LEI:213800OC94PF2D675H41
Hostelworld Group plc
("Hostelworld" or the "Group" or the "Company") preliminary results
for the year ended 31 December 2023
A record year, with adjusted
EBITDA exceeding market guidance
21 March 2024: Hostelworld, a
leading global OTA focused on the hostel market, is pleased to
announce its preliminary results for the year ended 31 December
2023.
Significant developments
· Record full year net GMV and generated revenue
· Leader in Social Travel, with a highly differentiated
business model driving strong growth in App bookings and reduced
marketing costs as a % of revenue
· Robust bookings growth across all regions, a record year for
Asia
· Operating costs continue to decline as a % of
revenue
· Strong cash conversion driving deleveraging of balance
sheet
· Returned the business to profitable earnings per
share
· Continued progress of ESG agenda: launched 'Staircase to
Sustainability' framework, awarded 'Investors in Diversity' Silver
accreditation (building on 2022 Bronze) and published the 2nd
edition of 'Understanding the carbon impact of hostels vs. hotels'
in partnership with Bureau Veritas validating hostels as more
sustainable than hotels
· Strong start to 2024 with positive trends
continuing
Financial highlights
· Full
year net bookings totalled 6.5m, an increase of 37% year on year
(2022: 4.8m)
· Net
GMV €618.7m, an increase of 32% year on year (2022:
€470.1m)
· Net
revenue for the period was €93.3m an increase of 34% year on year
(2022: €69.7m)
· Net
Average Booking Value ('ABV') of €14.36, a decrease of 4% year on
year (2022: €14.90), a combination of bed price inflation and a
greater proportion of Asian destination bookings
· Direct marketing as a percentage of revenue amounted to 50%
(2022: 58%)
· Operating costs (excluding paid marketing costs, exceptional
costs and share option charges) of €25.3m an increase of €0.4m year
on year, continue to reduce as a % of revenue, 27% (2022:
35%)
· Adjusted EBITDA of €18.4m (2022: €1.3m)
· Profit after tax of €5.1m (2022: €17.3m loss)
· Adjusted EPS 9.91 cent (2022: 5.97 cent
loss)
Balance sheet and cash flow
· Total cash as at 31 December 2023 of €7.5m (2022: €19.0m) and
net debt €12.3m (2022: €21.6m)
· Adjusted free cashflow of €13.9m, 75% cash conversion (FY22:
-521% cash conversion), balance of €7.5m revolving credit facility
fully repaid in February 2024
Gary Morrison, Chief Executive Officer,
commented:
"I
am very pleased to report another strong year of strategic progress
for Hostelworld, which is reflected in our results. Over 2023 we
grew market share, delivered record revenues, and increased
operating leverage through a combination of reduced marketing spend
(as a percentage of revenue) and continued operating cost
discipline to deliver €18.4m EBITDA, which exceeded our guidance
range of €17.5m - €18.0m.
This operational delivery coupled with the strong cash
conversion characteristics of our business model and a new €17.5m
facility agreed with Allied Irish Banks, plc in May 2023, enabled
us to strengthen our balance sheet and reduce our finance costs. As
of February 2024, we have repaid in full the €7.5m revolving credit
facility drawn down with AIB. Interest on the remaining term loan
is charged at 2.65% over EURIBOR.
I
am also proud to report that the Group continues to progress its
ESG agenda and in particular the recent launch of our 'Staircase to
Sustainability' framework with the Global Sustainable Tourism
Council. This framework will help our hostel partners to promote
the inherent sustainability advantages of their hostel
accommodation."
Outlook
"With our record performance in 2023 and substantial progress
in strengthening our balance sheet, I believe we are strongly
positioned to deliver against our medium-term financial commitments
published at our Capital Markets Day in November 2022. We have
started 2024 with strong momentum, and I feel confident that we
will continue our track record of profitable growth and value
creation for our shareholders."
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 contact Powerscourt on the
contact details provided below, or join directly via webcast link
provided below.
Webcast Link
https://brrmedia.news/HSW_FY23
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
Powerscourt
hostelworld@powerscourt-group.com
Eavan Gannon / Nick
Dibden
+44 (0) 20 7250 1446
About Hostelworld
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.
Chairman's Statement:
Michael Cawley
Introduction
2023 was a year of improved
financial performance and strategic development for Hostelworld.
Our differentiated strategy enabled us to achieve record revenues,
grow market share, and deliver adjusted EBITDA earnings ahead of
market guidance. Our mission, to 'help travellers find people to
hang out with', has resonated strongly with our customers, 61% of
whom are young solo travellers (2022 59%), with our innovative
'social' strategy enabling them to make connections and build a
community.
Demand was strong across all key
markets and resulted in a year of record revenue growth. Following
a prolonged period of travel restrictions, 2023 was a milestone
year, particularly for Asia, with bookings into this region the
largest in the history of the business. European demand was also
particularly strong, with bookings up +14%, revenue up +21% and bed
prices remaining high throughout the year.
We continued to evolve and enhance
our social network product offering during the year. Initially
launched in 2022, enhancements during 2023 focussed on the customer
experience, with improvements to the sign-up process, richer user
profiles, and messaging functionality. As a result, we saw
increased engagement through the app, with 68% of 2023 bookings
made by social network members (2022: 34%). Hostel hosted social
events ('Linkups') were launched in Q2 2023, providing customers
with a range of opportunities to connect with other like-minded
travellers and share travel experiences.
We also continued to be
disciplined and focussed on costs. I am particularly pleased
to report that operating costs (which exclude paid marketing,
exceptional items and share option charges) remain below 2019
levels (-10%) and have declined as a % of revenue from 35% in 2019
to 27% in 2023.
Our People
Hostelworld is powered by its
people, and we are fortunate to be able to attract and retain
talented and committed staff from a diversity of backgrounds in all
areas of the business. Each contributes to a vibrant culture in
Hostelworld which promotes equality and dignity at work and ensures
everyone feels they belong. The Group's strong performance and
strategic development during 2023 was achieved thanks to their
focus, dedication and innovation, and I would like to express the
Board's gratitude for their efforts.
Sustainability
Ensuring a sustainable future is
of paramount importance to all our stakeholders and is reflected in
our company values.
The Group welcomes the second
publication of a research report by leading sustainability and
compliance specialist, Bureau Veritas, which confirms that hostels
emit significantly less Scope 1 and Scope 2 emissions (tCO2e)
compared to a typical hotel chain, on a per bed-night basis.
Further, the report also confirms that the average emissions of
hostels have reduced year-on-year, whilst by contrast, hotel
emissions have increased.
Hostelling clearly offers
consumers a unique opportunity to travel responsibly and this
affords Hostelworld, as the only OTA exclusively promoting hostels,
a distinct competitive advantage. Given its leadership position in
the industry, Hostelworld has a responsibility to promote the
inherent sustainable features of the category and we are committed
to fully supporting our hostel partners journey in recognising and
embracing the importance of sustainability. To achieve this, we
have partnered with the Global Sustainable Travel Council ("GSTC")
to develop a sustainability measurement and management system
unique to the hostelling category, which went live in January 2024.
This 'Staircase to
Sustainability' framework is the first of its kind and is
aligned to the GSTC's sustainability criteria. The framework will
allow hostels to showcase their sustainability credentials and will
be of invaluable assistance to our customers who are looking to
minimise their carbon footprint.
Working with our emission
reduction advisors South Pole, the Group have been accredited with
the 'Funding Climate Action' label for a third consecutive year.
The label recognises the Group's commitment to reducing and
controlling its own emissions. Hostelworld had minimal scope 1 and
2 emissions of 7 tCO2e (well below the annual target set by the
Group of 30 tCO2e) but is responsible for increasing scope 3
emissions due to an increase in purchased consumables relating to
paid marketing costs and business travel linked to the growth in
the Group's booking volume.
Capital Structure and Dividend
Our principal objective is to
deliver growth in long-term sustainable value for our shareholders.
In May 2023 the Group re-financed a 5-year term loan facility drawn
down with HPS Investment Partners LLC (or subsidiaries or
affiliates thereof) in February 2021 and replaced it with a new
3-year facility with Allied Irish Banks, plc. This facility is
comprised of a €10 million term loan, a €7.5 million revolving
credit facility and an undrawn €2.5 million overdraft. The term
loan and RCF each had an initial interest rate payable of 3.75%
over EURIBOR, which subsequently reduced to 2.65% over EURIBOR as
the ratio of net debt to adjusted EBITDA reduced to less than 1
times. Since drawdown in May we have repaid the RCF in full, €5.5m
during 2023 and a further €2.0m in February 2024, and we have
repaid €2.5m of the term loan, €1.7m in 2023 and a further €0.8m in
2024.
At 31 December 2023, the Group had
warehoused payroll taxes owing to the Irish Revenue Commissioners
of €9.6m, inclusive of interest accruing at 3% per annum. On 05
February 2024, the Irish Revenue Commissioners announced that the
applicable interest rate would reduce to 0%. The Group continues to
work closely with the Irish Revenue Commissioners to agree a
schedule of repayments. At year-end, the Group agreed to make a
repayment of 15% of the balance owed in May 2024, with monthly
repayments of the remaining amounts due being made for the
subsequent three-year period.
The Board continues to believe
that the payment of dividends would not be in the best interests of
the business for the foreseeable future.
Governance
I am pleased to report that the
Board continues to effectively lead the business in delivering our
strategy, overseeing the culture of Hostelworld and ensuring
meaningful progress continues to be made in the important area of
diversity, equity and inclusion. Critical features of my role as
Chair are ensuring that the Board sets a clear tone from the top
and that our governance procedures are robust. In this regard, I am
grateful to be ably supported by Board colleagues with a wealth of
skills and expertise who share a common aim for the highest
standards in corporate governance.
Outlook
Hostelworld is very well
positioned with a product offering that resonates with our
customers and a business model underpinned by cost discipline and
operational excellence. We look forward to a year of further
progress in 2024 and remain very confident in the Group's long-term
ability to drive improved profitability and create shareholder
value.
Michael Cawley
Chairman
20 March 2024
Chief Executive's Review:
Gary Morrison
"I am very pleased to report another strong year of strategic
progress for Hostelworld, which is reflected in our results. Going
into 2024, we are strongly positioned to deliver against our
medium-term financial commitments. We have started the new year
with strong momentum and I feel very confident that we will
continue our track record of continued profitable growth and value
creation for our shareholders."
Over 2023 we grew market share,
delivered record revenues, and increased operating leverage through
a combination of reduced marketing spend (as a percentage of
revenue) and continued operating cost discipline to deliver €18.4m
EBITDA, which exceeded our guidance range of €17.5m - €18.0m. In
particular, I am pleased to report our full year marketing costs as
a percentage of revenue fell from 51% in the first half of the year
to 50% on a full year basis, which demonstrates the ability of our
unique app centric social strategy to grow market share whilst
reducing marketing costs.
In parallel we continued to invest
in our marketing technology platform, which enables us to allocate
our marketing spend to maximise new customer acquisition,
underpinned by our ability to predict the lifetime value of these
new customers versus their acquisition cost in a granular fashion.
We also made solid progress on modernising our platform enabling us
to support faster execution of our growth strategy.
Overall, these results coupled
with the strong cash conversion characteristics of our business
model and a new facility agreed with Allied Irish Banks, plc in May
2023, enabled us to strengthen our balance sheet and reduce our
interest costs. As of 31 December 2023, we have repaid €5.5m of the
original €7.5m revolving credit facility drawn down in May 2023,
with interest on the balance now charged at 2.65% over
EURIBOR.
Finally, the Group continues to
progress its ESG agenda by managing its low carbon emissions and
being awarded with a 'Funding Climate Action' label by South Pole,
and by collaborating with our hostel partners to promote the
inherent sustainability advantages of hostel
accommodation.
Executing our Growth Strategy
During 2023, we continued to
execute our highly differentiated social network growth strategy,
consistent with our Company Mission to 'help travellers find people
to hang out with'.
At its core, our social network
leverages our customers' booking data to create chat
rooms/channels, accessible via our iOS and Android apps, that
comprise customers who have overlapping stay dates in hostels and
host cities. Hostel-based chat rooms comprise customers who will be
staying in the same hostel on the same dates. City-based chat rooms
comprise customers who will be staying in any hostel in the same
city on the same dates, and are further divided into themes, such
as drinks and dancing, walking tours, food etc. This in turn
enables our customers to also find other hostellers to hang out
with who are visiting the same city on the same dates (and who have
similar interests). Collectively, these chat rooms/channels open up
to customers who have opted into the social platform 14 days before
check in, and close 3 days after check out.
Since launching this social
network in Q2 2022 we have seen the number of customers signing up
to use the social network (Social Members) steadily increase and
surpass the 1 million mark in late 2023. Moreover, we have seen
that these Social Members are very valuable. On average Social
Members make circa twice the number of bookings and are three times
more likely to use the app over the first 91 days since acquisition
compared to non-members. Collectively, this growth strategy has not
only driven market share gains, but also powered strong growth in
app bookings relative to other channels, which in turn has served
to reduce our marketing expenses as a percentage of revenue over
time. These trends have further accelerated in 2023 as we continued
to broaden and strengthen the appeal of our social network to our
customers through improvements to our social network's sign-up
process, richer traveller profiles, and enhanced chat room
features.
In particular, during the year we
improved our social network sign-up process on our website to make
it easier for customers who used our platform before the launch of
our social network to join the network on their next booking. This
served to increase the number of customers signing up to the
network, which in turn increased the proportion of bookings made by
Social Members to 74% by Q4 2023, up from 54% in Q4
2022.
Throughout the year we invested in
improving our traveller profiles so that Social Members can share
more about their interests, spoken languages, places they know
well, and other related information. This helps Social Members
learn more about others that they interact with in the chat
rooms/channels. Similarly, we also invested in our chat room
functionality to make it easier for users to track conversations
via threads, share their reactions to posts using emojis, and
specifically mention other users using the familiar "@" notation.
Collectively these improvements served to increase engagement on
the platform, with the number of messages sent by social members
during 2023 (as a proxy), increasing by 6.9x year-on-year, versus
the growth in the underlying bookings made by Social Members of
2.8x year-on-year.
Finally, we launched a new
platform ('Linkups') mid-year to enable our hostel partners to
publish their catalogue of events to all our customers staying in
the city. These events range from walking tours led by hostel staff
members to open air cinema nights, pub tours, and excursions to
local attractions in the neighbourhood. This is of particular
importance to our hostel partners as it enables them to market
their events to a wider audience than they could achieve alone, and
to our customers as it expands the range of activities while
hostelling where they can meet other hostellers to hang out with.
While it is still early in respect of publishing participation
figures to date, especially as we continue to iterate on the
platform, and how we present the content to users in the app, we
have been delighted to see strong growth in the inventory loaded on
to the platform by our hostel partners. In particular, we can
report that more than 63% of Social Members who made a booking in
Q4 2023 were able to see at least 3 hostel events in their
destination city that they could attend.
Overall, the continued investments
in our social strategy during 2023 continues to pay dividends in
the form of continued market share growth, where our bednights grew
30% year-on-year versus an estimated category growth rate of 8%,
and a reduction of marketing expenses as a percentage of revenue
which fell from 51% in H1 2023 to 50% on a full year
basis.
This said, we are even more proud
to see the tangible difference our social network is making to our
customers lives, when we help them find people to hang out with,
and they post about these experiences on social networks such as
Instagram, TikTok, X and so forth. Over the course of 2023 we've
seen thousands of these stories, videos, and posts, ranging from a
single traveller organising a karaoke bar event in Tokyo with 20
others she'd never met, to another finding a group of solo
travellers who went skydiving together in Hawaii, and a love story
too, with a British couple meeting up in Vietnam using our
platform… who've since moved in together in London. Indeed, we are
very privileged to be enabling these amazing experiences every day,
and this enviable word of mouth effect compounds all the other work
that we do. We look forward to reporting more stories throughout
2024!
Expanding our Inventory Coverage
Over the last 25 years,
Hostelworld has taken great pride in providing not only our
customers with a wide selection of competitive hostels, but also
providing our hostel partners with the most profitable customers,
at market-leading competitive commission rates, and superior
customer service.
During 2023, we continued to
progress our long-term objectives of (i) strengthening the
relationships with our existing hostel partners and (ii) making it
easier for new hostel partners to join our platform.
With COVID-19 travel restrictions
firmly in the rear-view mirror, our global markets team once again
went out in the market to meet with our partners through dedicated
Hostelworld conferences, market visits, attendance at third-party
events, and leveraging our privileged partnerships with local
hostel associations. These face-to-face meetings help us meet new
hostel partners, cement our commercial relationships with existing
partners, and help us provide guidance and information to all in
getting the most out of our platform.
Investing in our Platform
Over the course of the year we
continued to migrate key services on our platform to our cloud
native architecture. The key services migrated this year include
our payments service, all the sub-systems that support our social
platform, and our customer-facing website. We also began migrating
our core inventory and pricing services to the new cloud native
architecture and expect to complete this work in 2024.
The cloud native approach delivers
many advantages, such as application level "on demand" scaling, a
more flexible microservices-based architecture, and more
opportunities to use off-the-shelf features from our cloud services
provider, such as artificial intelligence and machine learning
optimisation engines. Collectively, these technology benefits will
flow through into reduced hosting costs and enable faster execution
of our growth strategy.
We also continue to make
improvements in our underlying platform infrastructure now we can
take advantage of cloud-based hosting. This has reduced the number
of single points of failure, made problem identification/resolution
easier, and has improved the scalability and latency of our
services. The process for updating our systems is more automated,
simpler, less disruptive, and less likely to result in an outage.
We have already seen a significant improvement in uptime and
manageability as a result of this and will continue to invest in
this area.
Progressing our ESG Agenda
In parallel with helping millions
of travellers in our category Meet The World®, we are also
committed
to building a better world in
everything we do, while making sustainability a competitive
advantage for Hostelworld over time.
As noted in my last letter to
shareholders in 2023, we continue to see growth in the importance
of sustainability for all stakeholders in the travel ecosystem.
Within the hostelling category, similar to last year, over half of
our customers indicated that sustainability plays a role in both
where and how they travel. In 2023 however, we now see that 82% of
our customers are actively choosing hostels based on their belief
that hostels are the most sustainable accommodation type.
Throughout the year we have also seen growing demand from our
hostel partners for a sustainable management system that aligns to
travel industry standards.
More broadly, we continue to 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. In particular, we are seeing the
standards maintained and published by the United Nations World
Tourism Organisation and Global Sustainable Tourism Council
continuing to evolve, and increased disclosure requirements driven
in large part by the Task Force on Climate-Related Financial
Disclosures.
Taken collectively, it's clear the
importance of sustainability in travel is increasing, and we expect
that trend to continue over the coming years. Consequently, last
year we developed and executed our sustainability strategy as a
series of three linked initiatives, and I am confident that the
progress we've made (and will continue to make) will position us
strongly as the sustainability champion of the hostelling category
over the years to come.
Our first initiative relates to
maintaining a data-driven fact base to allow us and our hostel
partners to promote hostels as the most sustainable accommodation
option available. Once again, we collaborated with Bureau Veritas
to refresh the calculation of scope 1 and 2 emissions of a
representative group of hostels and compared these with the
publicly available emissions data from a representative group of
hotel chains. The second edition of this report (which was
published in February 2024) once again indicated that the
hostelling category emits significantly less Scope 1 and Scope 2
emissions (tCO2e) on a per bednight basis compared to a
one-night stay in a typical hotel chain. In particular, the report
indicates that the sustainability gap between hostels and hotels
has widened still further year-over-year, with hostels reporting a
year-on-year reduction in average emissions whilst the year-on-year
emissions from the hotels analysed shows an increase. This report
is invaluable for both ourselves and our hostel partners in
confirming to our collective target audiences that choosing to stay
in hostels is the most sustainable option.
The second initiative builds on
the first by providing a common framework for hostel partners to
not only showcase their sustainability credentials on our platform,
but to also encourage progression towards even more sustainable
operations. Whilst over half of our larger hostels/hostel chains
are already using a sustainable management system, those that are
indicate a lack of standards in the hostelling category overall
(making comparisons by travellers difficult) and those that are not
indicate existing systems are both time consuming and costly.
Throughout 2023 we worked closely with our hostel partners, the
GSTC, Bureau Veritas and other relevant bodies to build a set of
hostel-appropriate standards and a reporting platform for all
hostels listed on our platform. This strategy, branded
"Staircase to
Sustainability", launched in January 2024 and delivers on
three key objectives. Firstly, it provides a uniform set of tiered
standards, aligned to GSTC criteria, for hostels to present their
sustainability credentials. Secondly, it provides a means for
hostels to display adherence to these tiered standards on our
site/apps to our travellers (based on inputs provided by hostel
partners) such that our customers can make informed choices about
where to stay. Thirdly, it provides the impetus for hostels to
improve their sustainability operations over time, and progress
through the tiers. We are incredibly excited about this platform
and how it will drive sustainability in our category in 2024 and
beyond.
Our final initiative relates to
reducing our own emissions, and I am pleased to report during 2023
we were awarded the 'Funding Climate Action' label, in partnership
with South Pole. Furthermore, I am pleased to report that in 2023
our scope 1 and 2 emissions totalled 7 tCO2e, which is
substantially below the threshold of 30 tCO2e/annum
target set for 2023. As our business grows we expect our scope 3
emissions will also grow primarily through increased paid marketing
costs, and employee travel as we come together as a company
(offsites) and travel to meet our hostel partners. In 2024 we plan
to review these scope 3 emissions and set a reduction target which
goes beyond the thresholds stipulated by the SBTi.
Investing in our Employees, Hostel Partners and
Communities
Our employee mission is to foster
a culture where everyone experiences personal growth and helps
others achieve it too. Similar to companies across the world, we
continue to adjust to the changes in where work is performed. We
believe nurturing our desired culture is key to supporting our
approach to agile working. Consequently, we revised our desired
employee behaviours this year to highlight the importance of
Growing Others - building on our belief that investing in growing
others benefits everyone. I am pleased with our investments in
learning and development resources to support the team in bringing
this to life.
We're proud of our work building a
highly inclusive workplace culture that celebrates differences by
giving a voice to everyone. Building on initiatives over the past
few years, this year we introduced new policies to support
Fertility Leave, Surrogacy Leave, and Menopause at Work. We saw our
efforts across many parts of this agenda recognised when awarded
the Silver Accreditation by Investors in Diversity. This accolade
recognises our commitment to diversity and inclusion practices. The
accreditation is based on feedback from our team members and their
firsthand experiences of the culture within Hostelworld.
Turning to our hostel partners,
our regional hostel conferences provide an unrivalled opportunity
for in-person engagement and knowledge sharing. They allow us to
promote our strategy, share industry trends, and solicit feedback.
In 2023 we held two such events. The first, our Latin American
conference, took place in Bogota in September 2023, our first event
in the region since 2019. We also took advantage of being in
Colombia to arrange a number of smaller events and market visits in
Colombia and neighbouring markets. A month later we held our
European event in Copenhagen. Both conferences also attracted
prominent speakers from relevant tourism bodies in the regions.
This not only allowed us to celebrate the importance of the hostel
sector to tourism in the region, it allowed us to pave the way for
similar future events in other regions. In addition to these
flagship events, we carried out numerous market visits and city
events in key markets across Europe and the Asia-Pacific region. In
parallel, we continued to run webinars covering market updates,
revenue management, product updates, and showcasing our ESG
developments. We continue to run our HOSCAR awards, this year
celebrating five categories including The People Person, The
Community Champion, and The Eco Warrior.
Finally, we're pleased to see
people across the business using volunteering days introduced last
year. This leave helps our people to have an impact in their local
communities, whether through activities organised by teams or
individually. Together with our charity partnerships, through both
events and financial support, the variety of activities shows our
people are passionate about making a difference and building a
better world.
Summary
Over the course of 2023, we have
demonstrated the capacity of our social network growth strategy to
drive profitable growth in market share, and we have continued to
maintain a tight rein over costs. Taken together, this enabled the
Hostelworld team to deliver €18.4m in EBITDA which comfortably
exceeded our last published guidance of €17.5m - €18.0m. 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 exceptional results. As I mentioned in our year-end town
hall, I have the privilege of leading a team of extraordinary
people who do extraordinary things.
With our record performance in
2023 and substantial progress in strengthening our balance sheet, I
believe we are strongly positioned to deliver against our
medium-term financial commitments published at our Capital Markets
Day in November 2022. We have started 2024 with strong momentum,
and I feel confident that we'll continue our track record of
profitable growth and value creation for our
shareholders.
Gary Morrison
Chief Executive Officer
20 March 2024
Financial Review: Caroline
Sherry
|
2023
|
2022
|
|
2023
|
2022
|
|
2023
|
2022
|
Net Bookings
|
6.5m
|
4.8m
|
Generated Revenue1
|
€93.7m
|
€71.2m
|
Net Revenue1
|
€93.3m
|
€69.7m
|
Net Average Booking Value
("ABV")2
|
€14.36
|
€14.90
|
Net Gross Merchandise Value
("GMV")2
|
€618.7m
|
€470.1m
|
|
|
|
Direct Marketing Costs as a % of
Revenue2
|
50%
|
58%
|
Operating Expenses
|
€88.4m
|
€83.1m
|
|
|
|
Operating Profit/(Loss) for the Year
|
€5.0m
|
(€13.6m)
|
Profit/(Loss) for the Year
|
€5.1m
|
(€17.3m)
|
Basic EPS
|
4.21 cent
|
(14.71) cent
|
Adjusted EBITDA2
|
€18.4m
|
€1.3m
|
Adjusted EBITDA Margin2
|
20%
|
2%
|
Adjusted EPS2
|
9.91 cent
|
(5.97) cent
|
Cash and Cash Equivalents
|
€7.5m
|
€19.0m
|
Adjusted Free Cash Flow
|
€13.9m
|
(€6.9m)
|
Cash Conversion
|
75%
|
(521%)
|
Net Debt
|
€12.3m
|
€21.6m
|
Net Asset Position
|
€59.2m
|
€52.2m
|
|
|
|
1 Generated revenue is gross
revenue less cancellations and excludes impact of deferred revenue.
Net revenue is revenue adjusted for deferred revenue, ancillary
revenue streams, vouchers, refunds and other accounting
adjustments.
2The Group uses Alternative
Performance Measures (APMs) which are non-IFRS measures to monitor
the performance of its operations and of the Group as a whole.
These APMs along with their definitions are provided in the
Appendix 1 which form part of the Annual Report.
"2023 was a record year for Hostelworld, with both net GMV
and generated revenue growing 32% compared to 2022 and net bookings
growing 37%. This strong volume growth, combined with increased
operating leverage due to reduced marketing spend (as a percentage
of revenue) and operating cost discipline, resulted in an adjusted
EBITDA which exceeded the upper end of our guidance range and a
return to profit after tax."
Revenue and Operating Profit
Net GMV grew year-on-year to
€618.7m (2022: €470.1m) and net bookings totalled 6.5m, an increase
of 37% compared to 2022 (2022: 4.8m) driven by strong growth across
all regions and in particular, Asia. Generated revenue for the
period was €93.7m (2022: €71.2m), an increase of 32%. Net ABV, the
average value paid by a customer for a net booking was €14.36 which
decreased by 4% from 2022 (2022: €14.90), driven by a combination
of bed price inflation and a greater proportion of Asian
destination bookings.
Net revenue recognised for the
period was €93.3m (2022: €69.7m) after considering deferred
revenue, ancillary revenue streams, vouchers, refunds and other
accounting adjustments. Featured listing advertising revenue,
revenue generated from hostels advertising on our platform, grew to
€1.2m (2022: €0.3m).
Deferred revenue cost of €0.4m
(2022: €2.0m), a provision for bookings made under the free
cancellation policy, where a customer can cancel and receive a
refund. Year-on-year reduction driven by 2022, where the balance
sheet provision reflected the Group's recovery post COVID-19 and
the return to normalised levels of free cancellation bookings. The
deferred revenue provision at year end totalled €3.4m (31 December
2022: €3.0m), and accounts for bookings where the cancellation date
has not yet passed. This provision balance will unwind in
2024.
Operating expenses totalled €88.4m
(2022: €83.1m), an increase of €5.3m year-on-year. The Group had an
increase of €5.5m in direct marketing costs to €46.9m (2022:
€41.4m) in part, due to increased booking volume. Direct marketing
costs as a percentage of net revenue reduced to 50% (2022: 58%),
with the Hostelworld app-centric social strategy driving marketing
efficiencies. Credit card fees increased by €0.6m to €2.7m (2022:
€2.1m), directly driven by the increase in booking
volumes.
Wage inflation and discretionary
compensation primarily, drove an increase in wages and salaries
costs to €19.7m (2022: €17.9m). 2022 costs include the benefit of
€0.4m of COVID-19 subsidy support received from the Irish Revenue
Commissioners, no such subsidy was received in 2023. Offsetting
increases in direct marketing costs, credit card fees, and wages
and salaries, was a reduction of €2.6m in other operating cost
lines to €19.1m (2022: €21.7m).
Group operating profit amounted to
€5.0m (2022: loss of €13.6m), a year-on-year increase of €18.6m.
Adjusted EBITDA of €18.4m (2022: €1.3m) exceeded the upper end of
market guidance and represented growth of €17.1m compared to prior
year.
Foreign Exchange
The Group incurred a foreign
exchange loss of €0.2m (2022: €0.7m). Current year loss arose with
the strengthening of the US dollar against the Euro in the second
half of the year.
Exceptional Items
Exceptional items warrant separate
disclosure due to their nature or materiality. The Group incurred
€3.8m (2022: €0.8m) of exceptional cost items in 2023.
The Group incurred €3.6m of costs
in refinancing the 5-year debt facility provided by HPS Partners
LLP in February 2021. As the facility was repaid before the end of
the 5-year agreement, the Group incurred €2.8m of accelerated
interest costs relating to transaction and warrant costs
capitalised on drawdown, €0.7m of early repayment penalty interest
and €0.1m of exit costs.
Prior year exceptional items
related to a final settlement amount paid to the founder of Counter
App Limited, in respect of their shareholders agreement and other
contractual relationships with the Group and associated legal
costs.
Share-Based Payment
The Group incurred a total
share-based payment expense of €1.7m (2022: €2.4m) arising on the
issuance of options in accordance with the Group's Restricted Share
Award ("RSU"), Long-Term Incentive Plan ("LTIP") and Save as you
Earn ("SAYE") plan.
Two awards vested in 2023. On 20
February 2023 the Company issued 1,027,655 shares to satisfy
restricted share awards granted by the Company at a value €0.01 per
share in relation to RSU 2021 which vested in equal tranches in
February 2022 and February 2023. This grant was made during
COVID-19 in lieu of a cash bonus. On 16 May 2023 the Company issued
1,645,994 shares to satisfy long-term incentive plan awards in
relation to LTIP 2020. 75% of the performance obligations were
satisfied.
In 2024 one LTIP award is set to
vest at 100%. The final number of awards that will vest will be
finalised in May 2024.
Earnings per Share
Basic earnings per share for the
Group was 4.21 cent (2022: loss per share: 14.71 cent). Adjusted
earnings per share was 9.91 cent per share (2022 loss per share:
5.97 cent per share) with the return to profitability, of both
metrics, reflective of the business's strong recovery post
COVID-19.
The weighted average number of
shares in the period was 122.0m (2022: 117.3m) and the total number
of shares at the balance sheet date was 123.6m (2022: 117.5m).
Increase year on year is due to the vesting of the RSU award
(1.0m), LTIP award (1.7m), SAYE award (0.1m) and warrants (3.3m), a
condition of the HPS debt facility agreement.
Net Finance Costs
The Group incurred €2.6m of
finance costs in 2023 (2022: €4.3m), with interest costs arising on
the Group's debt facilities. The decrease in costs year-on-year is
attributable to the refinancing completed in May 2023.
The legacy €30.0m HPS facility was
drawn down in February 2021 during COVID-19 and had an interest
rate of 9% per annum over EURIBOR. HPS interest charges, excluding
those classified as exceptional, amounted to €1.6m (2022: €4.2m),
of which cash interest paid totalled €1.1m (2022: €nil), prior year
interest costs were capitalised as PIK interest.
A new 3-year facility was signed
with AIB in May 2023. This facility is comprised of a €10.0m term
loan, a €7.5m revolving credit facility ("RCF") and an undrawn
€2.5m overdraft. The AIB term loan and RCF each had an initial
interest rate payable of 3.75% over EURIBOR. In July 2023 this
reduced to 3.25%, as the ratio of Net Debt to adjusted EBITDA was
less than 2 times as at 30 June 2023, and in October 2023 this
further reduced to 2.65% as the ratio of Net Debt to adjusted
EBITDA was less than 1 times as at 30 September 2023. Total AIB
interest charges amounted to €0.7m (2022: €nil), of which cash
interest paid totalled €0.6m (2022: €nil). The Group also incurred
interest charges of €0.2m (2022: €nil) on its debt warehoused with
the Irish Revenue Commissioners, at a rate of 3% since May 2023. On
05 February 2024 it was announced that this is reduced to 0% with
the reduction in rate applying to any interest amounts accrued to
date.
The Group also incurred interest
charges of €0.2m (2022: €nil) on its debt warehoused with the Irish
Revenue Commissioners, at a rate of 3% since May 2023. On 05
February 2024 it was announced that this is reduced to 0% with the
reduction in rate applying to any interest amounts accrued to
date.
Current and Deferred Taxation
The Group corporation tax charge
for 2023 is €0.2m (2022: €0.2m) and primarily relates to our
international operations where we have an office or branch where
tax losses from our Irish operations cannot be utilised.
During 2023 an additional deferred
tax asset of €6.4m was recognised (2022: €0.8m). At 31 December
2023 the carrying value of deferred tax assets amounted to €15.5m
(2022: €9.2m). Deferred tax assets are recognised to the extent
that it is probable that future taxable profits will be available
against which any unused tax losses and unused tax credits can be
utilised. In 2023 the Group returned to an operating profit of
€5.0m (2022: operating loss of €13.6m). The Group has forecasted a
growing profit in each of the years from 2024 to 2028, driven by
growth in bookings and revenue, maintaining direct marketing cost
as a % of revenue at current levels, continued cost discipline and
reduced interest charges.
Debt Warehoused
The Group availed of the Irish
Revenue Commissioners tax warehousing scheme and warehoused €9.4m
by deferring payment of all Irish employer taxes from February 2021
to March 2022. Total amount warehoused at 31 December 2023 was
€9.6m (2022: €9.4m), including an interest charge incurred of 3.0%
on the balance since 01 May 2023. The Group has agreed initial
repayment terms with the Irish Revenue Commissioners of a 15%
downpayment in May 2024, followed by regular monthly repayments
thereafter over a 3-year period.
In February 2024 the Irish Revenue
Commissioners announced that 0% interest would apply to debt
warehoused, with the reduction in rate applying to any interest
amounts accrued to date. The Group continues to monitor and comply
with the appropriate Revenue guidelines applicable to this scheme
and will formalise its repayment plan in May 2024.
Development Labour
Total development labour
intangible asset additions amounted to €4.0m during 2023 (2022:
€4.5m). This asset arose due to work completed delivering our
social strategy, modernising our platforms, and revamping our
hostel activations process. This balance includes internal
development labour of €2.9m (2022: €2.0m) relating to staff costs
capitalised during the year, and external development labour of
€1.1m (2022: €2.5m) relating to external contractors who have
specialist skills. The year-on-year increase in internal staff
costs is driven by the nature of the work completed in 2023,
compared to 2022 where time was spent on migrating to the cloud and
other non-capitalisable work.
Net Debt and Financing
At the balance sheet date net debt
totalled €12.3m (2022: €21.6m). Net debt is comprised of cash of
€7.5m (2022: €19.0m), and debt facilities relating to bank
borrowings of €10.2m (2022: €31.1m) comprising of an RCF of €2.0m
and a term loan of €8.2m, and warehoused taxes of €9.6m (2022:
€9.5m).
Reduction year-on-year in net debt
driven by refinancing of the legacy COVID-19 debt facility in May
2023 to a new 3-year facility with AIB. Altogether €17.4m was drawn
down from AIB, net of arrangement fee, and utilised to repay the
former debt facility held with HPS. In total HPS repayments made
across April and May totalled €34.5m, comprising of €30.0m
principal and €4.5m PIK. Balance of repayment to HPS comprised of
the Group's cash reserves. Since drawdown in May 2023 we have
repaid the RCF in full, €5.5m during 2023 and a further €2.0m in
February 2024, and we have repaid €2.5m of the term loan, €1.7m in
2023 and €0.8m in 2024. Our adjusted free cash flow of 75% (2022:
absorption of 521%) represents a return to a more normalised cash
generation ratio for the Group, as we recover from COVID-19, and a
deleverage of our borrowing facilities as set out above.
Impact of New Accounting Standards
New accounting standards and
amendments to existing standards implemented in 2023 did not have a
material impact on the Group.
Related Parties
Related party transactions are
disclosed in note 24 of the Group's Annual Report and Financial
Statements.
Investor Relations
The Group has 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 2023, 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 us 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.
We also engage regularly with AIB,
our debt partners, since the successful refinancing facility was
signed in May 2023.
Dividend
The Board does not expect to pay a
cash dividend, under its current policy, in respect of the 2023
financial year. 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
20 March 2024
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2023
|
Notes
|
2023
|
2022
|
|
|
€'000
|
€'000
|
Non-current assets
|
|
|
|
Intangible assets
|
10
|
66,533
|
73,358
|
Property, plant and
equipment
|
|
818
|
735
|
Deferred tax assets
|
11
|
15,530
|
9,174
|
Investment in associate
|
|
1,117
|
980
|
Cash and cash
equivalents
|
12
|
750
|
750
|
|
|
84,748
|
84,997
|
Current assets
|
|
|
|
Trade and other
receivables
|
|
3,275
|
3,246
|
Corporation tax
|
|
91
|
22
|
Cash and cash
equivalents
|
12
|
6,714
|
18,212
|
|
|
10,080
|
21,480
|
Total assets
|
|
94,828
|
106,477
|
|
|
|
|
Issued capital and reserves attributable to equity owners of
the parent
|
|
|
|
Share capital
|
13
|
1,236
|
1,175
|
Share premium
|
13
|
14,425
|
14,328
|
Other reserves
|
14
|
2,918
|
6,432
|
Retained earnings
|
|
40,599
|
30,308
|
Total equity attributable to equity holders of the parent
Company
|
|
59,178
|
52,243
|
|
|
|
|
Non-current liabilities
|
|
|
|
Non-current debt
|
|
|
|
Debt
warehoused
|
15
|
6,425
|
9,438
|
Borrowings
|
17
|
4,807
|
30,869
|
Lease liabilities
|
|
35
|
-
|
|
|
11,267
|
40,307
|
Current liabilities
Current debt
Debt
warehoused
Borrowings
|
15
17
|
3,204
5,340
|
-
244
|
Trade and other payables
|
|
|
|
Trade
payables
Deferred
revenue
Accruals and other
payables
|
16
16
16
|
3,314
3,891
7,859
|
3,944
3,201
5,718
|
Lease liabilities
|
|
545
|
547
|
Corporation tax
|
|
230
|
273
|
|
|
24,383
|
13,927
|
Total liabilities
|
|
35,650
|
54,234
|
Total equity and liabilities
|
|
94,828
|
106,477
|
The financial statements were
approved by the Board of Directors and authorised for issue on 20
March 2024 and signed on its behalf by:
Gary Morrison
Caroline Sherry
Chief Executive Officer
Chief Financial Officer
Hostelworld Group plc registration number 9818705 (England
and Wales)
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
|
|
Share
capital
|
Share
premium
|
Retained
earnings
|
Other
reserves
|
Total
|
|
Notes
|
€'000
|
€'000
|
€'000
|
€'000
|
€'000
|
|
|
|
|
|
|
|
Balance at 01 January 2022
|
|
1,163
|
14,328
|
45,140
|
6,475
|
67,106
|
|
|
|
|
|
|
|
Issue of shares
|
|
12
|
-
|
-
|
-
|
12
|
Total comprehensive income for the
year
|
|
-
|
-
|
(17,263)
|
(11)
|
(17,274)
|
Credit to equity for equity settled
share-based payments
|
|
-
|
-
|
-
|
2,399
|
2,399
|
Transfer of exercised and expired
share-based awards
|
|
-
|
-
|
2,431
|
(2,431)
|
-
|
Balance at 31 December 2022
|
|
1,175
|
14,328
|
30,308
|
6,432
|
52,243
|
|
|
|
|
|
|
|
Issue of shares
|
13
|
61
|
97
|
-
|
-
|
158
|
Total comprehensive income for the
year
|
|
-
|
-
|
5,136
|
(24)
|
5,112
|
Credit to equity for equity settled
share- based payments
|
14
|
-
|
-
|
-
|
1,665
|
1,665
|
Transfer of exercise, vesting or
expiry of warrants
|
14
|
-
|
-
|
3,073
|
(3,073)
|
-
|
Transfer of exercised and expired
share-based awards
|
|
|
|
2,082
|
(2,082)
|
-
|
Balance at 31 December 2023
|
|
1,236
|
14,425
|
40,599
|
2,918
|
59,178
|
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
|
Notes
|
2023
|
2022
|
|
|
€'000
|
€'000
|
Cash flows from operating activities
|
|
|
|
Profit/(loss) for the
year
|
|
5,136
|
(17,263)
|
Taxation
|
|
(6,206)
|
(649)
|
Loss before tax
|
|
(1,070)
|
(17,912)
|
Amortisation and
depreciation
|
4
|
11,774
|
11,597
|
Share of results of
associate
|
|
(137)
|
206
|
Net profit on disposal of
leases
|
4
|
(3)
|
(1)
|
Net loss on disposal of property,
plant and equipment
|
4
|
-
|
1
|
Financial income
|
|
(53)
|
-
|
Finance expense
|
7
|
2,581
|
4,301
|
Finance expense
(exceptional)
|
7
|
3,526
|
-
|
Employee equity settled
share-based payment expense
|
|
1,682
|
2,396
|
Changes in working capital items:
|
|
|
|
Increase in trade and other
payables
|
|
2,392
|
1,457
|
Increase in trade and other
receivables
|
|
(28)
|
(1,244)
|
Cash generated from operations
|
|
20,664
|
801
|
Interest paid (including lease
interest)
|
|
(3,036)
|
(1,370)
|
Interest received
|
|
59
|
-
|
Income tax paid
|
|
(262)
|
(180)
|
Net cash used in operating activities
|
|
17,425
|
(749)
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Acquisition / development of
intangible assets
|
10
|
(3,986)
|
(4,597)
|
Purchases of property, plant and
equipment
|
|
(101)
|
(196)
|
Net cash used in investing activities
|
|
(4,087)
|
(4,793)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Drawdown of borrowings
|
17
|
17,369
|
-
|
Transaction costs relating to
borrowings
|
17
|
(170)
|
-
|
Repayment of borrowings
|
17
|
(41,233)
|
-
|
Proceeds received on issue of
warrants
|
13
|
33
|
-
|
Proceeds received on issue of
shares
|
13
|
98
|
-
|
Repayments of obligations under
lease liabilities
|
|
(909)
|
(752)
|
Net cash (used in)/ from financing
activities
|
|
(24,812)
|
(752)
|
|
|
|
|
Net decrease in cash and cash
equivalents
|
|
(11,474)
|
(6,294)
|
Cash and cash equivalents at the
beginning of the year
|
|
18,962
|
25,267
|
Effect of foreign exchange rate
changes
|
|
(24)
|
(11)
|
Cash and cash equivalents at the end of the
year
|
12
|
7,464
|
18,962
|
HOSTELWORLD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
1. General
Information
Hostelworld Group plc, hereinafter
"the Company", is a public limited Company incorporated in the
United Kingdom on the 9 October 2015 under the Companies Act and is
registered in England and Wales. The registered office of the
Company is One Chamberlain Square, Birmingham, B3 3AX, 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.
The Company's shares are quoted on
Euronext Dublin and the London Stock Exchange.
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 cash flows and related notes, has been
taken from the consolidated financial statements of Hostelworld
Group plc ("Company") for the year ended 31 December 2023, which
were approved by the Board of Directors on 20 March 2024. 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").
An unqualified report on the
consolidated financial statements for the year ended 31 December
2023 has been given by the auditors, KPMG. 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 02 May
2024.
New accounting standards and
amendments to existing standards implemented in 2023 did not have a
material impact on the Group.
2. Going Concern
Hostelworld's business activities, together with
the main factors likely to affect its future development and
performance, are described in the Chief Executive's Review. After
due consideration and review, the Directors have a reasonable
expectation that the Group has adequate resources to continue in
operational existence for a period of at least 12 months from the
date of approval of the Financial Statements. The Group therefore
continues to adopt the going concern basis in preparing its
Financial Statements.
3. Revenue and 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 Chief Executive Officer, 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 after tax
of the Group throughout 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 revenue is derived wholly from
external customers and is generated from a large number of
customers, none of whom is individually
significant.
The Group's major
revenue-generating asset class comprises of 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.
Revenue split by country, is
dependent on the location of the hostel or property. No
single country, year on year, contributes 10% or
more of total revenue. Our top five
countries year on year account for 36% of overall revenue (2022:
38%) relating to USA, Australia, and key European destinations.
Revenue split by continent is presented as follows:
|
|
2023
|
2022
|
|
|
€'000
|
€'000
|
|
|
|
|
Europe
|
|
56,400
|
45,936
|
Americas
|
|
17,311
|
15,719
|
Asia, Africa and
Oceania
|
|
19,553
|
8,035
|
Total revenue
|
|
93,264
|
69,690
|
Revenue arising within Ireland,
the country of domicile, amounted to €1,780k (2022:
€1,795k).
Disaggregation of revenue is
presented as follows:
|
2023
|
2022
|
|
€'000
|
€'000
|
|
|
|
Technology and data processing
fees
|
92,079
|
69,363
|
Advertising revenue and ancillary
services
|
1,185
|
327
|
Total revenue
|
93,264
|
69,690
|
In the year ended 31 December
2023, the Group generated 99% (2022: 100%) of its revenues from the
technology and data processing fees that it charged to
accommodation providers.
As at 31 December 2023, €3,438k of
revenue relating to free cancellation bookings has been deferred
(2022: €3,005k). Revenue is recognised at the time the
reservation is made in respect of non-refundable commission on the
basis that the Group has met its performance obligations at the
time the booking is made. In respect of the free cancellation
product, which offers the traveller the opportunity to make a
booking on a free cancellation basis and to receive a refund of
their deposit in certain circumstances, such related revenue is not
recognised until the last cancellation date has passed as one party
can withdraw from the contract until such a date has passed.
Deferred revenue is expected to be recognised within twelve months
of initial recognition.
Advertising revenue and revenue
generated from other services are recognised over the period when
the service is performed. The Group's non-current assets are
located in Ireland, Australia, Portugal, China, and the United
Kingdom. Non-current assets are disaggregated as
follows:
|
|
|
2023
|
2022
|
|
|
|
€'000
|
€'000
|
|
|
|
|
|
Total non-current
assets
|
|
|
84,748
|
84,997
|
Analysed as:
|
|
|
|
|
Ireland
|
|
|
83,552
|
83,825
|
Australia
|
|
|
1,117
|
980
|
United Kingdom
|
|
|
21
|
20
|
Portugal
|
|
|
49
|
156
|
China
|
|
|
9
|
16
|
4. Operating
Expenses
Profit for the year has been
arrived at after charging/(crediting) the following operating
costs:
|
|
|
2023
|
2022
|
|
Notes
|
|
€'000
|
€'000
|
|
|
|
|
|
Marketing expenses
|
|
|
47,557
|
42,233
|
Staff costs
|
|
|
19,743
|
17,906
|
Credit card processing
fees
|
|
|
2,672
|
2,047
|
Loss on disposal of plant,
property and equipment
|
|
|
-
|
1
|
Net profit on disposal of
leases
|
|
|
(3)
|
(1)
|
Exceptional items
|
5
|
|
253
|
835
|
FX loss
|
|
|
156
|
714
|
Other administrative
costs
|
|
|
6,279
|
7,781
|
Total administrative expenses
|
|
|
76,657
|
71,516
|
|
|
|
|
|
Depreciation of tangible fixed
assets
|
|
|
963
|
968
|
Amortisation of intangible fixed
assets
|
10
|
|
10,811
|
10,629
|
Total operating expenses
|
|
|
88,431
|
83,113
|
Other administrative costs are net
of external contractor costs capitalised of €829k (2022:
€705k).
Included within marketing expenses
are paid marketing costs of €46,881k (2022: €41,393k). Remainder of
marketing expenses relate to brand marketing costs. Other
administration costs include rent and rates, legal and
professional, training and recruitment, website maintenance and
security and data analytics.
Included within operating expenses
is a total credit of €240k (2022: €184k) in relation to a research
and development ("R&D") tax credit claimed in respect of
projects completed in 2022 and 2021. Included in staff costs are
government grant amounts totalling €nil (2022: €376k) for a subsidy
received under the Employment Wage Subsidy Scheme in
Ireland.
5. Exceptional
Items
|
|
|
2023
|
2022
|
|
|
|
€'000
|
€'000
|
|
|
|
|
|
Litigation settlements
|
|
|
-
|
519
|
Restructuring costs
|
|
|
3,779
|
316
|
Total
|
|
|
3,779
|
835
|
Included in exceptional items are
operating costs of €253k (2022: €835k) and finance costs of €3,526k
(2022: €nil).
In the current year, exceptional
items primarily relate to costs incurred on refinancing of the HPS
facility totalling €3.6m, broken down as €0.7m of early repayment
penalty interest, €0.1m of transaction costs relating to exiting
the old facility and €2.8m accelerated interest costs which relate
to transaction costs capitalised on drawdown of HPS facility in
February 2021, which were expected to be amortised over a 5-year
period to 2026, but unwound in full on refinancing.
Prior year exceptional items
related to a final settlement amount paid to the founder of Counter
App Limited, in respect of their shareholders agreement and other
contractual relationships with the group and associated legal
costs.
6. Staff Costs
The average monthly number of
people employed (including Executive Directors) was as
follows:
|
|
2023
|
2022
|
|
|
|
|
Average number of persons employed:
|
|
|
|
Administration and
sales
|
|
123
|
130
|
Development and information
technology
|
|
108
|
109
|
Total
|
|
231
|
239
|
The aggregate remuneration costs
of these employees is analysed as follows:
|
|
|
2023
|
2022
|
|
Notes
|
|
€'000
|
€'000
|
Staff costs comprise:
|
|
|
|
|
Wages and salaries
|
|
|
17,880
|
14,405
|
Termination benefits - exceptional
items
|
|
|
-
|
218
|
Social security costs
|
|
|
2,115
|
1,987
|
Pensions costs
|
|
|
462
|
432
|
Other benefits
|
|
|
538
|
687
|
Share option charge
|
|
|
1,682
|
2,396
|
|
|
|
22,677
|
20,125
|
|
|
|
|
|
Capitalised development
labour
|
10
|
|
(2,934)
|
(2,001)
|
Total
|
|
|
19,743
|
18,124
|
Capitalised development labour of
€2,934k (2022: €2,001k) relates to employee costs capitalised.
Increase year on year relates to the nature of projects completed
in 2023, with 2022 work including non capitalisable work such as
migrating to the cloud and social experiments.
7. Finance Costs
|
Notes
|
|
2023
|
2022
|
|
|
|
€'000
|
€'000
|
|
|
|
|
|
Interest on lease
liabilities
|
|
|
39
|
31
|
Finance costs - HPS
facility
|
17
|
|
1,641
|
4,243
|
Finance costs - AIB
facility
|
17
|
|
701
|
-
|
Finance costs -
exceptional
|
5
|
|
3,526
|
-
|
Finance costs - warehoused debt
and other
|
|
|
200
|
27
|
Total
|
|
|
6,107
|
4,301
|
Exceptional finance costs
primarily relate to acceleration of interest charges on HPS as a
result of the refinancing of the HPS facility in May
2023.
Included in 'finance costs -
warehoused debt and other' is €190k recognised during 2023 (2022:
€nil) on the balance of warehoused payroll tax liabilities. Further
detail is included in note 15. On 05 February 2024 the Irish
Revenue Commissioners announced that the applicable rate of
interest on these will reduce to 0%, with any amounts already paid
being refunded or accrued being written off.
8. Taxation
|
|
|
2023
|
2022
|
|
Notes
|
|
€'000
|
€'000
|
Corporation tax:
|
|
|
|
|
Current year charge
|
|
|
130
|
183
|
Adjustments in respect of prior
years
|
|
|
20
|
(10)
|
Total
|
|
|
150
|
173
|
Origination and reversal of
temporary differences
|
11
|
|
(6,356)
|
(822)
|
Total tax credit for the year
|
|
|
(6,206)
|
(649)
|
Corporation tax is calculated at
12.5% (2022: 12.5%) of the estimated taxable profit for the year.
The Irish 12.5% corporation tax rate has been used as this is the
rate at which most of the Group's profits will be taxed. Taxation
for other jurisdictions is calculated at the rates prevailing in
the respective jurisdictions. The corporation tax charge
relates primarily to international operations where tax losses from
our Irish operations cannot be utilised. The charge for the year
can be reconciled to the consolidated income statement as
follows:
|
2023
|
2022
|
|
€'000
|
€'000
|
|
|
|
Loss before tax on continuing
operations
|
(1,070)
|
(17,912)
|
Tax at the Irish corporation tax
rate of 12.5% (2022: 12.5%)
|
(134)
|
(2,239)
|
Effects of:
|
|
|
Tax effect of expenses that are
not deductible in determining taxable profit
|
1,169
|
867
|
Tax effect of losses not
utilised
|
-
|
480
|
Tax effect of losses
utilised
|
(421)
|
(34)
|
Tax effect of income taxed at
different rates
|
87
|
201
|
Depreciation and amortisation
(less)/greater than capital allowances
|
(654)
|
752
|
Effect of different tax rates of
subsidiaries operating in other jurisdictions
|
83
|
156
|
Net recognition of deferred tax
asset (note 11)
|
(6,356)
|
(822)
|
Adjustments in respect of prior
years
|
20
|
(10)
|
Total
|
(6,206)
|
(649)
|
9. Earnings/(Loss) per
Share
Basic earnings/(loss) per share is
computed by dividing the profit/(loss) for the year after tax
available to ordinary shareholders by the weighted average number
of ordinary shares outstanding during the year.
|
|
2023
|
2022
|
|
|
|
|
Weighted average number of shares
in issue ('000s)
|
|
121,990
|
117,338
|
Profit(loss) for the year
(€'000s)
|
|
5,136
|
(17,263)
|
Basic earnings/(loss) per share (euro cent)
|
|
4.21
|
(14.71)
|
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 year 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.
|
|
2023
|
2022
|
|
|
|
|
Weighted average number of
ordinary shares in issue ('000s)
|
|
121,990
|
117,338
|
Effect of dilutive potential
ordinary shares:
|
|
|
|
Share options ('000s)
|
|
4,366
|
-
|
Weighted average number of
ordinary shares for the purpose of diluted earnings per share
('000s)
|
|
126,356
|
117,338
|
Diluted earnings/(loss) per share (euro
cent)
|
|
4.07
|
(14.71)
|
10. Intangible Assets
Additions during the period
included capitalised development costs of €3,953k (2022: €4,511k)
of which internal development labour amounted to €2,934k (2022:
€2,001k) for staff costs capitalised during the year, and external
development labour of €1,019k (2022: €2,510k) relating to external
contractors who have specialist skills. Other additions to
intangible assets were software additions of €33k (2022: €15k) and
an acquisition of a domain name of €Nil (2022: €71k). There were no
disposals. Offsetting additions is a total amortisation charge of
€10,811k for the period ended 31 December 2023 (31 December 2022:
€10,629k).
11. Deferred Taxation
|
Intangible assets
|
Property, plant and equipment
|
Losses and interest relief
|
Total
|
At 01 January 2022
|
8,225
|
127
|
-
|
8,352
|
Credit/(charge) to income
statement
|
835
|
(13)
|
-
|
822
|
At 01 January 2023
|
9,060
|
114
|
-
|
9,174
|
Credit/(charge) to income statement
|
995
|
(69)
|
5,430
|
6,356
|
At 31 December 2023
|
10,055
|
45
|
5,430
|
15,530
|
Deferred tax assets are recognised
to the extent that it is probable that taxable profits will be
available in future periods. Current year recognition of deferred
tax assets is reliant upon the Board
approved 2024 budget and four-year outlook which covers a period to 31 December 2028 which outlines the
Directors expectations on future profitability of the business.
Whilst the forecasts include inherent estimation uncertainty, the
Group have determined that there would be sufficient taxable income
generated to realise the benefit of the deferred tax assets. As
part of our recoverability analysis, the Group has performed a
sensitivity analysis on taxable profits growth over the next five
years. The Group's forecasted taxable profits would have to decline
by over 25% over the next five years before there is a risk that
the deferred tax asset is not fully recovered in that
period.
12. Cash and Cash Equivalents
|
2023
|
2022
|
|
€'000
|
€'000
|
Non-current assets
|
|
|
Cash and cash
equivalents
|
750
|
750
|
Total
|
750
|
750
|
Non-current asset amount of €750k,
relates to a rental guarantee in place which has been classified in
non-current assets as the guarantee is in place for a period of
longer than 12 months after the balance sheet date. As the amount
is held in a bank account which can be accessed by the Group the
amount has been disclosed as a cash and cash equivalent.
Current assets
Cash and cash
equivalents
|
6,714
|
18,212
|
Total
|
6,714
|
18,212
|
Balance of cash and cash
equivalents comprise cash and short-term bank deposits
only.
13. Share Capital
|
No of shares of €0.01
each
|
Ordinary
shares
|
Share
premium
|
Total
|
|
(thousands)
|
€'000
|
€'000
|
€'000
|
At 31 December 2022
|
117,511
|
1,175
|
14,328
|
15,503
|
Share issue - Restricted share
award 20 February 2023
|
1,028
|
10
|
-
|
10
|
Warrants issue to HPS, 29 March
2023
|
3,315
|
33
|
-
|
33
|
Share issue - LTIP, 16 May
2023
|
1,646
|
17
|
-
|
17
|
Share issue - SAYE
|
139
|
1
|
97
|
98
|
At 31 December 2023
|
123,639
|
1,236
|
14,425
|
15,661
|
The Group has one class of
ordinary shares which carries 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.
As part of legacy debt facility
drawn down during COVID-19 on 19 February 2021, the Group agreed to
issue warrants of 3,315,153 ordinary shares of €0.01 each in the
capital of Hostelworld (equivalent to 2.85% of Hostelworld's issued
share capital at the time of warrants issue). On 29 March 2023 HPS
exercised their warrants and 3,315,153 shares were
issued.
On 20 February 2023, the company
issued 1,027,655 shares to satisfy restricted share awards granted
by the Company at a value €0.01 per share.
On 16 May 2023 the Company issued
1,645,994 shares to satisfy long term incentive plan awards in
relation to LTIP 2020 at a value €0.01 per share.
A number of shares were issued at
€0.01 per share regarding the 2020 SAYE scheme. On 09 October 2023,
the Company issued 122,665 shares, on 20 October 2023 the Company
issued 7,867 shares and on 04 December 2023 the Company issued a
further 7,868 shares.
14. Other Reserves
The analysis of movement in
reserves is shown in the statement of changes in equity.
Reconciliation and movement of
amounts included in other reserves are set out below:
|
Foreign currency translation
reserve
|
Share-based payment
reserve
|
Warrant
reserve
|
Total other
reserves
|
|
€'000
|
€'000
|
€'000
|
€'000
|
|
|
|
|
|
Balance at 01 January 2022
|
40
|
3,362
|
3,073
|
6,475
|
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
(11)
|
-
|
-
|
(11)
|
Transfer of exercised and expired share-based awards
|
-
|
(2,431)
|
-
|
(2,431)
|
Credit to equity for equity settled
share-based payments
|
-
|
2,399
|
-
|
2,399
|
|
|
|
|
|
Balance at 31 December 2022
|
29
|
3,330
|
3,073
|
6,432
|
|
|
|
|
|
Exchange differences on translation
of foreign operations
|
(24)
|
-
|
-
|
(24)
|
Transfer of exercised and expired share-based awards
|
-
|
(2,082)
|
-
|
(2,082)
|
Transfer on exercise, vesting or
expiry of warrants
|
-
|
-
|
(3,073)
|
(3,073)
|
Credit to equity for equity settled
share-based payments
|
-
|
1,665
|
-
|
1,665
|
|
|
|
|
|
Balance at 31 December 2023
|
5
|
2,913
|
-
|
2,918
|
The warrant reserve related to the
warrants exercisable with HPS Investment
Partners LLC (or subsidiaries or affiliates thereof). On 29 March
2023 3,315,153 shares were issued to HPS on issuance of
warrants.
15. Warehoused Payroll Taxes
|
2023
|
2022
|
|
€'000
|
€'000
|
Non-current liabilities
|
|
|
Warehouse payroll taxes
|
6,425
|
9,438
|
Total
|
6,425
|
9,438
|
|
2023
|
2022
|
|
€'000
|
€'000
|
Current liabilities
|
|
|
Warehouse payroll taxes
|
3,204
|
-
|
Total
|
3,204
|
-
|
Total warehoused payroll taxes
|
9,629
|
9,438
|
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.
Total warehoused liability as at
31 December 2023 was €9,629k (2022: €9,438k), including an interest
charge incurred of 3% on the outstanding warehoused liability debt
since 01 May 2023. On 05 February 2024 the Irish Revenue
Commissioners announced that the applicable rate of interest on
these will reduce to 0%, with any amounts already paid being
refunded or accrued being written off.
The Group has agreed initial
repayment terms with the Irish Revenue Commissioners of a 15%
downpayment in May 2024, following by regular monthly repayments
thereafter over a 3-year period which is reflected in the
classification of the liability between current and non-current.
The Group continues to monitor and comply with the appropriate
Revenue guidelines applicable to this scheme.
16. Trade and Other Payables
|
2023
|
2022
|
|
€'000
|
€'000
|
Current liabilities
|
|
|
Trade payables
|
3,314
|
3,944
|
Accruals and other
payables
|
7,272
|
5,136
|
Deferred revenue
|
3,891
|
3,201
|
Payroll taxes
(non-warehoused)
|
587
|
582
|
Total
|
15,064
|
12,863
|
At 31 December 2023, €3,438k of
revenue was deferred relating to free cancellation bookings (2022:
€3,005k), €434k was deferred relating to featured listings (2022:
€178k) and €19k was deferred relating to Roamies (2022:
€18k).
17. Borrowings
|
2023
|
2022
|
|
€'000
|
€'000
|
Opening Balance
|
31,113
|
28,209
|
Repayments (HPS)
|
(34,066)
|
-
|
Drawdown (AIB)
|
17,369
|
-
|
Repayments (AIB)
|
(7,167)
|
-
|
Transaction costs relating to
borrowings (AIB)
|
(170)
|
-
|
Finance costs
|
2,342
|
4,243
|
Finance costs (exceptional
items)
Finance interest paid
|
2,827
(2,101)
|
-
(1,339)
|
Total
|
10,147
|
31,113
|
On 09 May 2023, the Group
refinanced its credit facilities with AIB plc. This included
cancelling and fully repaying its previous facilities held by
Hostelworld Group PLC of €30,000k with HPS Investment Partners LLC
(or subsidiaries or affiliates thereof). Hostelworld.com Limited
entered into a new facility of €20,000k comprising of a €2,500k
undrawn overdraft, a €7,500k RCF facility and a €10,000k term loan
facility. An amount of €17,369k was drawn down, net of arrangement
fee.
The purpose of the facility is to
meet the day-to-day working capital requirements of the Group. The
AIB term loan and RCF each had an initial interest rate payable of
3.75% over EURIBOR. In July 2023 this reduced to 3.25%, when the
ratio of Net Debt to adjusted EBITDA was less than 2 times. The
interest rate reduced further in October 2023 to 2.65% over EURIBOR
as Net Debt to adjusted EBITDA was less than 1 times. Relating to
the facilities, during the year the Group repaid €5,500k of its RCF
facility and repaid €1,666k of its term loan with AIB.
Financial covenants attached to
the facility are set out as follows:
1.
Maintaining a minimum cash balance on hand of €6,000k;
2.
Ensuring an interest cover of not less than 3:1. Interest cover is
defined as the ratio of Adjusted EBITDA to gross interest paid in
respect of any relevant period. Covenant is tested quarterly, based
on the prior 12-month actuals; and
3.
Ensuring the Groups adjusted leverage ratio does not exceed 3:1.
Adjusted leverage is defined as the ratio of net debt on the last
day of each quarter to adjusted EBITDA in respect of the 12 months
to the quarters reporting date.
The Group did not breach the
covenants during the period.
The prior facility related to a
€30,000k five-year term loan facility with HPS drawn down in
February 2021. On 05 April 2023 the Group repaid €10,000k of the
HPS facility and on 09 May 2023 the amount owing on the facility
was repaid in full. An early repayment penalty of 2% applied. Total
repayment penalty costs of €686k are included within Exceptional
items. The April and May repayments totalled €34,066k which
comprise of €30,000k principal and €4,066k PIK interest capitalised
as at 31 December 2023. Balance of PIK relating to 2023 included in
Finance interest paid. Between the first and third
anniversaries of drawdown of the HPS facility, Hostelworld elected
to capitalise 4.0% per annum of the accruing interest with the
balance of the interest during that period.
Finance interest paid during the
year totalled €2,101k (2022: €1,339k), comprised of HPS cash
interest of €1,067k (2022: €1,339k), AIB cash interest of €583k
(2022: €nil), and HPS PIK €451k (2022: €nil).
Borrowings are classified in the
consolidated statement of financial position as:
|
2023
|
2022
|
|
€'000
|
€'000
|
Non-current borrowings
|
4,807
|
30,869
|
Current borrowings
|
5,340
|
244
|
Total
|
10,147
|
31,113
|
Issue of warrants:
In connection with the HPS
facility, Hostelworld agreed to issue warrants over 3,315,153
ordinary shares of €0.01 each in the capital of Hostelworld
(equivalent to 2.85% of Hostelworld's current issued share capital
at the time of issue of the warrants) to HPS. The warrants were
exercisable at any time during the term of the loan and for a
twelve-month period following its scheduled termination at an
exercise price of €0.01 per ordinary share. Shares issued will be
the same class and carry the same rights as existing shares. An
amount of €3,073k was recorded for the initial recognition of the
warrants calculated on the basis of the market price of the shares
on the date of the agreement 19 February 2021 of €3,106,538 minus
the subscription price of €33,152 (3,315,153 X €0.01). On 29 March
2023 HPS exercised their warrants and 3,315,153 shares were
issued.
18. Events After the Balance Sheet
Date
On 05 February 2024 the Irish
Revenue Commissioners announced that the applicable rate of
interest on warehoused payroll tax balances outstanding will reduce
to 0%, with the reduction in rate applying to any interest amounts
accrued to date. This is a non-adjusting event.
There have been no other
significant events after the balance sheet date.