TIDMHSW
RNS Number : 6781G
Hostelworld Group PLC
31 March 2022
LEI:213800OC94PF2D675H41
Hostelworld Group plc ("Hostelworld" or the "Group" or the
"Company")
Preliminary Results for the Year ended 31 December 2021
FY 2021 in line with expectations, solid progress on growth
strategy and cost base positions the business well for the travel
recovery
31st March 2022: Hostelworld, a leading global OTA focused on
the hostel market, is pleased to announce its preliminary results
for the year ended 31 December 2021.
Significant developments
-- Recovery picked up as travel restrictions eased and confidence returned
-- Growth accelerated in key destinations where borders reopened
-- Temporary Omicron setback seen in final six weeks of trading,
experienced a strong start to 2022
-- Improved core business competitiveness through focused
investments in marketing capabilities, user experience, inventory
competitiveness and platform modernisation
-- EUR7m of operating costs removed [1] compared to 2019
Financial highlights
-- Full year net bookings totalled 1.5m (2020: 1.5m), which represents 21% of 2019 volumes
-- Net Revenue for the period of EUR16.9m, an increase of 10% year on year (2020: EUR15.4m)
-- Net Average Booking Value ("ABV") of EUR12.11, a 30% increase
year on year (2020: EUR9.33), recovering steadily compared to 2019
levels, due to favourable geographical mix, recovery of underlying
bed prices and longer length of stay bookings
-- Cancellations of 0.2m (EUR3.6m), a 43% decline year on year
(2020: 0.3 (EUR6.2m)). Cancellation rate as a portion of revenue
remains elevated versus normalised levels
-- Cost per net booking for the year was EUR8.77, a EUR3.57
increase over prior year (2020: EUR5.20)
-- Marketing as a percentage of revenue amounted to 72%, an
increase of 22% year on year (2020: 59%)
-- Administrative expenses [2] fell by 15% to EUR24.2m (2020:
EUR28.6m) due to tight management of our cost base
-- Adjusted EBITDA loss of EUR17.3m, flat year on year
Balance sheet and cash flow
-- Total cash as at 31 December 2021 of EUR25.3m (2020: EUR18.2m)
-- Secured a new EUR30m term loan facility in Feb 2021, with net proceeds received of EUR28.2m
-- Strong balance sheet and liquidity going into 2022, with
available capital to invest to accelerate growth
Gary Morrison, Chief Executive Officer, commented:
"While 2021 was a challenging year both for Hostelworld and the
global travel industry, I am pleased to say we saw a consistent
recovery throughout the year in both bookings and revenue versus
2019, save for the last few weeks where we saw travel concerns over
the Omicron variant.
I am also pleased to report that we made solid progress on all
elements of our strategy during the year whilst continuing to
significantly reduce our operating expenses versus 2020 levels.
Overall, I remain confident that our loyal customer base has
more desire than ever to travel and meet other like-minded
travellers once restrictions are eased. The improvements we
continue to make to our platform and our differentiated growth
strategy mean we are well-positioned to capitalise on those
opportunities as demand continues to return."
Outlook
Over the last 12 weeks to 27th March, we have experienced a
strong start to the year and a consistent recovery in weekly net
bookings and revenues. In parallel, we have also seen a recovery in
the direct margin (net revenue less direct marketing costs) as
travel restrictions eased, confidence returned, and normal trading
patterns resumed. Our business model is highly geared to travel
recovery, and we anticipate seeing a continued recovery in bookings
throughout the year.
Whilst our recent trading data would indicate that the impact of
COVID-19 on the travel industry is starting to recede, we, like
many other businesses and industry sectors, face new uncertainties
related to the effects of the Russian invasion of Ukraine. Whilst
it is difficult to predict what the mid to long term effects of
these events might be in continental Europe or further afield, we
are hopeful on a humanitarian level that there will be a swift and
peaceful resolution of the conflict.
The Board remains confident in the long-term resilience of our
business model and the growth potential of our Meet the World(R)
strategy. The year has started strongly and confidence in the
ability to travel freely is growing. The current trends are
encouraging and suggest that net bookings will continue to recover
towards 2019 levels, in the absence of any further escalation of
the conflict in the Ukraine or other unforeseen events. As we
approach the important second quarter it is too soon to give
definitive guidance for the year."
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 attend or
dial into the presentation, please find the webcast details
provided below:
Webcast Link
https://webcasting.brrmedia.co.uk/broadcast/6225fcd5969a0548ac0c386d
Event Title: Hostelworld Group PLC - Preliminary Results
2021
Confirmation Code: 5800558
Dial-in Phone Number: +44 (0) 330 165 4012
For further information please contact:
Hostelworld Group Corporate@hostelworld.com
plc
Gary Morrison, Chief Executive Officer
Caroline Sherry, Chief Financial Officer
Powerscourt hostelworld@powerscourt-group.com
Eavan Gannon / Nick
Dibden +44 (0) 20 7250 1446
About Hostelworld Group
Hostelworld Group is a leading Online Travel Agent focused on
the hostelling category, with a well-known trusted brand, 13.7
million reviews and a loyal customer base built up over 22 years.
Our core business provides our customers with hostel accommodation
options and hostel focused small group adventure tour products
(Roamies) in over 180 countries worldwide via our website and
native app platforms in 19 languages.
In parallel with helping millions of hostel focused travellers
Meet The World(R), we are also committed to building a better world
in everything we do. In particular, we are increasing our focus on
improving the sustainability of the hostelling industry, through
our active involvement in the Global Tourism Plastics Initiative
(GTPI), led by the UN Environment Programme and the World Tourism
Organization (UNWTO); our membership of the Global Sustainable
Tourism Council (GSTC); and our recent partnership with the South
Pole to offset all our greenhouse gas emissions in 2021.
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
2021 has been another year of unprecedented challenge for our
business, our hostel partners and for the wider travel industry.
Whilst the COVID-19 pandemic continued to have a material impact on
the financial performance of the business, 2021 was a year of solid
progress in delivering against our Meet the World(R) growth
strategy. We are very encouraged by the strong return in demand in
destinations where travel restrictions have eased.
The team, led by CEO Gary Morrison, continued to work on three
key areas that are fundamental to our strategy, ensuring the
business is competitively placed when demand returns. This work
focussed on competitive enhancements to the core online travel
agent ("OTA") business, broadening our customer offering and core
platform enhancements.
The on-going improvements the team continue to make in hostel
inventory, marketing capabilities and end-user experience, all
contribute toward the competitiveness of the core OTA business.
Following the successful testing of social features on our
platform, we look forward to the launch of this element of the
strategy in 2022.
We were pleased to announce our partnership with G Adventures
with the launch of Roamies, a new hostel focused adventure tour
product. This partnership is a significant milestone in the
execution of our Meet The World(R) growth strategy and broadens our
customer offering beyond hostel accommodation.
Our underlying platform underwent a complete modernisation
earlier this year with the migration of our platform to the cloud.
This enabled the teams to replace the legacy backend platform
resulting in faster execution times as well as generating cost
savings for the Group.
COVID-19 response
This year was another difficult year for the travel sector with
the industry having to adapt to changing Government guidelines,
travel bans and continued travel restrictions. Throughout this
challenging time, our priority has been our employees, who have
continued to show dedication and resilience in these unprecedented
times.
2021 started with encouraging levels of domestic demand,
particularly in US and Australian markets. Throughout the year we
have seen a strong correlation between the easing of restrictions
and demand recovery. This correlation was particularly evident in
Central American markets where booking volumes have steadily grown
and in the second half of the year surpassed 2019 levels. Pandemic
mitigation measures and the roll-out of the vaccine programme has
helped to bolster consumer confidence. Several southern European
destinations experienced strong growth following the reopening of
borders in late spring. This steady growth continued until the
latter part of November when the Omicron variant saw a resumption
of restrictions across many destinations.
Despite the subdued performance in markets outside of these
geographies, the response we have seen to-date in reopened
destinations demonstrates the strong desire our customers have to
travel and to Meet The World (R).
Dividends and capital structure
In order to conserve our cash resources, the Board believes the
continued suspension of cash dividends remains in the best
interests of the business for the foreseeable future. Throughout
the year, management conserved cash and implemented measures to
reduce fixed and variable costs. The business continued to access
government supports where available. A EUR30 million five-year term
loan facility was agreed in February 2021 with certain investment
funds and accounts of HPS Investment Partners LLC (or subsidiaries
or affiliates thereof) which further materially strengthened our
financial position.
Board composition
The composition of the Board is fully compliant with the 2018 UK
Corporate Governance Code. The Board has undertaken an appraisal of
the Directors, as well as an evaluation of the performance of the
Board and each sub-committee, which concluded that the Board is
functioning effectively.
Climate change
Reflecting our commitment to a sustainable future, and in
keeping with our UK listing and financial disclosure requirements,
the business adopted the requirements of the Taskforce for Climate
related Financial Disclosures ("TCFD"). In adherence with TCFD we
will disclose information across the four key areas of: Governance,
Strategy, Risk Management, and Metrics and Targets which are
covered further in the Annual Report.
Environmental, Social and Governance ("ESG")
The business has worked extensively this year to advance it's
ESG strategy. We recognise the importance of ESG in our corporate
culture and more broadly, the role that we play in driving
sustainability within the industry. We were therefore pleased to
announce our membership of the Global Sustainable Tourism Council
("GSTC") and look forward to seeing the work the business will do
with GSTC to drive sustainable travel initiatives. The business
performed a detailed assessment involving key stakeholder groups,
employees, customers and hostel partners in the development of its
ESG strategy. The output of this assessment was mapped to the
United Nation's Sustainable Development Goals ("SDG") which helped
identify strategic focus areas and a vision for sustainability
within Hostelworld.
Colleagues, customers and shareholders
I wish to thank our management team and my Board colleagues who
worked tirelessly throughout another difficult year for their
enthusiasm and commitment.
While the outlook remains uncertain, we have successfully put in
place business improvements that allows us to be optimistic for the
future. There is huge pent-up demand for travel and the investment
we have made leaves us well placed to capitalise on this, as and
when conditions allow.
Finally, I would like to thank you, our shareholders, for your
ongoing support.
Michael Cawley
Chairman
30 March 2022
Chief Executive Statement
While 2021 was a challenging year both for Hostelworld and the
global travel industry, I am pleased to say we saw a consistent
recovery throughout the year in both bookings and revenue versus
2019 save for the last few weeks where we saw travel concerns over
the Omicron variant. I am also pleased to report that we made solid
progress on all elements of our strategy during the year whilst
continuing to significantly reduce our operating expenses versus
2020 levels. Overall, I remain confident that our loyal customer
base has more desire than ever to travel and meet other like-minded
travellers once restrictions are eased. The improvements we
continue to make to our platform and our differentiated growth
strategy mean we are well-positioned to capitalise on those
opportunities as demand continues to return.
Actions in the light of the continued COVID-19 pandemic
As the pandemic continued throughout 2021, we have remained
focused on supporting our stakeholders, increasing our liquidity
and progressing our strategy.
In particular, we continued to support our hostel partners
through various communication channels including hosting 40
webinars with more than 1,000 hostels and showcasing hostels across
our key marketing channels. We have also carried out numerous
feedback surveys on key topics, leading to changes to our review
processes, our partner facing platform, and significant
enhancements in the automated reporting tools we provide to
hostels. During the year we also continued with our hostel industry
recognition programme, the HOSCARs, to celebrate the world's most
extraordinary hostels and the incredible impact they have had
supporting their local communities. Overall, we have continued to
invest heavily in supporting the Hostel industry throughout the
pandemic, with our (Hostel) Net Promoter Score increasing 4 points
to +47 in 2021.
Similarly, we have been supporting our employees throughout the
pandemic, and recently launched more programmes to facilitate agile
working policies, working from abroad policy and paid wellness and
parental leave days help to promote flexibility and work-life
balance when working from home.
In parallel with these activities, we also took further steps to
strengthen our liquidity position through a combination of ongoing
operating cost reductions and the successful negotiation of a new
five-year EUR30 million term loan facility which we drew down in
February 2021. These actions ensure that as things currently stand,
we have sufficient cash in reserve even with a prolonged period of
depressed demand.
Finally, I am also pleased with the progress we have made with
regards to strengthening our core business competitiveness
throughout the year, and in particular the progress we have made
with regards to our Meet The World (R) growth strategy.
Throughout the pandemic we have sought to proactively engage
with our shareholders given the fast-moving environment we find
ourselves operating in and I would like to thank all of them for
their continued support through these challenging times.
Key operational highlights and results
Similar to the initial recovery in Q3 2020, we saw swift
increases in demand in those destinations where travel restrictions
have eased. In particular, 2021 started with a strong recovery in
Central America, and domestic demand in the US and Australia. In
May and June, several southern European destinations opened their
borders with strong growth over the summer months. During the
second half of the year Central America surpassed 2019 levels, with
southern European destinations continuing growth to 60-80% of 2019
levels, until the latter part of November/December where the
Omicron variant saw a resumption of restrictions in many
destinations. Overall, we continue to see net bookings growth
mirroring changes in individual markets both positively and
negatively. Outside of these geographies, demand continued to
remain depressed.
As the recovery progressed we have seen several factors impact
our trading economics versus 2019. In particular, average net
booking values have steadily recovered to 2019 levels driven by a
favourable geographic mix, a recovery of underlying bed prices and
longer length of stay bookings; which has been partially offset by
higher cancellation rates (in part driven by a higher proportion of
free cancellation bookings), a reduction in blended commission
rates (driven by the removal of Elevate in 2020) and slightly
adverse FX movements. Marketing costs per net booking however have
remained elevated versus 2019 driven by lower conversion rates in
destinations where some level of restrictions persist, higher
cancellation rates (in part driven by a higher proportion of free
cancellation bookings) and higher average cost per clicks ("CPCs")
driven by geographic mix. Consequently, direct marketing costs as a
percentage of net revenue remain significantly higher than 2019
levels, although we expect these to gradually normalise as historic
travel patterns resume.
On the supply side, despite the continuing depressed demand
during 2021 we have only seen a very modest net reduction (3.5%) in
the number of hostels on our platform compared to levels at the end
of 2020, driven by continual sign ups to our platform. In addition,
I am also encouraged to see our customers are continuing to book
dorms in the majority of cases, with a steady recovery towards dorm
versus private booking levels versus 2019.
Despite our significantly reduced cost base, we have continued
to strengthen all areas of our business during 2021. Throughout the
year we delivered a significant number of core business
improvements designed to improve marketing capabilities, user
experience and inventory competitiveness. These improvements
included rewriting our core iOS and Android Apps to enable specific
features of our Meet The World (R) growth strategy, replacing our
legacy payments stack with Stripe, and migrating our overall
platform to the cloud. We also made significant progress on our
Meet The World (R) growth strategy with the launch of Roamies in
partnership with G Adventures to broaden our product range,
together with several social feature experiments that confirmed the
strong desire for these features from our customer base, which we
expect to launch in 2022.
In 2022 we will continue our platform modernisation program with
our main focus on transitioning our legacy backend to a new
operating platform which will leverage several "off the shelf"
services available from our selected cloud services provider. This
will further strengthen our Core business, enable faster execution
of our growth strategy and reduce cost over the medium term.
Our strategy
As outlined in our Interim results presentation in August 2021,
our long-term growth strategy is focused on three pillars; relating
to improving the competitiveness of our core OTA business,
executing our Meet The World (R) growth strategy, and continued
investments in platform modernisation. Overall, I am very pleased
with the progress we have made across all three pillars during
2021.
1. Improving the competitiveness of our core OTA business
Our first strategic pillar is focused on continuing to improve
our inventory competitiveness through user experience enhancements,
improved marketing capabilities and strengthening our position in
the hostel software market. This pillar essentially builds on the
initial roadmap for growth programme launched in late 2018. I am
confident that our core business is now materially stronger than Q4
2019 when we returned the business to growth.
Following our strategic investments in Counter App Limited
("Counter"), a low-cost property management system designed for the
hostel market, and Goki PTY Limited ("Goki"), an innovative digital
lock and smartphone app based key system in 2019, I am pleased to
report we have now successfully transitioned more than 85% of all
Backpack Online customers ("BPO", Hostelworld's legacy property
management system ("PMS")) to Counter. Counter also continues to
add more hostels to its platform at an impressive rate.
Goki has also seen increased interest in their products,
especially from the hotel sector, as travel has resumed and the
demand for contactless solutions has grown. The Goki management
team expect this trend to continue, with hotels accounting for the
majority of sales over the coming years. As this sits outside the
scope of Hostelworld's business, we have restructured our
relationship with Goki; reducing our shareholding from 49% to 31.5%
and removing our right to acquire the remaining shares of the
company we do not own in 2023.
2. Meet The World (R) growth strategy
Our second strategic pillar is focused on executing our Meet The
World (R) growth strategy. First outlined in our full year results
presentation in March 2020, this strategy will deliver growth by
providing a broader catalogue of relevant experiences beyond hostel
accommodation to our core business customer base. The addition of
pioneering social features enables our customers to explore the
world together with other likeminded travellers.
Consistent with our strategy, we announced the launch of Roamies
in December 2021. Roamies is a new hostel focused adventure tour
product developed with G Adventures, the world's largest small
group adventure tour provider. This new collaboration launched with
a collection of 38 tours across 50 hostels in 15 countries; with
departure dates starting in May 2022. The product is unique in
combining the spontaneous social experience provided by hostel
accommodation and guided adventure tours fulfilled by G Adventures.
Roamies will also benefit from a wide distribution strategy, with
tours available through Hostelworld and G Adventures online
channels, and approximately 60,000 offline travel agents
worldwide.
In parallel with broadening out our product catalogue, we also
conducted several social feature experiments during 2021 designed
to help hostellers meet other travellers they want to hang out with
while travelling. Overall, we are very pleased with the results of
these experiments, which confirmed our customer's strong desire for
these types of features which we expect to launch throughout
2022.
3. Platform modernisation
Our third strategic pillar relates to the ongoing modernisation
of our underlying platform to enable us to support faster execution
across both our core Hostelworld platform and Meet The World (R)
growth strategies; as well as reducing overall development and
technology costs in the medium term. To that end, earlier this year
we embarked on an ambitious plan to migrate our entire company to
the cloud; and in the second half we started a second initiative to
replace our legacy backend platform.
I am pleased to report that we have substantially completed the
cloud migration project and begun decommissioning our data centres.
We are also executing the new platform build plan to schedule and
expect to start migrating our PWA, iOS and Android Apps to the new
platform in early Q3 next year.
Business model
We are a leading global OTA focused on the hostel market. Our
core online platform provides the opportunity for predominately
hostel owners, as well as other low-cost accommodation providers,
to advertise their accommodation to independent travellers looking
for unique and social experiences.
We use data science and AI to effectively target our key
customer segments. Our differentiated social features connect
like-minded travellers, positioning us as the go to OTA for
hostellers and our extended product offering builds customer
loyalty by enhancing their travel experience.
Most of our revenue is generated through taking a commission
from bookings made through our technology platform, including the
Hostelworld website, and via our Apps. This efficient business
model has very favourable working capital attributes and strong
cash conversion.
In parallel with helping millions of hostel focused travellers
find and book hostel accommodation, we are also committed to
building a better world in everything we do. We are increasing our
focus on improving the sustainability of the hosteling industry,
and in January 2022 became a member of the Global Sustainable
Tourism Council (GSTC). In addition, we also partnered with South
Pole a global climate solutions provider to offset our 2021
greenhouse gas emissions.
Investing in people
Over the last 12 months we continued to take steps to strengthen
our execution capability through the implementation of a simpler
and more efficient growth orientated organisational structure. In
particular this new structure organises the company's marketing,
product, development and analytics resources into autonomous growth
teams; who are responsible for driving the most important KPI's of
the Company. Overall, I am very pleased with the benefits that the
new organisation model has delivered - including increased focus
and improved speed of execution on our growth strategy which I
expect to continue during 2022 and beyond.
We have also continued to work remotely for the majority of the
year in response to government guidelines and increased our support
for our employees through the launch of a holistic employee
wellbeing strategy during these very challenging times. In
particular, the program focuses on maintaining our employee's
physical, mental, social, and financial wellbeing through webinars
with outside professionals, the extension of flexible and remote
working policies, the provision of online social events, and
additional wellbeing leave days and paid parental leave. We also
introduced a new and enhanced Employee Assistance Programme (EAP)
which offers global support across all our locations.
Overall, our team has worked incredibly hard through an extended
period of ongoing uncertainty, and I would like to take this
opportunity to thank all our employees for their enduring
commitment and loyalty.
Dividends and capital allocation
In light of the significant uncertainty presented by COVID-19
the Board took the decision in March 2020 to suspend the final 2019
cash dividend, and in June 2020 we suspended cash dividends for the
foreseeable future.
Given the continued lack of medium term visibility and the
necessity to conserve our cash resources, the Board and I believe
that the continued suspension of cash dividends is in the best
interests of the business and our shareholders for the foreseeable
future.
The Board and I continue to believe the appropriate allocation
of capital resources is critical to ensuring the long-term growth
of the business and optimisation of our shareholder returns.
Outlook
While the short to mid-term outlook for the travel industry
remains challenging and uncertain, we continue to expect the pace
of recovery to be driven by the easing of travel restrictions in
individual markets, which we hope to see accelerated with the
continued rollout of vaccination programs worldwide.
Whilst this recovery is likely to progress throughout 2022 the
Board remains confident in the resilience of our business model,
and the growth potential of our Meet The World (R) strategy as
demand recovers. In the light of continued market uncertainty, the
Group will not provide full year guidance until such time as the
overall impact of COVID-19 on the Group becomes clearer.
The Board will continue to evaluate internal and external
opportunities that will deliver value for shareholders, in
particular the significant potential to enhance future growth
through our Meet The World (R) strategy.
I remain confident that Hostelworld will emerge from the
COVID-19 crisis stronger than before and be able to seize market
opportunities when normal travel patterns resume.
Gary Morrison
Chief Executive
30 March 2022
Financial Review
2021 2020 2021 2020
Net bookings 1.5m 1.5m Net asset position EUR67.2m EUR97.9m
--------- --------- ------------------- ---------- ----------
Cash and cash
Net revenue EUR16.9m EUR15.4m equivalents EUR25.3m EUR18.2m
--------- --------- ------------------- ---------- ----------
Net average
booking value
"ABV"* EUR12.11 EUR9.33
--------- --------- ------------------- ---------- ----------
Marketing costs
per net booking* EUR8.77 EUR5.20
--------- --------- ------------------- ---------- ----------
Operating loss
Operating expenses EUR49.4m EUR50.2m for the year EUR33.1m EUR50.3m
--------- --------- ------------------- ---------- ----------
Adjusted EBITDA Adjusted loss
loss* EUR17.3m EUR17.3m per share* 22.12cent 20.76cent
--------- --------- ------------------- ---------- ----------
Adjusted EBITDA
margin* -102% -113%
--------- --------- ------------------- ---------- ----------
Loss for the Basic loss
year EUR36.0m EUR46.9m per share 30.96cent 45.68cent
--------- --------- ------------------- ---------- ----------
*The 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 Annual Report.
Revenue and operating loss
Revenue for the period was EUR16.9m, an increase of 10% compared
to 2020 (2020: EUR15.4m). Adjusted EBITDA loss of EUR17.3m (2020:
EUR17.3m) and an operating loss of EUR33.1m (2020: EUR50.3m).
The continuation of COVID-19 travel restrictions throughout the
year resulted in curtailed bookings and revenue recovery. We are
however pleased to report a consistent recovery in booking demand
in destinations when and where restrictions eased.
Net bookings at 31 December 2021 totalled 1.5m, consistent year
on year and represents 21% of 2019 booking volumes. Europe,
excluding United Kingdom, had the largest booking volume in 2021
(770k) and recorded a strong recovery in H2 2021 (47% of H2 2019
compared to 7% of H1 2019). Overall Central America was the
strongest recovering market on a full year basis where bookings
averaged 75% of 2019 volumes, exceeding 2019 levels in H2 2021.
Cancellations, for bookings cancelled under the free
cancellation policy, amounted to 0.2m (EUR3.6m) (2020:
cancellations of 0.3m (EUR6.2m)) representing a year on year
decline of 43% in value. However, our cancellation rate as a
portion of revenue remains elevated versus normalised levels.
At 31 December 2021, we held EUR3.0m of customer deposits
relating to bookings made under the free cancellation policy (2020:
EUR3.1m), of this EUR2.0m relates to bookings already cancelled
(2020: EUR2.9m). Deferred revenue increased by EUR0.8m (2020:
reduction of EUR2.6m).
Net Average Booking Value ("ABV"), the average value paid by a
customer for a net booking, increased by 30% in 2021 (2020: 22%
decline) to EUR12.11 (2020: EUR9.33). ABV benefited from favourable
geographical mix, as a higher proportion of bookings came from
higher-value destinations such as Europe and North America, and
also from the recovery of underlying bed prices and longer length
of stay bookings. These benefits were partially offset by higher
cancellation rates, a reduction in blended commission rates and
foreign exchange movements.
The uncertain travel landscape was the primary driver of weaker
conversion levels across all source markets. In addition, costs
have also been impacted by higher cancellation rates, a combination
of a higher proportion of free cancellation bookings, increased
cancellation rates and higher average cost per click ("CPC") driven
by geographical mix. Overall, the cost per net booking for the year
was EUR8.77 (+EUR3.57 over prior year cost EUR5.20). Marketing as a
percentage of revenue amounted to 72% (2020: 59%). It is our
expectation that marketing costs will normalise as normal travel
patterns resume. 2021 direct marketing costs totalled EUR12.8m
(2020: EUR7.6m).
Excluding the impact of direct marketing costs, administration
expenses have reduced year on year by 15% compared to 2020 as we
tightly manage our cost base (2021: EUR24.2m, 2020: EUR28.6m).
The Group has availed of the Irish Revenue tax warehousing
scheme and deferred payment on all Irish employer taxes since
February 2020. We continue to monitor and comply with the
appropriate Revenue guidelines applicable to this scheme. We
availed of assistance under the Coronavirus Job Retention Scheme in
the UK until May 2021 and continue to avail of the temporary
COVID-19 Wage Subsidy Scheme in Ireland.
Exceptional items
Exceptional items are identified due to their nature or
materiality to help the reader form a better view of overall and
adjusted trading. The Group incurred EUR0.6m of exceptional cost
items (2020: EUR3.0m),
Restructuring costs of EUR0.7m (2020: EUR1.7m) primarily relate
to staff costs incurred as part of a growth orientated
organisational redesign. The new structure organises the Company's
marketing, product, development and analytics employees into
autonomous growth teams. The structure was initiated in the prior
year.
Share based payment
In 2021 the Group recognised an expense of EUR2.2m (2020:
EUR0.4m) relating to equity settled share-based payment
transactions.
During 2021 the Company granted a restricted share award ("RSU")
to selected employees, including the executive directors and
members of the management team. Total cost amounted to EUR1.4m.
The balance relates to the share-based payment charge arising on
the issuance of options in accordance with the Group's Long-Term
Incentive Plan ("LTIP") and Save As You Earn ("SAYE") plan.
Loss per share
Basic loss per share for the Group was 30.96 EUR cent (2020
basic loss per share: 45.68 EUR cent).
Adjusted loss per share was EUR22.12 cent per share (2020 loss
per share: EUR20.76 cent per share). The weighted average number of
shares in the period was 116.3m (2020: 106.9m) and the total number
of shares issued at the balance sheet date was 116.3m (2020:
116.3m).
Intangible asset
Carrying value of intangible assets at 31 December 2021 totals
EUR79.4m, a decrease of EUR6.9m from the prior year. The Group
capitalised development costs of EUR4.4m in the year, (2020:
EUR3.7m) and had an amortisation charge for the year of EUR10.9m
(2020: EUR11.7m). The Group recorded an impairment charge of
EUR0.4m in the current year for a specific project following a
management decision to cease ongoing investment. In 2020 the Group
recorded an impairment of EUR15.0m on its intangible assets
associated with Hostelbookers and Hostelworld.com.
Deferred tax
The Group is carrying a deferred tax asset of EUR8.4m (2020:
EUR7.6m). Current year deferred tax credit EUR756k (2020:
EUR1,013k) relates to a deferred tax asset created in the current
year for capital allowances not utilised and available for future
offset.
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.
Future taxable profits for recoverability of the deferred tax asset
have been estimated using the Board approved five-year plan and
management expect to utilise the deferred tax asset over a five
year period.
Lease liability
At the balance sheet date, the carrying value of the lease
liability totalled EUR0.1m (2020 EUR4.3m). Current year lease
liability relates to the Group's lease commitments for office space
in Portugal and China.
On 20 August 2021 the Group signed a lease assignment on its
Dublin office exiting its long-term commitment. On 1 August 2021
the Group exited its existing lease commitment in London. The Group
entered agreements for smaller spaces in both locations as part of
its hybrid working strategy.
Net debt and financing
At the balance sheet date cash and cash equivalents totalled
EUR25.3m (2020: EUR18.2m).
The Group has borrowings of EUR28.2m (2020: EUR1.2m). Current
year amount relates to a EUR30m debt facility with certain
investment funds and accounts of HPS Investment Partners LLC (or
subsidiaries or affiliates thereof). An amount of EUR28.8m, net of
original issue discount, was received on 23 February 2021.
The prior year amount related to a short-term invoice financing
facility. The Group also had a EUR7m revolving credit facility in
place at 31 December 2020 which was undrawn. In January 2021
amounts owing on the short-term invoice financing facility were
repaid in full and the Group signed a deed of release on the
revolving credit facility.
In January 2021 the Group agreed revised covenant terms with AIB
on a rental guarantee for the Central Park office, Dublin, the
Group's headquarters where financial covenants and parent company
guarantee were waived. In August 2021 as part of the lease
assignment the Group agreed a revised rental guarantee on One
Central Park with AIB, which is in turn guaranteed by the US Parent
company of the lease assignees.
At 31 December 2021 the Group was in compliance with all
financial covenants which applied at that date.
Corporation tax
The Group recorded a corporation tax charge of EUR0.1m (2020:
EUR0.6m credit). Current year corporation tax charge relates
primarily to our UK and Portuguese operations where tax losses from
our Irish operations cannot be utilised. Prior year trading losses
arising in 2020 had been carried back to 2019 and set against
taxable profits arising in that year resulting in a refund owing to
the Group in respect of tax paid in 2020.
Related party transactions
Related party transactions are disclosed in note 22 to the Group
financial statements.
Dividend
The Board does not expect to pay a cash dividend under its
current policy in respect of the 2021 financial year. Any payment
of cash dividends will be subject to the Group generating 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
30 March 2022
HOSTELWORLD GROUP PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2021
2021 2020
Notes EUR'000 EUR'000
Revenue 3 16,901 15,364
Operating expenses before impairment 4 (49,386) (50,251)
Impairment of intangible assets 10 (367) (14,996)
Share of results of associate 13 (225) (374)
Operating loss (33,077) (50,257)
Finance income - 8
Finance costs 7 (3,501) (246)
Loss before taxation (36,578) (50,495)
Taxation credit 8 562 1,638
Loss for the year attributable to the equity owners of the parent Company (36,016) (48,857)
----------- ------------
Basic and diluted loss per share (euro cent) 9 (30.96) (45.68)
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
2021 2020
EUR'000 EUR'000
Loss for the year (36,016) (48,857)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign operations 32 (7)
--------- --------
Total comprehensive income for the year attributable
to equity owners of the parent Company (35,984) (48,864)
--------- --------
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
2021 2020
Notes EUR'000 EUR'000
Non-current assets
Intangible assets 10 79,390 86,252
Property, plant and equipment 11 293 4,480
Deferred tax assets 12 8,352 7,596
Investment in associate 13 1,186 2,349
-------- --------
89,221 100,677
Current assets
Trade and other receivables 15 2,002 1,681
Corporation tax 18 54
Cash and cash equivalents 16 25,267 18,189
-------- --------
27,287 19,924
-------- --------
Total assets 116,508 120,601
-------- --------
Issued capital and reserves attributable to equity owners of the parent
Share capital 17 1,163 1,163
Share premium 17 14,328 14,328
Other reserves 17 6,475 1,218
Retained earnings 45,140 81,156
Total equity attributable to equity holders of the parent Company 67,106 97, 865
-------- --------
Non-current liabilities
Trade and other payables 18 8,049 -
Borrowings 19 28,209 -
Lease liabilities 14 - 2,492
-------- --------
36,258 2,492
Current liabilities
Trade and other payables 18 12,795 17,036
Borrowings 19 - 1,164
Lease liabilities 14 86 1,803
Corporation tax 263 241
-------- --------
13,144 20,244
-------- --------
Total liabilities 49,402 22,736
-------- --------
Total equity and liabilities 116,508 120,601
-------- --------
The financial statements were approved by the Board of Directors
and authorised for issue on 30 March 2022 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 YEARED 31 DECEMBER 2021
Share capital Share premium Retained earnings Other reserves Total
Notes EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------ -------------- -------------- ------------------ --------------- ---------
Balance at 1 January
2020 956 - 130,013 803 131,772
------ -------------- -------------- ------------------ --------------- ---------
Total comprehensive
income for the year - - (48,857) (7) (48,864)
------ -------------- -------------- ------------------ --------------- ---------
Issue of ordinary
shares
for cash 17 191 15,042 - - 15,233
------ -------------- -------------- ------------------ --------------- ---------
Share issue cost 17 - (698) - - (698)
------ -------------- -------------- ------------------ --------------- ---------
Bonus Issue shares 17 16 (16) - - -
------ -------------- -------------- ------------------ --------------- ---------
Credit to equity for
equity settled
share-based payments - - - 422 422
------ -------------- -------------- ------------------ --------------- ---------
Balance at 31
December
2020 1,163 14,328 81,156 1,218 97,865
------ -------------- -------------- ------------------ --------------- ---------
Total comprehensive
income for the year - - (36,016) 32 (35,984)
------ -------------- -------------- ------------------ --------------- ---------
Issue of warrants 19 - - - 3,073 3,073
------ -------------- -------------- ------------------ --------------- ---------
Credit to equity for
equity settled
share-based payments - - - 2,152 2,152
------ -------------- -------------- ------------------ --------------- ---------
Balance at 31
December
2021 1,163 14,328 45,140 6,475 67,106
------ -------------- -------------- ------------------ --------------- ---------
HOSTELWORLD GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2021
Notes 2021 2020
EUR'000 EUR'000
--------------------------------------------------------------- ------- ----------- ---------
Cash flows from operating activities
------- ----------- ---------
Loss before tax ( 36,578 ) (50,495)
------- ----------- ---------
Amortisation and depreciation 12,411 14,132
------- ----------- ---------
Impairment of intangible assets 4 367 14,996
------- ----------- ---------
Share of results of associate 13 225 374
------- ----------- ---------
Net profit on disposal of leases 4 (793) -
------- ----------- ---------
Net loss / (profit) on disposal property, plant and equipment 4 492 (55)
------- ----------- ---------
Finance income - (8)
------- ----------- ---------
Finance expense 7 3,501 246
------- ----------- ---------
Employee equity settled share-based payment expense 21 2,162 428
------- ----------- ---------
Changes in working capital items:
------- ----------- ---------
Increase in trade and other payables 5,074 5,586
------- ----------- ---------
(Increase) / decrease in trade and other receivables (321) 3,299
------- ----------- ---------
Cash generated from operations (13,460) (11,497)
------- ----------- ---------
Interest paid (155) (246)
------- ----------- ---------
Interest received - 8
------- ----------- ---------
Income tax (paid) / refund (136) 698
------- ----------- ---------
Net cash used in operating activities (13,751) (11,037)
------- ----------- ---------
Cash flows from investing activities
------- ----------- ---------
Acquisition / development of intangible assets 10 (4,397) (3,802)
------- ----------- ---------
Purchases of property, plant and equipment 11 (75) (64)
------- ----------- ---------
Net cash used in investing activities (4,472) (3,866)
------- ----------- ---------
Cash flows from financing activities
------- ----------- ---------
Deferred consideration (345) (503)
------- ----------- ---------
Proceeds from issue of share capital 17 - 15,233
------- ----------- ---------
Issue costs paid 17 - (698)
------- ----------- ---------
Proceeds from borrowings 19 28,800 3,454
------- ----------- ---------
Transaction costs relating to borrowings 19 (862) -
------- ----------- ---------
Repayment of borrowings 19 (1,164) (2,290)
------- ----------- ---------
Repayments of obligations under lease liabilities 14 (1,160) (1,462)
------- ----------- ---------
Net cash from financing activities 25,269 13,734
------- ----------- ---------
Net increase/(decrease) in cash and cash equivalents 7,046 (1,169)
------- ----------- ---------
Cash and cash equivalents at the beginning of the year 18,189 19,365
------- ----------- ---------
Effect of foreign exchange rate changes 32 (7)
------- ----------- ---------
Cash and cash equivalents at the end of the year 16 25,267 18,189
------- ----------- ---------
HOSTELWORLD GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
1. SIGNIFICANT ACCOUNTING POLICIES
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 Floor 5, 38 Chancery
Lane, The Cursitor, London, WC2A 1EN, 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 2021, which were approved by the Board of
Directors on 20 March 2022. 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 2021 has been given by the auditors,
Deloitte Ireland LLP. 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 11 May 2022.
Going concern
The Directors, after making enquiries, have a reasonable
expectation that the Group and Company has adequate resources to
continue operating as a going concern for the foreseeable
future.
Since the beginning of the COVID-19 pandemic, the Group has
maintained strong discipline over its cost base and cash reserves,
with trading and cash forecasts being prepared on a weekly basis.
Throughout COVID-19 two outlooks have been maintained: a base case
scenario based on expected trading and a stress case scenario,
which is a further deterioration of the base case scenario. These
scenarios evolved over time to take into account regional recovery
assumptions, projected revenue and margin flows, cost cutting
measures taken, projected net cash flows from operations and
available sources of funding including our EUR30m five-year term
loan facility with certain investment funds and accounts of HPS
Investment Partners LLC (or subsidiaries or affiliates thereof).
Actions taken by the Directors to preserve the Group's cash
position include the decision to suspend any cash dividends, the
elimination of all non-essential operating costs including
marketing, recruitment, travel and other variable overheads,
organisational redesigns and associated headcount reductions,
negotiation of credit terms with key vendors and Government
COVID-19 supports in both Ireland and the UK, including the debt
warehousing of Irish employer and employee taxes.
In December 2021 the Board approved a base case budget and a
stress case budget, both of which covered the period to March 2023,
a period of twelve-months from annual report signing. In addition,
a five-year outlook was approved. The base assumptions of these
budgets are conservative: bed prices are capped at 2019 prices and
booking recovery is built on a regional destination basis flexed
for timing of borders reopening to International travel as they
were at the time. The budget did not assume any increase in
commission rates and cancellation rates were forecast to be
elevated versus normal rates. In addition, no incremental revenue
was included for any existing or future partnerships. Under both
scenarios full recovery is not expected to happen until 2023 with
the stress case scenario assuming more depressed volumes versus
base case scenario and assumes minimal recovery in 2022.
Subsequent to our December Board meeting, the Board approved a
further additional scenario. This additional scenario reflected the
impact that the emergence of the Omicron variant was having on
travel demand. This scenario assumed that tougher travel
restrictions would be implemented, and demand would soften. Under
this scenario 2022 trading levels would be below the budget stress
case scenario; this scenario is very unlikely, but it demonstrates
a worst-case trading outlook. Neither the stress case scenario nor
worst-case scenario includes any additional cost cutting measures;
such cost cutting measures would be implemented should trading
deteriorate to these levels for a prolonged period.
Under all three scenarios, the Group has sufficient cash
reserves available and remains compliant with financial covenants
under the term loan facility agreement. During January 2022 the
Group's trading recovered, despite higher than normal cancellation
rates in the first two weeks of the month, and the Group's January
trading results closed in line with budgeted base case projections.
February 2022 trading results were also in line with our budgeted
base case projections.
The Directors have taken steps to ensure adequate liquidity is
available to the Group for the likely duration of the crisis and
the recovery period. Following the completion of a Placing, and the
securing of a revolving credit facility in 2020, on 19 February
2021 the Group signed a EUR30m five-year term loan facility with
certain investment funds and accounts of HPS Investment Partners
LLC (or subsidiaries or affiliates thereof). An amount of EUR28.8m
was received on 23 February 2021. The key features of the facility
are as follows:
-- The facility is single drawdown and bears interest at a
margin of 9.0% per annum over EURIBOR (with a EURIBOR floor of
0.25% per annum).
-- Financial covenants as follows (1) adjusted net leverage
(Hostelworld has to ensure that total net debt is no more than 3.0
x adjusted EBITDA from 31 December 2023 to 30 September 2024, and
no more than 2.5 x adjusted EBITDA from 31 December 2024 onwards);
and (2) minimum liquidity (Hostelworld has to ensure that at close
of business on the last business day of each month until it is
testing the adjusted net leverage ratios there is free cash in
members of the Group which have guaranteed repayment of the
facility of at least EUR6.0 million).
-- Security on the facility includes the share capital of the
Group, the bank accounts of the Group and the Group's intellectual
property.
We were in compliance with our minimum liquidity covenants at 31
December 2021.
At this point in time, the consequences of the current unrest in
Eastern Europe is uncertain. The Group has no operations in either
Russia or Ukraine and total forecasted revenues for 2022 in these
regions are less than 0.01% of the Group's net revenue. The
Directors will continue to closely monitor any developments in the
conflict, and the impact to the Group.
Having considered the Group's five year P&L outlook, cash
flow forecasts prepared for 12 months from date of signing, current
and anticipated trading volumes, together with current and
anticipated levels of cash and debt, the Directors are satisfied
that the Group and Company has sufficient resources to continue in
operation for the foreseeable future, a period of not less than 12
months from the date of this report, and accordingly, they continue
to adopt the going concern basis in preparing the Group financial
statements.
Basis of Preparation
The financial statements have been prepared in conformity with
the requirements of the Companies Act 2006 and UK adopted
International Financial Reporting Standards ("IFRS") and IFRS
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in
the European Union.
The consolidated financial statements also comply with Article 4
of the EU IAS Regulation. References to IFRS hereafter refer to UK
adopted IFRS and IFRS adopted by the EU.
The consolidated financial statements have been prepared under
the historical cost basis. The investment in associate is accounted
for using the equity method.
In the preparation of these consolidated financial statements
the accounting policies set out below have been applied
consistently by all Group companies. The consolidated financial
statements are presented in euro, which is the functional currency
of all Group companies.
Previously line items for administrative expenses, and
depreciation and amortisation were shown on the face of the income
statement and the share of associate profit / loss was shown after
operating profit. This year administrative expenses and
depreciation and amortisation are presented within one-line item
for operating expenses and share of associate profit / loss is now
taken into account in arriving at operating profit.
Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) all of which prepare financial statements up to
31 December.
Control is achieved when the Company has the power over the
investee, is exposed, or has rights, to variable return from its
investment with the investee and has the ability to use its power
to affect its returns. The financial statements of subsidiaries are
included in the consolidated financial statements from the date
that control commences until the date that control ceases. All
intragroup assets and liabilities, equity, income, expenses and
cash flows relating to transactions between the members of the
Group are eliminated on consolidation. Unrealised losses are also
eliminated, except where they provide evidence of impairment.
Associates
Associates are entities over which the Group has significant
influence but not control, generally accompanying a shareholding of
between 20% and 50% of the voting rights. Significant influence is
the power to participate in the financial and operating policy
decisions of the investee but is not control over those
policies.
Investments in associates are accounted for using the equity
method of accounting and are initially recognised at cost. On
acquisition of the investment in associate, any excess of the cost
of the investment over the Group's share of the net fair value of
the identifiable assets and liabilities of the investee is
recognised as goodwill, which is included within the carrying value
of the investment.
The Group's share of its associates' post-acquisition profits or
losses is recognised in 'Share of results of associate' in the
consolidated income statement, and its share of post-acquisition
movements in reserves is recognised in the consolidated statement
of changes in equity. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment, less any
impairment in value. Where indicators of impairment arise, the
carrying amount of the associate is tested for impairment by
comparing its recoverable amount with its carrying amount.
The requirements of IAS 36 are applied to determine whether it
is necessary to recognise any impairment loss with respect to the
Group's investment in an associate. When necessary, the entire
carrying amount of the investment (including goodwill) is tested
for impairment in accordance with IAS 36 as a single asset by
comparing its recoverable amount (higher of value in use and fair
value less costs of disposal) with its carrying amount. Any
impairment loss recognised is not allocated to any asset, including
goodwill that forms part of the carrying amount of the investment.
Any reversal of that impairment loss is recognised in accordance
with IAS 36 to the extent that the recoverable amount of the
investment subsequently increases.
Unrealised gains arising from transactions with associates are
eliminated to the extent of the Group's interest in the entity.
Unrealised losses are eliminated to the extent that they do not
provide evidence of impairment. When the Group's share of losses in
an associate equals or exceeds its interest in the associate, the
Group does not recognise further losses unless the Group has
incurred obligations or made payments on behalf of the associate.
The accounting policies of associates are amended where necessary
to ensure consistency of accounting treatment at Group level.
When the Group ceases to have significant influence, any
retained interest in the entity is re-measured to its fair value at
the date when significant influence is lost with the change in
carrying amount recognised in the consolidated income statement.
The Group also reclassifies any movements previously recognised in
other comprehensive income to the consolidated income
statement.
Business combinations
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the
sum of the acquisition date fair values of the assets transferred
by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interests issued by the Group
in exchange for control of the acquiree.
Acquisition related costs are recognised in the consolidated
income statement as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value at the
acquisition date, except that:
-- Deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
-- Liabilities or equity instruments related to share-based
payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based
payment arrangements of the acquiree are measured in accordance
with IFRS 2 Share-based Payment at the acquisition date; and
-- Assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations are measured in accordance with that
standard.
The fair value of the assets and liabilities are based on
valuations using assumptions deemed by management to be
appropriate. Professional valuers are engaged when it is deemed
appropriate to do so.
Goodwill represents the excess of the aggregate of the
consideration transferred and the amount of any non-controlling
interest in the acquired entity over the net identifiable assets
acquired.
Non-controlling interests
Non-controlling interests represent the portion of the equity of
a subsidiary not attributable either directly or indirectly to the
Group and are presented separately in the consolidated income
statement and within equity in the consolidated statement of
financial position, distinguished from shareholders' equity
attributable to the owners of the parent Company.
New standards, amendments and interpretations issued and adopted
by the group in 2021:
The following changes to IFRS became effective for the Group
during the year but did not result in material changes to the
Group's consolidated financial statements:
-- Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
-- Leases COVID-19- Related Rent Concessions (Amendment to IFRS 16)
-- Applying IFRS 9 'Financial Instruments' with IFRS 4
'Insurance Contracts' (Amendments to IFRS 4)
New and amended standards and interpretations not yet
mandatorily effective
The Group has not applied certain new standards, amendments and
interpretations to existing standards which are not yet mandatorily
effective and have not yet been endorsed by the UK or by the EU, in
some instances:
-- Leases COVID-19- Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16)
-- Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
-- Definition of Accounting Estimates (Amendments to IAS 8)
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12)
-- Initial Application of IFRS 17 and IFRS 9 - Comparative Information (Amendment to IFRS 17)
-- Property, Plant and Equipment - Proceeds before Intended Use (Amendments to IAS 16)
-- Amendments to IFRS 17
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37)
-- Reference to the Conceptual Framework (Amendments to IFRS 3)
-- Annual Improvements 2018-2020 Cycle:
o IFRS 1 First-time Adoption of International Financial
Reporting Standards - Subsidiary as a first-time adopter
o IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
o IFRS 16 Leases - Lease incentives
o IAS 41 Agriculture - Taxation in fair value measurements
Revenue recognition
The Group generates substantially all of its revenues from the
technology and data processing fees and service fees that it
charges to accommodation providers and the transaction service fees
it charges to consumers. The Group also generates revenues from
technology and data processing fees that it charges to providers of
other travel products and associated transaction service fees, from
cancellation protection fees, payment protection fees and from
advertising services.
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 having provided the technology
and data processing service 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.
Where the Group provides an ancillary service to allow a
flexible booking option which allows a booking to be cancelled for
no charge or a new booking to be made, such revenue is deferred,
until such time as the related check-in date has passed or for a
six-month period from the date of cancellation, at which time the
credit expires.
Where credits are granted to customers for utilisation on future
bookings, a provision is recorded against revenue based on the
probability that a credit offering will be used by a customer.
Ancillary advertising revenues are recognised over the period
when the service is performed. Revenue is measured at the fair
value of the consideration received or receivable.
Revenue is stated net of rebates, sales taxes and value added
taxes.
Leases
The Group assesses whether a contract is or contains a lease, at
inception of the contract. For contracts where the Group is a
lessee, a right-of-use asset is recognised, representing the
Group's right to use the underlying asset and a lease liability is
also recognised for the Group's obligation to make lease payments
during the lease term. The lease term of each contract is
determined as the non-cancellable period of the lease, together
with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an
option to terminate the lease (break option), if it is reasonably
certain not to exercise that option. For short term leases (defined
as leases with a lease term of 12 months or less) and leases of low
value assets, the Group recognises the lease payments as an
operating expense on a straight-line basis over the term of the
lease.
The right-of-use asset is initially measured at cost and
subsequently valued at cost less accumulated depreciation and
impairment losses. It is adjusted where a lease modification
results in a remeasurement of the lease liability.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the underlying asset. The
depreciation starts at the commencement date of the lease.
Whenever the Group incurs an obligation to restore the
underlying asset to the condition required by the terms and
conditions of the lease, a provision is recognised and measured
under IAS 37. To the extent that the costs relate to a right-of-use
asset, the costs are included in the related right-of-use
asset.
The carrying value of these assets are reviewed at the end of
each reporting period to determine whether there is any indication
that the assets have suffered an impairment loss. The Group applies
IAS 36 to determine whether a right-of-use asset is impaired and
accounts for any identified impairment loss as described in the
'Property, Plant and Equipment' policy.
Lease liabilities are measured at the present value of the
future lease payments. The lease payments are discounted using the
implicit interest rate in the lease, or where this cannot readily
be determined the Group use the Group's incremental borrowing rate.
The incremental borrowing rate depends on the term, currency and
start date of the lease and is determined based on a series of
inputs including: the risk-free rate based on government bond
rates; a country-specific risk adjustment and a credit risk
adjustment based on bond yields. Subsequently the lease liability
is increased to reflect interest on the lease liability and reduced
for payments made. The lease liability is remeasured for lease
modifications or reassessments.
Lease payments included in the measurement of the lease
liability comprise: (i) Fixed lease payments less any lease
incentives receivable; (ii) Variable lease payments that depend on
an index or rate, initially measured using the index or rate at the
commencement date; (iii) The amount expected to be payable by the
lessee under residual value guarantees; (iv) The exercise price of
purchase options, if the lessee is reasonably certain to exercise
the options; and (v) Payments of penalties for terminating the
lease, if the lease term reflects the exercise of an option to
terminate the lease.
The lease liability is presented as a separate line in the
consolidated statement of financial position. The lease liability
is subsequently measured by increasing the carrying amount to
reflect interest on the lease liability (using the effective
interest method) and by reducing the carrying amount to reflect the
lease payments made.
The Group re-measures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever: (i) The lease term has changed or there is a significant
event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the
lease liability is re-measured by discounting the revised lease
payments using a revised discount rate. (ii) The lease payments
change due to changes in an index or rate or a change in expected
payment under a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease payments
using an unchanged discount rate (iii) A lease contract is modified
and the lease modification is not accounted for as a separate
lease, in which case the lease liability is remeasured based on the
lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the
modification.
Cash paid on the interest portion of a lease liability is
included as part of operating activities in the consolidated cash
flow statement and cash payments for the principal portion of a
lease liability are included as part of financing activities.
Exceptional items
Exceptional items by their nature and size can make
interpretation of the underlying trends in the business more
difficult. Such items may include restructuring, material merger
and acquisition costs, profit or loss on disposal or termination of
operations, litigation settlements, legislative changes, material
acquisition integration costs and profit or loss on disposal of
investments. Judgement is used by the Group in assessing the
particular items which by virtue of their scale and nature should
be disclosed as exceptional items.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from net profit as reported in the
consolidated income statement because it excludes items of income
or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
date, and any adjustment to tax payable in respect of previous
years.
A provision is recognised for those matters for which the tax
determination is uncertain, but it is considered probable that
there will be a future outflow of funds to a tax authority. The
provisions are measured at the best estimate of the amount expected
to become payable. The assessment is based on the judgement of tax
professionals within the Company supported by previous experience
in respect of such activities and in certain cases based on
specialist independent tax advice.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are
recognised for unused tax losses, unused tax credits and deductible
temporary differences to the extent that it is probable future
taxable profits will be available against which the temporary
difference can be utilised.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated
with such investments and interests are only recognised to the
extent that it is probable that there will be sufficient taxable
profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered. Such reductions are
reversed when the probability of future taxable profits
improves.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current liabilities and when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the consolidated income statement, except
when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in euro, which is the
functional currency of the parent Company and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities denominated in
foreign currencies are retranslated at the rates prevailing on the
reporting date.
Non-monetary items (including deferred revenue) carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was determined
in accordance with IFRIC 22. Non-monetary items that are measured
in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
the consolidated income statement and consolidated statement of
comprehensive income for the period. For the purpose of presenting
consolidated financial statements, the assets and liabilities of
the Group's operations are translated at exchange rates prevailing
on the reporting date. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the
exchange rates at the date of transactions are used. Exchange
differences arising, if any, are classified as equity and
transferred to the Group's foreign currency translation
reserve.
Goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate. Exchange
differences arising are recognised in other comprehensive
income.
Retirement benefits costs
Contributions made in respect of employees' pension schemes are
charged through the consolidated income statement in the period
they become payable. The Group pays contributions to privately
administered pension insurance plans. The Group has no further
payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they
are due. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in the future payments is
available.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets
over their estimated useful lives, using the straight-line method.
The estimated useful lives, residual values and depreciation method
are reviewed at each year end, with the effect of any changes in
estimate accounted for on a prospective basis.
Right-of-use assets are depreciated over the shorter period of
the lease term and the useful life of the underlying asset.
Depreciation is provided on the following basis:
Leasehold property improvements : 5-10 years straight line
Computer equipment : 3-5 years straight line
Fixtures and equipment : 6-7 years straight line
Leasehold improvements are improvements made to buildings leased
by the Group when it has the right to use these leasehold
improvements over the term of the lease. The improvements will
revert to the lessor at the expiration of the lease.
The cost of a leasehold improvement is depreciated over the
shorter of:
1. The remaining lease term, or
2. The estimated useful life of the improvement.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. The gain or loss arising on
the disposal of an asset is recognised in the consolidated income
statement when the asset is derecognised.
In accordance with IAS 36 'Impairment of Assets', the carrying
amounts of items of property, plant and equipment are reviewed at
each reporting date to determine whether there is any indication of
impairment. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount.
Impairment losses are recognised in the consolidated income
statement. Following the recognition of an impairment loss, the
depreciation charge applicable to the asset is adjusted
prospectively in order to systematically allocate the revised
carrying amount over the remaining useful life.
Intangible assets
Goodwill
Goodwill is initially measured as the excess of the cost of the
business combination over the Group's interest in the net fair
value of the identifiable assets, liabilities and contingent
liabilities of the acquired subsidiary or associate. Identifiable
intangible assets, meeting either the contractual-legal or
separability criterion are recognised separately from goodwill.
Goodwill on acquisition of subsidiaries is included within
intangible assets. Goodwill associated with the acquisition of
associates is included within the interest in associates under the
equity method of accounting.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
Goodwill is reviewed for impairment annually or more frequently
if events or changes in circumstances indicated that the carrying
value may be impaired.
For the purposes of impairment testing, goodwill is allocated to
each of the Group's cash-generating units ("CGU") that is expected
to benefit from the synergies of the combination.
If the recoverable amount of the cash-generating unit is less
than its carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit on a pro-rata basis based
on the carrying amount of each asset in the unit. Any impairment
loss for goodwill is recognised directly in profit or loss in the
consolidated income statement. An impairment loss recognised for
goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the
attributable amount of goodwill is included in the determination of
the gain or loss on disposal.
Other intangible assets
The Group has four classes of intangible asset: domain names,
technology assets, affiliate contracts and development costs.
Other intangible are capitalised at their fair value and
amortised to the consolidated income statement on a straight-line
basis over their estimated useful lives except for the
Hostelbookers domain name which was amortised on a reducing balance
basis until fully impaired at 31 December 2021 (see note 10):
Domain names : 8-20 years
Technology assets : 4 years
Affiliate contracts : 5 years
Capitalised development costs : 2-5 years
The residual value associated with all intangible assets is
deemed to be EURnil.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Development expenditure in relation to internally-generated
intangible assets is capitalised when all of the following have
been demonstrated; the technical feasibility of completing the
intangible asset so that it will be available for use; the
intention to complete the project to which the intangible asset
relates and to use it or sell it; the ability to use or sell the
intangible asset, how the intangible asset will generate probable
future economic benefits; the availability of adequate technical,
financial and other resources to complete the development and to
use the intangible asset; and the ability to measure reliably the
expenditure attributable to the intangible asset during its
development.
The amount initially capitalised for internally-generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally-generated intangible asset can be
recognised, development expenditure is charged to profit or loss in
the period in which it is incurred.
An intangible asset is derecognised on disposal or when no
future economic benefits are expected to arise from the continued
use or disposal of the asset. The gain or loss arising on the
disposal of an asset is recognised in the consolidated income
statement when the asset is derecognised.
Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Directors review the
carrying amounts of the Group's tangible and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset,
the Directors estimate the recoverable amount of the
cash-generating unit to which the asset belongs. Where a reasonable
and consistent basis of allocation can be identified, corporate
assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest Group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible
assets not yet available for use are tested for impairment at least
annually, and whenever there is an indication that the asset may be
impaired.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. If the
recoverable amount of an asset (or a cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount
of the asset (or the cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or a cash-generating unit) is increased to the
revised estimate of its recoverable amount. The increased carrying
amount cannot exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or
the cash-generating unit) in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation
increase.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the
instrument.
Financial assets and liabilities are initially measured at fair
value plus transaction costs, except for those classified as fair
value through profit or loss, which are initially measured at fair
value. The fair value of financial assets and liabilities
denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate at the end of the
reporting period.
(a) Classification of financial assets
Trade and other receivables
Trade and other receivables are stated initially at their
transaction price and subsequently at amortised cost, less any
expected credit loss provision. The Group applies the simplified
approach to measuring expected credit losses which uses a lifetime
expected credit loss allowance for all trade receivables.
(b) Expected credit loss of financial assets
The Group always recognises lifetime expected credit losses
("ECLs") for trade receivables estimated using a provision matrix
based on the Group's historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including
time value of money where appropriate.
Lifetime ECLs represents the expected credit losses that will
result from all possible default events over the expected life of a
financial instrument. ECLs are reported in the consolidated income
statement.
(c) Classification of financial liabilities
Trade and other payables
Trade and other payables are initially recorded at fair value,
which is usually the original invoiced amount, and subsequently
carried at amortised cost. Liabilities are derecognised when the
obligation under the liability is discharged, cancelled or
expires.
Loans and borrowings
All loans and borrowings are initially recognised at fair value
of the proceeds received less any directly attributable transaction
costs. Transaction costs include fees and commission paid to
agents, advisers brokers and dealers. After initial recognition,
interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest method being the amount
at which the financial liability is measured at initial recognition
minus any principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference
between that initial amount and the maturity amount. Borrowings are
de-recognised when the Group's obligations specified in the
contracts expire, are discharged or cancelled. Borrowings are
classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liability for at
least 12 months after the financial position date.
Other financial liabilities
Financial liabilities are recognised initially at fair value and
are subsequently stated at amortised cost using the effective
interest method. The effective interest method is a method for
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability
to the amortised cost of a financial liability.
Financial liabilities are classified as current liabilities
unless the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date. The
Directors determine the classification of the Group's financial
liabilities at initial recognition.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks and other short-term highly liquid investments
with original maturities of three months or less. Restricted cash
and cash equivalent balances are those which meet the definition of
cash and cash equivalents but are not available for use by the
Group.
Recognition of warrants
Warrant reserve is recorded at the fair value of warrants
issued. Warrants have been recognised as equity instruments as each
warrant issued entitles the holder to a fixed number of ordinary
shares in exchange for a fixed exchange price of EUR0.01 per
ordinary equity share.
Dividends
Final dividends are recorded in the Group's financial statements
in the period in which they are approved by the Company's
shareholders. Interim dividends are recorded in the period in which
they are paid.
Share based payments
Equity settled share based payments to employees are measured at
the fair value of the equity instruments at the grant date. The
fair value excludes the effect of non-market-based vesting
conditions. Details regarding the determination of the fair value
of equity-settled share-based transactions are set out in note
21.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest. At each reporting
date, the Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in the consolidated
income statement such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the share
based payment reserve.
For cash settled share based payments, a liability is recognised
for the services acquired, measured initially at the fair value of
the liability. At each reporting date until the liability is
settled, and at the date of settlement, the fair value of the
liability is re-measured, with any changes in fair value recognised
in the consolidated income statement for the year.
Government Grants
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received. Government grants
that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support
to the Group with no future related costs are recognised in profit
or loss in the period in which they become receivable. Amounts are
recognised as income over the periods necessary to match them with
the related costs and are deducted in reporting the related
expense.
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 (other than those
involving estimations) that have a significant impact on the
amounts recognised and to make 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.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised if the revision affects
only that year, or in the year of the revision and future years if
the revision affects both current and future years.
(a) Critical judgements in applying the Group's accounting
policies :
The following are the critical judgements, apart from those
involving estimations (which are presented separately below), that
the directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in financial statements.
Capitalisation of development costs
Development costs are capitalised when the criteria set out in
paragraph 57 of IAS 38 Intangible assets have been demonstrated as
disclosed in our accounting policy disclosed in the annual report.
Determining the amount to be capitalised requires the Directors to
make judgements about each asset to ensure that they meet the
requirements. The most critical judgement is regarding the expected
future cash generation of the asset.
Accounting for exceptional items
Exceptional items by their nature and size can make
interpretation of the underlying trends in the business more
difficult. Judgement is used in assessing the particular items
which by virtue of their scale and nature should be disclosed as
exceptional items. Circumstances that the Group believe would give
rise to exceptional items for separate disclosure are outlined in
the exceptional accounting policy in the annual report.
(b) Key sources of estimation uncertainty:
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Going concern
The Directors have a reasonable expectation that the Group has
adequate resources to continue operating as a going concern for the
foreseeable future. Management estimation is required in
forecasting cashflow projections incorporating the impact of
COVID-19. The details of the going concern scenarios, key
assumptions and mitigating actions are outlined in the going
concern statement within note 1.
The most significant factor impacting our projections for going
concern relates to COVID-19 and what impact COVID-19 will have on
trading volumes. As outlined within note 1 we had three scenarios -
a base case, a stress case and a worst case which reflected an
Omicron run rate at the end of December 2021. We have utilised the
worst-case Omicron trading scenario and we have further stressed
the scenario. The Group has considered the impact to cash of
operating with a further 10% decline in revenue and direct
marketing costs but carrying the current level of operating costs
for a 12-month period. Under this scenario the Group continues to
have sufficient cash resources to operate as a going concern.
Deferred tax asset recognition and recoverability of deferred
tax assets
Deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available in future periods.
The extent to which it is probable that taxable profits will be
available in future periods is an estimate assessed based on the
approved five-year budget and long-term forecasts upon initial
recognition and at each reporting date. At 31 December 2021 the
carrying value of deferred tax assets amounted to EUR8.4m (2020:
EUR7.6m). Based on the Board approved five-year outlook there are
sufficient taxable profits to demonstrate the asset could be
substantially utilised over a five-year period to 31 December 2026.
The group has made a loss in 2020 and 2021 as a direct impact of
COVID-19. The 5-year outlook includes an assumption regarding
return to profit as we assume a recovery of bookings and revenue
with full trading recovery included in 2023, and a modest growth
rate applied to profits from 2023. A decline in taxable profits
from amounts included in our five-year budgeted projections would
impact the amount of the deferred tax asset which would be
recovered over the next five years. Should taxable
profits decline 5% over the next 5 years the deferred tax asset
would still be recoverable.
Carrying value of goodwill and intangible assets
The Directors assess annually whether goodwill has suffered any
impairment, in accordance with the relevant accounting policy and
intangible assets are assessed for possible impairment where
indicators of impairment exist. The recoverable amounts of cash-
generating units ("CGUs") are determined based on the higher of
fair value less costs of disposal or value in use calculations.
Management estimation is required in forecasting future cash flows
of cash-generating units including incorporating the impact of
COVID-19, the discount rates applied to these cashflows, the
expected long-term growth rate of the applicable business and
terminal values. The carrying amount of goodwill at 31 December
2021 amounted to EUR17.8m (2020: EUR17.8m) and the carrying amount
of domain names amounted to EUR56.4m (2020: EUR64.2m). Based on
work performed and the headroom identified in the models no
impairment was necessary in 2021 for goodwill or domain names.
Current year impairment charge of EUR367k relates to an impairment
of a specific project following a management decision to cease
ongoing investment. In 2020 the Group recognised an impairment
charge of EUR15.0m. Further details on the assumptions used and
sensitivity analysis are set out in note 10.
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 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 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 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 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 continent is presented as follows:
2021 2020
EUR'000 EUR'000
Europe 10,713 7,354
Americas 5,213 3,779
Asia, Africa and Oceania 975 4,231
---------- ----------
Total revenue 16,901 15,364
---------- ----------
Revenue arising within the country of domicile Ireland amounted
to EUR492k (2020: EUR418k). As at 31 December 2021, EUR1,020k of
revenue relating to free cancellation bookings has been deferred
(2020: EUR197k).
Disaggregation of revenue is presented as follows:
2021 2020
EUR'000 EUR'000
Technology and data processing fees 16,849 14,251
Advertising revenue and ancillary services 52 1,113
---------- ----------
Total revenue 16,901 15,364
---------- ----------
In the year ended 31 December 2021, the Group generated 100%
(2020: 93%) of its revenues from the technology and data processing
fees that it charged to accommodation providers.
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, the United Kingdom, Portugal, and China. Non-current
assets are disaggregated as follows:
2021 2020
Notes EUR'000 EUR'000
Total non-current assets 89,221 100,677
Broken out as:
Ireland 87,799 96,9 51
Australia 1,186 2, 3 49
United Kingdom 32 922
Portugal 165 430
China 39 25
4. OPERATING EXPENSES EXCLUDING IMPAIRMENT
Loss for the year has been arrived at after charging/(crediting)
the following operating costs:
2021 2020
Notes EUR'000 EUR'000
Marketing expenses 13,792 9,260
Staff costs 6 15,546 16,759
Credit card processing fees 573 571
Loss on disposal plant, property and equipment 492 12
Profit on disposal plant, property and equipment - (67)
Net profit on disposal of leases (793) -
Movement in expected credit loss 15 129 18
Exceptional items 5 588 2,989
FX loss / (gain) 419 (152)
Other administrative costs 6,229 6,729
---------- --------
Total administrative expenses 36,975 36,119
Depreciation of tangible fixed assets 11 1,519 2,458
Amortisation of intangible fixed assets 10 10,892 11,674
---------- --------
Total operating expenses excluding impairment 49,386 50,251
---------- --------
Included in staff costs are government assistance amounts
totalling EUR1,771k (2020: EUR1,085k) for furloughed employees
under the Coronavirus Job Retention Scheme in the UK and subsidy
received under the Employment Wage Subsidy Scheme in Ireland.
Included within marketing expenses are direct marketing costs of
EUR12,763k (2020: EUR7,551k). Other administration costs include
rent and rates, legal and professional, training and recruitment,
information technology website and security, ecommerce and data
analytics.
Auditor's remuneration
During the year, the Group obtained the following services from
its auditor - Deloitte Ireland LLP:
2021 2020
EUR'000 EUR'000
Fees payable for the statutory audit of the Company and consolidated financial statements 42 42
Fees payable for other services:
- statutory audit of subsidiary undertakings 96 135
- tax advisory services - -
- audit related assurance services 8 194
- corporate finance services - -
- other non-audit services 13 57
---------- -------
Total 159 428
---------- -------
5. EXCEPTIONAL ITEMS
2021 2020
EUR'000 EUR'000
Merger and acquisition costs (127) 1,332
Restructuring costs 715 1,657
Total 588 2,989
---------- --------
Merger and acquisition credit of EUR127k (2020: costs of
EUR1,332k) relates to a release of costs previously accrued for due
to a revision of estimate. 2020 merger and acquisition costs
relates to professional fees incurred.
Restructuring costs of EUR715k (2020: EUR1,657k) primarily
relate to staff costs incurred as part of an implementation of a
simpler and more efficient growth orientated organisational
structure. The new structure organises the Company's marketing,
product, development and analytics employees into autonomous growth
teams. The structure was initiated in the prior year where costs
were incurred relating to an initial internal realignment of our
technology and product departments. In 2020 we also incurred
professional fees incurred on review of funding options for the
Group.
6. STAFF COSTS
The average monthly number of people employed (including
Executive Directors) was as follows:
2021 2020
Average number of persons employed:
Administration and sales 110 137
Development and information technology 116 152
----- -----
Total 226 289
----- -----
The aggregate remuneration costs of these employees is analysed
as follows:
2021 2020
Notes EUR'000 EUR'000
Staff costs comprise:
Wages and salaries 12,823 15,550
Social security costs 1,367 1,935
Pensions costs 460 447
Other benefits 442 734
Share option charge 21 2,162 428
Capitalised development labour (1,708) (2,335)
---------- --------
Total 15,546 16,759
---------- --------
In addition to staff costs disclosed above termination benefits
disclosed within note 5 exceptional items restructuring costs
totalled EUR672k (2020: EUR935k).
7. FINANCE COSTS
Notes 2021 2020
EUR'000 EUR'000
Interest on lease liabilities 14 102 182
Finance costs - HPS facility 19 3,344 -
Finance costs - prompt pay facility 55 64
Total 3,501 246
------------------- ----------------
8. TAXATION
2021 2020
Notes EUR'000 EUR'000
Corporation tax:
Current year charge / (credit) 372 (395)
Adjustments in respect of prior years (178) (230)
---------- -----------
Total 194 (625)
Origination and reversal of temporary differences 12 (756) (1,013)
---------- -----------
Total tax credit for the year (562) (1,638)
---------- -----------
Corporation tax is calculated at 12.5% (2020: 12.5%) of the
estimated taxable profit for the year. Taxation for other
jurisdictions is calculated at the rates prevailing in the
respective jurisdictions. The corporation tax charge relates
primarily to our UK and Portuguese 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:
2021 2020
EUR'000 EUR'000
Loss before tax on continuing operations (36,578) (50,495)
--------- -----------
Tax at the Irish corporation tax rate of 12.5% (2020: 12.5%) (4,572) (6,312)
Effects of:
Tax effect of expenses that are not deductible in determining taxable profit 1,556 3,831
Tax effect of losses not utilised 3,173 2,789
Tax effect of losses carried back - (578)
Tax effect of income taxed at different rates 50 (49)
Depreciation less than capital allowances (130) (167)
Effect of different tax rates of subsidiaries operating in other jurisdictions 295 91
Recognition of deferred tax asset (756) (1,013)
Adjustments in respect of prior years (178) (230)
--------- -----------
Total (562) (1,638)
--------- -----------
The Group has unused trading tax losses of EUR25,384k (2020:
EUR17,689k) available for offset against future profits arising. A
deferred tax asset has not been recognised in respect of such
losses as it is not considered probable that there will be future
trading profits available against which the deferred tax asset can
be unwound, beyond those used to assess the recoverability of the
existing deferred tax asset at 31 December 2021. All tax losses
available may be carried forward indefinitely. In addition, in the
prior year the Group had an unrecognised deferred tax asset of
EUR1,871k as a result of an impairment of intellectual property in
2020. The balance is still unrecognised in the current year.
In 2020 as a result of the impact of COVID-19 Irish Revenue
introduced a temporary acceleration of corporation tax loss relief
under section 396D TCA 1997 which provides for a temporary
acceleration of corporation tax loss relief for accounting periods
affected by COVID-19. The measure allowed companies to estimate
their trading losses for certain accounting periods and carry back
up to 50% of those losses estimated against chargeable profits in
the preceding account period. The Group availed of this measure
with regard to the period ended 31 December 2020. An estimate of
the corporation tax loss for the period ended 31 December 2020 was
calculated and an amount of available trading losses was used to
partially offset trading profits in the period ended 31 December
2019. As a result of this relief, the Group was entitled to a
refund from the Irish tax authorities for corporation tax paid in
2019.
9. LOSS PER SHARE
Basic loss per share is computed by dividing the net loss for
the year available to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
2021 2020
Weighted average number of shares in issue ('000s) 116,321 106,947
Loss for the year (EUR'000s) (36,016) (48,857)
--------- -----------
Basic loss per share (euro cent) (30.96) (45.68)
--------- -----------
Diluted 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. The issue of warrants (note
19) and share options and share awards (note 21) are the Company's
only potential dilutive ordinary shares. Ordinary shares
potentially issuable from share-based payment arrangements and
warrants are anti-dilutive due to the loss in the financial period
meaning there is no difference between basic and diluted earnings
per share.
2021 2020
Weighted average number of ordinary shares in issue ('000s) 116,321 106,947
Effect of dilutive potential ordinary shares:
Share options ('000s) - -
-------- ----------
Weighted average number of ordinary shares for the purpose of diluted earnings per share
('000s) 116,321 106,947
-------- ----------
Diluted loss per share (euro cent) (30.96) (45.68)
-------- ----------
10. INTANGIBLE ASSETS
The table below shows the movements in intangible assets for the
year:
Capitalised
Domain Development
Goodwill Names Technology Affiliates Contracts Costs Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
Balance at 1 January
2020 47,274 214,708 14,068 5,500 14,372 295,922
Additions - - 153 - 3,649 3,802
Disposals for the
year - - (121) - - (121)
Balance at 31
December 2020 47,274 214,708 14,100 5,500 18,021 299,603
----------- ---------- ----------- --------------------- --------------------- ----------
Additions - - - - 4,397 4,397
Disposals for the
year - - (52) - - (5 2 )
Balance at 31
December 2021 47,274 214,708 14,048 5,500 22,418 303,948
----------- ---------- ----------- --------------------- --------------------- ----------
Accumulated
amortisation and
impairment
Balance at 1 January
2020 (29,426) (126,374) (13,911) (5,500) (11,591) (186,802)
Charge for year - (9,118) (132) - (2,424) (11,674)
Disposals for the
year - - 121 - - 121
Impairment recognised - (14,996) - - - (14,996)
Balance a t 31
December 2020 (29,426) (150,488) (13,922) (5,500) (14,015) (213,351)
----------- ---------- ----------- --------------------- --------------------- ----------
Charge for year - (7,810) (119) - (2,963) (10,892)
Disposals for the
year - - 52 - - 52
Impairment recognised - - - - (367) (367)
Balance a t 31
December 2021 (29,426) (158,298) (13,989) (5,500) (17,345) (224,558)
----------- ---------- ----------- --------------------- --------------------- ----------
Carrying amount
At 31 December 2020 17,848 64,220 178 - 4,006 86,252
----------- ---------- ----------- --------------------- --------------------- ----------
At 31 December 2021 17,848 56,410 59 - 5,073 79,390
----------- ---------- ----------- --------------------- --------------------- ----------
Capitalised development cost additions during the year comprised
of internally generated additions of EUR1,708k (2020: EUR2,335k)
and other separately acquired additions of EUR2,689k (2020:
EUR1,314k). Development costs have been capitalised in accordance
with IAS 38 Intangible Assets and are therefore not treated, for
dividend purposes, as a realised loss. Hostelworld continue to
utilise affiliate contracts to generate revenue and continue to pay
affiliate partner commissions.
Impairments
The carrying value of the capitalised development costs balance
at 31 December 2021 is EUR5,073k (2020: EUR4,006k. Current year
impairment charge of EUR367k relates to an impairment of a specific
project following a management decision to cease ongoing
investment.
The carrying value of the goodwill balance at 31 December 2021
is EUR17,848k (2020: EUR17,848k) and relates to an investment in
Hostelworld.com Limited by the Group in 2009. Goodwill, which has
an indefinite useful life, is subject to annual impairment testing,
or more frequent testing if there are indicators of impairment.
Following impairment testing based on the assumptions below, no
impairment was recognised for goodwill in the current or prior
year.
The carrying value of the Group's intellectual property at 31
December 2021 is EUR56,410k (2020: EUR64,220). Following impairment
testing based on the assumptions below, no impairment was
recognised for the Group's intellectual property in 2021. In 2020,
as a result of a strategic review of the business by the Directors,
it was determined to cease actively marketing our Hostelbookers
brand name. An impairment loss of EUR494k was recognised based on
the carrying value at 31 December 2020. The recoverable amount was
EURnil based on value in use calculations. Also, in 2020 following
a review of COVID trading performance and booking performance, the
Directors reassessed the estimated cash flows associated with the
Hostelworld.com intellectual property assets. This led to the
recognition of an impairment charge of EUR14,502k in relation to
the value of the Hostelworld.com domain name.
Cash generating units ("CGUs") to which goodwill and
intellectual property have been allocated represent the lowest
level at which the assets are monitored for internal reporting
purposes. Goodwill has not been allocated across CGUs as it is not
possible to identify separate CGUs. The recoverable amount of
goodwill and intellectual property allocated to a CGU is determined
based on a value in use computation. The key assumptions for
calculating value in use of the CGUs are discount rates, growth
rates and cash flows. They are described as follows:
Discount rates
2021 2020
Pre-tax discount rate; Goodwill 14.9% 13.2%
------- -------
Pre-tax discount rate: Intellectual Property 15.57% 14.69%
------- -------
The pre-tax discount rates are based on the Group's weighted
average cost of capital, calculated using the Capital Asset Pricing
Model adjusted for the Group's specific beta coefficient together
with a country risk premium to take account of the countries from
where the CGU derives its cash flows.
Cash flows
The cash flow projections are based on a five-year budget
formally approved by the Board of Directors.
In preparing the five-year budget, management have based
projections on travel news at the time of preparing including
government announcements on the reopening and closure of borders
and key assumptions on the return to growth of the market, consumer
behaviours, competitor activity and developing trends in the
industry in which the CGU operates.
Management have also considered the Group's history of earnings
and core strategic initiatives including improving the
competitiveness of our core OTA business and platform
modernisation. Management have also considered capital expenditure
requirements to maintain the CGU's performance and profitability.
Working capital requirements are forecast to move in line with
activity.
Growth rates
Growth rates are assessed based on the Board approved five-year
2021 budget. For goodwill a terminal value of 2% (2020: 2%) growth
into perpetuity was used to extrapolate cash flows beyond the
five-year budget period. This growth rate does not exceed the
long-term average growth rate for the industry in which each CGU
operates. For intellectual property growth rates included beyond
the five-year budget period ranged from 6% to 3% (2020: 8% to
3%).
Sensitivity analysis
The key assumptions underlying the impairment reviews are set
out above. Sensitivity analysis has been conducted in respect of
each of the CGUs using the following sensitivity assumptions: a 2%
increase in the discount rate; 10% decline in revenue in each of
the Board approved five-year numbers and nil terminal value growth.
Under each scenario no impairment was identified.
Sensitivity analysis has been completed on key assumptions in
isolation and in combination, and the headroom included is
significant. The key assumptions are discount factor, long term
growth rates and growth rates for each of the Board approved
five-year numbers. Sensitivities have been applied on all of these
assumptions.
From our sensitivity analysis we identified that Goodwill would
need to have nil terminal value growth and an increase in discount
rate of 4% to be considered impaired. This is not a likely
scenario. In addition, for our intellectual property management
considers that no reasonably possible changes in assumptions would
reduce a CGU's headroom to nil.
11. PROPERTY, PLANT AND EQUIPMENT
The table below shows the movements in property, plant and
equipment for the year:
Right-of-Use Assets Leasehold Property Fixtures &
(Leasehold Property) Improvements Equipment Computer Equipment Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Cost
Balance at 1 January
2020 4,333 1,877 823 3,659 10,692
Additions 1,681 23 - 41 1,745
Remeasurement 129 - - - 129
Disposals (769) (334) (169) (214) (1,486)
Balance at 31
December 2020 5,374 1,566 654 3,486 11,080
--------------------- ------------------- -------------------- ------------------- --------
Additions 116 - - 75 191
Disposals (5,036) (1,034) (470) (3,309) (9,849)
Balance at 31
December 2021 454 532 184 252 1,422
--------------------- ------------------- -------------------- ------------------- --------
Accumulated
depreciation
Balance at 1 January
2020 (1,061) (969) (560) (2,749) (5,339)
Charge for year (1,518) (258) (102) (580) (2,458)
Disposals 492 334 158 213 1,197
Balance at 31
December 2020 (2,087) (893) (504) (3,116) (6,600)
--------------------- ------------------- -------------------- ------------------- --------
Charge for year (960) (186) (60) (313) (1,519)
Disposals 2,665 612 413 3,296 6,986
Foreign exchange 4 - - - 4
--------------------- ------------------- -------------------- ------------------- --------
Balance at 31
December 2021 (378) (467) (151) (133) (1,129)
--------------------- ------------------- -------------------- ------------------- --------
Carrying amount
At 31 December 2020 3,287 673 150 370 4,480
--------------------- ------------------- -------------------- ------------------- --------
At 31 December 2021 76 65 33 119 293
--------------------- ------------------- -------------------- ------------------- --------
Right-of-use assets relate to the Group's lease commitments for
office space in Ireland, UK, Portugal and China. In August 2021 the
Group exited their long-term lease commitments for its Dublin and
London offices. Further detail is included in note 14.
For the remaining leases the average lease term of leases
entered at 31 December 2021 is less than 1 year. The maturity
analysis of lease liabilities is presented in note 14.
12. DEFERRED TAXATION
The following are the major deferred taxation assets recognised
by the Group and movements thereon during the current and prior
reporting year. Deferred tax assets primarily relating to temporary
differences between the carrying value of intangible and tangible
assets and their tax base. The Group does not have any deferred tax
liabilities (2020: EURnil).
2021 2020
EUR'000 EUR'000
Opening balance 7,596 6,583
Credited to the consolidated income statement 756 1,013
---------- ----------
Closing balance 8,352 7,596
---------- ----------
The deferred tax credit for the year ended 31 December 2021 of
EUR756k (2020: EUR1,013k) relates to a deferred tax asset created
in the current year for capital allowances not utilised and
available for future offset. Deferred tax is determined using tax
rates and laws enacted or substantively enacted by the reporting
date. The total tax charge in future periods will be affected by
any changes to the applicable tax rates in force in jurisdictions
in which the Group operates and other relevant changes in tax
legislation.
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.
Further detail is included within note 2 to the financial
statements.
13. INVESTMENT IN ASSOCIATE
2021 2020
EUR'000 EUR'000
Opening balance 2,349 2,723
Share of results of associate (225) (374)
Capital reduction (938) -
---------- ----------
Closing balance 1,186 2,349
---------- ----------
The Group holds an investment in Goki Pty Limited, an Australian
resident company. Goki Pty Limited's principal activity is software
development and principal place of business is Australia. The
investment in an associate is accounted for using the equity
method.
When the initial investment was made the Group had significant
influence but not control over the entity, due to the nature of its
voting rights. The Group controlled 49% of the voting rights and
was entitled to appoint 50% or more of the total number of
Directors to the Board.
On 7 July 2021 the directors of Goki PTY Limited approved a
reduction in the investment held by Hostelworld.com Limited in the
company. The shareholding was reduced from 49% to 31.5% through
means of a capital reduction. Hostelworld.com Limited retains one
Board seat, out of four, and continues to exert significant
influence over the company. Hostelworld.com Limited will continue
to account for Goki PTY Limited as an associate.
The original purchase consideration for the investment in Goki
PTY Limited was USD 3,000k. Following the completion of the
reduction in investment total purchase consideration reduced to USD
1,890k.
Deferred consideration of EURnil (2020: EUR1,266k) exists at the
balance sheet date.
Summarised financial information in respect of Goki Pty Limited
is set out below. This represents the amounts in Goki Pty Limited's
financial statements prepared in accordance with IFRSs.
Statement of financial position of Goki Pty Limited as at 31
December 2021:
2021 2020
EUR'000 EUR'000
Non-current assets 7 9
Current assets 354 1,829
Current liabilities (70) (200)
---------- ----------
Equity attributable to owners of the company 291 1,638
---------- ----------
Income statement of Goki Pty Limited for the year ended 31
December 2021:
2021 2020
EUR'000 EUR'000
Revenue 430 28
Loss after tax (502) (764)
Other comprehensive income attributable to the owners of the company - -
------- -------
Total comprehensive loss (502) (764)
------- -------
Group share of results of associate (225) (374)
------- -------
*Relates to group share of results of associate of 49% from 1
Jan until 7 July 2021 and 31.5% from 7 July 2021 to 31 December
2021.
Reconciliation of the above summarised financial information to
the carrying amount of the Group's interest in Goki Pty Limited
recognised in the consolidated financial statements:
2021 2020
EUR'000 EUR'000
Net assets of Goki Pty Limited 291 1,638
Proportion of the Group's ownership interest in the associate 31.5% 49%
Group share of net assets 92 803
Goodwill and transaction costs 1,930 2,868
Other adjustments (836) (1,322)
------- --------
Carrying amount of the group's interest in associate 1,186 2,349
------- --------
Other adjustments relate to the elimination of the Group's 31.5%
(2020: 49%) equity investment within the net assets of Goki Pty
Limited and amounts to 31.5% (2020: 49%) of the share capital of
Goki PTY Limited.
Commitment to extend loan to associate
Under the terms of the original shareholder purchase agreement,
there was a USD 500k loan facility option available to Goki Pty
Limited by the Group until July 2022. The loan facility was not
extended and on 7 July 2021 was not included as part of the revised
shareholder's agreement.
14. LEASE LIABILITIES
Lease liabilities relate to the Group's lease commitments for
office space in Ireland, Portugal, UK and China.
The movement in the Group's right-of-use assets during the
period is set out in note 11. The movement in the Group's lease
liabilities during the period is as follows:
2021 2020
EUR'000 EUR'000
Opening lease liability 4,295 4,291
Additions 82 1,681
Modification 33 -
Disposals (3,164) (344)
Lease term remeasurement - 129
Payments (1,340) (1,555)
Lease interest 102 182
Foreign exchange differences on lease payments 78 (89)
-------- --------
Closing lease liability 86 4,295
-------- --------
The maturity analysis of these lease liabilities is as
follows:
2021 2020
EUR'000 EUR'000
Maturity analysis
Within one year 85 1,940
Between one and five years - 2,660
Over 5 years - -
Less unearned interest 1 (305)
------- -------
Total 86 4,295
------- -------
These liabilities are classified in the consolidated statement
of financial position as:
2021 2020
EUR'000 EUR'000
Non-current lease liabilities - 2,492
Current lease liabilities 86 1,803
------- -------
Total 86 4,295
------- -------
The Group has used the following practical expedients permitted
by the standard on transition and at each reporting date - the use
of a single discount rate to a portfolio of leases with reasonably
similar characteristics, the accounting for operating leases with a
remaining lease term of less than 12 months as at 1 January 2020 as
short-term leases and the use of hindsight in determining the lease
term where the contract contains options to extend or terminate the
lease. The Group has elected not to reassess whether a contract is
or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date the Group
relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
Lease payments included in the consolidated statement of
cashflows relate to lease payments, lease interest and foreign
exchange differences on lease payments included in the table
above.
At 31 December 2021, the Group is committed to EUR103k (2020:
EUR19k) for short term leases. Including short term lease payments,
the total cash outflow for leases amount to EUR1,889k during 2021
(2020: EUR1,607k).
There is a clear payment schedule associated with our lease
liabilities and based on our cash flow forecasts the Group does not
face any significant liquidity risk with regards to its lease
liabilities.
Amounts recognised in consolidated income statement:
2021 2020
EUR'000 EUR'000
Net profit on disposal of leases (793) -
Depreciation expense on right-of-use assets 958 1,518
Interest expense on lease liabilities 102 182
Expense relating to short term leases 429 52
------- --------
Total 696 1,752
------- --------
15. TRADE AND OTHER RECEIVABLES
2021 2020
EUR'000 EUR'000
Amounts falling due within one year
Trade receivables 220 188
Prepayments and other receivables 978 1,191
Value added tax 804 302
---------- -------
Total 2,002 1,681
---------- -------
Due to their short-term nature, the carrying value of trade and
other receivables is deemed to be their fair value. Trade
receivables are non-interest bearing and trade receivable days are
5 days (2020: 4 days).
The Group always recognises lifetime expected credit losses
("ECLs") for trade receivables estimated using a provision matrix
based on the Group's historical credit loss experience, adjusted
for factors that are specific to the debtors, general economic
conditions and an assessment of both the current as well as the
forecast direction of conditions at the reporting date, including
time value of money where appropriate. The historical loss rates
are adjusted to reflect current and forward economic factors if
there is evidence to suggest these factors will affect the ability
of the customer to settle receivables under COVID-19.
Movement in the expected credit loss for trade receivables is as
follows:
2021 2020
EUR'000 EUR'000
At the beginning of the year 194 212
Decrease in loss allowance recognised during the year (129) (18)
---------- -------
At the end of the year 65 194
---------- -------
The net movement in the expected credit loss has been included
in note 4.
16. CASH AND CASH EQUIVALENTS
2021 2020
EUR'000 EUR'000
Cash and cash equivalents 25,267 18,189
Total 25,267 18,189
---------- -------
Included within cash and cash equivalents number is an amount
not available for use by the Group EUR750k (2020: EUR1,500k)
relating to a rental guarantee in place. Balance of cash and cash
equivalents comprise cash and short-term bank deposits only.
17. SHARE CAPITAL AND RESERVES
No of shares of EUR0.01 each Ordinary shares Share premium Total
(Thousands) EUR'000 EUR'000 EUR'000
At 1 January 2020 95,571 956 - 956
Share issue - 29 June 2020 19,114 191 14,344 14,535
Bonus issue - 17 September 2020 1,636 16 (16) -
---------------------------- --------------- -------------- -------
At 31 December 2020 and 2021 116,321 1,163 14,328 15,491
---------------------------- --------------- -------------- -------
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.
On 29 June 2020, the Company issued 19,114,155 Ordinary Shares
at EUR0.79695 per share by way of a Placing, raising gross proceeds
of EUR15,233k. EUR698k of directly attributable share issue costs
have been recognised as a deduction from share premium.
On 17 September 2020, the Company issued 1,636,252 bonus shares
to shareholders in lieu of a cash dividend at value EUR0.01 per
share.
On 19 February 2021, the Group agreed to issue warrants of
3,315,153 ordinary shares of EUR0.01 each in the capital of
Hostelworld (equivalent to 2.85% of Hostelworld's current issued
share capital). Detail is included within note 19.
Reconciliation and movement in reserves during the year as
follows:
Foreign currency Share based payment Warrant reserve (c) Total other reserves
translation reserve reserve (b)
(a)
Notes EUR'000 EUR'000 EUR'000 EUR'000
------ -------------------- -------------------- -------------------- ---------------------
Balance at 1 January
2020 15 788 - 803
------ -------------------- -------------------- -------------------- ---------------------
Exchange differences
on translation of
foreign operations (7) - - (7)
------ -------------------- -------------------- -------------------- ---------------------
Credit to equity for
equity settled
share based
payments - 422 - 422
------ -------------------- -------------------- -------------------- ---------------------
Balance at 31
December 2020 8 1,210 - 1,218
------ -------------------- -------------------- -------------------- ---------------------
Exchange differences
on translation of
foreign operations 32 - - 32
------ -------------------- -------------------- -------------------- ---------------------
Issue of warrants 19 - - 3,073 3,073
------ -------------------- -------------------- -------------------- ---------------------
Credit to equity for
equity settled
share based
payments - 2,152 - 2,152
------ -------------------- -------------------- -------------------- ---------------------
Balance at 31
December 2021 40 3,362 3,073 6,475
------ -------------------- -------------------- -------------------- ---------------------
(a) Foreign currency translation reserve
The foreign currency reserve reflects the foreign exchange gains
and losses arising from the translation of the Group's net
investment in foreign operations.
(b) Share-based payment reserve
The share-based payment reserve reflects the equity settled
share-based payment plans in operation by the Group (note 21).
(c) Warrant reserve
The warrant reserve relates to the warrants exercisable with HPS
Investment Partners LLC (or subsidiaries or affiliates thereof)
(note 19).
18. TRADE AND OTHER PAYABLES
2021 2020
EUR'000 EUR'000
Non-current liabilities
Payroll taxes 8,049 -
Total 8,049 -
---------- ----------
The Group has availed of the Irish Revenue tax warehousing
scheme and deferred payment on all Irish employer taxes from
February 2021. Total amount warehoused at 31 December 2021 amounted
to EUR8,049k (2020: EUR4,140k included within current liabilities).
The Group continues to liaise with Irish Revenue on the matter and
comply with all appropriate guidelines applicable. At 31 December
2021 amounts warehoused are recognised as non-current reflecting
the intention and unconditional right not to repay balance within
12 months.
2021 2020
EUR'000 EUR'000
Current liabilities
Trade payables 5,425 2,258
Accruals and other payables 6,113 9,003
Deferred revenue 1,036 207
Deferred consideration (note 13) - 1,266
Payroll taxes 221 4,302
Total 12,795 17,036
---------- ----------
At 31 December 2021, EUR1,020k of revenue was deferred relating
to free cancellation bookings (2020: EUR197k) and EUR16k was
deferred relating to featured listings (2020: EUR10k).
Included in accruals and other payables is a credit provision
amounting to EUR1,300k (2020: EUR1,528k) for vouchers and
incentives to customers for use on future bookings, and an amount
of EUR2,017k (2020: EUR2,889k) relating to customers who have
cancelled their free cancellation booking but have not yet been
refunded.
The average credit period for the Group in respect of trade
payables is 54 days (2020: 23 days). The Directors consider that
the carrying amount of trade and other payables is deemed to be to
their fair value.
19. BORROWINGS
2021 2020
EUR'000 EUR'000
Opening Balance 1,164 -
Received on Drawdown 28,800 3,454
Repayments (1,164) (2,290)
Loan issuance costs - issue of warrants (3,073) -
Transaction costs relating to borrowings (862) -
Finance costs 3,344 -
Total 28,209 1,164
---------- ----------
The Group had the following borrowing facilities in place during
2021:
1. A 'Prompt Pay' which was a short-term invoice financing
facility with Allied Irish Banks PLC. An amount of EUR3,454k was
drawn down in 2020. Terms attached to the facility was that
Hostelworld.com Limited must ensure it maintains a cash balance of
no less than EUR8.67m for the period ending 30th September 2020,
EUR5.75m for the period ending 31 December 2020 and EUR1.42m for
the period ending 31 March 2021. On 26 January 2021 the amount
owing on the facility was repaid in full and the facility is no
longer available to the Group.
2. A three-year revolving credit facility for EUR7m with the
Governor and Company of the Bank of Ireland to assist with the
investing and development needs of the business. No amounts were
ever drawn down on this facility. On 10 February 2021 the Group
signed a deed of release exiting the undrawn facility in place.
Covenants attached to the facility as follows: Hostelworld.com
Limited was to retain minimum cash balances of 20% of drawn
facilities and the revolving credit facility was required to return
to credit 20 days per annum. Hostelworld.com Limited were also
required to maintain a minimum tangible net worth of not less than
EUR90m.
3. On 19 February 2021 the Group signed a EUR30m five-year term
loan facility with certain investment funds and accounts of HPS
Investment Partners LLC (or subsidiaries or affiliates thereof).
The facility is single drawdown and bears interest at a margin of
9.0% per annum over EURIBOR (with a EURIBOR floor of 0.25% per
annum). Until the first anniversary of drawdown all interest rolls
up and capitalises. Between the first and third anniversaries of
drawdown, Hostelworld has an option to capitalise up to 4.0% per
annum of the accruing interest with the balance of the interest
during that period (and all interest accruing after the third
anniversary of drawdown) being cash pay.
The facility agreement includes the following financial
covenants: (1) adjusted net leverage (Hostelworld has to ensure
that total net debt is no more than 3.0 x adjusted EBITDA from 31
December 2023 to 30 September 2024, and no more than 2.5 x adjusted
EBITDA from 31 December 2024 onwards); and (2) minimum liquidity
(Hostelworld has to ensure that at close of business on the last
business day of each month until it is testing the adjusted net
leverage ratios there is free cash in members of the Group which
have guaranteed repayment of the facility of at least EUR6.0
million).
The lenders have the right to require repayment of the facility
if Hostelworld is subject to a change in control and Hostelworld
has the option to repay the facility early. If the facility is
repaid for any reason within the first four years of its term a
prepayment fee is payable as follows: if repayment is made (1) in
the first two years after drawdown then all interest from the date
of repayment to the second anniversary of drawdown is due, plus a
2% fee of the amount repaid, (2) between the second and the third
anniversary of drawdown the fee is 2% of the amount repaid and (3)
between the third and fourth anniversary of drawdown the fee is 1%
of the amount repaid.
Hostelworld and its principal trading subsidiaries will
guarantee repayment of the facility and amounts payable under it
and provide the lenders with a customary security package over
their assets. Cash dividends to shareholders are permitted provided
total net debt is below 2.0 x adjusted EBITDA, no events of default
are ongoing and the above stated minimum liquidity covenant will be
complied with after taking into account the proposed dividends. The
Group is required to fund any new acquisitions through new equity
and/or through a maximum of 50% of retained excess cashflow. Any
acquisition by the Group of the remaining shareholdings in Goki PTY
Limited and Counter App Limited is required to be funded from cash
on the balance sheet.
An amount of EUR28.8m was received on 23 February 2021, net of
original issue discount.
Issue of warrants:
In connection with the facility, Hostelworld has agreed to issue
warrants over 3,315,153 ordinary shares of EUR0.01 each in the
capital of Hostelworld (equivalent to 2.85% of Hostelworld's issued
share capital) to the lender. The warrants may be exercised at any
time during the term of the loan and for a twelve-month period
following its scheduled termination at an exercise price of EUR0.01
per ordinary share. Shares issued will be the same class and carry
the same rights as existing shares. An amount of EUR3,073k 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 EUR3,106,538 minus the subscription
price of EUR33,152 (3,315,153 X EUR0.01).
Borrowings are classified in the consolidated statement of
financial position as:
2021 2020
EUR'000 EUR'000
Non-current borrowings 28,209 -
Current borrowings - 1,164
------- -------
Total 28,209 1,164
------- -------
Change in liabilities arising from financing activities:
Lease liabilities (note 14) Borrowings Deferred consideration Total net debt
(note 13)
EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2020 (4,291) - (1,763) (6,054)
Financing cash flows 1,462 (1,164) 503 801
Other non-cash movements (1,466) - (6) (1,472)
Balance at 31 December 2020 (4,295) (1,164) (1,266) (6,725)
Financing cash flows 1,160 (26,774) 345 (26,053)
Other non-cash movements 3,049 (271) 921 4,483
Balance at 31 December 2021 (86) (28,209) - (28,295)
---------------------------- ----------- ----------------------- ---------------
Other non-cash movements for lease liabilities in 2021 and 2020
relate to additions, disposals, a modification and a lease term
remeasurement as included in note 14. Other non-cash movements in
2021 for borrowings relate to net amount of non-cash finance costs
incurred and the issuance costs for warrants (2020: EURnil). Other
non-cash movements for deferred consideration relate to capital
reduction as detailed in note 13 and foreign exchange differences
on revaluation of deferred consideration owing (2020: revaluation
of deferred consideration).
20. 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.
21. SHARE BASED PAYMENTS
Overall, the Group recognised an expense of EUR2,162k (2020:
EUR428k) relating to equity settled share-based payment
transactions in the consolidated income statement during the
year.
EUR719k (2020: EUR356k) relates to Long Term Incentive Plan
("LTIP") scheme, EUR1,392k (2020: EURnil) is in relation to the
Group's Restricted Share awards ("RSU") scheme, and EUR51k (2020:
EUR72k) in relation to the Save As You Earn ("SAYE") scheme. All
schemes are accounted for as equity settled in the financial
statements.
Long Term Incentive Plan ("LTIP") scheme
The Group operate a Long Term Incentive Plan for executive
Directors and selected management.
In 2021, there was one invitation made to executive directors
and selected management to participate in the Group's long-term
incentive plan ("LTIP"). 2,336,885 nil cost options were granted,
and these options will vest on 26 April 2024 subject to meeting
performance conditions based on the Company's adjusted EBITDA over
a three-year period, Counter App revenue generated based on a
target in 2023 and customer acquisition value targets to be met in
2023.
For the 2020 scheme vesting conditions are dependent on the
Adjusted Earnings per Share ("EPS") performance and Total
Shareholder Return ("TSR") of the Group over a three year period
("the performance period"). Up to 25% of the shares/options subject
to an award will vest according to the Group's adjusted EPS growth
compared with target during the performance period. Up to 75% of
the shares/options subject to an invitation will vest according to
the Group's TSR performance during the performance period measured
against the TSR performance indicators approved by the Remuneration
Committee.
For the 2019 scheme up to 70% of the shares/options subject to
an award will vest according to the Group's adjusted EPS growth
compared with target during the performance period. Up to 30% of
the shares/options subject to an invitation will vest according to
the Group's TSR performance during the performance period measured
against the TSR performance indicators approved by the Remuneration
Committee.
For all schemes an award will lapse if a participant ceases to
be an employee or an officer within the Group before the vesting
date and is not subject to good leaver provisions.
In 2021, EUR719k was expensed in the consolidated income
statement in relation to the Group's LTIP schemes (2020:
EUR356k).
Details of the share options outstanding during the year are as
follows:
2021 2020
EUR'000 EUR'000
Outstanding at beginning of year 3,864,472 1,501,647
Adjustment factor applied 55,262* -
Revised balance outstanding at beginning of period 3,919,734 1,501,647
Granted during the year 2,336,885 3,793,200
Forfeited during the year (1,515,144) (1,430,375)
Exercised during the year - -
Expired during the year - -
------------ ------------
Outstanding at the end of the year 4,741,475 3,864,472
------------ ------------
Exercisable at the end of the year -
------------ ------------
*On 17 September 2020, the company issued 1,636,252 bonus shares
to shareholders in lieu of a cash dividend at value EUR0.01 per
share. An adjustment was made to the LTIP schemes in 2021, when
approved by the Remuneration Committee, to ensure that award
holders are no better or worse off following the bonus issue than
they were beforehand.
Included in the number of options forfeited in 2021, are 745,199
of the 2019 awards which did not meet the vesting conditions based
on performance conditions from 1 January 2019 to 31 December 2021.
Included in the number of options forfeited in 2020, are 282,500 of
the 2018 awards which did not meet the vesting conditions based on
performance conditions from 1 January 2018 to 31 December 2020.
If the conditions are met, the remaining awards will vest on the
later of the 3rd anniversary of the grant and the determination of
the performance condition and will then remain exercisable until
the 7th anniversary of the date of grant, provided the individual
remains an employee or officer of the Group or is subject to good
leaver provisions. The measurement period for the 2019, 2020 and
2021 awards for performance conditions is over 3 years from 1
January 2019 to 31 December 2021, from 2 May 2020 to 1 May 2023 and
from 27 April 2021 to 26 April 2024 respectively.
Share options under the LTIP scheme have an exercise price of
GBPnil. The fair value, at the grant date, of the TSR-based
conditional awards was measured using a Monte Carlo simulation
model.
Fair value of options granted during the year:
At the grant date, the fair value per conditional award and the
assumptions used in the calculations
are as follows:
April 2021 May 2020 November August June April 2019
2019 2019 2019
Year of potential vesting 2024 2023 2022 2022 2022 2022
----------- ---------- --------- -------- -------- -----------
Number of share options granted 2,336,885 3,793,200 69,422 187,842 76,204 933,995
----------- ---------- --------- -------- -------- -----------
Share price at grant date GBP1.00 GBP0.74 GBP1.32 GBP1.50 GBP2.07 GBP1.95
----------- ---------- --------- -------- -------- -----------
Exercise price per share option GBPnil GBPnil GBPnil GBPnil GBPnil GBPnil
----------- ---------- --------- -------- -------- -----------
Expected volatility of Company share price n/a 51.86% 40.1% 40.0% 42.1% 46.1%
----------- ---------- --------- -------- -------- -----------
Expected life 3 years 3 years 3 years 3 years 3 years 3 years
----------- ---------- --------- -------- -------- -----------
Expected dividend yield n/a 6.06% 6.0% 4.9% 4.9% 4.3%
----------- ---------- --------- -------- -------- -----------
Risk free interest rate n/a 0.08% 0.51% 0.43% 0.56% 0.71%
----------- ---------- --------- -------- -------- -----------
Weighted average fair value at grant date GBP1.00 GBP0.49 GBP1.16 GBP1.27 GBP1.97 GBP1.93
----------- ---------- --------- -------- -------- -----------
Remaining weighted average life of options
(years) 2.32 1.33 0.87 0.64 0.42 0.25
----------- ---------- --------- -------- -------- -----------
Expected volatility was determined based on the market
performance of the Company over a period of 36 months prior to the
date of grant for all the 2020 and 2019 awards.
Market based vesting conditions, such as the TSR condition, have
been taken into account in establishing the fair value of equity
instruments granted. Non-market based performance conditions, such
as the EPS conditions, were not taken into account in establishing
the fair value of equity instruments granted, however the number of
equity instruments included in the measurement of the transaction
is adjusted so that the amount recognised is based on the number of
equity instruments that are expected to vest.
Restricted Share awards ("RSU") scheme
In lieu of a cash bonus in 2021 the Directors approved the grant
of a restricted share award scheme. Total cost in 2021 amounted to
EUR1,392k (prior year: EURnil).
During 2021 the Company granted a restricted share award ("RSU")
to selected employees, including the executive directors and
members of the management team. In total 2,642,212 nil cost options
were granted. Each award will vest in two tranches on 28 February
2022 in respect of 50% of the plan shares and 28 February 2023 in
respect of the remaining 50% of the plan shares. Vesting will be
dependent upon the participant being employed by Hostelworld as of
the vesting date and satisfactory personal performance.
2021 2020
Outstanding at the beginning of the period - -
Granted during the year 2,642,212 -
Forfeited (312,402) -
---------- ----
Total 2,329,810 -
---------- ----
Save As You Earn ("SAYE") scheme
During the year ended 31 December 2021, the Group did not
approve the granting of any new SAYE scheme following the
withdrawal of Ulster Bank from the Irish market who were the only
bank with an Irish banking licence that accepted new accounts for
Save As You Earn schemes.
Prior to 2021, a scheme was approved in 2019 and 2020. The
schemes last three years and employees may choose to purchase
shares at the end of the three year period at the fixed discounted
price set at the start. The share price for the scheme has been set
at a 20% discount for Irish and UK based employees in line with
amounts permitted under tax legislation in both jurisdictions.
Number of SAYE share options granted
2021 2020
Outstanding at beginning of year 440,791 290,592
Adjustment factor applied 6,303* -
Revised balance outstanding at beginning of period 447,094 -
Granted during the year 11,541 358,305
Forfeited during the year (181,011) (208,106)
------------------- ------------------
Outstanding share options granted at end of year 277,624 440,791
------------------- ------------------
* On 17 September 2020, the Company issued 1,636,252 bonus
shares to shareholders in lieu of a cash dividend at value EUR0.01
per share. An adjustment was made to the Save As You Earn schemes
in 2021, when approved by the Remuneration Committee, to ensure
that award holders are no better or worse off following the bonus
issue than they were beforehand.
At the grant date, the fair value per conditional award and the
assumptions used in the calculations
are as follows:
Scheme UK office Irish office UK office Irish office
Grant date August 2020 August 2020 October 2019 October 2019
-------------- -------------- -------------- --------------
Year of potential vesting 2023 2023 2022 2022
-------------- -------------- -------------- --------------
Share price at grant date GBP0.63 EUR0.70 GBP1.30 EUR1.52
-------------- -------------- -------------- --------------
Exercise price per share option GBP0.50 EUR0.56 GBP1.17 EUR1.30
-------------- -------------- -------------- --------------
Expected volatility of company share price 54.2% 54.2% 39.5% 39.5%
-------------- -------------- -------------- --------------
Expected life 3 years 3 years 3 years 3 years
-------------- -------------- -------------- --------------
Expected dividend yield 6.13% 6.13% 9.3% 9.3%
-------------- -------------- -------------- --------------
Risk free interest rate -0.03% -0.03% 0.51% 0.51%
-------------- -------------- -------------- --------------
Weighted average fair value at grant date GBP0.20 EUR0.22 GBP0.21 EUR0.24
-------------- -------------- -------------- --------------
Valuation model Black Scholes Black Scholes Black Scholes Black Scholes
-------------- -------------- -------------- --------------
Expected volatility was determined in line with market
performance of the Company for the 2020 and 2019 schemes. For the
2018 schemes, expected volatility was determined in line with
market performance of the Company and comparator companies as there
was insufficient historic data available for the Company at the
grant date of the awards
Cash settled share-based payments
During 2018, the Group issued to certain individuals share
appreciation rights ("SARs"), in the form of Phantom Shares that
require the Group to pay the intrinsic value of the SAR at the date
of exercise. The Group has recorded liabilities of EUR26k and a
corresponding expense of EUR26k in relation to these SARs as at 31
December 2021 (2020: EUR7k). Where relevant the fair value of these
SARs was determined by using a Black Scholes model.
22. RELATED PARTY TRANSACTIONS
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Directors' remuneration
2021 2020
EUR'000 EUR'000
Salaries, fees, bonuses and benefits in kind 1,076 1,101
Amounts receivable under long-term incentive schemes 257 102
Termination benefits - -
Other remuneration 402 -
Pension contributions 61 62
-------- --------
Total 1,796 1,265
-------- --------
Retirement benefit charges arise from pension payments relating
to 2 Executive Directors (2020: 2). Other remuneration EUR402k
relates to share-based payment expense in respect of the Restricted
Share awards ("RSU") scheme operated in 2021 (2020: EURnil).
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.
2021 2020
EUR'000 EUR'000
Short term benefits 2,608 2,899
Share based payments charge 1,450 271
Termination benefits 593 289
Post-employment benefits 152 133
---------- ----------
Total 4,803 3,592
---------- ----------
23. SUBSIDIARIES AND ASSOCIATES
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:
Company Holding Nature of Business Registered Office
Hostelworld.com Limited 100%* Technology trading company Floor 3
196 Ordinary shares @ EUR1 Charlemont Exchange
Charlemont St
Dublin
D02 VN88
Ireland
-------- ----------------------------------- ----------------------------------
Hostelworld Services Portugal LDA 100% Marketing and research and Rua Antònio Nicolau D'Almeid
500 Ordinary shares @ EUR1 development services company 45, 5th Floor
4100-320 Oporto
Portugal
-------- ----------------------------------- ----------------------------------
Hostelworld Business Consulting 100% Business information consulting Suite 304
(Shanghai) Co., Limited** and marketing planning Block 2
No.425 Yanping Road
Jing'an District
Shanghai China 200042
425 2 304
,
-------- ----------------------------------- ----------------------------------
Hostelworld Services Limited 100%* Marketing services and technology Floor 5
104123 Ordinary shares @ GBP0.001 trading company 38 Chancery Lane
The Cursitor
London
WC2A 1EN
United Kingdom
-------- ----------------------------------- ----------------------------------
Counter App Limited 51% Technology company Floor 3,
51 Ordinary shares @ EUR1 Charlemont Exchange
Charlemont St
Dublin
D02 VN88
Ireland
-------- ----------------------------------- ----------------------------------
* held directly by the Company
** 3 Million RMB contributed by Hostelworld.com Limited for 100%
ownership of subsidiary
All subsidiaries have the same reporting date as the Company
being 31 December.
On 19 June 2020, "Project Hydra Funding Limited" was
incorporated as a 100% subsidiary of Hostelworld Group plc. The
company was a Jersey registered company and the company was
involved in the transfer of funds from the equity raise to
Hostelworld Group PLC which raised gross proceeds of EUR15.2m. The
entity was subsequently liquidated on 10 July 2020.
On 4 June 2020 a new subsidiary was incorporated "Hostelworld
Business Consulting (Shanghai) Co., Limited" and became a 100%
owned subsidiary of Hostelworld.com Limited. The principal activity
of this subsidiary is business information consulting and marketing
planning.
ASSOCIATES
The following details the Company's current investment in
associates, including the name, country of incorporation, and
proportion of ownership interest:
Company Holding Nature of Business Registered Office
Goki Pty Limited 49% / 31.5%* Technology company 477 Kent St, Sydney NSW 2000, Australia
------------- ------------------- ----------------------------------------
* 49% up until 7 July 2021
On 21 June 2020, Hostelworld.com Limited signed an agreement to
purchase 7,645,554 shares in Goki Pty Limited, an Australian
incorporated proprietary company limited by shares. The purchase
consideration for this transaction was USD 3m. This transaction was
completed on 22 July 2020 and on this date, an investment in
associate was recognised in the consolidated financial statements.
On 7 July 2021 the directors of Goki PTY Limited approved a
reduction in the investment held by Hostelworld.com Limited in the
company. The shareholding was reduced from 49% to 31.5% through
means of a capital reduction.
24. FINANCIAL RISK MANAGEMENT
24.1 Financial risk factors
The Directors manage the Group's capital, consisting of both
debt and equity, to ensure that the Group will be able to continue
as a going concern while also maximising the return to
stakeholders. As part of this process, the Directors review
financial risks such as liquidity risk, credit risk, foreign
exchange risk and interest rate risk regularly.
Liquidity risk
Cash flow forecasting is monitored by rolling forecasts of the
Group's liquidity requirements to ensure it has sufficient cash to
meet operational needs while not breaching any covenants that the
Group adheres to. Such forecasting takes into consideration the
Group's debt financing plans.
The Group's policy is to ensure that it has sufficient long-term
funding in place to meet its payment obligations and complies with
covenants. The risk is managed centrally by the group and reviewed
by the Board on a regular basis.
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period at the
reporting date to the contractual maturity date. The Group had no
derivative financial liabilities in the current or prior year. The
amounts disclosed in the table are the contractual undiscounted
cash flows.
Notes 2021 2020
EUR'000 EUR'000
Up to 1 year
Borrowings - 1,164
Trade and other payables 11,274 11,205
-------- --------
Total up to 1 year 11,274 12,369
-------- --------
2021 2020
EUR'000 EUR'000
Between 2 and 5 years
Borrowings 32,453 -
-------- --------
Total between 2 and 5 years 32,453 -
-------- --------
Total 43,760 12,369
-------- --------
Interest rate risk
The principal aim of managing interest rate risk is to limit the
adverse impact on cash flows of movements in interest rates. Cash
requirements are managed centrally by the Group. The Group only has
one debt facility in place with HPS where the Group is charged 9.0%
per annum over EURIBOR (with a EURIBOR floor of 0.25% per annum).
EURIOR rates were negative in 2021 and therefore there was no
impact on the cashflows of the group.
There is a floor on our facility EURIBOR 0.25% and therefore for
our sensitivity analysis we have considered a 1% increase in
Euribor rates which would result in a EUR1.8m impact on the Income
Statement, over the duration of the tenure, with respect to the
interest charge on HPS debt facility.
Credit risk and foreign exchange risk
The Directors monitor the credit risk associated with loans,
trade receivables and cash and cash equivalent balances on an
on-going basis. The majority of the Group's trade receivable
balances are due for maturity within 5 days and largely comprise
amounts due from the Group's payment processing agents.
Accordingly, the associated credit risk is determined to be low.
These trade receivable balances, which consist of euro, US dollar
and Sterling amounts, are settled within a relatively short period
of time, which reduces any potential foreign exchange exposure
risk.
At 31 December 2021 and 2020, all material cash balances are
held with banks with a minimum credit rating of BBB-, as assigned
by international credit rating agencies. As a result, the credit
risk on cash balances is limited. The carrying value of trade
receivables, trade payables and cash and cash equivalents is a
reasonable approximation of their fair value. The Group does not
enter into or trade financial instruments, including derivative
financial instruments, for speculative purposes.
The Board considers capital to comprise of long-term debt as
disclosed in note 19 and equity as disclosed in note 17. The
Directors' objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital. In order to maintain or adjust the capital structure, the
Directors may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets. In
2020 and 2021 cash dividends were suspended due to COVID-19
uncertainty.
The Group will ensure it retains sufficient reserves to manage
its day to day cash requirements, including capital expenditure
requirements, whilst ensuring appropriate dividends are distributed
to shareholders.
25. DIVIDENDS
There are no cash dividends in 2020 or 2021 as the Board took
the decision to suspend cash dividends in 2020.
Future cash dividend payments 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.
26 . PARENT COMPANY EXEMPTION
The Company has taken advantage of the exemption provided under
section 408 of the Companies Act 2006 not to publish its individual
income statement and related notes.
27. EVENTS AFTER THE BALANCE SHEET DATE
There are no significant events after the balance sheet
date.
[1] Operating costs excludes paid marketing costs
[2] Administration expenses excludes paid marketing costs
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END
FR KBLFXLXLEBBV
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