TIDMHSW
RNS Number : 8374H
Hostelworld Group PLC
23 August 2016
Hostelworld Group plc
("Hostelworld" or the "Group")
2016 Interim Results Announcement
Adjusted EBITDA of EUR10.1m; Interim Dividend of 4.8 cents per
share
Operational Highlights
-- Continuing progress with key strategic focus areas of Brand, Pricing, Mobile and Asia:
ü Core Hostelworld brand booking growth of 16% (H1 2015: 14%
growth); Group bookings from not-paid-for channels improved to 61%
of total (H1 2015: 58%)
ü Higher commission bookings using our Elevate product increased
to 28% of Group total (H1 2015: 17%)
ü Hostelworld brand bookings from mobile devices increased to
45% of total (H1 2015: 36%), with mobile app bookings accounting
for 26% (H1 2015: 19%)
ü Continued growth in emerging markets, with Hostelworld brand
bookings to Asian destinations up 30%
Financial Highlights
-- Adjusted EBITDA for the half year of EUR10.1m (H1 2015:
EUR10.0m) on revenues of EUR40.2m (H1 2015: EUR43.9m), benefiting
from strong focus on higher quality revenues and more efficient PPC
marketing
-- Adjusted EBITDA Margin improved to 25% (H1 2015: 23%)
-- Total Group bookings reduced to 3.5m (H1 2015: 3.6m),
reflecting reduced investment in lower margin bookings,
particularly on non-core supporting brands, combined with the
impact of more difficult market conditions
-- Group Adjusted Profit after Tax of EUR7.7m (H1 2015: EUR8.8m)
-- Adjusted pro-forma Earnings Per Share of EUR0.08 (H1 2015: EUR0.09)
-- Adjusted free cash flow conversion of 107% and strong balance sheet
-- Interim dividend of 4.8 euro cents per share, in line with stated dividend policy
-- On track to meet expectations for the full year
Feargal Mooney, Chief Executive Officer, commented:
"The core Hostelworld brand has delivered strong growth in the
first half of the year against a background of more challenging
market conditions, particularly in Europe as a consequence of a
number of terrorist attacks in key European destinations.
Reflecting a key strategic focus of the Group on the Hostelworld
brand and more profitable channels and to discontinue lower margin
business, bookings in our supporting brands now represent just 15%
of the Group total.
Trading during the key months of July and August has been in
line with our expectations, underpinned by the strength of our
brand and platform. We will continue to manage the risks to our
business posed by the impact of terrorist attacks on travel demand
and patterns and by macro-economic uncertainties and currency
fluctuations surrounding Brexit and, based on performance for the
year to date, our expectations for the full year are
unchanged".
ends
For further information please contact:
Hostelworld Group plc today: +44 (0) 20 7067 0000
Feargal Mooney, Chief Executive thereafter: +353 (0) 1 498 0700
Officer
Weber Shandwick
Nick Oborne/ Tom Jenkins +44 (0) 20 7067 0000
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
Notwithstanding the more challenging market conditions for the
travel industry particularly in Europe, the Group continues to make
substantial progress in implementing our key strategic objectives.
In our most recent annual report, we reported the Group's key
objectives for 2016 were (1) 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
further improve our customer experience by allowing for seamless
transactions across multiple devices with consistency of user
experience and functionality; (3) to work closely with
accommodation providers assisting them with yield management and
revenue optimisation and (4) to expand in markets where the offline
to online travel shift is still emerging and where there is a
significant penetration opportunity for hostels and budget
accommodation product.
Financial Review
Key Performance Indicators
Constant Financial
Currency Year 2015
H1 '16 H1 '15 % change % change
------------------------------- --------- ------- --------- ---------- -----------
Bookings - Hostelworld brand
(m) 3.0 2.6 16% 5.2
------------------------------- --------- ------- --------- ---------- -----------
Bookings - supporting brands
and channels (m) 0.5 1.1 -51% 2.0
------------------------------- --------- ------- --------- ---------- -----------
Total Booking Volume (m) 3.5 3.6 -4% 7.2
------------------------------- --------- ------- --------- ---------- -----------
Net Revenue (EURm) 40.2 43.9 -9% -7% 83.5
------------------------------- --------- ------- --------- ---------- -----------
Average Booking Value ("ABV")
(gross) (EUR) 11.8 12.6 -6% 12.1
------------------------------- --------- ------- --------- ---------- -----------
Adjusted EBITDA 10.1 10.0 1% +4% 23.6
------------------------------- --------- ------- --------- ---------- -----------
The Group's flagship brand is Hostelworld which now accounts for
circa 85% of Group bookings. Since the start of 2015, the Group has
focused its attention and resources on this brand, increasing its
relevance to and reach amongst the target young independent
traveller as evidenced by its continued strong bookings growth of
16% in the six months to 30 June 2016. Whilst bookings of the
Hostelworld brand grew, those of the Group's supporting brands
(notably Hostelbookers) were 51% lower for the six month period
from January to June. This reflected planned changes to their
product offering, the Group's focus on improving the quality of its
revenue streams and the more marked impact on these brands of an
evolving online travel landscape. Overall group bookings declined
by 4%, impacted by weaker demand in Europe, and by the strategy to
optimise margin performance especially on the supporting brand
channels. The associated Total Transaction Values ("TTV") in the
six months ended 30 June 2016 were EUR284m (30 June 2015: EUR339m),
while average commission rates in the six months ended 30 June 2016
increased to 13.7% (30 June 2015: 13.1%).
Group net revenue decreased by 9% for the six month period from
January to June 2016, which corresponds to a 7% decrease on a
constant currency basis.
This is due to the fact that average booking value has been 6%
lower in the current period, reflecting the evolving geographic
mix, the continued higher proportional growth in bookings of
shorter duration, the greater percentage of bookings into hostel
dorm beds, lower bed prices in certain destinations and exchange
rate movements, particularly in relation to GBP which is a key
settlement currency for the Group. These negative factors were
partially offset by increased penetration of the Elevate pricing
product. In the six months to 30 June 2016, 28% of group bookings
(2015: 17%) attracted the higher Elevate commission at an average
commission rate of 16.8% (2015: 16.0%).
The Group realised strong efficiencies in the online marketing
campaigns for the flagship Hostelworld brand and this together with
the strategy of optimising for margin rather than volume on the
supporting brand channels resulted in marketing spend as a
percentage of net revenue in the first half of 2016 reducing to 43%
as compared to 50% in the first half of 2015. Bookings in
not-paid-for channels increased to 61% of total bookings (2015:
58%).
Bookings on mobile devices now represent 45% of Hostelworld
brand bookings as compared to 36% in the six months ended 30 June
2015.
Adjusted EBITDA
Group adjusted EBITDA of EUR10.1m has increased by 1% relative
to the six months ended 30 June 2015 and by 4% on a constant
currency basis. Adjusted EBITDA as a percentage of net revenue
increased from 23% to 25%.
Administrative expenses decreased by EUR3.8m to EUR30.4m in the
six months ended 30 June 2016. A key contributory factor was the
efficiencies achieved in online marketing which resulted in lower
marketing expenses of EUR17.2m in the six months to 30 June 2016 as
compared to EUR22.0m in the prior period. Marketing spend per
booking declined by 18% from EUR6.03 to EUR4.93.
Staff costs were EUR7.5m during the six months ended 30 June
2016 (2015: EUR6.9m). Excluding the impact of the level of
development labour capitalised (2016: EUR1.2m; 2015: EUR2.1m), on a
like for like basis, gross staff costs decreased by 4% or EUR0.3m.
Other costs, excluding listed company related costs were in line
with 2015.
Reconciliation between Operating Profit and Adjusted EBITDA:
Financial
(EURm) H1 16 H1 15 Year 2015
------------------------------------- -------- ------ -----------
Operating (loss)/profit (5.5) 3.7 7.2
------------------------------------- -------- ------ -----------
Depreciation 0.5 0.4 0.8
------------------------------------- -------- ------ -----------
Amortisation of development
costs 1.6 0.7 1.4
------------------------------------- -------- ------ -----------
Amortisation of acquired intangible
assets 4.9 5.0 9.9
------------------------------------- -------- ------ -----------
Impairment charges 8.2 - -
------------------------------------- -------- ------ -----------
Exceptional items 0.3 0.3 4.3
------------------------------------- -------- ------ -----------
Share option charge 0.1 - -
------------------------------------- -------- ------ -----------
Adjusted EBITDA 10.1 10.0 23.6
------------------------------------- -------- ------ -----------
Following a review of trading performance and due to the
supporting brands now being run for margin and not for volume, the
resultant level of bookings and revenue derived from the
Hostelbookers website being less than previously projected, the
directors reassessed the estimated future cashflows associated with
the Hostelbookers intellectual property assets. This has led to the
recognition of an impairment charge of EUR8,199k in relation to the
value of the Hostelbookers domain names. The estimated useful life
of these domain names was also reduced to a period of seven and
half years from the reporting date of 30 June 2016. Exceptional
items for the six months to 30 June 2016 were EUR0.3m (2015:
EUR0.3m) and were primarily redundancy related costs. The share
option charge for the period reflects the share based payment
charge arising on the issuance of 928,464 nil cost options in April
2016 in accordance with the Group's Long Term Incentive Plan
(LTIP).
Adjusted Profit after Taxation
Financial
EURm H1 16 H1 15 Year 2015
-------------------------------------- -------- ------- -----------
Adjusted EBITDA 10.1 10.0 23.6
-------------------------------------- -------- ------- -----------
Depreciation (0.5) (0.4) (0.8)
-------------------------------------- -------- ------- -----------
Amortisation of development
costs (1.6) (0.7) (1.4)
-------------------------------------- -------- ------- -----------
Corporation tax (0.3) (0.1) (0.4)
-------------------------------------- -------- ------- -----------
Adjusted Profit after Taxation 7.7 8.8 21.0
-------------------------------------- -------- ------- -----------
Exceptional costs (0.3) (0.3) (4.3)
-------------------------------------- -------- ------- -----------
Amortisation of acquired intangibles (4.9) (5.0) (9.9)
-------------------------------------- -------- ------- -----------
Net financial costs - (18.3) (30.9)
-------------------------------------- -------- ------- -----------
Other gains - - 104.2
-------------------------------------- -------- ------- -----------
Share option charge (0.1) - -
-------------------------------------- -------- ------- -----------
Impairment charges (8.2) - -
-------------------------------------- -------- ------- -----------
Deferred taxation 1.1 - 1.0
-------------------------------------- -------- ------- -----------
(Loss)/profit for the period (4.7) (14.8) 81.2
-------------------------------------- -------- ------- -----------
Adjusted Profit after Taxation is a metric that the Group uses
to calculate the dividend payout for the year. 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.
The Group corporation tax charge of EUR0.3m is an effective tax
rate (corporation tax as a percentage of Adjusted EBITDA) of 3.43%.
The corresponding charge in the six months ended 30 June 2015 of
1.13% is reflective of the previous capital structure of the
Group.
The outcome of the impairment review resulted in a reduction in
the carrying value of the deferred tax liability. This was
partially offset by the amortisation of deferred tax assets,
resulting in overall net deferred tax credit of EUR1.1m for the six
months period ended 30 June 2016.
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 declined by 7% (EUR2.8m)
and Adjusted EBITDA has increased by 4% (EUR0.4m) for the six
months ended 30 June 2016. Constant currency is calculated by
applying the average exchange rates for the six months period ended
30 June 2016 to the financial results for the six months period
ended 30 June 2015 on a month by month basis. The Group's principal
policy is to match cashflows 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 recommend an interim dividend of EUR4.6m or 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 consolidated financial statements. The proposed dividend
is payable on 27 September to all shareholders on the Register of
Members on 2 September 2016.
In May 2016, the Group paid a maiden dividend of EUR2.6m or 2.75
cent per share in respect of the period from Admission on 02
November 2015 to 31 December 2015.
Adjusted Free Cashflow conversion
EURm H1 16 H1 15 2015
--------------------------------------------- --------- ------- -------
Adjusted EBITDA 10.1 10.0 23.6
--------------------------------------------- --------- ------- -------
Capitalised development spend (1.2) (2.1) (4.3)
--------------------------------------------- --------- ------- -------
Capital expenditure (0.6) (1.6) (3.2)
--------------------------------------------- --------- ------- -------
Interest and tax paid (0.1) (0.1) 0.2
--------------------------------------------- --------- ------- -------
Net movement in working capital (1) 2.6 1.4 (1.1)
--------------------------------------------- --------- ------- -------
Adjusted Free Cashflow 10.8 7.6 15.3
--------------------------------------------- --------- ------- -------
Adjusted FCF conversion 107% 75% 65%
--------------------------------------------- --------- ------- -------
(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 lower level of capitalised development
expenditure and capital expenditure in 2016, resulted in higher
adjusted free cashflow conversion of 107% (30 June 2015: 75%).
Total Cash at 30 June 2016 was EUR18.7m (30 June 2015:
EUR11.0m), of which EUR2.2m is 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 2016 (30 June 2015: EUR324.5m, all of
which were shareholder related).
Related party transactions
Related party transactions are disclosed in note 16 to the
condensed set of 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
2015. A detailed explanation of the risks and how the Group seeks
to mitigate the risks, can be found on pages 23 to 27 of the annual
report which is available at www.hostelworldgroup.com.
The Group will continue to evaluate the impact of the UK's EU
referendum result on exchange rates and on travel patterns. The UK
as a destination represents 7% of group bookings and 14% of
Hostelworld brand bookings are from UK nationals.
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.
Future outlook
Trading during the key months of July and August has been in
line with our expectations, underpinned by the strength of our
brand and platform. We will continue to manage the risks to our
business posed by the impact of terrorist attacks on travel demand
and patterns and by macro-economic uncertainties and currency
fluctuations surrounding Brexit and, based on our performance for
the year to date our expectations for the full year are
unchanged.
By order of the board
Feargal Mooney Mari Hurley
Chief Executive Officer Chief Financial Officer
Date: 22 August 2016 Date: 22 August 2016
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2016
Six months ended Six months Year
30 June 2016 ended ended 31
30 June 2015 December 2015
EUR'000 EUR'000 EUR'000
Notes (Unaudited) (Audited) (Audited)
Revenue 3 40,168 43,915 83,451
Administrative expenses 4 (30,437) (34,158) (64,087)
Depreciation and amortisation expenses 4 (7,000) (6,084) (12,170)
Impairment losses 4 (8,199) - -
Operating (loss)/profit (5,468) 3,673 7,194
Financial income 2 - 8
Financial costs 5 (36) (18,322) (30,866)
Other gains 5 - - 104,158
(Loss)/profit before taxation (5,502) (14,649) 80,494
Taxation 6 795 (133) 680
(Loss)/profit for the period attributable to the
equity owners of the parent company (4,707) (14,782) 81,174
---------------- ------------------ ---------------
Basic and diluted (loss)/earnings per share (cents) 7 (4.93) (492.70) 445.59
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2016
Six months ended Six months ended Year
30 June 2016 30 June 2015 ended 31
December 2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
(Loss)/profit for the period (4,707) (14,782) 81,174
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translation of foreign operations (562) 389 333
---------------- ---------------- ---------------
Total comprehensive (expense)/income for the period
attributable to equity owners of the parent
company (5,269) (14,393) 81,507
---------------- ---------------- ---------------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2016
30 June 30 June
2016 2015 31 December 2015
EUR'000 EUR'000 EUR'000
Notes (Unaudited) (Audited) (Audited)
Non-current assets
Intangible assets 8 145,463 162,396 158,972
Property, plant and equipment 9 3,552 2,615 3,523
Deferred tax assets 919 617 1,325
149,934 165,628 163,820
Current assets
Trade and other receivables 10 3,215 5,789 3,249
Corporation tax - 778 3
Cash and cash equivalents 11 18,652 10,985 13,620
21,867 17,552 16,872
----------- ----------- -----------------
Total assets 171,801 183,180 180,692
----------- ----------- -----------------
Issued capital and reserves attributable to equity owners
of the parent
Share capital 12 956 30 956
Share premium - 13,521 -
Other reserves 3,745 - 3,628
Foreign currency translation reserve 133 751 695
Retained earnings/(accumulated losses) 154,083 (172,883) 161,418
Total equity attributable to equity holders of the parent
company 158,917 (158,581) 166,697
----------- ----------- -----------------
Non-current liabilities
Borrowings 13 - 306,152 -
Deferred tax liabilities 1,003 2,915 2,563
1,003 309,067 2,563
Current liabilities
Borrowings 13 - 18,302 -
Trade and other payables 14 11,547 14,288 11,405
Corporation tax 334 104 27
11,881 32,694 11,432
----------- ----------- -----------------
Total liabilities 12,884 341,761 13,995
----------- ----------- -----------------
Total equity and liabilities 171,801 183,180 180,692
----------- ----------- -----------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2016
Retained
earnings/ Foreign currency
Accumulated translation
Share capital Share premium losses Other reserves reserve Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2015 30 13,521 (158,101) - 362 (144,188)
-------------- -------------- ------------------ -------------- ------------------ ----------
Total
comprehensive
(expense)/
income for the
period - - (14,782) - 389 (14,393)
As at 30 June
2015 30 13,521 (172,883) - 751 (158,581)
-------------- -------------- ------------------ -------------- ------------------ ----------
Elimination on
reorganisation (30) (13,521) - - - (13,551)
Issue of capital
(net of costs) 956 238,345 - - - 239,301
Merger reserve - - - 3,628 - 3,628
Capital reduction - (238,345) 238,345 - - -
Total
comprehensive
income/
(expense) for
the period - - 95,956 - (56) 95,900
As at 31 December
2015 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)/
income for the
period - - (4,707) - (562) (5,269)
As at 30 June
2016 956 - 154,083 3,745 133 158,917
-------------- -------------- ------------------ -------------- ------------------ ----------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2016
Six months Six months Year
ended ended ended
30 June 2016 30 June 2015 31 December
2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Cash flows from operating activities
(Loss)/profit before tax (5,502) (14,649) 80,494
Depreciation of property, plant
and equipment 480 382 813
Amortisation of intangible assets 6,520 5,702 11,357
Impairment of intangible assets 8,199 - -
Transaction costs (included within
financing activities) - - 4,546
Loss on disposal of property,
plant and equipment - 130 251
Financial income (2) - (8)
Financial expense 36 18,322 30,866
Other gains - - (104,158)
Employee equity settled share
based payment expense 121 - -
Changes in working capital items:
Increase/(decrease) in trade
and other payables 292 1,943 (940)
Increase in trade and other receivables (472) (3,463) (1,117)
------------- ------------- -------------
Cash generated from operations 9,672 8,367 22,104
Interest paid (36) - (79)
Interest received 2 - 8
Income tax (paid)/refunded (49) (131) 319
------------- ------------- -------------
Net cash from operating activities 9,589 8,236 22,352
------------- ------------- -------------
Cash flows from investing activities
Acquisition/capitalisation of
intangible assets (1,210) (2,082) (4,321)
Purchases of property, plant
and equipment (600) (1,651) (3,168)
Net cash used in investing activities (1,810) (3,733) (7,489)
------------- ------------- -------------
Cash flows from financing activities
Dividend payment (2,628) - -
Repayment of shareholders' loans - (13,784) (195,125)
Proceeds on issue of shares,
net of expenses - - 173,607
------------- ------------- -------------
Net cash used in financing activities (2,628) (13,784) (21,518)
------------- ------------- -------------
Net increase/(decrease) in cash
and cash equivalents 5,151 (9,281) (6,655)
Cash and cash equivalents at
the beginning of the period 13,620 19,942 19,942
Effect of exchange rate changes
on cash and cash equivalents (119) 324 333
------------- ------------- -------------
Cash and cash equivalents at
the end of the period 18,652 10,985 13,620
Restricted cash balances (2,225) - (2,225)
------------- ------------- -------------
Unrestricted cash balances at
the end of the period 16,427 10,985 11,395
------------- ------------- -------------
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2016
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 2016 comprise the
Company and its subsidiaries (together referred to as "the Group").
The condensed consolidated interim financial statements for the
period ended 30 June 2016 are unaudited.
The information for the year ended 31 December 2015 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 22 August
2016.
2. ACCOUNTING POLICIES
Basis of preparation
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. The Group
has not previously produced a half-yearly report containing a
condensed set of consolidated financial statements.
The comparatives for the six month period ended 30 June 2015
presented in these financial statements are the audited
consolidated results of Wings Lux 2 S.à r.l and the statement of
financial position at that date reflects the share capital
structure of Wings Lux 2 S.à r.l.
The consolidated statement of financial position for the
financial year ended 31 December 2015, presents the legal change in
ownership of the Group, including the share capital of Hostelworld
Group plc and the merger reserve arising as a result of the group
reorganisation and the IPO transaction.
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
Since the last Annual Report a number of amendments to existing
accounting standards have been adopted. These had no material
impact on the financial statements.
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
2015.
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 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 Six months Year
ended ended ended 31
30 June 2016 30 June 2015 December 2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Europe 25,409 28,798 53,812
Americas 7,218 7,634 14,951
Asia, Africa and Oceania 7,541 7,483 14,688
Total revenue 40,168 43,915 83,451
-------------- -------------- ---------------
4. OPERATING EXPENSES
(Loss)/profit for the period has been arrived at after charging
the following operating costs:
Six months Six months Year
ended ended ended 31
30 June 2016 30 June 2015 December
2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Marketing expenses 17,211 21,962 37,410
Credit card processing
fees 1,055 1,037 1,958
Staff costs 7,502 6,945 12,721
Loss on disposal of property,
plant and equipment - - 251
Exceptional Items 271 291 4,267
Other administrative costs 4,398 3,923 7,480
Total administrative expenses 30,437 34,158 64,087
Depreciation of tangible
fixed assets 480 382 813
Amortisation of intangible
fixed assets 6,520 5,702 11,357
Impairment of intangible
assets 8,199 - -
Total operating expenses 45,636 40,242 76,257
------------- ------------- ----------
5. FINANCIAL COSTS AND OTHER GAINS
Six months ended Six months Year
30 June 2016 ended 30 ended 31
June 2015 December
2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Finance costs:
Interest payable on shareholders'
loans - 18,305 30,786
Bank commission and other
charges 36 17 80
Total finance costs 36 18,322 30,866
---------------- ---------- ----------
Other gains
In 2015, other gains relate solely to the write off of
shareholder loans of EUR104,158k as part of the Group
reorganisation in November 2015.
6. TAXATION
The corporation tax charge for the six month period is EUR347k
(30 June 2015: EUR114k), 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 credit for the six month period of EUR1,142k
(30 June 2015: charge of EUR19k) relates to the reduction in
carrying value of the deferred tax liability arising from the
impairment charge (Note 8), offset by the amortisation of deferred
tax assets.
7. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net
profit/(loss) attributable to ordinary shareholders by the weighted
average number of ordinary shares in issue during the period.
Six months Six months Year
ended ended ended 31
30 June 2016 30 June 2015 December
2015
Weighted average number of shares
in issue ('000s) 95,571 3,000 18,217
(Loss)/profit for the period
(EUR'000s) (4,707) (14,782) 81,174
------------- ------------- ----------
Basic (loss)/earnings per share
(cents) (4.93) (492.70) 445.59
------------- ------------- ----------
Diluted (loss)/earnings per share
(cents) (4.93) (492.70) 445.59
------------- ------------- ----------
Actual earnings per share, calculated by dividing the net
profit/(loss) attributable to ordinary shareholders by the actual
number of ordinary shares in issue at 30 June 2016, is a loss per
share of 4.93 cents (30 June 2015: loss per share of 15.47 cents;
31 December 2015: earnings per share of 84.94 cents).
8. INTANGIBLE ASSETS
The table below shows the movements in intangible assets for the
period:
Capitalised
Domain Affiliates Development
Goodwill Names Technology Contracts Costs Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
Balance at 1 January
2015 47,274 214,640 13,325 5,500 1,414 282,153
Additions - - - - 2,082 2,082
Effect of foreign
currency exchange
difference - - - - 11 11
----------- --------- ----------- ----------- ------------- ----------
Balance at 30 June
2015 47,274 214,640 13,325 5,500 3,507 284,246
----------- --------- ----------- ----------- ------------- ----------
Additions - - - - 2,251 2,251
Effect of foreign
currency exchange
difference - - - - (23) (23)
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2015 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
----------- --------- ----------- ----------- ------------- ----------
Accumulated amortisation
and impairment
Balance at 1 January
2015 (29,426) (68,145) (12,658) (5,500) (416) (116,145)
Charge for the period - (4,843) (118) - (741) (5,702)
Effect of foreign
currency exchange
difference - - - - (3) (3)
----------- --------- ----------- ----------- ------------- ----------
Balance at 30 June
2015 (29,426) (72,988) (12,776) (5,500) (1,160) (121,850)
----------- --------- ----------- ----------- ------------- ----------
Charge for the period - (4,801) (160) - (691) (5,652)
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2015 (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)
----------- --------- ----------- ----------- ------------- ----------
Net book value
At 30 June 2015 17,848 141,652 549 - 2,347 162,396
----------- --------- ----------- ----------- ------------- ----------
At 31 December 2015 17,848 136,851 389 - 3,884 158,972
----------- --------- ----------- ----------- ------------- ----------
At 30 June 2016 17,848 123,808 272 - 3,535 145,463
----------- --------- ----------- ----------- ------------- ----------
In 2016, following a review of trading performance and due to
bookings and revenue being less than previously projected, the
directors reassessed the estimated future cashflows associated with
the Hostelbookers intellectual property assets. This led to the
recognition of an impairment charge of EUR8,199k in relation to the
value of the Hostelbookers domain names. The estimated useful life
of these domain names was also reduced to a period of seven and
half years from the reporting date of 30 June 2016.
9. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2016, the Group invested
EUR600k on additional property, plant and equipment (30 June 2015:
EUR1,651k)
10. TRADE AND OTHER RECEIVABLES
30 June 30 June 31 December
2016 2015 2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Amounts falling due within one
year
Trade receivables 991 1,651 621
Prepayments and accrued income 790 1,250 822
Value Added Tax 1,434 1,802 1,806
Amount due from related parties - 1,086 -
3,215 5,789 3,249
----------- --------- ------------
11. CASH AND CASH EQUIVALENTS
30 June 30 June 31 December
2016 2015 2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Cash and cash equivalents 18,652 10,985 13,620
Restricted cash balances (2,225) (2,225) (2,225)
Unrestricted cash balances 16,427 8,760 11,395
------------ ---------- ------------
In 2015, the Group entered into a guarantee with AIB Bank plc
related to the lease of office space in Dublin. The guarantee
requires that EUR2,225k remains on deposit with the bank, reducing
over the duration of the lease up to its first break period in
April 2025.
12. SHARE CAPITAL
The share capital of the Group is represented by the share
capital of the parent company, Hostelworld Group plc. This company
was incorporated on 9 October 2015 to act as the holding company of
the Group, and as a management services company. Prior to this the
share capital of the Group was represented by the share capital of
the previous parent, Wings Lux 2 S.à r.l.
Share capital as at 30 June 2016 amounted to EUR955,708. There
were no additional shares issued during the six month period ending
30 June 2016.
13. BORROWINGS
The Group had no borrowings at 30 June 2016 (30 June 2015:
EUR324,454k; 31 Dec 2015: EURNil). The balance owing at 30 June
2015 related to shareholder loans (EUR306,152k) and their
associated accrued interest (EUR18,302k). All of these balances
were satisfied as part of the Group reorganisation in November
2015.
On 21 October 2015, in connection with the IPO process, the
Group entered into a working capital facility with AIB Bank plc for
EUR2,500k. During the period to 30 June 2016 there have been no
drawdowns under this facility.
14. TRADE AND OTHER PAYABLES
30 June 30 June
2016 2015 31 December 2015
EUR'000 EUR'000 EUR'000
(Unaudited) (Audited) (Audited)
Amounts falling due within one year
Trade payables 3,674 4,648 5,439
Accruals and other payables 7,115 8,348 5,168
Payroll taxes 674 571 694
Value Added Tax 84 436 104
Amount due to related parties - 285 -
11,547 14,288 11,405
------------ ---------- -----------------
15. SHARE BASED PAYMENTS
On 5 April 2016, 928,464 nil cost share options were granted to
employees as part of a long term incentive plan. These share
options will vest on 4 April 2019, subject to meeting performance
conditions.
16. RELATED PARTY TRANSACTIONS
At the reporting date, the Group had no amounts owing to any of
the related parties listed below.
During the six months ended 30 June 2016, as disclosed in the
Annual Report, the former controlling shareholder of the Group,
H&F Wings Lux 1 S.à r.l. ("Lux 1") paid a discretionary bonus
payment of EUR1,559k (EUR1,400k 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 EUR850k.
The Group had borrowings from Lux 1 comprising of H PECs and
accrued interest thereon of EUR257,779k as at 30 June 2015 (31
December 2015: Nil). The Group also had borrowings from a
shareholder, Wings Mgt Equity Co Limited, comprising A & B PECs
and accrued interest thereon. As at 30 June 2015 there was
EUR66,675k due on these borrowings (31 December 2015: Nil).
At 30 June 2015; the Group had:
-- an amount of EUR354k (31 December 2015: EURNil) receivable from Lux 1
-- an amount of EUR112k (31 December 2015: EURNil) receivable from Wings Mgt Equity Co Limited
-- an amount of EUR125k (31 December 2015: EURNil) payable to
Hellman & Friedman Capital Partners VI (Cayman), L.P.
-- an amount of EUR19k (31 December 2015: EURNil) payable to Lux 1
Transactions between the company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note.
17. EVENTS AFTER THE REPORTING DATE
Dividend
In accordance with the Group's dividend policy, in respect of
the current period, the directors propose that an interim dividend
of 4.8 cents per share amounting to EUR4.6m (30 June 2015: EURNil)
be paid to shareholders on 27 September 2016. This dividend has not
been included as a liability in these condensed consolidated
interim financial statements. The proposed dividend is payable to
all shareholders on the Register of Members on 2 September
2016.
In May 2016, the Group paid a maiden dividend of EUR2.6m or 2.75
cent per share in respect of the period from Admission on 02
November 2015 to 31 December 2015.
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: 22 August 2016 Date: 22 August 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VLLFLQVFFBBB
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