Hostelworld Group plc ("Hostelworld" or the "Group" or the "Company")
Interim Results 2024
Strong bookings growth, FY Adjusted EBITDA guidance in line with expectations
Hostelworld is pleased to provide an update on trading up to 30 June 2024 ("H1").
Strong financial delivery continued in H1 2024:
· Continuing growth in net bookings, a record half-year for
· Social strategy continuing to deliver, with direct marketing as a % of revenue1 at the low end of guidance range
· Continuing to maintain cost discipline, underpinning significant Adjusted EBITDA growth
· Highly cash generative business model, AIB term loan facility and RCF repaid early and in full
Well positioned for further profitable growth:
· Continuing investment in our social network strategy driving growth in penetration and usage
· App bookings growth continuing to outpace Web, delivering marketing efficiencies to fuel future growth
· Growing hostel supply, with market coverage increasing 3% year on year
· Reiterating FY 2024 Adjusted EBITDA guidance in line with market consensus2
Financial highlights:
· Net bookings of 3.7m (+9% year on year) driven by record performances in
· Net average booking value of
· Net revenue of
· Direct marketing as a percentage of revenue1 totalled 45%, down 6% from 51% in H1 2023, driving net margin growth of +23% year on year
· Proportion of bookings from social members increased to 80% (66% in H1 2023)
· Operating costs3 of
· Operating profit for the period
· H1 2024 adjusted EBITDA
Balance sheet and cash flow:
· 30 June 2024 cash balance of
· Net debt4 position of
· Commenced repayment of warehoused payroll taxes to Irish Revenue,
· Net asset position of
Gary Morrison, Chief Executive Officer, commented:
"I am very pleased to report strong growth in net bookings (+9% YoY) and even stronger growth in net margins (+23%), primarily driven by our highly differentiated social strategy. This performance, coupled with operating cost discipline, has translated directly into strong operating cashflow enabling us to fully repay our residual debt facility with AIB, two years ahead of schedule.
In parallel, I am also pleased to report that we made good progress during H1 on all aspects of our growth strategy. We have continued to provide our customers with enhanced social network product features, added more hostel inventory to our platform, and have continued to upgrade our platform towards a fully cloud native architecture. In respect of delivering on our key sustainability strategic goals, we launched our 'Staircase to Sustainability' platform to deliver ongoing sustainability improvements in the hostel industry."
Trading update
During the first 6 months of the year, net bookings grew +9% YoY driven by strong consumer demand for low-cost destinations. This trend was driven primarily by strong growth in net bookings made by
Strong consumer demand for lower cost destinations for the half year overall has resulted in ABVs contracting by 10% YoY (H1 2024:
We are pleased to report that marketing cost as a percentage of revenue1 has also reduced from 51% in H1 2023 to 45% in H1 2024, primarily driven by our social strategy. This highly differentiated strategy drives new and existing customers to use our mobile native app. This has resulted in a greater mix of low-cost bookings overall, which in turn has delivered a 23% increase in net margin YoY. On a full year basis, we expect direct marketing costs as a percentage of revenue1 will remain in the 45% to 50% range as we continue to optimise marketing investments for long term growth in new customers and direct margin.
Finally, we have seen continued robust momentum in operating cash performance, with cash generation of
1Revenue is generated revenue - gross revenue less cancellations and excludes impact of deferred revenue
2Company compiled market consensus FY 2024 adjusted EBITDA is
3Operating costs exclude paid marketing costs, credit card fees, exceptional costs, share option charges, depreciation and amoritisation
4Net debt is cash less outstanding debt, including term loan, revolving credit facility and warehoused payroll taxes
Outlook:
The Board remains confident in our differentiated growth strategy and reaffirms our full year earnings guidance of adjusted EBITDA in line with market consensus, absent any deterioration in the macro-economic climate or the occurrence of significant air travel related disruptions.
Date of retirement of Mr. Michael Cawley as Chair (Date change from 02 May 2024 RNS announcement):
Following a change to the date of the scheduled October 2024 Company Board meeting from 21 October to 10 October, with effect from the close of the 10 October 2024 Board meeting, Mr. Michael Cawley will step down from the Board and Mr. Ulrik Bengtsson will assume the role of Chair of both the Board and the Nomination Committee.
Analyst Presentation
A presentation will be made to analysts today at 9.00am, a copy of which will be available on our Group website: http://www.hostelworldgroup.com.
If you would like to dial into the presentation, please join directly via the webcast link provided or contact Sodali & Co on the contact details provided below.
Webcast link: https://brrmedia.news/HSW_IR24
For further information please contact:
Hostelworld Group PLC Corporate@hostelworld.com
Gary Morrison, Chief Executive Officer
Caroline Sherry, Chief Financial Officer
David Brady, Head of Commercial Finance
Sodali & Co hostelworld@sodali.com
Eavan Gannon / Oliver Banks +44 (0) 20 7250 1446
About Hostelworld Group
Hostelworld Group PLC is a ground-breaking social network powered Online Travel Agent ("OTA") focused on the hostelling category, with a clear mission to help travellers find people to hang out with. Our mission statement is founded on the insight that most travellers go hostelling to meet other people, which we facilitate through a series of social features on our platform that connect our travellers in hostels and cities based on their booking data. The strategy has been extraordinarily successful, generating significant word of mouth recommendations from our customers and strong endorsements from our hostel partners.
Founded in 1999 and headquartered in Ireland, Hostelworld is a well-known trusted brand with almost 230 employees, hostel partners in over 180 countries, and a long-standing commitment to building a better world. To that end, our focus over the last few years has been on improving the sustainability of the hostelling industry. In particular, over the last two years we have commissioned independent research to validate the category's sustainability credentials, and recently introduced a hostel specific sustainability framework which encourages our hostel partners to move to even more sustainable operations and also provides the data points for our customers to make more informed decisions about where they stay. In addition, our customers are now able to offset their trip's carbon emissions should they wish to do so, and we have maintained our 'Funding Climate Action' label awarded by South Pole.
Disclaimer
This announcement contains forward-looking statements. These statements relate to the future prospects, developments and business strategies of Hostelworld. Forward-looking statements are identified by the use of such terms as "believe", "could", "envisage", "estimate", "potential", "intend", "may", "plan", "will" or variations or similar expressions, or the negative thereof. Any forward-looking statements contained in this announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, Hostelworld's actual results may vary materially from those expected, estimated or projected. Any forward-looking statements speak only as at the date of this announcement. Except as required by law, Hostelworld undertakes no obligation to publicly release any update or revisions to any forward-looking statements contained in this announcement to reflect any change in events, conditions or circumstances on which any such statements are based after the time they are made.
Cautionary statement
This Interim Management Report (IMR) has been prepared to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose. The IMR contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report but such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. |
This interim management report has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Hostelworld Group plc and its subsidiary undertakings when viewed as a whole.
Chief Executive's Review: Gary Morrison
Throughout the first half of the year, we have continued to execute our highly differentiated growth strategy as outlined in our Capital Markets Day presentation in November 2022, commensurate with our Company Mission to "help travellers find people to hang out with".
Executing our growth strategy
At its core, our ground-breaking social network leverages our customer booking data to create online hostel and city-based chat rooms, populated by customers with overlapping stay dates, accessible via our iOS and Android apps. Customers use these chat rooms and other customer's profiles to make plans and find people to hang out with in destination. These chat rooms are available to customers who have opted into the social platform 14 days before check-in, and close 3 days after check-out.
Since launching our social network in Q2 2022 we have seen penetration steadily increase, with now over 80% of all of our bookings being made by social members in the first half of this year (+14% YoY). Moreover, we have also seen a steady increase in usage, with growth in messages sent far outstripping growth in bookings made by social members. Overall, our social strategy has not only driven strong growth in net bookings and market share since launch but has also driven strong growth in App bookings (+20% YoY) relative to other web channels (+2% YoY), which has served to reduce our marketing expenses as a percentage of generated revenue over time.
Over the course of H1 2024 we have continued to innovate and strengthen our differentiated social network value proposition with upgrades to customer profiles and chat features. We've now made it easier for our customers to initiate chats with others through a dedicated pane in our application that exposes the profiles of all travellers in a location with overlapping stay dates. We've also continued to add to the richness of our profile content by incorporating users' Instagram photos within their profiles. Additionally, we have helped our users better signal their interest in socialising through a new "hang out" status within the chat platform, similar to how other instant messaging platforms signal online/offline/away statuses. Over the balance of the year, we will continue to invest in driving more robust profile content, increased profile visibility and higher profile completion rates across our user base. Finally, within the chat product itself we identified a need for customers to be able to create personal group chats on our social network. This feature was released earlier this year, and we continue to refine it. Over the balance of the year, we will continue to build upon our chat functionality, making it easier for customers to discover chat content, especially in cities with very large numbers of daily chat users.
In parallel to the ongoing work on our social platform, we have continued to streamline our new hostel sign up and onboarding processes and improved the LinkUps product for all hostels. The improvements to the sign up and onboarding processes have resulted in a greater number of hostels entering our acquisition pipeline, and a significant reduction in the time and effort to onboard new properties. Collectively this has increased our market coverage from 73% in H1 2023 to 77% in H1 2024. In relation to Linkups, we have continued to invest in this differentiator for our hostel partners, with many smaller features released to make the product easier to use and allowing hostels to upload and display multiple photos of their events within our shopping funnel. Collectively, I am delighted to see that this has encouraged even more hostels to load their event catalogue on to the LinkUps platform; with more than 84% of social members with a booking (in H1 2024) seeing at least one LinkUp that they could attend in a trip, and 73% seeing at least three LinkUps that they could attend in a trip.
More generally, our overarching objective with regards to our hostel partners is to ensure we deliver them the most profitable customers at market leading commission rates and provide them with the tools to showcase the very best of what they offer through our LinkUps and our 'Staircase to Sustainability' platforms.
To that end, we have expanded our B2B marketing programs to educate and inform, both new and existing hostel partners, on how to get the most from the platform, with Hostelworld conferences in Chiang Mai in April this year, and additional conferences planned in Copenhagen and Mexico City in Autumn. In addition to these conferences, we have both sponsored and hosted numerous events around the world over the last six months and delivered multiple webinars in all major languages and geographies. Finally, we continue to send our global markets team on market visits to meet our hostel partners in person and provide detailed guidance on how to use the tools/features of our platform to maximise their business with us.
Investing in our platform
Over the last 6 months, we have continued to build key services on our platform with application level "on demand" scaling, a flexible microservices based architecture, and more opportunities to use off the shelf services from our cloud services provider. These services include state of the art artificial intelligence and machine learning optimisation engines, which are now powering some of our key services. Our current focus is on the migration of our core inventory availability and pricing services to this new architecture, which we expect to have completed by year end.
Leveraging our cloud-native architecture has allowed us to make good progress towards our goal of transitioning our infrastructure from periodic manual configurations to infrastructure as code. This moves towards eliminating single points of failure and dramatically improves the scalability and resilience of our systems, in addition to reducing our hosting cost.
Progressing our ESG agenda
In parallel with helping millions of travellers around the world to find people to hang out with, we are also committed to building a better world in everything we do.
As noted over the last two years in letters to shareholders, we continue to see growth in the importance of sustainability to all stakeholders in the travel ecosystem. Within the hostelling category, we not only see the majority of young travellers indicating that a hostel's sustainability credentials play a role in deciding where to stay, but also actively choosing to stay in hostels over other accommodation types given their favourable sustainability credentials. In parallel, we also see our hostel partners investing in more sustainable operations, coupled with a strong need for a sustainable management system which both aligns to travel industry standards and allows them to showcase their sustainability practices. More broadly, across travel and other categories, we also see increasing demands for companies not only to do more to address the risks of climate change, but also provide more granular disclosures around their efforts for the same.
We continued our collaboration with Bureau Veritas to refresh the calculation of scope 1 and 2 emissions of a representative group of hostels (+24 % YoY) and compared these with the publicly available emissions data from a representative group of hotel chains. The second edition of this report was published in February 2024 and once again indicated that the hostelling category emits significantly less (-82%) scope 1 and scope 2 emissions (tCO2e) on a per bednight basis compared to a 1-night stay in a typical hotel chain. Furthermore, the analysis also indicated that the sustainability gap between hostels and hotels has widened still further YoY, with hostels reporting a YoY reduction in average emissions whilst the YoY emissions from the hotels analysed shows an increase.
Our work over the last six months has focused on growing our sustainability improvement framework for the hostelling industry. As noted in my shareholder communications from last year, we have made a significant investment to build this sustainability framework for the hostelling industry in early 2023, with three specific objectives in mind.
1. The framework had to be anchored in GSTC standards to ensure that the sustainability classifications it generated were robust, traceable and comparable against any other business in the travel ecosystem;
2. The framework needed to be appropriate to the needs of smaller business hostel owners, who had reported that existing travel industry sustainability measurement systems were either too costly or time consuming to maintain; and
3. The framework needed to not only provide the means for hostel partners to showcase their sustainability credentials on our platform, but to also encourage progression towards even more sustainable operations over time.
After almost a year's worth of work, I am delighted to report that we delivered on all three objectives in February this year, with the launch of our 'Staircase to Sustainability' platform. This bespoke sustainability improvement framework comprises a data collection process built into our existing hostel facing extranet portal, logic within our platform to determine a sustainability classification level for each hostel, and the means to display that sustainability classification level as a "badge" throughout our website and mobile native apps. Since launching the 'Staircase to Sustainability' platform, we have seen strong uptake from the hostels on our platform, with over 1,800 hostels having already completed the sustainability assessment process and receiving a classification on platform; and a further 250 in the pipeline. Overall, we are very proud to play our leading role in championing sustainability in the hostel industry, and we are excited to see the impact of this framework in the years to come.
We also champion our own sustainability. For the past three years we have been awarded the 'Funding Climate Action' label, in partnership with South Pole partly due to our elimination and strict control of scope 1 and scope 2 emissions. This year we have partnered with South Pole to perform a detailed review of our scope 3 emissions and set a target for these emissions, which goes beyond the thresholds stipulated by the SBTi for our size of Company. We will report to the market later this year.
In addition to our efforts towards building a more sustainable travel industry, we also seek to build an inclusive, high-performance culture at Hostelworld, and ensure we create a positive impact within the communities we operate in. To that end, over the last six months we have worked closely with Neurodiversity Ireland, the Dyslexia Association of Ireland and the UK National Autistic Society to enhance our employee's understanding and support of Neurodiversity across our business, and thus creating a safe space for open discussions and inclusivity.
In parallel, we have also strengthened our partnership with Teen-Turn, an Irish based charity that helps teenage girls from underserved backgrounds gain experience working in STEM with the aim of leading more women into tech-focused qualifications and careers. We are delighted to have welcomed program participants to our business on summer internships.
Summary
Over the first six months of this year, we have continued to demonstrate the capacity of our social strategy to drive profitable growth in market share, and we have continued to tightly manage costs. Taken together, this enabled the Hostelworld team to deliver an 88% increase YoY in adjusted EBITDA, and fully repay our outstanding debt with AIB, two years ahead of schedule. I'd therefore like to take this opportunity to thank each and every one of our employees for their commitment and hard work in delivering these results.
Gary Morrison
Chief Executive Officer
08 August 2024
Financial Review: Caroline Sherry
Highlights
· Net bookings of 3.7m (+9% year on year) driven by record performances in Asia and Central America
· Net average booking value of
· Net revenue of
· Direct marketing as a percentage of generated revenue totalled 45%, down 6% from 51% in H1 2023, driving a net margin growth of +23% year on year
· Total operating costs of
· Operating profit
· Adjusted EBITDA
· Adjusted earnings per share 6.0 € cent (H1 2023: adjusted loss per share 1.9 € cent)
· Closing cash position of
· Net asset position of
Revenue and operating profit
Net bookings totalled 3.7m, an increase of 9% compared to H1 2023 (H1 2023: 3.4m) driven by strong growth in Asia and Central America. Net ABV, the average value paid by a customer for a net booking was
Featured listing advertising revenue, revenue generated from hostels advertising on our platform, grew to
Operating expenses totalled
Group operating profit amounted to
Exceptional items
Exceptional items warrant separate disclosure due to their nature or materiality. The Group incurred no exceptional items in the period. Prior period exceptional items primarily relate to costs incurred on refinancing of the HPS facility totalling
Share-based payment
The Group incurred a total share-based payment expense of
On 22 April 2024, 5,245 shares were issued regarding the 2020 SAYE scheme at
On 03 May 2024 a new LTIP plan of 1,909,075 awards was struck for executives and key members of the Hostelworld team. All LTIP and RSU awards are nil cost options.
Current and deferred tax
The Group corporation tax charge for H1 2024 is
Deferred tax charge amount to
Earnings per share
Basic earnings per share for the Group was 2.03 € cent (H1 2023: loss per share: 6.23 € cent). Adjusted earnings per share was 6.0 € cent per share (H1 2023 loss per share: 1.9 € cent per share) with the return to profitability, of both metrics, reflective of the business's return to normal trading post COVID-19.
Finance costs, net debt and financing
At the balance sheet date, the Group had repaid AIB debt facilities, in full and 2 years ahead of schedule, and had a closing net debt position of
In May 2023 the Group repaid the
The Group incurred
Debt warehoused
The Group availed of the Irish Revenue Commissioners tax warehousing scheme and warehoused
In May 2024 the Group made an initial payment of 15%, in line with the repayment terms set with the Irish Revenue Commissioners, followed by monthly payments. These monthly payments will continue over a three-year period to April 2027. The Group continues to monitor and comply with the appropriate Revenue guidelines applicable to this scheme.
Development labour
Total development labour intangible asset additions amounted to
Impact of new accounting standards
New accounting standards and amendments to existing standards implemented in 2024 did not have a material impact on the Group.
Related parties
Related party transactions are disclosed in note 15 to the condensed Group Financial Statements.
Investor relations
The Group have a proactive approach to investor relations. The release of our annual and interim results, along with quarterly trading updates, provide regular information regarding our performance and are accompanied by presentations, webcasts and conference calls. In May 2024, an AGM was held providing engagement channels for our shareholders to send advance questions to the Board, with all details relating to the AGM published on the Company's website.
We held a number of investor roadshows and attended industry conferences. These engagements provided an opportunity for the management team to meet existing and/or potential investors and analysts in a concentrated set of meetings. This direct feedback and input on the investor community's perspective of the Company is reflected upon to ensure that our investor relations communications remain meaningful and effective.
Principal risks and uncertainties
There are a number of potential risks and uncertainties which could have a material impact on future Group performance and could cause actual results to differ materially from expected and historical results. The Board considers the risks and uncertainties described in detail in the 2023 Annual Report and Financial Statements, published on 02 April 2024, to remain applicable. Any changes to this evaluation and a description of each is set out within the Appendix.
Dividend
The Directors do not propose an interim dividend in respect of the six months ended 30 June 2024 (six months ended 30 June 2023: €nil). Any payment of cash dividends will be subject to the Group generating adjusted profit after tax, the Group's cash position, any restrictions in the Group's banking facilities and subject to compliance with Companies Act 2006 requirements regarding ensuring sufficiency of distributable reserves at the time of paying the dividend.
Caroline Sherry
Chief Financial Officer
08 August 2024
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
6 months ended 30 June 2024 |
6 months ended 30 June 2023 |
Year ended 31 December 2023 |
|
Notes |
€'000 |
€'000 |
€'000 |
|
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
|
Revenue |
3 |
46,435 |
45,837 |
93,264 |
Operating expenses* |
4 |
(42,496) |
(47,600) |
(88,431) |
Reversal of impairment of trade receivables |
|
13 |
7 |
14 |
Share of results of associate |
|
56 |
88 |
137 |
|
|
|
|
|
Operating profit/(loss) |
|
4,008 |
(1,668) |
4,984 |
Finance income |
|
|
- |
53 |
Finance costs* |
|
(304) |
(5,415) |
(6,107) |
|
|
|
|
|
Profit/(loss) before tax |
|
3,704 |
(7,083) |
(1,070) |
|
|
|
|
|
Tax (cost)/credit |
6,9 |
(1,180) |
(413) |
6,206 |
Profit/(loss) for the period/year attributable to the equity owners of the parent Company |
|
2,524 |
(7,496) |
5,136 |
Basic earnings/(loss) per share (euro cent) |
|
2.03 |
(6.23) |
4.21 |
Diluted earnings/(loss) per share (euro cent) |
|
1.96 |
(6.23) |
4.07 |
*No current period exceptional costs. Included in operating expenses 30 June 2023 are exceptional cost of
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
6 months ended 30 June 2024 |
6 months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
Unaudited |
Unaudited |
Audited |
|
|
|
|
Profit/(loss) for the period/year |
2,524 |
(7,496) |
5,136 |
Items that may be reclassified subsequently to profit or loss: |
|
|
|
Exchange differences on translation of foreign operations |
4 |
(25) |
(24) |
Total comprehensive income/(loss) for the period/year attributable to equity owners of the Parent Company |
2,528 |
(7,521) |
5,112 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
|
|
|
|
|
|
|
|
|
|
|
Notes |
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
|
€'000 |
€'000 |
€'000 |
|
|
Unaudited |
Unaudited |
Audited |
Non-current assets |
|
|
|
|
Intangible assets |
8 |
64,320 |
69,457 |
66,533 |
Property, plant and equipment |
|
735 |
1,047 |
818 |
Deferred tax assets |
9 |
14,456 |
8,861 |
15,530 |
Investment in associate |
|
1,173 |
1,068 |
1,117 |
Cash and cash equivalents |
|
- |
750 |
750 |
|
|
80,684 |
81,183 |
84,748 |
Current assets |
|
|
|
|
Trade and other receivables |
10 |
4,894 |
4,515 |
3,275 |
Corporation tax |
|
100 |
1 |
91 |
Cash and cash equivalents |
|
5,029 |
9,947 |
6,714 |
|
|
10,023 |
14,463 |
10,080 |
Total assets |
|
90,707 |
95,646 |
94,828 |
|
|
|
|
|
Issued capital and reserves attributable to equity owners of the parent |
|
|
|
|
Share capital |
11 |
1,250 |
1,235 |
1,236 |
Share premium |
11 |
14,425 |
14,328 |
14,425 |
Other reserves |
|
3,835 |
4,235 |
2,918 |
Retained earnings |
|
43,123 |
25,885 |
40,599 |
Total equity attributable to equity holders of the parent Company |
|
62,633 |
45,683 |
59,178 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Non-current debt |
|
|
|
|
Debt warehoused |
12 |
4,903 |
6,833 |
6,425 |
Borrowings |
14 |
- |
9,870 |
4,807 |
Lease liabilities |
|
33 |
- |
35 |
|
|
4,936 |
16,703 |
11,267 |
Current liabilities Current debt Debt warehoused Borrowings |
12 14 |
2,674 - |
2,653 7,522 |
3,204 5,340 |
Trade and other payables |
|
|
|
|
Trade payables Deferred revenue Accruals and other payables |
13 13 13 |
5,396 7,498 6,785 |
5,907 8,883 7,136 |
3,314 3,891 7,859 |
Lease liabilities |
|
473 |
826 |
545 |
Corporation tax |
|
312 |
333 |
230 |
|
|
23,138 |
33,260 |
24,383 |
Total liabilities |
|
28,074 |
49,963 |
35,650 |
Total equity and liabilities |
|
90,707 |
95,646 |
94,828 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
Share capital |
Share premium |
Retained earnings |
Other reserves |
Total |
|
Notes |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
Balance at 31 December 2022 (audited) |
|
1,175 |
14,328 |
30,308 |
6,432 |
52,243 |
|
|
|
|
|
|
|
Issue of shares |
|
60 |
- |
- |
- |
60 |
Total comprehensive income for the period |
|
- |
- |
(7,496) |
(25) |
(7,521) |
Credit to equity for equity settled share-based payments |
|
- |
- |
- |
901 |
901 |
Transfer of exercised and expired share-based awards |
|
- |
- |
3,073 |
(3,073) |
- |
Balance at 30 June 2023 (unaudited) |
|
1,235 |
14,328 |
25,885 |
4,235 |
45,683 |
Issue of shares |
|
1 |
97 |
- |
- |
98 |
Total comprehensive income for the period |
|
- |
- |
12,632 |
1 |
12,633 |
Credit to equity for equity settled share- based payments |
|
- |
- |
- |
764 |
764 |
Transfer of exercised and expired share-based awards |
|
|
|
2,082 |
(2,082) |
- |
Balance at 31 December 2023 (audited) |
|
1,236 |
14,425 |
40,599 |
2,918 |
59,178 |
Issue of shares |
11 |
14 |
- |
- |
- |
14 |
Total comprehensive income for the period |
|
- |
- |
2,524 |
4 |
2,528 |
Credit to equity for equity settled share- based payments |
|
- |
- |
- |
913 |
913 |
Balance at 30 June 2024 (unaudited) |
|
1,250 |
14,425 |
43,123 |
3,835 |
62,633 |
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
|
|
|
|
|
|
|
|
|
|
|
Notes |
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
|
€'000 |
€'000 |
€'000 |
|
|
Unaudited |
Unaudited |
Audited |
Cash flows from operating activities |
|
|
|
|
Profit/(loss) for the period/year |
|
2,524 |
(7,496) |
5,136 |
Tax |
|
1,180 |
413 |
(6,206) |
Profit/(loss) before tax |
|
3,704 |
(7,083) |
(1,070) |
Amortisation and depreciation |
4 |
4,899 |
5,971 |
11,774 |
Share of profit of associate |
|
(56) |
(88) |
(137) |
Net profit on disposal of leases |
4 |
(5) |
- |
(3) |
Financial income |
|
(7) |
- |
(53) |
Finance expense |
|
311 |
1,901 |
2,581 |
Finance expense (exceptional) |
5 |
- |
3,514 |
3,526 |
Employee equity settled share-based payment expense |
|
918 |
939 |
1,682 |
Changes in working capital items: |
|
|
|
|
Increase in trade and other payables |
13 |
4,615 |
9,111 |
2,392 |
Increase in trade and other receivables |
10 |
(1,619) |
(1,269) |
(28) |
|
|
12,760 |
12,996 |
20,664 |
Interest paid (including lease interest) |
|
(299) |
(2,210) |
(3,036) |
Interest received |
|
7 |
- |
59 |
Income tax paid |
|
(41) |
(19) |
(262) |
Net cash generated from operating activities |
|
12,427 |
10,767 |
17,425 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Acquisition / development of intangible assets |
8 |
(2,352) |
(1,544) |
(3,986) |
Purchases of property, plant and equipment |
|
(41) |
(61) |
(101) |
Net cash used in investing activities |
|
(2,393) |
(1,605) |
(4,087) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Drawdown of borrowings |
14 |
- |
17,369 |
17,369 |
Transaction costs relating to borrowings |
14 |
- |
(170) |
(170) |
Repayment of borrowings |
14 |
(10,333) |
(34,066) |
(41,233) |
Repayment of warehoused debt |
12 |
(1,861) |
- |
- |
Proceeds received on issue of warrants |
|
- |
33 |
33 |
Proceeds received on issue of shares |
|
- |
- |
98 |
Repayments of obligations under lease liabilities |
|
(279) |
(568) |
(909) |
Net cash used in financing activities |
|
(12,473) |
(17,402) |
(24,812) |
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(2,439) |
(8,240) |
(11,474) |
Cash and cash equivalents at the beginning of the period/year |
|
7,464 |
18,962 |
18,962 |
Effect of foreign exchange rate changes |
|
4 |
(25) |
(24) |
Cash and cash equivalents at the end of the period/year |
|
5,029 |
10,697 |
7,464 |
NOTES TO THE CONDENSED GROUP INTERIM FINANCIAL STATEMENTS
1. General information
Hostelworld Group plc, hereinafter "the Company", is a public limited company incorporated in the United Kingdom. The registered office of the Company is One Chamberlain Square, Birmingham, B3 3AX. The Company is the ultimate parent company of the Group and its shares are quoted on the Euronext Dublin and London Stock Exchange.
These condensed group interim financial statements as at, and for the period from 1 January 2024 to 30 June 2024 (half year/six months) ("interim financial statements") were approved for issue by the Board of Directors on 08 August 2024.
2. Accounting policies
Basis of preparation
The interim financial statements should be read in conjunction with the financial statements as at, and for the year ended 31 December 2023, the "2023 annual report". The interim financial statements do not include all of the information required for a complete set of IFRS financial statements and have not been audited or reviewed by the Group's auditor. The methods of computation, presentation and accounting policies adopted in the preparation of the interim financial statements are consistent with those applied in the 2023 Annual Report other than those noted below. The Group's accounting policies are set out in note 1 and note 2 to the financial statements in the 2023 Annual Report. The auditors reported on the 2023 annual report and their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34 'Interim Financial Reporting'.
Going concern
The directors, after making enquiries, have a reasonable expectation that the Group has adequate resources to continue operating as a going concern for the foreseeable future.
As 30 June 2024, the Group had repaid its borrowing facilities held with AIB in full, 31 December 2023 borrowings totalled
The Directors took account of the principal risks and uncertainties identified and discussed on pages 25 to 27 and believe that the Group is well placed to manage these risks successfully. The Directors also considered the Group's cash flow forecasts and current and anticipated trading volumes and are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of signing of this report, and accordingly, they continue to adopt the going concern basis in preparing the condensed Group financial statements.
Changes in accounting policies
Since the last Annual Report there are a number of amendments to existing accounting standards that have been adopted. These did not have a material impact on the condensed Group financial statements. The same accounting policies and methods of computation are followed compared with the most recent annual Group financial statements.
Key judgements and sources of estimation uncertainty
In preparing these condensed Group financial statements, the directors have made judgements in applying the Group's accounting policies and there are key sources of estimation uncertainty which affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the condensed Group financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2023.
3. Revenue
The Group's major revenue-generating asset class comprises its software and data processing services. There have been no changes to the basis of segmentation or the measurement basis for the segment profit or loss. Reportable segment information is presented as follows:
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Europe |
25,089 |
26,840 |
56,400 |
Americas |
8,873 |
8,957 |
17,311 |
Asia, Africa and Oceania |
12,473 |
10,040 |
19,553 |
Total revenue |
46,435 |
45,837 |
93,264 |
For the six-month period ended 30 June 2024, an amount of
Disaggregation of revenue is presented as follows:
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Technology and data processing fees |
45,615 |
45,362 |
92,079 |
Ancillary services and advertising revenue |
820 |
475 |
1,185 |
Total revenue |
46,435 |
45,837 |
93,264 |
In the six months ended 30 June 2024, the Group generated 98% (30 June 2023: 99%) of its revenues from the technology and data processing fees that it charged to accommodation providers.
4. Operating expenses
Profit/(loss) for the period has been arrived at after charging/ (crediting) the following operating costs:
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Marketing costs - brand |
393 |
372 |
676 |
Marketing costs - direct |
22,871 |
26,456 |
46,881 |
Credit card processing fees |
1,431 |
1,452 |
2,672 |
Staff costs |
8,911 |
9,583* |
19,743 |
Contractor costs |
926 |
607* |
1,268 |
Platform operating costs |
1,588 |
1,787 |
3,173 |
Profit on disposal of lease liability |
(5) |
- |
(3) |
Exceptional items |
- |
79 |
253 |
Foreign exchange loss/(gain) |
60 |
(106) |
156 |
Other administrative costs |
1,601 |
1,525 |
2,015 |
Total administrative expenses |
37,776 |
41,755 |
76,834 |
Depreciation of property, plant and equipment |
334 |
526 |
963 |
Amortisation of intangible fixed assets |
4,565 |
5,445 |
10,811 |
Amortisation of R&D tax credit |
(179) |
(126) |
(177) |
Total operating expenses |
42,496 |
47,600 |
88,431 |
Total administration expenses decreased by
Included within administration expenses in the current period is a total credit of
*An amount of
5. Exceptional items
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Restructuring costs - operating expenses Restructuring costs - finance costs |
- - |
79 3,514 |
253 3,526 |
Total exceptional items |
- |
3,593 |
3,779 |
Prior period/year exceptional items primarily relate to costs incurred on refinancing of the HPS facility totalling
6. Tax
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Tax cost Deferred tax cost/(credit) |
106 1,074 |
100 313 |
150 (6,356) |
Tax cost/(credit) |
1,180 |
413 |
(6,206) |
The corporation tax charge for the six-month period amounted to
Tax charge represents the best estimate of the average annual effective tax rate expected for the full year applied to the pre-tax profit or loss of each group entity during the six-month period. In calculating the expected tax rate, the Group has taken the forecasted full year 2024 earnings or loss of each group entity.
7. Earnings/(loss) per share
Basic loss per share is computed by dividing the net loss for the period available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period:
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Weighted average number of shares in issue ('000s) |
124,102 |
120,395 |
121,990 |
Profit/(loss) for the period (€'000s) |
2,524 |
(7,496) |
5,136 |
Basic earnings/(loss) per share (€ cent) |
2.03 |
(6.23) |
4.21 |
Diluted earnings/(loss) per share is computed by adjusting the weighted average number of ordinary shares in issue to assume conversion of all potential dilutive ordinary shares. Share options and share awards are the Company's only potential dilutive ordinary shares. In the prior 6 month period ordinary shares potentially issuable from share based payment arrangements are anti-dilutive due to the loss in the financial period meaning there is no difference between basic and diluted earnings per share.
|
Six months ended 30 June 2024 |
Six months ended 30 June 2023 |
Year ended 31 December 2023 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Weighted average number of shares in issue ('000s) |
124,102 |
- |
121,990 |
Share options (€'000s) |
4,906 |
- |
4,366 |
Weighted average number of ordinary shares for the purpose of diluted earnings per share (€'000s) |
129,008 |
- |
126,356 |
Diluted earnings/(loss) per share (€ cent) |
1.96 |
- |
4.07 |
8. Intangible assets
Additions during the period comprised of capitalised development costs of
Capitalised development costs additions during the period are made up of internal staff costs of
Offsetting additions is a total amortisation charge of
9. Deferred tax
|
Intangible assets |
Property, plant and equipment |
Losses and interest relief |
Total |
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
At 01 January 2023 (audited) |
9,060 |
114 |
- |
9,174 |
Credit/ (cost) to the income statement |
995 |
(69) |
5,430 |
6,356 |
At 31 December 2023 (audited) |
10,055 |
45 |
5,430 |
15,530 |
(Cost) / credit to the income statement |
(815) |
1 |
(260) |
(1,074) |
At 30 June 2024 (unaudited) |
9,240 |
46 |
5,170 |
14,456 |
10. Trade and other receivables
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Amounts falling due within one year |
|
|
|
Trade receivables (hostels and payment processor) |
1,919 |
1,191 |
777 |
Prepayments and accrued income |
1,054 |
922 |
1,172 |
Value added tax due from Revenue Commissioners |
1,921 |
2,402 |
1,326 |
|
|
|
|
|
4,894 |
4,515 |
3,275 |
11. Share capital
|
No of shares of |
Share capital €'000 |
Share premium €'000 |
Total €'000 |
|
|
|
|
|
At 31 December 2023 |
123,639 |
1,236 |
14,425 |
15,661 |
Share issue - SAYE award, 22 April 2024 |
5 |
- |
- |
- |
Share issue - LTIP award, 29 May 2024 |
1,346 |
14 |
- |
14 |
At 30 June 2024 |
124,990 |
1,250 |
14,425 |
15,675 |
The Group has one class of ordinary shares which carry no right to fixed income. The share capital of the Group is represented by the share capital of the parent company, Hostelworld Group plc. All the Company's shares are allotted, called up, fully paid and quoted on the London Stock Exchange and Euronext Dublin.
12. Warehoused payroll taxes
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Opening balance |
9,629 |
9,438 |
9,438 |
Repayments made |
(1,861) |
- |
- |
Finance costs (unwind)/cost |
(191) |
48 |
191 |
|
|
|
|
Closing balance |
7,577 |
9,486 |
9,629 |
The Group has availed of the Irish Revenue tax warehousing scheme and deferred payment on all Irish employer taxes arising during the period from February 2021 to March 2022. In 2024 the Group wrote-off
The Group made an initial down payment of 15% in line with the repayment terms set with the Irish Revenue Commissioners in May 2024, followed by monthly payments in May and June which will continue over a three-year period to April 2027. This repayment plan is reflected in the classification of the liability between current and non-current.
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Non current liability |
4,903 |
6,833 |
6,425 |
Current liability |
2,674 |
2,653 |
3,204 |
|
|
|
|
Total warehoused payroll taxes |
7,577 |
9,486 |
9,629 |
13. Trade and other payables
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Current liabilities |
|
|
|
Trade payables |
5,396 |
5,907 |
3,314 |
Accruals and other payables |
6,141 |
6,546 |
7,272 |
Deferred revenue |
7,498 |
8,883 |
3,891 |
Payroll taxes (non-warehoused) |
644 |
590 |
587 |
|
|
|
|
|
19,679 |
21,926 |
15,064 |
At 30 June 2024,
14. Borrowings
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
|
|
|
Opening balance |
10,147 |
31,113 |
31,113 |
Repayments (HPS) |
- |
(34,066) |
(34,066) |
Drawdown (AIB) |
- |
17,369 |
17,369 |
Repayments (AIB) |
(10,333) |
- |
(7,167) |
Transaction costs capitalised related to borrowings |
- |
(170) |
(170) |
Finance costs |
472 |
1,838 |
2,342 |
Finance costs - exceptional items |
- |
2,827 |
2,827 |
Finance interest paid |
(286) |
(1,519) |
(2,101) |
|
|
|
|
|
- |
17,392 |
10,147 |
In 2021 the Group signed a
A three-year facility was signed with AIB on 09 May 2023. This facility was comprised of a
At the date of repayment all security and covenant requirements held by AIB were released. The Group continues to hold an undrawn
|
30 June 2024 |
30 June 2023 |
31 December 2023 |
|
€'000 |
€'000 |
€'000 |
|
(Unaudited) |
(Unaudited) |
(Audited) |
Non-current liability |
- |
9,870 |
4,807 |
Current liability |
- |
7,522 |
5,340 |
|
|
|
|
Total borrowings |
- |
17,392 |
10,147 |
15. Group structure and related party transactions
On 02 May 2024 Ulrik Bengtsson and Paul Duffy were appointed as non-executive independent directors to the Group.
On 09 February 2024 Hostelworld Management Services Limited was incorporated with a registered address at Charlemont Exchange, Charlemont St, Dublin, D02 VN88. Its principal activity relates to the provision of management services to the Group. On 01 April 2024 a permanent establishment of Hostelworld Management Services Limited was registered in the Netherlands.
There are no other changes to the Group structure or related parties to highlight in respect of H1 2024.
16. Events after the reporting date
There have been no significant events, outside the ordinary course of business, affecting the Group since 30 June 2024.
APPENDIX 1: ALTERNATIVE PERFORMANCE MEASURES
The Group uses the following alternative performance measures (APMs) which are non-IFRS measures to monitor the performance of its operations and of the Group as a whole. An explanation of each APM and its purpose within the Group is set out from page 222 within the Annual Report and Financial Statements for the year ended 31 December 2023, published on 02 April 2024.
Adjusted EBITDA and Adjusted EBITDA Margin
Definition: The Group uses earnings before interest, tax, depreciation and amortisation, excluding exceptional and non-cash items (adjusted EBITDA) and Adjusted EBITDA margin when assessing trading profitability in the business from one period to the next.
Why we use it: Adjusted EBITDA and Adjusted EBITDA margin allows the Group to review baseline profitability. This APM removes items which do not impact underlying trading performance.
Reconciliation between profit/(loss) for the period and adjusted EBITDA / Adjusted EBITDA margin:
|
30 June 2024 |
30 June 2023 |
|
€'000 |
€'000 |
Profit/(loss) for the period |
2,524 |
(7,496) |
Tax |
1,180 |
413 |
Net finance costs |
304 |
1,901 |
Net finance costs (exceptional) |
- |
3,514 |
Operating profit/(loss) |
4,008 |
(1,668) |
Depreciation |
334 |
526 |
Amortisation of development costs |
1,623 |
1,524 |
Amortisation of acquired intangible assets |
2,942 |
3,921 |
R&D tax credit |
(179) |
(126) |
Share of result of associate |
(56) |
(88) |
Exceptional items |
- |
79 |
Share based payment expense |
918 |
939 |
Adjusted EBITDA |
9,590 |
5,107 |
Adjusted EBITDA |
9,590 |
5,107 |
Net revenue |
46,435 |
45,837 |
Adjusted EBITDA Margin % |
21% |
11% |
Adjusted profit after tax ("Adjusted PAT")
Definition: Adjusted profit after tax is an APM that the Group uses to calculate the potential dividend when a dividend is being paid, subject to company law requirements regarding distributable profits and the dividend policy within the Group.
Why we use it: It excludes items that the Group cannot control when considering trading profitability which can have large impact on the reported result for the period, and which can make underlying trends difficult to interpret.
Reconciliation between adjusted EBITDA and profit/(loss) for the period:
|
30 June 2024 |
30 June 2023 |
|
€'000 |
€'000 |
Adjusted EBITDA |
9,590 |
5,107 |
Depreciation |
(334) |
(526) |
Amortisation of development costs |
(1,623) |
(1,524) |
Net finance costs |
(304) |
(1,901) |
Net finance costs (exceptional) |
- |
(3,514) |
R&D tax credit |
179 |
126 |
Share of result of associate |
56 |
88 |
Corporation tax |
(106) |
(100) |
Adjusted profit/(loss) after tax |
7,458 |
(2,244) |
Exceptional items |
- |
(79) |
Amortisation of acquired intangible assets |
(2,942) |
(3,921) |
Share based payment expense |
(918) |
(939) |
Deferred tax |
(1,074) |
(313) |
Profit/(loss) for the period |
2,524 |
(7,496) |
Adjusted earnings per share
Definition: Adjusted EPS is calculated on the weighted average number of ordinary shares in issue, using the adjusted profit after tax.
Why we use it: It is an additional measure of underlying performance that excludes exceptional items that are not related to ongoing operational performance and other certain items which do not impact underlying trading performance. Adjusted EPS is a performance condition included in the Executive Director and Senior Management remuneration for the LTIP 2024 plan struck.
|
30 June 2024 |
30 June 2023 |
Adjusted profit/(loss) after tax €'000 |
7,458 |
(2,244) |
Weighted average shares in issue ('m) |
124 |
120 |
Adjusted EPS (cent per share) |
6.0 |
(1.9) |
Adjusted free cash flow
Definition: Free cash flow adjusted for capital expenditure, acquisition of intangible assets, net finance costs, net movement in working capital and excluding the effect of exceptional costs.
Why we use it: It is a measure which shows the cash the Group is generating/(using) to operate day to day. It excludes certain items which do not relate to the day-to-day activities of the Group.
|
30 June 2024 |
31 December 2023 |
|
€'000 |
€'000 |
Net decrease in cash and cash equivalents |
(2,439) |
(11,474) |
Add back |
|
|
Repayment of borrowings |
10,333 |
41,233 |
PIK interest paid |
- |
451 |
Repayment of warehoused debt |
1,861 |
- |
Proceeds from borrowings |
- |
(17,369) |
Transaction costs capitalised |
- |
170 |
Proceeds on issue of shares |
- |
(98) |
Proceeds received on issue of warrants |
- |
(33) |
Exceptional items |
154 |
986 |
Adjusted free cash flow |
9,909 |
13,866 |
Adjusted EBITDA |
9,590 |
18,379 |
Adjusted free cash flow % |
103% |
75% |
Exceptional items paid relate to 2023 exceptional costs paid in 2024.
Reconciliation between adjusted free cash flow and net cash from operating activities for the period/year:
|
30 June 2024 |
31 December 2023 |
|
€'000 |
€'000 |
Adjusted free cash flow |
9,909 |
13,866 |
Exceptional items |
(154) |
(986) |
PIK interest paid |
- |
(451) |
Lease liability payments |
279 |
909 |
Acquisition/capitalisation of intangible assets |
2,352 |
3,986 |
Purchases of property, plant and equipment |
41 |
101 |
Net cash from operating activities |
12,427 |
17,425 |
Exceptional items paid relate to 2023 exceptional costs paid in 2024.
Generated revenue, net gross merchandise value ("GMV") and net average booking value ("ABV")
Definition: Generated revenue is total bookings, less cancellations and excludes the impact of adjustments the cost of refunds, chargebacks and voucher provisioning items such as deferred revenue. Net GMV represents the gross transaction value of bookings on our platform less cancellations. Net ABV represents the average value paid by a customer for a net booking.
Why we use it: Generated revenue is used in order to exclude from trading ratios the impact of non-trading items such as deferred revenue. Net GMV demonstrates the total value of transactions executed through our platform i.e. 100% of the booking value. Net ABV is an APM which measures the average value paid by a customer for a booking.
|
30 June 2024 |
30 June 2023 |
|
€'000 |
€'000 |
GMV |
379,414 |
390,850 |
Cancellations |
(48,578) |
(51,300) |
Net GMV (100% deposit) |
330,836 |
339,550 |
Hostelworld commission share: |
|
|
Gross revenue |
57,688 |
59,267 |
Cancellations |
(7,368) |
(7,769) |
Generated revenue |
50,320 |
51,498 |
Deferred revenue cost |
(3,636) |
(5,613) |
Other ancillary revenue |
131 |
153 |
Adjustments to revenue |
(820) |
(171) |
Advertising income |
820 |
475 |
Volume incentive rebates |
(380) |
(505) |
Net revenue |
46,435 |
45,837 |
|
30 June 2024 |
30 June 2023 |
Generated revenue (€'000) |
50,320 |
51,498 |
Net bookings (#'000) |
3,701 |
3,398 |
Net ABV € cent |
13.60 |
15.15 |
Direct marketing costs as a % of generated revenue
Definition: Direct marketing costs as a percentage of generated revenue is an APM which looks at the efficiency of marketing spend.
Why we use it: This APM identifies how efficient the Groups marketing channels are. Generated revenue is utilised to understand the relationship between bookings/revenue and the direct marketing costs for those. Net revenue includes items such as deferred revenue and other ancillary streams which do not impact the amount spent through direct marketing to acquire bookings.
|
30 June 2024 |
30 June 2023 |
|
€'000 |
€'000 |
Direct marketing costs |
22,871 |
26,456 |
Generated revenue |
50,320 |
51,498 |
Direct marketing costs as a % of generated revenue |
45% |
51% |
Net margin
Definition: Net margin is an APM which is calculated by deducting direct costs from revenue. Direct costs are comprised of direct marketing costs and credit card fees. Further detail is included in note 4.
Why we use it: This APM identifies the trading profit margin, excluding administration costs / day to day expenses.
|
30 June 2024 |
30 June 2023 |
|
€'000 |
€'000 |
Net revenue |
46,435 |
45,837 |
Direct costs |
(24,302) |
(27,908) |
Net margin |
22,133 |
17,929 |
APPENDIX 2: PRINCIPAL RISKS AND UNCERTAINTIES
The Group's risk register identifies key risks including any emerging risks, and monitors progress in managing and mitigating these risks. Each risk identified is subject to an assessment incorporating likelihood of occurrence and potential impact on the Group. The Group's risk register is subject to review by the Executive Leadership Team ('ELT') prior to reporting to the Audit Committee and Board.
The principal risks and uncertainties faced by the Group are reported annually within the Annual Report and Financial Statements for the year ended 31 December 2023, published on 02 April 2024.
A review was performed of the risk register during H1 2024.
|
Strategic & external risk |
Technological, Cyber & Data risk |
Financial risk |
Operational & Regulatory risk |
Not previously disclosed |
- Execution of strategy |
|
|
|
Increased level of risk |
|
- Data security - Cyber security |
|
|
Unchanged level of risk |
- Macroeconomic conditions - Competition - Impact of uncontrollable events |
- Platform evolution and innovation - Marketing optimisation
|
- Taxation |
- Third party reliance - Climate change and sustainability - Regulation - Business continuity - Brand and reputation - People |
Decreased level of risk |
|
|
- Financial |
|
The following changes were made:
1. The risk associated with the Group's execution of strategy has been added. This reflects the inherent risk in the Group's ambitious growth targets.
2. The risk profile of Cyber security and Data security have both increased. The continuous upward momentum in the cost of cybercrime is demonstrative of the increasing risk in this area. The sophistication of bad actors continues to grow at rapid pace including their incorporation of new methods based off advances in artificial intelligence. This poses an increased level of threat to both system integrity and data security.
3. The profile of our Financial risk has decreased reflecting the reduced liquidity and interest rate risk upon the Group's repayment of the balance of the AIB term loan facility in H1 2024.
The other risks included have not materially changed from those reported within the annual report.
The principal risks and uncertainties which are applicable for the second half of the year are summarised below.
Material risks
· Macroeconomic conditions
· The Group's financial performance is largely dependent on the wider availability of, and demand for travel services. The demand for travel services is influenced by a range of macroeconomic circumstances and their impact on consumers discretionary spending levels. Economic activity, employment levels, inflation, interest rates, foreign exchange movements, access to credit, and geopolitical stability are among the factors that can impact travel demand.
· Data security
· The security of the confidential business information we generate when engaging in e-commerce, and the personal data we capture from customers and employees, is essential to ensure compliance with legislation and maintaining confidence in our services. As an online platform, we are constantly exposed to threats in the form of internal and external attacks or disruption to our systems or those of our third-party suppliers.
· Cyber security
· The Group, like other companies is susceptible to cyberattacks which could compromise the integrity of our systems and the security of our data. Cyberattacks by individuals, groups of hackers, and state-sponsored organisations are increasing in frequency. The tools and techniques used in such attacks continue to evolve in sophistication.
· Competition
· The risks posed by competition where we compete for supply of hostel inventory and customers could adversely impact our market share and future growth of the business. Our competition may have more resources than we do enabling them to compete more effectively.
· Execution of strategy
· The Group pursues an ambitious growth strategy to deliver attractive and sustainable returns for shareholders. Delivering this strategy requires strong leadership, employee engagement, investment, and governance. The Group operates in an intensely competitive global environment and the risk of loss in market share to competitors, and less than expected market growth, among other factors, may impact on the ability of the Group to successfully execute strategy.
· Marketing optimisation
· Search engines frequently update and change the logic that determines the placement and display of results. As these algorithms evolve, our marketing strategy is at risk of falling behind and not remaining competitive. Our costs to improve or maintain our placement in search results can increase which directly impacts our results and margins.
· Platform evolution and innovation
The ever-increasing pace of change of new technology, infrastructure and software offerings change how customers research, purchase and experience travel. We must stay abreast of technological innovation and change, both in our product offerings and supporting infrastructure, or risk becoming irrelevant to the modern customer. We invest a significant amount in our infrastructure, product, and user experience.
· People
· The Group is dependent on its ability to attract, retain and develop creative, committed, and skilled employees to achieve its strategic objectives. The recruitment environment remains intense. Workforce location decisions may have cost, regulatory, taxation, and other impacts. People risk remains steady but may increase in future if the Group does not keep pace with market developments.
· Brand and reputation
· Hostelworld is a world-leading OTA focused on the hostel market. We rely on the strength of our brand in the market to attract customers to our platform and to secure bookings. Consumer trust and confidence in our brand is therefore essential to ongoing revenue stability and growth. Negative publicity could impact brand perception, consumer loyalty and ultimately revenues.
· Third party reliance
· We rely on hostel accommodation providers to provide us with our inventory. Any limitations on such will directly impact our business and results of operations.
· We rely on a number of key third-party providers within our technology environment for our cloud storage and databases. Any interruption in service from any of these providers may lead to a loss in revenue, loss in site and app functionality, increased input from customer services and engineer time, and ultimately if we experience multiple failures, we risk reputational and brand damage.
· The Group relies on payment processors and payment card schemes to execute certain components of the payments process. There is a risk that the Group may not maintain its relationships with these third parties on favorable terms or that the transaction fees imposed by these providers are increased.
· Climate change and sustainability
· Climate change and sustainability continue to be areas of focus for the Group and are further evolving as areas of heightened concern with consumers and stakeholders. There is a request for more accountability from our customers, employees, and other stakeholders as to the Group's actions to limit its direct and indirect impact on climate change.
· Impact of uncontrollable events
· The threat of a global pandemic (similar to COVID-19), terrorist attacks in key cities and aircrafts in flight, geopolitical conflicts, climate change, natural disasters or other adverse events outside of the control of the Group may reduce demand for or prevent the ability to travel to affected regions. This may result in risk to the health of our employees and customers and consequential negative impact on economic activity.
· Regulation
· The Group's business is global and highly regulated, and is exposed to issues such as competition, licensing of local accommodation and experiences, consumer compliance, taxation, intellectual property, trademarks, data protection and information security, and commercial disputes in multiple jurisdictions. Regulatory and legal requirements, and uncertainties around these issues could subject the Group to business constraints, increased regulatory and compliance costs, and other complexities which may otherwise harm our business.
· Business continuity
· Failure in our IT systems or third-party hosted services on which we rely could disrupt availability of our booking engines and payments platforms, or availability of administrative services.
· Financial risk
· The Group's activities expose it to a variety of financial risks; market risk (particularly exchange rates), credit risk, and liquidity risk. The Group proactively manages financial risk by seeking to minimise potential adverse effects on its financial performance.
· Taxation
· Due to the global nature of our business, tax authorities in other jurisdictions may consider certain taxes as due in their jurisdiction. If those tax authorities take a different view than the Group as to the basis on which the Group is subject to tax, it could result in the Group having to account for tax that it currently does not collect or pay. Additional employee locations in a remote working environment also could give rise to potential tax implications.
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