TIDMHSW
RNS Number : 1329U
Hostelworld Group PLC
05 April 2016
Hostelworld Group plc
("Hostelworld" or the "Group")
Preliminary Results for the Year ended 31 December 2015
Hostelworld, the world's leading hostel-focused online booking
platform, is pleased to announce its preliminary results for the
year ended 31 December 2015.
These represent the Group's first results since its listing on
the London and Irish Stock Exchanges in November 2015, raising a
net EUR173.6 million.
Operational Highlights
-- Successful re-launch of Hostelworld brand leading to
accelerated growth of 17% (2014: 11% growth), with average growth
in H2 of 21%, post brand re-launch; overall Group booking growth of
1%
-- Continued high level (58%) of Group bookings from not-paid-for channels (2014: 57%)
-- 21% of Hostelworld(1) bookings attracted higher commission using Elevate product (2014: 15%)
-- Continued development of responsive interfaces for all
devices - desktop, tablet and mobile - with 41% of 2015 Hostelworld
brand bookings from mobile devices (2014: 31%)
-- Good progress in emerging markets - Asia is the fastest
growing destination region (+10%). South Korea is now the 7(th)
highest nationality for Hostelworld brand bookings
-- Additional one million customer reviews and additional one million Hostelworld app downloads
Financial Highlights
-- Group revenue up by 5% to EUR83.45m (FY 14: EUR79.27m)
-- Average booking value up by 5% to EUR12.1 per booking
-- EUR8.5m increase in marketing investment for the year to
EUR37.4m, including EUR3.2m Hostelworld Brand re-launch
-- Adjusted EBITDA for the year of EUR23.6m (2014: EUR27.0m), reflecting marketing investment
-- Adjusted EBITDA in the second half of the year increased to
EUR13.6m compared to EUR10m in the first half of the year
-- Group Adjusted Profit after Tax of EUR21m (2014: EUR25.6m)
-- Adjusted pro-forma Earnings Per Share of EUR0.22 (2014: EUR0.27)
-- Continued strong underlying cash conversion
-- Maiden dividend of 2.75 euro cents per share, in line with
stated dividend policy and representing 70% - 80% of the Adjusted
Profit after Tax for the period since IPO
(1) Hostelworld Group bookings excluding Hostelbookers
Feargal Mooney, Chief Executive Officer, commented:
"We offer hostels worldwide the market leading proposition,
providing them with a low cost distribution channel, access to a
global customer base, access to our online property management
system and to our leading booking engine technology.
"Consumers trust strong brands. The Hostelworld brand is
characterised by a sense of adventure, community and social
interaction, which appeals to our core target millennial
demographic. We made significant investments in the brand in 2015
and are well poised to capitalise on these in 2016 and beyond.
"The new financial year has started well and in line with our
expectations. The strength of our brand and technology together
with healthy booking numbers and continued pricing improvements,
underpinned by a growing marketplace, gives the Board confidence in
the Group's future prospects."
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 0810
Chairman's Statement
In our first year reporting as a publicly listed Company, I am
pleased to present our financial results for what has been a
momentous year for the Group. Hostelworld reached a number of
important milestones and is now well placed strategically and
operationally to face the future with confidence.
Admission to listing
We were delighted to announce our admission to a premium listing
on the main market of the London Stock Exchange and a secondary
listing on the Irish Stock Exchange's main securities market on 2
November 2015, valuing the Group at EUR245 million. Our IPO was a
significant landmark in Hostelworld's development. Our public
status offers us access to global investors and will facilitate our
plans to grow and generate value for our shareholders. I welcome
all new shareholders to the Group, we are committed to developing
positive long term relationships with each of you through open and
transparent communication.
Results and financial position
The Group operates a number of brands. The flagship brand is
Hostelworld, which accounts for circa 73% of Group bookings. Over
the last year, the Group focused its attention and resources on
rejuvenating this brand to make it more relevant to the target
millennial consumer and accelerate bookings growth. As part of this
strategy, the Group increased its marketing budget which was
principally responsible for a reduction in the Group's margin. This
strategy was implemented in the first half of the financial year
and has been successful in driving bookings growth for the
Hostelworld brand with bookings rising by 21% year-on-year in the
second half of the financial year.
Whilst bookings of the Hostelworld brand grew, those of the
Group's supporting brands (notably Hostelbookers) were, as
anticipated, lower year-on-year. We have taken steps, including the
transition of Hostelbookers to a new platform earlier in 2016, to
reduce this rate of decline. On a Group basis, we experienced
positive revenue growth with net revenue increasing by 5% year on
year. Adjusted EBITDA is down EUR3.4m year on year; a key
contributory factor being the investment in a new brand identity
and advertising campaign for Hostelworld, which we are confident
will deliver benefits in 2016 and beyond. Adjusted EBITDA for the
six month period from July to December was stable year-on-year,
reflecting improved overall Group trading performance.
The business continues to have highly attractive cash flow and a
very favourable working capital cycle.
Dividend
Consistent with the guidance given during the IPO process, the
Board is recommending a maiden dividend of 2.75 euro cent per share
which reflects the distribution of 75% of the Adjusted Profit after
Taxation for the period since the IPO date of 2 November 2015, on a
pro rata basis. This is our first dividend and we look forward to
providing dividend growth in future earnings periods. Subject to
shareholder approval the dividend will be paid on 31 May 2016 to
those shareholders on the register at the close of business on 29
April 2016.
Board
To facilitate the IPO, a restructuring of companies in the Group
was undertaken. The parent company of the Group is Hostelworld
Group plc ("the Company"), which was incorporated on 9 October
2015. The directors of this Company include myself as Chairman, CEO
Feargal Mooney, and CFO Mari Hurley, all of whom were directors of
the previous parent company of the Group.
In addition, we welcomed new non-executive directors Michael
Cawley and Andy McCue to the Board of Hostelworld Group plc. Both
Michael and Andy bring extensive experience of international
businesses with significant web-based revenues and we are already
seeing the positive impact of their involvement in the Group. These
appointments also ensured that Hostelworld Group plc was fully
compliant with the UK Code of Corporate Governance in respect of
the composition of its Board in advance of its IPO. The Board
regularly monitors risk and control processes to ensure they
support the Group's strategy and objectives.
I would also like to take this opportunity to sincerely thank
former board colleagues - Stephen Duckett, Kingsley Duffy, Patrick
Healy and Zita Saurel for their contribution to the Group in recent
years.
People
On behalf of the Board, I would like to thank all of our
employees for their continuing commitment to, and hard work on
behalf of the business. In particular, I would like to thank the
Senior Management Team and the finance team. The IPO process was
immensely time-consuming, and not only was it a successful process,
but they continued to deliver on their other objectives at the same
time, which is a tribute to their professionalism and
dedication.
Outlook
In recent years, the business has invested in its people,
technology and brand. It has also modified its operating model to
proactively anticipate and respond to changes in the market place.
This investment and an absolute focus on serving the hostel sector
and the millennial consumer in particular means the Group is
well-positioned for future growth and development. The new
financial year has started well and in line with our expectations.
The strength of our brand and technology, together with healthy
booking numbers and continued pricing improvements, underpinned by
a growing marketplace, gives the Board confidence in the Group's
future prospects.
Richard Segal
Chairman
4 April 2016
Chief Executive's Statement
I am delighted to present my first CEO statement since our
flotation in November 2015.
Continued strategic progress
2015 has been a year of significant progress for the Group from
a financial, strategic and operational perspective, during which we
strengthened our commitment to leading the industry and enhancing
our customers' experiences across all online and mobile
interfaces.
Bookings
Bookings for the Group's primary Hostelworld brand grew by 17%
in the year with an average growth rate of 21% for the final six
months of the year, post the brand launch. Total Group bookings and
revenues grew by 1% (59,675 bookings) and 5% (EUR4.2 million)
respectively, in the year.
We are pleased with the progress made in managing cost-per-click
and cost-per-booking which drives a more efficient and profitable
booking mix. In 2015, bookings from not-paid-for channels increased
to 58% of overall Group bookings. We are confident that our
marketing strategy with the goal of diversifying online marketing
channels and increasing brand awareness will continue to drive
bookings into lower cost or not-paid-for channels.
Brands
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Consumers trust strong brands. Our brand is characterised by a
sense of adventure, community and social interaction, which appeals
to our target millennial demographic. We made significant
investments in the brand in 2015 and are well placed to capitalise
on these in 2016 and beyond.
In May 2015, we relaunched our global lead brand Hostelworld,
using the 'Meet the World' positioning. The new brand design, logo
and imagery focus the brand on its mission of enhancing the travel
experience through social interaction. Furthermore during the first
half of 2015 we began our 'Meet the World' mass media advertising
campaign to increase Hostelworld's brand awareness. The campaign
comprised a multi-channel UK-focused campaign across television,
cinema, national outdoor media and included increased global social
channels and online advertising activity. We immediately
experienced the positive impact of the increased brand and
marketing investment and this was sustained throughout the
remainder of 2015.
In early 2016, we also repositioned and relaunched Hostelbookers
with the 'Just a Step Away' proposition. This brand serves
customers globally who travel for a specific purpose or event and
are looking for affordable, central accommodation options.
Technology
The development of responsive interfaces for the Hostelworld and
Hostelbookers brands was a key focus in 2015, ensuring both are
available for all devices (desktop, tablet and mobile) in every
orientation. Hostelworld was also made available on two new app
platforms, Apple Watch & Apple TV, becoming the first hostel
booking platform on these devices. On Android, the Hostelworld App
was redesigned using Google's Material Design, earning Top
Developer recognition from Google. Our mobile team continued to
focus on improving the customer experience throughout the year
offering Touch ID for login & checkout, Spotlight search,
wish-lists and offline bookings, which are all time-saving
enhancements to help the mobile hostel traveller. This "mobile
first" strategy has resulted in mobile (including tablet)
representing 41% of Hostelworld brand bookings for the year (2014:
31%).
Pricing and Yield Management
Our Elevate programme gives accommodation providers the
opportunity to increase their prominence in search lists
dynamically in exchange for a higher commission rate of up to 8%
above the relevant base commission rate. We also offer a premium
listing feature, which enables accommodation providers to purchase
fixed slots at the top of Hostelworld's and our other brands'
results on a monthly cycle. In 2015, 21% of the bookings on
Hostelworld were delivered to properties participating in
"Elevate", an increase from 15% in 2014. In addition, we provide
enhanced revenue management services to our properties which
continued to evolve through 2015.
Asia
We progressed our strategy to grow our customer base and revenue
in emerging markets. In 2015, we increased our supply base in key
Asian markets through our dedicated team based in Shanghai, with
Asia becoming our fastest growing destination continent. South
Korea grew to become our seventh highest customer nationality for
Hostelworld brand bookings (2014: 8th).
Business model
We operate the world's leading hostel-focused online booking
platform. We offer a simple and comprehensive online mechanism that
gives providers of hostels and other budget accommodation a shop
window to show their accommodation to millennial travellers. We
facilitate bookings between the two, offering a top-class booking
experience that provides us with commission-based revenue.
At the time of booking, hostel travellers pay a non-refundable
deposit directly to us, and the remainder of the cost of their stay
directly to the hostel at the time of their visit. The deposit
equates to our revenue from the transaction. This efficient,
light-touch business model has favourable working capital
requirements and strong cash conversion. Refunds, debt collection
and invoicing overheads are all minimised.
The market
Given the limited available market data on the hostel sector,
Hostelworld commissioned leading independent research company for
the travel sector, Phocuswright, to undertake the first dedicated
study of the global hostel market. The study conducted in the
second half of 2015 included surveying over 1,000 hostel operators
worldwide, 2,700 hostel travellers from six key consumer markets
and 800 non-hostel travellers, as well as a series of interviews
with key hostel operators and stakeholders. The key findings of the
study are:
-- Phocuswright projects 7%-8% hostel revenue growth per year
through 2018 for the global hostel market, when it estimates that
the total hostel market will reach nearly $7 billion in room
revenue.
-- The report confirms that hostel accommodation is undergoing a
revolution. Today, 9 in 10 hostels have private rooms in addition
to dorm rooms or traditional shared rooms. Indeed 57% of all hostel
rooms are private rooms. Hostels are investing in a range of
value-added amenities, room and common area design as well as
expanding bed capacity.
-- Millennial customers (18-34 years of age) are the key target
market in our sector of the travel industry, representing 70% of
total guests.
-- Compared to other traveller segments, hostel travellers stand
out for their passion for travel. Hostel travellers are more likely
to have university degrees and place travel at the top of their
list for discretionary spend, travelling longer and spending more
on travel than other travellers in most markets profiled by
Phocuswright.
-- Online channels accounted for two-thirds of global hostel
revenue in 2014 (compared with less than 40% of hotel gross
bookings globally). More than 70% of online hostel bookings are
made via an online travel agent.
Our key strategic pillars identified for 2015 and 2016 are set
out overleaf.
Strategic Reason 2015 Progress 2016 Priorities
Pillar
--------------- ---------------------- ------------------------------------- --------------------------------------
1. Brand and We want to In May 2015, we globally relaunched The Group expects to expand its
Marketing ensure our our lead brand Hostelworld, using digital marketing campaign to
Investment platforms are the other key markets and to continue
the preferred 'Meet the World' positioning. The to realise efficiencies in its
choice for new booking mix and management of
the growing brand design, logo and imagery focus cost-per-click and cost-per-booking.
number of millennial the brand on its mission of
travellers enhancing As a global business, brand and
worldwide to the travel experience through social marketing investment will be spread
visit when interaction. In June 2015 we began across key markets. In order to
planning their with reach our target demographic,
trips. 'Meet the World' mass media we will use a mix of channels,
advertising online display advertising and
campaign to increase Hostelworld's social channels such as Facebook,
brand Twitter and Instagram.
awareness. The campaign comprised a
multi-channel UK focused campaign We intend to continue our brand
across advertising and foster brand
television, cinema, national outdoor partnerships
and increased global social media with an increased focus on PR
and and unique content dissemination
online activity. across global media platforms.
We believe that the Group's business Furthermore, we will continue
is already experiencing the benefits to raise the awareness of the
of the increase in brand and quality of the hostel product
marketing and improve general perception
investment, with Hostelworld brand of hostels so as to increase
bookings consideration
across all nationalities increasing of hostels by a wider cohort of
by an average of 21% for July to travellers.
December
2015, compared to the same months in We will continue scaling our customer
2014. relationship management ("CRM")
In addition, the Group has further programme by expanding the reach
optimised and frequency of targeted customer
its booking mix with not-paid-for communications across all our
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channels brands in multiple channels (email,
representing 58% of overall Group mobile, onsite).
bookings.
We have also seen improvements in In January 2016, we re-branded
management Hostelbookers with the 'Just a
of cost-per-click and Step Away' proposition, as this
cost-per-booking brand serves customers globally
metrics. who travel for a specific purpose
Marketing spend as % of Group net or event, hence are looking for
revenues affordable, central accommodation
increased from 36% in 2014 to 45% in options.
2015.
--------------- ---------------------- ------------------------------------- --------------------------------------
2. Investment Millennial During 2015 we focused on the Our key deliverable for 2016 is
in Technology customers expect consolidation to further improve our customer
to transact of brands onto a single technology experience by enhancing our iOS
seamlessly platform and Android apps. We intend to
across multiple by completing the migration of expand the user experience beyond
devices, with Hostelbookers the booking transaction and provide
consistency onto the Hostelworld platform, which our app customers with relevant
of user experience launched in early January 2016. We and timely content both pre and
and functionality. continued in-trip.
Meeting this our "mobile first" strategy by
expectation developing In addition, we will intensify
is key to continued fully responsive interfaces, our conversion optimisation programme
future customer ensuring to ensure the customer funnel
acquisition that customers have the same user within the web and app sites is
and retention. experience optimised through analytics-based
and breadth of functionality testing and continual improvement.
regardless
of device. In parallel, we continued We will continue to eliminate
to enhance our iOS and Android elements of legacy architecture,
applications which will increase the functionality
for tablets and smart-phones. We of our technology platform across
also all of our brands. This will reduce
launched on Apple Watch and Apple complexity which we expect will
TV. achieve further operational
efficiencies.
As a result of this focus,
Hostelworld
continues to see strong growth in
its
mobile business with 41% of
Hostelworld
brand bookings transacting on a
mobile
platform in 2015.
--------------- ---------------------- ------------------------------------- --------------------------------------
3. Flexible Working closely Our Elevate programme gives We intend to increase the penetration
Pricing Model with accommodation accommodation of Elevate bookings among
providers assisting providers the opportunity to accommodation
them with yield increase providers, both on Hostelworld
management their prominence in search lists and through the newly-migrated
and revenue dynamically Hostelbookers site which can now
optimisation. in exchange for a higher commission use the Elevate technology.
rate of up to 8% above the relevant
base commission rate. It also We will continue to explore and
includes test other products and services
a premium listing feature, which that we could potentially provide
enables to our hostel partners to enable
accommodation providers to purchase them to better manage and grow
fixed slots at the top of their businesses.
Hostelworld's
and other brands' city search
results
pages on a monthly cycle. In 2015,
21%
of the bookings on Hostelworld were
delivered to properties
participating
in Elevate, an increase from 15% in
2014.
Revenue management services provided
to properties continued to evolve
through
2015 and included the distribution
of
reports that were focused on
assisting
them to improve their yield.
Improved
local market-related information
including
"price to demand trend", "booking
lead
time" and "average bed price" were
provided.
--------------- ---------------------- ------------------------------------- --------------------------------------
4. Geographic To expand the In 2015, we increased our supply We will actively expand in markets
Expansion reach of our base where the offline-to-online travel
customer base in key Asian markets through our shift is still emerging and where
and tap into dedicated there is a significant penetration
increased demand team based in Shanghai. Asia was our opportunity for hostels and budget
from millennials fastest growing destination region, accommodation product.
in emerging as travellers tapped into the growth We will particularly seek to
markets. of hostel product within the region. capitalise
South Korea was our seventh highest on consumer growth in South Korea,
customer nationality for Hostelworld locating dedicated personnel
brand bookings for the twelve months in-country
ended 31 December 2015. and enhancing our understanding
of the market development
opportunity.
We will also focus on adapting
our product, user experience and
marketing and work on the
implementation
of alternative payment methods
for key local markets e.g. Alipay
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for China.
--------------- ---------------------- ------------------------------------- --------------------------------------
People
We are fortunate to have an excellent and diverse pool of
talented individuals working in our global team who deliver an
exceptional service to our customers.
In December 2015, we launched our first set of Company values,
called "SPIRIT", which represents the growth and maturity of our
organisation. "SPIRIT" stands for our core values of Service
Excellence, Pace, Innovation, Respect, Initiative and Team
Together. I am very excited by these "SPIRIT" values and look
forward to embedding them further into Hostelworld.
I believe that what makes our people special is their ability to
constantly think about the changing needs of our customers and
their willingness to take ownership of responsibilities. I am very
grateful for the tremendous effort they make each and every
day.
Outlook
The beginning of the 2016 year continues to provide evidence of
the robust trading characteristics of our business. We have
continued to invest in our in-house capability in managing our paid
traffic and this has enabled us to further optimise conversion and
margin.
During January 2016, the Group successfully launched a newly
rebranded and responsive Hostelbookers website and app. The new
site includes the Elevate dynamic pricing functionality, benefits
from a larger set of properties and is expected to slow the decline
of Hostelbookers bookings over time.
Our extensive experience in all aspects of the online hostel
market and our position as market leader leaves us well placed to
exploit the growth opportunities in the sector and I look forward
to the future with confidence.
Feargal Mooney
Chief Executive
4 April 2016
Financial Review
Introduction
-- Strong Hostelworld brand bookings growth of 17%
-- Total Group bookings grew by 1%
-- Gross average booking value of EUR12.1, increase of 5%
-- Marketing expenses represented 45% of Net Revenue (2014: 36%)
-- Adjusted EBITDA margin of 28% (2014: 34%)
-- Strong underlying cash conversion and dividend of EUR2.6m in line with dividend policy
Key Performance Indicators
2015 2014 % change
------------------------------- ----- ----- ---------
Bookings - Hostelworld brand
(m) 5.2 4.4 17%
Bookings - supporting brands
and channels (m) 2.0 2.7 -27%
Total Booking Volume (m) 7.2 7.1 1%
Net Revenue (EURm) 83.5 79.3 5%
Average Booking Value ("ABV")
(gross) (EUR) 12.1 11.5 5%
------------------------------- ----- ----- ---------
Adjusted EBITDA 23.6 27.0 -12%
------------------------------- ----- ----- ---------
For the year ending December 2015 booking volumes for the
business increased by 1%, with the Hostelworld brand growing by 17%
during the year. Bookings in not-paid-for channels represented 58%
of total bookings. The Group's booking volumes are seasonal and
peak between May and August during the summer travel period in the
northern hemisphere. The associated Total Transaction Values
("TTV") in 2015 were EUR634m (2014: EUR634m).
The bookings growth combined with an increase in Average Booking
Value ("ABV") of 5% during the year resulted in an overall increase
in net revenue of EUR4.2m. The Group's ABV increased due to a
number of factors, primarily due to favourable exchange rates and
by increased penetration of the Elevate pricing product on
Hostelworld bookings. In 2015, 21% of these Hostelworld bookings
attracted higher commission at average commission rate of 16.2%.
Factors which negatively affected ABV in 2015 included the shift
towards mobile bookings, as such customers book fewer bednights per
booking, a higher proportion of bookings into hostel dorm beds and
growth in Asia as a destination region.
There was additional investment in marketing with the rebranding
of the Hostelworld brand in June 2015, the results of which are
evident in the stronger growth rates in the Hostelworld brand
bookings in the second half of the year (H2 15: 21%, H1 15:
14%).
While the Group operates in one segment and is managed as such,
we review business performance on a bookings volume and average
booking value basis for both the Hostelworld brand as well as all
supporting brands (including Hostelbookers, Hostels.com, booking
engines and affiliates).
Adjusted EBITDA
The Group uses Earnings before Interest, Tax, Depreciation and
Amortisation, excluding the impact of exceptional items (Adjusted
EBITDA) as a key performance indicator when measuring the outcome
in the business from one period to the next, and against budget.
Exceptional items are non-recurring and by their nature and size
can make interpretation of the underlying trends in the business
more difficult. We believe this Adjusted EBITDA measure more
accurately reflects the key drivers of profitability for the Group
and removes those items which do not impact underlying trading
performance, thereby making comparisons more meaningful.
Administration expenses increased from EUR57.8m in 2014 to
EUR64.1m in 2015. A key contributory factor was higher marketing
expenses, which increased from EUR28.9m in 2014 (36% of Net
Revenue) to EUR37.4m in 2015 (45% of Net Revenue). This increase
includes the additional investment in the Hostelworld brand of
EUR3.2m incurred during the first six months of the year.
Staff costs were EUR12.7m during the year (2014: EUR14.1m), the
year on year reduction being due to the level of development labour
capitalised (2015: EUR4.2m; 2014: EUR1.3m). On a like for like
basis, gross staff costs increased by EUR1.5m during the year, a 9%
increase.
Reconciliation between Operating Profit and Adjusted EBITDA:
EURm 2015 2014
----------------------------- ----- -------
Operating profit/(loss) 7.2 (42.5)
Depreciation 0.8 0.7
Amortisation of development
costs 1.4 0.4
Amortisation of acquired
intangible assets 9.9 12.3
Impairment charges 0.0 50.7
Exceptional items 4.3 5.4
Adjusted EBITDA 23.6 27.0
----------------------------- ----- -------
Exceptional items for the year were EUR4.3m (2014: EUR5.4m).
Total fees incurred in relation to the IPO were EUR10.2m of which
EUR4.5m has been expensed through the Income Statement as an
exceptional item with the balance of EUR5.7m charged to the share
premium account. Other non-recurring items totalling net income of
EUR0.2m have been classified as exceptional within administration
expenses. These non-recurring items relate to redundancy costs and
the costs of moving office, offset by a reversal of a prior year
accrual which is considered exceptional and one-off in nature. In
2014, corporate finance costs of EUR3.9m, redundancy costs of
EUR1.3m and other non-recurring costs of EUR0.2m were expensed to
the Income Statement as exceptional items.
Adjusted EBITDA decreased from EUR27.0m to EUR23.6m, a key
contributor being the increased investment of EUR3.2m in
Hostelworld brand re-launch. Adjusted EBITDA margin decreased from
34% of net revenue in 2014 to 28% in 2015.
Adjusted Profit after Taxation
EURm 2015 2014
-------------------------------- ------- -------
Adjusted EBITDA 23.6 27.0
Depreciation (0.8) (0.7)
Amortisation of development
costs (1.4) (0.4)
Corporation tax (0.4) (0.3)
Adjusted Profit after Taxation 21.0 25.6
Exceptional costs (4.3) (5.4)
Amortisation of acquired
intangibles (9.9) (12.3)
Net financial costs (30.9) (34.5)
Other gains 104.2 -
Impairment charges 0.0 (50.7)
Deferred taxation 1.0 5.1
-------------------------------- ------- -------
Profit/ (loss) for the year 81.2 (72.2)
-------------------------------- ------- -------
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 and deferred
taxation which can have large impacts on the reported result for
the year, and which can make underlying trends difficult to
interpret.
Adjusted Profit after Taxation decreased from EUR25.6m to
EUR21.0m in line with the reduction in Adjusted EBITDA.
Based on the weighted average shares in issue during 2015,
reported Earnings per Share ("EPS") as set out in Note 9 is 4.46
cent per share for the financial year (2014: loss per share 24.04
cent). Using Adjusted Profit after Taxation as the measure of
earnings, and the actual number of shares in issue as at 31
December 2015, would result in an adjusted EPS of 22 cent per share
for the year. The corresponding EPS for 2014 calculated on the same
basis, using the number of shares in issue as at 31 December 2015
is 27 cent per share.
Accounting for the IPO and reorganisation
In preparation for the IPO, the Group undertook a capital
reorganisation and restructuring, which simplified the Group
structure and eliminated all shareholder related debt. Prior to the
IPO, a new holding company was created and this acquired control of
the Group. As this was a common control transaction, it is outside
the scope of IFRS 3 (Business Combinations) and the comparatives
presented are the consolidated results for the Hostelworld Group.
Further details about the accounting for the IPO are disclosed
within Note 1 and Note 13.
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The impact on the Income Statement related to the IPO
transaction and reorganisation are the fees incurred, as explained
above in Exceptional Costs, and the one off gain included in Other
Gains and Net Finance Costs, which is detailed below.
Other gains and net finance costs
As part of the IPO, EUR181.4m was paid to shareholders as
consideration for preference shares and the redemption of
shareholder loans and accrued interest, and the remaining balance
of shareholder loans and interest was waived or exchanged for
shares in the newly listed entity. This has resulted in an
exceptional gain of EUR104.2m in 2015. Interest accrued on
shareholder loans up to the date of the IPO was EUR30.9m (2014:
EUR34.5m).
As a result of the IPO, shareholder loans and accrued interest
at 31 December 2015 are EURnil (2014: EUR319.9m).
Taxation
The Group corporation tax charge of EUR0.4m (2014: EUR0.3m) is
an effective tax rate (corporation tax as a percentage of Adjusted
EBITDA) of 1.5% (2014: 1.1%). The low effective tax rate is
primarily as a result of carried forward tax losses arising from
the previous capital structure in the Group. It is expected that
the Group will benefit from these tax losses in the coming year and
that the effective tax rate will be in the region of 4% for 2016,
increasing due to the change in the Group's capital structure post
listing. This is dependent on the continuation of the current
operating structure and current tax law.
The deferred taxation credit of EUR1.0m (2014: EUR5.1m) arises
primarily in relation to acquired intangibles and the partial
recognition of carried forward tax losses. The primary contributor
to the 2014 deferred taxation credit was the impairment of the
goodwill arising on the Hostelbookers business.
Adjusted Free Cashflow conversion
EURm 2015 2014
---------------------------- ------- ------
Adjusted EBITDA 23.6 27.0
Capitalised development
spend (4.3) (1.4)
Capital expenditure (3.2) (0.7)
Interest and tax paid 0.2 (0.9)
Net movement in working
capital (1) (1.1) 0.0
---------------------------- ------- ------
Adjusted Free Cashflow 15.3 24.0
---------------------------- ------- ------
Adjusted FCF conversion 65% 89%
---------------------------- ------- ------
(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. In 2015 there was a higher than normal
level of investment in capital expenditure due to spend of EUR2.0m
(2014: EUR0.03m) on leasehold improvements and fixtures and
fittings as the Group entered into new leases in London and Dublin
to allow for the expansion of the business. Adjusting for these
higher than average levels of investment and a delayed VAT reclaim,
the cash conversion would be 75% of Adjusted EBITDA. The lower
level of capitalised development expenditure and capital
expenditure in 2014, resulted in adjusted free cashflow conversion
of 89%.
On 21 October 2015, in connection with the IPO, the Group
entered into a working capital facility with AIB Bank plc (the
"Revolving Credit Facility") for EUR2.5m. During the period to 31
December 2015, there have been no drawdowns under this
facility.
Total Cash at 31 December 2015 was EUR13.6m (2014: EUR19.9m), of
which EUR2.2m is held in a restricted account as part of a
guarantee related to the lease of the Dublin office (as disclosed
in Note 12). There were no borrowings at 31 December 2015 (2014:
EUR319.9m, all of which was shareholder related).
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 5% (EUR4.7m)
and Adjusted EBITDA has declined by 22% (EUR6.5m) in 2015.Constant
currency is calculated by applying the average exchange rates for
the year ended 31 December 2015 to the financial results for the
year ended 31 December 2014 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.
Incorporation and capital reduction
On 9 October 2015, Hostelworld Group plc was incorporated and
registered in England and Wales under the Companies Act 2006 as a
public limited Company. The Company has reduced its share capital
by means of a court-sanctioned reduction in capital in order to
provide it with the distributable reserves required to support the
intended dividend policy. The capital reduction and cancellation of
share premium received court approval on 16 December 2015.
Dividend
The Group is committed to an attractive dividend policy, and is
pleased to recommend a total dividend payout of EUR2.6m which
reflects a distribution of 75% of the Adjusted Profit after
Taxation for the period since the IPO date of 2 November 2015, on a
pro rata basis. This represents a distribution of 2.75 cent per
share, based on the number of shares in issue at 4 April 2016.
Subject to shareholder approval the dividend will be paid on 31 May
2016 to those shareholders on the register at the close of business
on 29 April 2016.
Mari Hurley
Chief Financial Officer
4 April 2016
HOSTELWORLD GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014
Notes EUR'000 EUR'000
Revenue 3 83,451 79,265
Administrative expenses 4 (64,087) (57,677)
Depreciation and amortisation expenses 4 (12,170) (13,443)
Impairment losses 4 - (50,692)
Operating profit/(loss) 7,194 (42,547)
Financial income 8 17
Financial costs 7 (30,866) (34,479)
Other gains 7 104,158 -
Profit/(loss) before taxation 80,494 (77,009)
Taxation 8 680 4,826
--------- ---------
Profit/(loss) for the year attributable to the equity owners of the parent company 81,174 (72,183)
--------- ---------
Basic and diluted earnings per share (cents) 9 4.46 (24.04)
A reconciliation to Adjusted EBITDA and Adjusted Profit after
Taxation is provided in the Financial Review on page 12.
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014
EUR'000 EUR'000
Profit/(loss) for the year 81,174 (72,183)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 333 282
-------- ---------
Total comprehensive income/(expense) for the year attributable
to equity owners of the parent company 81,507 (71,901)
-------- ---------
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
2015 2014
Notes EUR'000 EUR'000
Non-current assets
Intangible assets 10 158,972 166,008
Property, plant and equipment 3,523 1,419
Deferred tax assets 1,325 693
-------- ----------
163,820 168,120
Current assets
Trade and other receivables 11 3,249 2,326
Corporation tax 3 728
Cash and cash equivalents 12 13,620 19,942
-------- ----------
16,872 22,996
-------- ----------
Total assets 180,692 191,116
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-------- ----------
Issued capital and reserves attributable to equity owners of the parent
Share capital 956 30
Share premium - 13,521
Other reserves 13 3,628 -
Foreign currency translation reserve 695 362
Retained earnings/(accumulated losses) 161,418 (158,101)
-------- ----------
Total equity attributable to equity holders of the parent company 166,697 (144,188)
-------- ----------
Non-current liabilities
Borrowings - 285,638
Deferred tax liabilities 2,563 2,964
-------- ----------
2,563 288,602
Current liabilities
Borrowings - 34,278
Trade and other payables 14 11,405 12,345
Corporation tax 27 79
-------- ----------
11,432 46,702
-------- ----------
Total liabilities 13,995 335,304
-------- ----------
Total equity and liabilities 180,692 191,116
-------- ----------
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
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
Notes 13
As at 1 January
2014 30 13,521 (85,918) - 80 (72,287)
-------------- -------------- ------------------ -------------- ------------------ ----------
Total
comprehensive
(expense)/
income for the
year - - (72,183) - 282 (71,901)
As at 31 December
2014 30 13,521 (158,101) - 362 (144,188)
-------------- -------------- ------------------ -------------- ------------------ ----------
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 for the
year - - 81,174 - 333 81,507
As at 31 December
2015 956 - 161,418 3,628 695 166,697
-------------- -------------- ------------------ -------------- ------------------ ----------
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014
Notes EUR'000 EUR'000
Cash flows from operating activities
Profit/(loss) before tax 80,494 (77,009)
Depreciation of property, plant and
equipment 4 813 659
Amortisation of intangible assets 4 11,357 12,784
Impairment of intangible assets 4 - 50,692
Transaction costs (included within 4,546
financing activities) -
Loss on disposal of property, plant 251
and equipment -
Financial income (8) (17)
Financial expense 7 30,866 34,479
Other gains 7 (104,158) -
Changes in working capital items:
(Decrease)/increase in trade and other
payables 14 (940) 4,286
Increase in trade and other receivables 11 (1,117) (174)
---------- ---------
Cash generated from operations 22,104 25,700
Interest paid (79) (203)
Interest received 8 17
Income tax refunded/(paid) 319 (667)
---------- ---------
Net cash from operating activities 22,352 24,847
---------- ---------
Cash flows from investing activities
Acquisition/capitalisation of intangible
assets 10 (4,321) (1,414)
Purchases of property, plant and equipment (3,168) (722)
Net cash used in investing activities (7,489) (2,136)
---------- ---------
Cash flows from financing activities
Repayment of shareholders' loans (195,125) -
Proceeds on issue of shares, net of 173,607
expenses -
Repayments of bank loans - (7,874)
---------- ---------
Net cash used in financing activities (21,518) (7,874)
---------- ---------
Net (decrease)/increase in cash and
cash equivalents (6,655) 14,837
Cash and cash equivalents at the beginning
of the year 19,942 4,823
Effect of exchange rate changes on
cash and cash equivalents 333 282
---------- ---------
Cash and cash equivalents at the end
of the year 13,620 19,942
Restricted cash balances 12 (2,225) -
---------- ---------
Unrestricted cash balances at the
end of the year 11,395 19,942
---------- ---------
HOSTELWORLD GROUP PLC
NOTES TO THE FINANCIAL INFORMATION
1. GENERAL INFORMATION AND BASIS OF PREPARATION
The financial information, comprising of the consolidated income
statement, consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated
statement of changes in equity, consolidated statement of cashflows
and related notes, has been taken from the consolidated financial
statements of Hostelworld Group plc ("Company") for the year ended
31 December 2015, which were approved by the Board of Directors on
4 April 2016. The financial information does not constitute
statutory accounts within the meaning of sections 435(1) and (2) of
the Companies Act 2006 or contain sufficient information to comply
with the disclosure requirements of International Financial
Reporting Standards ("IFRS").
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An unqualified report on the consolidated financial statements
for the year ended 31 December 2015 has been given by the auditors,
Deloitte. It did not include reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their
report and did not contain any statement under section 498 (2) or
(3) of the Companies Act 2006. The consolidated financial
statements will be filed with the Registrar of Companies, subject
to their approval by the Company's shareholders at the Company's
Annual General Meeting on 26 May 2016.
The Company is a public limited company incorporated in the
United Kingdom on the 9 October 2015. The registered office of the
Company is High Holborn House, 52 - 54 High Holborn, London, WC1V
6RL, United Kingdom.
The Company and its subsidiaries (together "the Group") provide
software and data processing services that facilitate hostel,
B&B, hotel and other accommodation bookings worldwide.
Basis of Preparation
The consolidated financial statements incorporate the financial
statements of the Company and its directly and indirectly owned
subsidiaries, all of which prepare financial statements up to 31
December. The consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS), International Financial Reporting Interpretations Committee
(IFRIC) interpretations and those parts of the Companies Act 2006,
applicable to companies reporting under IFRS. The Group financial
statements have been prepared in accordance with IFRSs adopted by
the European Union ("the EU") which comprise standards and
interpretations approved by the International Accounting Standards
Board ("IASB"). The financial statements are also prepared in line
with IFRSs as issued by the IASB.
On 2 November 2015, as part of a reorganisation, the ultimate
parent of the group changed from H&F Wings Lux 1 S.Ã r.l to
Hostelworld Group plc.
The Company obtained control of the entire share capital of
Wings Lux 2 S.Ã r.l. Wings Lux 2 S.Ã r.l. is a Luxembourg holding
company incorporated on 19 November 2009 as a société Ã
responsabilité limitée for an unlimited period of time, subject to
general company law. The registered office of the company is 5, Rue
Guillaume Kroll L - 1882, Luxembourg.
This transaction falls outside the scope of IFRS 3 "Business
Combinations". Accordingly, following the guidance regarding the
selection of an appropriate accounting policy provided by IAS 8
"Accounting policies, changes in accounting estimates and errors",
the transaction has been accounted for in these financial
statements using the principles of merger accounting set out in FRS
102 The Financial Reporting Standard Applicable in the UK and
Republic of Ireland. This policy, which does not conflict with
IFRS, reflects the economic substance of the transaction.
The comparatives presented in these financial statements are the
consolidated results of Wings Lux 2 S.Ã r.l. The prior year balance
sheet reflects the share capital structure of Wings Lux 2 S.Ã r.l.
The current year balance sheet 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
transaction. The consolidated statement of changes in equity and
the additional disclosures in Note 13 explain the impact of the
reorganisation in more detail.
The consolidated financial statements have been prepared on the
historical cost basis. The principal accounting policies adopted
are set out below.
These consolidated financial statements are presented in euro
(EUR) because that is the currency of the primary economic
environment in which the Group operates. Foreign operations are
included in accordance with the Group's accounting policies. All
amounts in the notes are shown in euro unless otherwise stated.
The directors have assessed the ability of the Company and Group
to continue as a going concern and are satisfied that it is
appropriate to prepare the financial statements on a going concern
basis of accounting. In doing so, the directors have assessed that
there are no material uncertainties to the Group's and Company's
ability to continue as a going concern for the foreseeable future,
being a period of at least 12 months from the date of approval of
the financial statements.
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies, the
directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors considered relevant. Actual results may differ from these
estimates.
(a) The critical judgements that have been made that have the
most significant effect on the amounts recognised in the
consolidated financial statements are set out below:
Useful lives for amortisation of intangible assets
Intangible assets are disclosed in Note 10. The amortisation
charge is dependent on the estimated useful lives of the assets.
The directors regularly review estimated useful lives of each type
of intangible asset and change them as necessary to reflect its
current assessment of remaining lives and the expected pattern of
future economic benefit embodied in the asset. Changes in asset
lives can have a significant impact on the amortisation charges for
that year.
Capitalisation of Development Costs
Development costs are capitalised in accordance with the Group's
accounting policies. Determining the amount to be capitalised
requires the directors to make assumptions regarding expected
future cash generation of the asset and expected period of
benefit.
(b) Key sources of estimation that have been made that have the
most significant effect on the amounts recognised in the
consolidated financial statements are set out below:
Impairment of goodwill and intangible assets
The directors assess annually whether goodwill has suffered any
impairment, in accordance with the relevant accounting policy, and
the recoverable amounts of cash-generating units are determined
based on value-in-use calculations that require the use of
estimates. Intangible assets are assessed for possible impairment
where indicators of impairment exist.
Further details on the assumptions used are set out in Note
10.
Deferred Tax
Deferred tax assets are recognised for all unused tax losses to
the extent that it is probable that taxable profits will be
available in future periods which the losses can be utilised.
Judgement is required to determine the amount of deferred tax
assets that can be recognised, based upon the likely timing and
level of future taxable profits.
Accounting for Reorganisation and IPO Costs
The Company incurred significant costs in relation to the Group
reorganisation and subsequent initial public offering (IPO) of its
shares. As part of these processes, the Group engaged appropriate
legal, accounting and tax advisors. The key area of technical
consideration was the application of the principles of
International Accounting Standard 32: Financial Instruments:
Presentation (IAS 32) as to whether the costs incurred in respect
of the IPO are directly attributable to the issuing of new shares,
in which case it is permissible for them to be deducted from share
premium. Non-directly attributable costs are required to be
expensed directly to the income statement. Given the related costs
arose largely concurrently, judgement was required in assessing the
apportionment of costs.
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.
The CODM assesses the performance of the business based on the
consolidated adjusted profit/(loss) after tax of the Group for the
year. This measure excludes the effects of certain income and
expense items, which are unusual by virtue of their size and
incidence, in the context of the Group's ongoing core operations,
such as the impairment of intangible assets and one-off items of
expenditure.
All segmental revenue is derived wholly from external customers
and, as the Group has a single reportable segment, inter-segment
revenue is zero.
The Group's major revenue-generating asset class comprises its
software and data processing services and is directly attributable
to its reportable segment operations. In addition, as the Group is
managed as a single business unit, all other assets and liabilities
have been allocated to the Group's single reportable segment.
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:
2015 2014
EUR'000 EUR'000
Europe 53,812 52,128
Americas 14,951 13,969
Asia, Africa and Oceania 14,688 13,168
---------- ----------
Total revenue 83,451 79,265
---------- ----------
The Group's non-current assets are located in Ireland,
Luxembourg and the UK.
4. OPERATING EXPENSES
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Profit/(loss) for the year has been arrived at after charging
the following operating costs:
2015 2014
Note EUR'000 EUR'000
Marketing expenses 37,410 28,856
Credit card processing fees 1,958 1,844
Staff costs 6 12,721 14,146
Loss on disposal of property, plant 251
and equipment -
Exceptional Items 5 4,267 5,407
Other administrative costs 7,480 7,424
---------- --------
Total administrative expenses 64,087 57,677
Depreciation of tangible fixed assets 813 659
Amortisation of intangible fixed
assets 10 11,357 12,784
Impairment of intangible assets 10 - 50,692
---------- --------
Total operating expenses 76,257 121,812
---------- --------
Auditors' remuneration
During the year, the Group obtained the following services from
its Auditors:
2015 2014
EUR'000 EUR'000
Fees payable for the statutory audit 35
of the Company -
Fees payable for other services:
- statutory audit of subsidiary undertakings 115 163
- tax advisory services 4 4
- other assurance services 191 5
- corporate finance services 854 -
- other services 91 -
---------- --------
Total 1,290 172
---------- --------
The figures in 2015 relating to other assurance services,
corporate finance services and other services all relate to the IPO
and Group reorganisation which occurred in November 2015.
5. EXCEPTIONAL ITEMS
2015 2014
EUR'000 EUR'000
Merger and acquisition costs 3,994 3,879
Redundancy costs 211 1,263
Integration and relocation costs 573 265
Non-recurring gain (511) -
Total exceptional items 4,267 5,407
---------- --------
Merger and acquisition costs were incurred in relation to the
listing of the Company on the main market of the London Stock
Exchange and the main securities market of the Irish Stock Exchange
plc (the "IPO"), and the related reorganisation of the Group and
prior year corporate finance activities. Redundancy costs relate to
the restructuring of the Group following the acquisition of
Hostelworld Services Limited (formerly Hostelbookers.com Limited)
in 2013. The integration and relocation costs primarily relate to
the costs incurred for office moves in both Dublin and London. The
non-recurring gain of EUR511k relates to the release of an accrual
related to the potential indirect taxes of the Hostelbookers
business where the liability was settled in 2015 and is recorded as
exceptional due to its one-off nature.
6. STAFF COSTS
The average number of people employed (including executive
directors) during the year was as follows:
2015 2014
Average number of persons employed
Administration and sales 155 169
Development and information technology 101 92
----- -----
Total number 256 261
----- -----
The aggregate remuneration costs of these employees is analysed
as follows:
2015 2014
EUR'000 EUR'000
Staff costs comprise:
Wages and salaries 14,756 13,501
Social security costs 1,669 1,559
Pensions costs 240 195
Other benefits 233 186
Capitalised development labour (4,177) (1,295)
---------- --------
Total 12,721 14,146
---------- --------
7. FINANCIAL COSTS AND OTHER GAINS
2015 2014
EUR'000 EUR'000
Finance costs:
Interest payable on shareholders'
loans 30,786 34,285
Bank borrowing costs - 110
Bank charges 80 84
-------- --------
Total finance costs 30,866 34,479
-------- --------
Other gains
Other gains in the current year relate solely to the write off
of shareholder loans of EUR104,158k as part of the Group
reorganisation in November 2015. Given that the Group has tax
losses brought forward, the write off of the shareholders' loans
did not have any tax impact on the income statement apart from the
reduction in unrecognised deferred tax losses carried forward (Note
8).
8. TAXATION
2015 2014
EUR'000 EUR'000
Corporation tax:
Current year 297 269
Adjustments in respect of prior years 58 32
---------- ----------
Total 355 301
Deferred tax (1,035) (5,127)
---------- ----------
Total (680) (4,826)
---------- ----------
Corporation tax is calculated at 12.5% (2014: 29.22%) of the
estimated taxable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions. The charge for the year can be reconciled
to the consolidated income statement as follows:
2015 2014
EUR'000 EUR'000
Profit/(loss) before tax on continuing operations 80,494 (77,009)
---------- ---------
Tax at the Irish corporation tax rate of 12.5%
(2014: 29.22% (Luxembourg)) 10,062 (22,502)
Effects of :
Tax effect of (income)/ expenses that are not
taxable/deductible in determining taxable profit (8,644) 11,801
Tax effect of utilisation of tax losses not previously
recognised (1,767) 3,792
Effect of different tax rates of subsidiaries
operating in other jurisdictions 280 2,397
Recognition of deferred tax asset on tax losses (669) (346)
Adjustments in respect of prior years 58 32
---------- ---------
Total for the year (680) (4,826)
---------- ---------
9. 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 year.
2015 2014
Weighted average number of shares in issue
('000s) 18,217 3,003
Profit/(loss) for the year (EUR'000s) 81,174 (72,183)
------- ---------
Basic earnings/(loss) cents per share 4.46 (24.04)
------- ---------
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 31 December 2015, is EUR0.85
(2014: loss per share of EUR0.76).
10. INTANGIBLE ASSETS
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The table below shows the movements in intangible assets for the
year:
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
2014 47,274 214,640 13,325 5,500 - 280,739
Additions - - - - 1,414 1,414
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2014 47,274 214,640 13,325 5,500 1,414 282,153
----------- --------- ----------- ----------- ------------- ----------
Balance at 1 January
2015 47,274 214,640 13,325 5,500 1,414 282,153
Additions - - - - 4,333 4,333
Effect of foreign
currency exchange
difference (12) (12)
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2015 47,274 214,640 13,325 5,500 5,735 286,474
----------- --------- ----------- ----------- ------------- ----------
Accumulated amortisation
and impairment
Balance at 1 January
2014 - (36,985) (11,192) (4,492) - (52,669)
Charge for year - (10,777) (583) (1,008) (416) (12,784)
Impairment (29,426) (20,340) (926) - - (50,692)
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2014 (29,426) (68,102) (12,701) (5,500) (416) (116,145)
----------- --------- ----------- ----------- ------------- ----------
Balance at 1 January
2015 (29,426) (68,102) (12,701) (5,500) (416) (116,145)
Charge for year - (9,687) (235) - (1,435) (11,357)
----------- --------- ----------- ----------- ------------- ----------
Balance at 31 December
2015 (29,426) (77,789) (12,936) (5,500) (1,851) (127,502)
----------- --------- ----------- ----------- ------------- ----------
Net book value
At 31 December 2014 17,848 146,538 624 - 998 166,008
----------- --------- ----------- ----------- ------------- ----------
At 31 December 2015 17,848 136,851 389 - 3,884 158,972
----------- --------- ----------- ----------- ------------- ----------
10. INTANGIBLE ASSETS (CONTINUED)
The goodwill balance at 31 December 2015 relates to the
following investments:
a) An investment in Hostelworld.com Limited in 2009 which
resulted in a goodwill amount of EUR17,848k. The carrying value of
this balance as at 31 December 2015 is EUR17,848k (2014:
EUR17,848k);
b) An investment in Hostelworld Services Limited (formerly
Hostelbookers.com Limited), which resulted in a goodwill amount of
EUR29,426k in 2013. The carrying value of this balance at 31
December 2015 is EURNIL (2014: EURNIL).
Goodwill, which has an indefinite useful life, is subject to
annual impairment testing, or more frequent testing if there are
indicators of impairment. The cash flow projections are initially
based on the three year budgets approved by the directors and
extended out for a further 12 years. The cash-flow projections take
into account key assumptions including historical trading
performance, anticipated changes in future market conditions,
industry and economic factors and business strategies.
The pre-tax discount rate which has been applied in determining
value in use is 11.4% (2014: 11.0%). The discount rate is based on
the Group estimated weighted average cost of capital adjusted for
business specific risk of the CGU. Based on the 2016 budget, growth
rates are assessed based on approved budgets and forecast and range
from 5% to 10% over the forecast period after 2016. Cash flows
beyond the 15 year period are extrapolated using the estimated
long- term growth rate of 2% (2014: 2%).
There are no reasonable possible changes to the assumptions
presented above that would result in any further impairment
recorded in each of the years presented in these financial
statements.
Following impairment testing, no impairment was recognised for
goodwill in 2015. There were no indicators to require an impairment
test of intangible assets in the current year. In 2014, following a
review of trading performance and revenue being less than
originally projected, the directors reassessed estimated future
cashflows for the Hostelbookers trade, which led to the full
impairment of the goodwill recognised in relation to the
acquisition of the Hostelbookers trade of EUR29,426k and the
recognition of an impairment charge of EUR21,266k in relation to
the value of other intangible assets relating to Hostelbookers.
11. TRADE AND OTHER RECEIVABLES
2015 2014
EUR'000 EUR'000
Amounts falling due within one year
Trade receivables 621 880
Prepayments and accrued income 822 560
Value Added Tax 1,806 283
Amount due from related parties - 603
---------- --------
3,249 2,326
---------- --------
The carrying value of trade and other receivables also
represents their fair value. Trade receivables are non-interest
bearing and trade receivable days are 3 days (2014: 4 days). Given
the nature of the business, allowance for impairment of receivables
is not material.
12. CASH AND CASH EQUIVALENTS
2015 2014
EUR'000 EUR'000
Cash and cash equivalents 13,620 19,942
Restricted cash balances (2,225) -
-------- --------
Unrestricted cash balances 11,395 19,942
-------- --------
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.
13. GROUP REORGANISATION AND IMPACT ON RESERVES
As part of the Group reorganisation as described in the basis of
preparation in Note 1, the Company became the ultimate parent
entity of the Group. By doing so, it also indirectly acquired all
of the shareholdings previously held by Wings Lux 2 S.Ã r.l in each
of its 100% owned subsidiaries.
Subsequent to the acquisition of Wings Lux 2 S.Ã r.l, share
capital and share premium to the value of EUR61,147k was issued in
part consideration for shareholders' loans (including accrued
interest) held in Wings Lux 2 S.Ã r.l. Shareholder loans and
accrued interest amounting to EUR181,359k was paid out of the
proceeds of the issue of new shares in the Company with a further
amount of EUR13,766k repaid by the Group prior to the
reorganisation. The remaining shareholder loans and accrued
interest of EUR104,158k was forgiven (Note 7).
The imposition of Hostelworld Group plc as a new holding company
of Wings Lux 2 S.Ã r.l does not meet the definition of a business
combination under IFRS 3 "Business Combinations", and, as a
consequence, the acquired assets and liabilities of Wings Lux 2 S.Ã
r.l and its subsidiaries continue to be carried in the consolidated
financial statements at their respective carrying values as at the
date of the reorganisation. The consolidated financial statements
of Hostelworld Group plc are prepared on the basis that the
Hostelworld Group is a continuation of the previous group,
reflecting the substance of the arrangement. As a result, the
difference in fair value between shares issued in acquiring Wings
Lux 2 S.Ã r.l and the carrying value of its assets have been
accounted for as a merger reserve of EUR3,628k.
14. TRADE AND OTHER PAYABLES
2015 2014
Notes EUR'000 EUR'000
Amounts falling due within one year
Trade payables 5,439 4,650
Accruals and other payables 5,168 6,422
Payroll taxes 694 582
Value Added Tax 104 406
Amount due to related parties 16 - 285
---------- ----------
11,405 12,345
---------- ----------
(MORE TO FOLLOW) Dow Jones Newswires
April 05, 2016 02:00 ET (06:00 GMT)
The average credit period for the Group in respect of trade
payables is 26 days (2014: 31 days).
15. COMMITMENTS AND CONTINGENCIES
(i) OPERATING LEASES
At the reporting date, the Group had commitments under
non-cancellable operating leases which fall due as follows:
2015 2014
EUR'000 EUR'000
Operating leases
Within one year 994 964
Within two to five years 3,682 2,232
More than five years 2,433 -
-------- --------
7,109 3,196
-------- --------
All operating lease commitments relate to buildings. These
relate to two leases of office space in Ireland and the UK. These
leases are due to expire in 2035 and 2025 respectively.
The operating lease charge included in the consolidated income
statement was EUR928k in 2015 (2014: EUR793k).
(ii) CONTINGENCIES
In the normal course of business the Group may be subject to
indirect taxes on its services in certain foreign jurisdictions.
The directors perform ongoing reviews of potential indirect taxes
in these jurisdictions. Although the outcome of these reviews and
any potential liability is uncertain, no provision has been made in
relation to these taxes as the directors believe that it is not
probable that a material liability will arise.
16. RELATED PARTY TRANSACTIONS
Prior to the reorganisation of the Group on 2 November 2015,
Wings Lux 2 S.Ã r.l was a subsidiary of H&F Wings Lux 1 S.Ã
r.l., a company incorporated in Luxembourg. The prior ultimate
parent was Hellman & Friedman Capital Partners VI (Cayman)
L.P., an exempt limited partnership incorporated under the laws of
Cayman Islands with registered office at Walker House, 87 Mary
Street, George Town, Grand Cayman, KY1-9002, Cayman Islands.
Subsidiaries
The following is a list of the Company's current investments in
subsidiaries, including the name, country of incorporation, and
proportion of ownership interest:
Country of
Company incorporation Holding Nature of Business
Wings Lux 2 S.Ã Luxembourg 100% Intermediate holding
r.l company
Wings Lux 3 S.Ã Luxembourg 100% Intermediate holding
r.l company
Wings Holdco Ltd Ireland 100% Intermediate holding
company
Wings Bidco Ltd Ireland 100% Intermediate holding
company
WRI Nominees Ltd Ireland 100% Holding of IP
WRI Holdings Ireland 100% Intermediate holding
company
Web Reservations International Ireland 100% Intermediate holding
company
Hostelworld.com Ltd Ireland 100% Technology trading company
Boo Travel Ltd Ireland 100% Dormant company
Wings Corporate Services Ireland 100% Management services company
Ltd
Cornetto Bidco Ltd Jersey 100% Intermediate holding
company
Hostelworld Services UK 100% Technology trading company
Limited
Anytrip.com Ltd UK 100% Dormant company
All subsidiaries have the same reporting date as the Company
being 31 December.
On 22 February 2016, H&F Wings Bidco Ltd changed its name to
Wings Bidco Ltd and H&F Wings Holdco Ltd changed its name to
Wings Holdco Ltd.
On 26 February 2016, H&F Wings Lux 2 S.Ã r.l changed its
name to Wings Lux 2 S.Ã r.l and H&F Wings Lux 3 S.Ã r.l changed
its name to Wings Lux 3 S.Ã r.l.
17. RELATED PARTY TRANSACTIONS (CONTINUED)
DIRECTORS' REMUNERATION
2015 2014
EUR'000 EUR'000
Salaries, fees, bonuses and benefits in
kind 956 796
Gains on exercise of share options - -
Amount receivable under long term incentive
schemes - -
Pension contributions 23 19
-------- --------
Total 979 815
-------- --------
The comparative figures included in this note relate to Mari
Hurley, Feargal Mooney and Richard Segal, who were remunerated by a
subsidiary undertaking in the period prior to the incorporation of
the Company on 9 October 2015.
KEY MANAGEMENT PERSONNEL
The Group's key management comprise the Board of Directors and
senior management having authority and responsibility for planning,
directing and controlling the activities of the Group.
2015 2014
EUR'000 EUR'000
Short term benefits 2,342 1,648
Post employment benefits 52 25
Other long term benefits - -
Share based payments - -
Termination benefits - -
---------- ----------
Total 2,394 1,673
---------- ----------
Transactions between the Group and the Related Parties and the
balances outstanding are disclosed below:
The Group has no borrowings from its previous immediate parent
undertaking, H&F Wings Lux 1 S.Ã r.l. as at 31 December 2015
(2014: EUR254,019k). In 2015, H&F Wings Lux 1 S.Ã r.l., the
selling shareholders agreed to pay Richard Segal a sum of EUR5,000k
(net sum of EUR2,500k) and any employer tax liability that accrued
to the company in full satisfaction of an agreement with him dated
28 September 2011. For administration purposes the sum was paid by
the Group and reimbursed by the shareholders.
Prior to the reorganisation, the Group had borrowings from a
shareholder, Wings Mgt Equity Co Limited, comprising A & B PECs
and accrued interest thereon. As at 31 December 2015, there was no
balance due on these borrowings (2014: EUR65,897k).
18. DIVIDENDS
In accordance with the Group's dividend policy, the directors
recommend the payment of a dividend for 2015 of EUR0.0275 per share
amounting to EUR2.6m. This is to be approved by the shareholders at
the 2016 AGM on 26 May 2016.
19. EVENTS AFTER THE BALANCE SHEET DATE
There were no significant events after the balance sheet
date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR AKQDNOBKDCQK
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April 05, 2016 02:00 ET (06:00 GMT)
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