TIDMHSW
RNS Number : 3647X
Hostelworld Group PLC
29 April 2019
LEI: 213800OC94PF2D675H41
29 April 2019
Hostelworld Group plc
("Hostelworld" or the "Company")
Publication of Annual Report for 2018 and Notice of 2019 Annual
General Meeting
Annual Report and Accounts
Hostelworld, the world's leading hostel-focused online booking
platform, is pleased to announce that its Annual Report 2018 has
been posted or is being made available to shareholders today.
Annual General Meeting
The Company confirms that its Annual General Meeting will be
held at 12 noon on 31 May 2019 at the offices of the Company, Floor
2, One Central Park, Leopardstown, Dublin 18, Ireland. A Circular
containing the Chairman's Letter and Notice of 2019 Annual General
Meeting and Form of Proxy has also been posted or is being made
available to shareholders today.
Documents available for inspection
The following documents:
-- Annual Report 2018;
-- Circular containing the Chairman's Letter and Notice of 2019 Annual General Meeting;
-- Form of Proxy;
have been submitted to the UK Listing Authority via the National
Storage Mechanism, and the Irish Stock Exchange (trading as
Euronext Dublin), and will shortly be available for inspection at
the following locations:
www.morningstar.co.uk/uk/NSM
and at:
Companies Announcements Office
Euronext Dublin
28 Anglesea Street
Dublin 2
The Annual Report 2018, the Circular containing the Chairman's
Letter and Notice of the 2019 Annual General Meeting and the Form
of Proxy are also available on the Company's website at
www.hostelworldgroup.com.
Regulated Information
The information set out in the Appendix, which is extracted from
the Annual Report 2018, is included for the purposes of complying
with DTR 6.3.5 and its requirements on how to make public annual
financial reports. The information in the Appendix should be read
in conjunction with the Company's preliminary results for the year
ended 31 December 2018 released on 2 April 2019 which can be viewed
at www.hostelworldgroup.com. Together, these constitute the
material required by DTR 6.3.5 to be communicated in unedited full
text through a Regulatory Information Service.
Contacts:
Hostelworld Group plc
TJ Kelly, Chief Financial Officer
John Duggan, Company Secretary
Tel: +353 (0) 1 498 0700
Appendix
Directors' Responsibilities Statement
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
are required to prepare the Group Financial Statements in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union and Article 4 of the IAS
Regulation and have elected to prepare the parent Company Financial
Statements in accordance with FRS 101 Reduced Disclosure Framework
("Relevant Financial Reporting Framework") and applicable law.
Under company law the Directors must not approve the Financial
Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the
profit or loss of the Group for that period.
In preparing the parent Company Financial Statements, the
Directors are required to:
> Select suitable accounting policies and then apply them
consistently;
> Make judgments and accounting estimates that are reasonable
and prudent;
>State whether financial reporting standard 101 reduced
disclosures framework has been followed, subject to any material
departures disclosed and explained in the financial statements;
and
> Prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group Financial Statements, International
Accounting Standard 1 requires that Directors:
> Properly select and apply accounting policies;
> Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
> Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the Group's financial position and financial
performance; and
> Make an assessment of the Company's ability to continue as
a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of Financial Statements may differ
from legislation in other jurisdictions.
Responsibility Statement
We confirm that to the best of our knowledge:
> The Financial Statements, prepared in accordance with the
Relevant Financial Reporting Framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole;
> The Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
> The Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
position and performance, business model and strategy.
This responsibility statement was approved by the Board of
Directors on 1 April 2019 and is signed on its behalf by:
John Duggan
Company Secretary
1 April 2019
Principal Risks and Uncertainties
The Board takes overall responsibility for identifying the
nature and extent of the risks to be managed by the Group to ensure
the successful delivery of its strategic and business priorities.
The Audit Committee monitors certain risk areas and the internal
control system, as set out in the report on governance.
The nature of the principal risks and uncertainties faced by the
Group is on the whole unchanged, although, external geopolitical
factors, including a hard Brexit continue to impact the Group's
risk profile in certain areas. The most significant of these
factors is the volatility in exchange rates to the euro, in
particular that of the US dollar and sterling and the continued
incidence of terrorism.
The Group's risk register identifies key risks and monitors
progress in managing and mitigating them and is reviewed at least
annually by the Board. The most material risks facing the Group are
set out in the table below, together with comments on how they are
managed to minimise their potential impact. While the table below
is not prioritised nor an exhaustive list of all risks that may
impact the Group, it is the Board's view of the principal risks at
this point in time. Individually or together, these risks could
affect our ability to operate as planned, and could have a
significant impact on revenue and shareholder returns. Additional
risks and uncertainties, including those that have not been
identified to date or are currently deemed immaterial, may also,
individually or together, have a negative impact on our revenue,
returns, or financial condition.
The Board also considered its obligations in relation to
providing both the annual viability and going concern statements
and its conclusions can be found on page 35 and in note 1 to the
Consolidated Financial Statements, respectively.
Risk Description and Impact Management and Mitigation
1. Macroeconomic Revenue is derived from Our business is a global one,
Conditions the wider leisure travel with a dispersed population
sector. A decline in macroeconomic of users, and a geographically
conditions could result dispersed set of destinations.
in a reduction in leisure Whilst market conditions may
travel, and declining decline in certain regions,
revenues. the globally diversified nature
of the business significantly
Significant movements mitigates this, with c.50%
in FX rates can have a of destination markets in
dramatic impact on travel Europe and c.50% in the rest
volumes, revenues and of world.
travel patterns. Increased
volatility in currency FX movements may impact travel
markets have heightened decisions and travel patterns
this risk. by customers, but typically
there is a degree of counterbalancing
movement e.g. the weakening
of the US dollar against the
euro means fewer US travellers
visiting the Eurozone, but
decreased marketing costs
from US denominated suppliers
such as Google.
FX translation risk is mitigated
through matching foreign currency
cash outflows and foreign
currency cash inflows and
by minimising holdings of
excess non-euro currency above
anticipated outflow requirements.
------------------------------------ ----------------------------------------
2. Impact of Terrorism The threat of terrorist Our target 18-34 year old
Threat on Leisure attacks in key cities population tend to be both
Travel and on aircraft in flight flexible as to destination,
may reduce the appetite and less concerned about risk-taking
of the leisure traveller than other sectors in the
to undertake trips particularly leisure travel industry.
to certain geographies,
resulting in declining The dispersed nature of our
revenues. business also acts as a mitigant,
Increased incidence of with c.50% of destination
terrorism impacts consumer markets in Europe and c.50%
confidence and can shift in the rest of world.
demand away from certain
destinations.
------------------------------------ ----------------------------------------
3. Competition The business operates We continue to build on our
in an increasingly competitive strong market position, and
marketplace and our relative our app bookings have grown
scale and size could impact by 22% in 2018.
our ability to keep pace The Group continues to invest
with changes in customer in leveraging its unique data
behaviour and technology assets allowing it to target
change. Failure to continue and grow the most profitable
to innovate on our product customer segments by optimising
offering and to compete its overall marketing investment.
effectively in our marketplace The Group continues to strengthen
could have an adverse its core platform in order
effect on our market share to improve its flexibility
and the future growth and the experience of our
of the business. customers while also upgrading
Increased competition our third-party platform connectivity
from other online travel in order to defend our competitive
agents ("OTAs") or from position.
the alternative accommodation The market we operate in remains
sector or a disruptive highly fragmented with a high
new entrant such as large proportion of independent
hotel chains into the and small chains. We continue
hostel segment or loss to focus on expanding our
of key accommodation suppliers global footprint, meeting
could impact revenue due emerging demand and also strengthening
to potential loss of traffic our overall market position.
or could increase traffic We undertake regular research
acquisition costs. Demand to track performance in key
for our services could markets and seek feedback
suffer, reducing revenue from customers as to the relevancy
and margins. and competitiveness of our
proposition as well as propensity
to recommend to others.
------------------------------------ ----------------------------------------
4. Search Engine A large proportion of The Group invests heavily
Algorithms traffic to our websites in recruiting and retaining
is generated through internet key personnel with the requisite
search engines such as skills and capabilities in
Google, from non-paid paid & non-paid searches.
(organic) searches and This in-house expertise is
through the purchase of supplemented by the deployment
travel-related keywords of leading technology tools
(paid search). We therefore and where required the engagement
rely significantly on of specific deep functional
practices such as Search third party expertise.
Engine Optimisation ("SEO")
and Search Engine Marketing The search marketing team
("SEM") to improve our works closely with Google
visibility in relevant to understand any changes
search results. Search in functionality to the adwords
engines, including Google, platform so that we can avail
frequently update and of any efficiencies in our
change the logic that search traffic. The Group
determines the placement participates in alpha and
and display of results beta feature tests that give
of a user's search, which Hostelworld first mover advantage
can negatively impact with new functionality that
placement of our paid can help drive efficiency.
and organic results in
search results. This could
result in a decrease in
bookings and thus revenue.
It could also result in
having to replace free
traffic with paid traffic,
which would negatively
impact margins.
------------------------------------ ----------------------------------------
5. Brand Consumer trust in our We are focussed on investing
brand is essential to in our core products, platform
ongoing revenue growth. and technological capabilities
Negative publicity around to support our brand proposition
our products or services as well as actively managing
could negatively impact our brand portfolio through
on traveller and accommodation social media channels.
provider confidence and Our customer service team
result in loss of revenue. strive to ensure that customers
have a positive experience
at all stages of interacting
with us.
The Group has a Crisis Communications
Document in place which sets
out in detail how various
incidents are managed including
appropriate escalation processes.
------------------------------------ ----------------------------------------
6. Data Security We capture personal data Hostelworld works closely
from our customers, including with internal and external
credit card details and audit functions to ensure
retain this on our systems. that our system architectures,
There is always a risk work processes and policies
of a cyber security related are in place to provide as
attack or disruption, much protection as possible.
including by criminals,
hacktivists or foreign Hostelworld continues to be
governments on our systems fully compliant with the guidelines
or those of third party of the payment card industry
suppliers. (i.e. is "Level 1 PCI compliant")
Cybercrime including unauthorised and is in the process of implementing
access to confidential its compliance obligations
information and systems in connection with certain
would have significant aspects of Payment Services
reputational impact and Directive 2 ("PSD2") as it
could result in financial relates to customer payment
or other penalties. authorisation requirements.
Specifically, the Group will
be required to facilitate
the implementation of certain
customer authentication security
measures by its payment processor,
issuing banks and card schemes.
We have adopted all the requirements
of GDPR and will continue
to monitor compliance. We
regularly review our employee
information security policy
and we continue to invest
in security training for all
staff so that they remain
vigilant and alert to the
possibility of cybercrime.
We conduct regular independent
penetration testing of our
software. We proactively address
vulnerabilities with a continual
vulnerability assessment program.
We have also implemented Web
Application Protector from
Akamai to migrate threats
in real-time.
------------------------------------ ----------------------------------------
7. Regulation The global nature of our We monitor regulatory matters
business means we are in locations in which we provide
exposed to regulatory services with a particular
issues regarding competition, focus on those areas where
licensing of local accommodation, we have local operations.
language usage, web-based Suitable expertise has been
trading, consumer compliance, engaged to ensure compliance
tax, intellectual property, with the Group's regulatory
trademarks, data security obligations. In addition the
and commercial disputes Group has engaged appropriately
in multiple jurisdictions. qualified support to ensure
Compliance with new regulations compliance with the Listing
can mean incurring unforeseen Rules, the FRC Corporate Governance
costs, and non-compliance Code and the Market Abuse
could result in penalties Regulations.
and reputational damage.
In addition, as a listed
company on the London
and Euronext Dublin Stock Developments to international
Exchanges, adherence to laws and regulations continue
the Listing Rules is required. to be closely monitored as
Uncertainty remains as Brexit proceeds. The Group's
to the impact of Brexit multinational structure with
on UK and international Head Office in Dublin provides
laws and regulations including some natural mitigation to
matters such as travel the potential impact.
visas or work visas for
our UK staff.
------------------------------------ ----------------------------------------
8. Tax The taxation of e-commerce In collaboration with our
businesses is constantly tax advisers, a large professional
being evaluated and developed services firm, we assess possible
by tax authorities around tax impacts in the jurisdictions
the world. The taxation in which we operate to ensure
of online transactions our tax obligations are aligned
in the travel space remains to the operational nature
unsettled in the United of our business.
States in particular.
The taxation of e-commerce
is also under active review
by both the OECD and European
Commission.
Due to the global nature
of our business, tax authorities
in other jurisdictions
may consider that taxes
are due in their jurisdiction,
for example because the
customer is resident in
that jurisdiction or the
travel service is deemed
to be supplied in such
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, which
could have a material
adverse effect on the
Group's financial condition
and results of operation
if it could not reclaim
taxes already accounted
for in the jurisdictions
the Group considers relevant.
The Group has historically
had a low effective tax
rate due to the Group's
capital and corporate
structure and the effect
of carried forward tax
losses.
Changes to tax legislation
or the interpretation
of tax legislation or
changes to tax laws based
on recommendations made
by the OECD in relation
to its Action Plan on
Base Erosion and Profits
Shifting ("BEPS") or national
governments may result
in additional material
tax being suffered by
the Group or additional
reporting and disclosure
obligations.
------------------------------------ ----------------------------------------
9. Business Continuity Failure in our IT systems As an e-commerce organisation,
or those on which we rely the Group's business continuity
such as third party hosted plan focusses on the continued
services could disrupt operation of consumer facing
availability of our booking products and related services
engines and payments platforms, to ensure our e-commerce trading
or availability of administrative systems can continue to process
services at our office bookings. Our fully distributed
locations, with a knock-on and redundant architecture
reduction in financial across two data centres based
performance. in two different countries
supports this approach. The
Group has worked with external
advisers to produce robust
documented business continuity
and disaster recovery capabilities.
We have also extended our
eCommerce BCP plans to include
our corporate office.
------------------------------------ ----------------------------------------
10. People The Group is dependent The Group has developed strong
on ability to attract, recruitment processes supported
retain and develop creative, by effective HR policies and
committed and skilled procedures. The Group has
employees so as to achieve an increased focus on understanding
its strategic objectives. the drivers of employee engagement,
this has informed the development
of its Employee Value Proposition
aimed at driving levels of
motivation, alignment and
commitment to the Group's
strategic goals. The Group
also operates from five global
offices, which provides flexibility
for location of recruitment
of key talent, thereby opening
up a larger pool of talent
for selection.
------------------------------------ ----------------------------------------
11. Brexit The Group is exposed to The Group is a global business
Brexit-related risks and and continues to grow its
uncertainties in relation international footprint and
to its continued impact presence across its key markets.
on global markets and Through continued international
currency exchange rate expansion and diversification
fluctuations. The uncertainties the Group will seek to naturally
in relation to the movement mitigate the impacts of Brexit.
of people may result in However, the Group will continue
the reduction of bookings to assess Brexit and implement
particularly into and any necessary remediation
from the UK travel market steps to mitigate its impact
which could impact on on the Group.
Group revenue. In the
twelve months ended 31
December 2018, the UK
as a destination represented
6% of total Group bookings
(2017: 7%) and 14% of
Group bookings were from
UK nationals (2017: 14%).
Overall a decline in
macroeconomic conditions
and the warning from the
Bank of England of a Brexit
related recession in the
UK could negatively impact
consumer confidence and
reduce spending in all
areas including the wider
leisure travel sector.
------------------------------------ ----------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCLIFSESFIAFIA
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