates thereof) ('HPS'). The Group refinanced with a three-year facility
with AIB. This facility was comprised of a €10m term loan which was repaid
in full in June 2024 (€1.7m in 2023, €8.3m in 2024), a €7.5m revolving
credit facility which was repaid in full in Q1 (€5.5m in 2023, €2.0m in
2024) and an undrawn €2.5m overdraft. At the date of repayment all
security and covenant requirements held by AIB were released. The Group
continues to hold an undrawn €2.5m overdraft facility with AIB.
The Group incurred €0.3m of finance costs (H1 2023: €5.4m), with interest
costs arising on the Group's AIB facility totalling €0.5m, offset by a
credit recognised of €0.2m relating to interest on debt warehoused. Prior
period expense relates to AIB and HPS finance interest costs. The decrease in
costs year on year is attributable to the refinancing completed in May
2023. HPS interest charges, excluding those classified as exceptional which
totalled €3.5m, amounted to €1.6m in H1 2023.
Debt warehoused
The Group availed of the Irish Revenue Commissioners tax warehousing scheme
and warehoused €9.4m by deferring payment of all Irish employer taxes from
February 2021 to March 2022. Total amount warehoused at 30 June 2024 was
€7.6m (31 December 2023: €9.6m). In 2024 the Group wrote-off €0.2m of an
interest charge which related to an announcement by the Revenue Commissioners
on 05 February 2024 that the applicable rate of interest on debt warehoused
would reduce to 0%.
In May 2024 the Group made an initial payment of 15%, in line with the
repayment terms set with the Irish Revenue Commissioners, followed by monthly
payments. These monthly payments will continue over a three-year period to
April 2027. The Group continues to monitor and comply with the appropriate
Revenue guidelines applicable to this scheme.
Development labour
Total development labour intangible asset additions amounted to €2.4m during
H1 2024 (2023: €1.5m). This asset arose due mainly to work completed
delivering our social strategy, particularly LinkUps in H1 2024, modernising
our platforms, and revamping our hostel activations process to streamline the
hostel sign up and onboarding processes. This balance includes internal
development labour of €1.5m (H1 2023: €1.1m) relating to staff costs
capitalised during the period, and other internally generated additions of
€0.9m (H1 2023: €0.4m).
Impact of new accounting standards
New accounting standards and amendments to existing standards implemented in
2024 did not have a material impact on the Group.
Related parties
Related party transactions are disclosed in note 15 to the condensed Group
Financial Statements.
Investor relations
The Group have a proactive approach to investor relations. The release of our
annual and interim results, along with quarterly trading updates, provide
regular information regarding our performance and are accompanied by
presentations, webcasts and conference calls. In May 2024, an AGM was held
providing engagement channels for our shareholders to send advance questions
to the Board, with all details relating to the AGM published on the Company's
website.
We held a number of investor roadshows and attended industry conferences.
These engagements provided an opportunity for the management team to meet
existing and/or potential investors and analysts in a concentrated set of
meetings. This direct feedback and input on the investor community's
perspective of the Company is reflected upon to ensure that our investor
relations communications remain meaningful and effective.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which could have a
material impact on future Group performance and could cause actual results to
differ materially from expected and historical results. The Board considers
the risks and uncertainties described in detail in the 2023 Annual Report and
Financial Statements, published on 02 April 2024, to remain applicable. Any
changes to this evaluation and a description of each is set out within the
Appendix.
Dividend
The Directors do not propose an interim dividend in respect of the six months
ended 30 June 2024 (six months ended 30 June 2023: €nil). Any payment of
cash dividends will be subject to the Group generating adjusted profit after
tax, the Group's cash position, any restrictions in the Group's banking
facilities and subject to compliance with Companies Act 2006 requirements
regarding ensuring sufficiency of distributable reserves at the time of paying
the dividend.
Caroline Sherry
Chief Financial Officer
08 August 2024
Responsibility Statement
Each of the Directors of Hostelworld Group plc (as listed on pages 86 and 87
of the Annual Report and Financial Statements for the year ended 31 December
2023, published on 02 April 2024) confirm that, to the best of each person's
knowledge and belief:
1. The condensed set of Group Financial Statements has been prepared
in accordance with United Kingdom adopted International Accounting Standard 34
'Interim Financial Reporting';
2. The Interim Management Report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year); and
3. The Interim Management Report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board
Gary Morrison
Caroline Sherry
Chief Executive Officer
Chief Financial Officer
08 August 2024
08 August 2024
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
Notes €'000 €'000 €'000
Unaudited Unaudited Audited
Revenue 3 46,435 45,837 93,264
Operating expenses* 4 (42,496) (47,600) (88,431)
Reversal of impairment of trade receivables 13 7 14
Share of results of associate 56 88 137
Operating profit/(loss) 4,008 (1,668) 4,984
Finance income - 53
Finance costs* (304) (5,415) (6,107)
Profit/(loss) before tax 3,704 (7,083) (1,070)
Tax (cost)/credit 6,9 (1,180) (413) 6,206
Profit/(loss) for the period/year attributable to the equity owners of the 2,524 (7,496) 5,136
parent Company
Basic earnings/(loss) per share (euro cent) 2.03 (6.23) 4.21
Diluted earnings/(loss) per share (euro cent) 1.96 (6.23) 4.07
*No current period exceptional costs. Included in operating expenses 30 June
2023 are exceptional cost of €79k, 31 December 2023 €253k, and included in
finance costs are exceptional costs 30 June 2023 of €3,514k, 31 December
2023 €3,526k. Further detail provided in note 5.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
Unaudited Unaudited Audited
Profit/(loss) for the period/year 2,524 (7,496) 5,136
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 4 (25) (24)
Total comprehensive income/(loss) for the period/year attributable to equity 2,528 (7,521) 5,112
owners of the Parent Company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
Notes Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31
December 2023
€'000 €'000 €'000
Unaudited Unaudited Audited
Non-current assets
Intangible assets 8 64,320 69,457 66,533
Property, plant and equipment 735 1,047 818
Deferred tax assets 9 14,456 8,861 15,530
Investment in associate 1,173 1,068 1,117
Cash and cash equivalents - 750 750
80,684 81,183 84,748
Current assets
Trade and other receivables 10 4,894 4,515 3,275
Corporation tax 100 1 91
Cash and cash equivalents 5,029 9,947 6,714
10,023 14,463 10,080
Total assets 90,707 95,646 94,828
Issued capital and reserves attributable to equity owners of the parent
Share capital 11 1,250 1,235 1,236
Share premium 11 14,425 14,328 14,425
Other reserves 3,835 4,235 2,918
Retained earnings 43,123 25,885 40,599
Total equity attributable to equity holders of the parent Company 62,633 45,683 59,178
Non-current liabilities
Non-current debt
Debt warehoused 12 4,903 6,833 6,425
Borrowings 14 - 9,870 4,807
Lease liabilities 33 - 35
4,936 16,703 11,267
Current liabilities 12 2,674 2,653 3,204
Current debt 14 - 7,522 5,340
Debt warehoused
Borrowings
Trade and other payables
Trade payables 13 5,396 5,907 3,314
Deferred revenue 13 7,498 8,883 3,891
Accruals and other payables 13 6,785 7,136 7,859
Lease liabilities 473 826 545
Corporation tax 312 333 230
23,138 33,260 24,383
Total liabilities 28,074 49,963 35,650
Total equity and liabilities 90,707 95,646 94,828
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Share capital Share premium Retained earnings Other reserves Total
Notes €'000 €'000 €'000 €'000 €'000
Balance at 31 December 2022 (audited) 1,175 14,328 30,308 6,432 52,243
Issue of shares 60 - - - 60
Total comprehensive income for the period - - (7,496) (25) (7,521)
Credit to equity for equity settled share-based payments - - - 901 901
Transfer of exercised and expired share-based awards - - 3,073 (3,073) -
Balance at 30 June 2023 (unaudited) 1,235 14,328 25,885 4,235 45,683
Issue of shares 1 97 - - 98
Total comprehensive income for the period - - 12,632 1 12,633
Credit to equity for equity settled share- based payments - - - 764 764
Transfer of exercised and expired share-based awards 2,082 (2,082) -
Balance at 31 December 2023 (audited) 1,236 14,425 40,599 2,918 59,178
11 14 - - - 14
Issue of shares
Total comprehensive income for the period - - 2,524 4 2,528
Credit to equity for equity settled share- based payments - - - 913 913
Balance at 30 June 2024 (unaudited) 1,250 14,425 43,123 3,835 62,633
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
Notes Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
Unaudited Unaudited Audited
Cash flows from operating activities
Profit/(loss) for the period/year 2,524 (7,496) 5,136
Tax 1,180 413 (6,206)
Profit/(loss) before tax 3,704 (7,083) (1,070)
Amortisation and depreciation 4 4,899 5,971 11,774
Share of profit of associate (56) (88) (137)
Net profit on disposal of leases 4 (5) - (3)
Financial income (7) - (53)
Finance expense 311 1,901 2,581
Finance expense (exceptional) 5 - 3,514 3,526
Employee equity settled share-based payment expense 918 939 1,682
Changes in working capital items:
Increase in trade and other payables 13 4,615 9,111 2,392
Increase in trade and other receivables 10 (1,619) (1,269) (28)
12,760 12,996 20,664
Interest paid (including lease interest) (299) (2,210) (3,036)
Interest received 7 - 59
Income tax paid (41) (19) (262)
Net cash generated from operating activities 12,427 10,767 17,425
Cash flows from investing activities
Acquisition / development of intangible assets 8 (2,352) (1,544) (3,986)
Purchases of property, plant and equipment (41) (61) (101)
Net cash used in investing activities (2,393) (1,605) (4,087)
Cash flows from financing activities
Drawdown of borrowings 14 - 17,369 17,369
Transaction costs relating to borrowings 14 - (170) (170)
Repayment of borrowings 14 (10,333) (34,066) (41,233)
Repayment of warehoused debt 12 (1,861) - -
Proceeds received on issue of warrants - 33 33
Proceeds received on issue of shares - - 98
Repayments of obligations under lease liabilities (279) (568) (909)
Net cash used in financing activities (12,473) (17,402) (24,812)
Net decrease in cash and cash equivalents (2,439) (8,240) (11,474)
Cash and cash equivalents at the beginning of the period/year 7,464 18,962 18,962
Effect of foreign exchange rate changes 4 (25) (24)
Cash and cash equivalents at the end of the period/year 5,029 10,697 7,464
NOTES TO THE CONDENSED GROUP INTERIM FINANCIAL STATEMENTS
1. General information
Hostelworld Group plc, hereinafter "the Company", is a public limited company
incorporated in the United Kingdom. The registered office of the Company is
One Chamberlain Square, Birmingham, B3 3AX. The Company is the ultimate parent
company of the Group and its shares are quoted on the Euronext Dublin and
London Stock Exchange.
These condensed group interim financial statements as at, and for the period
from 1 January 2024 to 30 June 2024 (half year/six months) ("interim financial
statements") were approved for issue by the Board of Directors on 08 August
2024.
2. Accounting policies
Basis of preparation
The interim financial statements should be read in conjunction with the
financial statements as at, and for the year ended 31 December 2023, the "2023
annual report". The interim financial statements do not include all of the
information required for a complete set of IFRS financial statements and have
not been audited or reviewed by the Group's auditor. The methods of
computation, presentation and accounting policies adopted in the preparation
of the interim financial statements are consistent with those applied in the
2023 Annual Report other than those noted below. The Group's accounting
policies are set out in note 1 and note 2 to the financial statements in the
2023 Annual Report. The auditors reported on the 2023 annual report and their
report was unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
The condensed set of financial statements included in this half-yearly
financial report has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 'Interim Financial Reporting'.
Going concern
The directors, after making enquiries, have a reasonable expectation that the
Group has adequate resources to continue operating as a going concern for the
foreseeable future.
As 30 June 2024, the Group had repaid its borrowing facilities held with AIB
in full, 31 December 2023 borrowings totalled €10,147k, and held cash on
hand of €5,029k, 31 December 2023: €7,464k. The Group have commenced
repaying its debt warehoused with the Irish Revenue Commissioners and have a
repayment plan in place for three years to April 2027. Amount owed as at 30
June 2024 was €7,577k, 31 December 2023: €9,629k.
The Directors took account of the principal risks and uncertainties identified
and discussed on pages 25 to 27 and believe that the Group is well placed to
manage these risks successfully. The Directors also considered the Group's
cash flow forecasts and current and anticipated trading volumes and are
satisfied that the Group has sufficient resources to continue in operation for
the foreseeable future, a period of not less than 12 months from the date of
signing of this report, and accordingly, they continue to adopt the going
concern basis in preparing the condensed Group financial statements.
Changes in accounting policies
Since the last Annual Report there are a number of amendments to existing
accounting standards that have been adopted. These did not have a material
impact on the condensed Group financial statements. The same accounting
policies and methods of computation are followed compared with the most recent
annual Group financial statements.
Key judgements and sources of estimation uncertainty
In preparing these condensed Group financial statements, the directors have
made judgements in applying the Group's accounting policies and there are key
sources of estimation uncertainty which affect the application of accounting
policies and the reported amounts of assets and liabilities, income and
expense. Actual results may differ from these estimates. In preparing the
condensed Group financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the consolidated
financial statements for the year ended 31 December 2023.
3. Revenue
The Group's major revenue-generating asset class comprises its software and
data processing services. There have been no changes to the basis of
segmentation or the measurement basis for the segment profit or loss.
Reportable segment information is presented as follows:
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Europe 25,089 26,840 56,400
Americas 8,873 8,957 17,311
Asia, Africa and Oceania 12,473 10,040 19,553
Total revenue 46,435 45,837 93,264
For the six-month period ended 30 June 2024, an amount of €3,636k was
deferred to the balance sheet (30 June 2023: €5,613k) which will be
recognised largely in H2 2024. Please see note 13 for deferred revenue
provision at balance sheet date.
Disaggregation of revenue is presented as follows:
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Technology and data processing fees 45,615 45,362 92,079
Ancillary services and advertising revenue 820 475 1,185
Total revenue 46,435 45,837 93,264
In the six months ended 30 June 2024, the Group generated 98% (30 June 2023:
99%) of its revenues from the technology and data processing fees that it
charged to accommodation providers.
4. Operating expenses
Profit/(loss) for the period has been arrived at after charging/ (crediting)
the following operating costs:
Six months ended Six months ended Year ended 31 December 2023
30 June 2024 30 June 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Marketing costs - brand 393 372 676
Marketing costs - direct 22,871 26,456 46,881
Credit card processing fees 1,431 1,452 2,672
Staff costs 8,911 9,583* 19,743
Contractor costs 926 607* 1,268
Platform operating costs 1,588 1,787 3,173
Profit on disposal of lease liability (5) - (3)
Exceptional items - 79 253
Foreign exchange loss/(gain) 60 (106) 156
Other administrative costs 1,601 1,525 2,015
Total administrative expenses 37,776 41,755 76,834
Depreciation of property, plant and equipment 334 526 963
Amortisation of intangible fixed assets 4,565 5,445 10,811
Amortisation of R&D tax credit (179) (126) (177)
Total operating expenses 42,496 47,600 88,431
Total administration expenses decreased by €3,979k to €37,776k (30 June
2023: €41,755k), predominantly due to a decrease in direct marketing costs
of €3,585k to €22,871k (30 June 2023: €26,456k) driven by the growth of
free bookings as a result of the social strategy and efficiency in paid
marketing channels.
Included within administration expenses in the current period is a total
credit of €158k (30 June 2023: €62k) in relation to an R&D tax credit
claimed in respect of projects completed in 2023 and 2022.
*An amount of €156k has been re-presented in the prior 6-month period
between staff costs and contractor costs relating to third party contractors
engaged by the Group for a fairer presentation of the staff costs incurred by
the Group.
5. Exceptional items
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Restructuring costs - operating expenses - 79 253
Restructuring costs - finance costs - 3,514 3,526
Total exceptional items - 3,593 3,779
Prior period/year exceptional items primarily relate to costs incurred on
refinancing of the HPS facility totalling €3.6m, broken down as €0.7m of
early repayment penalty interest, €0.1m of transaction costs relating to
exiting the old facility and €2.8m accelerated interest costs which relate
to transaction costs capitalised on drawdown of HPS facility in February 2021,
which were expected to be amortised over a five-year period to 2026, but
unwound in full on refinancing.
6. Tax
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Tax cost 106 100 150
Deferred tax cost/(credit) 1,074 313 (6,356)
Tax cost/(credit) 1,180 413 (6,206)
The corporation tax charge for the six-month period amounted to €106k (30
June 2023: €100k). Current and prior period charge relate primarily to our
overseas operations where tax losses from our Irish operations cannot be
utilised.
Tax charge represents the best estimate of the average annual effective tax
rate expected for the full year applied to the pre-tax profit or loss of each
group entity during the six-month period. In calculating the expected tax
rate, the Group has taken the forecasted full year 2024 earnings or loss of
each group entity.
7. Earnings/(loss) per share
Basic loss per share is computed by dividing the net loss for the period
available to ordinary shareholders by the weighted average number of ordinary
shares outstanding during the period:
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(Unaudited) (Unaudited) (Audited)
Weighted average number of shares in issue ('000s) 124,102 120,395 121,990
Profit/(loss) for the period (€'000s) 2,524 (7,496) 5,136
Basic earnings/(loss) per share (€ cent) 2.03 (6.23) 4.21
Diluted earnings/(loss) per share is computed by adjusting the weighted
average number of ordinary shares in issue to assume conversion of all
potential dilutive ordinary shares. Share options and share awards are the
Company's only potential dilutive ordinary shares. In the prior 6 month period
ordinary shares potentially issuable from share based payment arrangements are
anti-dilutive due to the loss in the financial period meaning there is no
difference between basic and diluted earnings per share.
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
(Unaudited) (Unaudited) (Audited)
Weighted average number of shares in issue ('000s) 124,102 - 121,990
Share options (€'000s) 4,906 - 4,366
Weighted average number of ordinary shares for the purpose of diluted earnings
per share (€'000s)
129,008 - 126,356
Diluted earnings/(loss) per share (€ cent) 1.96 - 4.07
8. Intangible assets
Additions during the period comprised of capitalised development costs of
€2,351k (31 December 2023: €3,953k) and software additions of €1k (31
December 2023: €33k). There were no disposals.
Capitalised development costs additions during the period are made up of
internal staff costs of €1,448k (FY 2023: €2,934k) and other internally
generated additions of €903k (FY 2023: €1,019k).
Offsetting additions is a total amortisation charge of €4,565k for the
period ended 30 June 2024 (FY 2023: €10,811k).
9. Deferred tax
Intangible assets Property, plant and equipment Losses and interest relief Total
€'000 €'000 €'000 €'000
At 01 January 2023 (audited) 9,060 114 - 9,174
Credit/ (cost) to the income statement 995 (69) 5,430 6,356
At 31 December 2023 (audited) 10,055 45 5,430 15,530
(Cost) / credit to the income statement (815) 1 (260) (1,074)
At 30 June 2024 (unaudited) 9,240 46 5,170 14,456
10. Trade and other receivables
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Amounts falling due within one year
Trade receivables (hostels and payment processor) 1,919 1,191 777
Prepayments and accrued income 1,054 922 1,172
Value added tax due from Revenue Commissioners 1,921 2,402 1,326
4,894 4,515 3,275
11. Share capital
No of shares of €0.01 each (thousands) Share capital €'000 Share premium €'000 Total €'000
At 31 December 2023 123,639 1,236 14,425 15,661
Share issue - SAYE award, 22 April 2024 5 - - -
Share issue - LTIP award, 29 May 2024 1,346 14 - 14
At 30 June 2024 124,990 1,250 14,425 15,675
The Group has one class of ordinary shares which carry no right to fixed
income. The share capital of the Group is represented by the share capital of
the parent company, Hostelworld Group plc. All the Company's shares are
allotted, called up, fully paid and quoted on the London Stock Exchange and
Euronext Dublin.
12. Warehoused payroll taxes
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Opening balance 9,629 9,438 9,438
Repayments made (1,861) - -
Finance costs (unwind)/cost (191) 48 191
Closing balance 7,577 9,486 9,629
The Group has availed of the Irish Revenue tax warehousing scheme and deferred
payment on all Irish employer taxes arising during the period from February
2021 to March 2022. In 2024 the Group wrote-off €191k of an interest charge
which related to an announcement by the Revenue Commissioners on 05 February
2024 that the applicable rate of interest on debt warehoused would reduce to
0%.
The Group made an initial down payment of 15% in line with the repayment terms
set with the Irish Revenue Commissioners in May 2024, followed by monthly
payments in May and June which will continue over a three-year period to April
2027. This repayment plan is reflected in the classification of the liability
between current and non-current.
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Non current liability 4,903 6,833 6,425
Current liability 2,674 2,653 3,204
Total warehoused payroll taxes 7,577 9,486 9,629
13. Trade and other payables
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Current liabilities
Trade payables 5,396 5,907 3,314
Accruals and other payables 6,141 6,546 7,272
Deferred revenue 7,498 8,883 3,891
Payroll taxes (non-warehoused) 644 590 587
19,679 21,926 15,064
At 30 June 2024, €7,073k of revenue was deferred relating to free
cancellation bookings (31 December 2023: €3,438k), €405k relates to hostel
advertising revenue (31 December 2023: €434k) and €20k was deferred
relating to Roamies (31 December 2023: €19k). The majority of this balance
will unwind in H2 2024.
14. Borrowings
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Opening balance 10,147 31,113 31,113
Repayments (HPS) - (34,066) (34,066)
Drawdown (AIB) - 17,369 17,369
Repayments (AIB) (10,333) - (7,167)
Transaction costs capitalised related to borrowings - (170) (170)
Finance costs 472 1,838 2,342
Finance costs - exceptional items - 2,827 2,827
Finance interest paid (286) (1,519) (2,101)
- 17,392 10,147
In 2021 the Group signed a €30.0m five-year term loan facility with certain
investment funds and accounts of HPS Investment Partners LLC. In May 2023 the
facility was repaid in full and refinanced with AIB.
A three-year facility was signed with AIB on 09 May 2023. This facility was
comprised of a €10,000k term loan which was repaid in full in June 2024
(€1,667k in 2023, €8,333k in 2024), a €7,500k revolving credit
facility which was repaid in full in February 2024 (€5,500k in 2023,
€2,000k in 2024) and an undrawn €2,500k overdraft.
At the date of repayment all security and covenant requirements held by AIB
were released. The Group continues to hold an undrawn €2,500k facility with
AIB.
30 June 2024 30 June 2023 31 December 2023
€'000 €'000 €'000
(Unaudited) (Unaudited) (Audited)
Non-current liability - 9,870 4,807
Current liability - 7,522 5,340
Total borrowings - 17,392 10,147
15. Group structure and related party transactions
On 02 May 2024 Ulrik Bengtsson and Paul Duffy were appointed as non-executive
independent directors to the Group.
On 09 February 2024 Hostelworld Management Services Limited was incorporated
with a registered address at Charlemont Exchange, Charlemont St, Dublin, D02
VN88. Its principal activity relates to the provision of management services
to the Group. On 01 April 2024 a permanent establishment of Hostelworld
Management Services Limited was registered in the Netherlands.
There are no other changes to the Group structure or related parties to
highlight in respect of H1 2024.
16. Events after the reporting date
There have been no significant events, outside the ordinary course of
business, affecting the Group since 30 June 2024.
APPENDIX 1: ALTERNATIVE PERFORMANCE MEASURES
The Group uses the following alternative performance measures (APMs) which are
non-IFRS measures to monitor the performance of its operations and of the
Group as a whole. An explanation of each APM and its purpose within the Group
is set out from page 222 within the Annual Report and Financial Statements for
the year ended 31 December 2023, published on 02 April 2024.
Adjusted EBITDA and Adjusted EBITDA Margin
Definition: The Group uses earnings before interest, tax, depreciation and amortisation, excluding exceptional and non-cash items (adjusted EBITDA) and Adjusted EBITDA margin when assessing trading profitability in the business from one period to the next.
Why we use it: Adjusted EBITDA and Adjusted EBITDA margin allows the Group to review baseline profitability. This APM removes items which do not impact underlying trading performance.
Reconciliation between profit/(loss) for the period and adjusted EBITDA / Adjusted EBITDA margin:
30 June 2024 30 June 2023
€'000 €'000
Profit/(loss) for the period 2,524 (7,496)
Tax 1,180 413
Net finance costs 304 1,901
Net finance costs (exceptional) - 3,514
Operating profit/(loss) 4,008 (1,668)
Depreciation 334 526
Amortisation of development costs 1,623 1,524
Amortisation of acquired intangible assets 2,942 3,921
R&D tax credit (179) (126)
Share of result of associate (56) (88)
Exceptional items - 79
Share based payment expense 918 939
Adjusted EBITDA 9,590 5,107
Adjusted EBITDA 9,590 5,107
Net revenue 46,435 45,837
Adjusted EBITDA Margin % 21% 11%
Adjusted profit after tax ("Adjusted PAT")
Definition: Adjusted profit after tax is an APM that the Group uses to calculate the potential dividend when a dividend is being paid, subject to company law requirements regarding distributable profits and the dividend policy within the Group.
Why we use it: It excludes items that the Group cannot control when considering trading profitability which can have large impact on the reported result for the period, and which can make underlying trends difficult to interpret.
Reconciliation between adjusted EBITDA and profit/(loss) for the period:
30 June 2024 30 June 2023
€'000 €'000
Adjusted EBITDA 9,590 5,107
Depreciation (334) (526)
Amortisation of development costs (1,623) (1,524)
Net finance costs (304) (1,901)
Net finance costs (exceptional) - (3,514)
R&D tax credit 179 126
Share of result of associate 56 88
Corporation tax (106) (100)
Adjusted profit/(loss) after tax 7,458 (2,244)
Exceptional items - (79)
Amortisation of acquired intangible assets (2,942) (3,921)
Share based payment expense (918) (939)
Deferred tax (1,074) (313)
Profit/(loss) for the period 2,524 (7,496)
Adjusted earnings per share
Definition: Adjusted EPS is calculated on the weighted average number of
ordinary shares in issue, using the adjusted profit after tax.
Why we use it: It is an additional measure of underlying performance that
excludes exceptional items that are not related to ongoing operational
performance and other certain items which do not impact underlying trading
performance. Adjusted EPS is a performance condition included in the Executive
Director and Senior Management remuneration for the LTIP 2024 plan struck.
30 June 2024 30 June 2023
Adjusted profit/(loss) after tax €'000 7,458 (2,244)
Weighted average shares in issue ('m) 124 120
Adjusted EPS (cent per share) 6.0 (1.9)
Adjusted free cash flow
Definition: Free cash flow adjusted for capital expenditure, acquisition of
intangible assets, net finance costs, net movement in working capital and
excluding the effect of exceptional costs.
Why we use it: It is a measure which shows the cash the Group is
generating/(using) to operate day to day. It excludes certain items which do
not relate to the day-to-day activities of the Group.
30 June 2024 31 December 2023
€'000 €'000
Net decrease in cash and cash equivalents (2,439) (11,474)
Add back
Repayment of borrowings 10,333 41,233
PIK interest paid - 451
Repayment of warehoused debt 1,861 -
Proceeds from borrowings - (17,369)
Transaction costs capitalised - 170
Proceeds on issue of shares - (98)
Proceeds received on issue of warrants - (33)
Exceptional items 154 986
Adjusted free cash flow 9,909 13,866
Adjusted EBITDA 9,590 18,379
Adjusted free cash flow % 103% 75%
Exceptional items paid relate to 2023 exceptional costs paid in 2024.
Reconciliation between adjusted free cash flow and net cash from operating
activities for the period/year:
30 June 2024 31 December 2023
€'000 €'000
Adjusted free cash flow 9,909 13,866
Exceptional items (154) (986)
PIK interest paid - (451)
Lease liability payments 279 909
Acquisition/capitalisation of intangible assets 2,352 3,986
Purchases of property, plant and equipment 41 101
Net cash from operating activities 12,427 17,425
Exceptional items paid relate to 2023 exceptional costs paid in 2024.
Generated revenue, net gross merchandise value ("GMV") and net average booking
value ("ABV")
Definition: Generated revenue is total bookings, less cancellations and
excludes the impact of adjustments the cost of refunds, chargebacks and
voucher provisioning items such as deferred revenue. Net GMV represents the
gross transaction value of bookings on our platform less cancellations. Net
ABV represents the average value paid by a customer for a net booking.
Why we use it: Generated revenue is used in order to exclude from trading
ratios the impact of non-trading items such as deferred revenue. Net GMV
demonstrates the total value of transactions executed through our platform
i.e. 100% of the booking value. Net ABV is an APM which measures the average
value paid by a customer for a booking.
30 June 2024 30 June 2023
€'000 €'000
GMV 379,414 390,850
Cancellations (48,578) (51,300)
Net GMV (100% deposit) 330,836 339,550
Hostelworld commission share:
Gross revenue 57,688 59,267
Cancellations (7,368) (7,769)
Generated revenue 50,320 51,498
Deferred revenue cost (3,636) (5,613)
Other ancillary revenue 131 153
Adjustments to revenue (820) (171)
Advertising income 820 475
Volume incentive rebates (380) (505)
Net revenue 46,435 45,837
30 June 2024 30 June 2023
Generated revenue (€'000) 50,320 51,498
Net bookings (#'000) 3,701 3,398
Net ABV € cent 13.60 15.15
Direct marketing costs as a % of generated revenue
Definition: Direct marketing costs as a percentage of generated revenue is an
APM which looks at the efficiency of marketing spend.
Why we use it: This APM identifies how efficient the Groups marketing channels
are. Generated revenue is utilised to understand the relationship between
bookings/revenue and the direct marketing costs for those. Net revenue
includes items such as deferred revenue and other ancillary streams which do
not impact the amount spent through direct marketing to acquire bookings.
30 June 2024 30 June 2023
€'000 €'000
Direct marketing costs 22,871 26,456
Generated revenue 50,320 51,498
Direct marketing costs as a % of generated revenue 45% 51%
Net margin
Definition: Net margin is an APM which is calculated by deducting direct costs
from revenue. Direct costs are comprised of direct marketing costs and credit
card fees. Further detail is included in note 4.
Why we use it: This APM identifies the trading profit margin, excluding
administration costs / day to day expenses.
30 June 2024 30 June 2023
€'000 €'000
Net revenue 46,435 45,837
Direct costs (24,302) (27,908)
Net margin 22,133 17,929
APPENDIX 2: PRINCIPAL RISKS AND UNCERTAINTIES
The Group's risk register identifies key risks including any emerging risks,
and monitors progress in managing and mitigating these risks. Each risk
identified is subject to an assessment incorporating likelihood of occurrence
and potential impact on the Group. The Group's risk register is subject to
review by the Executive Leadership Team ('ELT') prior to reporting to the
Audit Committee and Board.
The principal risks and uncertainties faced by the Group are reported annually
within the Annual Report and Financial Statements for the year ended 31
December 2023, published on 02 April 2024.
A review was performed of the risk register during H1 2024.
Strategic & external risk Technological, Cyber & Data risk Financial risk Operational & Regulatory risk
Not previously disclosed - Execution of strategy
Increased level of risk - Data security
- Cyber security
Unchanged level of risk - Macroeconomic conditions - Platform evolution and innovation - Taxation - Third party reliance
- Competition - Marketing optimisation - Climate change and sustainability
- Impact of uncontrollable events - Regulation
- Business continuity
- Brand and reputation
- People
Decreased level of risk - Financial
The following changes were made:
1. The risk associated with the Group's execution of strategy has been
added. This reflects the inherent risk in the Group's ambitious growth
targets.
2. The risk profile of Cyber security and Data security have both
increased. The continuous upward momentum in the cost of cybercrime is
demonstrative of the increasing risk in this area. The sophistication of bad
actors continues to grow at rapid pace including their incorporation of new
methods based off advances in artificial intelligence. This poses an increased
level of threat to both system integrity and data security.
3. The profile of our Financial risk has decreased reflecting the
reduced liquidity and interest rate risk upon the Group's repayment of the
balance of the AIB term loan facility in H1 2024.
The other risks included have not materially changed from those reported
within the annual report.
The principal risks and uncertainties which are applicable for the second half
of the year are summarised below.
Material risks
· Macroeconomic conditions
· The Group's financial performance is largely dependent on the
wider availability of, and demand for travel services. The demand for travel
services is influenced by a range of macroeconomic circumstances and their
impact on consumers discretionary spending levels. Economic activity,
employment levels, inflation, interest rates, foreign exchange movements,
access to credit, and geopolitical stability are among the factors that can
impact travel demand.
· Data security
· The security of the confidential business information we generate
when engaging in e-commerce, and the personal data we capture from customers
and employees, is essential to ensure compliance with legislation and
maintaining confidence in our services. As an online platform, we are
constantly exposed to threats in the form of internal and external attacks or
disruption to our systems or those of our third-party suppliers.
· Cyber security
· The Group, like other companies is susceptible to cyberattacks
which could compromise the integrity of our systems and the security of our
data. Cyberattacks by individuals, groups of hackers, and state-sponsored
organisations are increasing in frequency. The tools and techniques used in
such attacks continue to evolve in sophistication.
· Competition
· The risks posed by competition where we compete for supply of
hostel inventory and customers could adversely impact our market share and
future growth of the business. Our competition may have more resources than we
do enabling them to compete more effectively.
· Execution of strategy
· The Group pursues an ambitious growth strategy to deliver
attractive and sustainable returns for shareholders. Delivering this strategy
requires strong leadership, employee engagement, investment, and governance.
The Group operates in an intensely competitive global environment and the risk
of loss in market share to competitors, and less than expected market growth,
among other factors, may impact on the ability of the Group to successfully
execute strategy.
· Marketing optimisation
· Search engines frequently update and change the logic that
determines the placement and display of results. As these algorithms evolve,
our marketing strategy is at risk of falling behind and not remaining
competitive. Our costs to improve or maintain our placement in search results
can increase which directly impacts our results and margins.
· Platform evolution and innovation
The ever-increasing pace of change of new technology, infrastructure and
software offerings change how customers research, purchase and experience
travel. We must stay abreast of technological innovation and change, both in
our product offerings and supporting infrastructure, or risk becoming
irrelevant to the modern customer. We invest a significant amount in our
infrastructure, product, and user experience.
· People
· The Group is dependent on its ability to attract, retain and
develop creative, committed, and skilled employees to achieve its strategic
objectives. The recruitment environment remains intense. Workforce location
decisions may have cost, regulatory, taxation, and other impacts. People risk
remains steady but may increase in future if the Group does not keep pace with
market developments.
· Brand and reputation
· Hostelworld is a world-leading OTA focused on the hostel market.
We rely on the strength of our brand in the market to attract customers to our
platform and to secure bookings. Consumer trust and confidence in our brand is
therefore essential to ongoing revenue stability and growth. Negative
publicity could impact brand perception, consumer loyalty and ultimately
revenues.
· Third party reliance
· We rely on hostel accommodation providers to provide us with our
inventory. Any limitations on such will directly impact our business and
results of operations.
· We rely on a number of key third-party providers within our
technology environment for our cloud storage and databases. Any interruption
in service from any of these providers may lead to a loss in revenue, loss in
site and app functionality, increased input from customer services and
engineer time, and ultimately if we experience multiple failures, we risk
reputational and brand damage.
· The Group relies on payment processors and payment card schemes
to execute certain components of the payments process. There is a risk that
the Group may not maintain its relationships with these third parties on
favorable terms or that the transaction fees imposed by these providers are
increased.
· Climate change and sustainability
· Climate change and sustainability continue to be areas of focus
for the Group and are further evolving as areas of heightened concern with
consumers and stakeholders. There is a request for more accountability from
our customers, employees, and other stakeholders as to the Group's actions to
limit its direct and indirect impact on climate change.
· Impact of uncontrollable events
· The threat of a global pandemic (similar to COVID-19), terrorist
attacks in key cities and aircrafts in flight, geopolitical conflicts, climate
change, natural disasters or other adverse events outside of the control of
the Group may reduce demand for or prevent the ability to travel to affected
regions. This may result in risk to the health of our employees and customers
and consequential negative impact on economic activity.
· Regulation
· The Group's business is global and highly regulated, and is
exposed to issues such as competition, licensing of local accommodation and
experiences, consumer compliance, taxation, intellectual property, trademarks,
data protection and information security, and commercial disputes in multiple
jurisdictions. Regulatory and legal requirements, and uncertainties around
these issues could subject the Group to business constraints, increased
regulatory and compliance costs, and other complexities which may otherwise
harm our business.
· Business continuity
· Failure in our IT systems or third-party hosted services on which
we rely could disrupt availability of our booking engines and payments
platforms, or availability of administrative services.
· Financial risk
· The Group's activities expose it to a variety of financial risks;
market risk (particularly exchange rates), credit risk, and liquidity risk.
The Group proactively manages financial risk by seeking to minimise potential
adverse effects on its financial performance.
· Taxation
· Due to the global nature of our business, tax authorities in
other jurisdictions may consider certain taxes as due in their jurisdiction.
If those tax authorities take a different view than the Group as to the basis
on which the Group is subject to tax, it could result in the Group having to
account for tax that it currently does not collect or pay. Additional employee
locations in a remote working environment also could give rise to potential
tax implications.
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