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Hostelworld Group PLC   -  HSW   

Half-year Report

Released 07:00 22-Aug-2017

RNS Number : 5924O
Hostelworld Group PLC
22 August 2017
 

Hostelworld Group plc

("Hostelworld" or the "Group")

 

2017 Interim Results Announcement

Strong first half and on track to meet Full Year expectations

 

 

 

Operational Highlights 

 

·    Strong H1 2017 performance

·    Group bookings growth of 11% (to 3.9m bookings) with core Hostelworld brand up 21% during the period

·    Continued delivery on marketing efficiencies:

Bookings from not-paid-for channels 62% of total (H1 2016: 61%)

Marketing investment represented 41% of Net Revenue (H1 2016: 43%)

·    50% of bookings coming from mobile devices, up from 43% in H1 2016

·    Strong Asia performance - inbound overall bookings growth of 18% (H1 2016: 10%)

·    New technology development centre launched in Portugal to enhance capability

 

 

Financial Highlights

 

·    Group Net Revenue increased by 16% to €46.6m (H1 2016: €40.2M); 17% increase at constant currency, benefiting from an increase in Average Booking Value of 3% (H1 2016: decrease of 6%);

·    Adjusted EBITDA increased by 27% to €12.9m (H1 2016: €10.1m) adjusted EBITDA up 30% at constant currency

·    Adjusted EBITDA Margin increased to 28% (H1 2016: 25%)

·    Group Adjusted Profit after Tax of €10.3m (H1 2016: €7.7m)

·    Adjusted pro-forma Earnings Per Share of €0.11 (H1 2016: €0.08)

·    Underlying adjusted free cash conversion of 101% (H1 2016: 107%)

·    Cash balances of €17.7m at 30 June 2017, after payment of  2016 Final and Supplementary dividends in June 2017

·    Interim dividend of 5.1 euro cents per share (H1 2016: 4.8 euro cents), in line with stated dividend policy

·    On track to meet the Board's expectations for the full year

 

 

Feargal Mooney, Chief Executive Officer, commented:

 

"The Group has returned to growth, reflecting the strength of the core Hostelworld brand, which now represents 92% of total Group bookings and the success of our continuing product, marketing and operational initiatives. The strong trading seen in the second half of 2016 continued throughout the early months of 2017, with growth in bookings across all geographies.

 

The level of growth in H1 2017 was somewhat flattered by a weak comparative in H1 2016, and growth rates in the June to August period have been more modest. Our expectations for the full year outcome are nonetheless unchanged, and we have declared a 6% increase in the interim dividend.

 

We remain confident in our long term strategy and execution and will continue to manage the risks to our business posed by the impact of terrorist attacks on travel demand alongside general macro-economic uncertainties and currency fluctuations."

 

ends

 

 

For further information please contact:

 

Hostelworld Group plc                                                         today: +44 (0) 20 7067 0000

Feargal Mooney, Chief Executive Officer                                  thereafter: +353 (0) 1 498 0700                        

Weber Shandwick                                                                 +44 (0) 20 7067 0000

Nick Oborne/ Tom Jenkins

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

INTERIM MANAGEMENT REPORT

 

 

 

To the members of Hostelworld Group plc

 

Cautionary statement

This Interim Management Report (IMR) has been prepared solely 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.

 

Strategic Update

 

The Group continues to make good progress in implementing our key strategic objectives. In our most recent annual report, we reported the Group's key objectives for 2017 which were:

(1) to invest in our Core Products competitiveness to ensure our platforms are the preferred choice for the growing number of young independent travellers worldwide to visit when planning their trips;

(2) to Differentiate our offering delivering features unique to the hostel product and enabling our customers to have a great experience throughout the research, booking and travel period;

(3) to establish a vibrant Community that encourages engagement with our platform, with other travellers and with hostels;

(4) to drive Revenue per Customer by increasing loyalty and providing an enhanced and more personalised service to travellers.

 

Financial Review

 

Key Performance Indicators

 

 

 

H1 '17

H1 '16

% change

Reported

% Change Constant Currency

 

 

Financial Year 2016

Bookings - Hostelworld brand (m)

3.6

3.0

21%

 

6.2

Bookings - supporting brands and channels (m)

0.3

0.5

(43%)

 

0.9

Total Booking Volume (m)

3.9

3.5

11%

 

7.1

 

 

 

 

 

 

Average Booking Value ("ABV") (gross) (€)

12.2

11.8

3%

4%

11.6

Net Revenue (€m)

46.6

40.2

16%

17%

80.5

Adjusted EBITDA

12.9

10.1

27%

30%

23.9

 

Group bookings increased by 11% in the six months ended 30 June  2017 (2016: 4% decline) driven by strong booking performance in our core Hostelworld brand in the period which grew 21% (2016: 16%). The year on year comparative was partially due to a weaker six months ended 30 June 2016 as a result of softer demand due to terrorist attacks and other geopolitical events in European cities during that period.

 

The Group's flagship brand, Hostelworld now represents 92% of Group bookings as compared to 85% in the six months ended 30 June 2016. Reflecting our deliberate focus on the flagship brand, bookings of the Group's supporting brands were 43% lower for the six month period from January to June (2016: -51%). The associated Total Transaction Values ("TTV") in the six months ended 30 June 2017 were €316m (2016: €284m).

 

While the Group operates in one segment and is managed as such, business performance is reviewed on a bookings volume and average booking value basis for both the Hostelworld brand as well as all supporting brands (including Hostelbookers, Hostels.com, booking engines and affiliates).

 

Group net revenue increased by 16% for the six month period from January to June 2017, which corresponds to a 17% increase on a constant currency basis.

 

Average booking value has been 3.5% higher in the current period, reflecting an increase in the underlying base price per bed and the continuing positive contribution from our pricing programmes, including Elevate. The gains were partially offset by the continued decline in the number of bed nights per booking as bookings made from mobile devices continue to grow, representing 50% of total bookings in the six months ended 30 June 2017 (2016: 43%), Mobile customers however, transact more frequently than other customers. Other offsetting factors included the evolving geographic mix and the greater percentage of bookings into hostel dorm beds. Exchange rate movements did not have an adverse impact on average booking value in the six months ended 30 June 2017, unlike in the same period in 2016.

 

The Group continues to maintain an efficient marketing mix with marketing investment as a percentage of net revenue of 41% in the six months ended 30 June 2017 as compared to 43% in the same period in 2016. Bookings in not-paid-for channels increased to 62% of total bookings (2016: 61%).

 

Adjusted EBITDA

 

The Group uses Earnings before Interest, Tax, Depreciation and Amortisation, excluding exceptional items (Adjusted EBITDA) as a key performance indicator when measuring and evaluating the performance of the business from one period to the next, and against budget. Exceptional items are non-recurring and by their nature and size can make interpretation of the underlying performance in the business more difficult. We believe this non-GAAP measure more accurately reflects the key drivers of profitability for the Group and removes those items which do not impact underlying trading performance, thereby making comparisons more meaningful and useful for stakeholders of the business.

 

Group Adjusted EBITDA of €12.9m has increased by €2.8m (27%) relative to the six months ended 30 June 2016 and by 30% on a constant currency basis. Adjusted EBITDA as a percentage of net revenue increased from 25% to 28%. Marketing spend per booking is broadly stable at €4.97 (2016: €4.93).

 

Administrative expenses increased by €3.8m to €34.2m in the six months ended 30 June 2017. €2.2m of this increase was attributable to the increase in marketing expenses from €17.2m to €19.4m in the six months ended 30 June 2017, which contributed to revenue growth of 16%.

 

Gross staff costs (excluding share based payment expense) increased from €8.6m to €9.4m. Average headcount decreased from 249 in the six months ended 30 June 2016 to 240 in the six months ended 30 June 2017. Excluding the impact of the level of development labour capitalised in accordance with IFRS standards (2017: €0.4m; 2016: €1.2m), share based payment expense and the impact of a bonus accrual in H1 2017, staff costs decreased by 2% on a constant currency basis.

 

Other administrative expenses incurred between January and June 2017 are broadly stable to prior year.

 

 

Reconciliation between Operating Profit and Adjusted EBITDA:

 

(€m)

 

H1 17

H1 16

Financial Year 2016

Operating profit/(loss)

5.2

(5.5)

0.2

Depreciation

0.5

0.5

0.9

Amortisation of development costs

1.6

1.6

3.2

Amortisation of acquired intangible assets

5.2

4.9

10.6

Impairment charges

-

8.2

8.2

Exceptional items

-

0.3

0.4

Share option charge

0.4

0.1

0.4

Adjusted EBITDA

12.9

10.1

23.9

 

Exceptional items for the six months to 30 June 2017 were €nil (2016: €0.3m).   The share option charge for the period reflects the share based payment charge arising on the issuance of options in April 2016 and March 2017 in accordance with the Group's Long Term Incentive Plan (LTIP). The total options in issue at 30 June 2017 are 1,756,747 nil cost options. The impairment charge in 2016 of €8.2m was a result of a review of trading performance of the Hostelbookers brand. At 30 June 2017, there are no indications that the Hostelbookers intellectual property assets are carried at an amount higher than their recoverable amount.

 

Adjusted Profit after Taxation

 

 €m

 

H1 17

H1 16

Financial Year 2016

Adjusted EBITDA

12.9

10.1

23.9

Depreciation

(0.5)

(0.5)

(0.9)

Amortisation of development costs

(1.6)

(1.6)

(3.2)

Corporation tax

(0.5)

(0.3)

(0.5)

Adjusted Profit after Taxation

10.3

7.7

19.4

Exceptional costs

(0.0)

(0.3)

(0.4)

Amortisation of acquired intangibles

(5.2)

(4.9)

(10.6)

Net financial costs

-

-

(0.1)

Share option charge

(0.4)

(0.1)

(0.4)

Impairment charges

-

(8.2)

(8.2)

Deferred taxation

(0.3)

1.1

1.1

Profit/(loss) for the period

4.4

(4.7)

0.8

 

Adjusted Profit after Taxation is a non-GAAP metric that the Group uses to calculate the dividend payout for the year, subject to Company Law requirements regarding distributable profits. It excludes exceptional costs, amortisation of acquired domain and technology intangibles, impairment charges, net finance costs, share option charge and deferred taxation which can have large impacts on the reported result for the year, and which can make underlying trends difficult to interpret.

 

Adjusted Profit after Taxation increased from €7.7m to €10.3m due to the strong trading performance in the period, and the weaker comparative in the six months ended 30 June 2016.

 

The Group's corporation tax charge of €0.5m is an effective tax rate (corporation tax as a percentage of Adjusted EBITDA) of 4.0%. The corresponding charge in the six months ended 30 June 2016 was 3.4%.

 

The Groups' deferred tax charge for the six months ended 30 June 2017 of €0.3m (30 June 2016: credit of €1.1m) relates to the amortisation of deferred tax assets reduced by the amortisation of deferred tax liabilities. The credit of €1.1m in the six month period ended 30 June 2016 mainly relates to the reduction in carrying value of the deferred tax liability arising from the impairment of the Hostelbookers intellectual property assets.

 

Based on the weighted average shares in issue during the six months ended 30 June 2017, Earnings per Share ("EPS") as set out in note 6 to the condensed financial statements is 4.60 cents per share (30 June 2016: loss of 4.93 cents per share). Using Adjusted Profit after Taxation as the measure of earnings would result in an adjusted EPS of 11 cents per share (30 June 2016: 8 cents per share). 

 

Foreign exchange risk

 

The Group's primary operating currency is the euro. The Group also has significant sterling and US dollar cash flows. Restated on a constant currency basis, revenues have increased by 17% (€6.9m) and Adjusted EBITDA has increased by 30% (€3.0m) for the six months ended 30 June 2017. Constant currency is calculated by applying the average exchange rates for the six months period ended 30 June 2017 to the financial results for the six months period ended 30 June 2016 on a month by month basis. The Group's principal policy is to match cash flows of like currencies, with excess sterling and US dollar revenues being settled into euros on a timely basis.

 

Dividend

 

The Group is committed to an attractive dividend policy, and is pleased to declare an interim dividend of €4.9m or 5.1 cent per share (2016: 4.8 cent per share) which is in line with the Group's stated dividend policy.  This dividend has not been included as a liability in these condensed financial statements.  The interim dividend is payable on 22 September 2017 to all shareholders on the Register of Members on 1 September 2017.

 

In June 2017, the Group paid a final dividend of €9.9m or €0.104 per share in respect of the financial year ending 31 December 2016. Additionally the Group paid a discretionary, non-recurring supplementary dividend of €10.0m or €0.105 per share. After payment of the recommended interim dividend for 2017, the Group will have returned €32.1m to shareholders in dividends in the two years since the initial listing in November 2015.

 

Adjusted Free Cashflow conversion

 

 €m

 

H1 17

H1 16

2016

Adjusted EBITDA

12.9

10.1

23.9

Capitalised development spend

(0.4)

(1.2)

(2.4)

Capital expenditure

(0.8)

(0.6)

(0.7)

Interest and tax paid

(0.3)

(0.1)

(0.3)

Net movement in working capital (1)

1.6

2.6

1.0

Adjusted Free Cashflow

13.0

10.8

21.5

Adjusted FCF conversion

101%

107%

90%

(1) changes in working capital excludes the effects of exceptional costs

 

The Group has a business model which produces strong free cash flow conversion, with a negative working capital cycle on operational cash flows. The movement in working capital in the first six months of 2017 was at a lower level than in the same period in 2016, which resulted in a lower adjusted free cash flow conversion of 101% (30 June 2016: 107%). The lower level of capitalised development expenditure increased the free cash flow conversion percentage above that achieved in full year 2016.

 

Total Cash at 30 June 2017 was €17.7m (30 June 2016: €18.7m), of which €nil is restricted (30 June 2016: €2.2m held in a restricted account as part of a guarantee related to the lease of the Dublin office).

 

There were no borrowings at 30 June 2017 (30 June 2016: €nil).

 

Related party transactions

 

Related party transactions are disclosed in note 15 to the condensed financial statements.  There have been no changes in the related party transactions described in the last annual report which would have had a material effect on the financial position or performance of the Group.    

 

Risks and uncertainties

 

The principal risks and uncertainties facing the Group remain those disclosed in the annual report for the year ended 31 December 2016.  While the nature of the principal risks and uncertainties faced by the Group remain unchanged on the whole, external geopolitical factors have changed the Group's risk profile in certain areas. Amongst the most significant of these factors are, the increased incidence of terrorism and the proposed exit of the United Kingdom from membership of the European Union (known as "Brexit"). In the six months ended 30 June 2017, the UK as a destination represented 7% of total group bookings and 14% of group bookings were from UK nationals.

 

The Group will continue to manage the risks to the business posed by the impact of terrorist attacks on travel demand and by macro-economic uncertainties and currency fluctuations, particularly in USD and GBP, surrounding geopolitical events.

 

A detailed explanation of the risks and how the Group seeks to mitigate the risks, can be found on pages 32 to 37 of the annual report which is available at www.hostelworldgroup.com.

 

Going concern

 

As stated in note 2 to the condensed financial statements, the directors 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 this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

 

Board Update

 

Richard Segal has informed the Board of his intention to resign as Non-Executive Chairman, a position he has held for 6 years. Richard has led the Group through a period of strong change and growth, as both a private and listed business, and the Board expresses its deep gratitude for his guidance and contribution during that time. Richard will be succeeded by Michael Cawley, currently Senior Independent Non-Executive Director, during 2017 at a date yet to be confirmed.    

 

We have also announced today the appointment, effective 1 October 2017, of Carl Shepherd as a Non-Executive Director. Carl, a co-founder of Homeaway Inc., brings an immense wealth of listed company experience in the on-line travel industry, including in North America and Asia, and his skills and knowledge will be of great benefit as we continue to take the Group forward in our international markets.

 

The search is underway for a further Non-Executive Director to complement the skills and experience of the Board.

 

Future outlook

 

The Group has returned to growth, reflecting the strength of the core Hostelworld brand, which now represents 92% of total Group bookings and the success of our continuing product, marketing and operational initiatives. The strong trading seen in the second half of 2016 continued throughout the early months of 2017, with growth in bookings across all geographies.

 

The level of growth in H1 2017 was somewhat flattered by a weak comparative in H1 2016, growth rates in the June to August period have been more modest. Our expectations for the full year outcome are nonetheless unchanged, and we have declared a 6% increase in the interim dividend.   

 

Future outlook (continued)

 

We remain confident in our long term strategy and execution and will continue to manage the risks to our business posed by the impact of terrorist attacks on travel demand alongside the general macro-economic uncertainties and currency fluctuations.

 

 

By order of the board

 

 

 

__________________                                                            ______________                                            

Feargal Mooney                                                                    Mari Hurley

 

Chief Executive Officer                                                          Chief Financial Officer

 

Date:                                                                                   Date:

 

 

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

 

 

 

Six months ended

30 June 2017

 

Six months

ended

30 June

2016

 

Year

ended 31

December 2016

 

 

€'000

 

€'000

 

€'000

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

 

Revenue

3

46,649

 

40,168

 

80,514

Administrative expenses

4

(34,183)

 

(30,437)

 

(57,397)

Depreciation and amortisation expenses

4

(7,250)

 

            (7,000)

 

(14,731)

Impairment losses

4

-

 

(8,199)

 

(8,199)

 

 

 

 

 

 

 

Operating profit/(loss)

 

5,216

 

(5,468)

 

 

 

187

 

 

 

 

 

 

 

Financial income

 

4

 

2

 

5

Financial costs

 

(43)

 

(36)

 

(59)

 

 

 

 

 

 

 

Profit/(loss) before taxation

 

5,177

 

(5,502)

 

133

 

 

 

 

 

 

 

Taxation (charge)/credit

5

(784)

 

795

 

651

 

 

 

 

 

 

 

Profit/(loss) for the period attributable to the equity owners of the parent company

 

 

 

4,393

 

 

(4,707)

 

 

         784

Earnings per share:

 

 

 

 

 

 

 

Basic earnings/(loss) per share (cents)

6

4.60

 

(4.93)

 

0.82

Diluted earnings/(loss) per share (cents)

6

4.58

 

(4.93)

 

0.82

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

 

 

Six months ended 30 June 2017

 

Six months ended 30 June 2016

 

Year ended

31 December 2016

 

 

€'000

 

€'000

 

€'000

 

(Unaudited)

 

(Unaudited)

 

(Audited)

 

 

 

 

 

 

Profit/(loss) for the period

4,393

 

(4,707)

 

784

Items that may be reclassified subsequently to

profit or loss:

 

 

 

 

 

Exchange differences on translation of foreign operations

3

 

(562)

 

(680)

 

 

 

 

 

 

Total comprehensive income/(expense) for the period attributable to equity owners of the parent company

4,396

 

(5,269)

 

104

             

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2017

 

 

 

 

 

30 June

2017

 

30 June

 2016

 

31 December 2016

 

 

€'000

 

€'000

 

€'000

 

Notes

(Unaudited)

 

(Unaudited)

 

(Audited)

Non-current assets

 

 

 

 

 

Intangible assets

7

133,257

 

145,463

 

139,619

Property, plant and equipment

8

3,344

 

3,552

 

Deferred tax assets

 

217

 

919

 

 

 

 

 

 

 

 

 

 

136,818

 

149,934

 

143,336

Current assets

 

 

 

 

 

Trade and other receivables

9

3,970

 

3,215

 

2,627

Cash and cash equivalents

10

17,662

 

18,652

 

 

 

 

 

 

 

 

 

 

21,632

 

21,867

 

27,259

Total assets

 

158,450

 

171,801

 

170,595

 

 

 

 

 

 

Issued capital and reserves attributable to equity owners of  the parent

 

 

 

 

 

 

Share capital

11

956

 

956

 

956

Other reserves

 

3,628

 

3,628

 

3,628

Foreign currency translation reserve

 

18

 

133

 

Share based payment reserve

 

735

 

117

 

Retained earnings

 

139,405

 

154,083

 

 

 

 

 

 

 

 

Total equity attributable to equity holders of the parent company

 

144,742

 

158,917

 

159,936

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

Deferred tax liabilities

 

592

 

1,003

 

764

 

 

 

 

 

 

 

 

 

592

 

1,003

 

764

Current liabilities

 

 

 

 

 

 

Trade and other payables

12

12,651

 

11,547

 

Corporation tax

 

465

 

334

 

226

 

 

 

 

 

 

 

 

 

13,116

 

11,881

 

9,895

Total liabilities

 

13,708

 

12,884

 

10,659

Total equity and liabilities

 

158,450

 

171,801

 

170,595

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

 

 

Share capital

Retained earnings

Other reserves

Foreign currency translation

reserve

Share Based Payment Reserve

Total

 

€'000

€'000

€'000

€'000

€'000

€'000

 

 

 

 

 

 

 

As at 1 January 2016

956

161,418

3,628

695

-

166,697

 

 

 

 

 

 

 

Dividends

-

(2,628)

-

-

-

(2,628)

Credit to equity for equity settled share based payments

-

-

-

-

117

117

Total comprehensive (expense) for the period

-

(4,707)

-

(562)

-

(5,269)

 

 

 

 

 

 

 

As at 30 June 2016 (unaudited)

956

154,083

3,628

133

117

158,917

 

 

 

 

 

 

 

Dividends

-

(4,588)

-

-

-

(4,588)

Credit to equity for equity settled share based payments

-

-

-

-

234

234

Total comprehensive income/ (expense) for the period

-

5,491

-

(118)

-

5,373

 

 

 

 

 

 

 

As at 31 December 2016 (audited)

956

154,986

3,628

15

351

159,936

 

 

 

 

 

 

 

Dividends

-

(19,974)

-

-

-

(19,974)

Credit to equity for equity settled share based payments

-

-

-

-

384

384

Total comprehensive income for the period

-

4,393

-

3

-

4,396

 

 

 

 

 

 

 

As at 30 June 2017 (unaudited)

956

139,405

3,628

18

735

144,742

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

 

 

 

Six months

ended

30 June 2017

 

Six months ended

30 June 2016

 

Year ended

31 December

2016

 

 

€'000

 

€'000

 

€'000

 

 

(Unaudited)

 

(Unaudited)

 

(Audited)

Cash flows from operating activities

 

 

 

 

 

 

 

Profit/(loss) before tax

 

5,177

 

(5,502)

 

133

Depreciation of property, plant and equipment

 

483

 

480

 

886

 

Amortisation of intangible assets

 

6,767

 

6,520

 

13,845

 

Impairment of intangible assets

 

-

 

8,199

 

8,199

 

Loss on disposal of property, plant and equipment

 

-

 

-

 

19

 

Financial income

 

(4)

 

(2)

 

(5)

 

Financial expense

 

43

 

36

 

59

 

Employee equity settled share based payment expense

 

398

 

121

 

362

 

Changes in working capital items:

 

 

 

 

 

 

 

Increase/(decrease) in trade and other payables

 

2,969

 

292

 

(1,553)

 

(Increase) in trade and other receivables

 

(1,343)

 

(472)

 

(24)

 

Cash generated from operations

 

14,490

 

9,672

 

21,921

 

Interest paid

 

(43)

 

(36)

 

(59)

 

Interest received

 

4

 

2

 

5

 

Income tax (paid)

 

(275)

 

(49)

 

(280)

 

Net cash from operating activities

 

14,176

 

9,589

 

21,587

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Acquisition/capitalisation of intangible assets

 

(405)

 

(1,210)

 

(2,500)

 

Purchases of property, plant and equipment

 

(770)

 

(600)

 

(746)

 

Net cash used in investing activities

 

(1,175)

 

(1,810)

 

(3,246)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Dividends

 

(19,974)

 

(2,628)

 

(7,216)

 

Net cash used in financing activities

 

(19,974)

 

(2,628)

 

(7,216)

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(6,973)

 

5,151

 

11,125

 

Cash and cash equivalents at the beginning of the period

 

24,632

 

13,620

 

13,620

 

Effect of exchange rate changes on cash and cash equivalents

 

3

 

(119)

 

(113)

 

Cash and cash equivalents at the end of the period

 

17,662

 

18,652

 

24,632

 

Restricted cash balances

 

-

 

(2,225)

 

-

 

Unrestricted cash balances at the end of the period

 

17,662

 

16,427

 

24,632

                 

 

 

 

 

 

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2017

 

 

1.         GENERAL INFORMATION

 

Hostelworld Group plc, hereinafter "the Company", is a public limited company incorporated in the United Kingdom on the 9 October 2015.  The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2017 comprise the Company and its subsidiaries (together referred to as "the Group").  The condensed consolidated interim financial statements for the period ended 30 June 2017 are unaudited.

 

The information for the year ended 31 December 2016 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts 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.

 

These interim financial statements were authorised for issue by the Board of Directors of Hostelworld Group plc on 21 August 2017.

 

 

2.         ACCOUNTING POLICIES

 

Basis of preparation

 

The annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of consolidated financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. 

 

Going concern

 

The directors 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 this report.  Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements. 

 

Accounting policies

 

The accounting policies applied by the Group in the consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2016.

 

There are no new or amended IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on 1 January 2017 that had a material impact on the Group.

 

The Group is currently assessing the impact of other standards and interpretations that are effective for the first time for the financial year beginning on 1 January 2018. It is not expected that IFRS 9 - Financial Instruments will have a material impact on the measurement of financial instruments. Based on the Group's existing business model, the Directors do not anticipate that the implementation of IFRS 15 - Revenue from Contracts with Customers will have a material impact on how revenue is recognised.

 

Accounting estimates and judgements

 

In preparing these interim consolidated financial statements, the directors have made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The significant judgements made by the directors in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2016.

 

 

3.         REVENUE & SEGMENTAL ANALYSIS

 

The Group is managed as a single business unit which provides software and data processing services that facilitate hostel, hotel and other accommodation bookings worldwide, including ancillary on-line advertising revenue.

 

The directors determine and present operating segments based on the information that is provided internally to the CEO, who is the Company's Chief Operating Decision Maker (CODM). When making resource allocation decisions, the CODM evaluates booking numbers and average booking value.  The objective in making resource allocation decisions is to maximise consolidated financial results.

 

All segmental revenue is derived wholly from external customers and, as the Group has a single reportable segment, inter-segment revenue is zero.  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 2017

Six months ended

30 June 2016

Year

ended 31

December 2016

 

€'000

€'000

€'000

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

Europe

28,606

25,409

49,497

Americas

8,503

7,218

14,938

Asia, Africa and Oceania

9,540

7,541

16,079

 

 

 

 

Total revenue

46,649

40,168

80,514

 

 

 

4.         OPERATING EXPENSES

 

Profit/(loss) for the period has been arrived at after charging the following operating costs:

 

 

 

 

Six months ended

30 June 2017

 

Six months ended

30 June 2016

Year

ended 31 December 2016

 

 

 

€'000

 

€'000

€'000

 

 

 

(Unaudited)

 

(Unaudited)

(Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing expenses

 

 

19,353

 

17,211

32,842

Credit card processing fees

 

 

1,105

 

1,055

1,931

Staff costs

 

 

9,484

 

7,502

14,359

Loss on disposal of property, plant and equipment

 

 

-

 

-

19

FX(gain)/loss

 

 

(74)

 

(262)

(214)

Exceptional Items

 

 

-

 

271

449

Other administrative costs

 

 

4,315

 

4,660

8,011

 

 

 

 

 

 

 

Total administrative expenses

 

 

34,183

 

30,437

57,397

 

 

 

 

 

 

 

Depreciation of tangible fixed assets

 

 

483

 

480

886

Amortisation of intangible fixed assets

 

 

6,767

 

6,520

13,845

Impairment of intangible assets

 

 

-

 

8,199

8,199

 

 

 

 

 

 

 

Total operating expenses

 

 

41,433

 

45,636

80,327

 

 

 

5.         TAXATION

 

The corporation tax charge for the six month period is €514k (30 June 2016: €347k), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six month period.

 

The deferred tax charge for the six month period of €270k (30 June 2016: credit of €1,142k) relates to the amortisation of deferred tax assets offset by the reduction in deferred tax liabilities.

 

The credit of €1,142k in the six month period 30 June 2016 relates to the reduction in carrying value of the deferred tax liability arising from the impairment charge (Note 7), offset by the amortisation of deferred tax assets.

           

 

6.         EARNINGS PER SHARE

 

The calculation of the basic and diluted earnings per share is based on the following:

 

 

Six months ended

30 June 2017

 

Six months ended

30 June 2016

 

Year ended 31 December 2016

 

 

Earnings:

 

(Unaudited)

 

(Unaudited)

 

(Audited)

Earnings for the purposes of basic earnings

per share (€'000s)

4,393

 

(4,707)

 

784

 

 

 

 

 

 

Earnings for the purposes of diluted earnings

per share (€'000s)

4,393

 

(4,707)

 

784

 

 

Six months

ended

30 June 2017

 

Six months

ended

30 June 2016

 

Year ended 31 December 2016

 

 

Number of Shares:

 

(Unaudited)

 

(Unaudited)

 

(Audited)

Weighted average number of ordinary shares for

the purposes of basic earnings per share ('000s)

95,571

 

95,571

 

95,571

 

 

 

 

 

 

Effect of dilutive potential ordinary shares:

 

 

 

 

 

 

Share options ('000s)

400

 

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for

the purposes of diluted earnings per share ('000s)

95,971

 

95,571

 

95,571

 

 

 

 

 

 

 

Earnings per Share:

 

 

 

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share (cents)

4.60

 

(4.93)

 

0.82

 

 

 

 

 

 

Diluted earnings/(loss) per share (cents)

4.58

 

(4.93)

 

0.82

 

 

 

 

 

 

 

 

 

7.         INTANGIBLE ASSETS

 

The table below shows the movements in intangible assets for the period:

 

 

 

 

Goodwill

Domain

Names

Technology

Affiliates Contracts

Capitalised Development
Costs

Total

€'000

€'000

€'000

€'000

€'000

€'000

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

47,274

214,640

13,325

5,500

5,735

286,474

Additions

-

-

-

-

1,211

1,211

Effect of foreign currency exchange difference

 

-

-

-

-

(1)

(1)

Balance at 30 June 2016

47,274

214,640

13,325

5,500

6,945

287,684

 

 

 

 

 

 

 

Additions

-

-

118

-

1,174

1,292

Transfer from tangible assets

-

-

383

-

-

383

Effect of foreign currency exchange difference

-

-

(12)

-

1

(11)

Balance at 31 December 2016

47,274

214,640

13,814

5,500

8,120

289,348

 

 

 

 

 

 

 

Additions

-

-

42

-

363

405

Effect of foreign currency exchange difference

-

-

-

-

-

-

Balance at 30 June 2017

47,274

214,640

13,856

5,500

8,483

289,753

 

 

 

 

 

 

 

Accumulated amortisation and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 1 January 2016

(29,426)

(77,789)

(12,936)

(5,500)

(1,851)

(127,502)

Charge for the period

-

(4,844)

(117)

-

(1,559)

(6,520)

Impairment

-

(8,199)

-

-

-

(8,199)

Balance at 30 June 2016

(29,426)

(90,832)

(13,053)

(5,500)

(3,410)

(142,221)

 

 

 

 

 

 

 

Charge for the period

-

(5,472)

(209)

-

(1,644)

(7,325)

Transfer from tangible assets

-

-

(187)

-

-

(187)

Effect of foreign currency exchange difference

-

-

4

-

-

4

Balance at 31 December 2016

(29,426)

(96,304)

(13,445)

(5,500)

(5,054)

(149,729)

 

 

 

 

 

 

 

Charge for the period

-

(5,074)

(165)

-

(1,528)

(6,767)

Effect of foreign currency exchange difference

-

-

-

-

-

-

Balance at 30 June 2017

(29,426)

(101,378)

(13,610)

(5,500)

(6,582)

(156,496)

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2016

17,848

123,808

272

-

3,535

145,463

At 31 December 2016

17,848

118,336

369

-

3,066

139,619

At 30 June 2017

17,848

113,262

246

-

1,901

133,257

 

 

In 2016, following a review of trading performance the directors reassessed the estimated future cashflows associated with the Hostelbookers intellectual property assets. This led to the recognition of an impairment charge of €8,199k in relation to the value of the Hostelbookers domain names.  The estimated useful life of these domain names was also reduced from the reporting date of 30 June 2016.

 

At 30 June 2017, there are no indications that the Hostelbookers intellectual property assets are carried at an amount higher than their recoverable amount.

 

8.         PROPERTY, PLANT AND EQUIPMENT

 

During the six months ended 30 June 2017, the Group invested €770k on additional property, plant and equipment (30 June 2016: €600k)

 

 

9.         TRADE AND OTHER RECEIVABLES

 

 

30 June

2017

 

30 June

2016

31 December 2016

 

€'000

 

€'000

€'000

 

(Unaudited)

 

(Unaudited)

(Audited)

Amounts falling due within one year

 

 

 

 

Trade receivables

1,216

 

991

892

Prepayments and accrued income

999

 

790

731

Value Added Tax

1,755

 

1,434

1,004

 

 

 

 

 

 

3,970

 

3,215

2,627

 

 

 

10.       CASH AND CASH EQUIVALENTS

 

 

30 June

2017

30 June

2016

31 December 2016

 

€'000

€'000

€'000

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

 

 

Cash and cash equivalents

17,662

18,652

24,632

Restricted cash balances

-

(2,225)

-

 

 

 

 

Unrestricted cash balances

17,662

16,427

24,632

 

 

 

The Group entered into a guarantee with AIB Bank plc during 2015 related to the lease of office space in Dublin. The guarantee initially required that €2,225k remain on deposit with the bank. The requirement was removed by AIB Bank plc during 2016.

 

 

11.       SHARE CAPITAL

 

 

Share capital as at 30 June 2017 amounted to €955,708 (30 June 2016: €955,708). There were no additional shares issued during the six month period ending 30 June 2017.

 

 

12.       TRADE AND OTHER PAYABLES

 

 

30 June

2017

30 June

2016

31 December 2016

 

€'000

€'000

€'000

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

Amounts falling due within one year

 

 

 

Trade payables

4,183

3,674

3,344

Accruals and other payables

7,935

7,115

5,797

Payroll taxes

529

674

524

Value Added Tax

4

84

4

 

 

 

 

 

12,651

11,547

9,669

13.       DIVIDENDS

 

 Amounts recognised as distributions to equity holders in the financial year:

 

 

 

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

 

€'000

€'000

€'000

 

Final 2015 dividend of €0.0275 per share (paid 31 May 2016)

 

-

2,628

2,628

Interim 2016 dividend of €0.048 per share (paid 27 September 2016)

 

-

-

4,588

Final dividend for the year ended 31 December 2016 of €0.104 per share (paid 6 June 2017)

 

9,939

-

-

Supplementary dividend of €0.105 per share (paid 6 June 2017)

 

10,035

-

-

 

 

 

 

 

19,974

2,628

7,216

Interim dividend for the year ended 31 December 2017 of €0.051 per share (2016: €0.048 per share)

4,874

4,588

-

           

 

 

The directors declare an interim dividend of 5.1 cents per share amounting to €4.9m (30 June 2016: €4.6m) be paid to shareholders on 22 September 2017. This dividend has not been included as a liability in these condensed consolidated interim financial statements. The interim dividend is payable to all shareholders on the Register of Members on 1 September 2017.

 

 

14.       SHARE BASED PAYMENTS

           

            On 29 March 2017, 847,663 nil cost share options were granted to employees as part of a long term incentive plan. These share options will vest on 28 March 2020, subject to meeting performance conditions.

                                                                                                                 

On 5 April 2016, 928,464 nil cost share options were granted to employees as part of a long term incentive plan.  During the six months to 30 June 2017, 19,380 of these share options have been forfeited leaving 909,084 still in issue at 30 June 2017. These share options will vest on 4 April 2019, subject to meeting performance conditions.

 

 

15.       RELATED PARTY TRANSACTIONS

During the six months ended 30 June 2017, the Group had no transactions with any related parties, and as at the reporting date, the Group had no amounts owing to any related party.              

 

During the six months ended 30 June 2016, the former controlling shareholder of the Group, H&F Wings Lux 1 S.à r.l. ("Lux 1") paid a discretionary bonus payment of €1,559k (€1,400k net of employer taxes) to certain senior management and employees of the Group in relation to their performance up to the date of Admission.  The Group did not bear any costs associated with this payment. Mr. Feargal Mooney, executive director and CEO, received an award of €850k.

 

 

 

16.       EVENTS AFTER THE REPORTING DATE

 

On 5 July 2017 181,208 options were granted to a number of eligible employees in the Group as part of a Save as You Earn scheme. These options will vest in August 2020 subject to a number of conditions.

 

An interim dividend of 5.1 cents per share amounting to €4.9m (30 June 2016: €4.6m) is referred to in note 13 above.

 

There were no other material subsequent events since the reporting date.

 

 

 

 

 

 

 

 

 

 

HOSTELWORLD GROUP PLC

 

RESPONSIBILITY STATEMENT

 

 

 

 

We confirm that to the best of our knowledge:

 

(a)  the condensed set of consolidated financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

 

(b)  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

 

(c)  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

 

 

 

 

__________________                                                           ______________                                            

Feargal Mooney                                                                     Mari Hurley

 

Chief Executive Officer                                                          Chief Financial Officer

 

Date:                                                                                      Date:

 


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